[Federal Register Volume 83, Number 232 (Monday, December 3, 2018)]
[Notices]
[Pages 62327-62328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26167]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Airlift PTTD 
Brace

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of the Airlift PTTD Brace. CBP has concluded that the 
country of origin of the Airlift PTTD Brace is Mexico for the purpose 
of U.S. Government procurement.

DATES: The final determination was issued on November 23, 2018. A copy 
of the final determination is attached. Any party-at-interest, as 
defined in 19 CFR 177.22(d), may seek judicial review of this final 
determination within January 2, 2019

FOR FURTHER INFORMATION CONTACT: Joy Marie Virga, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade (202) 325-
1511.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on 11/23/18, CBP 
issued a final determination concerning Airlift PTTD Brace, which may 
be offered to the United States Government under an undesignated 
government procurement contract. The final determination, HQ H299701, 
was issued at the request of DJO, LLC, under procedures set forth at 19 
CFR part 177, subpart B, which implements Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 2511-18). In the final 
determination, CBP concluded that the aircell produced in Mexico 
imparts the final product with its essential character. Further, the 
assembly operations completed in Mexico permanently attach the various 
parts to each other so that they lose their individual identities and 
become part of the completed Airlift. Therefore, the country of origin 
for purposes of U.S. Government procurement of the Airlift PTTD Brace 
is Mexico.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that 
notice of final determinations shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

    Dated: November 23, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H299701

November 23, 2018

OT:RR:CTF:VS: H299701 JMV

CATEGORY: Origin

Matthew M. Caligur
Baker & Hostetler, LLP
811 Main St., Suite 1100
Houston, TX 77002-6111

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Country of Origin of Airlift PTTD Brace

Dear Mr. Caligur,

    This is in response to your request of June 11, 2018 requesting 
a final determination regarding the country of origin of the Airlift 
PTTD Brace (``Airlift'') on behalf of DJO, LLC (``DJO'') pursuant to 
subpart B of Part 177, U.S. Customs and Border Protection (``CBP'') 
Regulations (19 C.F.R. Sec.  177.21, et seq.). As a domestic 
producer of merchandise, DJO is a party-at-interest within the 
meaning of 19 C.F.R. Sec.  177.22(d) and is entitled to request this 
final determination.
    You requested confidential treatment for certain information 
contained in your submission and in the file. Pursuant to 19 C.F.R. 
Sec.  177.2(b)(7), the identified information has been bracketed and 
will be redacted in the public version of this ruling.

FACTS:

    DJO is a global provider of orthopedic devices, including a 
broad range of products used for rehabilitation, pain management and 
physical therapy. The Airlift, one of the items that DJO develops, 
is designed for the treatment of posterior tibial tendon dysfunction 
(``PTTD''), or for early signs and symptoms of the adult acquired 
flat foot. A sample of the finished article and photographs of the 
components were submitted with your request. The Airlift is 
essentially a brace that covers the ankle and foot. Depending on the 
severity of the patient's condition, the Airlift can be prescribed 
for use as part of a conservative treatment to stabilize the foot 
and ankle to help prevent further degeneration. It can also be 
prescribed for use post-surgically and during rehabilitation. The 
Airlift is produced in three sizes for both the left and right foot 
with varying dimensions, but all have the same structure and 
composition and are manufactured using the process described below. 
Foot support and ankle stabilization are provided by the Airlift's 
integrated aircell and semi-rigid shells. The aircell, located under 
the foot arch, is integral to preventing and rehabilitating flat 
foot. The aircell is adjustable using a hand bulb, which is included 
with the brace. When inflated, the aircell can accommodate variances 
in arch shapes and heights. The semi-rigid shells are anatomically 
designed to the shape of the ankle for secure support and 
stabilization. These shells help realign the ankle and support the 
patient. The Airlift uses a rear entry design which allows the 
patient to slip his or her foot into the back of the brace. Two hook 
and loop straps secure the brace and can be used to adjust fit. 
These design elements eliminate the need for lacing, improve patient 
compliance and make the Airlift easier to put on than custom braces.
    The Airlift is produced from the following components: a form 
assembly from [country A], a springloaded valve from [country B], a 
hand bulb from [country A], an aircell from Mexico, tubing from 
[country C], a pneumatic coupler from [country D], an elbow from 
[country D], resin polyether from [country D], colorant from 
[country D], foam from [country C], polyurethane laminate from 
[country D], and polyurethane film from [country D]. Production of 
the Airlift takes place at DJO's facility in Tijuana, Mexico. DJO 
produces the aircells in Mexico using

[[Page 62328]]

laminate polyurethane from [country D], stuffing them with foam and 
sewing the sides closed. DJO places the pneumatic coupling on the 
fixture. DJO connects the tubing to the pneumatic coupling. DJO 
places the aircell on the fixture to assemble the side of pneumatic 
coupling in the aircell tubing. DJO then inserts the completed 
aircells into the wrap, ensuring that the tubing is exposed and 
open. DJO then places the elbow and valve into the pneumatic 
fixtures to create an assembly, which is also placed into the wrap 
and connected to the tubing. The Airlift is then packaged into a box 
along with the hand bulb and instructional information, which is 
labeled for shipping.
    You state that the Airlift is classified under subheading 
9021.10.00, Harmonized Tariff Schedule of the United States 
(``HTSUS''), which provides for ``Orthopedic appliances, including 
crutches, surgical belts and trusses; splints and other fracture 
appliances; artificial parts of the body; hearing aids and other 
appliances which are worn or carried, or implanted in the body, to 
compensate for a defect or disability; parts and accessories 
thereof; Orthopedic or fracture appliances, and parts and 
accessories thereof.''

ISSUE:

    What is the country of origin of the Airlift for purposes of 
U.S. Government Procurement?

LAW AND ANALYSIS:

    CBP issues country of origin advisory rulings and final 
determinations as to whether an article is or would be a product of 
a designated country or instrumentality for the purposes of granting 
waivers of certain ``Buy American'' restrictions in U.S. law or 
practice for products offered for sale to the U.S. Government, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  177.21 et seq., 
which implements Title III of the Trade Agreements Act of 1979, as 
amended (19 U.S.C. Sec.  2511 et seq.).
    Under the rule of origin set forth under 19 U.S.C. Sec.  
2518(4)(B):

An article is a product of a country or instrumentality only if (i) 
it is wholly the growth, product, or manufacture of that country or 
instrumentality, or (ii) in the case of an article which consists in 
whole or in part of materials from another country or 
instrumentality, it has been substantially transformed into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed.

See also 19 C.F.R. Sec.  177.22(a).

    In determining whether the combining of parts constitutes a 
substantial transformation, the determinative issue for CBP is the 
extent of operations performed and whether the parts lose their 
identity and become an integral part of the new article. Belcrest 
Linens v. United States, 6 C.I.T. 204 (1983), aff'd, 741 F.2d 1368 
(Fed. Cir. 1984). Assembly operations that are minimal or simple, as 
opposed to complex or meaningful, will generally not result in a 
substantial transformation. See Headquarters Ruling Letter (``HQ'') 
H125975, dated January 19, 2011. CBP considers the totality of the 
circumstances and makes such determinations on a case-by-case basis.
    The Court of International Trade has also applied the ``essence 
test'' to determine whether the identity of an article is changed 
through assembly or processing. For example, in Uniroyal, Inc. v. 
United States, 3 C.I.T. 220, 225 (1982), aff'd, 702 F.2d 1022 (Fed. 
Cir. 1983), the court held that imported shoe uppers added to an 
outer sole in the United States were the ``very essence of the 
finished shoe'' and thus were not substantially transformed into a 
product of the United States. Further, the court noted that the 
attachment of the outsole to the upper was a minor manufacturing or 
combining process which left the identity of the upper intact.
    Here, the manufacturing operations that combine the Airlift into 
a finished product are completed at DJO's facility in Mexico and 
cause the various parts to lose their individual identities. In 
Mexico, DJO creates the tubing used to inflate the aircell, cuts the 
laminate polyurethane to size and shape for the aircell, fills the 
aircell with foam, and sews it closed. DJO then connects the tubing 
into the aircell using a coupler and plastic elbow, after which the 
aircell is sewn into the Airlift. This processing permanently 
attaches the various parts to each other so that they lose their 
individual identities and become part of the completed Airlift.
    Further, similar to the shoe upper in Uniroyal, the aircell 
imparts the essence of the brace as it is the part that provides 
arch support to prevent or reduce adult onset flat foot, and 
supports the ankle to treat PTTD. While the form assembly is 
imported with lateral stays that work to immobilize the ankle, it is 
not until the insertion of the aircell that the Airlift is suitable 
for treatment of these conditions. Therefore, a customer is likely 
to make the decision to purchase the Airlift based on the function 
of the aircell.
    As such, we find the manufacture of the aircell in Mexico and 
additional processing to create a fully functioning brace results in 
a substantial transformation of the components such that the country 
of origin for government procurement purposes is Mexico.

HOLDING:

    The country of origin of the Airlift for purposes of U.S. 
Government procurement is Mexico.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec. 177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 CFR 177.30, any party-at-interest may, within 30 days 
of publication of the Federal Register Notice referenced above, seek 
judicial review of this final determination before the Court of 
International Trade.

    Sincerely,

Alice A. Kipel,

Executive Director Regulations & Rulings Office of Trade

[FR Doc. 2018-26167 Filed 11-30-18; 8:45 am]
 BILLING CODE 9111-14-P