[Federal Register Volume 84, Number 40 (Thursday, February 28, 2019)]
[Notices]
[Pages 6808-6811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03539]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Various 
Stimulating Probes

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

ACTION: Notice of final determination.

-----------------------------------------------------------------------

SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of various stimulating probes. Based upon the facts 
presented, CBP has concluded in the final determination that the United 
States is the country of origin of the stimulating probes for purposes 
of U.S. Government procurement.

DATES: The final determination was issued on February 20, 2019. 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 April 1, 2019.

FOR FURTHER INFORMATION CONTACT: Cynthia Reese, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade (202-325-
0046).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on 02/20/19, CBP 
issued a final determination concerning the country of origin of 
various stimulating probes for purposes of Title III of the Trade 
Agreements Act of 1979. This final determination, HQ H300744, was 
issued at the request of Rhythmlink International, 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 has concluded that, based 
upon the facts presented, the processing that occurs in China does not 
substantially transform the stimulating probes from products of the 
United States to products of China. Therefore, the stimulating probes 
are products of the United States for purposes of U.S. Government 
procurement.
    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

[[Page 6809]]

final determination within 30 days of publication of such determination 
in the Federal Register.

    Dated: February 20, 2019.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H300744
February 2, 2019
OT:RR:CTF:VS H300744 CMR
CATEGORY: Origin
David S. Robinson, Esq.
Nexsen Pruet
4141 Parklake Avenue
Suite 200
Raleigh, NC 27612

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); subpart B, Part 177, CBP Regulations; 
Various Stimulating Probes
Dear Mr. Robinson:
    This is in response to your request of August 30, 2018, on behalf 
of your client, Rhythmlink International, LLC, (hereinafter, 
Rhythmlink) requesting a final determination concerning the country of 
origin of various stimulating probes for purposes of U.S. government 
procurement under Title III of the Trade Agreements Act of 1979 (TAA), 
as amended (19 U.S.C. Sec.  2511 et seq.). Rhythmlink is a party-at-
interest within the meaning of 19 C.F.R. Sec.  177.22(d)(1), and is 
entitled to request this final determination under 19 C.F.R. Sec.  
177.23(a). In addition, you have requested a country of origin 
determination for marking purposes.
FACTS:
    Rhythmlink manufactures and distributes medical devices and 
provides custom packaging, private labeling, custom products and 
contract manufacturing to its customers. It seeks a country of origin 
determination for purposes of government procurement under Title III of 
the TAA for six stimulating probes. These six probes are: the Standard 
Ball Tip Probe, the Tapered Ball Tip Probe, the Standard Monopolar 
Probe, the Extended Monopolar Probe, the Monopolar Stimulating Probe 
with Removable Handle, and the Slide Shaft Stimulating Probe.
    The probes are produced in the United States from U.S. origin 
steel. You describe the processing in the United States as consisting 
of engineering and design work and manufacturing of the steel probes. 
The engineering and design work includes: research and development; 
design control; IP generation; regulatory clearances; specifications; 
engineering drawings; work instructions; tooling, fixtures, and 
equipment designs; functional verification testing; sterilization 
validation; packaging, sterile barrier, shelf life validation; and 
process validations. The manufacturing which occurs in the United 
States, by a third-party contract manufacturer, entails cutting raw 
stainless steel rods of 316 straight grade stainless steel to a 
specified length to meet specified tolerances. The stainless steel rods 
are cut by a precision mill or band saw. After cutting, the rods are 
ground to a precise diameter on a precision lathe. In addition, the 
lathe is used to create a taper on a portion of one end of the rod to 
narrow the diameter to half of the original diameter of the tip. The 
rods are centered precisely on the narrow rod tip and welded to a 
stainless steel ball to form a connection with a strength of greater 
than or equal to 36 pounds. The probes resulting from this 
manufacturing process are then subject to passivation which involves a 
process of cleaning the probes ultrasonically with an alkaline cleaning 
detergent, rinsing with deionized water, placing in an acid solution, 
rinsing twice in separate deionized water tanks and drying. The steel 
probes are then packaged and shipped to China for further processing.
    In China, the probes are attached to a leadwire of Korean origin 
using Chinese solder, and covered with a heat shrink from China, Japan, 
or the United States. The probes are attached to a hand grip consisting 
of a U.S.-origin handle insert and a Korean origin plastic handle. You 
indicate that the processing in China takes less than four minutes. The 
finished probes are inserted into a protective cover from the United 
States and packaged for shipment to the United States.
    You indicate that there is an insulated stimulating probe with a 
removable handle. For the removable handle style probe, there are only 
two steps performed in China: maintaining an inventory and packaging. 
The removable handle probe consists of three functional components: an 
insulated stainless steel probe (United States), a wire with DIN 42-802 
connectors on each end coiled tightly (Korea or Japan), and a removable 
plastic handle (United States). There is no protective cover for this 
probe as it is secured within a durable plastic tray with a lid which 
serves as protective packaging. You state that all parts are packed 
unattached, in a plastic tray, pouched and boxed.
    Upon return to the United States, the probes are subjected to a 30-
hour sterilization process and subjected to a randomized sampling and 
testing protocol.
ISSUE:
    What is the country of origin of the stimulating probes described 
herein for U.S. government procurement purposes?
LAW AND ANALYSIS:
    U.S. Customs and Border Protection (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 purpose 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, Trade Agreements Act of 
1979, as amended (19 U.S.C. Sec. Sec.  2511-2518).
    The rule of origin set forth in 19 U.S.C. Sec.  2518(4)(B) states:

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 rendering advisory rulings and final determinations for purposes 
of U.S. Government procurement, CBP applies the provisions of subpart B 
of Part 177 consistent with the Federal Procurement Regulations. See 19 
C.F.R. Sec.  177.21. In this regard, CBP recognizes that the Federal 
Acquisition Regulations restrict the U.S. Government's purchase of 
products to U.S.-made or designated country end products for 
acquisitions subject to the TAA. See 48 C.F.R. Sec.  25.403(c)(1). The 
Federal Acquisition Regulations define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the United 
States or that is substantially transformed in the United States 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 
transformed.

    The regulations define a ``designated country end product'' as:


[[Page 6810]]


WTO GPA [World Trade Organization Government Procurement Agreement] 
country end product, an FTA [Free Trade Agreement] country end product, 
a least developed country end product, or a Caribbean Basin country end 
product.

    A ``WTO GPA country end product'' is defined as an article that:

(1) Is wholly the growth, product, or manufacture of a WTO GPA country; 
or
(2) In the case of an article that consists in whole or in part of 
materials from another country, has been substantially transformed in a 
WTO GPA country 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 transformed. The term refers to a product offered for 
purchase under a supply contract, but for purposes of calculating the 
value of the end product includes services (except transportation 
services) incidental to the article, provided that the value of those 
incidental services does not exceed that of the article itself.

See 48 C.F.R. Sec.  25.003.

China is not a WTO GPA country.

    In National Hand Tool Corp. v. United States (``National Hand Tool 
Corp.''), 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993), the 
court considered the nature of ``substantial transformation''. At issue 
were sockets and flex handles which were either cold formed or hot 
forged into their final shape prior to importation from Taiwan, speeder 
handles which were reshaped by a power press after importation, and the 
grip of flex handles which were knurled in the United States. The 
imported articles were then heat treated which strengthened the surface 
of the steel, and cleaned by sandblasting, tumbling, and/or chemical 
vibration before being electroplated. In certain instances, various 
components were assembled together which the court stated required some 
skill and dexterity. The court determined that the imported articles 
were not substantially transformed and that they remained products of 
Taiwan. In making its determination, the court focused on the fact that 
the components had been cold[dash]formed or hot[dash]forged ``into 
their final shape before importation,'' and that ``the form of the 
components remained the same'' after the assembly and 
heat[dash]treatment processes performed in the United States. Although 
the court stated that a predetermined use would not necessarily 
preclude a finding of a substantial transformation, it noted that such 
determination must be based on the totality of the evidence. The court 
then concluded that no substantial change in name, character or use 
occurred as a result of the processing performed in the United States. 
See also, Superior Wire v. United States, 867 F.2d 1409 (Fed. Cir. 
1989), regarding the origin of wire rod made into wire. CBP has 
recently discussed the applicability of these and similar court 
decisions to stainless steel drill bits and other various articles 
exported from the United States for finishing purposes. See 
Headquarters Ruling Letter (HQ) W968396, dated December 21, 2006.
    In Superior Wire v. United States, 867 F.2d 1409 (Fed Cir. 1989), 
the court held that wire rod made into wire in Canada was not 
substantially transformed because there was no significant change in 
use or character. The court noted that the strength characteristic of 
the wire was ``metallurgically predetermined'' and the changes were 
primarily cosmetic. The court viewed the wire rod and wire as 
``different stages of the same product.''
    In this case, U.S. steel is used in the United States to form the 
stimulating probes which are sent to China for further processing. We 
find the processing of the probes that occurs in China does not change 
the name, character or use of the probes. The probe with the removable 
handle, for instance, is packed with all parts unattached, in a plastic 
tray. In HQ H296072, dated July 13, 2018, CBP considered the processing 
of a Subdermal Needle Electrode. The processing was quite similar to 
the processing that the stimulating probes undergo in this case, and 
included soldering a leadwire to the needle electrode, adding a heat 
shrink and protective cover, and packaging. The stimulating probes are 
not substantially transformed by the processing that occurs in China. 
This case differs from HQ H296072 in that a handle is added to the 
stimulating probes.
    In some cases, the attachment of a handle has been determined to be 
a substantial transformation, in other cases, it has not. See HQ 
734521, dated September 17, 1992, for a discussion of various rulings 
involving the attachments of handles and the effect on the origin of 
the product. See also, HQ 559366, dated August 29, 1995; HQ 733804, 
dated November 9, 1990; and, HQ 561339, dated March 9, 2000. In this 
case, the handle on the stimulating probes is not necessary to the 
functioning of the probes, but adds to their ease of use. The 
stimulating probes are the essence of the products returned to the 
United States after processing in China. As such, we find the 
stimulating probes which are processed in China to attach a leadwire 
and hand grip, and covered with a heat shrink, are considered to be of 
United States origin for purposes of government procurement.
    As for the insulated stimulating probe with a removable handle, 
which is only packaged in China, the individual parts retain their 
origin. Packaging of the components does not effectuate a substantial 
transformation.
    With regard to your marking question, Section 304 of the Tariff Act 
of 1930, as amended (19 U.S.C. Sec.  1304), provides that, unless 
excepted, every article of foreign origin (or its container) imported 
into the United States shall be marked in a conspicuous place as 
legibly, indelibly, and permanently as the nature of the article (or 
container) will permit in such a manner as to indicate to an ultimate 
purchaser in the United States the English name of the country of 
origin of the article. 19 C.F.R. Part 134 sets forth the regulations 
implementing the country of origin marking requirements and exceptions 
of 19 U.S.C. Sec.  1304, along with certain marking provisions of the 
Harmonized Tariff Schedule of the United States (19 U.S.C. Sec.  1202). 
``Country of origin'' is defined, in relevant part, as: the country of 
manufacture, production, or growth of any article of foreign origin 
entering the United States. 19 C.F.R. Sec.  134.1(b). Further work or 
material added to an article in another country must effect a 
substantial transformation in order to render such other country the 
``country of origin'' within the meaning of this part[.]'' As we have 
determined that no substantial transformation occurs in China due to 
the processing of the stimulating probes, their origin for marking 
purposes remains the United States. With regard to the insulated 
stimulating probe with a removable handle, consisting of an insulated 
stainless steel probe (United States), a wire with DIN 42-802 
connectors on each end coiled tightly (Korea or Japan), and a removable 
plastic handle (United States), each component retains its individual 
country of origin for marking purposes. See HQ 556451, dated January 
28, 1992; and, HQ 561454, dated December 14, 1999.
    For purposes of marking, the stimulating probes which are processed 
in China are products of the United States. Because the stimulating 
probes are products of the United States that are exported and returned 
without undergoing a substantial transformation, they are excepted from 
country of origin marking requirements pursuant to 19 C.F.R. 134.32(m). 
With regard to the insulated stimulating probe that is merely packaged 
in China with a handle

[[Page 6811]]

and wire connect, the origin of each component must be identified. 
Please note that if you wish to mark the stimulating probes, the 
insulated stimulating probe, or the packaging containing these products 
to indicate that they are ``Made in the USA'', the marking must comply 
with the requirements of the Federal Trade Commission (FTC). We suggest 
that you direct any questions on this issue to the FTC.
HOLDING:
    Based on the information provided, with the exception of the 
insulated stimulating probe with a removable handle, the country of 
origin of the stimulating probes is the United States. With regard to 
the insulated stimulating probe with a removable handle, which is only 
packaged in China, the country of origin of the individual packaged 
components remains unchanged.
    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 C.F.R. 
Sec.  177.30, any party-at-interest may, within 30 days after 
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 and Rulings, Office of Trade.

[FR Doc. 2019-03539 Filed 2-27-19; 8:45 am]
BILLING CODE 9111-14-P