[Federal Register Volume 84, Number 105 (Friday, May 31, 2019)]
[Notices]
[Pages 25297-25299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11373]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning
Electroenceplogram (EEG) Cutaneous Electrodes
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 Rhythmlink International L.L.C'.s,
Electroencephalogram (EEG) Cutaneous Electrodes. Based upon the facts
presented, CBP has concluded in the final determination that the last
substantial transformation of the Electroencephalogram (EEG) Cutaneous
Electrode Product occurs in the United States.
DATES: The final determination was issued on May 24, 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 July 1, 2019.
FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and
Special Programs Branch, Regulations and Rulings, Office of
International Trade (202-325-0132).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 24, 2019,
pursuant to subpart B of part 177, Customs and Border Protection (CBP)
Regulations (19 CFR part 177, subpart B), CBP issued a final
determination concerning the country of origin of the
Electroencephalogram (EEG) Cutaneous Electrodes which may be offered to
the United States Government under an undesignated government
procurement contract. This final determination, in HQ H300745, was
issued at the request of Rhythmlink International, L.L.C. 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 assembly
and attachment of a lead wire to the U.S. origin Electroencephalogram
(EEG) Cutaneous Electrodes by crimping or gluing in China is not a
substantial transformation. Therefore, the last substantial
transformation of the Rhythmlink Electroencephalogram (EEG) Cutaneous
Electrode product occurs in the United States.
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: May 24, 2019.
Craig T. Clark,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
HQ H300745
May 24, 2019
OT:RR:CTF:VS H300745 RSD
CATEGORY: Origin
David S. Robinson
Nexsen Pruet, PLLC
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;
Electroencephalogram (EEG) Cutaneous Electrodes; Substantial
Transformation
Dear Mr. Robinson:
This is in response to your letter, dated September 10, 2018,
requesting a final determination on behalf of Rhythmlink International,
LLC. (Rhythmlink) pursuant to subpart B of Part 177 of the U.S. Customs
and Border Protection (CBP) Regulations (19 C.F.R. Part 177).
This final determination concerns the country of origin of various
self-adhesive cutaneous electrode products. As a U.S. importer,
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.
Samples of three versions of the product have been submitted for our
review.
FACTS:
Rhythmlink is headquartered in Columbia, North Carolina and
manufactures and distributes medical devices. It seeks a country of
origin determination for the purposes of United States government
procurement for a line of Electroencephalogram (EEG) Electrode
products.
An EEG is a test that detects electrical activity in the brain
using electrodes attached to the scalp. Doctors use an EEG test to help
diagnose certain neurological conditions, such as epilepsy and sleep
disorders. The EEG electrode allows for a physical connection between a
patient and medical diagnostic equipment. To use the EEG electrodes,
the patient's scalp is cleaned, and the cutaneous electrodes are
attached to the patient's skin using a small amount of an adhesive
conductive gel or paste, either to record physiological signals (e.g.,
the electroencephalogram) or to apply electrical stimulation. To
accomplish its function, the EEG electrode uses a glass-filled ABS
plastic mold with a silver-chloride coating. It is designed and
manufactured to specifications as a U.S. Food and Drug Administration
(FDA) medical regulated ``cutaneous electrode'', mainly for the
recording of its electrical conductor function. Rhythmlink's EEG
electrodes are disposable.
The product comes in varying lengths/styles and the end user can
customize the color of the connecting wire. The electrodes' function is
common to all lengths and is unchanged by the color of the connecting
wire. There are three EEG electrode products that have common
construction and function: the Disposable Slim Cup, the Disposable Deep
Cup, and Disposable Webb.
Rhythmlink conducts all engineering and design of the EEG
electrodes in the United States. The actual production and manufacture
of the cutaneous electrodes is outsourced to a third party
subcontractor located in the United States. The single-source
manufacturer supplies the finished EEG electrodes to Rhythmlink, marked
``Country of Origin: USA.'' The manufacturer must further certify that,
``This uniform silver coating applied to precision molded products
enhances the mechanical and electrical performance of the finished
electrode products so they can meet or exceed applicable AAMI
Standards.''
The fully assembled, packaged end product for medical use consists
of five elements: the cutaneous electrode, the lead wire, a miniscule
amount of crimp or glue, a heat shrink tube, and packaging. The
subcontractor-supplied cutaneous electrodes are shipped from the United
States to China where a lead wire is attached. You state that the lead
wire acts as an electrical conductor that transfers low voltage
electrical signals from the electrode to medical diagnostic
[[Page 25298]]
equipment. The lead wire used in the product is a commercially
available 26-gauge twisted copper wire comprising 19 strands of 38-
gauge copper wire with medical grade PVC covering (in a total of 25
color options). The Korean supplier of this wire, cuts the wire, crimps
a socket pin, and attaches a connector to one end of the wire and then
ships the wire to China. Neither the wire nor the connectors are
proprietary and are common electrical materials.
In China, to support certain optional user preferences, the EEG
electrodes are either attached to the lead wire of Korean origin, using
a crimp produced in the United States or China. Crimp is a mix of tin,
copper and nickel and represents only a tiny portion of the product's
cost. Alternatively, the process will utilize a German conductive
adhesive glue, which is a mix of silver and epoxy and also represents a
very small percentage of the product's cost. The lead wire is crimped
or glued to the electrode. The crimping process takes roughly five
seconds (six operators can professionally crimp 6,000 products in a
day). The alternative gluing process takes roughly 20 seconds (six
operators can professionally glue 1,500 products in a day). Next, a
heat shrink from either the United States or Japan is used to cover the
joint. The heat shrink tube is an off-the-shelf product from a third
party contractor from the United States or Japan that is available in
almost 40 different diameters. The product is ultrasonically cleaned
and dried (spin and convention drying), a heat shrink cover is added,
and the product is inserted into a plastic pouch and cardboard
packaging. After the EEG electrodes are shipped back to the United
States, the products are subjected to randomized testing and sampling
for quality control purposes.
ISSUE:
Where does the last substantial transformation of the adhesive
cutaneous EEG product occur 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.) (TAA).
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 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 Federal Acquisition 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.
In reaching its country of origin determinations, the Court of
International Trade has examined the essential character of an article
to determine whether its identity has been substantially transformed
through assembly or processing. For example, in Uniroyal, Inc. v.
United States, 3 CIT 220, 225, 542 F. Supp. 1026, 1030 (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 the character of the product
remained unchanged and did not undergo a substantial transformation.
See also National Hand Tool Corp. v. United States,16 CIT 308 (1992),
aff'd, 989 F.2d 1201 (Fed. Cir. 1993). Similarly, in National Juice
Products Association v. United States, 10 CIT 48, 61, 628 F. Supp. 978,
991 (1986), the court held that imported orange juice concentrate
``imparts the essential character'' to the completed orange juice and
thus was not substantially transformed into a product of the United
States.
For products used in medical-related applications, we have held
that no substantial transformation occurs when the critical components
which impart the essential character of the product subsequently
undergo simple assembly and processing. 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 electrodes
undergo in this case, and included attaching a lead wire to the
electrode, adding a heat shrink and protective cover, and packaging. In
HQ H296072, the subdermal needle electrodes of U.S. origin were
attached by soldering in China. CBP held that the stimulating probes of
the subdermal needle electrodes were not substantially transformed by
the Chinese processing.
HQ H300744, dated February 20, 2019, concerned the country of
origin of various stimulating probes for purposes of U.S. government
procurement. The probes were produced in the United States by cutting
U.S. origin raw stainless steel rods to specified lengths. After
cutting, the rods were ground to a precise diameter on a precision
lathe. In China, the steel probes were attached to a lead wire of
Korean origin using Chinese solder, and the probes were covered with a
heat shrink from China, Japan, or the United States. The probes were
attached to a hand grip consisting of a U.S.-origin handle insert and a
Korean origin plastic handle. CBP held that the stimulating probes were
not substantially transformed by the processing that occurred in China.
Although a handle was added to the stimulating probes, CBP noted that
the handles were not necessary to the functioning of the probes, but
rather only added to their ease of use.
In this case, the product's main function is provided by the EEG
cutaneous electrode, which allows for a physical connection between a
patient and the medical diagnostic equipment when the electrode is
applied directly to a patient's skin to record physiological signals.
Attaching the lead wire to the EEG electrode allows the EEG to be used,
but the EEG electrode does not lose its individual identity by the
simple assembly in China. Consequently, the U.S. cutaneous EEG
electrodes, rather than the Korean-origin lead wire, determine the
essence of the finished product.
As in HQ H296072 and HQ H300744, the processing in China which
involves the attaching of the lead wire by simple assembly through
crimping or gluing is a minor operation that leaves the identity of the
U.S. made self-adhesive cutaneous EEG electrodes intact. Both
[[Page 25299]]
the crimping and gluing require only a low level of skill and
technology. The crimping process takes roughly five seconds to perform,
while the alternative gluing process takes roughly 20 seconds to
complete. The remaining processing of the Product, consisting of
cleaning and drying (spin and convention drying), adding the heat
shrink cover, and inserting the Product into the plastic pouch and
cardboard packaging are likewise simple, minor, and low-skill
operations. Therefore, we find that the name, character, and use of the
cutaneous electrode remain unchanged after the lead wire and other
components are attached in China. As such, the U.S. origin cutaneous
EEG electrodes which are processed in China by attaching a lead wire
and being covered with a heat shrink, are not substantially
transformed. Accordingly, for purposes of government procurement, we
find that the last substantial transformation of the product is in the
United States.
HOLDING:
Based on the information provided, the last substantial
transformation of the self-adhesive cutaneous EEG electrode product
occurs in the United States.
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,
Craig T. Clark
Acting Executive Director, Regulations and Rulings, Office of Trade
[FR Doc. 2019-11373 Filed 5-30-19; 8:45 am]
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