[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55013-55016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19358]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Score[supreg]7t Tablets

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 certain SCORE[supreg]7T tablets. Based upon the 
facts presented, CBP has concluded that the country of origin of the 
SCORE[supreg]7T tablets in question is Taiwan for purposes of U.S. 
Government procurement.

DATES: The final determination was issued on September 1, 2022. 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 no later than October 11, 2022.

FOR FURTHER INFORMATION CONTACT: Albena Peters, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, at (202) 
325-0321.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on September 1, 
2022, U.S. Customs and Border Protection (CBP) issued a final 
determination concerning the country of origin of certain 
SCORE[supreg]7T tablets for purposes of Title III of the Trade 
Agreements Act of 1979. This final determination, HQ H325833, was 
issued at the request of Advanced Technologies Group, LLC (ATG), 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 country of origin of the tablets is 
Taiwan for purposes of U.S. Government procurement.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination 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: September 1, 2022.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H325833

September 1, 2022

OT:RR:CTF:VS H325833 AP

Category: Origin

Charles Weiss, Partner, Bryan Cave Leighton Paisner LLP, One 
Metropolitan Square, 211 North Broadway Suite 3600, St. Louis, MO 
63102-2750

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of 
Origin of SCORE[supreg]7T tablets

Dear Mr. Weiss:

    This is in response to your June 17, 2022 request, on behalf of 
Advanced Technologies Group, LLC (``ATG''), for a final determination 
\1\ concerning the country of origin of SCORE[supreg]7T tablets used in 
U.S. correctional institutions. This request is being sought because 
ATG wants to confirm eligibility of the merchandise for U.S. Government 
procurement purposes pursuant to Title III of the Trade Agreements Act 
of 1979 (``TAA''), as amended (19 U.S.C. 2511 et seq.), and subpart B 
of part 177, U.S. Customs and Border Protection (``CBP'') Regulations 
(19 CFR 177.21, et seq.). ATG is a party-at-interest within the meaning 
of 19 CFR 177.22(d)(1) and 177.23(a), and is therefore entitled to 
request this final determination. On August 24, 2022, we held a meeting 
with you and your client representatives.
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    \1\ ATG previously submitted a request for an advisory ruling 
dated March 7, 2022. Under the facts presented in the advisory 
ruling request, the imported tablets arrived with installed 
manufacturer's generic Android firmware, which ATG states is no 
longer the case. On April 20, 2022, we issued advisory ruling HQ 
H324386 concluding that the removal of the installed manufacturer's 
firmware from the imported functioning tablet and the installation 
of the U.S.-designed and developed firmware did not constitute a 
substantial transformation. The merchandise was a functioning tablet 
upon importation and remained a functioning tablet, just with 
limited and specialized functions.
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Facts

    The SCORE[supreg]7T tablet at issue is a custom-designed tablet 
assembled in China and shipped to the United States. The chipset 
powering the tablet is manufactured in Taiwan and represents 
approximately 60 percent of the cost of the tablet's hardware. The 
circuit and component layout for the motherboard is also made in 
Taiwan. The tablet uses a system on a chip (``SOC'') design. The SOC is 
an integrated circuit that

[[Page 55014]]

includes the central processing unit, memory, input/output logic, 
secondary storage, graphics processing unit, radio frequency signal 
processing functions, and communication controller on a single 
microchip. You explain that the chipset does all computing on the 
tablet. The hardware tablet is assembled in China. The assembly process 
involves combining the components manufactured in Taiwan with a screen 
to make the finished tablet. You describe the assembly operations in 
China as ``simple and repetitive'' and requiring ``little worker 
skill.'' Upon importation into the United States, the tablet does not 
have the manufacturer's generic Android firmware or other firmware 
installed.
    ATG designs, develops, writes, and installs the tablet's operating 
system (``OS''), known as SCORE[supreg] firmware, in the United States 
at ``a substantial effort and cost to ATG.'' ATG's firmware is an ATG 
proprietary custom-built version of the Android system, which 
``reflects over 20,000 hours of software development by ATG 
personnel.'' ATG uses Google-provided (not manufacturer's) Android OS 
as a starting point to design and develop its own firmware. ATG's 
firmware contains security protections that control the tablet's 
functionality, communication capabilities, applications allowed to be 
installed or run, and enforces rules that users in correctional 
institutions must follow. ATG removes all Android functions, features, 
and drivers that are not needed at correctional institutions and 
reprograms the remaining Android functions and applications to impose 
new security rules and adds new security features.
    Once ATG's firmware is installed, the tablet cannot run regular 
Android applications. The firmware transforms the tablet into a highly 
secure tablet specifically designed to meet Federal Bureau of Prisons 
security requirements. When the tablet connects to ATG's network 
implemented in correctional institutions, ATG's SCORE[supreg] servers 
automatically update the firmware to the most current version. The 
firmware only allows ATG-signed applications to run. You state that 
only select ATG personnel can modify or remove ATG's firmware.

Issue

    What is the country of origin of the subject tablet 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 CFR 177.21-177.31, which implements Title 
III of the TAA, as amended (19 U.S.C. 2511-2518).
    CBP's authority to issue advisory rulings and final determinations 
is set forth in 19 U.S.C. 2515(b)(1), which states:

    For the purposes of this subchapter, the Secretary of the 
Treasury shall provide for the prompt issuance of advisory rulings 
and final determinations on whether, under section 2518(4)(B) of 
this title, an article is or would be a product of a foreign country 
or instrumentality designated pursuant to section 2511(b) of this 
title.

    The rule of origin set forth under 19 U.S.C. 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.

    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 Regulation 
(``FAR''). See 19 CFR 177.21. In this regard, CBP recognizes that the 
FAR restricts 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 CFR 25.403(c)(1).
    The FAR, 48 CFR 25.003, defines ``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.

    Section 25.003 defines ``designated country end product'' as:

    a 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.

    Section 25.003 defines ``WTO GPA country end product'' 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.

    Taiwan is a WTO GPA country. China is not.
    ATG asserts that the subject tablet is substantially transformed in 
the United States because its firmware is entirely developed, written 
and installed in the United States, and without ATG's firmware the 
tablet is non-functional. ATG maintains that the use of the 
SCORE[supreg]7T tablet ``is solely dictated by the firmware and it 
otherwise has no use.''
    The issue of substantial transformation is a ``mixed question of 
technology and customs law, mostly the latter.'' Texas Instruments, 
Inc. v. United States, 681 F.2d 778, 783 (CCPA 1982). The substantial 
transformation test is whether an article emerges from a process with a 
new name, character, or use, different from that possessed by the 
article prior to processing. See Texas Instruments, 681 F.2d at 778. 
CBP considers the totality of the circumstances and makes substantial 
transformation determinations on a case-by-case basis. The country of 
origin of the item's components, the extent of the processing that 
occurs within a country, and whether such processing renders a product 
with a new name, character, or use are primary considerations. See 
Headquarters Ruling Letter (``HQ'') H311606, dated June 16, 2021. No 
one factor is determinative.
    A new and different article of commerce is an article that has 
undergone a change in commercial designation or identity, fundamental 
character, or commercial use. A determinative issue is the extent of 
the operations performed and whether the materials lose their identity 
and become an integral part of the new article. See Nat'l Hand Tool 
Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. 
Cir. 1993). ``For courts to find a change in character, there often 
needs to be a substantial alteration in the characteristics of the 
article or components.'' Energizer Battery, Inc. v. United States, 190 
F. Supp. 3d 1308, 1318 (Ct. Int'l Trade 2016) (citations omitted). 
Courts have looked to ``the essence'' of the completed article ``to

[[Page 55015]]

determine whether it has undergone a change in character as a result of 
post-importation processing.'' Id. (citing Uniroyal, Inc. v. United 
States, 542 F. Supp. 1026 (Ct. Int'l Trade 1982), aff'd, 702 F.2d 1022 
(Fed. Cir. 1983)). In Uniroyal, 542 F. Supp. at 1030, the U.S. Court of 
International Trade (``CIT'') held that ``it would be misleading to 
allow the public to believe that a shoe is made in the United States 
when the entire upper--which is the very essence of the completed 
shoe--is made in Indonesia and the only step in the manufacturing 
process performed in the United States is the attachment of an 
outsole.''
    In Data General Corp. v. United States, 4 CIT 182 (1982), the 
programming in the United States of a read-only memory chip (``PROM'') 
fabricated in a foreign country for use in a computer circuit board 
assembly substantially transformed the PROM into a U.S. article. After 
the programming, the PROM was exported for incorporation into a 
finished circuit board that was then imported into the United States. 
The programming bestowed upon each circuit its electronic function. The 
court concluded that the programming altered the character of the PROM 
and that altering the non-functioning circuitry comprising the PROM 
through technological expertise in order to produce a functioning read 
only memory device, possessing a desired distinctive circuit pattern, 
was no less a ``substantial transformation'' than the manual 
interconnection of transistors, resistors and diodes upon a circuit 
board creating a similar pattern. The programming established the 
``essence'' of the PROM, its pattern of interconnections, or stored 
memory.
    CBP has issued a number of rulings and final determinations 
regarding the origin of tablets and smartphones. In HQ H322417, dated 
Feb. 23, 2022, CBP concluded that a smartwatch originated from Taiwan 
for purposes of Section 301 trade remedies because Taiwan was the 
country where the two printed circuit board assemblies (``PCBAs''), 
which were the ``essence'' of the smartwatch, were manufactured by 
means of surface-mount technology (``SMT''). The final assembly and 
firmware upload in China did not result in another substantial 
transformation in China because it was not a complex or time-intensive 
process compared to the SMT operations in Taiwan and did not 
substantially transform the PCBAs. The firmware for the smartwatch was 
developed in third countries outside of China, including in the United 
States, and in some cases the firmware uploaded in China was an 
intermediate OS and the end user in the United States would need to 
download the final OS after importation into the United States. CBP's 
reasoning was that the PCBAs allowed the device to process information, 
communicate wirelessly, utilize global positioning system (``GPS'') 
functionality, play music and other audio, send, and receive text and 
email messages, and gather information on a user's fitness. In sum, the 
functionality of the smartwatch was dependent on the collective 
capabilities of the PCBA.
    In HQ H284834, dated Feb. 21, 2018, a tablet and a smartphone were 
produced in South Korea and China, respectively. Both were intended for 
purchase by the Veterans Health Administration for use by patients at 
home. In the United States, the tablet and smartphone went through a 
number of software uninstallations and installations. The generic 
Android functions originally included on the devices, such as alarms, 
calculators and text messaging, were removed. Other functions, such as 
Bluetooth capability, were modified and additional software was added. 
Mobile application software developed entirely in the United States was 
installed to enable patients to provide vital sign data by connecting 
to the peripheral devices via Bluetooth. When the preprogrammed tablets 
and smartphones were imported, they could perform their standard 
functions of an Android tablet or smartphone, and could be used for 
their intended purpose, and their name, character, and use remained the 
same. They were not substantially transformed in the United States by 
the downloading of the proprietary software, which allowed them to 
function with the Department of Veterans Affairs healthcare network. 
The country of origin of the imported tablets and smartphones for 
purposes of U.S. Government procurement remained the country where they 
were originally manufactured. See also HQ H284617, dated Feb. 21, 2018 
(concluding that the downloading of proprietary software after 
importation into the United States, which allowed tablets preprogrammed 
with a generic program to function within the Department of Veterans 
Affairs healthcare network, did not substantially transform the 
tablets; after the software was downloaded, the country of origin of 
the imported tablets for purposes of U.S. Government procurement 
remained the country where they were manufactured because their name, 
character, and use remained the same).
    In HQ H284523, dated Aug. 22, 2017, software was installed onto 
tablets in the United States to limit the original capacity of the 
imported tablets for the purpose of facilitating the reception, 
collection and transmission of a patient's medical data to Department 
of Veterans Affairs clinicians for their review. The general 
functionality of the tablet was removed and replaced so that it was 
easier for patients to use the device and access the system, and to 
better protect the security of the patient's medical data. The loading 
of specialized software onto the tablet and the disabling of the pre-
programmed general applications were insufficient to create a new and 
different article of commerce, since all of the functionality of the 
original computer was retained. The imported tablets were not 
substantially transformed in the United States by the downloading of 
the proprietary software, which allowed them to function with the 
Department of Veterans Affairs healthcare network. After the software 
was downloaded, the country of origin of the tablets for purposes of 
U.S. Government procurement remained the country where they were 
originally manufactured.
    In HQ H261623, dated Nov. 22, 2016, for purposes of U.S. Government 
procurement, in the first scenario, the country of origin of computer 
notebook hard disk drives (``HDDs'') was the country where the majority 
of the manufacturing operations occurred and where the firmware was 
written and installed onto the HDDs. In the second scenario, where the 
firmware was written in a different country from where it was 
downloaded onto the HDDs, for purposes of U.S. Government procurement 
and country of origin marking, the country of origin of the notebook 
was the country where the last substantial transformation took place.
    The subject tablets are distinguishable from the PROM in Data 
General Corp., supra., and from the HDDs in H261623. The PROM has no 
function or use until it is programmed. The programming establishes the 
pattern of interconnections within the PROM, which is its ``essence.'' 
After the PROM is programmed, it is no longer a PROM. Furthermore, the 
programming transforms the HDDs into digital storage devices that store 
or retrieve data. The tablet, on the other hand, remains a completed 
notebook after the OS is installed. The tablet has an integrated 
circuit that includes the central processing unit, memory, input/output 
logic, secondary storage, graphics processing unit, radio frequency 
signal processing functions, and communication controller. The chipset 
powering the tablet and the circuit and

[[Page 55016]]

component layout for the motherboard manufactured in Taiwan determine 
the tablet's functionality. The chipset enables the central processing 
unit to communicate with the other components of the tablet. You advise 
that the operations in China are ``simple'' and involve attaching all 
the parts together into the final tablet and adding a screen. Thus, 
consistent with our previous rulings and decisions above, we find that 
the last substantial transformation takes place in Taiwan where the 
chipset and the circuit and component layout for the motherboard are 
manufactured. After the final assembly in China, the tablet will 
undergo a firmware upload in the United States. The imported tablet 
already has the system requirements, which make it possible to install 
the firmware. The installation of the U.S.-developed firmware in the 
United States does not transform the Taiwan-manufactured tablet into 
another product with a new name, character or use. The country of 
origin of the tablet remains the country where the last substantial 
transformation occurred, which is Taiwan.
    Therefore, the SCORE[supreg]7T tablets programmed with ATG's U.S.-
developed firmware in the United States would be products of a foreign 
country or instrumentality designated pursuant to 19 U.S.C. 2511(b)(1).

Holding

    Based on the facts and analysis set forth above, the country of 
origin of the instant SCORE[supreg]7T tablets will be Taiwan.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 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 U.S. Court of International Trade.

Sincerely,

Alice A. Kipel,
Executive Director, Regulations and Rulings Office of Trade.

[FR Doc. 2022-19358 Filed 9-7-22; 8:45 am]
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