[Federal Register Volume 89, Number 108 (Tuesday, June 4, 2024)]
[Notices]
[Pages 47975-47977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12213]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Upholstered Wood Chairs

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 upholstered wood chairs. Based upon the 
facts presented, CBP has concluded that the components imported into 
the United States undergo a substantial transformation when made into 
the upholstered wood chairs.

DATES: The final determination was issued on May 29, 2024. 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 
determinations no later than July 5, 2024.

FOR FURTHER INFORMATION CONTACT: Elif Eroglu, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, (202) 325-
0277.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 29, 2024, 
CBP issued a final determination concerning the country of origin of 
certain upholstered wood chairs for purposes of title III of the Trade 
Agreements Act of 1979. This final determination, HQ H338482, was 
issued at the request of J Squared Inc., d/b/a University Loft Company, 
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, 
based upon the facts presented, the imported components are 
substantially transformed in the United States when made into the 
subject upholstered wood chairs.
    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.

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

HQ H338482

May 29, 2024

OT:RR:CTF:VS H338482 EE

Category: Origin

Matthew Johnson
J Squared Inc., d/b/a University Loft Company
2588 Jannetides Blvd.
Greenfield, IN 46140

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 Upholstered Wood Chairs

Dear Mr. Johnson:
    This is in response to your request, dated March 28, 2024, for a 
final determination concerning the country of origin of certain 
upholstered wood chairs 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.). Your request, submitted as an electronic 
ruling request, was forwarded to this office from the National 
Commodity Specialist Division for response. J Squared Inc., d/b/a 
University Loft Company (``ULC''), 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.

Facts

    You state that two upholstered wood chairs, item nos. G32PLY2 and 
G32PLY1, are manufactured at your facility in Greenfield, IN, utilizing 
components from various sources. Item no. G32PLY1 is a solid wood and 
high-pressure laminate upholstered chair. Its dimensions are: 19\15/
16\'' wide x 23\11/16\'' deep x 33'' high, with a 16'' seat height. It 
features a waterfall-style, legged design and the legs and seat rails 
are constructed of curved bentwood. It is made of solid hardwood and 
high-pressure laminate.
    Item no. G32PLY2 is a solid wood upholstered chair. Its dimensions 
are: 19\5/16\'' wide x 22\11/16\'' deep x 33'' high with a 16'' seat 
height. It features a waterfall-style, 2-position design and the legs 
and seat rails are constructed of curved bentwood.
    You state that for both chairs, the construction allows for 
replacement of individual components. The production of the upholstered 
wood chairs involves the following steps:

[[Page 47976]]

Step #1

    Fabric from the United States is cut to size for the seats with a 
cutting machine. Plastic welt cord from the United States is cut to 
size and wrapped around the inner upholstered chair back. The cut 
fabric for the back and the welt cord are sewn together with a sewing 
machine.

Step #2

    Sheets of dust covers from the United States are cut to the 
specific size of the bottom seat with the cutting machine.

Step #3

    Precut foam from the United States for the seats and backs are 
trimmed around the edges of the seat for even application of the 
fabric.
    For the seats, the foam is combined with the wooden seat component, 
the cut seat fabric, and the dust cover. The fabric and dust cover are 
stapled by hand over the foam and onto the wooden seat.
    For the inner/outer backs, the foam is combined with the wooden 
inner seat back, the back cut fabric, and the plastic welt cord that 
have already been sewn together. The fabric/welt cord is stapled by 
hand over the foam and onto the inner seat back. A finished non-
upholstered outer seat back is then attached.

Step #4

    Seven wooden components of the base of the chairs, consisting of 
the left seat rail, right seat rail, left leg, right leg, front 
crossbar, back crossbar, and bottom crossbar, are combined with 
hardware that is also purchased in the same kit as the wooden chair 
components. These include 60mm bolts with Loctite, 40mm bolts with 
Loctite, 35mm bolts with Loctite, and 10mm x 40mm large wooden dowels. 
The kit is from China.
    Five wooden components (minus the seat rails) are attached using 
wood glue and dowels. A total of four dowels are used per chair. Next, 
the chair base is put on a chair base clamp to make sure the base of 
the chair is square, and all dowels are properly inserted.
    Once it is confirmed that the base is straight, the remaining two 
wood components are added. The left and right seat rails are attached 
to the base using the 60mm bolts with Loctite. The upholstered seats 
are attached to the base using four 40mm bolts with Loctite. The 
upholstered inner backs with a finished outer back are attached to the 
base using four 35mm bolts with Loctite.

Step #5

    The chairs are packaged for shipment using Microfilm rolls to 
protect seat and back surfaces from touching during shipment. Chairs 
are then boxed or palletized.
    You provided an outline of the manufacturing process of the two 
chairs and the costed bill of materials.

Issue

    Whether the imported components are substantially transformed when 
assembled into the upholstered wood chairs in the United States.

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.

Emphasis added.
    The Secretary of the Treasury's authority mentioned above, along 
with other customs revenue functions, are delegated to CBP in the 
Appendix to 19 CFR part 0--Treasury Department Order No. 100-16, 68 FR 
28,322 (May 23, 2003).
    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.

See also 19 CFR 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 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.

    In order to determine whether a substantial transformation occurs, 
CBP considers the totality of the circumstances and makes such 
determinations on a case-by-case basis. The country of origin of the 
item's components, extent of the processing that occurs within a 
country, and whether such processing renders a product with a new name, 
character, and use are primary considerations in such cases. 
Additionally, CBP considers factors such as the resources expended on 
product design and development, the extent and nature of post-assembly 
inspection and testing procedures, and worker skill required during the 
actual manufacturing process when determining whether a substantial 
transformation has occurred. No one factor is determinative.
    In Carlson Furniture Indus. v. United States, 65 Cust. Ct. 474, 
Cust. Dec. 4126 (1970), which involved wooden chair parts, the court 
held that the assembly operations after importation were substantial in 
nature and more than a simple assembly of parts. The importer 
assembled, fitted, and glued the wooden parts together, inserted steel 
pins into the key joints, cut the legs to length and leveled them, and 
in some instances, upholstered the chairs and fitted the legs with 
glides and casters. The assembly operations resulted in the creation of 
a new article of commerce.
    In Headquarters Ruling Letter (``HQ'') H083693, dated March 23, 
2010, CBP held that a wood chest assembled in the United States was a 
product of the United States for purposes of U.S. Government 
procurement. The wood chest was assembled from over 20 U.S. and foreign 
components in a 20-step process which took approximately 41 minutes. 
CBP held that the components that were used to manufacture the wood 
chest, when combined with a U.S.-origin laminate top, were 
substantially transformed as a result of the assembly operations 
performed in the United States.

[[Page 47977]]

    In the instant case, as previously noted, the components in the kit 
from China consist of the left seat rail, right seat rail, left leg, 
right leg, front crossbar, back crossbar, bottom crossbar, 60mm bolts 
with Loctite, 40mm bolts with Loctite, 35mm bolts with Loctite, and 
10mm x 40mm large wooden dowels. The U.S.-origin fabric, dust covers, 
and welt cord are cut to size and combined with the U.S.-origin foam to 
form the seat and the seat back. Based on the information presented, 
when the foreign components are integrated with the U.S. components, 
they lose their individual identities and become an integral part of a 
new article, the upholstered wood chair, possessing a new name, 
character and use. We, therefore, find that the last substantial 
transformation occurs in the United States. As to whether the 
upholstered wood chair produced in the United States qualifies as a 
``U.S.-made end product,'' you may wish to consult with the relevant 
government procuring agency and review Acetris Health, LLC v. United 
States, 949 F.3d 719 (Fed. Cir. 2020).

Holding

    Based on the information outlined above, we determine that the 
components imported into the United States undergo a substantial 
transformation when made into the subject upholstered wood chairs.
    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. 2024-12213 Filed 6-3-24; 8:45 am]
BILLING CODE 9111-14-P