H325833

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®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 concerning the country of origin of SCORE®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. FACTS: The SCORE®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 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® 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® 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: Is wholly the growth, product, or manufacture of a WTO GPA country; or 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®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 determinati

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 o