H327997

HQ H327997 April 10, 2023 OT:RR:CTF:VS H327997 AMW CATEGORY: Origin Gene W. Rosen, Esq. Gene Rosen Law Group 200 Garden City Plaza, Suite 405 Garden City, NY 11530 RE: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Security Lab Inc.; Country of Origin of Video Surveillance and Data Management System; Substantial Transformation Dear Mr. Rosen: This is in response to your request of September 21, 2022, on behalf of your client, Security Lab Inc. (“Security Lab”), for a final determination concerning the country of origin of a video management and surveillance system 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.). Security Lab 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: Security Lab produces a product described as the “video management and surveillance system” (“VMS”). As outlined in your request, the VMS is a hardware system consisting of a camera array and central computer system designed to conduct and manage video surveillance operations that “is capable of handling up to 64 cameras per server simultaneously and can be used to power hundreds of servers within a single, centrally administered system….” The VMS comprises foreign-origin components that are assembled in the United States to create hardware that is then combined with U.S.-origin software, including the Security Lab Application Software and Microsoft Windows. The hardware components consist of the following items: Chassis (product of Taiwan) Partially completed motherboard (product of China) Central processing unit (“CPU”) (product of Costa Rica, Vietnam, or Malaysia) Hard disk drive (“HDD”) (product of Singapore or Thailand) Optical drive (product of China) Memory modules (product of China) Graphics cards (product of China) Alarm boards (product of China) Serial attached technology attachment (“SATA Controller”) (product of Taiwan) Redundant array independent disk controller (“RAID controller”) (product of Singapore) Power supply unit (“PSU”) (product of China), Computer fans (product of China) Network interface card (“NIC”) (product of Taiwan) Network camera (product of Taiwan, the Republic of Korea, or China) Computer keyboard (product of China), and Computer mouse (product of China). In addition, you state that the remaining “minor” components (e.g., cables, brackets, bezels, screws, and straps) will be sourced from a variety of countries. Your request indicates that, as explained in further detail below, the items will be assembled into a “computer” unit (i.e., the “system assembly”), which is housed in the chassis, and contains the motherboard, CPU, HDD, memory modules, graphics cards, alarm boards, SATA controller, RAID controller, PSU, fans, and NIC. The computer unit will control the operation of the network cameras, and will be operated by a user utilizing the keyboard and mouse. Of the countries of origin provided for each component, Taiwan, Singapore, Costa Rica, and the Republic of Korea are each TAA-designated countries while Vietnam, Malaysia, and China are not. The VMS manufacturing process consists of the following five phases: (1) order management; (2) hardware manufacturing; (3) application software, operating system and systems installation, configuration and management; (4) quality control and assurance; and (5) order and system closeout and final checks. In greater detail, these steps occur as follows: Order Management: After receiving a customer order, Security Lab employees issue a work order for the quantity of VMSs to be assembled, identifying the model number and requirements for the items to be manufactured. Security Lab employees then identify the bill of materials necessary. Hardware Manufacturing: This phase involves the assembly of the VMS hardware, subassemblies, and components. The process involves the use of an electric screwdriver, hot glue, harness connections, and tie strips. The assembly process involves up to 30 steps and occurs over the course of 60-90 minutes. Application Software, Operating System and Systems Installation, Configuration and Management: During this phase, Security Lab programmers, developers, testers, and hardware engineers design, develop and code the relevant version of the Security Lab Application Software to configure each system on a build-to-order basis. The software is integrated, installed, and configured into the completed hardware via an 18-step process occurring over the course of 60-90 minutes. Quality Control and Assurance: This phase involves a Security Lab employee conducting a 14-step quality control check and testing process of each VMS, including testing video and audio performance and network functionality. This phase occurs over the course of approximately 60 minutes. Order and System Closeout/Final Checks: This phase involves a six-step, 15-minute closeout process in which photographs of the complete VMS are taken and a tamper seal is placed along the VMS chassis. According to your submission, the Security Lab Application Software is designed and coded in the United States by Security Lab programmers on a C, C++ framework. The software includes the following capabilities: real-time audio, video, and data recording, viewing, listening, playback, storage, information management, situational awareness, and security device control. The Security Lab Application Software functions by receiving “communication” and “interoperability” instructions from the hardware’s firmware and application program interfaces (“APIs”). You state that, in this case, the firmware is programming that is written to the hardware device’s memory and that an API is a “software intermediary that allows two applications to ‘talk’ to each other.” ISSUE: Whether the imported components are substantially transformed when made into the subject VMS 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 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 CFR 177.21 et seq., which implements Title III, Trade Agreements Act of 1979, 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 Fed. Reg. 28, 322 (May 23, 2003). The rule of origin set forth in 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 o

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 CFR 177.21 et seq., which implements Title III, Trade Agreements Act of 1979, 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 Fed. Reg. 28, 322 (May 23, 2003).The rule of origin set forth in 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 Acquisition Regulation (“FAR”). See 19 CFR 177.21. In this regard, CBP recognizes that the FAR restr