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[Federal Register Volume 85, Number 237 (Wednesday, December 9, 2020)]
[Notices]
[Pages 79204-79208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27022]

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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

Notice of Issuance of Final Determination Concerning Three 
Vehicle Tracking Devices, a Satellite Device, an NFC Reader, and an NFC 
Keyring FOB

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 three vehicle tracking devices, a satellite 
device, a near field communication (NFC) reader, and an NFC keyring 
fob. Based upon the facts presented, CBP has concluded that the country 
of origin of the three vehicle tracking devices, the satellite device, 
and the NFC reader is Canada for purposes of U.S. Government 
procurement. The country of origin of the NFC keyring fob will be 
determined by the country of origin of the contactless integrated 
circuit (IC), which is usually Taiwan, but if unavailable, then either 
Thailand or Singapore will be the source country and the country of 
origin for purposes of U.S. Government procurement.

DATES: The final determination was issued on November 25, 2020. 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 January 8, 2021.

FOR FURTHER INFORMATION CONTACT: Beth Jenior, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, at (202) 
325-0347.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on November 25, 
2020, pursuant to subpart B of part 177, U.S. Customs and Border 
Protection Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of three vehicle 
tracking devices, one satellite device, one NFC reader, and one NFC 
keyring fob imported by Geotab USA, Inc. (Geotab), which may be offered 
to the U.S. Government under an undesignated government procurement 
contract. This final determination, Headquarters Ruling Letter H309128, 
was issued 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 country of origin of the three vehicle tracking devices, the 
satellite device, and the NFC reader is Canada for purposes of U.S. 
Government procurement. Regarding the NFC keyring fob, CBP concluded 
that the country of origin will be the country where the contactless 
integrated circuit is manufactured. In most cases, this will be Taiwan, 
but if the contactless integrated circuit cannot be sourced there, then 
it will be sourced from either Thailand or Singapore, and the 
corresponding sourcing country would then be the country of origin 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: November 25, 2020.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H309128

November 25, 2020

OT:RR:CTF:VS H309128 EGJ

CATEGORY: Origin

Mr. James Lay
Geotab USA, Inc.
770 E Pilot Rd., Suite A
Las Vegas, NV 89119
Re: U.S. Government Procurement; Country of Origin of Three Vehicle 
Tracking Devices, Satellite Device, NFC Reader, and NFC Keyring Fob; 
Substantial Transformation
Dear Mr. Lay
    This is in response to your ruling request, dated February 6, 2020, 
requesting a final determination on behalf of Geotab USA, Inc. 
(``Geotab'') pursuant to subpart B of Part 177 of the U.S. Customs and 
Border Protection (``CBP'') Regulations (19 CFR part 177).
    This final determination concerns the country of origin of three 
vehicle tracking devices, one satellite device, one near field 
communication (``NFC'') reader, and one NFC identification keyring fob. 
As a U.S. importer, Geotab is a party-at-interest within the meaning of 
19 CFR 177.22(d)(1) and is entitled to request this final 
determination.

Facts

    Geotab is a technology company which designs and imports vehicle 
tracking systems, and has submitted six different products for our 
review. The products' descriptions, pictures, and manufacturing 
processes are set forth below.

Product Descriptions

    The first three products are telematics devices, which are designed 
to transmit vehicle tracking information over long distances. 
Specifically, the three products are:

[[Page 79205]]

     The GO9 device and its component harnesses;
     The GO9-NOGPSF, which is a GO9 device with the GPS 
permanently disabled, and its component harness; and
     The GR8 (ATT-GRLTEA1), which is a rugged version of the 
GO8 device that can be used for harsh conditions and installed on the 
exterior of a vehicle, for example on a truck trailer or on heavy 
equipment, and its component harness.
    You state that the three vehicle tracking devices are very similar 
in design. When each end product is packaged, it includes the tracking 
device with one or more harnesses (communications and data cables), and 
other minor components, such as zip ties, mounting brackets, decals or 
stickers, and screws. A harness may be an external component that is 
plugged into the device or it may be a component built into the item. 
You have provided the following picture of the GO9 device, which does 
not have a built-in harness:
[GRAPHIC] [TIFF OMITTED] TN09DE20.000

    You have also provided the following picture of the GR8 device, 
which does have a built-in harness:
[GRAPHIC] [TIFF OMITTED] TN09DE20.001

    In addition, you have asked for a determination of the country of 
origin of a satellite device, which is an auxiliary item that plugs 
into a GO9 or GO8 device and that allows the GO9 or GO8 device to 
communicate over the satellite network when cellular connectivity is 
lost. The satellite add-on is a single device with two external 
components. Pictured below, it consists of the satellite device (the 
silver box on the lower left side), an IOX integrated receiver/decoder 
(IRD) (the rectangular unit at the bottom of the image), and an 
external antenna (the black square unit on the top right of the image), 
which are delivered connected together with a zip tie:
[GRAPHIC] [TIFF OMITTED] TN09DE20.002

    Finally, you have also requested a determination regarding an NFC 
reader and an NFC keyring fob, described as follows:
     An IOX NFC reader (IOX-NFC-READERA), which allows 
dispatchers or managers to easily view where each driver is at any 
point in time and to monitor each driver as s/he operates a vehicle; 
and
     An NFC identification keyring fob (GEO-NFC FOB BLUE20), 
used in conjunction with the NFC reader to identify the individual 
driver operating a vehicle.
    NFC technology allows two devices placed within a few centimeters 
of each other to exchange data. In order for this to work, both devices 
must be equipped with an NFC chip and an antenna.\1\ According to your 
website, the NFC reader plugs into the Geotab vehicle tracking device. 
Each authorized vehicle driver has an assigned NFC keyring fob with a 
specific serial number assigned to that driver. The driver swipes the 
NFC keyring fob across the NFC reader before beginning the trip so that 
the vehicle tracking device can register who is driving the vehicle. 
See ``NFC Driver ID Technology: How to Use and Install,'' (April 5, 
2018) available at https://www.geotab.com/blog/driver-id/.
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    \1\ See ``Everything you need to know about NFC and mobile 
payments,'' CNET (September 9, 2014) available at https://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/.
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    You state that the NFC reader is a single unit featuring a black 
rectangular casing and a long connecting wire. It is pictured below 
with the NFC keyring fob (the blue item with an attached key ring, 
second from the right) and other minor components, such as the mounting 
bracket and screws, double sided tape for installation (the red item), 
the NFC sticker (the item on the far right), and a zip tie. You note 
that the NFC keyring fob and the sticker are sold separately.
[GRAPHIC] [TIFF OMITTED] TN09DE20.003

Three Vehicle Tracking Devices

    You state that the GO9, the GO9-NOGPSF, and the GR8 vehicle 
tracking devices all have a similar manufacturing process. Each device 
consists of both Canadian and non-Canadian components, and two main 
components of each product are a printed circuit board assembly 
(``PCBA'') and proprietary software. The PCBAs for each of these 
products are manufactured in Canada. Additionally, all of the PCBAs for 
these three devices are loaded with software developed in Canada. You 
have provided us with the details of the manufacturing process for the 
GO9 device as a representative example.
    For the GO9 and other two devices, most of the components are 
imported into Canada from China. At a facility in Canada, the PCBAs are 
assembled from two major components: A main card and a daughter card. 
To produce these two boards, blank printed circuit boards are run 
through surface mount technology (``SMT'') machines and are populated 
with different components. The GPS device is surface mounted to the 
main board and an antenna is attached to the daughter board. Next, the 
two boards are combined together into a single PCBA.
    The inert PCBAs are shipped from the manufacturing facility to 
Geotab's facility which is also in Ontario, Canada. At Geotab's 
facility, the following six processes are performed: (1) Programming 
and testing, (2) closing, (3) scanning, (4) packaging, (5) labeling, 
and (6) debugging. During the first programming and testing phase, 
Geotab loads the final firmware and configurations onto the PCBA's 
subassembly. This firmware was also developed in Canada. Then a SIM 
card is placed into the subassembly and the unit is tested. Various 
labels are affixed to parts of the unit, including the casing. The 
subassembly is inserted into the casing, then the unit is tested, 
inspected, and finally the casing is closed. Then the light pipe, 
labels, and decals are added. The device is placed in a box with its 
product literature and zip tie.

[[Page 79206]]

    You note that the harness is a communication and data cable that is 
either hard-wired into the device or plugs into the device. The harness 
allows interaction between the device and the vehicle; it also provides 
connectivity to facilitate the transmission and collection of data. In 
many instances, an external harness is not necessary because the device 
can be plugged directly into the vehicle's On-Board Diagnostics 
(``OBD'') port. You state the harnesses are subsidiary items, and that 
all of harnesses for these devices are currently sourced from China. 
You state that the devices are packaged together with their harnesses 
when they are shipped to the final customer in the United States.

IOX Satellite Add-On

    Turning to the satellite device, it is made up of three major 
components which connect to each other via an electrical cord: The 
satellite box, an IOX integrated receiver/decoder (``IRD''), and an 
external antenna. The satellite box contains a PCBA, an internal 
antenna, and a modem. All of the discrete components of the satellite 
box are imported into Canada. The blank board is populated with the 
discrete components, including the modem, using SMT equipment at a 
facility in Canada. Then, the PCBA is shipped to Geotab's facility in 
Canada. At Geotab, the antenna is attached to the PCBA, which is then 
tested and packaged in its outer casing. This finished satellite box is 
the component that provides an alternative data connection based on a 
satellite signal when the GO device loses its cell tower based signal.
    The IRD is the component which communicates and facilitates the 
data flow between the satellite box and the vehicle tracking device. 
The IRD is built in China, where it is loaded with proprietary software 
developed by Geotab in Canada. It is shipped to Canada to be packaged 
together with the satellite box. The final component is the external 
antenna, which is completely manufactured in China and shipped to 
Canada to be packaged together for shipment with the other two 
components.

NFC Reader

    With regard to the NFC Reader, it contains two PCBAs, a main board, 
and an antenna board. Just like the components for the vehicle tracking 
devices, most of the components of these PCBAs are imported from China. 
At a Canadian facility, the blank imported boards are all populated 
with their components using SMT equipment. The two PCBAs and the two 
boards are combined together into a single assembly. The new PCBA 
subassembly is loaded with Geotab firmware developed in Canada. In 
addition, the NFC reader's harness from China is wired into the PCBA at 
this facility.
    Next, the PCBA subassembly is shipped to Geotab's Ontario facility, 
where it is inserted between two plastic pieces which will form the 
outer casing. The unit is tested, labelled, and packaged with a 
mounting bracket and a zip tie for delivery to customers.

NFC Fobs

    With regard to the NFC fobs, they are manufactured in Taiwan. Each 
fob is made up of the following parts, sourced in Taiwan: (1) Plastic 
casing, (2) an ``Ultralight C--contactless ticket integrated circuit 
(``IC'') chip,'' (3) coil/antenna, (4) metal ring, and (5) label paint. 
However, you note that occasionally the manufacturer in Taiwan is 
unable to source the contactless IC in Taiwan. In those instances, the 
manufacturer will source the IC from either Thailand or Singapore. The 
fob's assembly always takes place in Taiwan.
    After the finished fobs are imported into Canada, Geotab programs a 
serial number into each fob so that it can be uniquely identified. 
Then, Geotab marks the fobs and packages them into packs of 20 each for 
export.

Issue

    What is the country of origin of the three vehicle tracking 
devices, the satellite device, the NFC reader, and the NFC keyring fob 
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 et seq., which implements Title 
III of the Trade Agreements Act of 1979, as amended (19 U.S.C. 2511 et 
seq.).
    Under the rule of origin set forth under 19 U.S.C. 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 CFR 177.22(a).
    The test for determining whether a substantial transformation will 
occur 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 Inc. v. United States, 69 C.C.P.A. 
151 (1982). In order to determine whether a substantial transformation 
has occurred, CBP considers the totality of the circumstances and makes 
such determinations on a case-by-case basis. CBP has stated that 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. This determination is based on the 
totality of the evidence. See National Hand Tool Corp. v. United 
States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).

Three Vehicle Tracking Devices and the NFC Reader

    In Data General v. United States, 4 CIT 182 (1982), the court 
determined that for purposes of determining eligibility under item 
807.00, Tariff Schedules of the United States (predecessor to 
subheading 9802.00.80, Harmonized Tariff Schedule of the United 
States), the programming of a foreign PROM (Programmable Read-Only 
Memory chip) in the United States substantially transformed the PROM 
into a U.S. article. The court noted that the programs were developed 
by a U.S. project engineer with many years of experience in ``designing 
and building hardware.'' In addition, the court noted that while 
replicating the program pattern from a ``master'' PROM may be a quick 
one-step process, the development of the pattern and the production of 
the ``master'' PROM required much time and expertise. The court noted 
that it was undisputed that programming altered the character of a 
PROM.
    Accordingly, in some cases we have found that programming a device 
in the same country where the software was developed can constitute a 
substantial transformation. In HQ 558868, dated February 23, 1995, we 
determined that blank cards embedded with microchips were substantially 
transformed when they were imported into the United

[[Page 79207]]

States and programmed into Secure ID cards using software developed in 
the United States. We took the view that the programming changed the 
blank card from a card with many potential applications into a card 
that could only be used to enable the user to log into a secured 
computer. See also HQ 735027, dated September 7, 1993 (programming 
imported blank media (EEPROM) with U.S. software in the United States 
substantially transformed it into media which prevented the piracy of 
software).
    We note that all four of these devices contain software developed 
and downloaded onto them in Canada. In addition to the software, these 
four devices all contain PCBAs built in Canada. The blank boards and 
the various capacitors, resistors, and other elements are permanently 
combined together using SMT machines at a facility in Canada. We note 
that the PCBAs are made up of a variety of parts from different 
countries, including non-TAA countries such as China.
    For the four relevant devices, we note that they are imported into 
Canada as bare boards, PCBA parts, external housing, and wire 
harnesses. When the PCBAs are built in Canada, programmed with Canadian 
software in Canada, and changed into a finished vehicle tracking device 
or NFC reader in Canada, we find that they have a different name, 
character, and use than the imported articles. Therefore, we find that 
the discrete parts of these four devices are substantially transformed 
in Canada. As such, the country of origin for the purposes of 
government procurement of the three vehicle tracking devices and the 
NFC reader is Canada.

Satellite Device

    Unlike the vehicle tracking devices and reader, the satellite 
device is made up of three different components: The satellite box, the 
IRD, and the external antenna. The satellite box contains a PCBA 
populated in Canada, which incorporates a modem and an internal 
antenna. The satellite box is the part of the system which connects to 
the satellite system in the event the vehicle tracking device loses its 
connection to cellular tower signals. The IRD communicates with the 
vehicle tracking device, and the external antenna provides additional 
connectivity. Both the IRD and the external antenna are completely 
manufactured in China; however, the IRD is loaded with proprietary 
software developed in Canada.
    As stated previously in our analysis of the tracking devices and 
NFC reader, we have found that in certain situations, manufacturing a 
PCBA constitutes a substantial transformation. With regard to the 
satellite box, we find that populating a bare board with a modem, an 
internal antenna, and enclosing it in the finished housing constitutes 
a substantial transformation. The individual components lose their 
identities as modems, antennae, capacitors, and resistors--and have a 
new name, character, and use as a satellite device box.
    With regard to the remaining two components, we find that their 
country of origin is China. Although Canadian software is downloaded 
onto the IRD in China, we note that they are entirely manufactured in 
China. In HQ H241177, dated December 3, 2013, we examined Ethernet 
switches assembled to completion in Malaysia and then shipped to 
Singapore, where U.S.-origin software was downloaded onto the switches. 
In that ruling, we noted that:
    We find that the software downloading performed in Singapore does 
not amount to programming. Programming involves writing, testing and 
implementing code necessary to make a computer function in a certain 
way. See Data General supra. See also ``computer program'', 
Encyclopedia Britannica (2013), (9/19/2013) http://www.britannica.com/, 
which explains, in part, that ``a program is prepared by first 
formulating a task and then expressing it in an appropriate computer 
language, presumably one suited to the application.''
    While the programming occurs in the U.S., the downloading occurs in 
Singapore. Given these facts, we find that the country where the last 
substantial transformation occurs is Malaysia, that is, where the major 
assembly processes are performed. The country of origin for purposes of 
U.S. Government procurement is Malaysia.
    Like the Ethernet switches referenced above, downloading Canadian 
software onto the IRD in China is not sufficient to substantially 
transform the device. However, we note that both the IRD and the 
external antenna are packaged together with the satellite box to form a 
finished satellite device system. All three components of the satellite 
device system operate as a single system when exported to the United 
States; therefore, we must determine the singular country of origin for 
the entire system.
    In determining the country of origin for the satellite device 
system, the Court of International Trade's (``CIT'') analysis in 
Uniroyal, Inc. v. United States (``Uniroyal'') is instructive, wherein 
the CIT examined whether a finished shoe upper was substantially 
transformed when it was combined with the shoe's outer sole. 3 CIT 220, 
542 F. Supp. 1026 (1982), aff'd 702 F.2d 1022 (Fed. Cir. 1983). The CIT 
noted that ``the upper--which in its condition as imported is already a 
substantially complete shoe--is readily recognizable as a distinct item 
apart from the outsole to which it is attached.'' Id. at 224. In 
addition, the CIT cited to Grafton Spools, Ltd. v. United States, 45 
Cust. Ct. 16 (1960), another substantial transformation case in which 
the U.S. Customs Court noted that purchasers of typewriter ribbons were 
buying the ribbon, and not the spool upon which the ribbon was wound. 
The CIT noted that ``in Grafton Spools the ribbon and not the spool was 
the essence of the finished article, while here the upper is the 
essence of the completed shoe.'' Id. at 226-227. In Uniroyal, the CIT 
ultimately concluded that adding the outer soles did not result in a 
substantial transformation of the uppers as the uppers were the very 
essence of the finished shoe.
    In the satellite device system, we find that it is the satellite 
box which is the ``very essence'' of the finished system, while the 
other two devices perform subsidiary roles. The satellite box 
communicates with the satellite network when the vehicle tracking 
device loses its connection with cellular towers. The IRD facilitates 
the flow of information between the tracking device and the satellite 
box, while the external antenna boosts connectivity. For all of these 
reasons, we find that the country of origin of the complete system will 
be the country of origin of the satellite box. For government 
procurement purposes, the country of origin of the satellite device 
system will be Canada, where the PCBAs were populated with various 
components.

NFC Keyring Fob

    With regard to the NFC fobs, each fob is made up of the following 
parts sourced in Taiwan: (1) Plastic casing, (2) an ``Ultralight C--
contactless ticket IC chip,'' (3) coil/antenna, (4) metal ring, and (5) 
label paint. However, you note that occasionally the manufacturer in 
Taiwan is unable to source the contactless IC in Taiwan. In those 
instances, the manufacturer will source the IC from either Thailand or 
Singapore. The fob's assembly always takes place in Taiwan.
    In Headquarters Ruling Letter (``HQ'') H303864, dated December 26, 
2019, an electric motor from China was shipped to Mexico for assembly 
with the impeller, the seal, and the plastic housing to form the 
finished pump assembly. In that case, we noted that the assembly was 
rather simple--it involved press fitting the parts into each other. 
Moreover, the electric motor was the

[[Page 79208]]

most expensive and substantive part of the finished pump assembly. We 
found that it imparted the ``very essence'' of the pump assembly, as it 
turned the impeller and moved the fluid through the pump.
    The question presented is whether the contactless IC is 
substantially transformed when it is assembled together with the other 
components. We note that in NFC technology, an NFC chip and an antenna 
are combined to transmit information across short distances. In this 
case, the driver's serial ID number is transmitted to the NFC reader 
for tracking purposes. Therefore, the NFC chip is central to the 
function of the finished NFC fob.
    Similar to the shoe upper in Uniroyal, the ribbon in Grafton 
Spools, and the electric motor in HQ H303864, we find that the NFC chip 
constitutes the ``very essence'' of the finished NFC fob. After the 
chip is assembled into the finished fob, its use remains unchanged. 
Therefore, we find that the country of origin of the NFC fob will be 
the country where the NFC chip is produced. In most cases, the country 
of origin will be Taiwan, but when the Ultralight C--contactless ticket 
IC is unavailable from Taiwan, then the country of origin of the NFC 
fob will be where the chip is sourced, which in this case is either 
Thailand or Singapore.

Holding

    The country of origin of the three telematics devices, the 
satellite devices, and the NFC reader for purposes of U.S. Government 
procurement is Canada.
    The country of origin of the NFC keyring fob for purposes of U.S. 
Government procurement is the country of origin of the contactless IC, 
which is usually Taiwan. However, if the contactless IC is sourced from 
Thailand or Singapore, then the country of origin for procurement would 
be Thailand or Singapore as the case may be.
    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 Court of International Trade.

Sincerely,

Alice A. Kipel,

Executive Director Regulations & Rulings, Office of Trade.

[FR Doc. 2020-27022 Filed 12-8-20; 8:45 am]
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