[Federal Register Volume 72, Number 33 (Tuesday, February 20, 2007)]
[Notices]
[Pages 7771-7774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-740]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection


Notice of Issuance of Final Determination Concerning Bolt 
Container Seals and Cable Seals

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 the Bureau of Customs and 
Border Protection (CBP) has issued a final determination concerning the 
country of origin of certain bolt container seals and cable seals to be 
offered to the United States Government under an undesignated 
government procurement contract. For each of the

[[Page 7772]]

two products, two different manufacturing scenarios were presented. 
Based upon the facts presented, the final determination found that 
China is the country of origin of the bolt container seal for purposes 
of U.S. Government procurement where the product is assembled in the 
United States from components of Chinese and Malaysian origin. Where a 
U.S.-origin lock body is used in the assembly of the bolt container 
seal in the United States, the final determination found that the 
country of origin of the lock body assembly is the United States and 
the country of origin of the imported bolt shank is China. With regard 
to the cable seal, the final determination found that the country of 
origin of the cable seal assembled in the United States from components 
of Chinese and Malaysian origin is China for purposes of U.S. 
Government procurement. The final determination also found that where a 
U.S.-origin lock body is used in the assembly of the cable seal in the 
United States, the country of origin of the cable seal is the United 
States for purposes of U.S. Government procurement.

DATES: The final determination was issued on February 8, 2007. 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 30 days of February 20, 2007.

FOR FURTHER INFORMATION CONTACT: Holly Files, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202-572-8817).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on February 8, 
2007, pursuant to Subpart B of Part 177, Customs Regulations (19 CFR 
Part 177, subpart B), CBP issued a final determination concerning the 
country of origin of certain bolt container seals and cable seals to be 
offered to the United States Government under an undesignated 
government procurement contract. The CBP ruling number is HQ W563587. 
This final determination was issued at the request of TydenBrammall 
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).
    The final determination examined four different manufacturing 
scenarios. The first two scenarios involve the manufacture of the bolt 
container seal. The third and fourth scenarios involve the manufacture 
of the cable seal. The first scenario proposed the assembly of the bolt 
container seal in the United States solely from parts of foreign 
origin. In the second scenario, the bolt container seal was assembled 
in the United States from parts of U.S. and foreign origin. The final 
determination concluded that, based upon the facts presented in the 
first scenario, the assembly and packaging in the United States of five 
foreign-origin components to create the bolt container seal did not 
substantially transform the foreign components into a product of the 
United States. In the second scenario, the final determination found 
that the assembly of a U.S.-origin lock body with other foreign-origin 
components in the United States to form a lock body assembly 
substantially transformed the foreign components of the lock body 
assembly into a product of the United States. However, as one foreign-
origin component, the bolt shank, was merely packaged with the lock 
body assembly, the final determination found that the bolt shank was 
not substantially transformed into a product of the United States. In 
the third scenario, the cable seal was assembled in the United States 
solely from parts of foreign origin. The fourth scenario involved the 
assembly of the cable seal in the United States from parts of U.S. and 
foreign origin. Based upon the facts presented in the third scenario, 
the final determination concluded that the assembly in the United 
States of four components of foreign origin to create the container 
seal did not substantially transform the foreign-origin components into 
a product of the United States. With regard to the facts presented in 
the fourth scenario, the final determination concluded that the 
assembly in the United States of a U.S.-origin lock body with foreign-
origin components to create the container seal substantially 
transformed the foreign components into a product of the United States.
    Section 177.29, Customs Regulations (19 CFR 177.29), provides that 
notice of final determinations shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, Customs Regulations (19 CFR 177.30), states 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: February 13, 2007.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

HQ W563587

February 8, 2007.
MAR-2-05 RR:CTF:VS W563587 HEF

Category: Marking

Mr. William L. Matthews
Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, N.W.
Washington, DC 20037-1122

RE: U.S. Government Procurement; Final Determination; country of 
origin of bolt container seals and cable seals; substantial 
transformation; 19 CFR Part 177

Dear Mr. Matthews:

    This is in response to your letter dated September 5, 2006, 
requesting a final determination on behalf of TydenBrammall, 
pursuant to subpart B of Part 177, Customs Regulations (19 CFR 
177.21 et seq.). Under these regulations, which implement Title III 
of the Trade Agreements Act of 1979, as amended (19 USC 2511 et 
seq.), U.S. Customs and Border Protection (``CBP'') issues country 
of origin advisory rulings and final determinations on whether an 
article is or would be a product of a designated foreign 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.
    This final determination concerns the country of origin of 
certain bolt container seals and cable seals. We note that 
TydenBrammall is a party-at-interest within the meaning of 19 CFR 
177.22(d)(1) and is entitled to request this final determination. 
Confidential treatment for certain business information identified 
in your request for a final determination will be extended in 
accordance with your request. Photographs of the bolt container 
seals and cable seals were submitted with your request. In preparing 
this final determination, consideration was given to your 
supplemental submission dated December 12, 2006.
    Facts:

I. Vu Bolt Container Seal

    You advise us that TydenBrammall will manufacture Vu Bolt 
Container Seals at its production facility in Angola, Indiana. The 
container seals are used to secure rail, container, and truck cargo 
shipments. The container seal is composed of the following five 
components: bolt shank, lock body, locking ring, inner cover, and 
clear cover. The bolt shank, lock body, and locking ring are 
manufactured in China. The inner cover and clear cover are 
manufactured in Malaysia.
    At the Indiana facility, a machine operator uses a press to seat 
the locking ring within the grooves of the lock body, and the 
operator gauges the locking ring to ensure proper placement within 
the lock body. Next, the lock body is inserted into the inner cover 
to form the lock body subassembly. The lock body subassembly is 
placed into a linear inkjet marking machine where a custom 
serialization number is applied to the subassembly. Then, the 
serialized subassemblies are inspected to ensure the correct 
serialization and quality. The serialized subassemblies are moved to 
an ultrasonic welding station where they are aligned in rows of five 
by ten and covered by the clear cover. There, the subassembly

[[Page 7773]]

and clear cover are ultrasonically welded together and then 
inspected for quality. Finally, the completed subassemblies are 
packaged together with the bolt shanks in packages of 200 Vu Bolt 
Container Seals per box.
    You also request that CBP issue a final determination for an 
identical assembly process except that the lock body is of U.S. 
origin.

II. XBorder Cable Seal

    You advise us that TydenBrammall will manufacture the XBorder 
Cable Seal at its production facility in Angola, Indiana. The 
XBorder Cable Seal is intended for one-time use on trucks, shipping 
containers, and freight rail cars. A TydenBrammall press release 
emphasizes that the seal has a secure and permanent locking 
mechanism that makes cargo tampering virtually impossible without 
detection. Press Release, TydenBrammall, Xborder\TM\ Seal Secures 
High Risk Cargo, http://www.tydenbrammall.com/cargoguy/pressreleases/xborder.pdf (last visited November 15, 2006). The 
XBorder Cable Seal is composed of the following four components: 
bolt shank, lock body, non-preformed cable, and locking ring. The 
bolt shank, lock body, and locking ring are manufactured in China, 
and the non-preformed cable is manufactured in Malaysia.
    To begin the U.S. assembly operation, a machine operator uses a 
press to seat the locking ring within the grooves of the lock body 
and gauges the locking ring to ensure its proper placement. Then, 
the operator uses a multi-headed electrical resistance cutting 
machine to cut the non-preformed cable to a specified length. Next, 
both ends of the cable are ground using an abrasive belt to taper 
the welded tips of the cable. Then, one end of the cable is 
positioned at the bolt shank to form the bolt shank subassembly. The 
bolt shank subassembly is inserted into a swaging press that applies 
an eight-axis crimp to the subassembly. The other end of the cable 
is positioned at the lock body to form the lock body subassembly. 
The lock body subassembly is inserted into a swaging press that 
applies an eight-axis crimp to the subassembly. Then, both crimps of 
the cable seal are inspected for quality by examining the depth and 
position of the crimps. Next, a custom serial number is applied to 
the cable seal using a laser. The finished XBorder Cable Seals are 
inspected for quality, bundled into groups of 10 and packaged 100 
per box.
    You also request that CBP issue a final determination for an 
identical assembly process except that the lock body is of U.S. 
origin.
    Issue:
    What are the countries of origin of the bolt container seal and 
the cable seal for purposes of U.S. Government procurement?
    Law and Analysis:
    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. Sec.  2511 et seq.), CBP issues country of origin 
advisory rulings and final determinations on 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.
    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).
    In determining whether the combining of parts or materials 
constitutes a substantial transformation, the determinative issue is 
the extent of operations performed and whether the parts lose their 
identity and become an integral part of the new article. Belcrest 
Linens v.  United States, 6 Ct. Int'l Trade 204, 573 F. Supp. 1149 
(1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing 
or combining process is a minor one which leaves the identity of the 
imported article intact, a substantial transformation has not 
occurred. Uniroyal Inc. v. United States, 3 Ct. Int'l Trade 220, 542 
F. Supp. 1026 (1982). Assembly operations that are minimal or 
simple, as opposed to complex or meaningful, will generally not 
result in a substantial transformation. See C.S.D. 80-111, C.S.D. 
85-25, and C.S.D. 90-97.
    In order to determine whether a substantial transformation 
occurs when components of various origins are assembled to form 
completed articles, CBP considers the totality of the circumstances 
and makes such decisions on a case-by-case basis. The country of 
origin of the article's components, the extent of the processing 
that occurs within a given country, and whether such processing 
renders a product with a new name, character, or use are primary 
considerations in such cases. Additionally, facts such as resources 
expended on product design and development, extent and nature of 
post-assembly inspection procedures, and worker skill required 
during the actual manufacturing process will be considered when 
analyzing whether a substantial transformation has occurred; 
however, no one such factor is determinative.

I. Vu Bolt Container Seal

    CBP has considered a number of different scenarios involving the 
assembly of locking apparatus. Each case presents a slightly 
different set of facts. In Headquarters Ruling Letter (``HRL'') 
734440, dated March 30, 1992, CBP found that a lock apparatus was 
substantially transformed in the United States as a result of 
combining it with pieces manufactured in the United States. CBP 
noted that the predominant expense of the assembled lock was in the 
parts produced in the United States, which required extensive 
manufacturing and development. By contrast, the imported piece was a 
generic mechanism that was inserted into the U.S. pieces.
    In HRL 734923, dated May 14, 1993, CBP determined that imported 
components of a door lockset, the rosettes and parts of the latch, 
were substantially transformed when they were assembled together 
with significant U.S. components in the United States to make the 
finished door lockset. CBP noted that the manufacture of the 
rosettes in China was relatively simple and did not require a great 
deal of precision as compared to the manufacture of the other 
components in the United States, which required significant 
precision and substantial machinery and tooling.
    Similarly, in HRL 735198, dated March 1, 1995, CBP held that 
imported lock cases and cylinder retainer blocks were substantially 
transformed into industrial padlocks in the United States as a 
result of their assembly with a substantial number of U.S.-origin 
components. CBP found that the character of the lock case and 
cylinder retainer block was changed as a result of their 
incorporation into the finished padlock.
    By contrast, in HRL 734227, dated June 26, 1992, CBP found that 
chrome plated levers did not lose their separate identity when they 
were combined with domestic locksets to form completed lever 
locksets. CBP reasoned that the levers were a significant component 
of the completed article, and their assembly in no way changed the 
character of the levers. The levers were clearly recognizable both 
before and after the assembly. Moreover, the lever was a separate 
component, which had to be disassembled from the rest of the lockset 
prior to its installation.
    In HRL 734629, dated October 1, 1992, CBP found that a lock 
cylinder was not substantially transformed where it was not attached 
to the remaining pieces of the lock until after it was received by 
the installer. Furthermore, CBP noted that the lock cylinder did not 
lose its separate identity when combined with the remaining pieces. 
The cylinder remained visible even after assembly by the installer 
and the attachment process was a simple screw mount, which meant 
that the cylinder easily could be replaced.
    In HRL 735133, dated May 5, 1994, CBP held that imported lock 
parts and assemblies were not substantially transformed when 
assembled in the United States with a U.S.-origin coverplate screw. 
CBP noted that most of the cost in making the finished lock was 
attributable to operations performed in Taiwan and that the 
production in the United States was a simple manual assembly 
operation of basically finished parts.
    In the first scenario, TydenBrammall proposes to assemble the Vu 
Bolt Container Seal entirely from imported parts. You contend that 
the various components are substantially transformed based on their 
assembly in the U.S. alone. The U.S. assembly operation that you 
describe consists of the assembly of a small number of parts, the 
addition of a serial number, the ultrasonic welding of a clear cover 
to the lock body assembly, and the packaging of the finished lock 
body assembly with the imported bolt shank. Similar to the situation 
described in HRL 735133, supra, we find that the described 
manufacturing process is a simple assembly operation of imported

[[Page 7774]]

components that is not complex and meaningful enough to result in a 
substantial transformation. In considering the last country in which 
the container seal underwent a substantial transformation, we 
believe that the lock body primarily imparts the essential character 
of the container seal. While the seal numbers are a unique feature 
to the container seal, the lock body is the component that imparts 
the ability of the container seal to actually lock and secure the 
cargo. The lock body is also the most valuable component of the 
container seal. Therefore, based on the facts presented in the first 
scenario, we find that China is the country of origin of the Vu Bolt 
Container Seal.
    In the second scenario, TydenBrammall proposes to assemble the 
Vu Bolt Container Seal in the same manner except that the lock body 
is of U.S. origin. According to the confidential figures you have 
provided, the cost of the lock body represents a significant 
percentage of the total cost of the components used in the Vu Bolt 
Container Seal. In fact, under this scenario, most of the cost in 
making the container seal is attributable to the U.S. part and the 
labor performed in the United States. Furthermore, as noted above, 
we find that the lock body imparts the essential character of the 
container seal. Thus, we find that the imported locking ring, inner 
cover, and clear cover are substantially transformed when assembled 
in the United States with the U.S.-origin lock body to form the lock 
body assembly.
    However, we also find that the Chinese-origin bolt shank is not 
substantially transformed when packaged with the lock body assembly 
in the United States. In HRL 734219, dated September 3, 1991, CBP 
ruled that water pans and charcoal pans were not substantially 
transformed when combined in the United States with other domestic 
and foreign components of smoker/grill units. CBP reasoned that the 
water pans and charcoal pans were completely finished articles when 
imported, there was no extensive manufacturing process involved, and 
that placing the pans into a container with other domestic and 
foreign articles was a minor operation, required no skill, and was 
not time-consuming. CBP noted that the pans were not permanently 
attached either before sale or once assembly of the unit was 
completed by the consumer. Moreover, Customs observed that the pans 
were functionally necessary to the use of the smoker/grill units, in 
that the units could not perform the essential operations of 
barbecuing, smoking, roasting or steaming without the pans.
    In the instant case, the bolt shank is a finished article when 
it is imported into the United States. In the United States, it is 
merely packaged with the lock body assembly. This act is not an 
extensive manufacturing process. The bolt shank is not attached to 
the lock body assembly prior to the sale of the container seal. When 
the U.S. customer attaches the bolt shank, it remains clearly 
visible. Furthermore, the bolt shank is functionally necessary to 
the essential operation of the container seal. As such, the bolt 
shank is not substantially transformed as a result of packaging it 
with the lock body assembly. Therefore, the country of origin of the 
bolt shank is China. We note that the distinction between the 
origins of the bolt shank and the lock body assembly is not 
necessary in the first assembly scenario, as the country of origin 
for both the bolt shank and the lock body assembly is China.
    Based upon the information provided, we find that China is the 
country of origin of the Vu Bolt Container Seal that is produced 
entirely from Chinese and Malaysian parts. Where TydenBrammall uses 
a U.S. lock body in the assembly of the product in the United 
States, the country of origin of the lock body assembly is the 
United States and the country of origin of the bolt shank is China.

II. XBorder Cable Seal

    In the first scenario, you propose to manufacture the XBorder 
Cable Seal using imported components only. On numerous occasions, 
CBP has considered various manufacturing processes performed on wire 
and cable and whether such processes result in substantial 
transformations. In HRL 561392, dated June 21, 1999, CBP held that 
the cutting of a cable to length and the assembly of the cable to 
connectors did not result in a substantial transformation. In HRL 
561392, all of the components were from Taiwan and the operations 
were performed in China.
    In HRL 560214, dated September 3, 1997, CBP found that where 
imported wire rope cable was cut to length, U.S.-origin sliding 
hooks were put on the rope, and U.S.-origin end ferrules were swaged 
on in the United States, the wire rope cable was not substantially 
transformed.
    In HRL 555774, dated December 10, 1990, CBP held that no 
substantial transformation occurred where Japanese wire was cut to 
length and U.S.-origin electrical connectors were crimped onto the 
ends of the wire in the United States.
    Consistent with these decisions, we find that a substantial 
transformation does not occur as a result of operations described in 
the first scenario, which include cutting an imported cable to a 
specified length, grounding its ends, crimping an imported bolt 
shank and imported lock body onto the ends, and serializing the 
product with a laser. In considering the last country in which the 
cable seal underwent a substantial transformation, we believe that 
the essential character of the cable seal is derived from the lock 
body, which enables the cable ends to be sealed permanently to 
secure the cargo and prevent tampering without detection. Therefore, 
the country of origin of the XBorder Cable Seal is China.
    In the second scenario, TydenBrammall proposes to assemble the 
XBorder Cable Seal in the same manner except that the lock body is 
of U.S. origin. According to the confidential figures you have 
provided, the lock body is by far the most valuable component of the 
cable seal. In fact, most of the cost in making the finished cable 
seal is attributable to the U.S. part and labor performed in the 
United States. As we stated above, we also believe that the lock 
body imparts the essential character of the cable seal. Therefore, 
we find that the components of foreign origin are substantially 
transformed when they are assembled with the U.S. lock body in the 
United States to form the cable seal. Based on these specific facts, 
the country of origin of the XBorder Cable Seal is the United 
States.
    Holding:
    Based upon the facts provided, we find that where the Vu Bolt 
Container Seal is assembled from Chinese and Malaysian components in 
the United States, the components are not substantially transformed. 
The country of origin for the Vu Bolt Container Seal for purposes of 
U.S. Government procurement is China.
    Where the lock body assembly of the Vu Bolt Container Seal is 
assembled in the United States using a U.S.-origin lock body, we 
find that the imported locking ring, inner cover and clear cover are 
substantially transformed. Thus, the country of origin of the lock 
body assembly for purposes of U.S. Government procurement is the 
United States. In addition, we hold that the Chinese-origin bolt 
shank does not undergo a substantial transformation. Therefore, the 
country of origin of the bolt shank for purposes of U.S. Government 
procurement is China.
    Where the XBorder Cable Seal is assembled from imported 
components in the United States, the imported components do not 
undergo a substantial transformation. Based on these facts, the 
country of origin of the XBorder Cable Seal for purposes of U.S. 
Government Procurement is China.
    Where the XBorder Cable Seal is assembled in the United States 
from imported components and a U.S.-origin lock body, we find that 
the imported components undergo a substantial transformation. 
Therefore, the country of origin of this XBorder Cable Seal for 
purposes of U.S. Government procurement is the United States.
    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. Any party-at-interest may, within 
30 days after publication of the Federal Register notice referenced 
above, seek judicial review of this final determination before the 
Court of International Trade.

Sincerely,

Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

[FR Doc. 07-740 Filed 2-16-07; 8:45 am]
BILLING CODE 9111-14-P