[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Notices]
[Pages 32806-32809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13847]


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DEPARTMENT OF HOMELAND SECURITY

 Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain 
Upright and Recumbent Exercise Bikes

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 upright and recumbent exercise bikes. 
Based upon the facts presented, CBP has concluded in the final 
determination that the U.S. is the country of origin of the upright and 
recumbent exercise bikes for purposes of U.S. government procurement.

DATES: The final determination was issued on June 2, 2010. 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 until July 9, 2010.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 2, 2010,

[[Page 32807]]

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 the upright and recumbent exercise bikes which may 
be offered to the U.S. Government under an undesignated government 
procurement contract. This final determination, in HQ H095239, was 
issued at the request of Brunswick Corporation 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 has concluded that, based upon the facts 
presented, the upright and recumbent exercise bikes, assembled in the 
U.S. from parts made in Mexico, China, Taiwan, Germany, Indonesia, 
Korea and the U.S., are substantially transformed in the U.S., such 
that the U.S. is the country of origin of the finished article for 
purposes of U.S. government procurement.
    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, 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: June 2, 2010.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

H095239

June 2, 2010
OT:RR:CTF:VS H095239 EE
CATEGORY: Marking

Ms. Shannon Fura
Mr. Jeremy Page
Page<bullet>Fura, P.C., 1 South Dearborn, Suite 2100, Chicago, IL 
60603

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Country of Origin; Upright and Recumbent Exercise Bikes

    Dear Ms. Fura and Mr. Page: This is in response to your 
correspondence of September 1, 2009, resubmitted January 19, 2010, 
forwarded to us by the National Import Specialist (``NIS'') 
Division, in which you requested a final determination on behalf of 
Brunswick Corporation (``Brunswick''), pursuant to subpart B of part 
177, Customs and Border Protection (``CBP'') Regulations (19 C.F.R. 
Sec.  177.21 et seq.). Under the pertinent regulations, which 
implement 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 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.
    This final determination concerns the country of origin of 
certain upright and recumbent exercise bikes. We note that Brunswick 
is a party-at-interest within the meaning of 19 C.F.R. Sec.  
177.22(d)(1) and is entitled to request this final determination.

FACTS:

    You describe the pertinent facts as follows. The items at issue 
consist of upright and recumbent exercise bikes produced in the U.S. 
from U.S. and foreign components by Brunswick's Life Fitness 
Division. You advise that both versions of the bikes are produced in 
the U.S. from a range of components and subassemblies. The majority 
of the components which comprise the bikes and the various 
subassemblies are stated to be of U.S. origin, with a lesser number 
sourced from Mexico, China, Taiwan, Germany, Indonesia, and Korea. 
All of the subassemblies are produced in the U.S. with the exception 
of the standard console assembly, which is produced in Indonesia. 
The various subassemblies are ultimately assembled into the final 
frame assembly to produce the final product. You state that the 
final assembly, which takes place in the U.S., is the most-complex 
step in the manufacturing process, requiring the incorporation of 
all of the other assemblies in a precise order to ensure the proper 
operation of the finished bike. The upright and recumbent exercise 
bikes will be tested and packaged in the U.S.
    You submitted the list of components for the upright and 
recumbent exercise bikes and the origin of each component. You also 
submitted illustrations of the upright and recumbent exercise bikes 
and the step-by-step assembly process in the U.S.

A. Upright Exercise Bike

    The upright exercise bike is produced from a number of distinct 
subassemblies which, with the exception of the console assembly, are 
assembled in the U.S. The primary subassemblies include the wheel 
assembly; the leg leveler and nut assembly; the seat assembly; the 
shieve/clutch bearing subassembly; the intermediate pulley/shaft; 
the drive pulley/crank hub; the idler-arm assembly; the alternator-
pulley assembly; the rear resistor/bracket/cable assembly; the PCB/
battery assembly; the reed switch/bracket subassembly; the shroud 
with decal assembly (left & right); and the handlebar assembly. The 
subassemblies are produced concurrently and then joined together 
during the final bike frame assembly process.
    The assembly of the upright exercise bike is comprised of 
approximately 352 individual operational steps and more than 175 
components. The production of the subassemblies takes approximately 
90 minutes, which includes 30 minutes for the final assembly.
    The upright exercise bike assembly process of the principal 
subassemblies involves:
    1. Pressing flange bearing into wheel using arbor press; (wheel 
assembly)
    2. Securing insert to wheel and bearing assembly with a screw; 
(wheel assembly)
    3. Attaching decal seat post and seat with fasteners. Attaching 
seat post guide, spring support brackets, guide base with fasteners 
and pressing on seat post bumper; (seat assembly)
    4. Pressing shieve and clutch bearing using mandrel; (shieve/
clutch bearing subassembly)
    5. Securing magnet and standoff assembly to crankshaft assembly 
with a screw; (intermediate pulley/shaft)
    6. Securing crank hub to pulley with bolts; (drive pulley/crank 
hub)
    7. Securing pulley to idler arm bracket with nut; (idler-arm 
assembly)
    8. Securing pulley to alternator with nut and washer; 
(alternator-pulley assembly)
    9. Assembling resistor, resistor brackets, resistor rod and 
covering the assembly with cardboard insulator; (rear resistor/
bracket/cable assembly)
    10. Installing wire harness to the resistor terminals with bolts 
and nuts; (rear resistor/bracket/cable assembly)
    11. Seating stand-offs to PCB bracket with mallet; (PCB/battery 
assembly)
    12. Securing PCB board to seating stand-offs with screws; (PCB/
battery assembly)
    13. Securing battery to PCB bracket with screws; (PCB/battery 
assembly)
    14. Securing reed switch to reed switch bracket with screws; 
(reed switch/bracket subassembly)
    15. Decal application on shrouds; (shroud with decal assembly)
    16. Assembling of handlebar with electrode (heartbeat 
measurement) cable assembly, poly sleeves, and caution labeling and 
attaching handlebar end caps with mallet. (handlebar assembly)

B. Recumbent Exercise Bike

    Similar to the upright exercise bike, the recumbent exercise 
bike is produced from a number of distinct subassemblies which, with 
the exception of the console assembly, are assembled in the U.S. The 
subassemblies include but are not limited to the resistor-mounting 
bracket assembly; the power-PCB bracket assembly; the shroud with 
decal assembly (left & right); the leg leveler assembly; the wheel 
assembly; the intermediate-pulley assembly; the idler-bracket pulley 
assembly; the pulley-clutch assembly; the crank-pulley assembly; the 
alternator-pulley assembly; the seat assembly; the lock assembly; 
the roller take-up assembly; the seat extrusion assembly; the 
battery mounting-bracket assembly; the extrusion endcap assembly; 
and the reed-switch mounting bracket assembly. The individual 
subassemblies are produced concurrently and then joined together and 
sequenced for the final bike frame assembly process to produce the 
finished recumbent bike.
    The assembly of the recumbent exercise bike is comprised of 
approximately 468 individual operational steps and more than 270 
components. The production of the recumbent exercise bike takes 
approximately 105 minutes, which includes 14 minutes for the final 
assembly.

[[Page 32808]]

    The recumbent exercise bike assembly process of the principal 
subassemblies involves:
    1. Securing resistor assembly into bracket with nut; (resistor-
mounting bracket assembly)
    2. Seating stand-offs to PCB bracket with mallet; (power-PCB 
bracket assembly)
    3. Securing the PCB board to stand-offs with screws bracket; 
(power-PCB bracket assembly)
    4. Decal application on shrouds; (shroud with decal assembly)
    5. Assembling nuts to leg levelers; (leg leveler assembly)
    6. Securing insert to wheel and bearing assembly with screw; 
(wheel assembly)
    7. Securing magnet and standoff assembly to crankshaft assembly 
with screw; (intermediate-pulley assembly)
    8. Securing pulley to idler arm bracket with nut; (idler-bracket 
pulley assembly)
    9. Pressing shieve and clutch bearing using mandrel; (pulley-
clutch assembly)
    10. Securing crank hub to pulley with bolts; (crank-pulley 
assembly)
    11. Securing pulley to alternator with nut and washer; 
(alternator-pulley assembly)
    12. Assembling handlebars with seat weldment, cable assembly, 
cable sleeve, bottom seat pad, roller take-up assemblies and rollers 
using screws, washers and nuts; (seat assembly)
    13. Assembling locking block with housing-insert assembly, 
compression spring, retainer bearing into housing, with packed 
housing. Further assembling and locking in place with groove pin 
(using arbor press), anti-rattle washer, knob/bracket assembly and 
handle using screws; (lock assembly)
    14. Pressing take-up roller shaft through take-up roller plate 
with arbor press; (roller take-up assembly)
    15. Assembling preload rollers to roller-place assemblies and 
assembling e-rings to assemblies; (roller take-up assembly)
    16. Assembling seat extrusion with threaded rivets and cable 
clamp. Attaching locking rack with fasteners, stop bracket and 
bumper strip with screws; (seat extrusion assembly)
    17. Securing battery to bracket with screws; (battery mounting-
bracket assembly)
    18. Assembling decal to endcap; (extrusion endcap assembly)
    19. Securing reed switch to reed switch bracket with screws. 
(reed-switch mounting bracket assembly)

ISSUE:

    What is the country of origin of the upright and recumbent 
exercise bikes for the purpose of U.S. government procurement?

LAW AND ANALYSIS:

    Pursuant to subpart B of part 177, 19 C.F.R. Sec.  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 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.
    Under the rule of origin set forth under 19 U.S.C. Sec.  
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 C.F.R. Sec.  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 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict 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 
C.F.R.Sec.  25.403(c)(1). The Federal Acquisition Regulations define 
``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.''

    48 C.F.R. Sec.  25.003.

    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, 573 F. Supp. 1149 (Ct. Int'l Trade 1983), 
aff'd, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations that are 
minimal or simple, as opposed to complex or meaningful, will 
generally not result in a substantial transformation. Factors which 
may be relevant in this evaluation may include the nature of the 
operation (including the number of components assembled), the number 
of different operations involved, and whether a significant period 
of time, skill, detail, and quality control are necessary for the 
assembly operation. See C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, 
C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. If the manufacturing 
or combining process is a minor one which leaves the identity of the 
article intact, a substantial transformation has not occurred. 
Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 
(1982), aff'd 702 F. 2d 1022 (Fed. Cir. 1983).
    In order to determine whether a substantial transformation 
occurs when components of various origins are assembled into 
completed products, 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, factors such as the 
resources expended on product design and development, extent and 
nature of post-assembly inspection and testing procedures, and the 
degree of skill required during the actual manufacturing process may 
be relevant when determining whether a substantial transformation 
has occurred. No one factor is determinative.
    In a number of rulings (e.g., Headquarters Ruling Letter 
(``HQ'') 735608, dated April 27, 1995 and HQ 559089 dated August 24, 
1995), CBP has stated: ``in our experience these inquiries are 
highly fact and product specific; generalizations are troublesome 
and potentially misleading.''
    In HQ 735368, dated June 30, 1994, CBP held that the country of 
origin of a certain finished bike assembled in Taiwan with 
components made in several countries was Taiwan. CBP stated that 
because the bicycle was assembled in Taiwan and one of the bicycle's 
most significant components, the frame, was made in Taiwan, the 
country of origin of the bicycle was Taiwan. Although the other 
components came from several different countries, when they were 
assembled together in Taiwan, they each lost their separate identity 
and became an integral part of a new article of commerce, a bicycle.
    In the instant case, the assembly of the upright exercise bike 
is comprised of approximately 352 discrete steps and over 175 U.S. 
and foreign components. The assembly of the recumbent exercise bike 
is comprised of approximately 468 discrete steps and over 270 U.S. 
and foreign components. With the exception of the standard console 
subassembly, all of the subassemblies are produced in the U.S. from 
U.S. and foreign components. The subassemblies are then assembled 
into the final frame assembly. We find that under the described 
assembly process, the foreign components lose their individual 
identities and become an integral part of the articles, the upright 
and recumbent exercise bikes, possessing a new name, character and 
use. The assembly process that occurs in the U.S. is complex and 
meaningful and requires the assembly of a large number of components 
into subassemblies to be assembled into the final products. Further, 
we note that a substantial number of components are of U.S. origin, 
where the assembly occurs, which was an important consideration in 
HQ 735368. Therefore, based upon the information before us, we find 
that the imported components that are used to manufacture the 
upright and recumbent exercise bikes are substantially transformed 
as a result of the assembly operations performed in the U.S. and 
that the country of origin of the bikes for government procurement 
purposes is the U.S.

HOLDING:

    The components that are used to manufacture the upright and 
recumbent exercise bikes are substantially transformed as a result 
of the assembly operations performed in the U.S. Therefore, the 
country of origin of the upright and recumbent exercise bikes for 
government procurement purposes is the U.S.
    Notice of this final determination will be given in the Federal 
Register, as required by

[[Page 32809]]

19 C.F.R.Sec.  177.29. Any party-at-interest other than the party 
which requested this final determination may request, pursuant to 19 
C.F.R.Sec.  177.31, that CBP reexamine the matter anew and issue a 
new final determination. Pursuant to 19 C.F.R.Sec.  177.30, 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, Regulations and Rulings Office of International 
Trade.

[FR Doc. 2010-13847 Filed 6-8-10; 8:45 am]
BILLING CODE 9111-14-P