CBP Issues Procurement Determination on Certain Clustered Storage Units
U.S. Customs and Border Protection has issued a final determination (HQ H082476) that the U.S. is the country of origin for certain Commodity-based Clustered Storage (ICS) Units1 for U.S. government procurement purposes.
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The final determination was issued at the request of Scale Computing.
(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 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.)
ICS Units are Assembled in U.S. Using Foreign Parts and U.S. Software
The final determination concerns the country of origin of Scale’s SN1000, SN2000, and SN4000 ICS Units. These units are assembled in the U.S. from parts made in China, Taiwan, India, Thailand, and Malaysia and software and firmware developed in the U.S.
The parts are assembled in the U.S. “through a build and verification process that includes approximately 112 steps and takes approximately one hour. Before the software is added, the assembled components create a rack mounted storage device, classifiable under HTS 8471.70.40. However, the device does not have pairing capability until the U.S.-made software is downloaded to it, which enables the device to function as a cloud computing device similar to a network storage RAID array. As the software affects the interconnection between the CPU and the storage units, the classification of the finished item becomes HTS 8471.80.10.
(Scale estimates that it spent 12,480 hours developing and at least 10,400 more hours annually in continued development and maintenance of the firmware and application software.)
CBP Finds Substantial Transformation Occurs in U.S., Issues Warning
CBP finds that the customization and installation of firmware and application software make what would otherwise be a non-functioning rack storage unit, into Scale’s proprietary clustered technology. As a result of the U.S. processing, CBP finds that the imported component parts are substantially transformed and therefore, the country of origin of the ICS Units is the U.S.
CBP warns, however, that whether the ICS Units may be marked "Made in the U.S.A." or with similar words, is an issue under the authority of the Federal Trade Commission (FTC) and CBP suggests interested persons contact the FTC on the propriety of markings indicating that articles are made in the U.S.
Any Party-at-Interest May Request Judicial Review by June 17, 2010
CBP states that any party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial review of this final determination by June 17, 2010. In addition, under 19 CFR 177.31, any party-at-interest other than the party which requested this final determination may request that CBP reexamine the matter anew and issue a new final determination.
1The Units at issue are mass data storage devices similar in function to Storage Area Network (SAN) or Network Attached Storage (NAS) devices (i.e., special purpose networks that interconnect different kinds of data storage devices -- such as tape libraries and disk arrays -- with associated data servers on behalf of a larger network of users). The models at issue differ only in their storage capacity: the SN1000 holds 1 Terabyte worth of data, the SN2000 holds 2 Terabytes, and the SN4000 holds 4 Terabytes.
CBP contact -- Alison Umberger (202) 325-0267
CBP notice (FR Pub 05/18/10) available at http://edocket.access.gpo.gov/2010/pdf/2010-11726.pdf