MAR-2 OT:RR:NC:N1:109
Mr. Gregory S. McCue
Steptoe & Johnson LLP
Attorneys at Law
1330 Connecticut Avenue, NW
Washington, DC 20036-1795
RE: THE COUNTRY OF ORIGIN AND MARKING OF MCAFEE NETWORK SECURITY MANAGER (“NSM”) APPLIANCES
Dear Mr. McCue:
This is in response to your letter dated August 25, 2010 requesting a ruling on whether the assembly processes that occur in California and in Hungary yield a substantial transformation on behalf of your client, McAfee Inc. In addition, you inquired as to whether the proposed marking “Assembled in Hungary” is an acceptable country of origin marking for the imported McAfee Network Security Manager (“NSM”) Appliances, which would be assembled in Hungary. A marked sample was not submitted with your letter for review.
McAfee proposes to manufacture it Network Security Manager (“NSM”) Appliances in one of two places, either in the United States, specifically California, or Hungary. The assembly process in each country will be the same. All of the parts necessary for these operations will be sourced from various countries and different suppliers and the countries of origin of the parts used will be from various countries or origin.
McAfee NSM devices come in two basic configurations. First, McAfee offers the standard NSM, which is an advanced solution for Intrusion Prevention System Sensors or NAC Appliances, to be deployed in small and medium-sized networks and enterprise branch offices, and is suitable for deployments of up to six sensors or appliances. Second, McAfee offers the NSM-Global Edition, which is tuned for managing Intrusion Prevention System Sensors or NAC Appliances in very large and distributed enterprise and service provider networks. The Global Edition is designed for unlimited global deployments of Intrusion Prevention Systems Appliances or NAC Appliances. The Global Edition uses somewhat different software than the standard NSM, but uses exactly the same hardware, assembled in exactly the same way. The difference between the two products is the number of Network Security Sensors allowed to be managed by the software licenses.
McAfee is considering a manufacturing process for its NSM devices that would include all the steps described further within this letter. All of these steps would occur at each of the two assembly sites, California and Hungary. McAfee will begin with a generic server sub-system, often referred to in the industry as a barebone chassis, purchased from Intel. The Intel product number for the barebone chassis, which will be used in manufacturing both types of the NSM Appliances, is SR1695GRPX.
As purchased from Intel, the barebone chassis is a sheet metal box holding a basic motherboard with empty slots in which to place the critical memory and functions devices. These memory and function devices will not be supplied by Intel as part of the barebone chassis, rather they will be designed and selected separately by McAfee for the NSM products. The devices, which will be added by McAfee, include the most important components for the memory and function of the appliances. Those components include a central processing unit (“CPU”), a DVD drive, A Remote Management Module (“RMM”), dual in-line memory modules (“DIMMS”), Network Interface Cards (“NICs”), specifically a Redundant Array of Independent Disks (”RAID”) modules, and hard drives. As described in more detail below, these and other critical components are not part of the barebone chassis purchased from Intel. Such critical components must be selected, acquired, installed and programmed by McAfee in order to make a functioning NSM Appliance. The barebone chassis as acquired from Intel contains certain basic mechanical features, such as fans and power supplies, but all the critical components that provide and support the brains, identity and critical functions for the NSM device have not yet been installed or programmed when the barebone chassis is received by McAfee. In other words, the barebone chassis as purchased from Intel is an inert, metal and plastic mass, which can do nothing in its condition as purchased.
The hardware manufacturing operations are as follows:
The CPU is installed on the bartebone chassis motherboard.
The heatsink, present in the package as received from Intel, is aligned and properly installed on the motherboard.
An Optical drive/DVD is installed into the chassis and attached to the motherboard.
An RMM is installed.
Memory DIMMs are installed on the motherboard.
An NIC/RAID Module is installed on “stand-offs”, which allow the module to float above the motherboard.
Hard Drives are installed in carriers and into the chassis.
Serial Number labels are repositioned.
Cabling and wiring is completed to connect the HDDs, DVD, NIC/RAID Module and NIC to the motherboard and power supplies.
The chassis cover is re-installed.
A new tamper proof label is installed on the chassis cover.
Rack handles, which come with the barebone chassis, are installed on the exterior of the chassis.
A McAfee dome label is affixed to the badge and installed on the device bezel.
A McAfee optical drive label is affixed to the badge and installed on the front of the DVD drive.
Each physical hardware assembly step above is performed manually. Some of those operations involve hand tools, such as torque driver, power screwdriver, etc., and will involve a few dozen small screws, which will be sourced locally, in the country where the operations occur.
After all the hardware assembly operations:
McAfee custom BIOS is loaded into a programmable device on the motherboard.
U.S. origin McAfee application software is downloaded onto the hard drive device.
The system is configured per customer’s order. The software may need to be upgraded to meet customer orders for different appliances.
The accessory kit is assembled. The slide rail and power cord are connected into the accessory kit, along with documentation, which will have been printed in the United States or Hungary.
Once all of the above steps are complete, hardware assembly and software download, a substantial testing regimen is conducted to ensure that the devices are functioning properly. This testing requires trained personnel and detailed knowledge of the products and is critical to production of a properly functioning device. The first testing step is:
Hi-Pot Test, as per safety standards and requirements.
After the Hi-Pot Test is performed and analyzed, a substantial and critical testing process resumes including testing steps that fall into two broad groups: the “Wake-up” Tests and the “Final System” Tests. Descriptions of each of the steps for these tests are as follows:
Wake-Up Tests:
Confirm the unit passed Hi-Pot Test
Boot the unit
Conduct “as-build” verification
Perform DMI BIOS info scan
Perform DIMM data scan
Initiate PCI scan
Perform HDD scan
Perform a quick memory test
Program the IPMI FRU data
Final Systems Tests:
Motherboard tests
CPU tests
Memory tests
BIOS configuration and branding
Power subsystems tests
HDD tests
Networking tests
Option card tests
Multithreaded System Load Test
After testing, inspection and packaging steps are performed additional steps are still required before manufacturing is complete. The following are the additional steps:
Pre-Delivery Inspection is performed
Final Quality Assurance inspection is performed.
Open Box Audit is performed.
Completed system is packed out and prepared for shipping to a customer.
With respect to country of origin marking, the Marking Statute, Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.
As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.
With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines “country of origin” as the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of the marking laws and regulations. For country of origin marking purposes, in accordance with CFR 134.35 (a) a substantial transformation of an imported article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the imported article. 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 and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. In this case, it is the opinion of this office that each of the assembly processes, which occur in California and in Hungary to manufacture the McAfee Network Security Manager Appliances, does result in a substantial transformation in accordance with CFR 134.35 (a).
The barebone chassis as acquired from Intel contains certain basic mechanical features, such as fans and power supplies, but all the critical components that provide and support the brains, identity and critical functions for the NSM device are not present when the barebone chassis is received by McAfee. The barebone chassis has not yet been installed with critical components or programmed when received by McAfee. The barebone chassis as purchased from Intel is an inert, metal and plastic mass, which can do nothing in it condition as purchased. In their condition, prior to assembly, the parts cannot function as any type of computer appliance as a sophisticated security appliance either. It is only after the assembly process that is undertaken by McAfee that all of the parts utilized create a device, which has the intelligence to enable it to function as intended, resulting in an article having a name, character, and use differing from that of the imported article. In addition, the installation and customization of the application software not only changes the function of the devices but, after software download, the devices are substantially more valuable than the same hardware without software. As such, pursuant to 19 CFR 134.1(b), the country of origin of the McAfee Network Security Manager Appliances assembled in and imported from Hungary would be Hungary. Therefore, in answer to your question as to whether the McAfee Network Security Manager Appliances, which will be assembled in Hungary, can be marked “Assembled in Hungary” this office finds that it is an acceptable country of origin marking. As such, it can be marked “Assembled in Hungary” as you proposed.
The proposed marking of the McAfee Network Security Manager Appliances assembled and imported from Hungary, as described above, is to be conspicuously, legibly and permanently marked in satisfaction with the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Linda M. Hackett at (646) 733-3015.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division