[Federal Register: March 23, 2004 (Volume 69, Number 56)]
[Notices]
[Page 13577-13580]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23mr04-93]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
Notice of Issuance of Final Determination Concerning Multi-
Function Printers
AGENCY: 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 multi-function printers to be offered to
the United States Government under an undesignated government
procurement contract. The final determination found that based upon the
facts presented, the country of origin of the Canon iRC3200 multi-
function printer is Japan.
DATES: The final determination was issued on March 17, 2004. 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 March 23, 2004.
FOR FURTHER INFORMATION CONTACT: Edward Caldwell, Special
Classification and Marking Branch, Office of Regulations and Rulings
(202-572-8836).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on March 17,
2004, 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 multi-function printers to be offered to
the United States Government under an undesignated government
procurement contract. The CBP ruling number is HQ 562936. This final
determination was issued at the request of Canon, Inc., 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 concluded that, based upon the facts
presented, the assembly in Japan of various Japanese- and Chinese-
origin parts to create Canon iRC3200 multi-function printers
substantially transformed the Chinese-origin components into a product
of Japan.
Section 177.29, Customs Regulations (19 CFR 177.29), provides that
notice of
[[Page 13578]]
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: March 17, 2004.
Sandra L. Bell,
Acting Assistant Commissioner, Office of Regulations and Rulings.
Attachment
MAR-2-05 RR:CR:SM 562936 EAC
Category: Marking
Mr. Harvey M. Applebaum, Esq.
Mr. David R. Grace, Esq.
Mr. Mark E. Feldman, Esq.,
Covington & Burling, 1201 Pennsylvania Avenue, NW., Washington, DC
20004-2401.
Re: U.S. Government Procurement; Final Determination; country of
origin of multi-function printers; substantial transformation; 19
CFR part 177
Dear Messrs. Applebaum, Grace, and Feldman: This is in response
to your letter dated December 22, 2003, requesting a final
determination under 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 U.S.C. 2411
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 the
Canon ``iRC3200'' multi-function printer that is assembled in Japan
and which Canon intends to sell to the U.S. Government through its
Canon U.S.A. affiliate. We note that Canon is a party-at-interest
within the meaning of 19 CFR 177.22(d)(2), and is entitled to
request this final determination.
Facts
Canon has requested this final determination in order to
determine the country of origin of the Canon iRC3200 multi-function
printer that is capable of performing printing, copying, scanning,
and facsimile functions. The printer is comprised of four main
subassemblies that have been identified as the printer unit, reader
scanner unit, color infrared (``iR'') controller unit, and control
panel unit. The printer unit itself consists of four smaller
subassemblies identified as the laser scanner unit, printer unit
without laser scanner (``PWS''), drum unit, and toner cartridge. You
state that the printer unit, assembled in Japan, performs the
electrophotographic process which is described as the most essential
task undertaken by the printer. You further state that the laser
scanner unit is perhaps the most complex component of the printer
and that its production requires the application of advanced
manufacturing technologies.
It is our understanding that during the aforementioned
electrophotographic process, a permanent photocopied image is placed
onto a sheet of paper through the steps of exposure, development,
transfer, and fixing. In describing the electrophotographic process,
you state that during the first and most significant step, exposure,
a computer image signal is converted into a laser drive signal which
must be calibrated to cast a laser beam precisely onto a
photosensitive drum. Following exposure, toner is electrostatically
attracted to a latent image located on the surface of the
photosensitive drum. The toner develops the latent image into a
visible image that is thereafter permanently affixed to printing
paper by a fixing unit which is comprised of a heater, fixing film
unit, and roller.
The laser scanner unit performs the exposure function that is,
in your opinion, the most important and precise element of the
electrophotographic process. The laser scanner unit is manufactured
within Japan from parts that are predominantly of Japanese origin.
With respect to the origin of the other components that form the
printer unit, you state that the toner cartridge (which supplies
toner to the printer unit) and drum unit (which performs the
development processes) are manufactured within Japan from parts of
Japanese origin. The PWS unit, on the other hand, is assembled in
China. However, the intermediate transfer belt, which is described
as the key component of the PWS unit, is manufactured in Japan. The
intermediate transfer belt transforms four color images, which are
created by four drum units, into a fully integrated color image that
is transferred onto print paper.
The second major subassembly of the printer, the reader scanner
unit, functions as the ``reader'' unit of the printer by storing
information onto a hard disk that is controlled by the color iR
controller unit. The reader scanner unit is assembled within China.
However, components that you describe as the key parts of the unit,
such as the Charge Coupled Devide (``CCD''), lens unit, and xenon
lamp, are manufactured in Japan. In regards to the purpose of each
of these components, the xenon lamp radiates light onto a document,
the lens unit focuses the light reflected from the document onto the
sensor portion of the CCD, and the CCD converts the light signal
into an electrical signal.
The third major component of the printer, the color iR
controller unit, including the software embedded in the unit, is
manufactured within Japan. The color iR controller unit integrates
the local area network and executes multiple tasks (such as copying,
printing, and scanning) efficiently on the network. You state that
the cost incurred by Canon in researching and developing the color
iR controller unit is substantial. The color iR controller unit
consists of three main subassemblies: the MEDOC, which enables the
simultaneous performance of multiple tasks; the GRAVES, which
performs image processing functions; and the SURF, which allocates
the burden of processing printing data between the computer and the
printer.
The fourth major component of the printer is the control panel
unit. The control panel unit is assembled in China. However, the
color Liquid Crystal Display (``LCD''), which is described as the
key component of the control panel unit, is manufactured in Japan.
The LCD is part of the printer's ``touch panel'' that indicates the
operational status of the printer.
As stated above, the printer's major subassemblies are assembled
within Japan to form a completed Canon iRC3200 printer. A
description of the processes undertaken to assemble a printer to
completion, as set forth in a facsimile transmitted to our office on
January 27, 2004, follows.
A. The Printer Unit
1. Laser Scanner Unit Assembly
An operator assembles a laser chip terminal onto a laser unit
printed circuit board (``PCB'') and adjusts the power of the laser
beam. Then an operator attaches a collimator lens to the laser unit
PCB after which the operator measures the focus of the laser spot
and checks the exterior of the laser unit. A series of component
parts are then attached to the optical case. Such component parts
have been identified as the lens supporting board unit, auto
registration motor, anamorphosis lens, motor unit, Beam Detect
(``BM'') sensor unit, laser unit, reflection unit, cylindrical lens,
long deflective element mirror, and BD mirror. After attaching the
components to the optical case, the operator adjusts the focus of
the cylindrical lens, position of sub scanning, position of BD
mirror, power of laser beam, and jitter. A cover is thereafter
attached and the image patterns and laser scanner unit exterior are
inspected.
2. Printer Unit Without Laser Scanner (``PWS'') Assembly
Various plates, mounts, rails, guides, stays, shafts, and covers
are assembled in order to complete the mechanical frames of the
printer unit and constitute the first assembly steps of the PWS.
Thereafter, the following components are assembled to the frames:
toner cartridge drive assembly, drum drive assembly, developing
drive assembly, intermediate transfer belt drive assembly, fixing
drive assembly, four laser scanner units, pick-up motor drive unit,
paper pick-up unit, duplex driver PCB, color iR controller unit,
intermediate transfer belt unit, duplex units, and fixing feeder
unit. After attaching these various items, an operator uses cables
to connect the components. The alignment of the rollers,
intermediate transfer belt unit, laser beam angle, magnification,
and starting point of laser scanning is adjusted. An operator then
makes adjustments to the laser power, facsimile power, heaters,
fans, and toner cartridge motor. Toner cartridges and drum units are
subsequently inserted into the frame. An operator temporarily
connects the reader scanner unit to the printer unit to check the
image. Components used only for testing purposes, such as the four
laser scanner units, color iR controller unit, drum
[[Page 13579]]
units, and toner cartridges, are then removed from the printer and
the PWS is packed for shipment.
3. Drum Unit Assembly
In order to complete the drum unit, an operator assembles
numerous components, such as a photosensitive drum, primary changing
roller, developing assembly, and developing cylinder. An operator
uniformly coats the drum unit with photosensitive materials during
assembly. Thereafter, the mechanical precision of the drum unit is
inspected and the unit is packaged.
4. Toner Cartridge
Items such as toner cartridge units, toner cartridge holders,
insert labels, logo labels, color labels, and side pads are
assembled to complete the toner cartridge. An operator thereafter
inspects the item and packs the toner cartridge.
B. Color iR Controller Unit
In order to assemble the color iR controller unit, an operator
first combines the controller main PCB with the controller sub-PCB.
Multiple components are then attached to the combined PCBs,
including items such as a static random access memory PCB, boot read
only memory, synchronous random access memory, fan, dust filter, and
hard disk. The various components are subsequently connected with
cables. An operator then inserts a power supply cable into the hard
disk and distribution units. The assembled color iR controller unit
is thereafter inspected.
C. Reader Scanner Unit
In order to build the reader scanner unit, an operator begins by
assembling a number of components such as a CCD, lens unit, xenon
lamp, interface PCB, lamp regulator PCB, reader controller PCB, and
sensor assembly. After connecting the components with cables, an
operator adjusts the mechanical alignment of certain items that form
the unit. Examples of such adjustments include modifying the
position of the mirror assembly and the tension of belts and wires
that move optical components, such as the CCD and mirror assembly.
An operator then tests the functionality of the item's communication
and paper size detection capabilities, the accuracy of input data,
the starting point of scanning, and image signals. Upon successful
completion of these tests, the reader scanner unit is packaged for
shipment.
D. Control Panel Unit
An operator assembles items such as a control panel key PCB, key
tops, and LCD in order to produce a control panel unit. The various
items are connected with cables. Thereafter, the operator inspects
and packages the unit for shipment.
E. Final Assembly
Using screws, an operator attaches four laser scanner units
(yellow, magenta, cyan, and black) as well as a color iR controller
unit to the PWS. An operator subsequently initializes the random
access memory of the color iR controller unit and calibrates the
angle of the laser beam, magnification performance, and the starting
point of laser scanning. An operator then tests the laser's power
and application communication within the printer unit. Drum units
and toner cartridges are attached for testing. Thereafter, the
starting point of sub-scanning, the blank spaces of right and left
in the test print image, and the roller pressure of the fixing
rollers are adjusted. The motors and sensors are tested and paper
size data is registered. Next, the reader scanner and document
feeder units are attached to the printer unit. Screws are utilized
to attach covers to the printer and the exterior of the unit is
inspected.
Upon completion of the aforementioned assembly procedures, an
operator inspects the functionality of the assembled Canon iRC3200
printer. The level of precision of the assembled unit is further
tested by printing test patterns and evaluating the images thereby
produced. Upon successful completion of the final inspections, the
completed iRC3200 is packaged and prepared for shipment.
Issue
Whether the assembled Canon iRC3200 printers are considered to
be products of Japan for purposes of U.S. Government procurement.
Law and Analysis
Under 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.), 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
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. Unites States, 573 F. Supp. 1149 (CIT 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. See C.S.D. 80-111, C.S.D.
85-25, C.S.D. 89-110, C.S.D. 85-118, C.S.D. 90-51, and C.S.D. 90-97.
In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), we held that for
purposes of the Generalized System of Preferences, the assembly of a
large number of fabricated components onto a printed circuit board
in a process involving a considerable amount of time and skill
results in a substantial transformation. In that case, in excess of
50 discrete fabricated components (such as resistors, capacitors,
diodes, integrated circuits, sockets, and connectors) were
assembled.
CBP has also previously considered, in a number of cases,
whether components imported into a country for assembly into
printers and other related items have been substantially transformed
as a result of such processing. For example, in Headquarters Ruling
Letter (``HRL'') 562495 dated November 13, 2002, color ink jet
printers were assembled within Singapore from components obtained
from Malaysia and a number of other countries. The assembly
procedures undertaken in Singapore were described as follows:
1. Circuit board assembly for the input/output unit, left side,
assembled to the chassis;
2. Power controller printed circuit board assembly assembled to
the chassis;
3. Preheating thermal drum inserted into the chassis;
4. Paper path motor assembled to the chassis;
5. Stepper assembly motor assembly, with gear, assembled to the
chassis;
6. Control panel cover assembly (user interface) assembled to
the chassis;
7. High voltage power supply assembled to the chassis;
8. Input/output circuit assembly board, right, assembled to the
chassis;
9. ``Barracuda'' print head assembly assembled to the chassis;
10. Purge control module assembled to the chassis;
11. Ink load assembly assembled to the chassis;
12. Electronic subsystem (ESS) controller board assembled to the
chassis; and,
13. Front cover assembly assembled to the chassis.
Upon completion of the foregoing procedures, the assembled printers
were subjected to high voltage electrical testing, inspected,
packaged, and prepared for export to the United States.
After considering the totality of the circumstances in HRL
562495, we held that the various imported components were
substantially transformed within Singapore and that the assembled
printers were required to be marked as products of that country upon
entry into the United States. In support of this determination, we
noted that the processing operations that occurred within Singapore
were complex and extensive, required the integration of 13 major
subassemblies to the chassis, and that the resulting product was a
new and distinct article of commerce that possessed a new name,
character, and use.
Prior to the case cited above, CBP ruled in HRL 561734 dated
March 22, 2001, 66 Fed. Reg. 17222, that Sharp multifunctional
machines (printer, copier and fax machines) assembled in Japan were
a product of Japan for purposes of government procurement. The
machines in that case were comprised of 227 parts (108 parts
obtained from Japan, 92
[[Page 13580]]
from Thailand, 3 from China, and 24 from ``other'' countries) and
eight subassemblies, each of which was assembled in Japan. It was
further noted that the scanner unit (one of the eight subassemblies
assembled in Japan) was characterized as ``the heart of the
machine.'' See also, HRL 561568 dated March 22, 2001, 66 FR 17222.
In HRL 734050 dated June 17, 1991, on the other hand, we
determined that the operations performed in China to assemble
printers did not substantially transform the Japanese components
utilized in those printers. The printers in that case were assembled
within China from five main components identified as the ``head'',
``mechanism'', ``circuit'', ``power source'', and ``outer case.''
The circuit, power source and outer case units were entirely
assembled or molded in Japan. The head and mechanical units were
manufactured in Japan but exported to China in an unassembled state.
All five units were exported to China where the head and mechanical
units were assembled with screws and screwdrivers. Thereafter, the
head, mechanism, circuit, and power source units were mounted onto
the outer case, also with screws and screwdrivers. It was stated
that the value of the Japanese-origin components utilized in the
printers far exceeded that of the Chinese-origin components. Based
upon the foregoing facts, we held that, even though the printers
were assembled to completion in China, the country of origin of the
completed printers for marking purposes was Japan. In making this
determination, we noted that the vast majority of the printer's
parts were of Japanese origin and that the operations performed in
China were only simple assembly operations.
As the cases set forth above demonstrate, in order to determine
whether a substantial transformation occurs when components of
various origins are assembled to form completed printers, CBP
considers the totality of the circumstances and makes such decisions
on a case-by-case basis. The country of origin of the printer's
components, 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.
As applied to the facts of this case, we find that the assembled
Canon iRC3200 multi-function printer is a product of Japan for
purposes of U.S. Government procurement. In making this
determination, we note that a substantial portion of the printer's
individual components and subassemblies are of Japanese origin. You
have described a number of these individual components and
subassemblies as the ``most complex'', ``key'', and ``essential'' of
the printer. In this regard, we recognize that, in addition to the
Japanese subassemblies, certain critical Japanese-origin parts are
incorporated into the Chinese subassemblies, namely the reader
scanner unit and the control panel unit. Furthermore, we find that
the processing that occurs in Japan is complex and meaningful,
requires the assembly of a large number of components, and renders a
new and distinct article of commerce that possesses a new name,
character, and use.
Holding
Based upon the facts of this case, we find that the processing
in Japan substantially transforms the components of Chinese origin.
Therefore, the country of origin of the Canon iRC3200 printer is
Japan for purposes of U.S. Government procurement.
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,
Acting Assistant Commissioner, Office of Regulations and Rulings.
[FR Doc. 04-6290 Filed 3-22-04; 8:45 am]
BILLING CODE 4820-02-P