[Federal Register Volume 66, Number 61 (Thursday, March 29, 2001)]
[Notices]
[Pages 17222-17225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-7711]


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DEPARTMENT OF THE TREASURY

Customs Service


Notice of Issuance of Final Determinations Concerning 
Multifunctional Machines

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Notice of final determinations.

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SUMMARY: This document provides notice that Customs has issued two 
final determinations concerning the country of origin of certain 
multifunctional machines which are being offered for sale to the U.S. 
Government. Customs held in both determinations that the country of 
origin of the multifunctional machines is Japan.

DATES: The final determinations were issued on March 22, 2001. Any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of the final determinations within 30 days of March 29, 2001.

FOR FURTHER INFORMATION CONTACT: Burton Schlissel, Attorney-Advisor, 
Special Classification and Marking Branch, (202) 927-1034.

[[Page 17223]]


SUPPLEMENTARY INFORMATION: Notice is hereby given that on March 22, 
2001, pursuant to subpart B of part 177, Customs Regulations (19 CFR 
part 177, subpart B), Customs issued two final determinations 
concerning the country of origin of certain multifunctional machines 
which are being offered to the U.S. Government. The U.S. Customs ruling 
numbers are HQ 561568 and 561734. Copies of the final determinations 
are attached. The final determinations were issued under procedures set 
forth in 19 CFR 177, subpart B, which implements Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 251 1-18). Customs 
concluded in the two determinations that components imported into Japan 
are substantially transformed as a consequence of the assembly 
operations performed in Japan with numerous Japanese-origin parts, 
resulting in the multifunctional machines. Accordingly, the country of 
origin of the multifunctional machines is Japan. This document gives 
notice pursuant to Sec. 177.29, Customs Regulations (19 CFR 177.29), of 
the two final determinations. Any party-at-interest, as defined in 19 
CFR 177.22(d), may seek judicial review of the final determinations 
within 30 days of March 29, 2001.

    Dated: March 23, 2001.
Stuart P. Seidel
Assistant Commissioner, Office of Regulations and Rulings.

    March 22, 2001.

HQ 561734

CLA-02 RR:CR:SM 561734 BLS

    Category: Classification
Fusae Nara, Esq., Winthrop, Stimson, Putnam & Roberts, One Battery 
Park Plaza, New York, New York 10004-1490

RE: U.S. Government procurement; final determination; country of 
origin of multifunctional machine; printer, copier, facsimile 
machine; substantial transformation; Title III, Trade Agreements Act 
of 1979 (19 U.S.C. 2511 et seq.); 19 CFR 177.21 et seq.

    Dear Ms. Nara: This is in reference to your letter of November 
5, 1999, on behalf of your client, Sharp Electronics Corporation 
(``Sharp''), 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. 2511 et seq.), the Customs Service 
issues country of origin advisory rulings and final determinations 
regarding 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 America'' 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 a 
multifunctional machine, Model No. 6600J, which Sharp Corporation 
(``Sharp'') is offering for sale to U.S. Government agencies. 
Accordingly, Sharp is a party-at-interest within the meaning of 19 
CFR 177.22(d)(1), and is entitled to request this final 
determination.

Facts

    Sharp makes a multifunctional machine, Sharp Model Number FO-
6600J (``6600J''), which can function as a printer, copier, and fax 
machine. The 6600J will be sold to U.S. Government agencies. You 
note that the 6600 J is identical to the Model FO-6600 in structure, 
function and appearance, so that the service manual for Model FO 
6600, which is enclosed, may serve as a reference for the 6600J.
    You state that the 6600J is assembled in Japan with the use of 
Japanese and other foreign parts and components. Your letter 
included a bill of materials for this model, which indicates the 
countries from which each part, component, or subassembly is 
sourced. The bill of materials indicates that there are 227 parts/
components/units (``parts''). Based on the information provided in 
the bill of materials, 108 parts are sourced from Japan, 92 parts 
from Thailand, three parts from China, and 24 parts from other 
countries.
    The 6600J is assembled in Japan from eight subassemblies or 
units, each of which is also assembled in Japan. The subassemblies 
are as follows:
    (1) Scanner Unit, which you characterize as the heart of the 
machine, is built in Japan with 126 parts and components. In the 
assembly of the Scanner unit, the following processes take place:
     Scanner driver unit is assembled;
     Scanner frame unit is assembled using over 40 pieces of 
parts, including light emitting diode (``LED''), sensors, gears, 
rollers, etc.
     The panel unit is built by connecting a panel assembly 
from Thailand and a document guide upper unit of Japanese origin;
     The optical guide is built from a charge coupled device 
(``CCD''), PWB imported from Thailand, mirror, lens, and other 
imported and Japanese parts;
     The scanner unit is built by combining the panel unit, 
optical unit, document guide lower unit and scanner driver unit.
     After the assembly, the scanner unit is tested to 
confirm that it scans printed letters and images properly;
    (2) Printer Unit: The printer engine imported from China is 
assembled with 25 other parts and components into the printer unit. 
The assembly requires the connection of safety switches and cables 
to the printer engine.
    (3) Left Panel Unit: The left side panel includes the plastic 
cabinet panel, speaker, telephone handset, and hook switch PWB.
    (4) Power Supply Unit: The Power Supply PWB is produced in Japan 
and assembled with other parts and components to form a power supply 
unit, which is then incorporated into the upper chassis unit as 
described below.
    (5) Hopper Unit: Various parts and plastic components are 
assembled with a gear and springs to form the hopper assembly.
    (6) Upper Chassis Unit: The upper chassis unit is built with 
several PWBs, including control PWB unit, TEL LIU (telephone 
interface unit No. 1) PWB, interface PWB and line control PWB, all 
of which are imported from Thailand. Those PWBs are combined with 
the Japanese origin power supply unit, described above, and they are 
fastened onto a reinforced panel. The upper chassis unit holds the 
upper cassette of printing paper for Model No. FO-6600J.
    (7) Lower Chassis Unit: The lower chassis unit includes TEL LIU 
2 (telephone line interface unit No. 2) PWB, which is imported from 
Thailand. Combined with 28 parts on a reinforced panel, the lower 
chassis forms the cavity to hold the lower cassette of printing 
paper for Model No. FO-6600J.
    (8) Inner Tray Unit: The inner tray unit to hold printout 
documents are assembled from seven parts.
    In the final assembly, the above eight units or subassemblies 
built in Japan are assembled into a finished multifunctional machine 
with an additional 101 parts and components, including exterior 
panels. The upper chassis unit and lower chassis unit are connected 
to make the mechanism unit. The scanner unit, printer unit, hopper 
unit and inner tray unit are connected to the top of the mechanism 
unit. Then a front cabinet is connected to the front of the 
mechanism unit. After all units have been connected, cables, labels 
and other additional parts are attached to the mechanism unit to 
complete Model No. FO-6600J.
    Finally, using sophisticated inspection equipment such as an 
exchanger, withstanding tester, sending level meter and dial tester, 
the finished product undergoes an extensive inspection procedure to 
confirm that all of its functions as a copier, computer printer, 
telephone and facsimile machine operate properly. The printing and 
scanning functions are tested to ensure that letters and images are 
properly scanned and printed. The computer printer function is 
tested to confirm that print commands from a computer are properly 
handled. The telecommunications functions are tested to ensure 
proper transmission and reception of telephone and facsimile 
signals. Then, Model No. FO-6600J is cleaned and packaged with 
product manual, trays, and a toner cartridge for shipment to the 
United States.
    You request a final determination pursuant to 19 CFR 177.25 that 
the country of origin is Japan.

Issue

    What is the country of origin of the multifunctional machine, 
Sharp Model Number FO-6600J?

Law and Analysis

    As prescribed under Title III of the Trade Agreements Act, the 
origin of an article not wholly the growth, product, or manufacture 
of a single country is to be determined by the rule of substantial 
transformation. 19 U.S.C. Sec. 2518(4)(B). An article is not a 
product of a country unless it has been substantially transformed 
there into a new and different

[[Page 17224]]

article of commerce with a name, character or use different from 
that of the article or articles from which it was transformed. 19 
U.S.C. Sec. 2518(4)(B)(ii); see also United States v. Gibson-Thomsen 
Co. Inc., 27 C.C.P.A. 267 (CAD. 98) (1940). In determining whether 
the combining of parts or materials constitutes a substantial 
transformation, the 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 CIT 204, 573 
F.Supp. 1149(1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984).
    Additionally, if the manufacturing or combining process is 
merely 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, 1029(1982), affd, 702 
F.2d 1022 (Fed. Cir. 193). In Customs Service Decision (``C.S.D.'') 
85-25 (September 25, 1984), Customs set forth the standards to 
determine when an assembly operation constitutes a substantial 
transformation. To substantially transform an article, an assembly 
must be complex and meaningful as opposed to a simple assembly. 
Factors to be considered include the time, cost and skill involved, 
the number of components assembled and the number of operations. See 
also Texas Instruments v. United States, 681 F.2d. 778 (CCPA 1982).
    In support of your assertion that the 6600J is substantially 
transformed in Japan, you cite Headquarters Ruling Letter (``HQ'') 
560433 (September 19, 1997), which involved the assembly of audio/
video receivers from foreign components and 16 foreign 
subassemblies. In that case, Customs found that the components and 
subassemblies lost their separate identities and became an integral 
part of the finished audio/video receiver as a result of the 
manufacturing operations. The character of the foreign components 
was also changed as a result of the assembly in that the finished 
article, an audio/video receiver, is visibly different than any of 
the individual foreign components and it acquires a new use in that 
it can receive and process audio and video signals.
    In reaching this conclusion, Customs cited to several prior HQs, 
which you also cite as support for finding that the 6600J is 
substantially transformed as a result of complex assembly operations 
in Japan. See HQ 734045 (October 8,1991) (assembly of subassemblies 
and other components into a lap top computer is a substantial 
transformation); HQ 732170 (January 5,1990) (television cabinet 
containing a tuner, speaker and circuit board was substantially 
transformed when assembled with domestic components into a finished 
television receiver); HQ 711967 (March 17, 1980) (television sets 
assembled in Mexico with components from Korea and picture tubes, 
cabinets, and additional wiring from the U.S. were products of 
Mexico for country of origin marking purposes).
    Based on the information provided and consistent with the court 
decisions and Customs rulings cited above, we find that the 
components imported into Japan that are used in the production of 
the 6600J multifunctional machine in the manner described above are 
substantially transformed as a result of the operations performed. 
Eight separate subassemblies are first assembled in Japan and then 
are joined together to create the finished multifunctional machine. 
The more than 227 parts and components, which are assembled in 
Japan, lose their separate identities when they become integral 
parts of the multifunctional machine. The finished machine clearly 
has a name, character and use distinct from the individual 
components from which it is made. Therefore, we find that the 
country of origin of the Model No. FO-6600J multifunctional machine 
is Japan.

Holding

    Based on the facts presented, the non-Japanese parts, which are 
further processed and assembled into the multifunctional machine in 
Japan, in the manner described above, are substantially transformed. 
Accordingly, the country of origin of the Model No. FO-6600J 
multifunctional machine is Japan. 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 
Customs reexamine the matter anew and issue a new final 
determination. Pursuant to 19 CFR 177.30, any party-at-interest, as 
defined at 19 CFR 177.22(d), 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,

Stuart P. Seidel,
Assistant Commissioner Office of Regulations and Rulings.
March 22, 2001.

HQ 561568

CLA-02 RR:CR:SM 561568 MFC

    Category: Classification.

Fusae Nara, Esq., Winthrop, Stimson, Putnam & Roberts, One Battery 
Park Plaza, New York, New York 10004-1490.

RE: U.S. Government procurement; final determination; country of 
origin of multifunctional machine; printer, copier, facsimile 
machine; substantial transformation; Title III, Trade Agreements Act 
of 1979 (19 U.S.C. 2511); 19 CFR 177.21 et seq.

    Dear Ms. Nara: This is in reference to your letter of November 
5, 1999, on behalf of your client, Sharp Electronics Corporation 
(``Sharp''), 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. 2511 et seq.), the Customs Service 
issues country of origin advisory rulings and final determinations 
regarding 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 America'' 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 multifunctional machines which Sharp Corporation (``Sharp'') 
assembles in Japan from Japanese and other foreign components and 
which are being offered for sale to U.S. Government agencies. 
Accordingly, Sharp is a party-at-interest within the meaning of 19 
CFR 177.22(d)(1), and is entitled to request this final 
determination.
    Enclosed with the request were service manuals for Facsimile 
Model FO-4700 and a brochure and service manual for Facsimile Model 
FO-6600.

Facts

    Sharp makes a multifunctional machine, Sharp Model Number FO-
4700J (``J model''), which can function as a printer, copier, and 
fax machine. The J model will be sold to U.S. Government agencies. 
You note that the J model is identical to the Model FO-4700 in 
structure, function and appearance, so that the service manual for 
Model FO-4700 may serve as a reference for the J model. You also 
note that the Model FO4700 is sold to the general U.S. market and is 
made in Thailand, while the J model will be sold to the U.S. 
Government and is assembled in Japan.
    You state that the J model is assembled in Japan with the use of 
Japanese and other foreign parts and components. Your letter 
included a bill of materials for the J model, which indicates the 
countries from which each part, component, or subassembly is 
sourced. The bill of materials indicates that there are 302 parts/
components/units (``parts''). Based on the information provided in 
the bill of materials, 155 parts are sourced from Thailand, 144 
parts are sourced from Japan, and three parts are sourced from 
China.
    The J model is assembled in Japan from seven subassemblies or 
units, each of which is also assembled in Japan. The subassemblies 
are as follows:
    (1) Scanner Unit, which you characterize as the heart of the 
machine, is built in Japan with 99 parts. In the assembly of the 
scanner unit, the following processes take place:
     Contact image sensor (CIS) is assembled;
     Scanner frame unit is assembled using over 50 parts, 
including CIS unit, scanner drive unit, gears, rollers, etc.;
     Panel unit is built by connecting a panel assembly from 
Thailand and a document guide upper unit of Japanese origin;
     Scanner unit is built by combining the scanner frame 
unit, panel unit and document guide lower unit;
     After the assembly, the scanner unit is tested to 
confirm that it scans printed letters and images properly;
    (2) Speaker Unit: A speaker is soldered to connector wires.
    (3) Upper Cover Guide Unit: More than 30 components including 
hopper guides and sensors are assembled together.
    (4) Printer Unit: Assembly of the printer engine imported from 
China with 10 other parts and components. The assembly requires the 
connection of safety switches and cables to the printer engine.
    (5) Left Panel Unit: The cabinet unit panel includes the plastic 
cabinet panel, holders and hooks, and forms the space to hold the 
printer unit.

[[Page 17225]]

    (6) Power Supply Unit: The power supply PWB (printed wiring 
board) unit is assembled with other parts and components to form a 
power supply unit, which is then incorporated into the printer unit.
    (7) Paper Feed Tray Unit: Various parts and plastic components 
are assembled to form the paper feed tray unit.
    In the final assembly in Japan, the above seven units or 
subassemblies are assembled into a finished multifunctional machine 
with an additional 90 parts and components. The scanner unit and 
power supply unit are connected to make the mechanism unit. The 
speaker unit, printer unit, upper cover unit and paper feed tray 
unit are connected to the top of the mechanism unit. Then, the front 
and rear cabinets are connected to the mechanism unit. After all 
units have been connected, cables, labels, and other additional 
parts are attached to the mechanism unit to complete the machine. 
You state that the processes in Japan require a number of skilled 
workers and sophisticated equipment.
    The finished product undergoes inspections to ensure that it 
functions as a copier, computer printer, telephone and facsimile 
machine. The J model is then cleaned and packaged with product 
manuals, trays, and a toner cartridge for shipment to the U.S.
    Your request seeks a final determination pursuant to 19 CFR 
177.25 that the country origin is Japan.

Issue

    What is the country of origin of the multifunctional machine, 
Sharp Model Number FO-4700J?

Law and Analysis

    As prescribed under Title III of the Trade Agreements Act, the 
origin of an article not wholly the growth, product, or manufacture 
of a single country is to be determined by the rule of substantial 
transformation. 19 U.S.C. 2518(4)(B). An article is not a product of 
a country unless it has been substantially transformed there into a 
new and different article of commerce with a name, character or use 
different from that of the article or articles from which it was 
transformed. 19 U.S.C. 2518(4)(B)(ii); see also United States v. 
Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267 (CAD. 98) (1940). In 
determining whether the combining of parts or materials constitutes 
a substantial transformation, the 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 CIT 204, 573 F.Supp. 1149(1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 
1368 (1984).
    Additionally, if the manufacturing or combining process is 
merely 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. 1026,1029(1982), affd, 702 
F.2d 1022 (Fed. Cir. 1983). In Customs Service Decision (``C.S.D.'') 
85-25 (September 25, 1984), Customs set forth the standards to 
determine when an assembly operation constitutes a substantial 
transformation. To substantially transform an article, an assembly 
must be complex and meaningful as opposed to a simple assembly. 
Factors to be considered include the time, cost and skill involved, 
the number of components assembled and the number of operations. See 
also Texas Instruments v. United States, 681 F.2d. 778 (CCPA 1982).
    In support of your assertion that the J model is substantially 
transformed in Japan, you cite Headquarters Ruling Letter (``HQ'') 
560433 (September 19, 1997), which involved the assembly of audio/
video receivers from foreign components and 16 foreign 
subassemblies. Customs found that the components and subassemblies 
lost their separate identities and became an integral part of the 
finished audio/video receiver as a result of the manufacturing 
operations. The character of the foreign components was also changed 
as a result of the assembly in that the finished article, an audio/
video receiver, is visibly different than any of the individual 
foreign components and it acquires a new use in that it can receive 
and process audio and video signals. In reaching this conclusion, 
Customs cited to several prior HQs, which you also cite as support 
for finding that the J model is substantially transformed as a 
result of complex assembly operations in Japan. See HQ 734045 
(October 8,1991) (assembly of subassemblies and other components 
into a lap top computer is a substantial transformation); HQ 732170 
(January 5,1990) (television cabinet containing a tuner, speaker and 
circuit board was substantially transformed when assembled with 
domestic components into a finished television receiver); HQ 711967 
(March 17, 1980) (television sets assembled in Mexico with 
components from Korea and picture tubes, cabinets, and additional 
wiring from the U.S. were products of Mexico for country of origin 
marking purposes).
    Based on the information provided and consistent with the court 
decisions and Customs rulings cited above, we find that the 
components imported into Japan that are used in the production of 
the J model multifunctional machine in the manner described above 
are substantially transformed as a result of the operations 
performed. Seven separate subassemblies are first assembled in Japan 
and then are joined together, along with an additional 90 parts and 
components, to create the finished J model. The more than 300 parts 
and components which are assembled in Japan lose their separate 
identities when they become integral parts of the multifunctional 
machine. The finished machine clearly has a name, character and use 
distinct from the individual components from which it is made. 
Therefore, we find that the country of origin of the J model 
multifunctional machine is Japan.
    You asked that our determination also be applied to similar 
multifunctional machines, Model Nos. FO-5550J, FO-5700J, and FO-
5800J, which are produced using ``virtually identical'' production 
processes as the J Model at issue. To the extent that the processing 
of these other models is the same as that described above, this 
ruling applies.

Holding

    Based on the facts presented, the non-Japanese parts, which are 
further processed and assembled into the multifunctional machine in 
Japan, in the manner described above, are substantially transformed. 
Accordingly, the country of origin of the multifunctional machine, 
the J model, is Japan. 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 
Customs reexamine the matter anew and issue a new final 6 
determination. Pursuant to 19 CFR 177.30, any party-at-interest, as 
defined at 19 CFR 177.22(d), 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,

Stuart P. Seidel,
Assistant Commissioner, Office of Regulations and Rulings.
[FR Doc. 01-7711 Filed 3-28-01; 8:45 am]
BILLING CODE 4820-02-P