[Federal Register Volume 67, Number 225 (Thursday, November 21, 2002)]
[Notices]
[Pages 70299-70300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29567]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Customs Service


Notice of Issuance of Final Determination Concerning Laser 
Printer Engines

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

ACTION: Notice of final determination.

-----------------------------------------------------------------------

SUMMARY: This document provides notice that Customs has issued a final 
determination concerning the country of origin of certain laser printer 
engines which are sold to OEM's to be incorporated into laser printers 
which will be offered to the United States Government. The final 
determination found that, based upon the facts presented, the country 
of origin of laser printer engines is Japan.

DATES: The final determination was issued on November 8, 2002. 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 November 21, 2002.

FOR FURTHER INFORMATION CONTACT: Karen S. Greene, Special 
Classification and Marking Branch, Office of Regulations and Rulings 
(202-572-8838).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on November 8, 
2002, pursuant to subpart B of part 177, Customs Regulations (19 CFR 
part 177, subpart B), Customs issued a final determination concerning 
the country of origin of certain laser printer engines which are sold 
to OEM's to be incorporated into printers offered to the United States 
Government . The U.S. Customs ruling number is HQ 562502. 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 of the laser scanner unit subasssembly in Japan 
and the final assembly in Japan of the laser scanner unit with other 
components to create certain laser printer engines results in a 
substantial transformation of the components imported into Japan. 
Accordingly, the country of origin of the printer engines is Japan.
    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, 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.
    Any party-at-interest, as defined in 19 CFR 177.22(d), may seek 
judicial review of this final determination within 30 days of November 
21, 2002.

    Dated: November 8, 2002.
Glen E. Vereb,
Acting Assistant Commissioner, Office of Regulations and Rulings.

Attachment
HQ 562502
MAR-05 RR:CR:SM 562502 KSG
CATEGORY: Marking
Harvey M. Applebaum, Esq.,
Covington & Burling, 1201 Pennsylvania Avenue NW., Washington, DC 
20004-2401.
Re: Country of origin of computer laser printer engines; substantial 
transformation;19 CFR 177.22; procurement

    Dear Mr. Applebaum: This is in response to your letter dated 
June 4, 2002, on behalf of Canon, Inc., requesting a final 
determination of origin pursuant to 19 CFR 177.22(c) regarding U.S. 
Government procurement of certain laser printer engines assembled in 
Japan.

Facts

    Canon, Inc., is the foreign manufacturer and exporter of the 
printer engine and therefore, a party-in-interest as defined in 19 
CFR 177.22(d).
    This case involves the Canon P1070 printer engine that is the 
principal part of laser beam printers. Canon will sell the printer 
engines exclusively to OEM's. The printer engine carries out most of 
the electrophotographic process, including the exposure function.
    The printer engine is composed of three subassemblies; the laser 
scanner unit, the transfer feeder unit and outer covers. The laser 
scanner unit is assembled in Japan using components manufactured in 
Japan and other countries. The laser scanner unit performs the 
exposure function. The transfer

[[Page 70300]]

feeder unit is assembled in China using components from Japan, China 
and Thailand. The transfer feeder unit carries out the transfer and 
fixing functions. The outer covers are manufactured in China.
    The first set of assembly steps for the laser scanner unit in 
Japan completes the laser unit subcomponent. Using setting 
equipment, a laser chip and collimator lens unit are attached to the 
laser unit printed circuit board (``PCB''). An operator solders the 
terminal of the laser chip to the laser unit PCB. An operator then 
adjusts the power of the laser beam radiated from the laser unit and 
checks the laser unit exterior.
    Following completion of the laser unit, an operator attaches 
additional component parts to an optical case: using screws, an 
operator attaches the beam detect (``BD'') sensor unit, scanner 
motor unit, laser unit and BD mirror; using a fixing spring, an 
operator attaches a reflection mirror; and using ultraviolet 
adhesives, an operator attaches a toric lens, fo lenses and a 
cylindrical lens. An operator measures and adjusts the power of the 
laser beam and jitter (distortion of rotating shaft of scanner 
motor).
    Then, an operator determines the starting point of the laser 
scanning. Finally, an operator attaches to the laser scanner unit a 
BD sensor unit moltplane and motor wire harness moltplane (by seal), 
a connector (by hand) and an outer cover (with screws). An operator 
then checks the exterior of the laser scanner unit. You advised that 
the assembly of the laser scanner unit requires precision.
    The transfer feeder unit transfers the toner on the 
photosensitive drum onto print paper. Assembly of the transfer 
feeder unit in China involves many steps and is a time-consuming 
process. This assembly includes attachment of the following 
components to a mold frame unit: paper pick-up unit, paper feed 
roller, registration roller unit, transfer charging roller unit, DC 
controller unit, pick-up drive unit, main drive unit, fixing unit 
and delivery roller unit. An operator then performs an electrical 
check of the transfer feeder unit. Using screws, an operator next 
attaches an outer cover and front cover to the transfer feeder unit. 
Finally, an operator checks the paper feed function of the transfer 
feeder unit.
    The final assembly of the laser beam printer engine occurs in 
Japan. Using screws, an operator fixes the laser scanner unit to the 
transfer feeder unit. An operator attaches the following components 
by hand to the laser scanner unit and transfer feeder unit: a laser 
wire harness, scanner motor wire harness, and BD wire harness. An 
operator then checks the electrical function of the engine to meet 
internal electrical safety requirements. An operator next attaches 
an auxiliary cover and display wire harness along with an upper 
cover and panel unit. Following the engine assembly, an operator 
evaluates the image of test pattern printouts to confirm that the 
printer engine meets printing precision requirements. You indicate 
that precise assembly is required for the printer engine.

Issue

    Whether the printer engines are substantially transformed in 
Japan so that they become products of Japan for U.S. Government 
procurement purposes.

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.), the Customs Service 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 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 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.
    Also see 19 CFR 177.22(a).
    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. See Uniroyal Inc. v. United States, 
3 CIT 220, 542 F. Supp. 1026 (CIT 1982). Assembly operations which 
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, and C.S.D. 90-97.
    In Texas Instruments Inc. v. United States, 681 Fed 2d 778 (CCPA 
1982), the court held that the assembly of encapsulated integrated 
circuits in Taiwan from materials imported from the U.S. constituted 
a double substantial transformation for the purposes of the 
Generalized System of Preferences (``GSP''). The imported goods 
involved in the case were electronic camera parts called ``cue 
modules'' that consist of a flexible circuit board with three 
integrated circuits attached. The court determined that silicon 
slices were imported into Taiwan and then further manufactured in 
Taiwan into IC chips. The IC chips were then manufactured into 
finished IC's. The court noted that the question presented was ``a 
mixed question of technology and customs law. * * *'' The court 
concluded that the finished IC's were ``the result of extensive 
manufacturing operations in Taiwan which converted materials into 
articles, as distinguished from mere assembly * * *'' and determined 
that a double substantial transformation had occurred.
    Customs ruled in Headquarters Ruling Letter (``HRL'') 561734, 
dated March 23, 2001, 66 Fed. Reg. 17222, that Sharp multifunctional 
machines (printer, copier and fax machine) assembled in Japan were a 
product of Japan for procurement purposes. The machines were 
comprised of 227 parts (108 parts sourced from Japan, 92 parts from 
Thailand, 3 parts from China, and 24 parts from other countries) and 
eight subassemblies, each of which was also assembled in Japan. 
Further, the scanner unit (one of the eight subassemblies) which was 
assembled in Japan was characterized as ``the heart of the 
machine.'' Also see HRL 561568, dated March 22, 2001, 66 Fed. Reg. 
17222.
    In HRL 560433, dated September 19, 1997, Customs held that the 
assembly in the United Kingdom of audio/video stereo receivers from 
16 subassemblies and other components originating from various 
countries resulted in a substantial transformation. Customs noted in 
that ruling that numerous skilled workers assembled the stereo 
receivers from numerous components and hundreds of raw materials. In 
HRL 734045, dated October 8, 1991, Customs held that foreign 
subassemblies and other components imported into Hong Kong which 
were processed and assembled with other domestic components to make 
laptop and notebook personal computers were substantially 
transformed as a result of the Hong Kong operations.
    Based on the facts in this case and consistent with HRL 561734 
and HRL 560433, we find that the printer engines are substantially 
transformed in Japan. When taken together, the manufacture of the 
laser scanner unit and final assembly of the printer engine in Japan 
is complex and meaningful. There are numerous parts involved in the 
assembly of the laser scanner unit and the final assembly of the 
printer engine. The assembly requires precision and trained workers. 
Further, as noted in HRL 561734, the scanner unit is an integral 
part of the printer engine. The name, character and use of the 
subassemblies and parts imported into Japan change as a result of 
the processing and other assembly operations performed in Japan. 
Therefore, pursuant to 19 U.S.C. 2518(4)(B), we find that the 
country of origin of the printer engines is Japan.

Holding

    Based on the facts presented, the components imported into Japan 
that are used in the manufacture of the computer printer engines 
involved in this case are substantially transformed in Japan. 
Accordingly, pursuant to 19 U.S.C. 2518(4)(B), the country of origin 
of the printer engines 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.
    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,
Glen E. Vereb,
Acting Assistant Commissioner, Office of Regulations and Rulings.
[FR Doc. 02-29567 Filed 11-20-02; 8:45 am]
BILLING CODE 4820-02-P