[Federal Register Volume 69, Number 56 (Tuesday, March 23, 2004)]
[Notices]
[Pages 13577-13580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6290]


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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