[Federal Register Volume 72, Number 152 (Wednesday, August 8, 2007)]
[Notices]
[Pages 44566-44568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15484]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
Notice of Issuance of Final Determination Concerning Printer
Cartridges
AGENCY: U.S. 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 printer cartridges which may be offered to
the United States Government under an undesignated government
procurement contract. CBP has concluded that, based upon the facts
presented, the operations performed at the United States facility do
not result in a substantial transformation of the goods. Therefore, the
goods will not be considered to be products of the United States.
DATES: The final determination was issued on August 2, 2007. 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 August 8, 2007.
FOR FURTHER INFORMATION CONTACT: Gerry O'Brien, Valuation and Special
Programs Branch, Regulations and Rulings, Office of International Trade
(202-572-8792).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on August 2,
2007, 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 printer cartridges which may be offered to
the United States Government under an undesignated government
procurement contract. This final determination, in HQ H009107, was
issued at the request of Nukote International, 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).
In the final determination, CBP concluded that, based upon the
facts presented, the operations performed at the United States facility
do not result in a substantial transformation of the goods. Therefore,
the goods will not be considered to be products of the United States.
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, CBP Regulations (19 CFR 177.30), provides 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: August 2, 2007.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of
International Trade.
HQ H009107
August 2, 2007.
MAR-2-05 OT:RR:CTF:VS H009107 GOB
CATEGORY: Marking.
G. Matthew Koehl, Esq., Kirkpatrick & Lockhart Preston Gates Ellis
LLP., 1735 New York Avenue NW., Suite 500, Washington, DC 20006-
5221.
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of
Origin of Printer Cartridges
Dear Mr. Koehl:
This is in response to your letter of March 26, 2007, requesting
a final determination on behalf of Nukote International, Inc.
(``Nukote''), pursuant to subpart B of Part 177, Customs and Border
Protection (``CBP'') 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.), CBP issues country
of origin advisory rulings and final determinations as to whether an
article is or would be a product of a designated 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
certain laser printer cartridge models. We note that Nukote is a
party-at-interest within the meaning of 19 CFR 177.22(d)(1) and is
entitled to request this final determination.
FACTS
You request a final determination with respect to three
manufacturing process scenarios and resulting end products. The
first scenario involves laser toner cartridges for color laser
printers, including both color and monochrome (black) cartridges.
The second scenario involves monochrome (black) laser toner
cartridges for conventional laser printers with an electronic chip.
The third scenario involves monochrome (black) laser toner
cartridges for conventional laser printers without an electronic
chip.
You describe the first process as follows. Nukote collects empty
toner cartridges from end users at collection sites in the United
States and, to a substantially lesser extent, in Canada, Singapore,
the United Kingdom, Hong Kong and China. Nukote also purchases used
printer cartridges from United States-
[[Page 44567]]
based brokers. These used printer cartridges were originally
manufactured at various locations in different countries. Nukote has
no process for identifying the country of origin of the empty
cartridges.
Nukote then sends the cartridges to a foreign country, where
they are sorted to remove units which cannot be remanufactured. This
process identifies cartridge type and printer type, and removes
damaged and broken parts and units that cannot be processed. The
cartridges which can be remanufactured are then shipped to a
different foreign facility, where Nukote has direct management and
operational responsibility and where the operations performed are
based on proprietary specifications developed by Nukote. At this
facility, the used cartridges are split open, disassembled and
separated into three sub-assemblies--the developer section, the
toner hopper, and the waste hopper. The original doctor blade is
cleaned and the original primary charge roller is sandblasted and
recoated. The drum is removed from the waste hopper, which, along
with the toner hopper, is scraped to remove plastic flash and
residual foam seal material, and then blown out to remove residual
toner from the original manufacturer. New foam seals are installed
on the toner hopper and waste hopper units. New waste hopper drums,
recovery blades and wiper blades are also installed. After being
rebuilt with a clean blade, roller and gears, the developer section
is temporarily assembled with a ``host'' toner section (the ``host''
hopper is used repeatedly for this test; it is not a part of an
operating toner cartridge) and the rebuilt waste hopper. The
temporarily-assembled unit is inserted in a printer which has been
``hot-wired'' to bypass the need for an electronic chip, which has
not been installed. The cartridge then undergoes a test print to
check that the seals do not leak and are capable of producing
acceptable quality print. This mechanical test does not evaluate
whether the cartridge will operate on its own in a printer. It could
not do so, as the cartridge has not been charged with toner and the
electronic chip has not been installed; without the chip, the
cartridge is not operable, as it cannot communicate with the
printer. The ``host'' hopper is then removed and the three main sub-
assembly components (the developer section, the toner hopper, and
the waste hopper) are prepared for shipment to Nukote's Rochester
facility.
Final assembly of the printer cartridges occurs at Nukote's
Rochester, New York facility. You state that the substantial
majority of the operations at this facility are performed by skilled
Nukote quality control and technical operations staff, which must
complete a minimum of three to four weeks of training in order to
become certified to engage in this activity. These operations
consist of the following: (1) Incoming Quality Inspection. You state
that the goods arrive without the electronic chip and toner that are
necessary for the printer cartridge to perform any useful function.
(2) Filling and Sealing. The toner hopper is filled with new
chemical toner and the hopper is sealed with a plug. The toner in
the first manufacturing process scenario is either of U.S. or
foreign origin. (3) Mechanical Assembly. The waste hopper, developer
section and toner hopper are assembled with screws, springs and
clips. (4) Testing. Nukote ``process tests'' ten percent of the
units for print quality and leakage. All of this testing is
performed by a Nukote quality control technician and/or quality
engineer. Nukote also ``life tests'' one to two percent of the
units. During this process, all seals, clips, blades, PCRs, and
rollers are visually inspected for cleanliness and proper assembly.
(5) Inspection. One hundred percent of the units are visually
inspected against a defined inspection criteria. (6) External
Cleaning. The exterior of the units is cleaned by a pneumatic air
line, a toner dust cloth and a dust collection device. (7)
Installation of a Computer Chip. A custom-engineered and IP-
protected chip, developed and manufactured in the United States, is
manually installed in each unit. The chip enables the printer
software to recognize the correct laser cartridge and permits the
printer to tabulate the page count and toner volume level. The
cartridge is non-functional without this chip. (8) Advance
Preparation for Shipment. A shipping protector, lot control tag and
shipping seals are applied. (9) Packaging for Shipment. The unit is
placed in a shipping bag, protective endcaps are installed, an
instruction sheet is added, a customer label is applied, and the
unit is sealed in a customer-specific box. (10) Skidding and
Shipment. The units are placed on a skid and sent to the shipping
warehouse for movement to a distribution center in Tennessee. The
cost of U.S. origin components for this scenario will vary from
approximately 21% to 74%, depending on whether the toner is of U.S.
or foreign origin.
The second process scenario involves conventional monochrome
printer cartridges with computer chips. This process is
substantially the same as the first process, with the following
exceptions. The disassembly process at the foreign facility is
slightly less complex because the cartridge itself is less complex
than a chemical toner color cartridge. The toner is always of U.S.
origin and is much less expensive than the toner for the color
cartridge. The cost of the drum is considerably less than in the
first scenario. The cost of U.S. origin components will range from
approximately 69% to 76%, depending on whether certain components
are of U.S. or foreign origin. As in the first scenario, a custom-
engineered and IP-protected chip, developed and manufactured in the
United States, is manually installed in each unit. The chip enables
the printer software to recognize the correct laser cartridge and
permits the printer to tabulate the page count and toner volume
level.
The third manufacturing process scenario is different from the
second only in that there is no computer chip in the third scenario.
The cost of U.S. origin components will range from approximately 60%
to 68%, depending on whether certain components are of U.S. or
foreign origin. As in the second scenario, the toner is always of
U.S. origin.
Issue
What is the country of origin of the subject laser printer
cartridge models for the purpose of U.S. Government procurement?
Law and Analysis
Pursuant to 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 as to 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 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.
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. United States, 573 F. Supp. 1149 (Ct. Int'l Trade 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. 89-118, C.S.D. 90-51,
and C.S.D. 90-97. In C.S.D. 85-25, 19 Cust. Bull. 844 (1985), CBP
held that for purposes of the Generalized System of Preferences
(``GSP''), 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 resulted 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. Whether an operation is complex and
meaningful depends on the nature of the operation, including the
number of components assembled, number of different operations,
time, skill level required, attention to detail, quality control,
the value added to the article, and the overall employment generated
by the manufacturing process.
In order to determine whether a substantial transformation
occurs when components of various origins are assembled into
completed products, CBP considers the totality of the circumstances
and makes such determinations on a case-by-case basis. The country
of origin of the item's components, extent of the processing that
occurs within a country, and whether such processing renders a
product with a new name, character, or use are primary
considerations in such cases. Additionally, factors such as the
resources expended on product design and development, extent and
nature of post-
[[Page 44568]]
assembly inspection and testing procedures, and worker skill
required during the actual manufacturing process will be considered
when determining whether a substantial transformation has occurred.
No one factor is determinative.
Nukote collects empty toner cartridges from end users at
collection sites in the United States and, to a substantially lesser
extent, in Canada, Singapore, the United Kingdom, Hong Kong and
China. Nukote also purchases used printer cartridges from United
States-based brokers. These used printer cartridges were originally
manufactured at various locations in different countries. The
cartridges are sorted at one foreign location and are then processed
at a second foreign location and subsequently in the United States.
At the second foreign location, the cartridges are split open,
disassembled, and separated into three sub-assemblies. Worn
components of the sub-assemblies are replaced and made operational
again. This work constitutes disassembly of the used cartridges, as
well as certain preparation for the processing which will occur in
the United States. At this point the goods are tested. It is claimed
that the sub-assemblies are not functional without the chip which is
later installed in the United States (at least in the two scenarios
where the chip is involved).
The processing which occurs at Nukote's Rochester, New York
facility includes inspection, filling and sealing, mechanical
assembly, testing, cleaning, installation of a computer chip,
preparation and packaging for shipment, and shipment. We do not
believe these operations are complex enough to result in a
substantial transformation of the sub-assemblies. The sub-assemblies
are essentially made functional again at the foreign facility. While
the chip which makes the cartridge work (in two of the three
scenarios) is inserted in the United States, we find that the
bringing together of the sub-assemblies in the United States does
not result in a substantial transformation of the goods. For
example, these operations in the United States are not as
significant as those in NY G87305, where the cartridges were
completely disassembled; salvageable parts were sorted into bins,
cleaned, and reconditioned; major components, including the OPC drum
and toner were replaced; and other new components were added.
In HQ 561232, dated April 20, 2004, CBP considered the steps
necessary to create a fully functional FM tuner, including
adjustments to the oscillator coil, two filter coils, and the
demodulator coil, selecting and installing two resistors, and
enclosing the item in a metal case. CBP held that ``while these
additional operations are required to create a fully functional
product, and are of a certain complexity requiring technical skill,
they do not change the essential character of the PCBA [printed
circuit board assembly], which at this stage of production has the
characteristics of the imported FM tuner but has not quite achieved
full functionality.'' Therefore, CBP held that there was not a
second substantial transformation in the Philippines. We believe
that HQ 561232 is relevant here as the imported sub-assemblies
possess the characteristics of the printer cartridge but, as
imported, have not achieved full functionality.
Holding
The operations performed at Nukote's Rochester, New York
facility do not result in a substantial transformation of the
cartridges. Therefore, the cartridges will not be considered to be
products of the United States.
Sincerely,
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of
International Trade.
[FR Doc. E7-15484 Filed 8-7-07; 8:45 am]
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