[Federal Register Volume 73, Number 21 (Thursday, January 31, 2008)]
[Notices]
[Pages 5862-5864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-1685]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection


Notice of Issuance of Final Determination Concerning Printers

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 printers which may be offered to the 
United States Government under an undesignated government procurement 
contract. CBP has concluded that the operations performed in each of 
two scenarios will result in the goods being considered products of the 
Netherlands.

DATES: The final determination was issued on January 25, 2008. 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 January 31, 2008.

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 January 25, 
2008, pursuant to subpart B of part 177, CBP Regulations (19 CFR part 
177, subpart B), CBP issued a final determination concerning the 
country of origin of certain printers which may be offered to the 
United States Government under an undesignated government procurement 
contract. This final determination, in HQ H013150, was issued at the 
request of Oc[eacute] North America 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 the operations performed in each of 
two scenarios will result in the goods being considered products of the 
Netherlands.
    Section 177.29, CBP 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: January 25, 2008.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

HQ H013150

January 25, 2008

MAR-2-05 OT:RR:CTF:VS H013150 GOB

Category: Marking
David M. Murphy, Esq. Grunfeld, Desiderio, Lebowitz, Silverman & 
Klestadt LLP, 399 Park Avenue, 25th Floor, New York, NY 10022-4877

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 Printers

    Dear Mr. Murphy:
    This is in response to your letter dated May 30, 2007, which we 
received by facsimile transmission on June 19, 2007, requesting a 
final determination on behalf of Oc[eacute] North America 
(``Oc[eacute]''), pursuant to subpart B of Part 177, Customs and 
Border Protection (``CBP'') Regulations (19 CFR 177.21 et seq.). We 
received your revised submission on July 17, 2007. Pursuant to our 
request for additional information, you submitted correspondence of 
September 28, 2007, November 2, 2007, and November 26, 2007.
    Under the pertinent regulations, which implement Title III of 
the Trade Agreements Act of 1979 (``TAA''), 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. You state that Oc[eacute] will be the importer of the 
subject merchandise.
    This final determination concerns the country of origin of 
certain ``Cobalt'' printers. We note that Oc[eacute] 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 describe the pertinent facts as follows. The Cobalt printer 
is a newly-designed wide-format printer, incorporating revolutionary 
print technology which was developed by Oc[eacute] Technologies BV 
in the Netherlands. The printer will be capable of printing wide 
format color documents using Oc[eacute]'s advanced imaging devices. 
The subassemblies for this printer are: Imaging devices; upper 
module; printer cartridges; cut and receiving unit; frame lower 
unit; power supply unit; controller, including embedded software; 
and media drawer. Based upon customer needs, customized software 
options, developed in the Netherlands and France, will be available. 
Some of the printer subassemblies will be assembled in the 
Netherlands, some will be assembled in Malaysia. You state that, 
after the subassemblies are completed, they will undergo a 
``substantial configuration'' in either the Netherlands or the 
United States.
    You claim that the imaging devices and the printer cartridges 
are the most important components of the printer system. The imaging 
devices are claimed to be the printer's most complex component and 
are the key to its function and capabilities because this particular 
printer is designed to create wide format printed sheets. The 
printer functions by converting a computer image signal into 
numerous signals and then steering each of the imaging devices, 
which perform the actual print process. The printing unit is steered 
by the printed board assembly of the imaging devices, which creates 
a fixed print onto a sheet of paper. The process allows the movement 
of the paper under the imaging devices, which require the use of 
printer ink/toner which is replenished with ink/toner from the 
cartridges when the ink/toner level lowers. The imaging devices will 
be produced in Oc[eacute] Technologies' new manufacturing site in 
the Netherlands from parts of European origin obtained from European 
suppliers, including a printed board assembly. Each imaging device 
is filled with blank ink/toner and tested in the Netherlands. You 
state that ``Oc[eacute] Technologies employs trained and highly 
skilled operators and technicians to manufacture the imaging devices 
in its high tech manufacturing facility.'' The imaging devices 
comprise fifty three percent (53%) of the printer's value.
    The printer cartridges contain color ink/toner which is used to 
print the image. The ink/toner cartridge will be produced in 
Oc[eacute] Technologies' manufacturing facility in the Netherlands, 
using plastic parts sourced in China. The cartridges will be filled 
with ink/toner and an EPROM (chip) inserted in the Netherlands. The 
chip controls communication with the engine controller.
    The following subassemblies will be assembled in Malaysia. The 
upper module, which is constructed from subunits consisting of 
various plates, guides, shafts, motors, printed circuit boards, and 
bundles, moves and guides the imaging devices along in a carriage. 
The upper module will be assembled in Malaysia from approximately 
600 parts in a process primarily involving screwing operations using 
workers who are ``low trained and low skilled.'' European parts 
constitute forty percent (40%) of the value of the upper module. The 
upper module comprises approximately twenty seven percent (27%) of 
the printer's value.
    The controller, developed by Oc[eacute] Technologies, converts 
the raw computer signal into specific signals to each imaging 
device. The keys to the controller are the mainboard, which will be 
sourced from a European supplier and of European origin, and its 
software, developed by Oc[eacute]

[[Page 5863]]

Technologies. The controller is assembled in Malaysia.
    In Malaysia, the cut and receiving unit, the frame lower unit, 
the power supply unit, the controller, and the media drawer will be 
assembled. In the near future, the two customer options--the roll 
holder and the roll loader--will be assembled in Malaysia. The 
Malaysian assembly costs are approximately one-half of one percent 
(0.5%) of the value of the printer. You state that ``[a] `fool proof 
assembly design' will be used by the Malaysian manufacturer in its 
assembly operations. Unskilled workers with minimal training will 
use simple tools to perform manufacturing operations involving 
mainly screwing and similarly simple processing.''
    After the Malaysian operations, the subassemblies will either be 
sent to Oc[eacute] Technologies' configuration center in the 
Netherlands or to the United States for ``substantial 
configuration.'' The subassemblies will be unpacked and integrated 
into a printer. The first steps are the affixing and positioning of 
the imaging devices to the upper module and the mounting of the 
upper module on the frame lower unit. The controller unit, power 
supply unit, media drawers, and cut and receiving unit are added. 
Blank ink/toner is flushed out of the imaging devices, which are 
filled with colored ink/toner. The printer is precision adjusted 
using Oc[eacute] Technologies' calibration software. After testing 
and fine-tuning, the printer is packed and transported to the 
customer. The cost of this operation is approximately three percent 
(3%) of the value of the printer.
    The values of the components relative to the finished printer 
are as follows: printer cartridge (includes toner and the chip)--one 
percent (1%); cut and receiving unit--four percent (4%); frame lower 
unit--three percent (3%); power supply unit--three percent (3%); 
media drawer--four percent (4%); imaging device--fifty three percent 
(53%); module upper--twenty seven percent (27%); and controller--
five percent (5%).
    You request an origin determination that the subject printer is 
either country of origin United States or country of origin 
Netherlands under the TAA, i.e., if the ``substantial 
configuration'' is performed in the United States, you request that 
the United States is the country of origin and if the ``substantial 
configuration'' is performed in the Netherlands, you request that 
the Netherlands is the country of origin.
    Issue:
    What is the country of origin of the subject printers 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.
    The courts and CBP have also considered the essential character 
of the imported article in making these determinations. See, for 
example, Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 3 CIT 
220, 224-225 (1982) (where it was determined that imported uppers 
were the essence of a completed shoe) and National Juice Products 
Association, et al v. United States, 628 F. Supp. 978, 10 CIT 48, 61 
(1986) (where the court addressed each of the factors (name, 
character, and use) in finding that no substantial transformation 
occurred in the production of retail juice products from 
manufacturing concentrate).
    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, and use are primary 
considerations in such cases. Additionally, factors such as the 
resources expended on product design and development, extent and 
nature of post-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.
    As stated above, there are eight subassemblies which form the 
completed printer: Imaging devices; upper module; cartridges; cut 
and receiving unit; frame lower unit; power supply unit; controller; 
and media drawer. The imaging devices and the cartridges will be 
assembled in the Netherlands; the other six subassemblies will be 
assembled in Malaysia.
    After certain of the operations are performed in Malaysia, the 
subassemblies will either be sent to Oc[eacute] Technologies' 
configuration center in the Netherlands or to the United States. 
Under this procedure, the operations performed will be the same 
whether they are performed in the Netherlands or the United States. 
You request a determination with respect to each of these scenarios, 
i.e., the country of origin if the configuration is performed in the 
Netherlands and the country of origin if the configuration is 
performed in the United States.
    You state that the imaging devices and the cartridges are the 
most important components of the printer. You state that the imaging 
devices are the printer's most complex component and are the heart 
of the printer's function and capabilities. The printer functions by 
converting a computer image signal into numerous signals and then 
steering each of the imaging devices, which perform the actual print 
process. We have stated that the origin of components is a relevant 
factor in substantial transformation determinations and that the 
outcome may change depending on where the various components 
originate and where they are assembled. See, for example, HQ 734256, 
dated July 1, 1992. Based upon the description of the printer, which 
is designed to create wide format printed sheets, we agree that the 
essential character of the printer is imparted by the imaging 
device, which is produced in the Netherlands. Based upon this fact, 
in connection with the final assembly operations performed in the 
Netherlands, we find that the country of origin for government 
procurement purposes is the Netherlands, i.e., the goods which are 
imported into the Netherlands from Malaysia and combined with the 
goods already in the Netherlands are substantially transformed in 
the Netherlands. The cumulative effect of the operations performed 
in the Netherlands and the fact that the imaging devices and the 
printer cartridges, both of which will be assembled in the 
Netherlands, are the most important components of the printer, allow 
us to conclude that the origin is the Netherlands. The imaging 
devices, which comprise approximately 53% of the printer's value, 
are the key to the printer's function and capabilities.
    Further, we find that if the above-described operations are 
performed in the United States, the country of origin for government 
procurement purposes is the Netherlands, i.e., a substantial 
transformation does not occur in the United States. We note that 
none of these subassemblies is produced in the United States. We 
find that the assembly

[[Page 5864]]

operations to be performed in the United States are not of such 
complexity and meaningfulness that they result in a substantial 
transformation of any of the subassemblies in the United States and 
that the origin of the printer will be imparted by the essential 
character of the printer, the imaging device.
    Holdings:
    In the situation in which the final assembly of the printer is 
performed in the Netherlands, the country of origin for government 
procurement purposes is the Netherlands, the country in which the 
imaging device and toner cartridge are produced and in which the 
final assembly is performed.
    In the instance in which the final assembly of the printer is 
performed in the United States, the country of origin for government 
procurement purposes is the Netherlands, the country in which the 
imaging device and toner cartridge are produced.
    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 the 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,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

[FR Doc. E8-1685 Filed 1-30-08; 8:45 am]
BILLING CODE 9111-14-P