[Federal Register Volume 73, Number 117 (Tuesday, June 17, 2008)]
[Notices]
[Pages 34309-34311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13544]



[[Page 34309]]

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

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Photocopying 
Machines

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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

SUMMARY: This document provides notice that the U.S. Customs and Border 
Protection (CBP) has issued a final determination concerning the 
country of origin of certain photocopying machines which may be offered 
to the United States Government under an undesignated government 
procurement contract. Based on the facts presented, CBP has concluded 
that certain goods imported into Japan are substantially transformed in 
Japan such that Japan is the country of origin of the finished 
photocopying machines for government procurement purposes.

DATES: The final determination was issued on June 11, 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 July 17, 2008.

FOR FURTHER INFORMATION CONTACT: Yuliya A. Gulis, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202-572-8783).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 11, 
2008, 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 photocopying machines which may be offered 
to the United States Government under an undesignated government 
procurement contract. This final determination, in HQ H025106, was 
issued at the request of Ricoh Company, Ltd. 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, certain goods imported into Japan are substantially 
transformed in Japan such that Japan is the country of origin of the 
finished photocopying machines for government procurement purposes.
    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), 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: June 11, 2008.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.
Attachment: HQ H025106.

HQ H025106

June 11, 2008

OT:RR:CTF:VS H025106 YAG

Category: Marking.

Mr. Yoshihiro Saito, Manelli Denison & Selter, PLLC, 2000 M Street, 
NW., Suite 700, Washington, DC 20036-3307
RE: U.S. Government Procurement; Country of Origin of Photocopying 
Machines; Substantial Transformation; 19 CFR Part 177

    Dear Mr. Saito: This is in response to your letter, dated March 20, 
2008, requesting a final determination on behalf of Ricoh Company, Ltd. 
(``Ricoh''), 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 (``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.
    This final determination concerns the country of origin of certain 
photocopying machines that Ricoh may sell to the U.S. Government. We 
note that Ricoh is a party-at-interest within the meaning of 19 CFR 
177.22(d)(1) and is entitled to request this final determination.

Facts

    The products subject to this ruling are certain photocopying 
machines manufactured by Ricoh, referred to as the ``AC1 Series'', and 
to be imported from Japan for the purpose of sales to U.S. government 
agencies. The AC1 Series have photocopying, printing, faxing, and 
scanning functions. The AC1 Series is capable of producing 40 or 50 
black-and-white copies of documents per minute, depending on the model. 
However, some copiers in this series are capable of scanning color 
images in documents. Ricoh has developed the AC1 Series in Japan and 
performed the entire engineering, development, design, and art work in 
Japan.
    An AC1 copier is stated to be a complex machine comprising a total 
of 2,534 pieces of individual parts. You state that at the initial 
stage of the copier production process, individual parts are assembled 
into various assemblages of parts called ``sections,'' ``systems,'' 
``subassemblies,'' or ``units.'' These part assemblages represent 53 
basic building blocks for each AC1 copier. These blocks are in turn 
incorporated into modularized units or subassemblies with distinct 
functions. You claim that the primary functional modules of the AC1 
copier are: the Scanning Unit, Laser Scanning Unit, Controller Unit 
(``Controller''), Photoconductor Unit, Developer Unit, Transfer Unit, 
and Fusing Unit. Additionally, the Main Frame, automatic document 
feeder (ADF), duplexer, and paper trays perform support functions by 
supplying power through the electrical systems, driving the engine and 
feeding/guiding and flipping the paper. You state that Ricoh will 
conduct the fabrication and/or the final assembly of the Scanning Unit, 
Laser Scanning Unit, Controller, Photoconductor Unit, and Main Frame in 
Japan, using blocks and individual parts of Japanese, Chinese, and 
third-country origins. On the other hand, the Developer Unit, Transfer 
Unit, Fusing Unit, and Base Engine and Image Control Unit (``BICU'') as 
well as the ADF, paper trays, etc. will be assembled in China by Ricoh 
Asia Industry, Ltd. (``RAI'') or its contractors, using Chinese and 
Japanese parts. The final assembly of AC1 photocopying machines will 
take place in Japan. Ricoh will also conduct testing on the 
subassemblies and finished copiers in Japan. The final assembly process 
will comprise at least 30 significant steps, not including pre-assembly 
work, tests or adjustments performed on individual subassemblies. 
Finally, the finished AC1 Series copiers will undergo final inspection 
and packing for shipment to the United States.

Scanning Unit

    The Scanning Unit performs the initial task of converting the 
original images into digital signals. An original document is scanned 
when the xenon lamp irradiates the original document through the 
exposure glass. The light that reads the document is reflected by three 
separate mirrors and arrives at a Charge Coupled Device (``CCD'') after

[[Page 34310]]

passing through an assemblage of small lens pieces. CCD incorporates 
photo diodes, which convert the light (i.e. photons) on the pixels into 
analog electronic signals. The analog signals are then converted into 
digital form through the printed wiring board called sensor board unit 
(``SBU'') and from there transmitted to the DRAM and flash memory 
boards located in the Controller Unit for storage. The DRAM stores the 
image memory, while the flash memory stores the program. The xenon lamp 
is a Japanese part. The reflection mirrors and the lens block are 
produced in China to Ricoh's specifications and Ricoh designs these 
optical parts. The CCD is manufactured in Japan by an unaffiliated 
producer. The first and second carriage sections of the Scanning Unit 
are pre-assembled by RAI in China by inserting a xenon lamp, a 
reflector, and mirrors into designated spots. However, after this pre-
assembly is complete, the carriage sections are shipped to Ricoh in 
Japan, where the subsequent assembly is performed by combining the 
first and second carriages together, installing a set of six lenses 
into a lens block, and CCD in perfect alignment with each other and 
with the rest of the components in the Scanning Unit. The exposure and 
sheet-through glasses are also attached at that stage. The complete 
Scanning Unit is then tested and a Scanner Validation Tool (``SVT''), 
which is a software package developed by Ricoh engineers, evaluates the 
test results against parameters.

Controller Unit Subassembly

    The Controller contains a central processing unit (``CPU''), a hard 
disk drive, a flash memory (ROM), two dual in-line memory modules 
(``DIMM''), a random access memory (DRAM or SDRAM), a non-volatile 
random access memory (``NVRAM'') and interface cards. The Controller 
controls all applications of AC1 as a photocopier, as well as its 
additional/optional functions as a printer, a scanner, or a fax 
machine. Once the information is stored in the DRAM and flash memory of 
the Controller, it is transmitted to the three application-specific-
integrated circuits (``ASICs''), located on the BICU board in the Main 
Frame section of the copier. All three ASICs will be manufactured in 
Japan. The CPU on the Controller Unit will be purchased from a Canadian 
producer. The DRAM and flash memory will be purchased from multiple 
countries. However, the Controller Unit itself will be assembled and 
tested in Japan.

Laser Scanning Unit

    The electronic signals processed by the ASICs are transmitted to 
the Laser Scanning Unit. In the Laser Scanning Unit, two laser diodes 
convert the electronic signals into pulsed laser beams, which are then 
sent to the photoconductor drum. On the way to the drum, the laser 
beams pass through a collimator lens, a cylindrical lens, and barrel 
troidal lens (``BTL'') and are reflected by polygonal and f-theta 
mirrors. The laser diodes, the f-theta mirror, BTL and the collimator 
lens will be produced in Japan. The cylindrical lens will be supplied 
from China. Nonetheless, the assembly of the Laser Scanning Unit will 
take place in Japan.

Photoconductor Unit

    The Photoconductor Unit contains a photoconductive drum and an 
electron-charging roller. The drum, coated with an Organic Photo 
Conductor (``OPC'') is the main component of the Photoconductor Unit. 
This unit is charged with electricity and the laser beam sweeps across 
it to make the electrostatic latent image. The drum is a Japanese 
product, and the time-consuming and capital intensive assembly of the 
photoconductor unit will take place in Japan.

Developer Unit

    The Developer Unit supplies the toner to the drum. The developer 
roller and developer doctor are the key components of this Unit and are 
manufactured in Japan. All other parts will be produced or purchased in 
China. The Developer Unit will be assembled and tested in China before 
being shipped to Japan for the final assembly of the copier.

Transfer Unit

    The Transfer Unit transfers the visible image from the drum to 
paper. The Transfer Unit will be assembled in China. The assembly of 
the Transfer Unit involves two steps. First, a toner sensor and a 
cleaning blade will be attached to the frame. Second, the Japanese made 
transfer belt will be installed. The transfer belt is specifically 
produced in Japan.

Fusing Unit

    The Fusing Unit permanently settles toner on the paper by applying 
heat and pressure to the migrated toner. It is a simple process and the 
Fusing Unit for the AC1 Series will be entirely assembled in China from 
Japanese and Chinese parts.

Main Frame

    The shell of the main frame will be made from steel sheets formed 
in China on Japanese dies. The Main Frame will be completely built in 
Japan. The engine, I/O board, BICU, and operation panels, as well as 
the exterior covers for the Main Frame, will be installed in Japan. The 
software for all PCBs will be supplied by Ricoh Japan.
    You request an origin determination that the subject photocopying 
machine is the country of origin Japan i.e., if the ``substantial 
configuration'' is performed in Japan.

Issue

    What is the country of origin of the subject photocopying machines 
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),

[[Page 34311]]

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 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.
    CBP has held in a number of cases involving similar merchandise 
that complex and meaningful assembly operations involving a large 
number of components result in a substantial transformation. In 
Headquarters Ruling Letter (``HRL'') 563491 (February 8, 2007), we 
addressed the country of origin of certain digital color 
multifunctional systems manufactured by Sharp and assembled in Japan of 
various Japanese--and Chinese--origin parts. In that ruling, we 
determined that color multifunctional systems were a product of Japan 
based on the fact that ``although several subassemblies are assembled 
in China, enough of the Japanese subassemblies and individual 
components serve major functions and are high in value, in particular, 
the transfer belt, control box unit, application-specific integrated 
circuits, charged couple device, and laser diodes.'' Further we found 
that the testing and adjustments performed in Japan were technical and 
complex and the assembly operations that occurred in Japan were 
sufficiently complex and meaningful. Thus, through the product assembly 
and testing and adjustment operations, the individual components and 
subassemblies of Japanese and foreign-origin were subsumed into a new 
and distinct article of commerce that had a new name, character, and 
use. See also HRL 562936, dated March 17, 2004.
    In HRL 561734, dated March 22, 2001, CBP held that certain 
multifunctional machines (consisting of printer, copier, and fax 
machines) assembled in Japan were a product of that country for the 
purposes of U.S. government procurement. The multifunctional machines 
were assembled from 227 parts (108 parts obtained from Japan, 92 from 
Thailand, 3 from China, and 24 from other countries) and eight 
subassemblies, each of which was assembled in Japan. See also HRL 
561568, dated March 22, 2001.
    Based on the facts and law in this case, we find that the assembled 
AC1 copiers are products of Japan for the purposes of U.S. Government 
procurement. Out of eight (8) subassemblies, only three (3) will be put 
together in China. Although the Developer Unit and the Transfer Unit 
will be assembled in China, we find that enough of the Japanese 
subassemblies and individual components serve major functions and are 
high in value, in particular, the transfer belt, Controller, ASCIS, 
CCD, laser diode, and Photoconductor Unit. In making this 
determination, we particularly note that the Controller Unit and the 
Photoconductor Unit are being assembled in Japan, with the 
Photoconductor Unit made entirely out of Japanese parts and the 
Controller Unit containing mostly Japanese products. Additionally, 
AC1's scanning and laser scanning units will be assembled in Japan, 
using a CCD, laser diodes, f-theta mirror, BTL, and collimator lens of 
Japanese origin. The Developer Unit subassembly is also important to 
the performance of photocopying machines. Although the developer unit 
will be assembled in China, the developer roller and developer doctor, 
2 key components of the unit, are of Japanese origin. Similarly, even 
though the Transfer Unit is partially assembled in China, the transfer 
belt itself is a Japanese part. We further note that the testing and 
adjustments performed in Japan are technical, complex, and time 
consuming. Based on your submission, it is evident that a large variety 
of adjustments are made to each subassembly prior to and during the 
final copier assembly process. These tests and adjustments utilize 
technologically advanced equipment and firmware, such as the SVT, LD 
Checker, and LSU Checker. The tests and adjustments will consume nearly 
one-third of the total final assembly time for AC1 copiers. Finally, 
the assembly operations that occur in Japan are sufficiently complex 
and meaningful. Through the product assembly and testing, the 
individual components and subassemblies of Japanese and foreign origin 
are subsumed into a new and distinct article of commerce that has a new 
name, character, and use. Therefore, we find that the country of origin 
of the AC1 series copiers for the purposes of U.S. Government 
procurement is Japan.

Holding

    Based on the facts of this case, we find that the processing in 
Japan substantially transforms the non-Japanese components. Therefore, 
the country of origin of the AC1 Series photocopying machines 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. Pursuant to 19 CFR 177.30, 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. E8-13544 Filed 6-16-08; 8:45 am]
BILLING CODE 9111-14-P