[Federal Register Volume 74, Number 160 (Thursday, August 20, 2009)]
[Notices]
[Pages 42087-42089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19953]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning
Multifunctional Machines
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 U.S. Customs and Border
Protection (``CBP'') has issued a final determination concerning the
country of origin of certain multifunctional machines which may be
offered to the United States Government under a government procurement
contract. Based upon the facts presented, in the final determination
CBP concluded that Japan is the country of origin of the
multifunctional machines for purposes of U.S. Government procurement.
DATES: The final determination was issued on August 12, 2009. 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 September 21, 2009.
FOR FURTHER INFORMATION CONTACT: Karen S. Greene, Valuation and Special
Programs Branch, Regulations and Rulings, Office of International Trade
(202-325-0041).
SUPPLEMENTARY INFORMATION: Notice is hereby given that on----------,
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 multifunctional machines which may be
offered to the United States Government under a government procurement
contract. This final determination, in HQ H039856, was issued at the
request of Sharp Electronics Corporation 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,
[[Page 42088]]
certain articles will be substantially transformed in Japan. Therefore,
CBP found that Japan is the country of origin of the finished articles
for purposes of U.S. Government procurement.
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 12, 2009.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of
International Trade.
Attachment
HQ H039856
August 12, 2009.
OT:RR:CTF:VS H039856 KSG.
Mr. Edmund Baumgartner, Esq.,
Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, NY
10036.
Re: U.S. Government Procurement; country of origin of
multifunctional printer machines; substantial transformation
Dear Mr. Baumgartner: This is in response to your letters, dated
November 26, 2007, July 2, 2008, and November 10, 2008, requesting a
final determination on behalf of Sharp Electronics Corporation
(``Sharp'') pursuant to subpart B of 19 CFR Part 177.
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 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.
This final determination concerns the country of origin of
certain multifunctional machines that Sharp may sell to the U.S.
Government. We note that Sharp is a party-at-interest within the
meaning of 19 CFR 177.22(d)(1) and is entitled to request this final
determination. A conference was held on this matter at Headquarters
on August 25, 2008.
FACTS
This case involves the Sharp Jupiter II J-models that are sent
to the U.S. for final assembly (Sharp model MX-M350NJ, MX-
M350UJ, MX-M450NJ, and MX-450OUJ)/ (``J-models''). These models have
digital multifunctional systems (monochrome copying, printing,
faxing and duplex scanning functions). The Jupiter II J-models
designated with an ``N'' feature a hard disc drive and network
interface card which allows them to function as networked printers
and send scanned documents in the form of e-mail attachments in
various formats. The Jupiter II J-models designated with a ``U'' are
not equipped with a hard disk or network interface card and function
with stand-alone capacity.
Sharp Corporation, Sharp's parent company (``Sharp Japan'')
developed the Jupiter II J-models in Japan; all the engineering,
development, design and artwork processes were developed in Japan.
Each J-model is produced from a scanner unit and printer engine
unit, which are assembled in Japan.
The scanner units and printer engine units are imported into the
U.S. where each is combined with a scanner rack and stand which can
contain optional paper feed drawers.
There are 16 main subassemblies that compose the Jupiter II J-
models.
Assembly in China
Assembly in China includes assembly of the duplex single pass
feeder (``DSPF'') subassembly; the laser scanning unit (``LSU'')
subassembly; the transfer unit subassembly; the developer (``DV'')
unit subassembly; the printer control unit (``PCU''); the fusing
unit subassembly; the multifunctional printer (``MFP'') control unit
and various other subassemblies.
(1) The DSPF subassembly transports original documents to the
scanning bed.
(2) The LSU subassembly takes the image data of the documents or
graphics and converts the data into laser beams which are exposed to
the drum surface and create the electrostatic images necessary for
printing.
(3) The transfer belt unit transfers the image created on the
drum onto the surface of the paper for printing. This unit is
assembled in China.
(4) The developer unit (``DV'') is used to transfer toner evenly
over the latent image created on the drum unit.
(5) The PCU controls the printing function of the J-models. It
is comprised of a control printed wire board (``PWB'') and mother
PWB that are stuffed in China.
(6) The fusing unit is used to fix the transferred image onto
paper.
Processing and Assembly in Japan of the Scanner Unit and the
Printer Engine Unit
The following parts which are stated to be critical components
are produced in Japan: the charge-coupled device (``CCD''), the
contact image sensor (``CIS''), the laser scanning unit (``LSU'')
housing, the LSU fixing base, the LSU synchronous lens, the LSU two
cylinder lenses, the transfer roller, the drum, the DSD flange, the
DSD flange spacer, the rollers, the lamps, the thermistors, the
thermostat, the cleaning roller, two sets of pawls, and the flash
memory chips.
Eight of the 16 subassemblies involve processing in Japan; the
upper cabinet rear unit; scanner base plate unit; the scanner
control mounting unit; the process unit subassembly; the drum unit
subassembly; the two rear frame units; the control box; and the high
voltage holder unit.
(1) The upper cabinet rear unit contains the detector
luminescence arm and ORS emission printer wire board, which detect
the size and placement of original documents on the scanning bed.
(2) The scanner base plate unit contains a charge-coupled device
(``CCD'') made in Japan, which is stated to be a critical component
for scanning and copying documents. The scanning base plate unit
contains lamps and mirror motors which illuminate and reflect the
image for scanning by the CCD.
(3) The scanner control mounting unit contains PWBs for
operating the original document detector and guides and harnesses to
hold the scanner's optical components in place.
(4) The process unit subassembly stores the drum used for
creating images.
(5) The drum unit contains the drum. The drum unit is assembled
in Japan with parts made in China and Japan.
(6) Rear frame 2 unit is assembled from the rear fixing plate
unit, solenoid fixing plate unit, dust support plate unit and other
frames, mounts, holder and plates. Rear frame 1 unit is assembled
from the main duct, fusing drawer, fixing plate, paper powder
remover case unit, box cooling duct unit and other parts.
(7) The control box unit is assembled with the control box upper
unit and other parts.
(8) The high voltage holder unit is assembled from a Chinese
holder and other parts.
Additional units are installed in the printer engine in Japan
including the developer guide unit, left door unit, cassette unit,
PS roller (resist roller) unit, main drive unit, paper feed unit,
lift-up unit, paper exit reverse unit, power supply unit, PCU PWB
fixing sub unit and inlet fixing unit.
Final assembly of the scanner unit and printer engine unit are
then performed in Japan. All functions of the printer engine and
scanner unit undergo adjustment and testing prior to being exported
to the U.S. You state that the testing and adjustment process takes
as much or more time than the physical assembly of the product and
require skilled personnel.
Final Assembly in the U.S.
The scanner unit and the printer engine unit are imported into
the U.S. where they are assembled onto a scanner rack and a scanner
stand to create the finished multi-functional machine. Final testing
of the machine is then performed.
The basic scanner stand is made in the U.S.
The scanner rack and stand with paper feed drawers (either 1,500
sheet or 2,500 sheet) are made in China.
ISSUE
What is the country of origin of the subject multifunctional
printer 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.
[[Page 42089]]
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
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.
In a number of cases, CBP has considered similar merchandise. In
Headquarters Ruling Letter (``HRL'') 563491 (February 8, 2007), CBP
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, CBP
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 CBP 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.
Finally, in HRL H020516, dated November 7, 2008, CBP considered
Sharp Andromeda II J models composed of eight main subassemblies,
two of which involved processing in Japan. Similar to this case, all
the engineering, development, design, and artwork were developed in
Japan. The multifunctional printer control unit was described as the
brain of the model. While some of the components were installed on
the control printer board in China, the flash read-only memory which
included firmware developed in Japan, was manufactured in Japan. The
other unit that involved production in Japan was the process unit,
that housed a drum produced in Japan. The process unit was assembled
in China. The other subassemblies were assembled in China but
certain key components of the subassemblies originated in Japan. The
final assembly was performed in Japan.
Based on the totality of the circumstances discussed in this
ruling, we agree that the Jupiter II J-models described in this
ruling are considered a product of Japan. As was determined in HRL
563491 and HRL H020516, substantial portions of the components that
are of key importance are of Japanese origin and all the
engineering, design and development of the multifunctional machines
occurs in Japan. As in H020516, we find the final assembly of the
subassemblies into a finished product in Japan to be sufficiently
complex and meaningful to result in a new and distinct article of
commerce that possesses a new name, character and use. In this case,
we also note that 8 of the 16 subassemblies involve processing in
Japan. In addition, the testing and adjustment of the
multifunctional machines in Japan is significant.
The processing that occurs in the U.S., which involves the
assembly of the finished printer engines and scanners to the stand
and rack, is a simple assembly operation that is not demonstrated to
be complex or meaningful and does not involve a large number of
components. Based on these factors, we find that there is no
substantial transformation in the U.S.
Accordingly, the country of origin of the Jupiter II J-model
multifunctional printer machines is Japan for purposes of U.S.
Government procurement.
HOLDING
Based on the facts of this case, the country of origin of the
Jupiter II J-model multifunctional printer 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. E9-19953 Filed 8-19-09; 8:45 am]
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