[Federal Register Volume 74, Number 219 (Monday, November 16, 2009)]
[Notices]
[Pages 58970-58973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-27350]


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

DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection


Notice of Issuance of Final Determination Concerning Toner 
Cartridges and Image Drums

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

ACTION: Notice of final determination.

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

SUMMARY: This document provides notice that the Bureau of U.S. Customs 
and Border Protection (``CBP'') has issued a final determination 
concerning the country of origin of certain toner cartridges and image 
drums to be offered to the United States Government under an 
undesignated government procurement contract. Based upon the facts 
presented, in the final determination CBP concluded that Japan is the 
country of origin of the subject toner cartridges and the United States 
is the country of origin of the subject image drums for purposes of 
U.S. Government procurement.

DATES: The final determination was issued on November 9, 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 December 16, 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 November 9, 
2009, 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 toner cartridges and image drums to be 
offered to the United States Government under an undesignated 
government procurement contract. This final determination, in HQ 
W563548, was issued at the request of Oki Data Americas, 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 replacement in the United States of minor components of 
U.S. and foreign origin and the addition of Japanese-origin toner to a 
Chinese-origin toner cartridge do not substantially transform the toner 
cartridge into a product of the United States. Therefore, the last 
country in which the toner cartridge undergoes a substantial 
transformation is based on the essential character of the toner 
cartridge, which is the toner from Japan. Based upon the facts 
presented, the final determination also concluded that the disassembly 
in the United States of a Thai-origin image drum, the cleaning and 
reassembly of salvageable parts, and the replacement of a significant 
number of parts essential to the functionality of the image drum result 
in a substantial transformation of the components into a product 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: November 9, 2009.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

Attachment

HQ W563548

November 9, 2009

MAR-2-05 RR:CTF:VS W563548 KSG

CATEGORY: Marking

Mr. Stephen E. Becker
Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, N.W.,
Washington, DC 20037-1122
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, Customs and Border 
Protection Regulations (19 CFR Sec.  177); Final Determination; 
country of origin of remanufactured toner cartridges and image drums

Dear Mr. Becker:

    This is in response to your letter dated July 28, 2006, 
requesting a final determination on behalf of Oki Data Americas, 
Inc. (``Oki Data''), pursuant to subpart B of Part 177, Customs 
Regulations (19 C.F.R. Sec.  177.21 et seq.). Under these 
regulations, which implement Title III of the Trade Agreements Act 
of 1979, as amended (19 U.S.C. Sec.  2511 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 
certain remanufactured toner cartridges and image drums. We note 
that Oki Data is a party-at-interest within the meaning of 19 C.F.R. 
Sec.  177.22(d)(1) and is entitled to request this final 
determination. In issuing this final determination, we have given 
consideration to the arguments presented during a meeting at our 
offices on November 17, 2006, and your additional submissions dated 
September 12, 2006, September 28, 2006, November 17, 2006, and 
November 30, 2006, which include photographs of the articles at 
various stages of the processes performed.

FACTS:

    I. Toner Cartridges
    You advise us that Oki Data will remanufacture C7300/7500 Series 
toner cartridges at its facility in Mount Laurel, New Jersey. You 
state that the spent toner cartridges were originally manufactured 
in China and that the toner cartridges were used in printers in the 
United States. You also indicate that the actual cartridges lack any 
notation of their origin.
    You advise that the toner cartridge is comprised of 52 parts 
plus toner. The remanufactured cartridge will consist of 20 newly 
manufactured parts: 14 from the

[[Page 58971]]

United States, 1 from the United Kingdom, and 5 from China. Such 
parts include, among others, the stopper film, the toner cap, the 
lever stopper, the left and right lockout plates, and, if damaged, 
the foam seal cap, and seal sponge. In addition, the remanufactured 
cartridges will be filled with new toner of Japanese origin, which 
you advise is the most valuable component of the remanufactured 
cartridge. Thirty-two parts will be salvaged from the used 
cartridges and reused in the remanufactured toner cartridge.
    When the depleted cartridges arrive at the facility in New 
Jersey, they are inspected for salvage. Acceptable cartridges will 
undergo the following key remanufacturing operations: (1) the 
exterior of the cartridge is vacuumed; (2) the seal tape, lever 
stopper, and remaining toner are removed; (3) the left side plate 
and spiral rod are removed and cleaned; (4) if necessary, the foam 
seal cap and seal sponge are replaced; (5) the cartridge interior is 
vacuumed and cleaned; (6) the stopper film is removed from the inner 
shutter and replaced with a new stopper film; (7) the inner shutter 
is reassembled; (8) the toner cap is removed; (9) the mixing bar and 
spiral rod are reinserted; (10) the left side plate is reassembled, 
and the technician verifies that the mixing bar and spiral rod 
engage with the mixing boss of the left side plate; (11) the 
partition film is reset; (12) seal tape is applied to the cartridge; 
(13) new toner is added to the cartridge; (14) a new toner cap and 
new lever stopper are installed; (15) the cartridge exterior is 
vacuumed and cleaned; (16) the cartridge is inspected for leakage; 
(17) a bar code is printed and applied to the cartridge; (18) the 
cartridge and light-emitting diode (``LED'') lens cleaner are placed 
into a black poly bag, which is then heat sealed; (19) the bagged 
cartridge is placed in a box, and a duplicate bar code label is 
applied to the box; and (20) in some instances, four boxed 
cartridges are inserted into labeled four-pack boxes, which are 
placed on pallets.

II. Image Drums

    Oki Data will remanufacture the C7300/C7500 Series image drums 
at its facility in Mount Laurel, New Jersey. You state that the used 
image drums originally were manufactured in Thailand and that the 
image drums were used in printers in the United States. You also 
indicate that the actual image drums lack any notation of their 
origin.
    You advise that the image drum is comprised of 110 component 
parts. Of this number, 56 parts will be newly manufactured in 
various countries: 12 in the United States, 1 in Canada, 5 in Japan, 
and 38 in Thailand. Several of the newly manufactured parts that 
will replace the worn parts of the used image drum are significant 
to the functionality of the product and include, among others, the 
organic photoreceptor drum (``OPC''), the developing roller, the 
charge roller, and the cleaning blade. All of these parts and the 
new lubricating toner powder originate in Japan. You state that the 
OPC drum is the most valuable component of the image drum. Fifty-
four parts will be salvaged from the used image drums.
    When the used image drums arrive at the New Jersey facility, 
their revision levels and previous remanufacturing statuses are 
verified. Acceptable image drums undergo the following key 
remanufacturing operations: (1) the top cover of the image drum is 
removed and cleaned; (2) the developer blade assembly is removed and 
the blade is discarded; (3) the left side plate is removed to expose 
the OPC drum, the cleaning blade, and the charge, developer, and 
sponge rollers; (4) the charge roller is removed and discarded; (5) 
the right side plate is removed; (6) the developer roller and gear 
are removed and discarded; (7) the toner powder is removed from the 
sponge roller assembly; (8) the OPC drum is removed and discarded; 
(9) the roller sponge assembly is removed, the mixing bar and 
plastic plates are saved, and the roller sponge, six gears, the 
sponge seals, felt sponges, and sub-sponge roller are discarded; 
(10) the cleaning blade assembly is removed and discarded; (11) the 
spring spiral is removed from the frame base; (12) the disassembled 
parts are cleaned; (13) the left side plate is reassembled using a 
new gear belt, belt toner, spiral part, e-ring, and new gear idles 
and electrical contacts (certain revision levels will receive a new 
left side plate and frame base); (14) a new cleaning blade and 
cleaning gear are installed into the frame base; (15) a new roller 
sponge, new sponge seals and felt sponges, and the salvaged mixing 
bar and plastic plates are used to assemble a new roller sponge 
assembly, which is then attached to the frame base; (16) a new OPC 
drum, roller developer, and fuse assembly are installed into the 
frame base; (17) the right side plate is reattached to the frame 
base; (18) a new charge roller is installed in the right side plate 
assembly; (19) the left side plate assembly is attached to the frame 
base; (20) a new blade developer is installed into the frame base 
assembly; (21) new toner is added to the toner hopper of the blade 
developer; (22) the top cover is reattached to the frame base; (23) 
the image drum's print quality is tested; (24) the image drum is 
wrapped in two types of protective sheeting and a new toner cover is 
installed; (25) a serial number label and date code label are 
applied to the image drum; (26) the image drum is placed into a 
black bag and packed into a labeled box, along with the warranty 
sheet, ecology sheet, and shipping label; and (27) three single-pack 
boxes are placed into a labeled overpack box, which is loaded onto a 
pallet. Essentially, the spent image drum is almost completely 
disassembled, and the new parts mentioned above are used to 
construct a functioning image drum.

ISSUE:

    What are the countries of origin of the remanufactured toner 
cartridges and image drums for purposes of U.S. Government 
procurement?

LAW AND ANALYSIS:

    Pursuant to Subpart B of Part 177, 19 C.F.R. Sec.  177.21 et 
seq., which implements Title III of the Trade Agreements Act of 
1979, as amended (19 U.S.C.Sec.  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. Sec.  
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 C.F.R. 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, 6 Ct. Int'l Trade 204, 573 F. Supp. 1149 
(1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing 
or combining process is a minor one which leaves the identity of the 
imported articles intact, a substantial transformation has not 
occurred. Uniroyal Inc. v. United States, 3 Ct. Int'l Trade 220, 542 
F. Supp. 1026 (1982). In Uniroyal, a country of origin marking case, 
the court considered whether the addition of outsoles in the United 
States to imported shoe uppers from Indonesia effected a substantial 
transformation of the uppers. In finding that the upper was the 
``very essence'' of the completed shoe, the court held that a 
substantial transformation of the uppers did not occur, as the 
attachment of the outsoles to the uppers was a minor manufacturing 
or combining process that left the identity of the uppers intact. 
Hence, the uppers were required to be marked with Indonesia as their 
country of origin.

I. Disassembly and Remanufacturing Operations

    CBP has examined disassembly and remanufacture of articles under 
a variety of circumstances. In some instances, CBP has found a 
substantial transformation to occur when articles are disassembled 
and used in the assembly of articles. In HRL 734213, dated February 
20, 1992, CBP held that the disassembly of an imported computer 
monitor and the installation of a U.S. touchscreen constituted a 
substantial transformation of the monitor for marking purposes. In 
New York Ruling Letter (``NY'') 183759, dated June 28, 2002, CBP 
found that fuel tank assemblies disassembled from completed motor 
vehicles in Germany and imported into the United States were 
substantially transformed when the assemblies and the motor vehicle 
bodies were assembled into completed motor vehicles and sold in the 
United States. See also HRL 561322, dated May 11, 1999 (an aircraft 
fuselage, imported disassembled, was substantially transformed into 
a product of the United States when it was reassembled and combined 
with engines, avionics, and landing gear to make a completed 
aircraft). In NY G87305, dated March 12, 2001, CBP found that two 
laser printer cartridge models,

[[Page 58972]]

originally manufactured in either China or Japan were to be marked 
as products of China as a result of remanufacturing operations 
performed in that country. CBP noted that these models were not 
simple toner cartridges, but models containing both development 
units and cleaning units. During the remanufacturing process, the 
cartridges were disassembled into over 30 individual parts or 
subassemblies, inspected, cleaned and reconditioned, and sorted by 
type into bins. The essential identity of the used cartridges was 
not maintained. Then, each cartridge received a new OPC drum, new 
toner, and a special foam part unique to the remanufacturing 
process, as well as other new components. In addition, a special 
seal assembly, a part also unique to the remanufacturing process, 
was added to some models. CBP found that significant value was added 
to the remanufactured laser printer cartridges and accounted for 
most of the cost of the finished cartridges.
    In some instances, CBP has not found a substantial 
transformation when non-functioning articles were disassembled and 
returned to their functionality. In HRL 559740, dated October 3, 
1996, CBP determined that failed power transformers shipped to 
Brazil for repair did not qualify for treatment under the GSP, as 
they did not undergo a substantial transformation. The repair 
operations consisted of the disassembly of the failed core/coil 
assembly, the reuse of the core, if possible, the replacement and/or 
repair of parts, and the mounting of the repaired core assembly into 
the old tank shell. However, as the essential identity of the 
transformers was retained throughout the operations, CBP found that 
the transformers qualified for treatment under subheading 
9802.00.50, HTSUS. See also, HRL 555313, dated June 19, 1990 (a 
substantial transformation did not occur when non-functional air 
conditioning compressors were exported to Mexico for disassembly, 
reconditioning, and reassembly with new parts into functional 
compressors; but, the repaired compressors were not eligible for 
subheading 9802.00.50, HTSUS, treatment as their component parts 
were separated without regard to maintaining the integrity of the 
original units); and HRL 557991, dated October 17, 1994, (used 
photocopier drum cartridges were eligible for subheading 9802.00.50, 
HTSUS, treatment, as replacing new corona wires, new photoreceptor 
drums, new cleaning blades, and new mylar sealing tape did not 
destroy the essential identity of the exported cartridges).
    You also cite HRL 561412, dated January 31, 2000, which examined 
the NAFTA marking requirements for remanufactured toner cartridges, 
in support of your position that the toner cartridges and image 
drums are substantially transformed in the United States. In that 
case, spent toner cartridges were completely disassembled in Canada 
and no effort was made to preserve the essential identity of the 
spent cartridges. During the remanufacturing process, the 
photoreceptor drum was discarded in nearly 100 percent of all cases 
and other key components, which contributed to the functionality of 
the cartridges, such as magnetic rollers, corona wires, and cleaning 
blades, were discarded in almost every case. CBP only looked to the 
used toner cartridge as the ``foreign material'' that did not 
undergo the requisite tariff shift. Applying the hierarchy of the 
NAFTA Marking Rules, CBP found that the used toner cartridge was the 
material that imparted the essential character of the good, but 
because of the lack of reliable data as to the origin of the toner 
cartridge, the origin was determined under 19 CFR 102.11(d) as the 
last country in which the cartridges underwent production. We note 
that pursuant to 19 U.S.C. 1625(c)(1), HRL 561412 and HRL 560768 
dated May 26, 1998 (another ruling concerning the origin of 
remanufactured cartridges), were revoked to allow consideration to 
not only the used cartridge as a ``foreign material,'' but to new 
parts incorporated into the remanufactured cartridge in determining 
the origin of the remanufactured cartridge. Accordingly, in H012926 
dated March 31, 2009, CBP took into consideration the used 
cartridges and the new component parts in the remanufactured 
cartridges. As no one single material imported the essential 
character to the remanufactured cartridge, the origin was determined 
to be the last country in which the remanufactured cartridge 
underwent production, pursuant to 19 CFR 102.11(d)(3).
    You also claim that in light of the recent new free trade 
agreements concerning recovered and remanufactured goods, that the 
toner cartridges and image drums should be considered to be 
substantially transformed in the U.S.

II. Toner Cartridges

    In the instant case, parts from the toner cartridge are removed 
and inspected, and salvageable parts are cleaned for reassembly. The 
toner appears to be the only significant component replaced during 
the remanufacturing operation. Other components having a mechanical 
function such as the shutters, mixing gear, mixing bar, and spiral 
attachment are not replaced. These operations are not as significant 
as the operations described in NY G87305, where the cartridges were 
completely disassembled, salvageable parts were sorted into bins, 
cleaned and reconditioned, major components of the cartridges, 
including the OPC drum and toner were replaced, and other new 
components, unique to the remanufactured product, were added. 
Moreover, the operations are not as extensive as the repair 
operations described in HRL 557991, where the replacement of the 
photoreceptor drum, cleaning blade, corona wire, and mylar sealing 
tape did not destroy the identity of the article and was deemed to 
be not so extensive as to create a new or different article.
    In contrast to the operations performed on the imported fuselage 
in HRL 561322, the subject cartridges essentially are in their 
finished form at the beginning of the remanufacturing process. To 
restore their functionality, the toner is recharged, minor 
components are replaced, salvageable parts are cleaned, and the 
restored cartridge is tested. These operations are significantly 
less substantial than the operations described in HRL 561322, where 
the imported fuselage was an empty shell that needed several 
essential components added to it before it could function as an 
aircraft.
    As such, the described remanufacturing operations do not 
substantially transform the used toner cartridge into a product of 
the United States. In considering the last country in which the 
toner cartridge underwent a substantial transformation, we believe 
that the new, imported toner imparts the essential character of the 
remanufactured toner cartridge. You also state that the toner, by 
far, is the most valuable component of the remanufactured cartridge. 
Therefore, we find that the remanufactured toner cartridge is a 
product of Japan for purposes of U.S. Government procurement.

III. Image Drums

    In contrast to the remanufacturing of the subject toner 
cartridges, the remanufacturing operations for the image drums 
involve the assembly of numerous new parts that are essential to the 
functionality of the image drum. The image drums require the 
replacement of the OPC drum, charge roller, roller sponge, developer 
roller, cleaning blade, developer blade, fuse, electrical contacts, 
and gears, as well as many other parts. The toner also must be 
replenished. It appears that most of the components that contribute 
to the functionality of the image drum will be removed from the used 
image drum at the remanufacturing facility in New Jersey and 
replaced with new parts. In essence, the housing of the image drum 
and other minor components are being reused in the remanufacture of 
the image drum, but the majority of the parts that impart the 
functionality of the image drum are new components. This scenario is 
similar to the imported fuselage, or empty aircraft shell, described 
in HRL 561322, supra, where the addition of an interior, two 
engines, avionics, and landing gear was necessary to transform the 
product into a functioning aircraft. Moreover, in the instant case, 
depending upon the revision level of the used image drum, the 
remanufacturing process also may require the replacement of the 
frame base and side plates.
    These operations appear to be significantly more extensive than 
the operations described in NY G87305, supra, where CBP found that 
used cartridges receiving new OPC drums, new toner, special parts 
unique to the remanufacturing process, and other new components were 
substantially transformed into products of China. Moreover, they 
involve the replacement of many more parts that are essential to the 
functionality of the image drum than the repair operations described 
in HRL 557991, supra.
    Thus, based on the facts provided, we believe that the 
disassembly of the used toner cartridge, the cleaning and reassembly 
of salvageable parts, and the replacement of a significant number of 
parts essential to the functionality of the drum are sufficient to 
substantially transform the non-functioning used image drum into a 
product of the United States. We also note that the remanufacturing 
operations for the image drum are complex, require technical skill, 
and add significant value to the image drums.
    HOLDING:
    Based upon the specific facts of this case, we find that the 
toner cartridges are not

[[Page 58973]]

substantially transformed as a result of the described 
remanufacturing operations performed in the United States. The 
country of origin of the remanufactured toner cartridges for 
purposes of U.S. Government procurement is Japan.
    We find that the image drums are substantially transformed into 
products of the United States when they undergo the described 
remanufacturing operations in the United States. Therefore, the 
country of origin of the remanufactured image drums is the United 
States.
    Notice of this final determination will be given in the Federal 
Register as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  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. E9-27350 Filed 11-13-09; 8:45 am]
BILLING CODE 9111-14-P