[Federal Register Volume 74, Number 233 (Monday, December 7, 2009)]
[Notices]
[Pages 64094-64095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29056]


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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 November 30, 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 January 6, 2010.

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 H039955, 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, 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: December 2, 2009.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

Attachment

    HQ H039955

November 30, 2009

OT:RR:CTF:VS H039955 KSG

Mr. Edmund Baumgartner, Esq.
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10036

Re: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979; Country of Origin of Multifunctional Printer Machines; 
substantial transformation

Dear Mr. Baumgartner:

    This is in response to your letter, dated November 26, 2007, 
requesting a final determination on behalf of Sharp Electronics 
Corporation (``Sharp'') pursuant to subpart B of 19 CFR Part 177. We 
apologize for the delay in our response.
    Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 2511 et 
seq.)(``TAA''), 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 printer 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 Dragon II J-models (Sharp model 
 MX-M550N/UJ, MX-M620N/UJ, and MX-M700N/UJ). These models 
have monochrome copying, printing, faxing and duplex scanning 
functions.
    Sharp Corporation, Sharp's parent company (``Sharp Japan'') 
developed the Dragon II J-models in Japan, including the 
engineering, development, design and art work processes. The 
production of the Dragon II J-Models begins with the preparation of 
the key subassemblies and units. According to your submission, there 
are 11 main subassemblies that compose the Dragon II J-models. Of 
the eleven subassemblies that compose the Dragon II J-Models, only 
the drum unit subassembly is assembled in Japan. The remaining 10 
subassemblies are assembled in China with parts from Japan and 
China. The final assembly of the merchandise is performed in Japan.

The Subassemblies Assembled in China

    According to your submission, the subassemblies which are 
themselves assembled in China are essentially as follows:
    The laser scanning unit (``LSU'') creates text or images on the 
photoconductor drum. It consists of a housing, synchronous lens, two 
cylindrical lenses, and asynchronous lower lens.
    The transfer belt unit transfers the image created on the drum 
onto the surface of the paper for printing.
    The multifunctional printer cabinet subassembly is comprised of 
the mechanical frame for the printer engine along with exterior 
panels, paper transport and exit components, paper driver motors, 
cooling fans and filters, sensors and switches for detecting paper 
and whether doors are open or closed, the paper manual feed unit, 
the toner supply motors and sensors, paper transport motors and 
sensors, the duplex section, the toner image transfer section, the 
image scanner section and the operation panel.
    The main charger unit subassembly charges the surface of the 
drum evenly by application of high voltage so that it can form 
electrostatic images when irradiated by laser beams.
    The process unit subassembly houses the drum used for creating 
images. The drum is produced and installed in China.
    The developer unit is used to transfer toner evenly over the 
latent image created on the

[[Page 64095]]

drum unit. It is composed of a developing roller, a developer 
doctor, a mixing roller, humidity sensor, developer and toner.
    The multifunctional printer control unit is the combination of a 
printed circuit board with a number of sophisticated integrated 
circuits. It controls the electrical and mechanical units. The 
control printed wiring board (``PWB'') and mother PWB are stuffed in 
China.
    The Duplex Single Pass Feeder unit transports original documents 
fed into the multifunctional printer to the scanner. It contains a 
contact image sensor (``CIS'').
    The fusing unit is used to fix the transferred image onto paper.
    The toner hopper unit subassembly transports toner from the 
hopper to the developing unit and transports waste toner to the 
waste toner section.

Japanese Parts and Subassembly

    The drum unit, which is assembled in Japan, contains the drum, a 
core component for creating images.
    The parts that are made in Japan that are claimed to be critical 
components include: the LSU housing, the LSU fixing base, the LSU 
synchronous lower lens, LSU two cylinder lenses, the transfer belt, 
cleaning brushes, drum separator pawls, the cleaning brush roller, 
the toner waste pipe, the drum, the mixing roller, the humidity 
sensor, the diodes and resistors, condensors, the flash ROM, the 
boot ROM, the firmware, the SDRAM, the application-specific 
integrated circuit (``ASIC''), the multifunctional printer input/
output ASIC, the system control ASIC, the LCD panel control ASIC, 
the USB controller, the CIS, the fusing gear, the separator pawl, 
the web roller, the cleaning sub roller, the cleaning roller 
bearing, the lower cleaning roller and the thermostats.
    The firmware and ASICS are developed and produced in Japan. 
Further, the developer (iron powder beads) and toner are produced in 
Japan.

Final Assembly and Testing In Japan

    The final assembly of the machines takes place in Japan. Sharp 
Japan starts with a MFP cabinet unit subassembly and attaches the 
various subassemblies by screws.
    The printer control unit (MFP control unit) together with the 
flash ROM (which includes the firmware) is installed in a slot on 
the back side of the MFP cabinet. The flash ROM is installed into 
the slot on the rear of the MFP cabinet unit. A network interface 
card is installed. An additional flash ROM and a network interface 
card are installed.
    Testing, final inspection and packaging of the units for 
shipment to the U.S. occurs in Japan.
    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 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 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 Sec.  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, 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), 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. See also HRL 562936, dated March 17, 2004.
    The processing operations presented in this case are most 
similar to that presented in HRL 563491. The composition and 
assembly process of a number of key subassemblies such as the laser 
scanning unit, the transfer belt unit and the controller unit are 
not meaningfully different from the assembly operations performed on 
the merchandise in our previous ruling. Taking all of the facts and 
circumstances into account, and in light of our previous decision, 
we find that the operations performed in Japan including the final 
assembly, testing and related operations to be sufficiently complex 
and meaningful to result in a new and distinct article of commerce 
in Japan. Therefore, we find that the Dragon II-J multifunctional 
printer machines are products of Japan for the purposes of U.S. 
Government procurement. We note however, that with so many of the 
subassemblies performed in China, the transfer of additional parts 
or processing from Japan to China might well require a different 
result.
    HOLDING:
    Based on the facts of this case, the country of origin of the 
Dragon 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 Sec.  177.29. Any party-at-interest 
other than the party which requested this final determination may 
request, pursuant to 19 CFR Sec.  177.31 that CBP reexamine the 
matter anew and issue a new final determination. Pursuant to 19 CFR 
Sec.  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. E9-29056 Filed 12-4-09; 8:45 am]
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