[Federal Register Volume 78, Number 69 (Wednesday, April 10, 2013)]
[Notices]
[Pages 21387-21389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-08347]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Printer and 
Fax Machine

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 the HP
    LaserJet Enterprise 500 Color Printer and Fax Machine M551. Based 
upon the facts presented, CBP has concluded in the final determination 
that China is the country of origin of the HP LaserJet Enterprise 500 
Color Printer and Fax Machine M551, for purposes of U.S. Government 
procurement.

DATES: The final determination was issued on April 3, 2013. A copy of 
the

[[Page 21388]]

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 May 10, 2013.

FOR FURTHER INFORMATION CONTACT: Karen Greene, Valuation and special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202-3235-0041).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on April 3, 
2013, pursuant to subpart B of part 177, Customs and Border Protection 
(CBP) Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of the HP LaserJet 
Enterprise 500 Color Printer and Fax Machine M551 which may be offered 
to the United States government under an undesignated government 
procurement contract. This final determination, in HQ H219519, was 
issued at the request of Hewlett-Packard Company 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 HP LaserJet Enterprise 500 
Color Printer and Fax Machines M551 assembled in Mexico from foreign 
made parts are products of China for purposes of U.S. Government 
procurement.
    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: April 3, 2013.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H219519

April 3, 2013

MAR-2 OT:RR:CTF:VS H219519 KSG

Carlos Halasz
Product Compliance Strategy & Policy
Hewlett-Packard Company
8501 SW 152 Street
Palmetto Bay, FL 33157

RE: Government Procurement; Country of Origin of HP LaserJet 
Enterprise 500 Color M551 Printer and Fax Machine; substantial 
transformation

Dear Mr. Halasz:

    This is in response to your letter dated May 21, 2012, 
requesting a final determination on behalf of Hewlett-Packard 
Company (``HP''), pursuant to subpart B of part 177 of the U.S. 
Customs and Border Protection (``CBP'') Regulations (19 CFR Part 
177). 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 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.
    The final determination concerns the country of origin of the HP 
LaserJet Enterprise 500 Color Printer and Fax Machine M551 
(``LaserJet 500''). We note that as a U.S. importer, HP is a party-
at-interest within the meaning of 19 CFR 177.22(d)(1) and is 
entitled to request this final determination. A telephone conference 
was held on this matter on September 27, 2012.

FACTS:

    The LaserJet 500 is a laser-based office machine for printing 
and faxing, suitable for use in homes and small to medium-size 
businesses. It is composed of the following components: (1) an 
incomplete print engine, which consists of a metal frame, plastic 
skins, motors, controller board (supplier provided firmware), a 
laser scanning system, fuser, paper trays, cabling, paper transport 
rollers, miscellaneous sensing and imaging systems; (2) the 
formatter board, which consists of a printed circuit board, industry 
standard components and customized integrated circuits; (3) the fax 
card; (4) the hard disc drive; (5) the solid state drive; (6) the 
firmware; (7) the intermediate transfer belt (``ITB''); and (8) 
minor components and accessories. The incomplete print engine may 
also come in two other configurations that include either the ITB or 
the base unit and all of the hardware components.
    It is stated that the complete print engine is the central 
mechanism of the LaserJet 500 that performs printing. It translates 
a laser image generated by the formatter to markings on paper, 
transports paper, and fuses the image on the paper. The ITB is 
essential to the imaging function because it transfers the image 
from each toner cartridge to the ITB by color plane and then carries 
the image to the paper. The print formatter is the main controller 
of the printer. Its main function is to receive input data from 
remote devices via different input ports, translate that data into 
format the print engine understands, and send the data onto the 
print engine, enabling the information to be printed onto paper. It 
is also responsible for providing command and control signals 
allowing the engine to start, run and stop motors in a manner that 
allows the paper to move from input devices to the designated output 
bin of the printer, while at the same time putting the printed image 
on the paper.
    All the parts are produced in China except for the hard disc 
drive, which is produced in Malaysia. The firmware that allows 
access to the hardware (such as trays, and paper size) and software 
(ex. job counting, security, stored jobs) is developed and written 
in the U.S. and is tested and debugged in either Brazil or India. 
The formatter and other sub-systems have their own firmware for 
operation.
    You presented three different scenarios. In scenarios one and 
two, the LaserJet 500 undergoes the following operations in Mexico: 
final assembly, downloading firmware written in U.S., and testing, 
which includes making settings appropriate to the country of the 
buyer and the client's specific needs. In scenario one, the assembly 
takes 3-4 minutes whereby the external memory drive is installed 
onto the formatter and the cables are routed as necessary. The 
firmware for the engine and formatter is downloaded onto the hard 
drive or solid state drive. In scenario two, the assembly takes 7-8 
minutes and involves the assembly discussed in scenario one, plus 
the installation of the ITB. In both scenarios, the testing takes 7-
14 minutes and includes making certain settings for the language, 
paper, functionality, and other feature settings, as described 
above. In scenario three, the LaserJet 500 undergoes assembly in 
Mexico that takes 2-3 minutes, the firmware for the sub-systems 
(engine, formatter) is downloaded onto the hard drive or solid state 
drive, and the product undergoes testing.
    The cost of the incomplete print engine is the most expensive of 
the hardware components, with the formatter board being the second-
most expensive component.

ISSUE:

    What is the country of origin of the imported LaserJet 500 for 
government procurement purposes under the three different scenarios?

LAW AND ANALYSIS:

    Pursuant to Subpart B of part 177, 19 CFR 177.21et 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).
    It is your position that the country of origin in scenarios one 
and two is Mexico because the final assembly, programming and 
testing results in a finished and operational laser printer. You 
believe that the country of origin in scenario three is Mexico 
because although the incomplete print engine already includes all 
hardware components when it is imported

[[Page 21389]]

into Mexico, the production processing in Mexico consists of loading 
the firmware onto the print engine.
    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 (CIT 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. In Customs Service Decision 
(``C.S.D.'') 85-25, 19 Cust. Bull. 844 (1985), CBP held that for 
purposes of the Generalizes System of Preferences, 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 were assembled.
    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, factor such as the 
resources expended on product design and development, the 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 Data General v. United States, 4 CIT 182 (1982), the court 
determined that for purposes of determining eligibility under item 
807.00, Tariff Schedule of the United States (predecessor to 
subheading 9802.00.80, Harmonized Tariff Schedule of the United 
States), the programming of a foreign Programmable Read Only Memory 
Chip (``PROM'') in the United States substantially transformed the 
PROM into a U.S. article. In programming the imported PROM's, the 
U.S. engineers systematically caused various distinct electronic 
interconnections to be formed within each integrated circuit. The 
programming bestowed upon each circuit its electronic function that 
is, its ``memory'' which could be retrieved. A distinct physical 
change was effected in the PROM by the opening or closing of the 
fuses, depending on the method of programming. This physical 
alteration, not visible to the naked eye, could be discerned by 
electronic testing of the PROM. The court noted that the programs 
were designed by a U.S. project engineer with many years of 
experience in ``designing and building hardware.'' While replicating 
the program pattern from a ``master'' PROM may be a quick one-step 
process, the development of the pattern and production of the 
``master'' PROM required much time and expertise. The court noted 
that it was undisputed that programing altered the character of a 
PROM. The essence of the article, its interconnections or stored 
memory, was established by programming. The court concluded that 
altering the non-function circuitry comprising a PROM through 
technological expertise in order to produce a functioning read only 
memory device, possessing a desired distinctive circuit pattern, was 
no less a substantial transformation than the manual interconnection 
of transistors, resistors and diodes upon a circuit board created a 
similar pattern.
    You cite HRL H185775, dated December 21, 2011, where CBP ruled 
that a laser-jet machine that operates as a printer, scanner, copy 
and fax machine, was considered a product of Mexico for procurement 
purposes. The scanner in that case was designed, developed and 
assembled in the U.S. The control panel was also designed in the 
U.S. The print engine was produced in Vietnam. The formatter, 
control panel, and solid state drive were produced in China. The 
hard disk drive was produced in Malaysia. This case is 
distinguishable from the instant case because the hardware was 
produced in various Asian countries.
    You also cite HRL H175415, dated October 4, 2011, where CBP held 
that development of U.S. software, at significant cost to the 
company and over many years plus the programming of an imported 
local area network switch in the U.S. together substantially 
transformed the switch in the U.S. In that case, the software 
provided the hardware with its essential character of data 
transmission by providing network switching and routing 
functionality among other operations. Accordingly, the country of 
origin of the switch was considered the U.S.
    Unlike H185775, in all three scenarios presented in this case, 
all the components except the hard disc drive are produced in China. 
The assembly performed in Mexico is a simple assembly not 
significant enough to result in a substantial transformation of 
those Chinese components and subassemblies. There is no showing that 
in any of the scenarios, the processing in Mexico is complex. The 
downloading of the firmware in Mexico does not change or define the 
use of the finished printer/fax machine. The firmware itself 
provides the essential characteristics of performing as a printer 
and fax machine. While the firmware may be developed in the U.S., 
the downloading is not occurring in the U.S. Further, the firmware 
downloaded in Mexico does not include all the firmware necessary for 
the finished good. Furthermore, some of the assemblies (formatter, 
for example) have their own firmware. All the significant parts that 
are the essence of the finished product are produced in China, 
particularly the high-cost print engine and formatter board. 
Accordingly, we find that the country of origin of the imported 
LaserJet 500 for government procurement purposes would be China 
under all three scenarios.

HOLDING:

    Based on the facts provided, the LaserJet 500 will be considered 
a product of China under all three scenarios for government 
procurement purposes.

Sincerely,
Sandra L. Bell,
Executive Director, Regulations and Rulings Office of International 
Trade.
[FR Doc. 2013-08347 Filed 4-9-13; 8:45 am]
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