[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32424-32427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12819]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Monochrome 
Laser Printers

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 monochrome laser printers. Based upon the 
facts presented, CBP has concluded in the final determination that the 
United States is the country of origin of the monochrome laser printers 
for purposes of U.S. Government procurement.

DATES: The final determination was issued on May 21, 2013. 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 on or before July 1, 2013.

FOR FURTHER INFORMATION CONTACT: Suzanne Kane, Valuation and Special 
Programs Branch: (202) 325-0119.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 21, 2013, 
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 monochrome laser printers which may be 
offered to the U.S. Government under an undesignated procurement 
contract. This final determination, in HQ H241146, was issued at the 
request of Ricoh Electronics, 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). In the final 
determination, CBP concluded that, based upon the facts presented, the 
particular monochrome laser printers, assembled in the United States 
from parts made in China, Japan, and the Philippines, are substantially 
transformed in the United States, such that the United States is the 
country of origin of the finished article 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, Customs 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: May 22, 2013.
Glen E. Vereb,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.

Attachment

HQ H241146

May 21, 2013
OT:RR:CTF:VS H241146 SEK
CATEGORY: Marking

Ms. Fusae Nara
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10036-4039

RE: U.S. Government Procurement; Country of Origin of Ricoh Aficio SP 
5200DNG/SP 5210DNG Monochrome Laser Printers

    Dear Ms. Nara:
    This is in response to your letter, dated March 11, 2013, 
requesting a final determination on behalf of your client, Ricoh 
Electronics, Inc. (Ricoh), pursuant to subpart B of Part 177, Customs 
and Border Protection (CBP) Regulations (19 CFR Sec.  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. Sec.  2511 et 
seq.), CBP issues country of origin trade 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 
monochrome laser printers that Ricoh may sell to the U.S. Government. 
We note that Ricoh is a party-at-interest within the meaning of 19 CFR 
Sec.  177.22(d)(1) and is entitled to request this final determination.

FACTS:

    The products at issue in this ruling are certain monochrome laser 
printers manufactured by Ricoh, consisting of the Ricoh Aficio SP 
5200DNG and SP 5210DNG. Ricoh intends to import the components and 
subassemblies of the printers from China and the Philippines for 
manufacture in the U.S. and subsequent sale to U.S. government 
agencies.
    Ricoh states that it developed the SP52000-series printers in 
Japan, and that the entire engineering, development, design and artwork

[[Page 32425]]

processes for the printers took place in Japan. The project team 
consisted of approximately 40 engineers, who were all based in Japan 
and worked for Ricoh's parent company, Ricoh Company, Ltd. At the 
initial stage of the printers production process, individual parts are 
assembled into various assemblages of parts called subassemblies. The 
manufacture of subassemblies takes place in multiple countries, 
including the United States, China, and the Philippines. The 
subassembly units incorporated in Ricoh's printers include the 
following:
     Duplex Unit: enables double-sided copying and printing. It 
is assembled in China.
     Fusing Unit: contains a fusing roller and a pressure 
roller, which are both manufactured in Korea, and a heater manufactured 
in Japan. The main task of the Fusing unit is to permanently affix the 
toner on the paper by applying heat and pressure to the toner powder. 
The Fusing unit is assembled in China.
     Laser Unit: receives the image from the Scanning unit and 
copies the image onto the organic photo conductor (OPC) drum. The Laser 
unit is assembled in China. The two key components of the Laser unit, 
the laser diode unit and two lenses, are manufactured in Japan.
     All in One Unit (AIO): is assembled in China and contains 
the toner powder manufactured in Japan using a formula developed by 
Ricoh Company, Ltd.
     Engine Board (EGB): controls all printer engine functions 
both directly and through other control boards. It is assembled in 
China.
     Power Supply Unit (PSU): provides the DC power to the 
system and AC power to the fusing. It is assembled in China.
     Hard Disk Drive (HDD): is either a standard or optional 
item depending on the model type of printer. Ricoh purchases HDDs made 
in the Philippines from another company.
     Operation Panel: acts as the interface between the user 
and printer and is assembled in China.

Ricoh states that the above subassemblies are assembled in China to 
construct the incomplete and non-functional printer engine. The 
incomplete engine includes the duplex unit, fusing unit, laser unit, 
AIO, EGB, PSU and other paper tray and mechanical parts to move paper 
throughout the printer. Ricoh asserts that the assembly of the 
incomplete and non-functional printer engine does not require 
sophisticated skills or expensive machinery.
    The next stage of the production process is the Controller unit 
subassembly. Ricoh states that in a completed printer, the Controller 
unit functions as the electronic ``brain'' of the printer and controls 
its functions. Ricoh states that it has invested significant amounts 
for R&D in Japan to develop the Controller unit, as well as millions of 
dollars in Ricoh's factory in Tustin, California for the machinery to 
manufacture different types of Controller units. Ricoh considers the 
manufacturing of the Controller unit, including the printed circuit 
board (PCB) and programming of the firmware (the fixed internal 
programs that control electronic devices), to be extremely complex, and 
necessitating highly skilled labor to perform optical inspections, 
soldering, functional testing and circuit testing.
    The Controller unit is manufactured in the United States in three 
stages. First, Ricoh manufactures the PCB in the United States, 
including the automatic board stuffing process using surface mount 
technology (SMT), automated optical inspection (AOI), and manual 
soldering. Ricoh states that approximately 1,243 components, including 
integrated circuits, diodes, capacitors, connectors, and other 
semiconductor devices are mounted on the PCB using both automated and 
manual soldering processes. Second, Ricoh programs the PCB with 
firmware that was developed in Japan. Once the installation of the 
firmware on the PCB is complete, the Controller unit becomes functional 
as the ``brain'' of the printer. Finally, after the assembly of the PCB 
and the installation of the firmware, the PCB undergoes testing to 
ensure the functionality and quality of the PCB.
    The final assembly of the printers consists of incorporating the 
Controller unit and HDD into the incomplete, non-functional printer 
engines. A control board panel is then attached to the Controller unit 
and fixed. An HDD controller board is attached to a side of an HDD 
bracket. An HDD is then mounted on the other side of the HDD bracket 
and fixed. The assembled HDD is mounted on the controller unit and 
fixed with controller unit and the control board. An interface panel 
and a ground plate panel are put together. The assembled part is 
inserted into the control board panel. The assembled unit is inserted 
into the rear of the incomplete printer engine and screwed down. The 
operation panel is connected to the incomplete printer engine by a 
cable and then attached to the front of the printer engine. The AIO is 
then installed to the printer engine. The assembled printers will 
undergo inspection at Ricoh's Tustin, California factory, which is 
certified as an ISO 14001 factory to conduct the inspection procedure.

ISSUE:

    What is the country of origin of the Ricoh Aficio SP 5200DNG/SP 
5210DNG monochrome laser printers 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 as to whether an article is 
or would be a product of a designated country or instrumentality for 
the purposes of granting waivers or 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 in 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. Sec.  177.22(a).
    In rendering advisory rulings and final determinations for purposes 
of U.S. Government procurement, CBP applies the provisions of subpart B 
of part 177 consistent with the Federal Acquisition Regulations. See 19 
C.F.R. Sec.  177.21. In this regard, CBP recognizes that the Federal 
Acquisition Regulations restrict the U.S. Government's purchase of 
products to U.S.-made or designated country end products for 
acquisitions subject to the TAA. See 48 C.F.R. Sec.  25.403(c)(1). The 
Federal Acquisition Regulations define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the United 
States or that is substantially transformed in the United States 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 
transformed.
48 C.F.R. Sec.  25.003.
    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

[[Page 32426]]

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, 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 determining whether the combining of parts or materials 
constitutes a substantial transformation, the determinative issue is 
the extent of the 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 that leaves the identity of the 
imported article intact, a substantial transformation has not occurred. 
Uniroyal, Inc. v. United States, 3 Ct. Int'l Trade 220, 542 F. Supp. 
1026 (1982). Assembly operations that are minimal or simple, as opposed 
to complex or meaningful, generally will 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 Data General v. United 
States, 4 Ct. Int'l Trade 182 (1982), the court determined that for 
purposes of determining eligibility under item 807.00, Tariff Schedules 
of the United States (predecessor to subheading 9802.00.80, Harmonized 
Tariff Schedule of the United States), the programming of a foreign 
PROM (Programmable Read-Only Memory chip) in the United States 
substantially transformed the PROM into a U.S. article. In programming 
the imported PROMs, the U.S. engineers systematically caused various 
distinct electronic interconnections to be formed within each 
integrated circuit. The court noted that the programs were designed by 
a U.S. project engineer with many years of experience in ``designing 
and building hardware.''
    CBP has held in a number of cases involving similar merchandise 
that complex and meaningful operations involving a large number of 
components result in a substantial transformation. In support of its 
position, Ricoh cites HQ H018467 (Jan. 4, 2008). In HQ H018467, CBP 
considered the country of origin of multi-function printers in which 
manufacturing took place in two countries. In that case, the following 
eighteen units were manufactured in the Philippines from components 
produced in various countries: the automatic document feeder unit, 
scanner unit, operation panel unit, feed unit, manual paper feed unit, 
lift up motor unit, subassembly units, automatic document transferring 
unit, induction heating fuser unit, induction heating power supply 
unit, transcription unit, developing unit, laser scanning unit, main 
drive unit, motor drive board, high voltage power supply board, low 
voltage power supply board, and automatic duplex unit board. The units 
were sent to Japan where the system control board, engine control 
board, OPC drum unit, and the toner reservoir were manufactured and 
incorporated into the units. The control boards were then programmed in 
Japan with Japanese firmware that controlled the user interface, 
imaging, memories, and the mechanics of the machines. The machines were 
then inspected and adjusted as necessary. CBP found that the 
manufacturing operations in Japan substantially transformed the 
Philippine units such that Japan was the country of origin of the 
multifunctional machines. In making our determination we took into 
consideration the fact that the system control board, the engine 
control board, and the firmware, which were very important to the 
functionality of the machines, were manufactured in Japan. We also 
found that the operations performed in Japan were meaningful and 
complex and resulted in an article of commerce with a new name, 
character and use.
    Ricoh also cites HQ H185775 (Dec. 21, 2011). In HQ H185775, CBP 
considered the country of origin of a multifunction office machine. In 
that case, the incomplete print engine was produced in Vietnam and 
consisted of a metal frame, plastic skins, motors, controller board 
with supplier-provided firmware, a laser scanning system, paper trays, 
cabling paper transport rollers, and miscellaneous sensing and imaging 
systems. The incomplete print engine was shipped to Mexico, where the 
following assemblies were added: the formatter board, scanner/automatic 
document feeder, control panel, fax card, hard disk drive/solid state 
drive, firmware (which was developed and written in the U.S.), along 
with other minor components and accessories. The finished products were 
also tested and prepared for shipping to their ultimate destinations. 
CBP determined that Mexico was the country of origin because a 
substantial transformation of the various components occurred in 
Mexico, and the assembly of the materials from various countries 
resulted in the final multifunctional office machine product.
    In this case, substantial manufacturing operations are performed in 
both China and Japan. Chinese subassemblies are imported into the 
United States, where they are combined with U.S.-origin PCBs, and 
programmed with Japanese-origin firmware. The Controller unit is stated 
to control the functions and mechanics of the printers along with the 
Japanese firmware. As the printers are comprised of subassemblies and 
components from various countries, but are also comprised of a 
Controller unit assembled in the United States (with U.S.-origin PCBs), 
which is important to the function of the printers, and the assembly in 
the United States completes the printers, we find that the last 
substantial transformation occurs in the United States. See HQ H198875, 
dated June 5, 2012 (CBP found that Singapore was the country of origin 
of multi-function peripherals assembled to completion in Singapore, 
where they were also fitted with Singaporean-origin PCBs and programmed 
with Japanese-origin application software); HQ 563012, dated May 4, 
2004 (CBP found that Hong Kong was the country of origin of fabric 
switches assembled to completion in Hong Kong, where they were also 
configured and programmed with U.S.-origin software that transformed 
the switches from non-functional devices into fabric switches capable 
of performing various Storage Area Network related functions); HQ 
H170315, scenario III, dated July 28, 2011 (application and transceiver 
boards for satellite phones were assembled in Malaysia and programmed 
with U.K.-origin software in Singapore, where the phones were also 
assembled. CBP found that no one country's operations dominated the 
manufacturing operations of the phones and that the last substantial 
transformation occurred in Singapore.) Therefore, the country of origin 
of the Ricoh Aficio SP 5200DNG/SP 5210DNG monochrome laser printers is 
the United States.

HOLDING:

    The imported components that are used to manufacture the Ricoh 
Aficio SP 5200DNG/SP 5210DNG monochrome laser printers are 
substantially transformed as a result of the assembly and firmware 
installation operations performed in the United States. Therefore, we 
find that the country of origin of the Ricoh Aficio SP 5200DNG/

[[Page 32427]]

SP 5210DNG monochrome laser printers for government procurement 
purposes 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. Pursuant to 19 C.F.R. 
Sec.  177.30, any party-at-interest may, within 30 days of publication 
of the Federal Register Notice referenced above, seek judicial review 
of this final determination before the Court of International Trade.

    Sincerely,
Glen E. Vereb,

Acting Executive Director, Regulations and Rulings, Office of 
International Trade.

[FR Doc. 2013-12819 Filed 5-29-13; 8:45 am]
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