[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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