[Federal Register Volume 79, Number 129 (Monday, July 7, 2014)]
[Notices]
[Pages 38327-38329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15765]
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DEPARTMENT OF HOMELAND SECURITY
Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Toner Cartridge Products
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 toner cartridge products known as All-In-
One Toner Cartridges. Based upon the facts presented, CBP has concluded
in the final determination that Japan is the country of origin of the
All-In-One Toner Cartridges for purposes of U.S. Government
procurement.
DATES: The final determination was issued on June 24th, 2014. 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 August 6, 2014.
FOR FURTHER INFORMATION CONTACT: Grace A. Kim, Valuation and Special
Programs Branch, Regulations and Rulings, Office of International Trade
(202) 325-7941.
[[Page 38328]]
SUPPLEMENTARY INFORMATION: Notice is hereby given that on June 24, 2014
pursuant to subpart B of Part 177, U.S. Customs and Border Protection
Regulations (19 CFR part 177, subpart B), CBP issued a final
determination concerning the country of origin of certain toner
cartridge products known as All-In-One Toner Cartridges, which may be
offered to the U.S. Government under an undesignated government
procurement contract. This final determination, HQ H251592, was issued
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 assembly processes performed in
Japan, substantially transform non-TAA country All-In-One Toner
Cartridges. Therefore, the country of origin of the All-In-One Toner
Cartridges is Japan for purposes of U.S. Government procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that a
notice of final determination 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: June 24, 2014.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International
Trade.
Attachment
HQ H251592
June 24, 2014
OT:RR:CTF:VS H251592 GaK
CATEGORY: Origin
Fusae Nara
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10036-4039
RE: U.S. Government Procurement; Country of Origin of All-In-One
Toner Cartridges; Substantial Transformation
Dear Ms. Nara:
This is in response to your letter, dated February 21, 2014,
requesting a final determination on behalf of Ricoh Company Ltd.
(``Ricoh''), pursuant to subpart B of part 177 of the U.S. Customs
and Border Protection (``CBP'') Regulations (19 C.F.R. Part 177).
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 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 Ricoh's all-
in-one (``AIO'') toner cartridge (``AIO cartridge''). We note that
as a foreign manufacturer, Ricoh 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.
FACTS:
Ricoh designed and developed the AIO cartridge in Japan, which
is used with Ricoh's Aficio multifunctional products (``MFP'') as
well as printers. The AIO cartridge can be distinguished from
conventional toner cartridge in that it does not only contain the
toner powder, but also a cleaning unit and a development unit. It
serves multiple functions by storing and transporting the toner,
then transferring and affixing letters and images onto paper. The
AIO cartridge also cleans the surface of the Organic Photo Conductor
(``OPC drum''), which converts the light signal to the electric
charge, enabling the toner particles to be affixed onto the paper.
In contrast, in a conventional cartridge, the cleaning of the OPC
drum is done by the MFP or printers.
As stated above, the AIO cartridge has three main components:
toner powder, development unit, and cleaning unit. The toner powder
is the ink that forms the letters and images on paper and is claimed
to be the most critical element of the AIO cartridge. Ricoh
developed and produces the toner powder in Japan and the formula for
the toner is proprietary and patented. The production process
involves pre-mixing the chemical ingredients using a highly
sophisticated chemical mixer; mixing and kneading the toner powder
by adding air pressure, followed by a cooling process; pulverizing
the toner; equalizing the toner particles into the same size; and
final mixing and packaging.
The development unit has a container called a ``hopper,'' that
holds the toner powder. The development unit is assembled in China
and imported to Japan, where the hopper will be filled with toner
powder. After the hopper is filled with toner powder, the hopper is
sealed and cleaned to avoid any contamination of the MFPs and
printers.
The cleaning unit is assembled in Japan and contains the OPC
drum, cleaning blade, charge rollers and other miscellaneous parts.
With the exception of the OPC drum, all components are made in
Japan. The OPC drum is produced in Thailand with parts from various
countries. It is stated that the assembly of the cleaning unit
requires experienced technicians, as the assembly is of a delicate
nature. The assembly process includes assembling the cleaning blade,
applying black toner powder on the cleaning blade for a smooth
contact with the OPC drum, setting the waste toner case, assembling
the cleaning blade to the spent toner case, and assembling the OPC
drum and charger roller into the cleaning unit.
The next step in producing the AIO cartridge involves making a
frame assembly in Japan, which is the outer structure of the AIO
cartridge. The arm shutter is assembled to both the right and left
sides of the frame; a spring is attached to each arm shutter; the
right frame is assembled by attaching the arm shutter and electrode
sheets, which connect the cleaning unit and development units to the
toner hopper; a memory chip and radio-frequency identification tag
(``RFID chip'') is installed to the side of the right frames. The
same processes are repeated for the left frame, except that the left
frame does not include a memory chip or RFID chip. After the outer
structure is assembled, the toner hopper, developer unit and
cleaning unit are assembled together in Japan. The assembly process
involves mounting the right and left frames onto the assembled
development unit and cleaning unit combination, assembling gears
connecting the frame to the development and cleaning units, and
installing the OPC drum shutter. The AIO cartridge is inspected and
data is input onto the RFID chip, which allows the MFP or printer to
recognize the AIO cartridge and informs the user when the AIO
cartridge should be replaced.
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 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, 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
[[Page 38329]]
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.
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. Ricoh states that
the toner for the cartridge is the most valuable component citing
Headquarters Ruling Letter (HQ) W563548 (Nov. 9, 2009). In that
case, CBP considered the country of origin of toner cartridges and
image drums which were remanufactured in the U.S. The toner
cartridges comprised 52 parts plus toner and 20 new parts were used
to remanufacture the toner cartridges: 14 from the U.S., 1 from the
U.K., and 5 from China. The remaining 32 parts were salvaged from
used cartridges, which were cleaned for reassembly. The components
with mechanical function such as the shutters, mixing gear, mixing
bar, and spiral attachments were simply cleaned and not replaced.
The cartridges were filled with new toner of Japanese origin and
tested. CBP found that the cartridges were not substantially
transformed in the U.S. because the remanufacturing processes were
rather simple. Rather, the toner was the only significant component
replaced during the remanufacturing operation. CBP concluded that
since the toner imparted the essential character of the
remanufactured toner cartridge, the country of origin was Japan. HQ
W563548 also considered the remanufacture of image drums in the U.S.
The image drums were comprised of 110 parts and 56 new parts were
used from various countries: 12 in the U.S., 1 in Canada, 5 in
Japan, and 38 in Thailand. Several of the newly manufactured parts
were significant to the functionality of the image drum, such as the
organic photoreceptor drum (claimed to be the most valuable
component of the image drum), the developing roller, the charge
roller, and the cleaning blade, which were all manufactured in Japan
including new lubricating toner powder. Unlike the toner cartridge
in W563548, the remanufacturing of the image drums required
replacement of most of the components that contributed to the
functionality of the image drum. Based on these facts, CBP concluded
that the image drum was substantially transformed in the U.S.
We find that substantial manufacturing operations are performed
in Japan in producing the AIO cartridge. While the OPC drum is
manufactured in Thailand, the other parts of the cleaning unit
originate in Japan. As a result of the assembly of the cleaning unit
in Japan, the OPC drum becomes an integral part of the cleaning unit
such that it may be considered a product of Japan. This is analogous
to the remanufactured image drum assembly process described in HQ
W563548. The development unit is manufactured in China. The toner
powder is manufactured in Japan and as found in W563548, it is the
most critical element of the AIO cartridge. These three components
(two of Japanese origin and one from China) are brought together by
the frame assembly also performed in Japan. Therefore, we find that
the country of origin of the Ricoh AIO cartridge is Japan.
HOLDING:
Based on the facts of this case, we find that the processing in
Japan substantially transforms the non-Japanese components.
Therefore, the country of origin of the AIO cartridge 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 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,
Sandra L. Bell,
Executive Director, Regulations and Rulings Office of International
Trade.
[FR Doc. 2014-15765 Filed 7-3-14; 8:45 am]
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