[Federal Register Volume 81, Number 3 (Wednesday, January 6, 2016)]
[Notices]
[Pages 496-498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33245]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Certain
Multifunction Printer 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 multifunction printer products known as
bizhub C3850FS multifunction digital printers (``bizhub MFP''). Based
upon the facts presented, CBP has concluded that the country of origin
of the bizhub MFP is Japan for purposes of U.S. Government procurement.
DATES: The final determination was issued on December 23, 2015. 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 February 5, 2016.
FOR FURTHER INFORMATION CONTACT: Antonio J. Rivera, Valuation and
Special Programs Branch, Regulations and Rulings, Office of
International Trade (202) 325-0226.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on December 23,
2015, 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 certain multifunction
printer products known as bizhub C3850FS multifunction digital
printers, which may be offered to the U.S. Government under an
undesignated government procurement contract. This final determination,
HQ 263561, 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 the processing in Japan resulted in a substantial
transformation. Therefore, the country of origin of the bizhub MFP 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: December 23, 2015.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
Attachment
HQ H263561
December 23, 2015
OT:RR:CTF:VS H263561 AJR
CATEGORY: Origin
Daniel E. Waltz, Esq., Squire Patton Boggs (US) LLP, 2550 M Street,
NW., Washington, DC 20037
RE: U.S. Government Procurement; Country of Origin of Multifunction
Printers; Substantial Transformation
Dear Mr. Waltz: This is in response to your letter, dated March
23, 2015, requesting a final determination on behalf of Konica
Minolta (``K/M''), 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.
This final determination concerns the country of origin of K/M's
bizhub C3850FS multifunction digital printers (``bizhub MFP(s)'').
We note that K/M is a party-at-interest within the meaning of 19 CFR
177.22(d)(1) and is entitled to request this final determination.
FACTS:
K/M plans to sell its bizhub MFPs to the U.S. government. The
bizhub MFPs are multifunction color machines that perform printing,
copying, scanning, and faxing functions. According to K/M's counsel,
the bizhub MFP was designed and developed in Japan, and its most
important and complex components will be manufactured in Japan. The
assembly process for the bizhub MFPs will start in Thailand and
finish in Japan, assembling a total of 11 subassemblies into the
final bizhub MFP product.
Assembly Processes in Thailand:
In Thailand, the following four subassemblies (collectively,
``Subassemblies 1-4'') will be assembled into their final form
within the bizhub MFP's frame:
1. The Print Head will be produced in Thailand from five sub-
components:
a G1 lens manufactured in Japan;
a G2 lens manufactured in Japan;
a polygonal motor manufactured in China;
a housing case manufactured in China; and,
a laser diode manufactured in Taiwan.
According to K/M's counsel, while the quantity at which the G1
and G2 lenses are produced lowers their relative cost, the lenses
are more complex than the other sub-components of the Print Head as
noted by the higher skill and technology levels needed to produce
them. The Print Head operates by reflecting a laser beam off of the
lenses and onto the rotating polygonal mirrors in order to produce a
copied image in the Latent Image Unit's photoconductor (``OPC'').
The Print Head will be assembled into, and
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permanently integrated within, each bizhub MFP in Thailand.
2. The Optical Lens will be manufactured in China from Chinese-
origin materials. It operates by accurately collecting the light
reflected from external documents onto its lens. It will be
assembled into, and permanently integrated within, each bizhub MFP
in Thailand.
3. The Charge Coupled Device (``CCD'') Board will be
manufactured in China. It separates the colors collected by the
Optical Lens, and converts them into independent colors. It will be
assembled into, and permanently integrated within, each bizhub MFP
in Thailand.
4. The Mechanical Control Board will be manufactured in
Thailand. It controls the bizhub MFP's input and output process
through an engine that feeds the paper. It will be assembled into,
and permanently integrated within, each bizhub MFP in Thailand.
Additionally, six subassemblies (collectively, ``tested
subassemblies'') will be assembled into the bizhub MFP for testing
purposes, but then removed after testing, as follows:
5. The Latent Image Unit will be produced in Thailand from three
sub-components:
OPC drums manufactured in Japan;
a developer, with toner and carrier developing
materials, manufactured in Japan; and,
an electrostatic charging roller manufactured in Japan.
The OPC drums receive the laser beam. Then, the developing
materials and electrostatic charging roller sense the image being
transmitted by the laser, regulate its thickness and precision, and
transfer it to the Image Transfer Belt. The Latent Image Unit will
be installed within a bizhub MFP for testing purposes, and then
removed, while in Thailand.
6. The Image Transfer Belt Unit will be manufactured in China
from three sub-components:
an image transfer belt manufactured in China;
a 1st image transfer roller manufactured in China; and,
a cleaning blade manufactured in China.
It receives the single-color image from the Latent Image Unit
and creates a multi-color image to transfer onto paper. The Image
Transfer Belt Unit will be shipped to Thailand, where it will be
installed within a bizhub MFP for testing purposes, and then
removed.
7. The 2nd Image Transfer Roller Unit will be manufactured in
China. It supports the Image Transfer Belt Unit. The 2nd Image
Transfer Roller Unit will be shipped to Thailand, where it will be
installed within a bizhub MFP for testing purposes, and then
removed.
8. The Fusing Unit will be produced in Thailand from three sub-
components:
a fusing belt manufactured in Japan;
a fusing roller manufactured in China; and,
a pressure sub-component manufactured in China.
According to K/M's counsel, the fusing belt accounts for a
significant percentage of the Fusing Unit's cost and is a key sub-
component. The Fusing Unit will be installed within a bizhub MFP for
testing purposes, and then removed, while in Thailand.
9. The Hard Disk Drive (``HDD'') will be manufactured in China
or Thailand. It will be installed within a bizhub MFP for testing
purposes, and then removed, while in Thailand.
10. The Power Supply Unit will be manufactured in China. It will
be shipped to Thailand, where it will be installed within a bizhub
MFP for testing purposes, and then removed.
Assembly Process in Japan:
Once the tested subassemblies are removed, the bizhub MFPs as
assembled with Subassemblies 1-4 will be shipped to Japan without
the tested subassemblies. Instead of shipping the tested
subassemblies, six separate but identical subassemblies
(collectively, ``Subassemblies 5-10,'' as described above) will be
shipped to Japan for final assembly. In Japan, these integrated and
unintegrated subassemblies will be assembled to completion with the
following subassembly:
11. The MFP Board will be manufactured from Japanese materials,
and installed with Japanese-developed software, in Japan. According
to K/M''s counsel, it constitutes the machine's ``brain'',
integrating the printer and copier functions, and converting
electric signals to digital signals, which are sent to the Print
Head to create the image. It will be assembled into, and permanently
integrated within, each bizhub MFP in Japan.
The finished bizhub MFP will be tested, adjusted, and calibrated
in Japan before shipment to the U.S. The testing conducted in Japan
includes electronically adjusting the laser position and intensity
of the laser diode's beam in the Print Head, and electronically and
physically adjusting the Latent Image Unit to calibrate the unit's
position and imaging accuracy. According to K/M's counsel, the
testing conducted in Japan requires skilled workmanship, involving
more complex and precise tests than the initial testing and
adjustments conducted in Thailand.
ISSUE:
What is the country of origin of the bizhub MFP for purposes of
U.S. Government procurement?
LAW AND ANALYSIS:
Pursuant to Subpart B of Part 177, 19 CFR 177.21 et 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).
To determine 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. CBP will make these decisions on a case-by-case basis,
considering the totality of the circumstances. The country of origin
of the article's components, the extent of the processing that
occurs within a given country, and whether such processing renders a
product with a new name, character, and use are primary
considerations in such cases. Additionally, facts such as resources
expended on product design and development, extent and nature of
post-assembly inspection procedures, and worker skill required
during the actual manufacturing process will be considered when
analyzing whether a substantial transformation has occurred;
however, no one such factor is determinative.
In various cases concerning similar merchandise, CBP has held
that complex and meaningful assembly operations involving a large
number of components will generally result in a substantial
transformation. In Headquarters Ruling Letter (``HQ'') 562936, dated
March 17, 2004, CBP addressed the country of origin of certain MFPs
assembled in Japan of various Japanese- and Chinese-origin parts.
CBP determined that the MFP was a product of Japan based on the fact
that a ``substantial portion of the printer's individual components
and subassemblies [were] of Japanese origin.'' Furthermore, CBP
noted that some of the Japanese components and subassemblies were
essential parts of the finished article, and other Japanese parts,
including the reader scanner unit and the control panel unit, were
critical to the production of the printer. Finally, CBP noted that
the Japanese processing operations were complex and meaningful, that
required ``the assembly of a large number of components, and
render[ed] a new and distinct article of commerce that possesse[d] a
new name, character, and use.''
In HQ H025106, dated June 11, 2008, CBP addressed the country of
origin of certain photocopying machines, which had photocopying,
printing, faxing, and scanning functions. The machines were
comprised of a scanning unit, controller unit subassembly, laser
scanning unit, photoconductor unit, developer unit, transfer unit,
and fusing unit. Three of these components were assembled into the
machine's frame in China, and the rest were assembled into the frame
in Japan,
[[Page 498]]
where the machines were completed. CBP noted that though the
developer unit and transfer unit were assembled in China, enough of
the subassemblies and individual components (e.g. the transfer belt
and photoconductor unit, among others) were from Japan, with the
photoconductor being made of entirely Japanese parts. It also noted
that though the developer unit would be assembled in China, two of
the unit's key components were from Japan; and while the transfer
unit would be partially assembled in China, the transfer belt was
from Japan. CBP also noted that there were a large variety of
adjustments that were made to the subassemblies in Japan, using
advanced equipment and firmware. As a result, CBP held that the
country of origin of the machines was Japan because the Japanese and
foreign origin parts were substantially transformed into the
machines through the product assembly that took place in Japan. See
also HQ H020516, dated November 7, 2008 (holding that the country of
origin of certain MFPs was Japan, using the same reasoning as HQ
562936 and HQ H025106, and also noting that the MFPs were designed
and developed in Japan).
Based on the facts presented, we note that though the assembly
of the bizhub MFP will take place in Japan and Thailand, there are
also operations that contribute to this assembly which will take
place in China. In situations like these, no one country imparts the
dominant portion of the work conducted. Nonetheless, based upon the
applicable legal standard, we determine that, the frame and
subassemblies of the bizhub MFP that will be imported into Japan
will be substantially transformed in Japan such that Japan will be
the country of origin for purposes of U.S. Government procurement.
In making this determination, we note that only four of the bizhub
MFP's subassemblies (i.e. Subassemblies 1-4) will be assembled into
the bizhub MFP's frame in Thailand, while the remaining seven
subassemblies (i.e. Subassemblies 5-10, plus the MFP Board) will be
assembled into, and permanently integrated within, the bizhub MFP in
Japan. Further, we note that the MFP Board (the ``brain'' of the
bizhub MFP) will be manufactured from all Japanese parts, will be
integrated into the bizhub MFP in Japan, and accounts for a
significant percentage of total subassemblies cost. Although many of
the individual subassemblies will be assembled outside of Japan, we
note sufficient use of Japanese sub-components in producing these
subassemblies, such as the fusing belt that will be used to make the
Fusing Unit, and the OPC drums, developer, and electrostatic roller
that will be used to make the Latent Image Unit. As a result, the
Japanese subassemblies and sub-components collectively attribute a
significant percentage of the total subassemblies cost. Moreover,
though we note the importance of the subassemblies and sub-
components from Thailand and China, these subassemblies and sub-
components will be integrated into a product that was designed and
developed in Japan, and will be operated by Japanese-developed
software that will also be installed onto the bizhub MFP in Japan.
See HQ H198875, dated June 5, 2012 (noting that a foreign HDD that
was integrated into an MFP in Singapore and installed with Japanese
software in Singapore contributed to the reason that the HDD was
substantially transformed into the MFP in Singapore). In this case,
K/M incurred significant resources in Japan by developing and
designing the MFP product, and its proprietary software, in Japan.
Finally, the assembly operations that occur in Japan will be
sufficiently complex and meaningful. Through the product assembly,
as well as the testing and adjustment operations, the individual
subassemblies and sub-components of Japanese and foreign-origin will
be subsumed into a new and distinct article of commerce that has a
new name, character, and use. Therefore, under the totality of the
circumstances, we find that the country of origin of the bizhub MFP
will be Japan for purposes of U.S. Government procurement.
HOLDING:
Based on the facts provided, the country where the last
substantial transformation will take places is Japan. As such, the
bizhub MFPs will be considered products of 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 177.29. Any party-at-interest other
than the party which requested this final determination may request,
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and
issue a new final determination. Pursuant to 19 CFR 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,
Myles B. Harmon,
Acting Executive Director
Regulations and Rulings
Office of International Trade
[FR Doc. 2015-33245 Filed 1-5-16; 8:45 am]
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