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NY L82400

February 14, 2005

MAR-2 RR:NC:1:120 L82400


Mr. Harvey M. Applebaum
Covington and Burling
1201 Pennsylvania Avenue NW
Washington, DC 20004-2401

RE: The country of origin marking of Drum Units-Substantial Transformation

Dear Mr. Applebaum:

In your letter dated February 2, 2005, you requested a ruling on behalf of Canon Inc. as to the proper country-of-origin for Drum Units assembled in China for use in Canon E210/212 multifunctional printers. Your letter submits that the operations constitute a substantial transformation such that China is the country of origin for purposes of country of origin marking.

The Drum Unit performs a four-stage electrophotographic process (exposure, development, transfer and fixing), which places a permanent photocopied image onto paper. The Drum Unit contains over eighty components, primarily of Chinese and Japanese origin. The key components consist of the drum composite, the cleaner blade, the charge roller, and the scraper sheet unit. The cleaner blade and charge roller components are assembled in Japan, while the drum composite and scraper sheet unit components are assembled in China. The subcomponents of the drum composite, cleaner blade, and charge roller components are exclusively of Japanese origin, while the subcomponents of the scraper sheet unit component are exclusively of Chinese origin.

The 30-step Drum Unit assembly occurs in China. The assembly requires skilled application of sophisticated manufacturing technologies, strictly controlled conditions and exact measurements and adjustments. This assembly process produces a new product name (the Drum Unit) with a new character (drum unit) and use (carrying out the development function of the electro-photographic process), distinct from individual components and subassemblies of the Drum Unit, thereby causing those components to lose their separate identities and become integral parts of the finished Drum Unit.

The following steps used in the assembly of the Drum Units in China indicate the precision, skilled evaluation and strictly-controlled conditions necessary to substantially transform the Japanese-origin subassemblies and components to finished Drum Units of Chinese origin:

Insert drum roller to drum cylinder
Attach flange to both ends of drum cylinder Affix scraper sheet to scraper sheet plate Attach brush to brush pipe
Attach spurs to spur plate
Affix vertical seal, blade, seal and scraper seal to cleaner container Attach charge electrode to cleaner container Affix handle label to cleaner container
Attach drum bushing to cleaner container
Attach charge roller terminals to cleaner container Attach cleaner blade to cleaner container Affix seals to cleaner container
Attach scraper sheet unit to cleaner container Attach waste toner feed screw to cleaner container Attach gear fix plate to cleaner container Attach charge roller to cleaner container Attach reciprocal front shaft, brush unit and reciprocal back shaft to cleaner container Attach drum composite to cleaner container Attach drum support to cleaner container
Attach spur unit to cleaner container

In step 11, a Canon-designed specialized instrument is used to ensure the cleaner blade presses over the surface of the drum uniformly to remove the residual toners adequately.

Precise measurement is used to ensure step 13 collects the residual toner adequately. These specialized instruments define the measurements of the rotating drum to ensure the laser beams create precise images when scanning the surface of the drum. The assembly of the Drum Unit occurs in a strictly controlled environment illuminated by a yellow beam to protect the surface of the photosensitive drum from exposure.

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. By enacting 19 U.S.C. 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of origin of which the goods were the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will. United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940)).

Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as: The country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of this part.

Accordingly, the country of origin of an article is the country in which it was wholly grown, or, if processed in several countries, the country in which the last substantial transformation occurred. The well-established test for determining whether a substantial transformation has occurred is derived from language enunciated by the court in Anheuser-Busch Association v. United States, 207 U.S. 556, 562 (1908), which defined the term "manufacture" as follows:

Manufacture implies a change, but every change is not manufacture and yet every change in an article is the result of treatment, labor and manipulation. But something more is necessary, as set forth and illustrated in Hartranft v. Wiegmann, 121 U.S. 609. There must be transformation; a new and different article must emerge, having a distinctive name, character or use.

Simply stated, a substantial transformation occurs "when an article emerges from a process with a new name, character, or use different from that possessed by the article prior to processing." See Texas Instruments, Inc. v. United States, 69 CCPA 152, 681 F. 2d 778 (1982)(cited with approval in Torrington Co. v. United States, 764, F.2d 1463, 1568 (1985).

In determining whether a substantial transformation occurs in manufacture by combining of parts or materials, the inquiry concerns the extent of operations and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 3 CIT 204, 573 F. Supp. 1149 (1983), aff’d 2 Fed. Cir. 105, 741 F. 2d 1368 (1984).

This finding is consistent with the determinations in HQ 557142 (May 28, 1993)(assembly of a wax thermal transfer page printer using approximately 420 parts results in substantial transformation); HQ 735315 (April 10, 1995) (spectrometer shell undergoes substantial transformation when combined with printed wiring board assemblies containing software and control capabilities). The assembly operations are more extensive than certain assembly operations found not to result in substantial transformation. See HQ 734050 (June 17, 1991)(assembly of five subassemblies by 45 minute screwdriver operations did not result in substantial transformation of the resulting printer).

Based upon the information provided, components and subcomponents as enumerated above undergo a substantial transformation when assembled in China to produce the Drum Unit for use in Canon E210/212 multifunctional printers. For the purposes of country of origin marking under Section 304 of the Tariff Act, as amended, the Drum Units shall be marked in accordance with Section 304 and Part 134, Customs Regulations, to indicate China as the country of origin. Thus, the Drum Units are considered a product of China and must be marked accordingly.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Denise M. Faingar at (646) 733-3010.


Robert B. Swierupski

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