MAR-2-05 RR:CR:SM 560768 MLR
John M. Peterson, Esq.
Neville, Peterson & Williams
80 Broad Street, 34th Floor
New York, NY 10004
RE: Country of origin marking for photoreceptor toner
cartridges; disassembly; cleaning; reassembly;
Canada; NAFTA; Article 509
Dear Mr. Peterson:
This is in reference to your letter of November 21,
1997, requesting a ruling on behalf of your client, Xerox
Corporation, concerning the country of origin marking of
certain photoreceptor toner cartridges (hereinafter
"cartridges"), imported from Canada. A sample of a
cartridge was submitted with your request.
FACTS:
It is stated that cartridges, classifiable under
subheading 8473.30.30, Harmonized Tariff Schedule of the
United States (HTSUS), for use with automatic data
processing (ADP) laser printers will be imported into the
U.S. from Canada. As imported from Canada, it is stated
that the cartridges will include a photoreceptor belt or
cylinder, toner receptacle unit, toner developing unit,
charge/discharge unit, and cleaning unit. A photoreceptor
is stated to be the surface on which an electrostatic
charge creates a positive image of the document being
printed. The toner chemical is stated to be essential to
the creation of the image which is transferred to the
paper. The developing unit creates the electrostatic
charge on the photoreceptor, and the housing is stated to
be specially shaped to fit inside the printer cabinet and
to allow the various components of the cartridge to
operate.
It is stated that the cartridges will be manufactured
in Canada by a Xerox contractor, in part from components
salvaged from "spent" or "used" toner cartridges. The
used cartridges will be sourced from a variety of
countries. It is stated that in Canada the cartridges
will undergo an extensive disassembly operation, which
will entail the following steps:
1. removal of covers,
2. removal of corona wires,
3. removal of springs,
4. release of springs,
5. removal of plastic pins,
6. separation of developer units from waste hoppers,
7. removal of metal axle from gear housing,
8. removal of photoreceptor drum,
9. removal of metal wiper blade,
10. vacuum cleaning of waste hopper to remove toner
chemicals therefrom,
11. inspection of toner auger (agitator) paddle and
white gears,
12. cleaning of wiper blade,
13. inspection of wiper blade,
14. if wiper blade is suitable for reuse, dipping
wiper blade in cleaning solution,
15. cleaning of wiper blade removed from solution,
16. inspection of wiper blade,
17. reinstallation of blade on clean waste hopper,
18. inspection of developer housing,
19. vacuum removal of toner chemicals from housing,
20. removal and inspection of magnetic roller, and
21. adjustment of tolerances and sealing of developer
unit.
It is stated that disassembled components which are
determined to be damaged or defective will be discarded.
Among the components which are likely to be replaced in
some cases are toner augers and gears, wiper blades,
developer housings, and magnetic rollers. It is also
stated that other components, such as corona wires and
photoreceptor drums, will be removed and replaced in
virtually all cases. It is also stated that no effort
will be made to identify the components which impart the
essential identity to any of the spent cartridges or to
keep those components together during the manufacturing
process. After disassembly, it is stated that the
salvaged parts will be placed in bins, and new parts will
be ordered from inventory. The process of assembly is
stated to consist of the following processes:
1. cleaning of mag roller (mag rollers will be
replaced in virtually all cases),
2. filling of toner hopper with a new supply of
electrostatic toner chemical,
3. checking for leakage in refilled cartridges,
4. affixing traceability label on cartridge,
5. cleaning of corona wire in ultrasonic bath,
6. drying of corona wire and installation in a clean
container,
7. installation of new photoreceptor drum (100
percent replacement part),
8. installation of metal axle into cartridge housing,
9. installation of corona wire (many of which will be
new replacement parts),
10. application of toner chemical on magnetic roller,
11. assembly of finished developer unit to waste
hopper,
12. reinstallation of cartridge cover on housing,
13. testing of cartridge and completion of
"traceability card", and
14. sealing and labeling of refurbished cartridges.
Xerox estimates that parts accounting for approximately 15
percent of the value of the spent cartridges will be
salvaged and reused, and that the remaining components
will be new components and will originate in Canada and
several other countries.
ISSUE:
Whether the refurbished cartridges may be marked
"Made in Canada".
LAW AND ANALYSIS:
The marking statute, section 304, Tariff Act of 1930,
as amended (19 U.S.C. 1304), provides that, unless
excepted, every article of foreign origin (or its
container) imported into the U.S. 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 U.S. the English name of the country of origin of
the article. Part 134, Customs Regulations (19 CFR Part
134) implements the country of origin marking requirements
and exceptions of 19 U.S.C. 1304.
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 U.S.
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; however for a good of a NAFTA country, the
NAFTA Marking Rules will determine the country of
origin. (Emphasis added.)
Section 134.1(j), Customs Regulations {19 CFR
134.1(j)}, provides that the "NAFTA Marking Rules" are the
rules promulgated for purposes of determining whether a
good is a good of a NAFTA country. A "good of a NAFTA
country" is defined in 19 CFR 134.1(g) as an article for
which the country of origin is Canada, Mexico, or the U.S.
as determined under the NAFTA Marking Rules set out at 19
CFR Part 102.
Section 102.11, Customs Regulations (19 CFR 102.11),
sets forth the required hierarchy for determining whether
a good is a good of a NAFTA country for marking purposes.
Paragraph (a) of this section states that the country of
origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic
materials; or
(3) Each foreign material incorporated in that good
undergoes an applicable change in tariff
classification set out in section 102.20 and
satisfies any other applicable requirements of
that section, and all other applicable
requirements of these rules are satisfied.
Based upon the facts in this case, we first apply the
rule in 19 CFR 102.11(a)(3). The finished cartridges are
stated to be classifiable under subheading 8473.30.30,
HTSUS, since Additional U.S. Note 2(c) to Chapter 84
includes "laser imaging assemblies ... incorporating more
than one of the following: Photoreceptor belt or cylinder,
toner receptacle unit, toner developing unit,
charge/discharge unit, cleaning unit." The applicable
change in tariff classification for heading 8473 set out
in section 102.20(o), Section XVI, Chapters 84 through 85,
provides:
8473 ... A change to heading 8473 from any other
heading, except from heading 8414, 8501, 8504,
8534, 8541, or 8542 when resulting from a simple
assembly.
It is claimed that several of the components which
are assembled into the cartridges are themselves
classifiable under heading 8473, as determined in New York
Ruling Letter (NYRL) A85693 dated July 18, 1996, NYRL
875263 dated June 16, 1992, and NYRL 872982 dated April 7,
1992. These components include mag rollers, photoreceptor
drums, and machine-dedicated plastic cartridge housings.
Therefore, it is claimed that to the extent some of the
components assembled into the refurbished cartridges are
not of Canadian origin, the requisite tariff shift will
not be satisfied.
However, the material that is imported into Canada
(i.e., the foreign material) is not component parts of
cartridges, but complete (albeit used) cartridges.
Therefore, the question presented is whether this foreign
material undergoes a change in tariff classification or
other requirement set out in section 102.20 for the good.
In this regard, a comparison between the used cartridges
imported into Canada and the refurbished cartridges
exported from Canada must be made. Based upon this
comparison, it is clear that the requisite tariff shift
will not occur. Furthermore, we also note that with
regard to the proposed disassembly operations, 19 CFR
102.17 provides that:
A foreign material shall not be considered to
have undergone the applicable change in tariff
classification set out in section 102.20 ... or
to have met any other applicable requirements of
those sections merely by reason of ... (b)
dismantling or disassembly.
Therefore, foreign used cartridges will not undergo the
necessary tariff shift even after disassembly and
reassembly in Canada, and 19 CFR 102.11(a)(3) will not be
applicable for determining the country of origin of the
imported cartridges. Accordingly, 19 CFR 102.11(b) of the
hierarchial rules must next be applied. This section
provides as follows:
Except for a good that is specifically described in
the Harmonized System as a set, or is classified as a
set pursuant to General Rule of Interpretation 3,
where the country of origin cannot be determined
under paragraph (a), the country of origin of the
good:
(1) Is the country or countries of origin of the
single material that imparts the essential
character of the good, or
(2) If the material that imparts the essential
character to the good is fungible, has been
commingled, and direct physical
identification of the origin of the
commingled material is not practical, the
country or countries of origin may be
determined on the basis of an inventory
management method provided under the
appendix to part 181 of this chapter.
When determining the essential character of a good under
19 CFR 102.11, 19 CFR 102.18(b)(1) provides that only
domestic and foreign materials that are classified in a
tariff provision from which a change is not allowed under
the 102.20 specific rule or other requirements applicable
to the good shall be taken into consideration. Section
102.18(b)(1)(iii), Customs Regulations {19 CFR
102.18(b)(1)(iii)}, provides that if there is only one
material that is classified in a tariff provision from
which a change in tariff classification is not allowed,
then that material will represent the single material that
imparts the essential character to the good under 19 CFR
102.11.
Xerox claims that it is impossible to find that any
single component of the imported toner cartridges imparts
the essential character, and that each cartridge contains
several components of roughly coequal importance in the
function of the article. The components of equal importance
are stated to be the photoreceptor, toner, developing unit,
and housing. However, as stated earlier, the foreign
material under the facts of this case is the imported
complete cartridges, not the components of such cartridges,
extracted as a result of the disassembly operation. Thus,
there is only one material, the imported cartridge, that
does not undergo any change in tariff as a result of the
tear down. Accordingly, pursuant to section 102.18(b)(iii),
we find that the imported cartridge is the single material
that imparts the essential character to the refurbished
good.
In this case, based upon the facts presented, it is
stated that the used cartridges are sourced from a variety
of countries. Next, they are disassembled and reassembled
using components not necessarily from the same used
cartridge. Therefore, we find that since direct physical
identification of the origin of the refurbished cartridges
is not practical, pursuant to section 102.11(b)(2), the
country of origin of the refurbished cartridges may be
determined on the basis of an inventory management method
provided under the appendix to 19 CFR Part 181.
It is also claimed that the cartridges may be marked as
a product of Canada by virtue of 19 CFR 102.19 since the
refurbished cartridges may be considered NAFTA "originating"
goods. Based upon the information presented, we disagree.
General Note 12, HTSUS, requires a change from any other
heading. If the used cartridges imported into Canada are
not originating, the refurbished cartridges imported into
the U.S. also will not be considered originating goods since
both the used cartridges and the refurbished cartridges are
classfied in heading 8473, HTSUS.
HOLDING:
Based upon the information provided, pursuant to 19 CFR
102.11(b), the country of origin of the refurbished
cartridges is the country of origin of the single material
that imparts the essential character to the good, which are
the used cartridges. However, since direct physical
identification of the commingled cartridges may not be
practical, the country of origin of the refurbished
cartridges may be determined by an inventory management
method of the appendix to 19 CFR Part 181.
A copy of this ruling letter should be attached to the
entry documents filed at the time the goods are entered. If
the documents have been filed without a copy, this ruling
should be brought to the attention of the Customs officer
handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division