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HQ 560768




May 26, 1998

MAR-2-05 RR:CR:SM 560768 MLR

CATEGORY: MARKING

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

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