On August 12, 2009, CBP published notice of its final determination in HQ H039856 pursuant to subpart B of Part 177 of CBP regulations concerning the country of origin of certain multifunctional machines which may be offered to the US Government under a government procurement contract. Under these regulations, 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 US law or practice for products offered for sale to the US Government.

CBP ultimately concluded that the multifunctional machines at issue would be substantially transformed in Japan and, thus, the country of origin of the finished multifunctional machines for purposes of US Government was Japan. In reaching its conclusion, CBP reasoned that substantial portions of the components of the machines that were of key importance were of Japanese origin, and all the engineering, design and development of the machines occurred in Japan. CBP found that final assembly of the subassemblies (assembled in China) into a finished product in Japan was sufficiently complex and meaningful to result in a new and distinct article of commerce that possessed a new name, character and use. CBP noted that eight of the 16 subassemblies involved processing in Japan, and that the testing and adjustment of the multifunctional machines in Japan was significant. Further, CBP found that processing that occurred in the United States— the assembly of the finished printer engines and scanners to the stand and rack—was a simple assembly operation that was not demonstrated to be complex or meaningful, and did not involve a large number of components. Thus, no substantial transformation occurred in the United States.