Lexmark Printers Avoid Duties on China After Revised Production Process, CBP Rules
Certain Lexmark printers no longer are subject to antidumping or countervailing duties on printers from China after the company changed its production process and proved the printers are substantially transformed in Mexico, CBP said in a recent ruling.
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CBP in April 2023 determined that China was the country of origin for Lexmark's MS/MX and CS/CX series printers even though they were imported from Mexico, making the printers subject to both Section 301 trade duties and Chinese country of origin marking (see 2311170054). But the agency said in a ruling last month that those duties no longer apply, and the country of origin for trade remedies and marking purposes is Mexico after Lexmark revised its "production scenario" for the printers.
In both scenarios, the printers were monochromatic, color multifunction or single-function machines. Both scenarios also had printer transports -- the basic housings and the associated structures of the printers, including the mechanical frames, covers and the structures containing the printer’s contents -- assembled in China.
But under its revised production process, Lexmark told CBP that the three most important subassemblies -- the imaging unit, developing unit and toner cartridge -- are manufactured in Mexico. It also said production of the printed circuit board assemblies (PCBAs) occurs in Mexico, with that production time accounting for 44% of the manufacturing time by labor hours of the finished printer.
Lexmark showed that the “final printer assembly and testing in Mexico accounts for 11% of the manufacturing time by labor hours of the printer at issue,” CBP said. “In total, 61% of printer manufacturing time by labor hours are spent in Mexico, 37% in China, 2% in the United States, and 1% in a third country.”
CBP also said "three of the most critical subassemblies of the finished printers, separate from the final assembly, are manufactured in Mexico." The Chinese printer transports Lexmark uses under its revised production process "have diminished functionality compared with the printer transports in your earlier production scenario," the agency said, adding that "much of that printer functionality is now found within the developing unit, imaging unit and toner cartridge when installed in the finished printers with the PCBA."
Because the revised production scenario calls for the PCBA, the developing unit and the imaging unit to be assembled in Mexico, CBP determined that Mexico is the country of origin.