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"This is a new departure for me," director Yojiro Takita said while accepting the award. "And we'll be back, I hope."
"Departures" is about a cellist (Masahiro Motoki) whose orchestra is disbanded and, desperate for work, becomes a funeral professional. The win should improve the film's U.S. box office when it debuts in May.
But it's also likely to further frustrate critics of the foreign film category, which in recent years has gone without nominating several much acclaimed films.
After a committee selects the nominees, the category is decided by Academy members who have seen exhibitions (not DVDs) of all the nominated films.
Last year, many had questions when France's "Persepolis" and Romania's "4 Months, 3 Weeks and 2 Days" weren't nominated.
Instead, Austria's "The Counterfeiters" won. This year, some wondered how Italy's acclaimed "Gomorrah" wasn't nominated.
Israel's "Waltz With Bashir" was one of the most acclaimed films of the year but defied easy categorization. A kind of animated documentary, it follows a soldier struggling to recall suppressed memories from his involvement in Israel's 1982 war with Lebanon. It won the Golden Globe for best foreign language film.
Takita said he was surprised about his win.
"It was hard to believe, and it was unbelievable," he said backstage at the Kodak Theatre in Los Angeles.
"Departures" has thus far earned at least $33.8 million in Japan, where it won numerous Kinema Junpo Awards -- the country's most prestigious film awards.
The other Oscar nominees were: Cannes Palme d'Or winner "The Class" from France; the crime caper from Austria "Revanche"; and Germany's "The Baader Meinhof Complex," which follows the West German terrorist group the Red Army Faction.
Best foreign film Oscars have historically gone to European films.
"For Japan movies, it's always been the classical samurai kind of movie which has won Oscars," Takita said "This was their first film that ... depicts the modern Japan."
Another Japanese film -- "La Maison En Petits Cubes," by Kunio Kato -- won the Oscar for best animated short film.
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