RR:TC:SM 560043 KKV
Ms. Angel L. Cooper
A.N. Deringer, Inc.
173 W. Service Road
Champlain, NY 12919
RE Tariff classification and country of origin of
copper wire exported to Italy for coating and
returned to the U.S. for additional processing;
step in production of final product; lack of
substantial transformation; Superior Wire v.
United States; HRL 557201; HRL 556301; HRL 555705
Dear Ms. Cooper:
This is in response to your letter dated August 19,
1996 (and additional submission dated November 18, 1996), on
behalf of Tecnosil U.S.A., Inc., which requests a binding
ruling regarding the tariff classification and country of
origin of copper wire exported to Italy for coating and
returned to the U.S. for additional processing. A sample of
the wire at two stages in the manufacturing process has been
submitted for our examination.
FACTS:
Solid or stranded tin-plated annealed copper conforming
to American Society for Testing and Material (ASTM)
specification B-33, of U.S.-origin, is exported to Italy,
where it is coated, by means of heat extrusion with
pressure, with a silicone rubber insulating material. Upon
its return to the United States, the insulated wire is
fitted with a fiberglass braid which completes the article
into an electric conductor for use as internal wiring for
electric equipment and appliances where temperatures do not
exceed 200ΓΈ Centigrade.
ISSUES:
1) What is the tariff classification of the
insulated wire upon its return to the U.S. for
additional processing?
2) What is the country of origin of the finished
article?
LAW AND ANALYSIS:
1) Tariff Classification
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 states, in
part, that for legal purposes, classification shall be
determined according to the terms of the heading and any
relative section or chapter notes.
While not binding on the contracting parties and
therefore, not dispositive, the Harmonized Commodity
Description and Coding System Explanatory Notes (ENS)
provide a commentary on the scope of each heading of the
Harmonized System, and thus, are useful in ascertaining the
classification of merchandise under the System. Customs
believes that the ENS should always be consulted ( See
Treasury Decision (T.D.) 89-80, dated August 16, 1989, 54
Fed. Reg. 35127, 35128 (August 23, 1989).
Heading 8544, HTSUS, provides for, among other things,
insulated wire, cable and other insulated electric
conductors, whether or not fitted with connectors. Relevant
Explanatory Notes state that, provided they are insulated,
heading 8544 covers electric wire, cable and other
conductors (e.g., braids, strips, bars) used as conductors
in electrical machinery, apparatus or installations. The
heading includes wiring for interior work or for exterior
use and can vary from very fine insulated wire to thick
cables of more complex types (see page 1404). Among other
things, the good of heading 8544 are made up of either a
single strand or multiple strand conductor, wholly of one
metal or of different metals, and one or more coverings of
insulating material, the aim of which is to prevent leakage
of electric current from the conductor and to protect it
against damages. Rubber and glass fiber yarns are among the
insulating materials frequently used. These Explanatory
Notes describe the articles in issue.
With regard to the merchandise at issue, under the
authority of GRI 1, the tin-plated annealed copper wire
coated with silicone rubber is provided for in heading 8544,
HTSUS. If for a voltage not exceeding 80 V, the returned
wire is classifiable in subheading 8544.49.00, HTSUS,
dutiable at the rate of 4.6 ad valorem; if for a voltage
exceeding 80 V but not exceeding 1,000 V, it is classifiable
in subheading 8544.59.20, HTSUS, dutiable at the rate of 5.3
percent, ad valorem; and if for a voltage exceeding 1,000 V,
the returned wire is classifiable in subheading 8544.60.40,
HTSUS, dutiable at the rate of 4.6 percent, ad valorem.
2) Country of origin
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304), provides that, unless excepted, every article
of foreign origin imported into the United States 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 United States the English name of the
country of origin of the article. By enacting 19 U.S.C.
1304, Congress intended to ensure that the ultimate
purchaser would be able to know by inspecting the marking on
the imported goods the country of which the goods are the
product. The evident purpose is to mark the goods so that
at the time of purchase the ultimate purchaser may, by
knowing where the goods were produced, be able to buy or
refuse to buy them, if such marking should influence his
will. United States v. Friedlaender & Co., 27 C.C.P.A. 297,
302 C.A.D. 104 (1940).
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 United States.
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.
Accordingly, the country of origin of an article is the
country in which it was wholly manufactured or, if processed
in several countries, the country in which the article last
underwent a substantial transformation. The
well-established test for determining whether a substantial
transformation has occurred is derived from language
enunciated by the court in Anheuser-Busch Brewing
Association v. United States, 207 U.S. 556, 562 (1908),
which defined the term "manufacture" as follows:
Manufacture implies a change, but every
change is not manufacture and yet
every change in an article is the result
of treatment, labor and manipulation.
But something more is necessary, as set
forth and illustrated in Hartranft v.
Wiegmann, 121 U.S. 609. There must be
transformation; a new and
different
article
must
emerge,
having a
distinctive name,
character
or use.
Simply stated, a substantial transformation occurs
"when an article emerges from a process with a new name,
character, or use different from that possessed by the
article prior to processing." See Texas Instruments, Inc.
v. United States, 69 CCPA 152, 681
F.2d 778 (1982) (cited with approval in Torrington Co. v.
United States, 764 F. 2d 1563, 1568 (1985)).
In Superior Wire v. United States, 669 F. Supp. 472
(1987), aff'd, 867 F.2d 1409 (1989), wire rod in coils was
shipped to Canada where it was drawn into wire. The
resulting product had various applications, but was
primarily used for concrete sewer pipe reinforcement. The
Court of International Trade found that the wire rod
dictated the final form of the finished wire, and that wire
rod and wire could be viewed as different stages of the same
product. The court noted that while the wire emerged
stronger and rounder after the drawing process, its strength
characteristic was metallurgically predetermined through
fabrication of the wire rod. Thus, the court found no
significant change in the use or character of the wire rod.
In general, Customs has determined that laminating,
coating, and encapsulating operations do not result in a
substantial transformation. In Headquarters Ruling Letter
(HRL) 557201, dated November 17, 1993, Customs held that,
while the encapsulation process added certain qualities to
the wire which did not exist prior to such operation, the
essential character of the bunched wire, as a conductor of
electricity, was not changed because of the enhancements
attributable to the insulating material. Similar to the
processing of the wire rod in Superior Wire, the process of
producing the insulated wire is a step in the production of
the final product. The fact that the insulated wire and
bare wire may be classified in different headings of the
HTSUS may be evidence of a substantial transformation, but
is not dispositive of the issue.
In HRL 556301, dated May 4, 1992, Customs reconsidered
a previous ruling, and affirmed that copper wire subjected
to drawing, bunching and twisting, annealing, and
encapsulating with polypropylene to form an insulated wire
strand constituted a substantial transformation. However,
the insulated wire strand did not undergo a second
substantial transformation for purposes of the GSP when it
was bundled with others and further encapsulated with PVC to
form cordage. (See also 555705, dated August 26, 1991).
In the instant case, U.S.-origin copper wire (solid or
stranded) which has been plated with tin and annealed, is
exported to Italy, where it is encapsulated in a silicone
rubber insulating coating, and returned to the U.S. for
additional processing. Although the insulating coating may
add certain physical qualities to the wire which did not
exist in its uncoated state, i.e., tensile strength,
resistance to heat, abrasion and chemicals, etc., these
enhancements do not alter the essential character of the
exported material -- a conductor of electricity. Similar to
the processing of the wire rod in Superior Wire, the process
of producing the insulated wire is a step in the production
of the final product. Accordingly, we find that the
exported wire is not substantially transformed into a new
and different product as a result of processing in Italy.
In the absence of a substantial transformation, which
renders the exported material a product of Italy, the
country of origin of the insulated wire, at the time of its
importation and upon completion of processing in the U.S.,
is the United States. Therefore, the imported wire is not
subject to the country of origin marking requirements of 19
U.S.C. 1304.
HOLDING:
Under the authority of GRI 1, the tin-plated, annealed
copper wire coated with silicone rubber is provided for in
heading 8544, HTSUS. If for a voltage not exceeding 80 V,
the returned wire is classifiable in subheading 8544.49.00,
HTSUS; if for a voltage exceeding 80 V but not exceeding
1,000 V, it is classifiable in subheading 8544.59.20, HTSUS;
and if for a voltage exceeding 1,000 V, the returned wire is
classifiable in subheading 8544.60.40, HTSUS.
U.S.-origin solid or stranded tin-plated annealed
copper is not substantially transformed into a new and
different article as a result of operations in Italy which
coat the wire with silicone rubber insulating material.
Accordingly, the country of origin of the insulated wire, at
the time of its importation and upon completion of
processing in the U.S., is the United States. The imported
wire is not subject to the country of origin marking
requirements of 19 U.S.C. 1304.
A copy of this ruling letter should be attached to the
entry documents filed at the time this merchandise is
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