MAR-05 RR:CR:SM 561167 BLS
Jonathan Green, Esq.,
4740 Connecticut Avenue., N.W.
Suite 903
Washington, D.C. 20229
RE: Country of origin marking of surgical suture products
Dear Mr. Green:
This is in reference to your letters dated September 9 and October 9, 1998, and an E-Mail dated October 20, 1998, on behalf of David Green, an individual, concerning country of origin marking of surgical suture products.
FACTS:
You advise that Mr. Green will be forming a company that will import surgical sutures from India for sale in the U.S. The thread (unsterilized) will be either of nylon (nonabsorbable polyamide) or of nonabsorbable silk and will be of U.S.-origin. You state that the needles may be a product of the U.S., or they may be produced in India from U.S.-origin steel wire. Upon return to the U.S., the sutures will be subject to a sterilization process. The processing in India and the U.S. will be as follows:
Production of Needles in India
Under this scenario, U.S-origin steel wire is shipped on spools to India where it is cut to length and pressed into the raw needle shape using cold form pressing. A channel is then formed through a heating process to impart a “groove” into the tail end of the needle to later accommodate the suture thread. The needles are then ground to impart a point and cutting edges and deburred to remove burrs acquired during grinding. The needles are then curved, to impart curvature to the needle.
Attaching Thread and Needles
These operations occur upon manufacture of the needles in India where completed needles are exported to India from the U.S.
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The suture thread is then attached to the channel of the needle as follows:
The die pair is inserted into the attaching machine
corresponding to the deburred needles.
The suture is cut to the required lengths (15 cms and 30 cms).
The needle is inserted into the needle holder so that the channel section protrudes outside along its axis.
The needle channel is placed into the groove of the stationary die; the full channel length of the needle must be inside the groove but not the pressed section.
The suture end is inserted into the channel.
The dies will press upon the channel, thereby closing the channel flanges around the thread.
This last step is repeated several times by rotating the needle between the dies for each closure to get a round, cylindrical shape. The thread and needle components are now attached.
Sterilization of the product will take place in the U.S. using either the gamma radiation or ethylene oxide (ETO) sterilization method.
ETO Sterilization Method
Once the nonsterile sutures arrive at the sterilization facility, they are inspected for damage and inventoried. The sutures are then prepared for processing. The outer shrink wrap packaging is removed and biological indicators are placed with the load to be sterilized. The biological indicators must be used to verify that sterility assurance levels are achieved. The load is then pre-conditioned in a climate-controlled chamber to elevate the temperature and humidity of the product. The load is then placed in the sterilization chamber and exposed to the ethylene oxide gases. After removal from the gas chamber, the load is placed in a aeration chamber to remove the ETO gas. The biological indicators are removed from the load and tested to prove that the process has resulted in achievement of sterility assurance levels. Release documentation is prepared and the sterilized sutures are shrink-wrapped and packed for shipping to the
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end-user.
Gamma Radiation Sterilization
Once the nonsterile sutures arrive at the sterilization facility, they are inspected for damage and inventoried. The sutures are then prepared for processing. Dosimeters
are placed with the load to be sterilized. The dosimeters must be used to verify that sterility assurance levels are achieved. The load is then placed in the sterilization
chamber and exposed to the gamma radiation. During irradiation, the product is rotated and moved up and down on steps within the chamber to ensure exposure of all parts to radiation. After removal from the chamber, the dosimeters are removed from the load and analyzed to verify that the proper radiation dose was received based on the unique requirements of each material to be sterilized. Release documentation is prepared and the sterilized sutures are shrink-wrapped and packed for shipping to the end user.
ISSUE:
What are the marking requirements for the surgical sutures sterilized in the United States?
LAW AND ANALYSIS:
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 U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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. Congressional intent in enacting 19 U.S.C. 1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is 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 at 302 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.35(a), Customs
Regulations (19 CFR 134.35(a)), provides that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be within the principle of the decision of
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U.S. v. Gibson Thomsen Co. Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940). Under this principle, the manufacturer or processor in the U.S. who substantially transforms the imported article into an article with a new name, character, or use will be considered the "ultimate purchaser" of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part.
A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson Thomsen Co., 27 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986).
In determining the marking requirements for the sterilized sutures, the initial question to be resolved is whether the U.S.-origin components sent to India undergo a substantial transformation as a result of the processing performed there.
In Headquarters Ruling Letter (HRL) 730999 dated December 12, 1988, Customs held that imported surgical needles attached to thread in the U.S. and thereby made into sutures suitable for use in cardiovascular surgery were substantially transformed in the U.S. Customs stated in that ruling that "the surgical needles alone, prior to processing, have no apparent use; it is only after the addition of surgical thread that the article becomes known as a suture and is suitable for use in surgery to bind body tissue." (See also HRL 554957( March 7, 1990), where spools of wire and thread of U.S.-origin were sent to West Germany where the wire was made into surgical needles and the resulting product after attachment with the thread was ophthalmic sutures. Citing HRL 730999, we held in that case that both the wire and thread underwent a substantial transformation as a result of the operations in West Germany and that accordingly the country of origin was West Germany.)
These rulings are controlling in the instant case, as the steel wire/needles and thread lose their identity in India as a result of the operations performed there. The resulting product, surgical sutures, has a name, character and use different from
that originally possessed by the components before being subjected to the processing
abroad. Therefore, the operations in India result in a substantial transformation of the U.S.-origin thread and steel wire/needles and the country of origin of the surgical sutures when imported into the U.S. is India. The issue which we must now address is whether the imported products undergo a substantial transformation in the U.S. as a result of the sterilization process.
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In National Hand Tool v. United States, 16 CIT 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), certain hand tool components used to make flex sockets, speeder handles, and flex handles, were imported from Taiwan. The imported components were either cold formed or hot forged into their final shape before importation, with the exception of the speeder handle bars, which were reshaped by a power press after importation. In the U.S., the components were subject to heat treatment, which increased the strength of the components, sand blasting (a cleaning process), and electroplating (enabling the components to resist rust and corrosion).
After these processes were complete, the components were assembled into the final products, which were used to loosen and tighten nuts and bolts.
The Court of International Trade found that the components were unchanged as to form after processing in the U.S., that the use of the imported articles was predetermined at the time of importation, and that the name of the components also remained the same after entry into the U.S. The court discounted plaintiff's argument that a substantial transformation should be found based on the value of the processing performed in the U.S., which plaintiff described as significant, but decided the issue based solely on name, character and use.
A similar finding was made in Superior Wire v. United States, 11 CIT 608, 669 F. Supp. 472 (CIT 1987), aff'd, 867 F.2d 1409 (Fed. Cir. 1989), where the appellate court affirmed the Court of International Trade's holding that a substantial transformation did not occur from the multi stage processing of drawing wire rod into wire. In that case, the court noted that the "end use of the wire rod is generally known before the rolling stage and the specifications are frequently determined by reference to the end product for which the drawing wire will be used." Accordingly, the court found that the character of the final product was predetermined and that the processing did not result in a significant change in either character or use of the imported material. While the wire rod and processed rod had different names and identities in the industry, the court concluded that they were essentially different stages of the same product.
These cases are determinative of the issue. The final identity and character of the completed article is established by the form of the unsterilized product, which has the identical appearance as the sterilized product. Further, the use of the completed product is predetermined at the time of importation, since in its imported form it is intended to be used only as sterilized surgical sutures.
Accordingly, we find that the imported surgical sutures do not undergo a substantial transformation as a result of the sterilization process in the U.S. and therefore the
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ultimate purchaser is not the U.S. processor but the hospital or other medical facility which purchases the products from the processor.
Pursuant to 19 U.S.C. 1304(a)(3)(D) and section 134.32(d), Customs Regulations (19 CFR 134.32(d)), articles for which the marking of the containers will reasonably indicate the country of origin of the articles are excepted from individual marking. This exception would apply, for example, in cases where the articles are imported in a properly marked container and Customs officials at the port of entry are satisfied that the ultimate purchaser will receive it in its original unopened marked container.
Customs has previously ruled that where the imported item must be sterile and an ultimate purchaser would be unable to use the product unless it was received in its sterile sealed container, the imported article is entitled to the exception set forth at 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). See HRL 733678 dated August 30, 1990 (surgical towels) and HRL 733325 dated August 8, 1990 (I.V. drip sets).
Because the ultimate purchasers, hospitals and other surgical facilities, will receive the surgical sutures in sterilized shrink-wrapped packing, the surgical sutures may be excepted from marking under the provisions set forth at 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), provided the packages in which the ultimate purchaser receives the sutures are properly marked to indicate the country of origin of the articles.
Since the imported surgical sutures will be repackaged into sterilized shrink-wrapped packaging after importation, they are subject to the repackaging requirements of section 134.34, Customs Regulations (19 CFR 134.34), which provides that an exception may be authorized in the discretion of the port director under 19 CFR 134.32(d) for imported articles which are to be repacked after release from Customs custody under the following conditions:
(1) The containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the U.S.
(2) The importer arranges for supervision of the marking of the containers by Customs officers at the importer’s expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to liquidation of the entry.
HOLDING:
1) Steel wire/needles and thread of U.S. origin undergo a substantial
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transformation in India when used to produce surgical sutures. Therefore, the country of origin of the imported articles is India. Sterilization of the surgical sutures in the U.S. does not result in a substantial transformation. Therefore, the ultimate purchaser of the imported suture products is the medical facility in the U.S. which purchases the products from the U.S. processor.
2) The surgical sutures which will be repacked may be excepted from individual country of origin marking pursuant to 19 CFR 134.32(d), subject to approval by the port director as provided in 19 CFR 134.34, provided the sterile packaging in which the suture products are sold are properly marked with India as the country of origin.
A copy of this ruling 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