MAR-2-05 RR:CR:SM 563082 EAC
Mr. Daniel J. Gluck
Serko & Simon, LLP
1700 Broadway
New York, NY 10019
RE: Country of origin marking requirements applicable to Whisper Golf Grips; golf club grips; substantial transformation; 19 U.S.C. §1304
Dear Mr. Gluck:
This is in response to your letter, dated July 22, 2004, requesting a ruling on behalf of Eaton Corporation, pertaining to the country of origin marking requirements applicable to Whisper Golf Grips that are partially produced in Thailand, Taiwan and China.
FACTS:
As stated above, the products under consideration in this case are referred to as Whisper Golf Grips (hereinafter referred to as “Whisper Grips”). As the name implies, Whisper Grips are intended for use as grips on golf clubs. Each Whisper Grip is approximately 10 ½ inches long, 1 inch wide at its base end, and ¾ of an inch wide at its open end. For purposes of this ruling, we assume that the grips will be sold as replacement grips at retail.
It is stated that the Whisper Grip is produced in four primary stages. During the first production stage, the grip’s “underlisting” (rubber underbody of the grip) is manufactured in Thailand. In order to produce the underlisting, EPDM rubber and natural rubber are initially cured in sulfur. The ingredients are mixed, blended and masticated in a mill. Thereafter, a cut is made into a “feed strip” from the mill as injection feed stock. The producer injection then molds the finished rubber underbody. The formed underlisting is thereafter packed and shipped to China.
During the second production stage, the outer grip material of the Whisper Grip is produced. The polyurethane raw material used to form the grip is manufactured in Taiwan in rolls measuring 36 inches wide, 150 yards long, and 1.5 millimeters thick. We are advised that this raw material is coated with an ultra-thin bottom layer of polyurethane as well as with an additional all-weather coating. After these operations, the resulting material is exported to China for further processing.
The third production stage, which occurs in China, involves cutting the imported grip material length-wise to create strips that are approximately 22 millimeters thick and 36 inches long. The cut material is then skived and tapered. Thereafter, the edges are embossed and logos are painted on the material.
The fourth production stage also occurs in China. During this stage, a wooden dowel is inserted into the underlisting. We are advised that this enables the grip material (which resembles tape) to be affixed to the underlisting with even pressure thereby ensuring that the underlisting will not become misshapen during the grip application process. The strips of material are applied to the underlisting in a spiral fashion beginning at the cap of the underlisting and finishing at the club head end. You state that pressure is applied as the strips, which are coated on the underside with adhesive, are wrapped around the underlisting.
After processing is complete, the Whisper Grips are individually packaged and placed into cartons for shipping.
ISSUE:
For marking purposes, what is the country of origin of the Whisper Golf Grips?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (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. 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. Friedlander & 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 the exceptions of 19 U.S.C. §1304. 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 the marking laws and regulations. The case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed and, as a result, the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35(a).
In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff’d, 2 Fed. Cir. 105, 741 F.2d 1368 (1984). Assembly operations that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See, C.S.D.s 80-111, 85-25, 89-110, 89-118, 89-129, 90-51 and 90-97. In Uniroyal, Inc. v. United States, 3 CIT 220 (CIT 1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983), the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was “the very essence of the completed shoe.”
In National Hand Tool v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993), the court determined that certain hand tool components used to make flex sockets, speeder handles, and flex handles were not substantially transformed within the United States. The components were cold-formed or hot-forged into their final shape prior to importation, with the exception of speeder handle bars, which were reshaped by a power press after importation, and the grips of the flex handles which were knurled in the United States. After entry, the imported items were heat treated to strengthen the components, sand-blasted to clean the components, and electroplated to better enable the components to resist rust and corrosion. In making this determination, the court noted that the processing which occurred within the United States did not alter the name of the imported components, that the character of the parts remained substantially unchanged upon the completion of such processing, and that the intended use of the articles was predetermined at the time of importation. Moreover, the court dismissed as a basis for a substantial transformation the value of the processing, stating that the substantial transformation test utilizing name, character and use criteria should generally be conclusive in country of origin marking determinations, and that such a finding must be based on the totality of the evidence.
U.S. Customs and Border Protection (“CBP”) has previously considered, in a number of cases, whether components assembled to form various end products have been substantially transformed during such assembly. For example, in Headquarters Ruling Letter (“HRL”) 562901 dated November 6, 2003, CBP determined that Chinese or Taiwanese-origin shafts and heads were not substantially transformed in the United States when combined with U.S.-origin grips, but were substantially transformed when combined with U.S.-origin shafts and grips.
We believe that HRL 560115 dated March 7, 1997, is also instructive for purposes of determining whether a substantial transformation has occurred in the present case. In HRL 560115, fishing rods were assembled to completion within China from U.S.-origin fiberglass rod blanks, Japanese- or Korean-origin line guides, and handles and reel seats produced outside of China. The main operations in this case consisted of: (1) thread wrapping the line guide components onto the rod, (2) epoxy encapsulating the thread, (3) fitting ferrules on some styles so that the rods may be broken into parts, and (4) affixing the handle and reel seat onto the rod. In finding that the country of origin of the finished rods was the United States, we noted that “the fishing rod’s characteristics are primarily imparted at the time of manufacture in the U.S., as the rod blank is exported from the U.S. in the length, diameter, and flexibility of the finished rod.” In other words, it was determined that the “essential character” of the finished rod was imparted by the rod blank and that a substantial transformation had not occurred within China.
In your submission, you state that HRL 959337 dated July 3, 1996, offers support to the argument that the underlistings and grip material under consideration in this case are substantially transformed within China. In HRL 959337, glove shells were imported into the United States where they were coated with a polyvinyl chloride (“PVC”) compound, heated, and cured. In noting consistency with past CBP decisions (namely, HRL 732418 dated February 12, 1990 and HRL 729844 dated October 24, 1986), we determined that the imported shells were substantially transformed when coated with PVC within the United States. However, we direct your attention to HRL 561614 dated June 11, 2002, another ruling regarding substantial transformation, in which we stated that “the new textile rules of origin, found at 19 CFR 102.21, became effective in 1996, such that the processing described in HRL 959337 and the textile rulings cited are of questionable precedential value for the situation considered here.” Although textile products are not under consideration in this particular case, we similarly believe that HRL 959337 is of questionable precedential value for purposes of the instant case.
As the various cases set forth above demonstrate, in order to determine whether a substantial transformation occurs when components of various origins are assembled to form completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of an item’s components, extent of the processing that occurs within a given country, and whether such processing renders a product with a new name, character, or use are primary considerations in such cases. Additionally, factors such as the value added by a particular procedure, resources expended on product design and development, and worker skill required during the actual manufacturing process may be considered when determining whether a substantial transformation has occurred; however, no one factor is determinative.
Based upon the totality of the circumstances in the instant case, we find that the imported grip material and underlistings are not substantially transformed within China when combined to form Whisper Grips. In making this determination, we have, at your suggestion, considered the value added to the finished product by the work performed in China. However, it remains our belief that the intended use of the underlistings and grip material is predetermined upon importation into China. Although the imported items are subject to some processing in China, it is apparent that such minor processing fails to substantially transform the imported items into new and distinct articles of commerce which possess a new name, character, or use. Moreover, it is our opinion that the underlistings, which provide the basic dimensions and form for the grips, imparts the essential character to the finished products. Therefore, since the one essential component of the grips is the underlisting, the country of origin of the Whisper Grip for marking purposes is Thailand.
HOLDING:
Based upon the information provided, it is our opinion that the grip material and underlistings are not substantially transformed within China. Therefore, as it is also our belief that the underlistings from Thailand impart the essential character to the finished products, we find that the country of origin of the Whisper Golf Grips for marking purposes is Thailand.
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 CBP officer handling the transaction.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division