MAR-2-05 CO:R:V:C 733565 RSD
Mr. Ernest Hoesterey, President
Medical Devices of Fall River, Inc.
594 Airport Road
P.O. Box 2567
Fall River, Massachusetts 02722
RE: The country of origin marking requirements for household
shears; scissors; forgings; substantial transformation; 19 CFR
134.35; 19 CFR 134.32(m)
Dear Mr. Hoesterey:
This is in response to your letter dated July 10, 1990,
requesting a ruling on the country of origin marking requirements
of household shears.
FACTS:
Medical Devices of Fall River, Inc. imports 8 inch straight
household shears from Pakistan for sale to the U.S. General
Services Administration. The steel for the shears is mined in
the U.S., and then delivered to a U.S. forging company. The
steel is then forged, trimmed, and straightened by the U.S.
forging company. The forgings are then delivered to Medical
Devices' factory for drilling and tapping. The screws used in
the shears are also manufactured to specification in the U.S.
The sheers are then packed and exported to Pakistan. At the time
they are exported from the U.S., the shears have the appearance
of an unfinished pair of scissors. The metal is not smooth and
the blades are dull, but they have basic size and shape of the
finished shears.
In Pakistan, subcontractors grind, polish, nickel plate,
heat treat, and assemble the shears. The shears are then
returned to the U.S. for further processing. This processing
includes branding, edging, honing, adjusting, peaning,
degreasing, oiling, inspecting, testing, wiping, and packaging.
The finished item is then shipped to G.S.A. depots throughout the
U.S. The total cost of domestic processing is $1.84 and foreign
processing cost is $.92. Four samples illustrating the various
stages of production were submitted.
ISSUE:
Whether U.S. shears which are further processed in Pakistan
are excepted from marking pursuant to 19 CFR 134.32(m),
pertaining to U.S. articles exported and returned.
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 its 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; C.A.D. 104 (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 U.S. 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 U.S. 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.
U.S. products exported and returned are specifically
excepted from country of origin marking requirements under
section 134.32(m), Customs Regulations (19 CFR 134.32(m)). With
certain exceptions not applicable here, Customs has ruled that
products of the U.S. which are exported for further processing
and subsequently returned, are not subject to country of origin
marking upon importation to the U.S. unless the further
processing in the foreign country constituted a substantial
transformation of the product. See HQ 732480, (July 31, 1989).
In determining whether there has been a substantial
transformation when forged blanks are processed into finished or
semi-finished instruments, Customs has looked at the extent and
effect of the specific processing operations. In HQ 732615,
C.S.D. 90-101 (June 6, 1990), a case involving surgical scissors
and other surgical instruments, Customs recently ruled that the
milling and the intricate cutting of forged blanks that create
the ratchet, teeth, inside rings and boxlock on the surgical
instruments are extensive operations. These operations with the
addition of heating treating and polishing give the surgical
instruments their basic character and result in a substantial
transformation. Similarly, Customs ruled in HQ 732844 (February
12, 1990), that U.S. made forgings that were not yet machined to
their actual dimensions and lack the essential characteristics
such as the capacities to grip, close, lock in place and to be
adjusted were substantially transformed by the extensive
machining, bending, cutting, riveting, assembly and polishing
operations done in Pakistan. We noted that these operations gave
the instruments their basic characteristics. In contrast,
Customs ruled in HQ 553197 (February 11, 1985), that rough
polishing, hand shaping and curving, heat treatment and final
polishing of instruments in Pakistan did not constitute a
substantial transformation.
In this particular case, after reviewing the samples
provided and steps involved in processing the shears, we find
that the processing done in the U.S. gives the shears their basic
characteristics. The foreign processing does not involve
extensive cutting or machining. The article leaving the U.S.
very much resembles the finished shears, and the processing done
in Pakistan are finishing operations, which although important,
do not alter the basic character of the shears. In addition, we
note that most of the cost involved in producing the shears comes
from processing done in the U.S. Consequently, we find that the
foreign processing of the shears does not result in an article
with a new name, character, or use, and that there is no
substantial transformation. Accordingly, the shears are excepted
from country of origin marking under 19 CFR 134.32(m).
HOLDING:
The processing of the U.S. made household shears in Pakistan
does not result in a substantial transformation. Therefore, the
shears are excepted from country of origin marking under 19 CFR
134.32(m).
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch