MAR-2-05 CO:R:C:V 734835 KR
Ms. Lisa Levaggi Borter
Adduci, Mastriani, Meeks & Schill
330 Madison Avenue
New York, NY 10017
RE: Country of origin marking of unfinished shear blade castings
to be imported and manufactured into finished scissors; substantial
transformation; 19 CFR 134.35.
Dear Ms. Borter:
This is in response to your letter dated September 29, 1992,
on behalf of your client Acme United Corporation (hereinafter
"Acme"), requesting a country of origin ruling regarding unfinished
shear blade castings to be imported and manufactured into finished
scissors in the United States. Samples of the product were
submitted for examination demonstrating the various manufacturing
stages. You have requested that the cost information and times of
production contained in your ruling request be kept confidential.
This information is in brackets and will not be included in the
copies of the ruling made available to the public. See 19 CFR
177.2(b)(7); 19 CFR 103.12(d).
FACTS:
You state that Acme intends to import unfinished shear blade
castings from Taiwan. The castings will be further processed in
the U.S. to become finished scissors. It is your position that
this further processing amounts to a substantial transformation.
You have divided the U.S. manufacturing costs into four
categories: labor, overhead, scrap/quality control (SC/QC), and
materials. The processing is done on four types of machines called
the Alotz, Blotz, M Lotz, and XX Lotz.
You have divided the domestic manufacturing operations into
fourteen stages. Stage 1 is the drilling stage. A puncture hole
is molded into the casting prior to importation. After importation
this hole must be further drilled for the joining rivet to be
inserted at a later stage.
Stage 2 is the polishing of the backside of the blade. This
consists of grinding off the rough surface left from the casting.
the polishing is done on the Alotz machine which uses an abrasive
belt to polish one piece at a time.
Stage 3 is the polishing of the foreside and cutting edge of
the blade casting. The operation and costs are identical to those
in Stage 2 supra.
Stage 4 is the polishing of the tip of the finger piece. The
operation and costs are the same as the previous two steps, except
that this step is only done to the finger blade.
Stage 5 is the polishing of the flat surface surrounding the
nail hole. This operation is done on the Blotz machine which is
a two belt polishing machine.
Stage 6 is the polishing of the outside blade consisting of
the entire flat outer surface area of both the finger and thumb
blades. This is done on the M Lotz machine. This results in a
rough finish.
Stage 7 is racking and nickel plating the blades. The blades
are placed on a rack and moves into six consecutive liquid
solutions: a cleaner, a water rinse, an acid bath to remove
surface impurities, a cleaner to remove the acid, and water rinse
to remove the cleaner, and lastly into a nickel plating tank where
the nickel is electrolytically bonded to the blades. The blades
are then removed from the rack and placed into totes.
Stage 8 is the grinding/sharpening of the blade edges of each
of the pieces. This is done manually on a grinding wheel. You
state that this and the riveting together of the blades are the
steps that impart he chief functional characteristics of the
scissors, the hinged cutting ability.
Stage 9 is the placing of the blade into a "Miford Riveter"
for the insertion of the rivet by activating a foot pedal.
Stage 10 is the assembly of the finger and thumb pieces using
the Miford Riveter. The machine places the blades together, a
washer is placed on top of the finger blade over the rivet. The
parts are place in a fixture on the machine which creates a head
on the finger side permanently joining the blades together.
Stage 11 is the grinding even of the points on the blades so
that the blades match. This is done manually on a grinding wheel.
Stage 12 is the buffing of the scissors on a XX Lotz machine.
First a cleaning compound and then two series of polishing wheels
buff each piece.
Stage 13 is called "Japanning". This consists of dipping,
racking, and baking. The operator manually dips the handles into
a vat of "japan", a lacquer or varnish giving a hard glossy finish.
The scissors are then put into a rack where the excess black paint
is wiped from the handles. Next the racks are loaded into an oven
to bake.
Stage 14 is the manual testing, inspection and oiling of the
scissors.
The actual time of casting in Taiwan is unknown, but you state
it is less than the processing time in the U.S. Further, you state
that the U.S. operations require much more skill than the simple
casting in Taiwan.
ISSUES:
Whether the imported blade castings are substantially
transformed by the additional processing performed in the U.S.
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. The Court of International Trade
stated in Koru North America v. United States, 701 F. Supp. 229,
12 CIT 1120 (CIT 1988), that "in ascertaining what constitutes the
country of origin under the marking statute, a court must look at
the sense in which the term is used in the statute, giving
reference to the purpose of the particular legislation involved."
The purpose of the marking statute is outlined in United States v.
Friedlaender & Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where
the court stated that: "Congress intended 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."
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, Customs Regulations (19 CFR
134.35), states that the manufacturer or processor in the U.S.
who converts or combines the imported article into a different
article having a new name, character or use will be considered the
ultimate purchaser of the imported article within the contemplation
of 19 U.S.C. 1304 and the article shall be excepted from marking.
A substantial transformation occurs when an article loses its
identity and becomes a new article 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, 628
F. Supp. 978, 10 CIT 48 (CIT 1986); Koru North America v. United
States, 701 F. Supp. 229, 12 CIT 1120, (CIT 1988).
Customs has ruled on several occasions on whether the
processing of forged blanks into finished or semifinished metal
instruments is a substantial transformation. In determining
whether there is a substantial transformation, Customs has looked
at the specific processing operations. In HRL 055703 (September
24, 1979), Customs ruled that a German forging sent to Malaysia for
milling and machining, including widening the holes for joining
matching pieces, machining small ridges for locking or gripping and
machining to define the edges and surfaces, was substantially
transformed into a surgical instrument whose country of origin was
Malaysia. In HRL 553197 (February 11, 1985), Customs determined
that the machining of forged blanks in the U.S., consisting of
deburring, milling, assembly and riveting constituted a substantial
transformation. In that same ruling Customs found that the
subsequent rough polishing, hand shaping and curving, heat
treatment and final polishing of the instruments in Pakistan was
not a substantial transformation.
In C.S.D. 90-53 (February 12, 1990) Customs ruled that while
the U.S. forgings may have resembled the size and shape of the
finished articles, they were not yet machined to their actual
dimensions and lacked essential characteristics such as the
capacities to grip, close, lock in place and to be adjusted.
Without the machining, bending, cutting, rivetting, assembly and
polishing operations the articles would not have been useful for
their purpose and did not have the characteristics thereof. In a
case similar to the instant situation, HQ 732615 (June 6, 1990),
Customs ruled that surgical scissors underwent a substantial
transformation after forging by refining the shape and grinding,
joining and riveting, polishing, adjusting, and buffing.
Based on these determinations we conclude in this instance
that the imported castings are substantially transformed in the
U.S. as a result of the further processing in the U.S. and
therefore become a product of the U.S. Accordingly, we find that
Acme is the ultimate purchaser of the castings under 19 CFR
134.35.
This ruling does not address the issue of whether "USA" may
be marked on the packaging, or scissors. The determination of
marking an item with the "USA" symbol is under the primary
jurisdiction of the Federal Trade Commission. We, therefore,
recommend that you contact the Federal Trade Commission, Division
of Enforcement, located at 6th and Pennsylvania Avenue, N.W.,
Washington, D.C. 20580, for any views concerning marking the
scissors with the "USA" symbol.
HOLDING:
Imported blade castings are substantially transformed into
scissors in the U.S. by the further processing steps performed in
the U.S. as described above. Therefore, Acme is the ultimate
purchaser of the blade castings.
Sincerely,
John Durant, Director