OT:RR:CTF:VS H305264 JMV
Mr. Bernhard Pommer
EOS GmbH Electro Optical Systems
Robert-Stirling-Ring 1
Krailling, Other 82152
Germany
RE: Modification of NY N111878; Polyetheretherketone Powder
Dear Mr. Pommer:
This is in reference to New York Ruling Letter (“NY”) N111878, dated July 14, 2010, issued to EOS GmbH Electro Optical Systems (“EOS”). In NY N111878, U.S. Customs and Border Protection (“CBP”) determined, in relevant part, that polyetheretherketone (“PEEK”) powder of U.K.-origin was substantially transformed in Germany and therefore a product of Germany. We have reviewed NY N111878 and found it to be in error. For the reasons set forth below, with respect to the country of origin of the subject PEEK powder, we hereby modify NY N111878.
FACTS:
Untempered polyetheretherketone powder (“PEEK”), CAS number 27380-27-4, classifiable under subheading 3907.20, Harmonized Tariff Schedule of the United States (HTSUS) and in the form of a fine powder is imported from the United Kingdom into Germany. PEEK is a thermoplastic polymer that can be used in engine parts and heat exchange applications. PEEK is an organic semi-crystalline engineering polymer in the polyaryletherketone family of plastics, which is one of the most important in additive manufacturing due to its high strength, temperature resistance and chemical resistance. PEEK is commercially available in several grades according to different molecular weights (or melt viscosities) to meet the requirements of different melt-processing methods. PEEK can be processed by conventional methods such as injection molding, extrusion, compression molding etc. The processing conditions used to mold PEEK can influence the crystallinity, and hence its mechanical properties.
In Germany, the PEEK is further processed by a tempering step. Tempering allows PEEK to be used at high temperatures in laser-sintering machines for dosing and recoating. Prior to this process, the raw material imported into Germany cannot be used for laser sintering. The tempered PEEK powder, also classifiable under subheading 3907.20, HTSUS, is intended for export to the United States for use in injection molding, extrusion, compression molding and composites for the manufacture of engine parts and in heat exchange applications.
Laser sintering or powder bed fusion is an additive manufacturing process (3-D printing) where a laser consolidates, layer upon layer, powdered materials to build three dimensional
objects, prototypes, or fully functional parts. Because laser sintering can create complex light weight parts without compromising functional requirements, manufacturers have become increasingly interested in laser sintering manufacturing, particularly in the aerospace, automotive, and medical industries. PEEK is a polymer commonly used in laser sintering.
Manufacturers who produce articles of PEEK via laser sintering face challenges that arise from the semi-crystalline nature of PEEK. The semi-crystalline nature makes PEEK highly susceptible to changes in processing conditions which can lead to variation of the final performance of PEEK. However, tempering PEEK prior to laser sintering controls the crystallization of PEEK and the level of residual stress in the printed items. Additionally, tempering PEEK creates better packing during manufacture of an article and changes the angle of response or shape of PEEK powder particles, which improves the particle flow.
ISSUE:
Whether the country of origin of the subject PEEK powder is Germany.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides, in relevant part:
(a) Marking of articles. Except as hereinafter provided, 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 container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.
Part 134, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements of 19 U.S.C. § 1304. Title 19, Section 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; . . .”
A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, or use, which differs from the original material subjected to the process. In Nat’l Hand Tool Corp. v. United States, 16 CIT 308, aff’d per curiam, 989 F.2d 1201 (Fed. Cir. 1993), the Court of International Trade determined that hand tool components, which were cold-formed and hot-forged in Taiwan into their final shape, with post-importation processing such as heat treatment and electroplating, and assembly occurring in the United States, did not undergo substantial transformation in the United States. There was no change in name because each article as imported had the same name in the completed tool. There was no change in character because the articles remained the same after heat treatment, electroplating, and assembly in the United States. The use of the imported articles was predetermined at the time of entry – each component was intended to be incorporated in a particular finished mechanics’ hand tool, except for one exhibit with a dual use. The court rejected the importer’s claim that the value added in the United States was relatively significant to the operation in Taiwan so that substantial transformation should be found, determining that such a finding could lead to inconsistent marking requirements for importers who perform exactly the same processes on imported merchandise but sell at different prices.
A similar finding was made in Superior Wire v. United States, 867 F. 2d 1409 (Fed. Cir. 1989), where the appellate court affirmed the Court of International Trade’s holding that no substantial transformation occurred from the multi-stage process 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 wire had different names and identities in the industry, the court concluded that they were essentially different stages of the same product.
Customs has generally held that a heat treatment will result in a substantial transformation only if alters the article’s mechanical properties to a significant extent. See Headquarters Ruling Letters (“HQ”) 083236 dated May 16, 1989. The decision in Ferrostaal Metals Corp. v. United States, 664 F.Supp. 535, 11 CIT 470 (1987), is also pertinent. That case concerned whether certain operations performed on cold-rolled steel sheet, described as a continuous hot-dip galvanizing process, substantially transformed the sheet. The process involved two steps: annealing, undertaken to restore the steel’s ductility lost in a previous cold rolling, and galvanizing, or dipping the steel in a pot of molten zinc. The court held that the continuous hot-dip galvanizing process resulted in a substantial transformation, in part, because the process changed the character of the steel sheet by significantly altering its mechanical properties and chemical composition.
In HQ 561978, dated December 22, 2000, CBP considered the origin of polytetrafluoroethylene (“PTFE”), a fluoropolymer (type of plastic) used for a variety of purposes, including as a non-stick coating for metals and other plastics. The manufacturer in that case imported PTFE into Italy in powder form from Russia, Poland or China. The PTFE was processed in Italy by one of two methods then sold to the United States. The first method involved heating the PTFE powder in a pre-sintering oven to its gel point of approximately 370 degrees to create extrusion grade PTFE. This process hardened and agglomerated the PTFE, but no filler or other ingredient was added. The second method of processing in Italy involved mixing and blending the powder PTFE with filler materials of different types and quantities (also of non-Italian origin) to create “filled” PTFE. In the second scenario, the milling, mixing, and blending of the virgin PTFE with filler materials in Italy did not result in a substantial transformation of the PTFE. Similarly, in the first scenario, CBP found that while the heat treatment to which the PTFE was subjected hardened and agglomerated the product, the process caused no significant change in the mechanical properties or chemical composition of the product. Therefore, CBP found that no substantial transformation of the PTFE occurred in Italy.
In this case, while the tempering of the PEEK that takes place in Germany may enable the PEEK to be better suited for laser-sintering, the basic properties remain the same. Tempering changes the shape and structure of PEEK particles, and while this process creates better stability and flow during manufacture of an article, we find this to be a minor change. After tempering, the PEEK remains a manufactured PEEK resin whose basic properties are determined in the initial production process. Therefore, we find that there is no substantial transformation, and the country origin of the PEEK is the United Kingdom.
HOLDING:
Based on the information presented, the PEEK described in NY N111878 has a country of origin of the United Kingdom for marking purposes.
EFFECT ON OTHER RULINGS:
NY N111878, dated July 14, 2010, is hereby MODIFIED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division