MAR-2-05 RR:TC:SM 559511 AT
Mr. Matthew Chang
Assistant Vice President
ITOCHU International Trading
335 Madison Avenue
New York, New York 10017
RE: Country of origin marking of imported hot-dipped galvanized and painted cold-rolled carbon steel sheets from the United
Kingdom which are processed in several countries;
substantial transformation; painting; cutting to length and
width; 19 CFR 134.1(b)
Dear Mr. Chang:
This is in response to your letter dated October 20, 1995,
requesting a ruling concerning the country of origin marking
requirements of hot dipped galvanized and painted cold-rolled
carbon sheets imported from the United Kingdom which are
processed in several countries. We regret the delay in
responding.
FACTS:
Your submission states that ITOCHU International Trading
("ITOCHU") intends to import hot-dipped galvanized and painted
cold-rolled carbon sheets from the United Kingdom which are to be
processed in three countries: Germany, Belgium and the United
Kingdom. You state that the steel sheet in coil will be
manufactured in Germany. The maker will form the steel, perform
hot rolling and cold reduction. The cold-rolled steel sheet in
coil will be 0.6 to 0.7 mm in thickness and from 1,000 to 1,300
mm in width. These coils are then sent to another firm in
Germany which will subject the coils to hot-dipped galvanization. The galvanized coils will then be shipped to Belgium for further
processing. In Belgium, the coils will be painted with a
polyester-based latex paint. The painted galvanized coils will
then be shipped to the United Kingdom where they will be slit
(cutting to length and width) into sheets of size 400 X 700 mm
and packaged for exportation to the U.S.
Based on the fact that several operations will be performed
on these imported hot-dipped galvanized and painted cold-rolled
carbon steel sheets in three different countries, and because
antidumping and/or countervailing duties may apply to the
imported articles, you have requested a definitive determination
as to the proper country of origin marking requirements for the
imported steel sheets.
We understand that our National Commodity Specialist
Division in New York has issued to ITOCHU ruling letter 813330
dated September 6, 1995, holding that the imported hot-dipped
galvanized and painted cold-rolled carbon steel sheets are
properly classified under 7212.40.5000, HTSUS, with a rate of
duty of 4.6 percent ad valorem.
ISSUE:
What are the proper country of origin marking requirements
of the imported hot-dipped galvanized and painted cold-rolled
carbon steel sheets which are processed in the three countries as
described above?
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 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.
Part 134 of the Customs Regulations implements the country of
origin marking requirements and exceptions of 19 U.S.C. 1304.
Part 134 of the Customs Regulations implements the country of
origin marking requirements and 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 Part 134.
A substantial transformation is said to have occurred when
an article emerges from a manufacturing process with a name,
character, or use which differs from the original material
subjected to the process. Torrington Co. v. United States, 764
F.2d 1563, 1568 (Fed. Cir. 1985), citing Texas Instruments, Inc.
v. United States, 631 F.2d 778, 782 (C.C.P.A. 1982).
An imported article is not a product of a country unless it
has been substantially transformed there into a new and different
article of commerce with a name, character, or use different from
that of the article or articles from which it was transformed.
As stated in your submission, the imported hot-dipped and painted
cold-rolled carbon steel sheets are processed in three different
countries.
Clearly, the operations performed in Germany to manufacture
the galvanized cold-rolled carbon steel coils including forming
the steel, hot rolling and cold reduction constitute a
substantial transformation in Germany. Thus, the country origin
of the galvanized cold-rolled carbon steel coils which are
exported to Belgium for further processing, is Germany.
In Belgium, the galvanized cold-rolled carbon steel coils
are painted with a polyester-based latex paint. In HQ 555881
(May 18, 1991), Customs found that adding a protective vinyl
coating to knee pads and floats was not a substantial
transformation even though, without the protective coating, the
articles could not be used in the manner intended. Customs
stated that, prior to the dipping process, the pads and floats
had the essential character as pads and floats, and thus the
name, character and use of the knee pads and floats did not
change as a result of the addition of the protective vinyl
coating. In HQ 734301 (March 31, 1992) Customs ruled that
Malaysian origin driftwood which was processed in the U.S. by
dipping the driftwood into a protective epoxy-resin coating and
adding a base did not result in a substantial transformation of
the Malaysian driftwood. Customs stated that, with or without
the protective coating, the essential character of the driftwood
remained the same. Similarly, in this case, we find that the
painting operation performed in Belgium does not result in a
substantial transformation of the galvanized cold-rolled carbon
steel coils. Like the knee pads and floats in HQ 555881 and the
driftwood in HQ 734301, the essential character of the steel
coils remain the same after the polyester-based latex paint is
applied. The name, character and use of the steel coils do not
change as a result of the painting operation. Thus, the country
of origin of the galvanized and painted cold-rolled carbon steel
coils which are exported to the United Kingdom for further
processing, is Germany.
The remaining issue is whether the German-origin galvanized
and painted cold-rolled carbon steel coils are substantially
transformed in the United Kingdom as a result of the slitting
operation (cutting to length and width) performed there.
Customs has consistently ruled that cutting materials to
defined shapes or patterns suitable for use in making finished
articles constitutes a substantial transformation. See, HQ
044590 (July 27, 1976). However, merely cutting to length and/or
width which does not render materials suitable for use in making
finished articles does not effect a substantial transformation.
See, HQ 555247 (January 11, 1990) (Customs ruled that the cutting
of steel bands to length and trimming its edges in the Virgin
Islands did not constitute a substantial transformation of the
steel bands since the cutting operation did not dedicate the
steel for a specific use, unlike the cutting of materials to
defined shapes or patterns suitable for use in making finished
articles.
In this case, we find that the slitting operation performed
in the United Kingdom does not constitute a substantial
transformation of the German-origin steel coils. Like the
cutting operation in HQ 555247, the slitting operation does not
dedicate the steel sheets for a specific use. Rather, the
slitting operation is merely the cutting of the steel coils to
length and width into steel sheets which can be used for multiple
purposes. Thus, we find that the German-origin galvanized and
painted cold-rolled carbon steel coils are not substantially
transformed as a result of the slitting operation performed in
Belgium to make the steel sheets. Accordingly, the country of
origin of the hot-dipped galvanized and painted cold-rolled
carbon steel sheets which are imported into the U.S. from the
United Kingdom, is Germany. Pursuant to the country of origin
marking requirements set forth in 19 U.S.C. 1304 and 19 CFR Part
134 the individual sheets or the outermost containers in which
the sheets are imported must be marked to indicate "Germany" as
the country of origin of the imported sheets. HOLDING:
Based on the facts presented, the country of origin of hot-dipped galvanized and painted cold-rolled carbon steel sheets
which are imported into the U.S. from the United Kingdom and
which are processed in Germany, Belgium and the United Kingdom in
the manner described above, is Germany. Accordingly, pursuant to
the country of origin marking requirements set forth in 19 U.S.C.
1304 and 19 CFR Part 134, the individual sheets or the outermost
containers in which the sheets are imported must be marked to
indicate "Germany" as the country of origin of the imported
sheets.
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
Tariff Classification
Appeals Division