RR:TC:SM 559847 KKV
Mr. Jay Younis
Trans-American Medical
Instrument Corporation
7633 West 100th Place
Bridgeview, IL 60455
RE: Country of origin marking requirements for
surgical instruments; lister bandage scissors;
mosquito forceps; kelly forceps; iris scissors;
operating scissors; National Hand Tool;
substantial transformation
Dear Mr. Younis:
This is in response to your letter dated May 10, 1996
(and subsequent transmittals dated June 15, 1996 and
December 13, 1996) which requests a ruling regarding the
country of origin marking requirements for certain surgical
instruments. Samples have been submitted for our
consideration.
FACTS:
You indicate that Trans-American Medical Instrument
Corporation (Tamsco Instruments) is involved in the
production of several types of surgical instruments in the
United States, including lister bandage scissors, mosquito
forceps, kelly forceps, iris scissors and operating
scissors. You have described the operations involved in
producing these instruments as follows. U.S.-origin
stainless steel sheets are purchased and tested for chemical
composition. The sheets of stainless are cut into strips of
suitable width, which are further cut into blanks. The
blanks are heated and hammer forged, transforming the blanks
into "forgings" which are then inspected visually and with
gauges. The forgings are annealed to remove any stresses
and are trimmed to remove any "flashes" created by the
forging process. Finally, the forgings undergo a cold
stamping process in which the trimmed forgings are
straightened before exportation to Pakistan for completion
into finished forceps and scissors.
In Pakistan, the forgings undergo milling operations in
which the box, rachet and jaw serrations are cut into the
forceps. The milled forgings are assembled and the initial
setting is completed. The assembled instruments undergo
grinding, filing, inspection and heat treatment, including
tempering and testing for hardness. The instruments also
undergo acid pickling to remove the thin layer of "scaling"
deposited during the heat treatment process and are polished
using a variety of polishing machines, soft cutting wheels,
grinding/polishing belts, cotton mops and satin finishing
wheels. The instruments undergo chemical cleaning, final
setting and adjustment operations, buffing and ultrasonic
cleaning. The instruments are marked using chemical etching
and steel stamping processed, visually inspected, boil
tested and lab tested prior to labeling and packing for
shipment to the U.S.
ISSUE:
Whether forgings of U.S. origin are substantially
transformed in Pakistan by milling, assembly, heat treating,
cleaning and polishing and inspection operations performed
in Pakistan, thereby subjecting the imported instruments to
country of origin marking when returned to the United
States.
LAW AND ANALYSIS:
Section 304, Tariff Act of 1930, as amended (19 U.S.C.
1304) provides that, unless excepted, every article of
foreign origin (or its container) imported into the U.S.
shall be marked in a conspicuous place as legibly,
indelibly, and permanently as the nature of the article 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. Inc., 27 CCPA 297, 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.
For country of origin marking purposes, a substantial
transformation of an imported article occurs when it is used
in the U.S. in manufacture, which results in an article
having a name, character, or use differing from that of the
imported article. As provided in 19 CFR 134.32(m), products
of the U.S. exported and returned are specifically excepted
from country of origin marking requirements. Therefore, if
a U.S. product is sent abroad for processing, the article
remains a product of the U.S. excepted from the country of
origin marking requirements unless prior to its return it is
substantially transformed in that country and, therefore,
becomes an article of foreign origin.
In National Hand Tool Corp. v. United States, 16 CIT
308, 312 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993),
sockets and flex handles were either cold formed or hot
forged into their final shape, speeder handles were reshaped
by a power press after importation, and the grip of the flex
handles were knurled in the U.S. The imported parts were
then heat treated which strengthened the surface of the
steel, and cleaned by sandblasting, tumbling, and/or
chemical vibration before being electroplated. In certain
instances, various components were assembled together which
the court stated required some skill and dexterity. The
court determined that the imported components were not
substantially transformed by the strengthening, cleaning,
and assembly performed in the U.S.; therefore, they remained
products of Taiwan. In making its determination, the court
focused on the fact that the components had been cold-formed
or hot-forged "into their final shape before importation",
and that "the form of the components remained the same"
after the assembly and heat-treatment processes performed in
the U.S. Although the court stated that a predetermined use
would not preclude the finding of a substantial
transformation, the determination must be based on the
totality of the evidence. No substantial change in name,
character or use was found to have occurred as a result of
the processing performed in the U.S.
In HRL 558747, dated January 20, 1995, German forgings
underwent a variety of manufacturing processes in the U.S.
Customs relied upon the analysis set forth in National Hand
Tool, and held that the additional work of assembling the
surgical instrument, cutting the ratchet teeth and the
scaling down operations were not extensive enough operations
to effect a substantial transformation.
In 559236, October 26, 1995, Customs considered German
manufactured forgings in which the box lock was formed and
the ratchet teeth and serrations were cut prior to
exportation to Pakistan for hardening, polishing and
assembly. Customs held that the final shape and essential
characteristics of the instruments was imparted by the
operations performed in Germany and that the hardening,
polishing and assembly of the two pieces in Pakistan did not
effect a substantial transformation.
With regard to the forceps and scissors at issue, we
note that, similar to the facts presented in National Hand
Tool, the instrument forgings are hot forged into their
final shape prior to exportation to Pakistan. Although the
forgings undergo additional processing and are further
refined and assembled into finished instruments, the form of
the components remains the same. Inasmuch as the forgings
resemble the shape and size of the completed instruments
upon importation into Pakistan, the operations performed in
Pakistan do not substantially transform the forgings into a
new and different article of Pakistani origin. Accordingly,
the origin of the finished instruments is the United States.
Because the surgical instruments are products of the
U.S. that are exported and returned without undergoing a
substantial transformation, they are excepted from country
of origin marking requirements pursuant to 19 CFR 134.32(m)
and, therefore, they may re-enter the U.S. without any
reference to Pakistan. Your letter indicates that you have
already consulted the Federal Trade Commission and received
authorization from that agency regarding the use of "TAMSCO
USA." Whether the marking "Made in the U.S.A." may appear
on the surgical instruments is also a matter within the
jurisdiction of the Federal Trade Commission. Therefore,
you should contact the FTC at the following
address regarding the appropriate use of this phrase:
Federal Trade Commission, Division of Enforcement, 6th and
Pennsylvania Avenue, N.W., Washington, D.C. 20508.
HOLDING:
On the basis of the information and sample submitted,
it is our determination that stainless steel forgings which
have been hot forged into the final shape of surgical
instruments are not substantially transformed into a new and
different article by additional milling, assembly, heat
treating, cleaning and polishing and inspection operations
performed in Pakistan. Therefore, upon reimportation, the
surgical instruments are exempt from marking as products of
the United States exported and returned.
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
Customs officer.
Sincerely,
John Durant
Director, Tariff Classification
Appeals Division