MAR-2-05 RR:CR:SM 562528 MLR

John M. Gurley, Esq. Coudert Brothers, L.L.P. 1627 I Street, N.W. Washington, DC 20006-4007

RE: Country of origin of ball bearings; substantial transformation; abbreviations

Dear Mr. Gurley:

This is in reference to your letter of August 21, 2002, requesting a ruling concerning the country of origin of certain ball bearings. Photographs were submitted with your request.

FACTS:

It is stated that ball bearings consist of races, balls, cages and shields/seals. The prospective foreign production scenario contemplated by your client first involves processing in country A followed by the remainder of the processing in country B. You state that, at this time, a final decision concerning the countries in which the bearings will be produced has not been made.

The production of the ball bearings in country A first involves either cutting or forging the rings. The cutting process involves cutting steel tube to produce round rings that are roughly in the size and shape needed. The forging process consists of forcefully stamping steel bar into round rings with a hole in the middle that are roughly in the size and shape needed. The cut/forged rings are turned--that is, they are manually placed on a machine that turns them to create a very rough ring shape with a groove. The rings are heat treated to harden the steel. The face of the rings is polished, which takes approximately two seconds per ring. The outside diameter of the rings is polished, which takes approximately one second per ring.

The remaining operations are performed in country B. First, the raceway of the bearing rings is ground (the balls of the bearing revolve around this raceway). The rings are sent through demagnetizing and washing machines. You advise that at this stage in the bearing manufacturing process, different production processes occur to the inner and outer rings, but that collectively, the next three steps are considered to constitute the superfinishing of the raceways. The bores of the inner rings are ground by machine, the purpose of which is to grind the inner diameter of the inner ring. The raceways of the outer rings are superfinished by machine, the purpose of which is to provide the outer ring with its required tolerance and precision. It is claimed that this is the most critical stage of the process. The inner ring bore and outer rings are again demagnetized and washed by machine. Next, the inner ring?s raceway is superfinished by machine, the purpose of which is to provide the inner ring with its required tolerance and precision. It is claimed that only after this step can the ring be considered as a precision bearing ring. The outer diameter is polished by machine, the purpose of which is to superfinish the outer diameter.

Next, the inner and outer rings are washed in an ultrasonic washing machine. The dimensions and the appearance of the bearing rings are inspected for quality. Corresponding inner and outer rings are manually sorted for assembly into completed bearings. The bearing balls and bearing cages that are acquired for the production process are matched with the corresponding inner and outer rings. Once the rings, balls and cages are sorted, they are assembled into finished bearings. The inner ring is placed inside the outer ring, and the balls are inserted into the gap between the two rings. The cage is then inserted and staked to the rings by a machine to cover the balls and to keep them in place. The assembled bearings are washed, inspected, placed in a vibration testing machine to test the noise level of the bearings when they are rotated. They are washed again, greased, and a seal or shield is added to protect the balls and cages. The fully assembled bearings are sprayed with a rust prevention oil and packed for shipment to the U.S.

It is stated that the origin of the balls, cages, and shields/seals will be country A. You maintain that the country of origin of the finished ball bearings in the above-described scenario is country B.

You also inquire as to whether the abbreviations ?PRC? for China, ?ROM? for Romania, ?VN? for Vietnam, and ?INDO? for Indonesia, are acceptable.

ISSUES:

I. What is the country of origin of the finished ball bearings produced as described above?

II. Whether the abbreviations ?PRC? for China, ?ROM? for Romania, ?VN? for Vietnam, and ?INDO? for Indonesia may be used for the country of origin marking on the respective ball bearings.

LAW AND ANALYSIS:

The marking statute, 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 (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. 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 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 manufacture which results in an article having a name, character, or use differing from that of the imported article. On the other hand, if the manufacturing or combining process is merely a minor one which leaves the identity of the imported article intact, a substantial transformation has not occurred and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).

It is claimed that the country of origin of the finished ball bearing under the scenario described above is country B, because the grinding and superfinishing that occurs in country B is what enables the races to achieve the necessary ABEC tolerance standards and develop those characteristics that allow it to perform as a ball bearing. Therefore, it is claimed that the races are substantially transformed to make the country of origin of the completed bearing country B. It is claimed that the essence of a ball bearing--that is, the ultra smooth surfaces measured in millionths of an inch, is imparted by the processing in country B. It is stated that ABEC rating is a measure of the class or degree of precision of annular roller bearings or ball bearings based on American National Standards Institute/Antifriction Bearings Manufacturers Association standards.

As support, Customs Ruling RM 363.2 K dated April 18, 1968, is cited which found that a manufacturer who processed imported rough formed ball bearing races into finished races by grinding and related finishing processes, and who used such finished races in the assembly of bearings with steel balls, retainers (or separators), and plates or seals of U.S. manufacture was considered the ultimate purchaser of the imported rough formed races.

Headquarters Ruling Letter (HRL) 731968 dated March 19, 1990, and HRL 731969 dated March 19, 1990, are also cited as support. In HRL 731968, tapered roller bearings and ball bearings were considered. Unfinished cups (outer rings) and cones (inner rings) produced in Romania by cold forging from steel bar, deburring, and heat treating, and finished rollers were sent to Israel. In Israel, the cups and cones were ground and superfinished, which involved grinding the face, the outer and inner diameters of the cup and cone, as well as honing the bearing contact surfaces. The cup, cone and rollers (or balls) were then assembled with cages of Israeli origin into finished tapered roller (or ball) bearings. Customs found that the grinding and related processes performed on the cups and cones in Israel resulted in a substantial transformation in that the essence of an antifriction bearing was its ultra smooth surfaces measured in millionths of an inch, which was imparted by the Israeli processing. HRL 731969 considered the country of origin of tapered roller bearings processed in the same manner as described in HRL 731968, except that the processing occurred in Argentina instead of Israel.

We find the processes in the scenario presented for our consideration to be virtually identical to the ones considered in HRL 731968 and 731969. In both instances, the rings are heat treated and polished (or deburred) in one country and the creation of the raceways, superfinishing and assembly occur in the second country. Accordingly, pursuant to HRL 731968 and HRL 731969, the country of origin of the bearings processed in the instant case will be country B. The fundamental character and use of the bearing rings is determined after the raceways are ground and they are no longer considered steel rings.

Regarding the use of abbreviations, 19 CFR 134.45(b) provides that abbreviations of country names ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Ý?½?Ý ??c???????????????????????????Ý?½?Ý ??c???0A`H??????H????C?C?C?C?ð`H??????H????C?C?C?C?ð?ð????A???????????????????????A?????????????????????????A??????????????????????????????Ý?½?Ý ????????????????????????????Ý?½?Ý ??c???0A`H??????H????C?C?C?C?ð`H??????H????C?C?C????????????Ý?½?Ý ??c???0A`???????????Ý?½?Ý ??????????????????Ý?½?Ý ??c????????????Ý?½?Ý ??c???0A`H??????H????C?C?C?C?ð`H??????H????C?C?C?C?ð?ð???????????????Ý?½?Ý ??c????????????????????????????????????????????Ý?½?Ý ??c???0A`H??????H????C?C?C?C?ð`H??????H????C?C?C?C?ð?ð????A???????????????????????A???????????????????????????Ý?½????????

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