MAR-2-05 CO:R:C:V 732615 RSD
Robert E. Ruggeri, Esq
Roger & Wells
1737 H Street, N.W.
Washington, D.C. 20006
RE: Country of Origin Marking of Surgical Instruments
Dear Mr. Ruggeri:
This is in response to your letter dated July 28, 1989, and
subsequent correspondence in which you seek a ruling concerning
the country of origin marking of surgical instruments. You are
seeking confirmation that the countries of origin for the
surgical instruments imported by your client are Pakistan and
Hungary. In your subsequent correspondence dated April 12, 1990,
you ask whether the marking "German Stainless-Made in Pakistan"
would be acceptable.
FACTS:
Your client is a nationwide distributor of imported
surgical instruments used in hospitals. The surgical instruments
are hemostats (clamplike instruments used in surgery) and
surgical scissors. In order to illustrate the manufacturing
process of the surgical instruments, your client has submitted a
ring containing physical samples of the eight stages of the
hemostat's production.
The first three stages of production are done in West
Germany. In West Germany, strip stainless steel is cut to rough
size and forged. The raw forging, with trim removed, is then
exported to Pakistan. The next 6 processing steps are completed
in Pakistan. In Pakistan, the raw forging is milled. The
ratchet, teeth, inside rings, and boxlock are milled on a milling
machine. Male and female forgings are made and the male is
inserted into the female part and the box pressed closed. A hole
is drilled through the boxlock and joined by a pin or rivet. The
instrument's shape is refined on a grinding wheel. The
instrument is adjusted so the teeth mesh properly, and is
straightened and aligned by an instrument maker using a hammer.
The instrument is heat hardened and tumbled in an abrasive medium
to further refine the finish of its surface. The hemostat is
hand polished on a wheel and finally adjusted. The instrument is
slightly blasted using sand or glass beads to create a non-glare
surface. The final step is to polish or use a buffing wheel to
produce a mirror like finish.
The scissors which your client imports, are made in the same
manner, except that the forgings are sent from Germany to Hungary
rather than Pakistan, for processing and then returned to Germany
for export to the United States.
The value of the hemostat forging as it leaves Germany
ranges from $1.25 to $1.30 for the small sizes and up to about
$2.40 for the larger sizes. The value of the finished hemostat
as it leaves Pakistan ranges from $4.00 to $9.50. The value of
stainless steel forging for the surgical scissors as it leaves
Germany ranges from $1.50 to $2.00. The value of the scissors as
it leaves Hungary, where it is processed, ranges from $6.00 to
$11.00.
In a subsequent letter dated April 12, 1990, you indicated
that your client wants to mark the surgical instruments on one
leg (the clamping portion of the hemostat and cutting portion of
the scissors) "German Stainless" and on the other leg "Made in
Pakistan" or alternatively "Made in Hungary."
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.
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., 27 C.C.P.A. 297 at 302 (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. The case of U.S. v. Gibson-Thomsen Co., Inc., 27
C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in
manufacture which results in an article having a name, character,
or use differing from that of the constituent article will be
considered substantially transformed.
Customs has ruled on several occasions on whether the
processing of forged blanks into finished or semifinished
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 we
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.
Recently, Customs ruled in HQ 732844, February 12, 1990,
that surgical instruments which are quite similar to those
involved in this case were substantially transformed when they
were processed in Pakistan. In that ruling, we noted that while
the U.S. made forgings resemble the size and shape of the
finished articles, they are not yet machined to their actual
dimensions and lack the essential characteristics such as the
capacities to grip, close, lock in place and to be adjusted.
Without the machining, bending, cutting, riveting, assembly and
polishing operations which were performed in Pakistan, the
articles cannot be used as surgical instruments and do not have
the characteristics thereof. Customs concluded that for purposes
of 19 U.S.C. 1304, the country of origin of the surgical
instruments was Pakistan.
Similarly in this case, the raw forgings produced in West
Germany, do not possess the essential characteristics of surgical
instruments. The milling and the intricate series of cuts that
create the ratchet, teeth, inside rings and boxlock are extensive
operations. The machining, milling, heat treating, polishing,
and other significant amount of processing done in Pakistan or
Hungary results in articles that have new and different
characteristics and give the surgical instruments their basic
character. With guidance from our previous decisions, we find
that the extensive processing done in either Pakistan or Hungary
which refines crude raw forgings into finished surgical
instruments capable of being used by hospitals constitutes a
substantial transformation. In addition, the extensive value
added by processing done in Pakistan or Hungary supports this
conclusion. Therefore, for purposes of 19 U.S.C. 1304, the
country of origin of the hemostats is Pakistan and the country of
origin of the surgical scissors is Hungary.
With respect to the proposed marking of the surgical
instruments "German Stainless" on one leg and marking on the
other leg of the instrument "Made in Pakistan" or "Made in
Hungary," we find that is acceptable so long as the requirements
of section 134.46, Customs Regulations (19 CFR 134.46), are met.
This section requires that when the name of any city or locality
in the U.S., or the name of any foreign country or locality other
than the name of the country or locality in which the article was
manufactured or produced, appear on an imported article or its
container, there shall appear, legibly and permanently, in close
proximity to such words, letter, or name and in at least a
comparable size, the name of the country of origin preceded by
"Made in," "Product of," or other words of similar meaning. The
purpose of this section is to prevent the possibility of
misleading or deceiving the ultimate purchaser of the actual
origin of the imported goods.
To satisfy the close proximity requirement of 19 CFR 134.46,
the name of the country of origin must generally be on the same
sides or surfaces as the other country name. Your proposed
marking of the surgical instruments would satisfy the close
proximity requirement if the words "Made in Pakistan" or Made in
Hungary" on one leg appear near to the words "German Stainless"
on the other leg and appear on the same surface of the
instrument in a manner so that they can be seen at the same
time. We note that the country of origin is preceded by the
words "Made in." As long as the country name Pakistan or Hungary
is legible and is in lettering in at least a comparable size to
the words "German Stainless," we find that the proposed marking
would be acceptable under 19 CFR 134.46.
HOLDING:
1) The processing of forged blanks as described above into
hemostats or surgical scissors in Pakistan or Hungary is a
substantial transformation. The country of origin for the
hemostats is Pakistan and the country of origin for the surgical
scissors is Hungary.
2) Assuming the conditions noted above are met, the proposed
marking "German Stainless" on one leg of the surgical instrument,
and "Made in Pakistan" or "Made in Hungary" on the other leg
satisfies the requirements of 19 CFR 134.46 and is acceptable.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch