CLA-2 CO:R:C:M 952033 LTO
Ms. Elizabeth L. Hintz
Meyer Manufacturing Co., Ltd.
382 Kwun Tong Road
Kowloon, Hong Kong
RE: Aluminum cookware ("Circulon"); GRI 2(a); EN to GRI 3(b);
HQ 084845; HQ 086555; HQ 733579; HQ 734321; HQ 734734;
Anheuser-Busch Brewing Association v. U.S.; EN 76.15;
7606.91.30; 7606.92.30
Dear Ms. Hintz:
This is in response to your letter of July 21, 1992,
requesting a ruling as to the classification and country of
origin for aluminum cookware under the Harmonized Tariff Schedule
of the United States (HTSUS). In response to your letter of June
8, 1992, by letter dated October 20, 1992 (HQ 734734), the Chief,
Value and Marking Branch of Customs Headquarters, provided you
with general information concerning the country of origin marking
of this cookware.
FACTS:
The articles in question are non-stick, hard anodized
aluminum pans sold under the name, "Circulon." You state that
you intend to locate a plant in the U.S. to produce these pans.
Your intended plan is to provide aluminum circles from your Hong
Kong plant to your Thailand plant.
In Thailand, the aluminum circles will go through the
following manufacturing processes: (1) bottom mark stamping; (2)
scroll trimming (grooves cutting); (3) drawing (forming of pan);
(4) edge trimming; (5) holes punching (for handle assembling);
(6) machine etching (cleaning); (7) interior sandblasting; (8)
exterior sunray polishing; (9) packing.
These pans will then be sent to the U.S., where the
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following will occur: (1) hard anodizing; (2) sealing; (3)
washing; (4) interior non-stick PTFE coating; (5) sealing; (6)
handle riveting (assembling); (7) cleaning; (8) packaging with
cover and knob (if lid is stainless steel, rather than glass, a
screw must be welded onto the lid). The complete pans will then
be packaged and ready for sale.
ISSUE:
1. Whether the cookware, as imported into the U.S., is
classifiable as an aluminum table, kitchen or other household
article, under Heading 7615, HTSUS.
2. What is the country of origin of the cookware?
LAW AND ANALYSIS:
1. Classification
The General Rules of Interpretation (GRI's) to the HTSUS
govern the classification of goods in the tariff schedule. GRI 1
states in pertinent part that "for legal purposes, classification
shall be determined according to the terms of the headings and
any relative section or chapter notes and, provided such headings
or notes do not otherwise require, according to the [remaining
GRI's]." Heading 7615, HTSUS, provides for aluminum table,
kitchen or other household articles and parts thereof.
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN) constitute the Customs Co-operation
Council's official interpretation of the Harmonized System.
While not legally binding, the ENs provide a commentary on the
scope of each heading of the Harmonized System, and are generally
indicative of the proper interpretation of these headings.
EN 76.15, pg. 1069, states that Heading 7615, HTSUS, covers
the same types of articles as are described in the ENs to Heading
7323, HTSUS (table, kitchen or other household articles of iron
or steel). EN 73.23, pg. 1035, states that Heading 7323, HTSUS,
covers articles for kitchen use such as "frying pans."
As imported into the U.S., the articles in question are
aluminum pans that have been stamped, trimmed, grooved,
sandblasted, polished and have had holes punched for handle
assembly. The pans have not been hard anodized, sealed, or non-
stick coated. The handles have not yet been assembled, nor have
the pans been fitted with lids (glass or stainless steel).
GRI 2(a) states that "[a]ny reference in a heading to an
article shall be taken to include a reference to that article
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incomplete or unfinished, provided that, as entered, the
incomplete or unfinished article has the essential character of
the complete or finished article." Thus, if the pans in question
have the essential character of complete or finished pans, they
would be classifiable under Heading 7615, HTSUS.
For an item to have the essential character of the finished
product, it must be recognizable as such a product. In
determining an article's essential character, one must look to
the merchandise in question--as it changes, so too may the
factors which determine its essential character. Factors found
to be relevant in other contexts include the significance of the
imported component (bulk, quantity, weight), its role in relation
to the use and overall functioning of the complete article and,
to the extent it validates the comparison, the cost or value of
the complete article versus the cost or value of the imported
component. See HQ 084845, dated November 24, 1989; HQ 086555,
dated April 16, 1990; EN to GRI 3(b), pg. 4.
It is our opinion that the pans in question are recognizable
as the finished product. Although it is necessary to attach the
handles, and to perform both the hard anodizing and non-stick
coating processes, the imported articles can only be used to
manufacture pans to be used for cooking. Moreover, the formed
pans are the major part of the end product, as the U.S.
processing is relatively minor. The formed pan "is the very
essence of the finished product and the fundamental character of
the pot/pan is not changed in the U.S." HQ 733579, dated August
20, 1990. (Since specific cost information was not submitted, it
is not possible to compare the cost of the foreign and domestic
processing.)
The articles in question have the essential character of
complete, aluminum pans. The finished aluminum pans would be
classified under Heading 7615, HTSUS, which provides for aluminum
kitchen articles. Specifically, they would be classifiable under
subheading 7615.10.30, HTSUS, which provides for aluminum cooking
and kitchen ware containing non-stick interior finishes. Thus,
according to GRI 2(a), the unfinished aluminum pans are likewise
classifiable under subheading 7615.10.30, HTSUS.
2. Country of origin
In order for the aluminum circles from Hong Kong to be
considered substantially transformed by the described processing
as to be regarded as a product of Thailand for tariff purposes,
the evidence must show that the processing results in a product
other than or materially different from the merchandise entering
Thailand. That is, a new and different article of commerce must
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emerge from the processing, one having a new name, character or
use. Anheuser-Busch Brewing Association v. United States, 207
U.S. 556 (1908).
Your intended plan is to provide aluminum circles from your
Hong Kong plant to your Thailand plant. In Thailand, the
aluminum circles will be manufactured into aluminum pans that
have been stamped, trimmed, grooved, sandblasted, polished and
have had holes punched for handle assembly. After importation
into the U.S., the handles will be assembled and the pans will be
fitted with lids (glass or stainless steel). The pans also will
be hard anodized, sealed, and coated with interior non-stick
coating in the U.S.
The raw aluminum circles from Hong Kong are substantially
transformed in Thailand into an article having a name, character
and use different than that possessed by the article as it
originally entered Thailand. As shown above, the aluminum
circles are transformed into unfinished, aluminum pans which have
the essential character of complete, aluminum pans.
The unfinished, aluminum pans from Thailand are not,
however, substantially transformed in the U.S. In HQ 733579,
dated August 20, 1990, this office held that a formed pan that
was shipped to the U.S., where it was de-burred (the removal of
rough edges and surfaces of the pot or pan), polished, painted,
coated with a non-stick surface and where its handle was
attached, was not substantially transformed in the U.S. While
the hard anodizing process performed in the U.S. on the articles
in question was not performed on the pan involved in HQ 733579,
and while the articles in question cannot be used as pans prior
to the processing performed in the U.S., the following reasoning
found in HQ 733579 applies to the instant case:
The imported aluminum pot/pan is not substantially
transformed in the U.S. into a new article with a new
name, character or use. Although it is necessary to
attach the handle in order for the pot/pan to be
functional, the imported article could only be used to
make a pot/pan to be used for cooking. The name,
character and use of the pot/pan would not change
when the handle is attached. The aluminum pot/pan is
the very essence of the finished product. A
significant amount of work is not done on the pot/pan
itself; the processing done on the pot/pan in the U.S.
is merely finishing and coating the pot/pan.
The imported aluminum pans are substantially transformed in
Thailand, and therefore, the country of origin for the imported
articles is Thailand. Moreover, because the imported articles
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are not substantially transformed in the U.S., the country of
origin of the finished aluminum pans is also Thailand.
In your ruling request, you state that if the hard anodizing
process is not sufficient to qualify the pans as products of the
U.S., you may send the aluminum circles from Hong Kong to
Thailand for stamping and groove cutting only, and then on to the
U.S. (for drawing, trimming, hole punching, etching,
sandblasting, polishing, hard anodizing, sealing, washing, non-
stick coating, handle riveting, cleaning and packaging). You
then ask for the classification and country of origin marking
requirements for these flat, stamped, grooved aluminum disks.
In this instance, the imported articles would not have the
essential character of complete or finished, aluminum frying
pans, according to GRI 2(a). Thus, they would not be
classifiable under Heading 7615, HTSUS.
The flat, stamped, grooved aluminum disks would be
classifiable under Heading 7606, HTSUS, which provides for
"[a]luminum plates, sheets and strip, of a thickness exceeding
0.2% mm." If the disks are of aluminum, not alloyed, not clad,
they would be classifiable under subheading 7606.91.30, HTSUS.
If they are of aluminum, alloyed, not clad, they would be
classifiable under subheading 7606.92.30, HTSUS.
With regard to the articles' country of origin, it is our
opinion that the aluminum disks are not substantially transformed
in Thailand by the stamping and grooving operation. However,
they are substantially transformed in the U.S., and, therefore,
the country of origin of the finished pans is the U.S.
The Federal Trade Commission (FTC) has jurisdiction
concerning the use of the phrase "Made in the U.S.A." See HQ
734321, dated April 13, 1992. Consequently, any inquiries
regarding the use of such phrase should be directed to the FTC.
The address is as follows:
Federal Trade Commission
Division of Enforcement
6th and Pennsylvania Ave., N.W.
Washington, D.C. 20508
HOLDING:
With regard to your initial proposal, the unfinished
Circulon pans are classifiable under subheading 7615.10.30,
HTSUS, which provides for "[t]able, kitchen or other household
articles and parts thereof, of aluminum . . . [c]ooking and
kitchen ware . . . [e]nameled or glazed or containing nonstick
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interior finishes . . . [o]ther." The corresponding rate of duty
for articles of this subheading is 5.7% ad valorem. This
provision is eligible for a free rate of duty under the
Generalized System of Preferences. See sections 10.171-10.178 of
the Customs Regulations (19 CFR 10.171-10.178).
The described processing operations in Thailand result in a
substantial transformation of the aluminum circles, or a product
having a new name, character and use, namely, the unfinished
pans. Thus, the imported articles are products of Thailand.
The subsequent processing of the imported articles in the
U.S. does not result in a substantial transformation of these
articles. Thus, the country of origin of the finished pans is
also Thailand.
With regard to your alternative proposal, the flat, stamped,
grooved aluminum disks are classifiable under Heading 7606,
HTSUS, which provides for "[a]luminum plates, sheets and strip,
of a thickness exceeding 0.2 mm." If the disks are of aluminum,
not alloyed, not clad, they would be classifiable under
subheading 7606.91.30, HTSUS. If they are of aluminum, alloyed,
not clad, they would be classifiable under subheading 7606.92.30,
HTSUS. The corresponding rate of duty for articles of these
subheadings is 3% ad valorem.
Aluminum circles from Hong Kong which are stamped and groove
cut only in Thailand are not substantially transformed in
Thailand. Thus, these articles are products of Hong Kong.
However, the subsequent processing in the U.S. results in a
substantial transformation of the flat, stamped, grooved aluminum
disks. Thus, for Customs purposes the country of origin of the
finished pans under this proposal is the U.S. The pans may not
be marked "Made in the U.S.A." unless authorized by the Federal
Trade Commission.
Sincerely,
John Durant, Director
Commercial Rulings Division