Customs Ruling HQ H003362 - Country of Origin Marking Requirements for Three Types of Imported Metal Blades Used in Making Hunting Arrowheads, Pill Splitters, and as Replacement Blades in Cutting Machines; 19 CFR 134.35, 19 CFR 134.26, 19 CFR 134.14, and 19 CFR 134.32(d)

Star
Send

HQ H003362
Feb 06, 2007

Type : MARKING • HTSUS :
Related: 731432; 728801; 732057; 733301; 561116; 559366; 561339; 735010; 560694

MAR-2 RR:CTF:TCM H003362 RSD

John F. Sweeney
President
Miami Valley Worldwide, Inc.
1300 E. Third Street
Dayton, Ohio 45403

RE: Country of Origin Marking Requirements for Three Types of Imported Metal Blades Used in Making Hunting Arrowheads, Pill Splitters, and as Replacement Blades in Cutting Machines; 19 CFR 134.35, 19 CFR 134.26, 19 CFR 134.14, and 19 CFR 134.32(d) Dear Mr. Sweeney:

This is in response to your letter of November 2, 2006, on behalf of American Cutting Edge requesting a ruling concerning the country of origin marking requirements for three different types of metal blades that are used in three different products, hunting arrowheads, pill splitters, and cutting machines. You have submitted various samples and other exhibits for our consideration.

FACTS:

You have presented three different scenarios in which American Cutting Edge is importing various types of metal blades that are used with three different products.

In the first situation, American Cutting Edge imports small metal blades in boxes of 800 such blades from Germany. The metal blades are sold to another company that uses them to produce hunting arrowheads (also called broadheads). The boxes of blades are marked in two separate places with a country of origin legend that reads “Made in Germany”. This marking is on the boxes of blades at the time they are imported into the United States. The other company uses the blades to make several different types of hunting arrowheads. These hunting arrowheads range in weight from 90-grain up to 125-grain. Each of the hunting arrowheads has three or four blades. In making the hunting arrowheads, the blades are attached to a metallic cylinder piece. The blister packaging containing the hunting arrowheads indicates that the bleeder blades are removable. In producing the hunting arrowheads, other than attaching the blades, there is no indication that any additional processing of the imported blades is involved.

In the second situation, small blades, made in Germany, are imported in boxes of 6,000 such blades. The boxes are marked in two separate locations with the legend “Made in Germany”. The blades are also sold to another company, who in turn uses them to make pill splitters. The pill splitter firmly grips all sizes of pills for accurate cutting. The blades are loaded into a machine, which in turn molds them into a plastic hinge like case to form the final product.

In the third situation, small blades are imported from Germany in boxes of 2000 such blades. Each box is marked with the country of origin legend, “Made in Germany” in two places. Inside each box are 10 plastic holders that contain 200 blades each. The words “Made in Solingen, Germany” are molded into the clear top of the 10 plastic holders. These blades are sold to various manufacturing companies. The manufacturing companies already possess certain machines that are used to cut items such as paper, tape, or film. When the blades for the cutting machines become worn out or dull, a replacement blade is installed into such cutting machines as necessary. The blade is then set to a determined width, for example, ¼ inch, ½ inch, 1 inch or at whatever setting wanted to cut the rolls. The film, paper, or tape is loaded into the machine. For example, a 2-foot roll of paper is cut in the middle, to make two 1-foot rolls.

ISSUES:

What is the country of origin marking requirements for the imported metal blades in the three different scenarios 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 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. 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, 302 (1940).

Part 134 of the Customs and Border Protection (CBP) Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), of the CBP Regulations, (19 CFR 134.41(b)), mandates that the ultimate purchaser in the United States must be able to find the marking easily and read it without strain.

Blades for the Hunting Arrowheads and Pill Splitters

Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), provides that: "country of origin" means the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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" for marking purposes.

A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). 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. Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp.1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). See also C.S.D. 85-25. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis. CBP ruled in C.S.D. 80-111, dated September 24, 1979, that a ceiling fan assembled in the United States in assembly line procedures was not substantially transformed in the United States. CBP considered factors such as the nature of the assembly, the amount of skilled labor and specialized equipment involved and the cost of the assembly process.

In determining whether there are substantial transformations, the fundamental question in this case is whether the imported metal blades lose their identity when they are combined together with other components to make the hunting arrowheads and the pill splitters. In HQ 731432 (June 6,1988), we pointed out six factors to be considered in determining whether an imported article loses its identity when it is combined with a domestic article:

1) whether the article is completely finished;

2) the extent of the manufacturing process of combining the article with its counterparts as compared with the manufacturing of the imported article;

3) whether the article is permanently attached to its counterparts;

4) the overall importance of the article to the finished product; see Uniroyal, Inc. v. United States, Supra. (no substantial transformation occurred where an imported footwear upper, the essence of the finished article, was combined with a domestically produced sole);

5) whether the article is functionally necessary to the operation of the finished article, or whether it is an accessory which retains its independent function; and,

6) whether the article remains visible after the combining.

These factors are not exclusive and there may be other factors relevant to a particular case and no one factor is determinative. See also HQ 728801 (February 26, 1986).

In HQ 732057, dated April 16, 1990, we considered the country of origin marking requirements for a knife blade for a rotary fabric-cutting instrument. We noted that that the circular knife blade was a finished product. Moreover, the process of attaching the blade to the handle of the rotary cutting instrument did not appear to be an extensive process when compared to the amount of processing that was involved in producing the blade itself. We also pointed out that the knife blade was absolutely necessary to the operation of the rotary cutting instrument, and remained visible after the combining. Although the knife blade represented only about 6% of the value of the rotary cutting instrument, we explained that the relative value of the imported item to the finished good is only one factor to be considered and may be outweighed by other factors. Thus, we determined that the knife blade did not lose its separate identity and was not substantially transformed when it was assembled with the handle of the rotary cutting instrument.

In HQ 733301, dated August 8, 1990, CBP considered a situation in which U.S.- made knife blade blanks, wooden or plastic handles, and rivets were shipped to Mexico for assembly, sharpening of the blade, and packaging for shipment to the United States. Although there was little information describing the assembly process, we indicated that the assembly of the parts into a finished knife and the sharpening of the blade were minor finishing operations that did not result in a substantial transformation. In HQ 561116, dated October 15,1998, a Taiwanese made knife blade and handle were sent to China for assembly of the knife and for polishing. The assembly of the blade to the handle appeared to be a simple operation, similar to the processing described in HQ 733301, and thus it did not result in a substantial transformation of these components. Therefore, the country of origin of the knife was determined to be Taiwan--where the blade and handle were made.

In HQ 559366, August 29, 1995, CBP reviewed the country of origin marking requirements for an ulu knife that consisted of a semi-circular blade and a handle. The ulu knife could be used in the kitchen for culinary and cutlery purposes. It also could be used as a utility knife, and it was also stated to be a collector's item. We ruled that the imported blades were not substantially transformed in the United States by the etching and assembly operations. Therefore, the retail container had to be clearly marked to indicate to the ultimate purchaser the country of origin of the ulu knives.

Based on the analysis set forth in the previously cited rulings, we believe in this case that the two types of imported blades are not substantially transformed when they are combined with the other parts to produce either the hunting arrowheads or the pill splitters. Here, the processing of installing the blades into these products appears to be fairly minimal. There is no indication that any further processing is done to the blades themselves. To produce these products, the blades do not require any further manufacturing other than a simple assembly or combining operation. Significantly, with respect to the hunting arrowheads, after their installation, the blades are removable. Most importantly, the blades appear to be the most important component of these products. Although there may be a name change, a change in name alone is considered the weakest evidence of a substantial transformation. National Juice Products Association v. U.S., 628 F. Supp. 978 at 989 (CIT 1986). See also HQ 561339, dated March 9, 2000. Thus, because the blades keep their separate identity, they are not substantially transformed when they are used to produce the hunting arrowheads and pill splitters. Consequently, we find that the country of origin of the imported blades must be disclosed to the ultimate purchasers of the hunting arrowheads and the pill splitters.

Section 134.14(a), CBP Regulations (19 CFR 134.14(a)), requires that when an imported article is of a kind which is usually combined with another article after importation but before delivery to an ultimate purchaser and the name indicating the country of origin of the article appears in a place on the article so that the name will be visible after such combining, the marking shall include, in addition to the name of the country of origin, words or symbols which shall clearly show that the origin indicated is that of the imported article only and not that of any other article with which the imported article may be combined after importation. Therefore, to indicate to the ultimate purchaser that the blade is of foreign origin, there should be a marking such as "Blade Made in Germany."

It is our understanding that although American Cutting Edge is the importer of the blades, it does not make the hunting arrowheads or the pill splitters. Instead, American Cutting Edge sells the blades to other companies who will use them in the production of the hunting arrowheads or the pill splitters. Once the hunting arrowheads and the pill splitters are produced, they are put into blister type packages for retail sale. Although in most circumstances products such as the blades in this case which are not substantially transformed after importation would have to be marked to indicate their country of origin, based on the samples of the packages of the hunting arrowheads and the pill splitters that were submitted, any marking that is put on the blades is not likely to be seen by the purchasers through the packages prior to the purchase of hunting arrowheads and pill splitters. Section 134.24(d)(2) CBP Regulations (19 CFR 134.24(d)(2)), provides that sealed containers or holders for imported articles which are normally unopened by the ultimate purchaser before purchase must be marked to indicate the country of origin of their contents. Similarly, in this case, since the hunting arrowheads and the pill splitters will be sold in blister type packages and any marking on the blades will not be visible when they are sold at retail, the packages for these products must contain a marking that indicates that the blades were made in Germany.

After they are imported into the United States, the imported blades will be processed and repacked into retail containers, but since they will not be substantially transformed, we find that the requirements of 19 CFR 134.26 will be applicable. See HQ 735010, August 4, 1993, and HQ 560694, December 17, 1997. 19 CFR 134.26(a) states that:

if an article subject to these requirements is intended to be repacked in retail containers after its release from CBP’s custody, or if the port director having custody of the article, has reason to believe that such article will be repacked after its release, the importer shall certify to the port director that, if the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article, or, if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements. (emphasis added).

Therefore, in this instance if American Cutting Edge intends to sell the imported blades to other companies who will use them to manufacture the hunting arrowheads and pill splitters as described above, then it must notify these manufacturers of their obligation to mark the retail packages, in which they sell their products, to indicate that the blades are made in Germany. In addition, in accordance of 19 CFR 134.26, American Cutting Edge must certify to CBP, at the port where the blades are entered, that they will notify all purchasers or transferees of the blades of their obligation to have their retail packages for their products legibly, permanently and conspicuously marked to indicate that the blades are made in Germany.

We also note that a small American flag with the words “Made in USA” is printed on the front of the sample package for the pill splitter. If as described above, the blades for the pill splitter were made in Germany, then the marking “Made in USA” would be inaccurate and must be removed from the package.

BLADES USED IN CUTTING MACHINES

With respect to the imported blades that will be used in the cutting machines, based on your description, it appears that they are used only as replacement blades and that no substantial transformation of these particular imported blades occurs. Therefore, the cutting machine owners are deemed to be the ultimate purchasers of these imported blades. Consequently, the country of origin of the blades must be disclosed to the cutting machine owners. Section 134.32(d), CBP Regulations (19 CFR 134.32(d)), provides an exception to the country of origin marking requirements for “[a]rticles for which the marking of the containers will reasonably indicate the origin of the articles.” The sample of the outer cardboard box containing the blades has a prominent paper label securely affixed to it, which reads “MADE IN GERMANY”. In addition, the blades are stored in individual plastic holders, which have the words “Made in Solingen Germany” molded into their tops. We find that that these two country of origin markings on the boxes and the plastic holders are legible, conspicuous and permanent and will be adequate to indicate the country of origin of the blades to their ultimate purchasers. Therefore, the individual blades are excepted from marking under 19 CFR 134.32(d) and the markings on the outer cardboard box and plastic holders of the blades satisfy the requirements of 19 U.S.C. 1304.

HOLDING:

The imported metal blades are not substantially transformed when they are combined together with other pieces and components to make the hunting arrowheads and the pill splitters. Therefore, the retail purchasers of the hunting arrowheads and pill splitters are the ultimate purchasers of the imported metal blades, and thus must be informed of the country of origin of the blades. Since any marking put on the blades will be not visible through the retail packages of hunting arrowheads and pill splitters, the packages for these products must be marked to indicate the country of origin of the blades. Since the importer is selling the blades to the producers of the hunting arrowheads and the pill splitters, in accordance with 19 CFR 134.26, it must certify to the Port Director at the port of entry, that it will notify the subsequent purchasers of the blades of their obligation to have the retail packages for these products be marked to indicate the country of origin of the blades. The ultimate purchasers of the blades used as replacement blades for the cutting machines are the machine owners. The country of origin marking on the sample cardboard boxes and plastic holders that contain the blades is sufficiently permanent, legible and conspicuous to satisfy the requirements of the country of origin marking law, 19 U.S.C 1304. Accordingly, the individual metal blades may be excepted from country of origin marking under 19 CFR 134.32(d).

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 with a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.

Sincerely,

Gail A. Hamill, Chief
Tariff Classification and Marking Branch