CLA-2 OT:RR:CTF:TCM H006417 EMS
B.J. Shannon, Esq.
Alston & Bird, LLP
The Atlantic Building
950 F Street, NW
Washington DC, 20004
RE: Request for reconsideration of HQ W968434; classification and country of origin marking requirements for multi-purpose garden tool manufactured by Leatherman Tool Group
Dear Ms. Shannon:
This letter is in reply to your correspondence, dated February 1, 2007, to the Bureau of Customs and Border Protection (CBP). You have requested that CBP reconsider its decision in HQ W968434, dated January 17, 2007. At issue is the decision in HQ W968434 which required your client, Leatherman Tool Group (Leatherman), to mark the stainless steel pruner component of a multipurpose garden tool to indicate its country of origin. In addition to your original correspondence, we have also taken into consideration a supplemental submission dated April 10, 2007, as well as another submission dated June 5, 2007, made after a meeting at our office on May 22, 2007. This letter affirms the holding in HQ W968434 and also clarifies the factual description of the goods and the legal analysis set forth therein.
FACTS:
Leatherman manufactures a multipurpose gardening tool, the Hybrid, in Portland, Oregon. The tool, which functions like a pocket-style Swiss Army Knife, features a plastic/rubber handle with an attached pruner head, and eight additional components attached to either of the handles. These additional components include a saw blade, a Phillips head screwdriver blade, a weeding tool, a ruler, a grafting knife, a flat head screwdriver, a sprinkler key and a bottle opener. The pruner head is the largest component, measuring approximately 4 ¼ inches. All of the components can be folded into the handle for storage, or pulled out of the handle for use. The tool measures approximately 4 ¾ inches when closed and 8 inches when open with the pruner head exposed. Leatherman has indicated that, with the exception of the three component tools, the Hybrid is manufactured in the United States. In HQ W968434, Leatherman requested that CBP determine the country of origin for the three imported component tools: an unfinished Phillips head screwdriver blade from Mexico, a saw blade from Taiwan, and a stainless steel pruner head from Taiwan.
Leatherman’s request for reconsideration is limited in scope to its position “that the pruner head is substantially transformed in the United States.” In HQ W968434, CBP determined, in relevant part, that the pruner head is not substantially transformed when it is attached post-importation to the Hybrid. Leatherman believes that the pruner head, which has “no commercial function other than integration into a tool,” is substantially transformed by becoming “part of the whole Hybrid unit when it is attached to the U.S. origin frame and the remainder of the 13 U.S. origin components.” Leatherman explains that the manufacture of the Hybrid in the United States is an “extensive” process. During that process, the pruner head is attached to the handles of the Hybrid.
Like many of the products manufactured by Leatherman, the Hybrid has a multi-tool functionality and all of the tools are capable of folding into a compact housing unit. The housing unit consists of the handles of the device. Only the pruner head has a safety lock that keeps it enclosed in the handles when it is not in use. When the pruner head is in use, the handles facilitate the manipulation of the pruner head to cut plants. The handles do not contribute to the functionality of any of the other separate component tools. In this regard, we note that the wire cutters, identified by Leatherman as a component tool, are not separate from the pruner head. The wire cutters, which are also manipulated by the handles of the Hybrid, are merely an indented space in a blade of the pruner head near its base. Leatherman explains that the pruner head is visible in the Hybrid only when its pruning or wire-cutting capabilities are utilized, but not when any of the other tools, including the U.S. made components, is utilized. Leatherman correctly points out that CBP made an error of fact in HQ W968434 in its characterization of the pruner head as unable to fold into the handle of the device.
Leatherman describes the essence of the Hybrid as “its ability to perform a complete range of gardening tasks within one tool” such as weeding, soil depth measuring, sprinkler system adjustment, sawing, and bark grafting. Leatherman believes that each of the functions performed by the separate component tools of the Hybrid is of equal importance for the user. In this regard, CBP notes that the User’s Guide for the Hybrid, available on Leatherman’s website, consistently describes the Hybrid as a “pruner multi-tool device,” and places significant emphasis on the function of the pruner. The “Maintenance” instructions provide for the care of the pruner blades before collectively addressing the rest of the component tools. The “Safety Considerations and Features” focus on the pruners specifically, cautioning the user to excise caution vis-à-vis its pruner blades when using the Hybrid. The instructions on “Opening/Closing the Pruners & Tools” speak first to how to unlock/open and lock/close the pruners. In order to use any of the other tools, the pruners must be locked in their folded position in the handles.
The Hybrid is one of three models of pruner tools featured on Leatherman’s website, www.Leatherman.com. The website provides for three categories of products: tools, knives, and accessories. Within the tools category, the following product lines are identified: “pruners, extra-large tools, full-size tools, pocket tools, keychain tools, tool adapters, and retired tools.” The line of “pruners” includes three product models: the Genus, the Hybrid, and the Vista. All three models prominently feature a pruner tool in their depictions on the website. The accompanying textual description of the Hybrid lists its key features, and the first component tool identified in that list is the pruners. The website identifies the closed length of the Hybrid as 4.74 in/ 12 cm and its open length as 8.13 in/ 20.65 cm. The 3.39 in/8.65 cm difference in measurement is owing to the length of the pruner head when extended from the handle. The Hybrid is packaged and sold in a box that also contains a nylon belt sheath that that the user can wear and use to store the Hybrid whether it is open (with the pruner exposed) or closed.
The Hybrid is marketed to consumers by companies other than Leatherman. For example, Amazon.com describes the Hybrid as “Pruners that Work as Hard as You Do: The Hybrid Line from Leatherman. According to Amazon.com, Muck Boots Online, and other online companies: “Gone are the days of carrying quality bypass pruners and multiple tools and having to search for them one-by-one. With the new Hybrid Leatherman pruners, gardeners have the stainless steel pruners they need with the most commonly used tools of the trade right in one convenient location [.]” Additional online examples of the marketing of the Hybrid include descriptions such as the “Leatherman Hybrid™ Pruning Multi-tool” by Gempler’s and the “Leatherman Hybrid Pruner” by Halifax Seed.
ISSUE:
What are the country of origin marking requirements for the stainless steel pruner head from Taiwan that is attached post-importation to the handle of a multipurpose gardening tool?
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 its 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. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, CBP Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements of 19 U.S.C. § 1304. For articles, other than goods of a NAFTA country, which are used in manufacture and substantially transformed in the United States, the manufacturer or processor in the U.S. who converts the imported article into a different article will be considered the "ultimate purchaser" and the article shall be excepted from marking. Section 134.35(a), CBP Regulations (19 C.F.R. § 134.35(a)). The outermost container of the imported good shall be marked in accord with Part 134, CBP Regulations (19 C.F.R. Part 134).
Pursuant to 19 C.F.R. § 134.1(b), the country of origin is “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" within the meaning of [Part 134].” Substantial transformation determinations are based on the totality of the evidence. Ferrostaal Metals Corp. v. United States, 11 Ct. Int’l Trade 470, 478 (1987). A substantial transformation occurs when imported articles that are combined in the United States with other articles are so processed in the United States that each loses its identity in a tariff sense and becomes an integral part of a new article having a new name, character, and use.” United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267, 273 (C.A.D. 98). However, “[i]f the manufacturing or combining process … leaves the identity of the imported article intact, a substantial transformation has not occurred.” Uniroyal Inc. v. United States, 3 Ct. Int’l Trade 220, 224 (1982).
CBP generally applies six factors on a case-by-case basis in order to determine whether an imported article loses its identity when it is combined with other articles in the United States:
(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;
(5) whether the article is functionally necessary to the operation of the finished good, or whether it is an accessory that retains its function; and
(6) whether the article remains visible after being combined into the finished good.
See HQ 731432 (June 6, 1988). No one factor of that analysis is determinative, nor are these factors exclusive, and there may be other factors relevant to a particular case. See HQ 728801 (February 26, 1986). In HQ W968434 CBP concluded that the imported pruner head does not lose its identity when it is combined into the Hybrid in the United States. CBP’s conclusion was properly based on the totality of the evidence presented by Leatherman even though HQ W968434 did not specifically analyze that issue under the six factor test enumerated above. In reconsidering this decision, CBP has applied the six factor test to determine whether the pruner head is substantially transformed when it is attached to the handles of the Hybrid.
The first three factors involve the post-importation processes performed on the pruner head. Per the first factor, the pruner head is finished when it is imported. It is not subjected to any further processing after its importation, and its predetermined use for integration into a tool is not tantamount to the loss of its identity as a pruner. The second factor evaluates the extent of the manufacturing process of combining the imported article with its counterparts as compared with the manufacturing of the imported article. The mere attachment of the pruner head to the handles of the Hybrid appears to be a simple process when compared with the amount of processing which must have been necessary to produce the pruner head in Taiwan. Cf. HQ H003362, dated February 6, 2007 (concluding that 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). Even though Leatherman has described as “extensive” the U.S. manufacturing operations for the other 13 components of the device, these operations do not appear to involve the manipulation of the pruner head. The third factor addresses whether the attachment of the pruner head to the Hybrid is permanent. The pruner head is permanently attached to the handle of the Hybrid, but this factor is of little weight given that the pruner head does not operate in tandem with any of the other tools housed in the Hybrid’s handles.
The fourth factor is the obvious basis for CBP’s finding in HQ W968434 that the pruner head did not undergo a substantial transformation. This factor looks to the overall importance of the imported article to the finished product. In HQ W968434 CBP concluded that the pruner head is “the most significant component of the entire tool.” The marketing materials, which tout the multifunctional capabilities of the Hybrid, prominently feature the pruner head. Indeed, Leatherman’s website labels the Hybrid as a “pruner,” and the User Instructions published by Leatherman emphasize the caution, operation, and care of the pruner over any of the other tools. Other retailers selling the Hybrid also identify it as a “pruner.” The design of the product also suggests that the pruner is the most significant tool. The pruner is larger than all of the other individual tools, it is the only tool that locks in the handles, and the handles of the device are used in its actual manipulation. Additionally, the nylon sheath which accompanies the Hybrid allows the unlocked device (with the pruners exposed) to be carried on the user’s person, for ease convenient access when gardening. While the multipurpose nature of the tool may be touted by Leatherman, the design of this accessory further suggests that the most frequently accessed component tool is the pruners.
The fifth and sixth factors pertain to the relative functional integration of the imported article into the finished good. The fifth factor evaluates the operation of the finished good, and looks to whether the imported article is functionally necessary. Leatherman emphasizes the Hybrid’s “multipurpose” nature in order to demonstrate that all of the tools are essential to the Hybrid, and to show that the pruner is of no greater significance than any other tool. Because each tool operates independently in this case, the functional necessity of the pruner is not a relevant factor in our determination as to whether the pruner head is substantially transformed when it is attached to the handles of the Hybrid. Per the sixth factor, the pruner remains visible even after being combined with the handle of the Hybrid. The ability to conceal the pruner does not detract from the fact that it is intended to be visible at the user’s discretion.
The six factors analyzed above demonstrate that the pruner head is not substantially transformed when it is attached to the handles of the Hybrid. The pruner head does not lose its identity as a result of the post-importation manufacturing process. CBP has issued rulings on the substantial transformation of imported blades when combined with parts of other origins. Most recently, in HQ H003362, CBP concluded that imported blades combined with other parts to produce hunting arrowheads and pill splitters were not substantially transformed because the blades were the most important component of the finished goods and they retained their separate identity. See also HQ 561116, dated October 15, 1998; HQ 559366 dated August 29, 1995; HQ 733301, dated August 8, 1990. Likewise, the function, design, and marketing of the Hybrid demonstrate that the pruner head is the most important component tool contained in the Hybrid.
Leatherman points to past CBP rulings on the imported components of golf clubs in support of its position that the attachment of the imported pruner head to components primarily of U.S. origin constitutes a substantial transformation of the pruner head. See HQ 562901, dated November 6, 2003; HQ 734256, dated July 1, 1992; and, HQ 734136, dated June 17, 1991. CBP’s cited these decisions in HQ W968434 to illustrate the general principle that the “significance of the imported components in relationship to the finished product” must be considered when determining whether an imported article was substantially transformed when assembled into a finished good in the United States. Our reconsideration of HQ W968434 has already assessed that relationship in its analysis of the fourth of the six factors discussed above. Additionally, we note the critical distinction that is the “multipurpose” nature of the Hybrid. Those past rulings on golf clubs involved finished goods with a single function (that of a golf club), and CBP deemed the imported articles to have lost their individual identity in favor of that single function when two of the three critical components of the golf clubs were of U.S. origin. Here, the Hybrid consists of a collection of component tools; but, while they share a common nexus with the handles of the device, each tool retains its individualized function. The multipurpose tool does not have a single function which subsumes the identity of the pruner head.
Leatherman’s argument as to the relevance of the extensive U.S. manufacturing process for the Hybrid is also unpersuasive in this case. Leatherman contends that a substantial transformation occurs when an imported article is combined into a domestic good of significant U.S. content. In support of this contention Leatherman cites the golf club cases discussed above and past CBP decisions on the substantial transformation of assembled locks. See HQ 735198, dated March 1, 1995; HQ 734923, dated May 14, 1993; and, HQ 734440, dated March 30, 1992. While a significant amount of U.S. content may militate in favor of a finding that a good loses its identity, the first three factors analyzed above demonstrate that the pruner head does not lose its identity by virtue of the content of domestic components in the Hybrid. Furthermore, the complexity of the assembly in the past decisions on locks is a significant distinction from the simple operations performed on the pruner head. See Belcrest Linens v. United States, 741 F.2d 1368, 1373 (Fed. Cir. 1984) (In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed on the imported article and whether the parts lose their identity and become an integral part of the new article).
Per Uniroyal, it is a longstanding principle of customs law that assembly operations which are minimal or simple, as opposed to complex or meaningful, generally will not result in a substantial transformation. See e.g. HQ 561339, dated March 9, 2000 (concluding that cake blades and handles of Chinese origin were not substantially transformed when assembled in the Czech Republic); HQ 560817, dated August 6, 1998 (finding that U.S.-made globes imported into the Philippines and assembled onto stands of Philippine origin were not substantially transformed); HQ 950005, dated January 9, 1992 (concluding that finished Chinese sledge hammer heads assembled onto the handles in Canada were not substantially transformed); HQ 734050, dated June 17, 1991 (concluding that Japanese-origin components were not substantially transformed in China when assembled in that country to form finished printers); and, C.S.D. 80-111, dated September 24, 1989 (concluding that a ceiling fan assembly in a U.S. assembly line procedure was not substantially transformed). Based on our analysis of the post-importation processing of the pruner head, see supra page 5, it is not substantially transformed when it is merely attached to the Hybrid.
For all of the foregoing reasons, we find the country of origin for imported pruner head is Taiwan. “Neither the statute [19 U.S.C. § 1304] nor the Customs Regulations contains any provisions regarding the marking of sets, mixtures of composite goods. In the absence of any special requirements, the general country of origin marking requirements apply, i.e., every article that is imported into the U.S. must be marked to indicate its country of origin as determined by where the article underwent its last substantial transformation.” T.D. 91-7 concerning "Tariff Treatment and Country of Origin Marking of Sets, Mixtures and Composite Goods, dated January 8, 1991. The Hybrid is a composite article consisting of different tools and the imported pruner head must be marked to indicate that its country of origin is Taiwan. When an imported article is combined into a finished good in the United States, but is not substantially transformed, the country of origin should be identified in a legible and conspicuous manner to indicate “(Name of imported article) made in (country).” See, e.g., HQ H003362.
However, when the outermost container of the pruner heads at the time of importation is correctly marked with the country of origin, the pruner heads may be excepted from this individual marking requirement pursuant to 19 C.F.R. § 134.34 at the discretion of the port director under 19 C.F.R. § 134.32(d). Section 134.32(d) excepts from marking imported articles that are to be repacked or manipulated after release from CBP custody under the following conditions: (1) The containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the U.S.; (2) The importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry. The packaging in which the Hybrid reaches the retail purchaser (who is the ultimate purchaser) must prominently feature the country of origin statement in a permanent and conspicuous location. 19 C.F.R. § 134.26.
CBP has no objection to additional markings on the Hybrid and/or its retail packaging which indicate that the tool is also of U.S. origin; but, whether an article may be marked with the phrase "Made in the USA” or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We note, however, that such marking may trigger the special marking requirements of 19 C.F.R. § 134.46. Section 134.46, CBP Regulations (19 C.F.R. § 134.46), as revised by T.D. 97-72, dated August 20, 1997, applies when non-origin marking may mislead or deceive the ultimate purchaser as to the actual country of origin of the article.
HOLDING:
The stainless steel pruner head imported from Taiwan is not substantially transformed in the United States and Taiwan must be reflected on the tool and/or the container in which it reaches the ultimate purchaser.
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 CBP officer handling the transaction.
EFFECT ON OTHER RULINGS:
HQ W968434, dated January 17, 2007, is hereby affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division
One of the three components of foreign manufacture is an unfinished Phillips head screwdriver blade from Mexico, a North American Free Trade Agreement (NAFTA) country. The screwdriver blade is unfinished in its condition as imported. After entry, the screwdriver blade must be reamed, heat-treated, finished before it is attached to the handle. GRI 2 (a) provides for the classification of unfinished articles, and states, in relevant part, that “[a]ny reference to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.” As entered, the unfinished screwdriver blade has the essential character of a completed screwdriver. Pursuant to GRI 2(a), the screwdriver is classifiable under subheading 8205.40, HTSUS, which provides for “[h]andtools (including glass cutters) not elsewhere specified or included;…Screwdrivers, and parts thereof.” In light of its post-importation processing, CBP determined in HQ W968434 that the screwdriver blade was a good of the United States, pursuant to NAFTA marking rules. See 19 C.F.R. §102.11(a)(1)(3). Accordingly, CBP ruled in HQ W968434 that this component of the multipurpose garden tool was excepted from the country of origin marking requirements. Cite.
The other two components of foreign manufacture are imported from Taiwan. The first is the stainless steel pruning head classifiable under subheading 8201.50, HTSUS, which provides for: “[h]andtools of the following kinds and base metal parts thereof:…pruners of any kind; …Secateurs and similar one-handed pruners and shears (including poultry shears), and parts thereof[.]” The second is the saw blade classifiable under subheading 8202.99, HTSUS, which provides for “[h]andsaws, and metal parts thereof; blades for saws of all kinds (including slittling, slotting or toothless saw blades), and base metal parts thereof: Other saw blades, and parts thereof: Other (including parts).” After entry, these two components are to be attached to the tool’s handle. In W968434, CBP determined that only the saw blade was substantially transformed and excepted from the country of origin marking requirements. CBP did not except the stainless steel pruner head from these requirements because the mere “attachment” of this component, which was determined to be the essence of the finished multipurpose garden tool, was not a substantial transformation.
In this regard, the pruner head is distinguishable from the finished saw blade that is also imported from Taiwan and attached to the Hybrid. HQ W968434 explained that the saw blade was a “minor or trivial part of a new article [the Hybrid]” and was “equally as useful as the additional U.S. components, such as the bottle opener, weeding tool and grafting knife.” Given that the saw blade was of much lesser importance for the Hybrid, HQ W968434 correctly determined that it was substantially transformed after importation even though it also retained its separate function after mere attachment to the Hybrid.