CLA-2: RR:CTF:TCM H065721 RM
Mr. Scott Davidson
Vice President & General Manager
Nippon Steel Trading America
1000 Cliff Mine Road
Park West One, Suite 240
Pittsburgh, PA 15275
Re: Country of Origin of Tin-Free Steel Sheets
Dear Mr. Davidson:
This is in response to your electronic submission, dated May 14, 2009, to U.S. Customs and Border Protection (“CBP”), on behalf of Nippon Steel Trading America (“Nippon Steel”), in which you request a determination on the country of origin of certain tin-free steel sheets imported from Thailand. In reaching this decision, we considered the arguments raised in your supplemental submission dated July 2, 2009.
FACTS:
Nippon Steel proposes to import tin-free steel sheets from Thailand. In your submission, you explain that a light-gauge cold-rolled product known as double-reduced black plate will be produced in Japan and shipped to Thailand. In Thailand, the plate will be coated with chromium to produce tin-free steel (otherwise known as electrolytic chromium coated steel), cut into rectangular sheets with scroll or jagged edges, coated with a protective enamel lacquer (a corrosion inhibitor), and baked in a large oven in order to bond the enamel coating to the sheets. The finished sheets will be shipped to the United States for immediate sale, where they will be used to manufacture food and beverage containers.
You note that the value of the double-reduced black plate steel shipped from Japan to Thailand is approximately $850 per metric ton, whereas the value of the tin-free steel that would be imported into the United States is approximately $1,260 per metric ton.
ISSUE:
What is the country of origin of the subject tin free steel sheets?
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." See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940).
Part 134 of the CBP Regulations (19 C.F.R. §134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.1(b), CBP Regulations (19 C.F.R. §134.1(b)), defines “country of origin” as “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 [the marking laws and regulations].” A “substantial transformation” of an article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing. See Uniden Am. Corp. v. United States, 24 Ct Int’l Trade 1191, 1195 (Ct. Int'l Trade 2000) (citing Texas Instruments, Inc. v. United States, 69 C.C.P.A. 151, 681 F.2d 778, 782 (CCPA 1982)). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. See Boltex Mfg. Co, LP. v. United States, 24 Ct. Int’Trade 972, 982 (Ct. Int’l Trade 2000) (citing Uniroyal, Inc. v. United States, 3 Ct. Int’l Trade 220, 225 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
In Ferrostaal Metals Corp. v. United States, 11 Ct. Int’l Trade 470, 473 (1987) (hereainfter “Ferrostaal”) the Court of International Trade considered the country of origin of certain cold-rolled steel sheets from Japan which were annealed (heated and then cooled in a furnace to enhance its ductility) and galvanized (coated with zinc to improve its resistance to rust) in New Zealand, a process referred to as “continuous hot-dip galvanizing.” At issue was whether the steel sheets were substantially transformed by virtue of that process.
The court found, first, that the process changed the character of the steel sheet. Specifically, the court explained that annealing altered its mechanical properties “by dedicating the sheet to uses compatible with the strength and ductility of the steel” whereas galvanizing “changed its chemical composition and provided corrosion resistance.” Ferrostaal, at 476. It added that the process was substantial in terms of the value added to the cold-rolled steel insofar as the hot-dipped galvanized product sells for almost twice as much. Id. Second, the court found that the process changed the utility of the product because “it transform[ed] a strong, brittle product which cannot be formed [and thus requires some form of heat treatment in order to be put to end uses] into a durable, corrosion-resistant product which is … formable for a range of commercial applications.” Id. at 477. It noted that, as a result, hot-dip galvanized steel is not commercially interchangeable with cold-rolled steel. Id. Third, the court found that the process resulted in a change in the name (i.e., from hard cold-rolled steel sheet to hot-dipped galvanized steel sheet) and tariff classification of the product. Ultimately, the court held that as a result of the change in name, character, and use, the steel sheet was substantially transformed in New Zealand into a new and different article of commerce.
In this case, the black plate cold-roll steel shipped from Japan to Thailand in coils will be electrolytically coated with chromium and a protective enamel lacquer, baked, and cut into rectangular sheets with scroll or jagged edges. According to The Making, Shaping and Treating of Steel (10th ed. 1985), a U.S. Steel publication, “… black plate is extremely susceptible to rusting … [its] most important use is in the manufacture of tin-free steel and tinplate …” (pg. 1139). In contrast, tin-free steel, described as “black plate additionally processed and electrolytically plated,” has “excellent adhesion with organic coatings and … high resistance to the undercutting of lacquers, which makes this product suitable for packing of certain food products and beverages.” (pg. 1139-1140). When used to make cans, the lacquer coating “prevent[s] the bleaching of highly-covered fruits or … sulphide staining caused by certain foods …” (pg. 166). In addition, information on tin-free steel available on a market competitor’s website explains that it is very resistant to heat and corrosion. See JFE Steel Corporation, Tin Plate and Tin Free Steel, available at http://www.jfe-steel.com.jp/en.
The process described above transforms a rust-prone steel product used mostly to manufacture other types of steel into one with a different name: tin-free steel sheet; a different character: one much more resistant to corrosion, heat, and sulfide stains; and a different use: it is widely used for making food and beverage cans. The resulting tin-free steel product is also substantially more expensive. Thus, under the “name, character and use” test applied by the court in Ferrostaal, we conclude that the process described above effects a “substantial transformation” on the cold-roll steel coils. This conclusion is in accord with Headquarters Ruling Letter 557713, dated April 5, 1994. In that substantially similar case, we held that coating a steel coil with electrolytic chromium, baking it, and cutting it into sheets with jagged edges, constituted a substantial transformation.
HOLDING:
The double-reduced black plate steel coil originating in Japan is substantially transformed in Thailand. As a result, the country of origin for marking purposes of the tin-free steel sheets imported into the United States is Thailand.
Requests regarding the scope of Antidumping Duty Order A-588-854 can be addressed to the International Trade Administration of the U.S. Department of Commerce at 1401 Constitution Ave, NW, Washington, DC, 20230.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch