OT:RR:CTF:VS H332922 AP
Center Director
Apparel, Footwear and Textiles CEE
U.S. Customs and Border Protection
555 Battery Street, Room 401
San Francisco, CA 94111
Attn.: Yvette M. Britton, First Level Supervisor
RE: Internal Advice; Application for Further Review of Protest No. 1704-22-105493; Golf Club Heads; Origin; Section 301
Dear Center Director:
The following is our internal advice decision with regard to the Application for Further Review ("AFR") of Protest Number 1704-22-105493, concerning the origin for purposes of Section 301 duties of golf club heads imported by Mizuno USA, Inc. ("importer" and "protestant"), which U.S. Customs and Border Protection ("CBP") liquidated as originating from China. Since the AFR was not timely,[1] this office will review this protest under 19 C.F.R.
177.11, and provide internal advice to the Apparel, Footwear and Textiles Center of Excellence and Expertise ("CEE") as requested by the CEE.
The importer has asked that certain information submitted in connection with its submission be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. 177.2(b)(7), the importer's request for confidentiality is approved. The information contained within brackets as well as all documents forwarded to our office will not be released to the public and will be withheld from the published version of this decision.
FACTS:
The goods at issue are golf club heads for golf irons, wedges, and putters classifiable under subheading 9506.39.0060, Harmonized Tariff Schedule of the United States Annotated ("HTSUSA"). According to the submitted documentation,[2] the products were forged in the shape of golf heads in Japan and shipped to China to undergo finishing procedures such as polishing, plating, painting, and laser engraving. The finished golf irons, wedges, and putters were then exported to the United States from China.
During the forging process in Japan, [x]-meter lengths of Japanese-origin mild carbon steel rods were cut into [x]-inch "billets," which were abrasion cleaned. Each billet was heated to [x] degrees Celsius and bent and stretched to ensure proper length and shape. An air hammer pounded the billet into the rough shape of a golf iron, wedge, or putter head. The billet was cut to remove excess metal and was reheated and placed in a mold, which compressed the carbon steel into the shape of a golf iron, wedge, or putter head. The golf head was sandblasted to remove impurities. After the golf heads were forged and sandblasted in Japan, they were shipped to China for finishing.
The finishing process in China was tailored based on whether the golf head was for an iron, wedge, or putter. The wedge and iron golf heads underwent polishing, plating, painting, and laser engraving. Wedge and iron golf heads were placed into a polishing machine with a rotating drum. A hole was drilled in the stem of the wedge and iron golf heads so that they could be attached to a shaft. The wedge and iron heads were then pressed against a high-speed rotating machine for final polishing. The surface of the wedge golf head was engraved with fine lines, the face was milled, and the head was stamped with the Mizuno symbol, and plated, and painted. The surface of the iron head was engraved with fine lines stamped with the Mizuno symbol, and plated and painted. The heads were inspected for quality, packed for shipping, and barcoded. The putter golf heads underwent polishing, plating, and painting. The putter golf heads were placed into a polishing machine with a rotating drum. The putter golf heads were pressed against a high-speed rotating machine for final polishing. Each putter golf head was plated, ion plated, and painted, before being inspected for quality, packed for shipping to the United States, and barcoded.
AFR/Protest Number 1704-22-105493 covers one June 5, 2021 entry (line 4), which was liquidated on April 29, 2022, as originating from China. The importer asserts that the golf heads should have been entered under subheading 9506.39.0060, HTSUSA only, with no secondary classification under Chapter 99. The importer is protesting the additional 7.5 percent ad valorem duty paid pursuant to subheading 9903.88.15, HTSUS.
ISSUE:
What is the country of origin of the subject wedge, iron, and putter golf club heads for purposes of Section 301 measures?
LAW AND ANALYSIS:
The United States Trade Representative ("USTR") has determined that an additional ad valorem duty of 7.5 percent will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 ("Section 301 measures"). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s)(i). Among the subheadings listed in U.S. Note 20(s)(i) of Subchapter III, Chapter 99, HTSUS, is 9506.39.00, HTSUS.
When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 681 F.2d 778 (CCPA 1982). The courts consider the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. See Belcrest Linens v. United States, 6 CIT 204 (1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).
In Nat'l Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd per curiam, 989 F.2d 1201 (Fed. Cir. 1993), hand tool components used to make flex sockets, speeder handles, and flex handles were cold-formed or hot-forged into their final shape prior to importation, with the exception of speeder handle bars, which were reshaped by a power press after importation, and the grips of the flex handles, which were knurled in the U.S. After entry, the imported items were heat treated, sand-blasted, and electroplated. The court found no substantial transformation because the processing within the U.S. did not alter the name of the imported components, the character of the parts remained substantially unchanged upon the completion of such processing, and the intended use of the articles was predetermined at the time of importation.
In New York Ruling ("NY") N310895, dated Apr. 17, 2020, iron golf club heads of forged steel were manufactured in Taiwan using raw steel bars sourced from Taiwan or Japan. The raw bars were cut to precise lengths and were bent by forging. When the shape forging process was complete, tungsten cap was tack welded in place onto the forged articles. Once fully welded and polished, the iron golf heads were co-forged into their final shape. The completed steel forged iron golf club heads were shipped from Taiwan to China for finishing operations. The country of origin of the forged steel iron club heads was Taiwan because the steel forging processes of the iron to the final shape of the iron golf heads took place in Taiwan. The finishing processes in China only gave the aesthetics to the casted and forged golf heads. The welding, machining, plating, or other finishing processes performed in China did not substantially change the name, character, or use of the steel forged heads.
In NY N308962, dated Feb. 12, 2020, two models of titanium driver golf heads were formed through casting processes in Taiwan using Chinese raw titanium. The production process included treating, melting, and casting raw titanium using wax injection molds. The process began by injecting wax into a tooling or mold to form the shape of the finished head. The waxes were assembled and layered together to create thick heat-resistant hard-shell clusters. The titanium material was melted in a high-temperature furnace and was then cast into the de-waxed, pre-heated shell clusters. After the casting was complete, the shell clusters underwent a de-shelling process and were broken into individually casted heads. Each casted titanium head was further sandblasted and polished into the final size and shape of the corresponding head model. The titanium driver golf heads were shipped to China for face or crown welding, hosel machining, masking and painting or physical vapor deposition coating, and decal application resulting in the cosmetically finished heads. The finished heads were then exported to their final destination. The country of origin of the finished golf heads for purposes of Section 301 trade remedies was Taiwan because the golf club heads were not substantially changed by the welding, machining or the cosmetic finishing processes performed in China.
In Headquarters Ruling Letter ("HQ") H313087, dated May 27, 2021, golf clubs were assembled in Mexico using a Chinese shaft, a Chinese grip, and a driver head finished in Mexico from raw Chinese castings. The head was produced in China because this was where the castings having the rough design of a club head were made. In Mexico, the welding, machining, grinding, sandblasting, polishing, masking, painting, logo engraving, ink fill for sole plate, machine buffing, and decal application provided the aesthetic to the cast head. The character of the cast head remained substantially unchanged and its intended use as a club head was predetermined at the time of its importation in Mexico. The country of origin of the finished golf clubs for purposes of Section 301 remedies was China (the country of origin of the head) because the head and the shaft originated in China and the final assembly in Mexico was a relatively simple assembly process of almost all finished parts that did not substantially transform the individual golf club components.
As in the cited cases, the instant golf heads were fashioned into their final shape during the forging process in Japan. The finishing process in China, which was undertaken for cosmetic purposes, did not effect a substantial transformation of the heads. The golf club heads produced in Japan retained their name when shipped from Japan to China. The polishing, engraving, stamping, and painting processes in China were for aesthetic purposes and the character of the forged heads did not change. The pre-determined end-use of the golf heads also remained the same before and after the aesthetic operations in China were complete. Accordingly, the origin of the wedge, iron, and putter golf club heads for purposes of Section 301 duties is Japan.
HOLDING:
The country origin of the instant golf club heads for purposes of Section 301 remedies is Japan and Section 301 measures do not apply. Protest No. No. 1704-22-105493 is referred back to your CEE for appropriate action.
This decision should be mailed by your office to the importer, through its customs consultant, no later than 60 days from the date of this letter. On that date, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the
Customs Rulings Online Search System ("CROSS") at https://rulings.cbp.gov/home, or other methods of public distribution.
Sincerely,
Monika Brenner, Chief
Valuation and Special Programs Branch
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[1] The protest filed on October 26, 2022, was timely. However, the AFR was not timely because the importer requested it on November 15, 2022, more than 180 days after the entry was liquidated.
[2] On February 13, 2024, the importer submitted a manufacturing affidavit to us affirming that the products forged into the shape of golf heads were produced by Mizuno Corporation at its Chuo Kogyo plant in Hiroshima, Japan from January 1, 2021 through December 31, 2021, and the origin was Japan. The affidavit lists the part numbers and affirms that the information contained in the document is "true and accurate." The waybill provided to us on January 31, 2024, shows that the products were loaded on a ship at Osaka, Japan on December 13, 2020, and the place of delivery was Hong Kong. According to the December 7, 2020 invoice from Mizuno Corporation in Japan to Chin Yu International Co., Ltd. (Chuo) in China provided to us on January 31, 2024, the products were marked "Made in Japan" and the Incoterms were "FOB Kobe, Japan." The manufacturing images submitted to us on November 10, 2023, show the various stages of the manufacturing processes in Japan and China.