MAR-2:OT:RR:NC:N2:206
Stephen Michael Ridolphi
J Juan Brake Systems
C/ Miguel Servet, 21-23
Gava-Barcelona, 08850
Spain
RE: The country of origin marking of brake hoses.
Dear Mr. Ridolphi:
This is in response to your letter dated December 18, 2018, requesting a ruling on the country of origin marking for Teflon and Nylon steel-braided hoses. Descriptive literature and pictures were provided with your request.
The two items under consideration have been identified as Teflon Steel-Braided Hoses and Nylon Steel-Braided Hoses.
You state in your request that the Teflon and Nylon hoses with steel wire braided around are produced in Spain. The raw materials, such as Teflon, Nylon, and steel wire are supplied by European companies. After the hoses are unpacked, they are put through machines, where the steel wire is braided around it. Finally, the outer nylon cover is extruded on top at the Spanish supplier. Once the outer sheath is extruded on the tubes, it is then repackaged for shipment to your facility in China.
In China, the brake hoses are assembled with steel fittings and/or ZAMAK clamps, the latter of which are supplied by European companies. Once this simple assembly is complete the braided brake hoses are packaged for shipment to the United States.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. 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 U.S. the English name of the country of origin of the article.
The "country of origin" is defined in 19 CFR 134.1(b) 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 this part.
For tariff purposes, the courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (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. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
In our further communication, you stated that the Teflon and Nylon steel hose is shipped from Spain to China in spools, where it is cut to a specific brake hose length. You also supplied pictures of the hose in its imported condition to China. This office has determined that in the condition the hose is imported into China, it is a simple tubing of base metal of heading 8307, Harmonized Tariff Schedule of the United States (HTSUS). It is not identifiable as a brake hose, and is not classifiable as such in the tariff. Once further processed in China, the hose becomes identifiable as a brake hose, which is classified in subheadings 8708.99.81, HTSUS, if used for vehicles, or 8714.10.00, HTSUS, if used for motorcycles.
As a result, it is the opinion of this office that a substantial transformation occurs in China; thus, the country of origin of the Teflon and Nylon Steel-Braided Hoses will be China. Therefore, the Teflon and Nylon Steel-Braided Brake Hoses are considered a product of China for marking purposes at the time of importation into the United States.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheadings 8708.99.81, HTSUS, unless specifically excluded, are subject to the additional 10 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8708.99.81, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division