MAR-2:OT:RR:NC:N1:113
Kelly Raia
Blue Tiger International
19 Benjamin Avenue
East Moriches, New York 11940
RE: The country of origin for K-Body Clamps assembled in Mexico; Section 301 trade remedy
Dear Ms. Raia:
In your letter dated June 21, 2022, on behalf of your client, Bessey Tools Inc., you requested a ruling on the country of origin of K-Body Clamps. Photographs, diagrams, and four country of origin scenarios were submitted for our review.
The product under consideration is identified as a K-Body Clamp, KRE 3512. The article is described as a large-faced bar clamp designed for woodworking. The clamp is used for holding pieces in its clamping jaws so that other functions (gluing, screwing, sanding, etc.) can be performed. You stated in your letter that “All pieces are functional. The backbone of the clamp is the steel rail. The fixed jaw (3101759) is affixed to the rail using two press fit pins which are applied using press-grade pressure. Next step is to create the moveable jaw for which the handle (3101767) is screwed/inserted into the threaded arm (3101766) and then inserted into the sliding jaw assembly (3101760). Both the threaded arm and the assembly have a cavity with the same shape as the steel rail that allows them to be slid down over the rail. This also allows them to move up and down the bar to adjust clamping capacity. To achieve clamping function, the rotation of the handle causes the arm to cant against the bar and lock into place. The continued rotation of the handle then forces the bottom of the assembly to move ever-downwards and create growing clamping force. Once the desired clamping force is achieved the rotation of the handle can be stopped and remain in place while other functions can be performed. When completed, the release of the clamp is achieved by counter-clockwise rotation of the handle.”
You requested a ruling for the country of origin of the finished K-Body Clamp. The clamp may be imported into the United States (U.S.) in four different country of origin scenarios. In all four scenarios, Mexico is the country where the imported parts will be assembled into the final product. You indicated that the basic components include the plastic end clip made in China, a steel rail (U.S. steel in scenarios A and C, and Italian steel in scenarios B and D), a steel/plastic handle made in China, a zinc sliding jaw assembly made in Germany, plastic rail protection clips made in China, and a steel/plastic fixed jaw made in Cambodia that consists of an upper and a lower part. The upper part is firmly connected to the rail and serves as a counter bearing for generating the clamping force in combination with the lower part. The lower part is guided on the rail and is used in combination with the upper part to generate the clamping force. The sliding jaw and the spindle are also used for generating clamping.
In scenario A, ID-8096, U.S. steel is cut into predefined lengths in Wisconsin and then imported into Mexico. Imported parts from various countries and the U.S. steel are assembled into the final product in Mexico.
In Scenario B, ID-8097, Italian steel is imported into the U.S. in 6 meter lengths, cut into predefined lengths in the U.S., and then imported into Mexico. Imported parts from various countries and the Italian steel are assembled into the final product.
In Scenario C, ID-8098, U.S. steel is imported into Mexico in 6 meter lengths. The steel is machined to shape and precision lengths in Mexico. This process includes cutting and drilling which requires precise use of fixturing and presses to form the rail. The long rails must be cut to precise lengths, drilled, buffed, chamfered, and then inspected for adherence to quality standards. Following this process, the rails are passed through to assemble with the sliding jaws, spindles, and handles to complete the clamp. The components are assembled into the final product in Mexico.
In Scenario D, ID-8099, Italian steel is imported into Mexico in 6 meter lengths. The steel is machined to shape and precision lengths in Mexico. Imported parts from various countries are then assembled into the final product in Mexico. The long rails must be cut to precise lengths, drilled, buffed, chamfered, and then inspected for adherence to quality standards. Following this process, the rails are passed through to assemble with the sliding jaws, spindles, and handles to complete the clamp.
In your submission, it is implied that the finished K-Body Clamp is classified within subheading 8205.70.0090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for handtools (including glass cutters) not elsewhere specified or included; blow torches and similar self-contained torches; vises, clamps and the like, other than accessories for and parts of machine tools or water-jet cutting machines; anvils; portable forges; hand- or pedal-operated grinding wheels with frameworks; base metal parts thereof: vises, clamps and the like, and parts thereof: other (including parts). We disagree. Note 1 to Chapter 82 states in pertinent part that “this chapter covers only articles with a blade, working edge, working surface or other working part of: (a) base metal....” Inasmuch as the outer surface of the clamp’s jaws are made of plastic, classification within Chapter 82 would be incorrect. Since the entire clamp is not classified in Chapter 82, the parts of the clamp cannot be classified in Chapter 82.
To achieve the clamping function, the rotation of the steel/plastic handle causes the zinc arm to cant against the steel bar and lock into place. The continued rotation of the handle then forces the bottom of the steel/plastic assembly to move downwards and create clamping force. Although the K-Body Clamp does not have a working edge of metal, the clamp would not function as intended without the rigidity/strength provided by the metal. In the opinion of our office, the steel causes the article to function as a clamp. Therefore, the applicable heading for the K-Body Clamp will be 7326, HTSUS, which provides for other articles of iron or steel.
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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.”
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11.
Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The K-Body Clamp is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the K-Body Clamp, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The imported K-Body Clamp is classified under heading 7326, HTSUS. The tariff shift requirement in Part 102.20 for the clamp at issue states:
A change to headings 7325 through 7326 from any heading outside that group.
In this case, the K-Body Clamp does not meet the tariff shift because foreign components including the spindle, the upper part and the lower part are also classified under heading 7326. As a result, the tariff shift requirement of section 102.11(a)(3) is not met. Section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation [(“GRI”)] 3, where the country of origin cannot be determined under paragraph (a) of this section:
The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good….
In determining the “essential character” of the finished good, Section 102.18(b)(1) provides, in relevant part:
(b) (1) For purposes of identifying the material that imparts the essential character to a good under Part 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under Part 102.20 specific rule or other requirements applicable to the good … (ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule…
When determining the essential character of a good under 19 C.F.R. § 102.11, 19 C.F.R. § 102.18(b)(1) provides that only domestic and foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to the good shall be taken into consideration. The handle is screwed into the sliding jaw and is used to generate the clamping force. The upper part is connected to the rail and serves as a counter bearing for generating the clamping force in combination with the lower part, and the lower part is guided on the rail and is used in combination with the upper part to generate the clamping force. The sliding jaw and the spindle are also used for generating clamping. The upper part and the lower part are from Cambodia, and the spindle is from China. In this case, the components that do not undergo the applicable tariff shift are the spindle, the upper part and the lower part.
Section 102.18(b)(2), Customs Regulations (19 C.F.R. § 102.18(b)(2)), provides: For purposes of determining which one of two or more materials described in paragraph (b)(1) of this section imparts the essential character to a good under § 102.11, various factors may be examined depending upon the type of good involved. These factors include, but are not limited to, the following: (i) The nature of each material, such as its bulk, quantity, weight or value; and (ii) The role of each material in relation to the use of the good.
Of the parts that do not undergo the applicable tariff shift requirement, no single item imparts the essential character. Each of these parts individually contribute significantly to the purpose of the subject clamp. Therefore, 19 C.F.R. § 102.11(b) cannot be used to determine the country of origin, we then turn to section 102.11(c) of the regulations.
The subject merchandise cannot be determined by application of 19 C.F.R. § 102.11(c), as it is not specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture, or composite good pursuant to General Rule of Interpretation 3. Accordingly, we turn to section 102.11(d) of the regulations.
Where the country of origin of a good cannot be determined under paragraph (a), (b), or (c) of this section, the country of origin of the good shall be determined as follows:
(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good; (2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or (3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production.
“Minor processing” is defined in 19 C.F.R. § 102.1(m). “Production” is defined in 19 C.F.R. § 102.1(n). “Simply assembly” is defined in 19 C.F.R. § 102.1(o).
Based on the facts provided, the operations performed in Mexico constitute more than “minor processing” and exceed “simple assembly”, Rule (1) and Rule (2) of § 102.11(d) are inapplicable.
Mexico is the last country in which the subject merchandise underwent manufacturing, processing, and assembly, these operations constitute production. In accordance with 19 C.F.R. § 102.11(d), Rule (3), the country of origin of the K-Body Clamp in each scenario for marking purposes is Mexico.
Section 301 Trade Remedy
Regarding the applicability of Section 301 trade remedies to the K-Body Clamp under consideration, CBP relies on the substantial transformation analysis when determining the country of origin for purposes of applying Section 301 trade remedies. 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) (Uniroyal). 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).
You indicated that the finished K-Body Clamp may be imported into the United States in four different country of origin scenarios. In all four scenarios, Mexico is the country where the imported parts will be assembled into the final product.
Based on the information provided, in each scenario, the components from China, Germany, Cambodia, and the United States are sent to Mexico where they are made into a new product identified as the K-Body Clamp. Regarding the applicability of Section 301 remedies in Mexico, it is the decision of this office that the manufacturing and/or assembly operations described above, do subsubstantially transform the individual components into a new and different article of commerce with a changed name, character, and use. Therefore, it is the opinion of this office that the manufacturing and assembly processes performed in Mexico result in a substantial transformation of the non-Mexican components, and therefore, the K-Body Clamp is a product of Mexico. The K-Body Clamp will not be subject to the additional duties under Section 301 of the Trade Act of 1974, as amended, upon importation.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs and Border Protection field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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 Ann Taub at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division