CLA-2-73:OT:RR:NC:N5:113
Mr. William Maloney
Sandler, Travis & Rosenberg, P.A.
675 Third Avenue, Suite 2425 New York, NY 10017
RE: The tariff classification and country of origin of hose clamps
Dear Mr. Maloney:
This is in response to your letter dated June 28, 2024, on behalf of your client Murray Corporation, requesting a ruling on the tariff classification and country of origin ruling of hose clamps for marking purposes and for applying trade remedies under Section 201, Section 232, and Section 301 of the Trade Act of 1974, as amended, from China.
The subject products are identified as Murray's series HSS all stainless steel general purpose worm drive hose clamps. The clamps have three components including the band, housing, and screw. The hose clamps are commonly used for indoor and outdoor hose repair, and for connecting two hoses or tubes to create a leak free seal. As described in the specification sheet, the HSS series clamps have a band width of inch. The clamps are made in several sizes to accommodate hoses ranging from Society of Automotive Engineers (SAE) hose sizes 6 to 128.
You stated in your letter that The raw material for production of the band and housing components of the clamps is flat coiled stainless steel (slitting stock) that was melted, formed and cast in India. The coil widths can range from 3 to 12 inches. The steel from India will be imported into Canada in two grades: AISI 201 SS and AISI 301 SS. In order to produce the clamp housing, the slitting stock from India must be sent to a slitting machine to be cut down to 40 mm width. For the bands, the slitting stock must be cut down to 12.7 mm widths. The slit steel is then mounted on a servo feeder and fed into presses where progressive dies are used to form the bands and housings. The bands must also be perforated according to precise specifications for them to be tightened in their applications. The bands and housings are manufactured to SAE hose clamp standard j1508. The bands and housings fabricated in Canada are assembled together and combined with a China origin screw to complete the clamp. They are then cleaned, washed and packaged.
The applicable subheading for the Murray's series HSS stainless steel worm drive hose clamps will be 7326.90.8688, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other articles of iron or steel, otherother. The rate of duty will be 2.9 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/.
In addition to a tariff classification, you are requesting a country of origin determination for the subject hose clamps for marking purposes. 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 subject hose clamps are 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 hose clamps, and paragraph (a)(3) must be applied next to determine the origin of the finished articles. We note the hose clamps are classified under subheading 7326.90.8688, HTSUS. The tariff shift requirement in Part 102.20 for the hose clamps at issue states:
A change to headings 7325 through 7326 from any heading outside that group.
Based on the information submitted, we find that the stainless steel coils from India being imported into Canada would be classified in either heading 7219 or 7220, HTSUS. The steel screws from China being imported into Canada would be classified in heading 7318, HTSUS. Therefore, the hose clamps meet the tariff shift. Accordingly, the country of origin of the hose clamps for marking purposes is Canada.
Regarding the applicability of Section 201, Section 232, and Section 301 trade remedies to the hose clamps under consideration, CBP relies on the substantial transformation analysis when determining the country of origin for purposes of applying 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, dated January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
You indicated that the subject hose clamps will be manufactured in Canada. The raw material for production of the band and housing components of the clamps is flat coiled stainless steel (slitting stock) that was melted, formed and cast in India. The steel from India will be imported into Canada in two grades including AISI 201 SS and AISI 301 SS. In order to produce the clamp housing, the slitting stock from India will be sent to a slitting machine to be cut down to 40 mm width. For the bands, the slitting stock will be cut down to 12.7 mm widths. The slit steel is then mounted on a servo feeder and fed into presses where progressive dies are used to form the bands and housings. The bands will also be perforated according to precise specifications for them to be tightened in their applications. The bands and housings are manufactured to SAE hose clamp standard j1508. The bands and housings fabricated in Canada are assembled together and combined with a China origin screw to complete the clamp. They are then cleaned, washed and packaged in Canada.
Regarding the applicability of Section 201, Section 232, and Section 301 trade remedies to the hose clamps under consideration, it is the decision of this office that the manufacturing operations described, in sum, do substantially transform the individual components into a new and different article of commerce with a changed name, character, and use. It is the opinion of this office that the manufacturing processes performed in Canada result in a substantial transformation of the non-Canadian components (India origin flat coiled stainless steel/slitting stock and China origin screws) and the hose clamps are products of Canada. Therefore, the hose clamps classified under 7326.90.8688, HTSUS, will not be subject to additional duties under Section 201, Section 232, and Section 301 of the Trade Act of 1974, as amended, upon importation.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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