CLA-2 RR:CTF:TCM 968318 JAS
Michael T. Shor, Esq.
Arnold & Porter LLP
555 Twelfth Street, N.W.
Washington, D.C. 20004-1206
RE: Brass Strip in Coils; Country of Origin for Marking and Duty Purposes
Dear Mr. Shor:
In your letter of July 3, 2006, on behalf of Wieland Metals, Inc., you request a ruling on the country of origin, for marking and normal duty purposes, for imports of brass strip in coil form.
FACTS:
The merchandise at issue is brass strip of Bulgarian origin, further processed in Germany as hereafter described, then imported into the customs territory. You indicate that in Bulgaria brass sheet is cast, hot rolled, milled, then cold rolled up to approximately fifteen times with intermediate annealing cycles, to a thickness of from 0.021 to 0.047 inches. The sheet is then slit lengthwise into strips from 8 to 18 inches wide. In Germany, the brass strip will be subjected to one cold-rolling pass which will reduce its thickness by slightly less than three one-thousandths of an inch. The purpose of this cold-rolling is to improve the product’s surface finish by making it smoother or shinier and making it suitable for stamping into connectors for the electronics industry, hardware parts, plumbing fixtures and furniture accessories. The processing in Germany does not alter the chemical or metallurgical properties of the strip. The product entering the customs territory is wrought strips of brass, flat-surfaced with a solid rectangular cross section, with a thickness of 0.0205 to 0.045 inches, in coils, meeting the composition specifications of copper alloys in the UNS C2000 series or the CDA 200 series.
- 2 -
ISSUE:
Whether the cold-rolling operation in Germany substantially transforms Bulgarian-origin brass strip so that Germany is regarded as the country of origin for marking and duty purposes.
LAW AND ANALYSIS:
For purposes of 19 U.S.C. § 1304 “country of origin” means the country of manufacture, production, or growth of any article of foreign origin entering the customs territory of the United States. (19 CFR 134.1). A commodity's country of origin for tariff purposes is the country in which the last substantial transformation took place. A substantial transformation occurs when, as a result of processing, a new article of commerce is created, one having a new name, character or use. Uniroyal, Inc. v. United States, 3 CIT 220, 542 , F.Supp. 1026, aff'd. 1 Fed. Cir. 21, 702 F. 2d 1022 (1983).
You maintain that neither the name, character or use of the brass strip changes as a result of the cold-rolling operation in Germany. The input and output products remain brass strip with the same chemical and metallurgical properties. The end use applications remain the same. You conclude that the German processing does not substantially transform the product and that Bulgaria remains the country of origin for tariff purposes.
The courts have indicated that cases dealing with substantial transformation are very product-specific and that only those involving similar processing - in this case the processing of a single material rather than those involving combination or assembly operations - should be deemed relevant. Superior Wire et al v. United States, 11 CIT 608, 669 F. Supp. 472 (Ct. Int’l. Trade, decided 1987). In HQ 734716, dated November 27, 1992, a case you cite, the polishing in Singapore of Japanese-origin grade 304 stainless steel sheet to achieve a No. 8 mirror finish to promote corrosion resistance was held not to constitute a substantial transformation for tariff purposes. HQ 734716 stated that improvement in corrosion resistance amounts to a change in a characteristic of the steel and not a change in its character. HQ 734716 affirmed an earlier decision, HQ 734091, dated June 2, 1992, and found [that] “Customs consistently finds that embellishment and finishing operations, such as polishing, enameling and cleaning, are not regarded as extensive processes that result in a new and different article of commerce.” HQ 554698, dated August 21, 1987, and HQ 071314, dated May 10, 1983, are cited for this proposition. By contrast, in HQ 089538, dated August 7, 1991, hot rolled stainless steel coils from one country cold rolled or cold reduced in another country were found, for marking purposes, to have met the substantial transformation test and to be products of the country where the cold reduction took place. This was
- 3 -
because the cold rolling significantly reduced the thickness of the steel by 50 to 60 percent and imparted greater tensile strength, factors not present in this case.
HOLDING:
Under the facts presented, we find that subjecting Bulgaria-origin brass strip to one cold-rolling pass in Germany which reduces its thickness by slightly less than three one-thousandths of an inch for the purpose of improving the product’s surface finish by making it smoother or shinier does not constitute a substantial transformation of the Bulgarian-origin strip. Bulgaria remains the country of origin of this product for marking and normal duty purposes.
Sincerely,
Cynthia Reese
for Gail A. Hamill, Chief
Tariff Classification and Marking Branch