CLA-2 RR:CTF:TCM W968434 ADK
B.J. Shannon, Esq.
Alston & Bird LLP
The Atlantic Building
950 F Street, NW
Washington DC, 20004
RE: Classification and Country of Origin Marking for the Leatherman Multi-purpose Garden Tool
Dear Ms. Shannon:
In a letter dated August 30, 2006, to the Bureau of Customs and Border Protection (CBP), you requested a binding ruling on the Country of Origin marking requirements for the three imported components of a multi-purpose gardener’s tool, on behalf of your client, Leatherman Tool Group (Leatherman). Additionally, you asked about the Country of Origin marking requirements for the final assembled product. Your letter was referred to this office for a response.
FACTS:
Leatherman manufactures a multi-purpose gardening tool, The Gardener’s Pruner, in Portland, Oregon. The tool, which functions like a pocket-style Swiss Army Knife, features a plastic/rubber handle with an attached pruner head, and eight additional components. These additional components include a saw blade, a Phillips head screwdriver blade, a weeding tool, a ruler, a grafting knife, a flat head screwdriver, a sprinkler key and a bottle opener. The pruner head is the largest component, measuring approximately 4 ¼ inches. Aside from the pruner head, each component can be folded into the handle for storage, or pulled out of the handle for use. The tool measures approximately 4 ¾ inches when closed and 8 inches when open.
Three of the components are articles of foreign manufacture. The first is the stainless steel pruning head imported from Taiwan, classifiable under subheading 8201.50, HTSUS, which provides for: “[h]andtools of the following kinds and base metal parts thereof:…pruners of any kind; …Secateurs and similar one-handed pruners and shears (including poultry shears), and parts thereof[.]” The second is the saw blade, also imported from Taiwan, classifiable under subheading 8202.99, HTSUS, which provides for “[h]andsaws, and metal parts thereof; blades for saws of all kinds (including slittling, slotting or toothless saw blades), and base metal parts thereof: Other saw blades, and parts thereof: Other (including parts).” After entry, these two components are attached to the tool’s handle.
The third imported article is an unfinished Phillips head screwdriver blade (screwdriver) from Mexico, a North American Free Trade Agreement (NAFTA) country. Pursuant to General Rule of Interpretation (GRI) 2(a), the screwdriver is classifiable under subheading 8205.40, HTSUS, which provides for “[h]andtools (including glass cutters) not elsewhere specified or included;…Screwdrivers, and parts thereof.” After entry, the screwdriver blade is reamed, heat-treated, finished and then attached to the handle.
The other components mentioned above, the weeding tool, ruler, grafting knife, flat head screwdriver, sprinkler key and bottle opener, are claimed to be manufactured in the United States.
ISSUES:
What is the proper classification, under the HTSUS, for the multi-purpose gardening tool?
What is the proper country of origin making for the final assembled multi-purpose gardening tool?
LAW AND ANALYSIS:
What is the Proper Classification for the Multi-purpose Gardening Tool?
Classification under the HTSUS is made in accordance with the GRIs. GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
It is undisputed that the Gardener’s Pruner is classifiable in chapter 82, HTSUS, which provides for “[t]ools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal.” The issue arises at the four-digit level as to the product’s essential character. The HTSUS provisions under consideration are as follows:
8201 Handtools of the following kinds and base metal parts thereof: spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry:
8201.50 Secateurs and similar one-handed pruners and shears (including poultry shears), and parts thereof
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8211 Knives with cutting blades, serrated or not (including pruning knives), other than knives of heading 8208, and blaces and other base metal parts thereof:
Other:
8211.93.00 Knives having other than fixed blades
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The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80. The relevant ENs are as follows:
The ENs to Heading 8201, HTSUS, provide in pertinent part:
This heading covers hand tools mainly used in agriculture, horticulture or forestry….
This heading includes:
* * *
(5) Secateurs and similar one-handed pruners and shears…. These are generally composed of two shafts articulated on a pivot about three-quarters of the way along their length. One of these shafts often terminates in a concave, and the other in a convex cutting edge….
(Emphasis in original)
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The Gardener’s Pruner is a composite good, comprised of a plastic handle, a pruner head and nine smaller gardening tools. Unless otherwise provided, composite goods are to be classified according to GRI 3(b). That rule provides, in pertinent part:
…composite goods consisting of different materials or made up of different components…shall be classified as if they consisted of the material or component which gives them their essential character….
EN IX to GRI 3(b) provides:
For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
(Emphasis in original)
* * *
Pursuant to GRI 3(b), the Gardener’s Pruner will be classified as if it consists only of the component part which imparts the essential character to the completed tool. Explanatory Note VIII to GRI 3(b) explains, "[t]he factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods." Court decisions on essential character for GRI 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the good. See Better Home Plastics Corp. v. U.S., 915 F. Supp. 1265 (CIT 1996), aff'd 119 F. 3d 969 (Fed. Cir. 1997) ("Better Home Plastics"); Mita Copystar America, Inc. v. U.S., 966 F. Supp. 1245 (CIT 1997), rehear'g denied, 994 F. Supp. 393 (1998); Vista Int'l Packing Co. v. U.S., 890 F. Supp. 1095 (CIT 1995). See also Pillowtex Corp. v. U.S., 893 F. Supp. 188 (CIT 1997), aff'd 171 F. 3d 1370 (CAFC 1999); Avenues in Leather, Inc. v. U.S., 2004 Ct. Int'l Trade LEXIS 39, aff'd 423 F.3d 1326 (Fed. Cir. 2005), HQ 968226, dated August 8, 2006.
Leatherman markets the subject merchandise as a Gardener’s Hybrid Pruner, stating that it will provide gardeners with the “stainless steel pruners they need [and] the most commonly used tools-of-the-trade right in one convenient location; on their belt loop.” When the tool’s plastic handles are opened, the only visible item is the pruner head itself. All other components must be folded out of the plastic handle prior to use. Furthermore, while open, the pruner head cannot be folded into the handle, as is the case with the other tools. Even while using the other features, the pruner head is always visible and ready for use. In relationship to the rest of the components, the pruner head is the most important and visible feature. See Headquarters Ruling (HQ) 964935, dated May 21, 2001. Based on these characteristics, we find that the essential character is imparted by the pruner head.
Heading 8201, HTSUS, is an eo nomine provision for secateurs and pruners of any kind. The ENs provide that secateurs and pruners are classified under subheading 8201, HTSUS. We therefore find that the tool is classified in subheading 8201.50, HTSUS.
Country of Origin Marking Rules for goods of NAFTA and Non-NAFTA countries
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), provides that unless excepted, every article of foreign origin imported into the United States 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 United States, the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. §1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, CBP Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. 1304. Pursuant to 19 CFR 134.1(b), the country of origin is 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 a good of a NAFTA country, however, the NAFTA Marking Rules will determine the country of origin. 19 CFR 134.1(j)
Substantial transformation determinations are based on the totality of the evidence. Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). A substantial transformation, for country of origin marking purposes, occurs when an imported article is used in domestic manufacture, which results in that article having a “name, character, or use differing from that of the imported article.” See United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98). For articles other than goods of a NAFTA country, which are used in manufacture and substantially transformed in the United States, the manufacturer or processor in the U.S. who converts the imported article will be considered the "ultimate purchaser" and the article shall be excepted from marking. Section 134.35(a), CBP Regulations (19 CFR 134.35(a)). The outermost container of the imported good shall be marked in accord with Part 134, CBP Regulations (19 CFR Part 134).
A good of a NAFTA country which is to be processed in the U.S., in a manner that would result in it becoming a good of the United States under the NAFTA Marking Rules, is excepted from marking. §134.35(b), CBP Regulations (19 CFR 134.35(b)). Unless the good is processed by the importer or on the importer’s behalf, the outermost container of the good shall also be marked in accord with Part 134.
A. Country of Origin Marking for the Screwdriver under 19 CFR 102, NAFTA Marking Rules
The unfinished screwdriver blade is claimed to be manufactured and imported from Mexico, a NAFTA country. The NAFTA Marking Rules apply in order to determine whether the unfinished screwdriver blade becomes a “good of the United States.” 19 CFR §102.11 sets forth the required hierarchy for NAFTA marking determinations. The following provisions must be applied sequentially, beginning with part (a)(1):
The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by §102.21:
(a) 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 section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
* * *
After entry, the screwdriver is reamed, heat-treated, finished and then attached to the plastic handle to become a component of the gardening tool. Once complete, the Gardener’s Pruner is classified under subheading 8201.50, HTSUS. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to this process because the screwdriver is neither wholly obtained, nor produced exclusively from domestic U.S. materials. It is therefore necessary to apply §102.11(a)(3). The relevant §102.20 rules for this heading provides:
HTSUS Tariff shift and/or other requirements
8201.10 -- 8202.40 A change to subheading 8201.10 through 8202.40 from any other subheading, including another subheading within that group.
Because the screwdriver undergoes the requisite tariff shift from subheading 8205.40, HTSUS, to subheading 8201.50, HTSUS, it becomes a “good of the United States” for the purposes of country of origin marking. Pursuant to §134.35(b), CBP Regulations (19 CFR 134.35(b)), the screwdriver is excepted from marking and need not reflect its Mexican origin.
B. Country of Origin Marking of the Taiwanese Saw Blade and Pruner Head under the Gibson-Thomsen Substantial Transformation Test
Counsel argues that the two Taiwanese component tools are substantially transformed within the United States and therefore excepted from the country of origin marking requirements. Under the substantial transformation test, we must determine whether the domestic manufacturing process results in a change in name, character and use for the given products. See Gibson – Thomsen Co., Inc. “If the manufacturing or combining process…leaves the identity of the imported article intact, a substantial transformation has not occurred.” Uniroyal Inc. v. United States, 3 CIT 220, 224 (1982).
In National Hand Tools Corp. v. United States, the CIT determined the country of origin marking requirements for imported individual tools which were used to produce flex sockets, speeder handles and flex handles. The court found that the “the character of the [tools] remained unchanged after heat-treatment, electroplating and assembly…[T]he form of the components remained the same since each component was either hot-forged or cold-forged into its final shape in Taiwan.” 16 CIT. 308, 311 (1992). The products were subjected in a few instances to minor assembly operations and were not combined with other tools after entry. They were imported in a substantially complete condition and then placed up for retail sale individually. In the present matter, while the imported components do not undergo a major change in shape, they are combined with additional component tools in the United States. Unlike the imports in National Hand Tools, these additional components are not intended for individual sale, but rather as parts of a larger composite tool. We find that the CIT’s decision in National Hand Tools is not controlling in the present matter.
When making substantial transformation decisions specifically for composite goods, CBP has focused on the significance of the imported components in relationship to the finished product. In HQ 734136, dated June 17, 1991, the United States Customs Service (now CBP) determined the country of origin marking requirements for golf clubs assembled from both foreign and domestic components. We concluded that where the foreign imports were relatively insignificant, the “addition of major U.S. components in the U.S. to form a completed golf club constitutes a substantial transformation.” Conversely, where a golf club’s grips were of U.S. origin, but the more important shaft and head were foreign imports, CBP concluded:
‘The grips are much less significant components as compared with the…shafts and their insertion onto the golf clubs is fairly simple…[B]ecause the most important components are foreign…there is no substantial transformation of the shafts….’ Citing HRL 734256, dated July 1, 1992
Chinese or Taiwanese golf club heads are substantially transform[ed] if they are assembled with a U.S. made shaft and a U.S. made grip in the U.S. to make finished golf clubs.
For clubs assembled in the U.S. for which there is no substantial transformation, i.e., those with both the shaft and the head made in China or Taiwan, the country of origin of each foreign component must be indicated….
HQ 562901, dated November 6, 2003, (Emphasis Added)
The above rulings make clear that substantial transformation determinations for composite merchandise are controlled by the relationship of the foreign import to the domestic components. If the import is insignificant in relationship to the domestic component, it will be substantially transformed in the United States by losing its identity and becoming an integral part of the new article. Conversely, where the foreign imports are more significant than the domestic components, the imports will not be substantially transformed after entry.
Applying this rule, we will first consider marking requirements for the Taiwanese saw blade. Like the hand grips referenced in HQ 562901, the saw blade is a “much less significant component…as compared with the” pruner head. Without the saw blade, the Gardener’s Pruner would maintain the same name, and function in the same manner. Also like the hand grips, the saw’s treatment within the United States is “fairly simple.” Id. When combined with the other component tools, the saw blade loses its identity and becomes a minor or trivial part of a new article – that is, the saw blade is equally as useful as the additional U.S. components, such as the bottle opener, weeding tool and grafting knife. In fact, the saw blade loses its individual name and is instead referred to collectively as The Gardener’s Pruner. As a result, we find that it undergoes a substantial transformation within the United States. Leatherman is deemed to be the "ultimate purchaser" and the saw blade is excepted from the country of origin marking requirement. Section 134.35(a), CBP Regulations (19 CFR 134.35(a)).
The result differs for the pruner head. Unlike the saw blade, the pruner head is the most significant component of the entire multipurpose tool. Even after assembly, the pruner head maintains the same name, character and use. Furthermore, the manufacturing process within the United States “is merely a minor one which leaves the identity of the [pruner head] intact.” Uniroyal, 3 CIT at 224. As a result, we find that the pruner head is not substantially transformed after entry into the United States. Taking into account the overall assembly of the tool in the U.S. and the number of U.S. components, we find that the country of origin for the entire Gardener’s Pruner will be Taiwan and the United States.
Counsel cites New York Ruling (NY) C84427, dated February 26, 1998, as evidence that the Taiwanese products are substantially transformed. The file for NY C84427 was stored in our former 6 World Trade Center office in New York City and was destroyed as a result of the terrorist incident on September 11, 2001. Based on counsel’s description a pair of scissors was imported and substantially transformed when made into a pocketknife. This result is in line with our determination in the present matter. In NY C84427 we assume the final article was marked to reflect the origin of the individual pocketknife component.
Furthermore, Counsel cites HQ 722886, dated October 18, 1983, in which U.S.-made blades were shipped abroad and attached to a two-piece handle. Although U.S. Customs determined that the U.S. blade was substantially transformed abroad, and required the completed knife to be marked “assembled in a (foreign country),” we permitted the blade itself to be marked “Blade U.S.A.” We note that while this ruling has been essentially overruled by National Hand Tool, 16 C.I.T. 308, 311, and was determined in accordance with former regulation 19 CFR 10.22, the labeling determination is still applicable, in part, today in that the mention of “Blade U.S.A” is indicative that the blade imparted the essential character to the finished article.
Therefore, we find the country of origin for the Gardener’s Pruner to be Taiwan and the United States. CBP has no objection to indicating that the tool is also of U.S. origin, but, whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508, on the propriety of markings indicating that an article is made in the U.S.
HOLDING:
Pursuant to GRI 3(b), the Leatherman multipurpose gardening tool is classifiable under subheading 8201.50.00, HTSUS, which provides for “Handtools of the following kinds and base metal parts thereof: spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry: Secateurs and similar one-handed pruners and shears (including poultry shears), and parts thereof.” The 2007, column one, general rate of duty is 1¢ each + 2.8 percent ad valorem.
Pursuant to NAFTA marking rule 19 CFR §102.11(a)(1)(3), the Phillips head screwdriver blade is a good of the United States and is excepted from the country of origin marking requirement. Pursuant to the Gibson-Thomsen substantial transformation test, the saw blade is substantially transformed and will be excepted from the marking country of origin marking requirement. However, as the stainless steel pruner imparts the essential character to the finished multipurpose garden tool, it is not substantially transformed and Taiwan must be reflected on the tool or container that reaches the ultimate purchaser.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch