CLA-2 RR:TC:SM 559782 MLR
Frederick L. Ikenson, Esq.
Larry Hampel, Esq.
Joseph A. Perna, V, Esq.
Frederick L. Ikenson, P.C.
1621 New Hampshire Avenue, N.W.
Washington, D.C. 20009
RE: Country of Origin Marking on hand tools; trowel; utility
knife; pole sander; handle; blade; sander base; sander
subassembly; substantial transformation.
Dear Mr. Ikenson, Mr. Hampel, and Mr. Perna:
This is in reference to your letter of April 10, 1996,
requesting a ruling on behalf of Hyde Manufacturing Company
("Hyde"), concerning the country of origin marking on
certain hand tools. Samples of the hand tools were
submitted with your request.
FACTS:
Hyde produces surface preparation and industrial hand
tools in the U.S. The hand tools at issue are a curved
stainless steel professional trowel, a top slide utility
knife, and a pole sander. It is stated that Hyde uses all
U.S.-origin parts except certain imported parts which are
not from a NAFTA party. It is also stated that Hyde
directly deals with the supplier so that Hyde is informed as
to the origin of the imported parts.
The trowel is a curved-blade drywall trowel which is
designed to bridge untapered drywall joints. The trowel is
comprised of a hardwood handle with a contoured grip and
flat sides, a stainless steel trowel plate, seven threaded
studs, one nut, all of U.S.-origin, and an imported
lightweight aluminum alloy frame. In the U.S., stainless
steel material is flattened and cut to the size of the
trowel plate. The studs are welded to the plate in the
locations that correspond to cavities of the imported handle
frame. The trowel plate is curved, and the frame and plate
are permanently joined by pressing the frame onto the
threaded studs. This assembly operation is performed on a
mechanical flywheel press with a die which maintains the
trowel plate's curved shape. Lastly, the wooden handle is
fitted to the frame with the nut.
The utility knife is a 3-position top slide utility
knife, designed to fit the palm of the hand. It features a
die-cast aluminum alloy construction, a push button top
slide blade adjustment, and two cutting/blade positions.
The side screw can be removed to replace the blade and to
access blade storage. The purpose of the knife is for
cutting drywall, floor covering, roofing, and for general
cutting. The utility knife consists of six parts. The
knife's body, referred to as a right and left "casting," is
actually two parts and is imported as a single part. The
other parts, all of U.S.-origin, are the knife blade, blade
carrier, thumb button, and screw. The assembly in the U.S.
is conducted by placing one body half into an air-operated
press assembly fixture, along with the blade carrier and
thumb button. Following a swedging of these parts together,
utilizing the press, a blade is placed into the carrier and
the other body half is placed over the assembly for
insertion of a screw, using an automatic screw driver.
The pole sander is used to sand ceilings and walls from
the floor level. It is comprised of a die-cast aluminum
head with a foam rubber sanding pad on the underside around
which sandpaper is positioned and held in place at the top
of the sander head by two clamps. A 48-inch hardwood pole,
with a standard Acme thread, screws into the swivel. The
pole sander consists of eleven parts: a pole, a rubber pad,
two wing nuts, two sandpaper clamps, one roll pin, and two
threaded pins, all of U.S.-origin, and an imported sander
base, and an imported swivel assembly. The assembly is
conducted by attaching the swivel assembly to the sander
base using the roll pin. Two threaded pins are pressed into
the sander base, i.e., an air-operated press seats the
threaded pins into holes in the sander base with an
interference fit. Two sandpaper clamps are attached over
the threaded pins and secured with two wing nuts. The
rubber pad is attached manually to the bottom of the sander
plate. A pole is packed loose in the carton with the sander
head assembly.
ISSUE:
What are the country of origin marking requirements of
the trowel, utility knife, and pole sander?
LAW AND ANALYSIS:
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.
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.
Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104
(1940).
Part 134, Customs Regulations (19 CFR Part 134)
implements the country of origin marking requirements and
exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs
Regulations {19 CFR 134.1(b)}, defines "country of origin"
as the country of manufacture, production or growth of any
article of foreign origin entering the U.S. 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 the
marking laws and regulations.
For country of origin marking purposes, a substantial
transformation of an imported article occurs when it is used
in the U.S. in manufacture, which results in an article
having a name, character, or use differing from that of the
imported article. If such substantial transformation
occurs, then the manufacturer is the "ultimate purchaser" of
the imported article, and the article is excepted from
marking and only the outermost container is required to be
marked. See 19 CFR 134.35. On the other hand, if the
manufacturing or combining process is merely a minor one
which leaves the identity of the imported article intact, a
substantial transformation has not occurred and an
appropriate marking must appear on the imported article so
that the consumer can know the country of origin. Uniroyal,
Inc. v. United States, 542 F. Supp. 1026, 1029 (CIT 1982),
aff'd, 702 F.2d 1022 (Fed. Cir. 1983).
You contend that Hyde is the ultimate purchaser of the
imported parts, as they are substantially transformed in the
U.S. when they are assembled with domestic parts into the
trowel, utility knife, or pole sander. A number of rulings
are cited as support. See Headquarters Ruling Letter (HRL)
707286 dated May 4, 1977 (imported side plates assembled
with U.S. roller, bushings, and pins into a roller chain
were substantially transformed for country of origin marking
purposes); HRL C.S.D. 79-312 dated October 26, 1978
(assembly, by riveting, drive and side lengths to cutter
components substantially transformed all parts into a saw
chain for purposes of the Generalized System of
Preferences); HRL 709321 dated October 27, 1978 (plastic
handle, electrode blade, cord, and terminal socket were
substantially transformed when assembled into disposable
electric scalpel for marking purposes); C.S.D. 90-51 dated
January 30, 1990 (valve bodies, adapters, and fasteners were
substantially transformed when combined with U.S. ball,
seat, stem, handle, and fasteners for marking purposes); and
HRL 733171 dated July 2, 1990 (razor handle and knob
assemblies lost their identity when they were assembled with
U.S. razor head and cartridge subassemblies for marking
purposes).
In regard to the utility knife, its parts are all
domestic, except the two parts which make up the knife body.
Among the rulings cited by you, none of them consider the
country of origin marking for the type of metal utility
knife in this case, and it does not appear that Customs has
issued any such rulings. As a result of being assembled
with the domestic parts, the imported casting parts undergo
a change in name to a utility knife. We also find that the
imported parts undergo a change in character. It is only
after the domestic assembly of the imported casting parts
with other domestic parts that the essence of a knife is
created, capable of carrying and retracting the blade to a
useable or safe position and housing extra blades.
Furthermore, although the two imported parts are dedicated
to become the body of the utility knife, they do not
themselves represent the very essence of the finished
utility knife. [While the blade is necessary in the
operation of the utility knife, for this type of metal
utility knife, we would find that neither the blade, nor the
body alone imparts the very essence of the utility knife.]
Accordingly, we find that the imported casting parts are
substantially transformed in the U.S., and, therefore, Hyde
is the ultimate purchaser of these imported parts.
In regard to the trowel and pole sander, all of the
parts are domestic, except the trowel contains an imported
frame, and the pole sander contains an imported sander base
and swivel assembly. You also do not cite HRL 734521 dated
September 17, 1992, which appears relevant to this case. In
HRL 734521, Customs considered a vise handle imported from
Taiwan which was combined with U.S.-made vise parts, namely,
the vise body, movable jaw, reversible jaw plates, nut,
screw, retaining collar, screw support, and thrust bearings.
In HRL 734521, two courts cases were specifically cited as
being relevant to the operations under consideration, United
States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940), and
Uniroyal, Inc. v. United States. In Gibson-Thomsen, the
court held that imported wood brush blocks and toothbrush
handles which had bristles inserted into them in the U.S.
lost their identity as such and became new articles having a
new name, character, and use. However, in Uniroyal,
imported uppers were found to be the "essence of the
completed shoe" and, therefore, were not substantially
transformed.
Accordingly, in HRL 734521, Customs found that the
imported vise handle was substantially transformed after
importation into the U.S. The vise handle was only a less
important part among the various parts of the vise, and the
key parts of the vise were the body and jaws which were made
in the U.S. This determination was also based upon HRL
733804 dated November 9, 1990, where Customs ruled that
attaching a U.S. handle to an imported broom head did not
substantially transform the imported broom head, but
instead, the broom had to be marked with the country of
origin of the "essential element of the finished article."
This was true "whether it is assembled with a foreign or
U.S.-made handle." Similarly in HRL 733196 dated August 10,
1990, Customs compared the manufacturing costs of different
pieces in determining that an imported ratchet handle was
substantially transformed because the U.S.-made pawl and
parts were the "very essence of the finished product."
In the case of the trowel, we find that the imported
frame loses its identity when it is attached to the U.S.-made trowel plate, as it is the trowel plate which is the
essential part for use in bridging untapered drywall joints.
Therefore, Hyde is the ultimate purchaser of the imported
frame. However, in regard to the pole sander, we find that
the sander base and swivel assembly are the critical parts
which make the pole sander useful in sanding ceilings and
walls. Without the solid base of the sander, the sandpaper
would not be flat and firm in order to perform the sanding
function. Furthermore, the swivel action of the sander, as
opposed to a rigid position, enables the user to perform the
sanding function especially on ceiling areas. Accordingly,
we find that the sander base and swivel assembly are not
substantially transformed, and Hyde is not the ultimate
purchaser of these parts. This is also supported by the
fact that less than 50 percent of the pole sander's value is
attributed to the U.S. parts. Additionally, while the
rubber pad is necessary to pad the sandpaper and the clamps
hold the sandpaper in place, the rubber pad can be pealed
off and replaced, and it is the firmness of the sander base
and the swivel action which makes the pole sander
functional. We also note that the other U.S. component
which enables the sander to be used on the ceiling is the
pole; however, as stated, any standard pole may be used.
Additionally, Hyde claims that because it deals directly
with the supplier of the imported parts, imports the parts,
and is the ultimate purchaser of the imported parts, Hyde is
informed of the origin of the imported parts. Therefore,
Hyde claims that the outermost containers in which the
foreign parts are imported are not required to be marked
with the foreign article's country of origin pursuant to 19
U.S.C. 1304(a)(3)(H) and 19 C.F.R. 134.32(h).
The above statutory section provides that an exception
from the country of origin marking requirements for any
article may be allowed if:
An ultimate purchaser, by reason of the character of
such article or by reason of the circumstances of its
importation, must necessarily know the country of origin
of such article even though it is not marked to indicate
its origin.
In this case, we find that the outermost containers in
which the foreign handle body parts for the utility knives
and the foreign frames for the trowels are imported may be
excepted from country of origin marking pursuant to 19
U.S.C. 1304(a)(3)(H) and 19 C.F.R. 134.32(h), provided
documentary evidence is submitted at the time of importation
to the satisfaction of the Port Director demonstrating that
Hyde necessarily knows the country of origin of the foreign
parts based on the circumstances of the importation, as
required under this provision. However, in regard to the
imported sander bases and swivel assemblies, since Hyde is
not the ultimate purchaser, no exception under 19 CFR
134.32(h) may be granted.
HOLDING:
Based upon the information provided, it is our opinion
that the imported handle body parts for the utility knives
and the imported frames for the trowels are substantially
transformed in the U.S. Therefore, Hyde is the ultimate
purchaser of the imported handle body parts and imported
frames. Accordingly, provided documentary evidence is
submitted at the time of importation to the satisfaction of
the Port Director demonstrating that Hyde necessarily knows
the country of origin of the foreign parts based on the
circumstances of the importation, the outermost containers
in which the foreign handle body parts for the utility knife
and the foreign frames for the trowels are imported may be
excepted from country of origin marking pursuant to 19
U.S.C. 1304(a)(3)(H) and 19 C.F.R. 134.32(h). In regard
to the imported sander bases and swivel assemblies, we find
that they are not substantially transformed by the processes
performed in the U.S. Accordingly, since Hyde is not the
ultimate purchaser, no exception from marking may be granted
under 19 CFR 134.32(h).
A copy of this ruling letter should be attached to the
entry documents filed at the time the goods are entered. If
the documents have been filed without a copy, this ruling
should be brought to the attention of the Customs officer
handling the transaction.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division