MAR-2-05 CO:R:C:V 733979 NL
Peter J. Koenig, Esq.,
Ablondi & Foster, P.C.
1130 Connecticut Avenue, N.W.,
Washington, D.C. 20036
RE: Steel Cores for Brake Shoe Assemblies; Substantial
Transformation; Ultimate Purchaser; Forgings; 19 CFR 134.35.
Dear Mr. Koenig:
This is in reply to your letter of December 4, 1990, in
which you request a ruling concerning the country of origin
marking requirements applicable to certain parts of automotive
brake shoe assemblies.
Your client, Friction, Inc. ("Friction"), imports steel
cores which are used exclusively in the manufacture of brake shoe
assemblies. The cores are not separately sold. The manufacture
consists of cleaning and painting the core, bonding an asbsestos
brake lining to it in a bonding oven using dry cement, and smooth
finishing the brake shoe assembly. In some cases additional
brake hardware may be affixed to the assembly. Samples of the
steel core and brake shoe assembly were submitted.
It is urged that the importer is the ultimate purchaser of
the steel cores within the meaning of 19 CFR 134.35., because he
effects a substantial transformation of the imported steel cores
by using them in the manufacture of brake shoe assemblies. It is
stated that the manufacture of the assembly costs considerably
more than the manufacture of the core, and that the price of the
assembly exceeds the price of the core by a similar margin. The
cost of painting equipment and bonding ovens is over $100,000.
Does the manufacture of the brake shoe assemblies
substantially transform the steel cores such that Friction is
their ultimate purchaser?
LAW AND ANALYSIS:
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 U.S. shall be marked in a conspicuous
place in such a manner as to indicate to the ultimate purchaser
in the U.S. the English name of its country of origin.
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirement and exceptions of 19
U.S.C. 1304. In general, the ultimate purchaser is the last
person in the U.S. to receive the article in the form in which it
was imported. If an imported article is used in manufacture, the
manufacturer may be the ultimate purchaser if he subjects the
article to a process which results in a substantial
transformation of the article. See, 19 CFR 134.1(d). A
substantial transformation is said to occur if, after processing,
a new article emerges having a new name, character, or use. See,
19 CFR 134.35. The imported article which is so transformed is
excepted from country of origin marking, although the outermost
containers of the imported article must be marked in accordance
with the marking requirements. Id.
In this case it is our opinion that the steel cores are
substantially transformed by their use in brake assemblies. In
their imported state the steel cores are plainly unfinished and
lack essential components of brake shoe assemblies, namely the
asbestos linings. Compared with the manufacture of the cores,
the process which results in the finished brake assembly is
extensive and costly. The steel core is permanently attached to
the friction lining, and is of secondary importance to the
lining. The steel core has no independent function, but rather
loses its separate identity by incorporation in the brake shoe
assembly. This finding is reinforced by the relative costs to
manufacture and prices of the cores and assemblies. Finally, it
is noted that the core is never sold separately, but only as part
of a brake shoe assembly.
Imported steel cores are substantially transformed by
incorporation in brake shoe assemblies. The importer of steel
cores who does such manufacturing is their ultimate purchaser,
and the cores are excepted from country of origin marking. At
importation the outermost containers of the cores must be marked
in accordance with 19 CFR 134.35.