MAR-2-05 CO:R:C:V 734062 AT
Ms. Elias Hollander
President
Hoffman Marketing & Distribution, Inc.
8 West Main Street
P.O. Box 309
Farmingdale, New Jersey 07727
RE: Country of origin marking requirements for imported key
blanks; grinding teeth; 19 CFR 134.35; substantial
transformation
Dear Ms. Hollander:
This is in response to your letter dated March 11, 1991,
requesting a binding ruling on the country of origin marking for
imported key blanks.
FACTS:
Your company intends to import key blanks from Mexico to be
used for residential and auto use. The imported key blanks will
arrive in the U.S. in bulk of several thousand packed in a box
with each box marked "Made in Mexico". Your company will then be
repackaging the key blanks in smaller quantities of 50 key blanks
per box and marking each box "Made in Mexico" for redistribution
to your customers. Your customers will be U.S. locksmiths and
hardware stores who intend to further process the keys by cutting
teeth into the blanks conforming to their customer's specifi-
cations by using special key cutting machines requiring a skilled
technician. You have submitted two samples of the imported key
blanks with the ruling request.
ISSUE:
What are the country of origin marking requirements for
imported key blanks which are processed in the U.S.?
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 in 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. Friedlander & Co., 27 C.C.P.A. 297 at 302;
C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the 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 transform-
ation in order to render such other country the "country of
origin" within the meaning of the marking laws and regulations.
The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267
(C.A.D. 98) (1940), provides that an article used in manufacture
which results in an article having a name, character or use
differing from that of the constituent article will be considered
substantially transformed. In such circumstances the U.S.
manufacturer is the ultimate purchaser. The imported article is
excepted from individual marking and only the outermost container
is required to be marked. (see 19 CFR 134.35)
Although, we have not previously ruled on the issue of
whether the cutting of teeth in key "blanks" is a substantial
transformation, there are various rulings concerning the
processing of metal "blanks" into finished articles. In
determining whether there has been a substantial transformation
Customs has looked at both the extent and effect of specific
processing operations.
In HQ 722066 (August 3, 1983), Customs ruled on the country
of origin marking requirements of key blanks imported from
Canada. We determined that the key blanks had to be individually
marked because the U.S. processing (embossing company name and
key number, removing the rough edges, polishing and nickel
plating) was not a substantial transformation.
In HQ 553197 (February 11, 1985), we ruled that rough
polishing, hand shaping and curving, heat treatment and final
polishing of instruments in Pakistan did not constitute a
substantial transformation. Similarly, in HQ 733565 (September
11, 1990), we ruled that unfinished household scissors exported
to Pakistan for further processing including grinding, polishing,
nickel plating, heat treating and assembly did not constitute a
substantial transformation. We noted that the foreign processing
done in Pakistan was nothing more than finishing operations,
which although important, did not alter the basic character of
the shears.
In contrast, in HQ 740134 (February 6, 1987), we ruled that
the grinding of geometrically shaped teeth on to blank saw blades
and other minor processing substantially transformed the blank
saw blades into a new article of commerce and the party
performing this processing is considered the ultimate purchaser
of the blank saw blades for country of origin marking purposes.
In HQ 732615, C.S.D. 90-101 (June 6, 1990), a case involving
surgical scissors and other surgical instruments, we ruled that
the milling and the intricate cutting of forged blanks that
create the ratchet, teeth, inside rings and boxlock on the
surgical instruments were extensive operations. We noted that
these operations with the addition of heat treating and polishing
gave the surgical instruments their basic character and resulted
in a substantial transformation. Similarly, in HQ 732844
(February 12, 1990), we ruled that U.S. made forgings that were
not yet machined to their actual dimensions and lack the
essential characteristics such as the capacities to grip, close,
lock in place and to be adjusted were substantially transformed
by the extensive machining, bending, cutting, riveting, assembly
and polishing operations done in Pakistan. We noted that these
operations gave the instruments their basic characteristics.
In this case, the processing of grinding teeth into the
imported key blanks, by using key cutting machines only
constitutes a minor change to the key blanks and the creation of
the teeth does not determine the essential character of the
finished key. As imported, the key blanks have the appearance of
an unfinished key and the processing of grinding teeth into the
key blanks is nothing more than a finishing process, which
although important, does not alter its basic character of that of
a key. Further, in contrast to the grinding of teeth into saw
blade blanks the process of grinding teeth into the key blanks is
easily and quickly done by a store employee immediately before
purchase. This type of processing must be considered minor.
Based on these considerations, we conclude that grinding teeth
into the key blanks by key cutting machines in the U.S., is not a
substantial transformation, and in accordance with 19 CFR 134.35,
your customers would not be considered the ultimate purchasers of
the key blanks. Rather, the retail purchasers of the keys are
the ultimate purchasers. Therefore, the key blanks are not
excepted from country of origin marking and must be individually
marked to reflect "Mexico" as the country of origin.
HOLDING:
The processing of cutting teeth into imported key blanks by
using special key cutting machines is not a substantial transfor-
mation and the processor is not the ultimate purchaser.
Accordingly, the imported key blanks are not excepted from
individual country of origin marking and must be individually
marked to reflect "Mexico" as the country of origin.
Sincerely,
John Durant, Director
Commercial Rulings Division