U.S. Department of Homeland Security
Washington, DC 20229
U.S. Customs and Border Protection
OT:RR:CTF:VSP H311480 TMF
Sonnenberg & Cunningham, P.A. 780 Fifth Avenue, South, Suite 200
Naples, FL 34102
RE: Country of Origin of Utility Knife Dear Mr. Cunningham:
This is in response to your correspondence, dated May 18, 2020, filed on behalf of your client, Great Star Industrial USA, LLC. (“Great Star”), requesting a prospective ruling pursuant to 19
C.F.R. § 177, regarding the country of origin of a utility knife. The National Commodity Specialist Division forwarded your client’s request to this office for our consideration. Our ruling is set forth below.
FACTS:
Great Star is a global manufacturer of tools and toolsets located in Huntersville, North Carolina, and it or one of its customers, which includes a large, well-known national retailer, will be the importer of record. You submitted the photo below and note that the color and similar details may change as production finalizes.
You describe this article as a retractable steel blade utility knife for general and utility cutting purposes. The steel blade is disposable and can be replaced by the ultimate purchaser. For safety and storage purposes, the utility knife’s blade is retractable into its zinc knife handle body. By pushing the silver-colored button forward the knife’s blade will be exposed. The knife is shipped
with the blade partially extended from the utility knife so that the ultimate purchaser can see that a blade is included and installed at the time of purchase. A protective plastic piece covers the extended blade during shipment and sale.
Production Scenarios 1 and 2:
In Scenario 1, the left and right sides of the utility knife’s handle body blade holder ("knife body") are made from diecast, zinc alloy from Vietnam (or third countries because this commodity may be globally sourced).
The knife body components (pictured in black below under the green section) are die-cut (without burrs), polished, then powder coated in Vietnam. You state the components are assembled together, likely by a small metal spring and a button imported into Vietnam from China. The steel utility knife blade is made by a third party in Vietnam, then it is assembled together with the utility knife body, likely using a small metal spring and button from China. Prior to shipment from Vietnam to China, you claim the article resembles a small utility knife with the blade and knife body, but without the rest of the handle which is made and attached in China. You state that in its condition as exported from Vietnam, this is called a "knife head".
In China, zinc or aluminum blocks are die cast to make the left and right sides of the back section of the utility knife handle (pictured in yellow below under the red section). It is deburred and powder coated. These two sides are assembled to the Vietnamese knife head with various Chinese springs, screws, washers, and a comfort grip. Then, then a plastic cover is placed over the tip of the blade for safety during shipping and retail display. Steps shown in green occur in Vietnam. Steps shows in red occur in China.
In Scenario 2, all production will be the exact same as Scenario 1, except the Vietnamese blade is assembled with the Vietnamese knife head in China, instead of Vietnam.
ISSUE:
What is the country of origin of the utility knife?
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 imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).
Part 134, Customs Regulations (19 C.F.R. 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 C.F.R. § 134.1(b)), defines “country of origin” as 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 the marking laws and regulations.
A “substantial transformation” occurs when an article loses its identity, and a new and different article emerges from the processing having a distinctive name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940) (the Court held that imported wood brush block and toothbrush handles which had bristles inserted into them in the United States lost their identity as such and became new articles having a new name, character and use). See also National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), in which the court focused on the fact that the components had been cold formed or hot forged "into their final shape before importation", and that "the form of the components remained the same" after the assembly and heat treatment processes performed in the U.S.
In this case, you present two assembly scenarios. In both scenarios, the blade blanks are formed in Vietnam, and the zinc or aluminum blocks are die cast to make the left and right sides of the back section of the utility knife handle. These two sides are then attached to a deburred, powder coated Vietnamese knife head with various Chinese springs, screws, washers, and a comfort grip.
You claim that the essential identity of the knives is imparted by the Vietnamese production of making raw steel into blades. You claim that the additional assembly operations in China are minor, such that there is no substantial transformation.
U.S. Customs and Border Protection (“CBP”) considered a utility knife in Headquarters Ruling Letter (“HQ”) 559782 dated May 24, 1996. All parts, except two cast parts which made up the knife body, were of U.S. origin, and the utility knife was assembled in the U.S. It was only
after the U.S. assembly of the imported casting parts with other domestic parts that the essence of a knife was created, capable of carrying and retracting the blade to a useable or safe position and housing extra blades. Although the two imported parts were dedicated to become the body of the utility knife, they did not themselves represent the very essence of the finished utility knife. While the blade was necessary in the operation of the utility knife, for this type of metal utility knife, CBP found that neither the blade, nor the body alone imparted the very essence of the utility knife.
Accordingly, CBP found that the imported casting parts were substantially transformed in the U.S.
New York Ruling Letter (NY) N308152 dated December 18, 2019, cited by you, considered a utility knife where the left and right side of the knife body was manufactured in Vietnam and assembled into a utility knife in China with a Chinese knife handle (also referred to as a "blade holder"), metal switch and PVC grip. In some situations, the disposable blade from China was also assembled. Reviewing the unique aspects of utility knives as mentioned in HQ 559782, it was
determined that the Vietnamese knife body would remain a part of the completed knife and would not be considered a knife until it could cut. Therefore, the country of origin was determined to be Vietnam as the essential identity of the handle was derived in Vietnam and the process that followed in China was found to be a simple assembly. However, where the disposable blades were added in China, the Vietnamese portion was considered substantially transformed into a functioning knife, capable of carrying and retracting the blade to a useable or safe position. In that situation, the country of origin was China.
Here, the steel disposable blades and knife body are both made in Vietnam and either assembled together in Vietnam as a "knife head” or exported separately to China for assembly with the Chinese knife handle in China. Consistent with National Hand Tool, we find the assembly processes in China are minor and there is no substantial transformation in China. Further, similar to the finding in HQ 559782, two of the three major sections of the utility knife are made in Vietnam. Therefore, we find the “overall shape, form and size of the blades [are] unaltered” during the finishing processes in China. See HQ 559366, supra. Therefore, we find Vietnam is the country of origin of the knives in both scenarios.
HOLDING:
Based on the facts provided, the country of origin of the utility knife is Vietnam. The utility knife’s country of origin marking requirements are met so long as the product is marked as “Made in Vietnam” or “Product of Vietnam.”
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,
Monika R. Brenner, Chief
Valuation & Special Programs Branch