MAR-2-05 CO:R:C:V 734091 RSD

Vincent Bowen, Esq.
Three Lafayette Centre
Wilke, Farr, & Gallagher
1155 21st Street, N.W.
Washington, D.C. 20036-3384

RE: Country of origin of mirror polished stainless steel, substantial transformation, finishing, polishing; 19 CFR 134.1; HQ 080139

Dear Mr. Bowen:

This is in response to your letter dated March 25, 1991, on behalf of your client, Okura & Co. (America) Inc. (Okura), regarding the country of origin of mirror-polished stainless steel, processed in Japan and Singapore. At the time the request was made, stainless steel sheet produced in Japan was subject to the steel voluntary restraint agreements. Although these agreements are no longer in effect, you have advised that you still would like a ruling in this matter. We have received a sample of a sheet of stainless steel with a 2B finish and a sheet of stainless steel which has been polished to a No. 8 mirror finish for our consideration. This case was referred to the National Import Specialist for steel products for her comments. You have also requested that certain information in the ruling be given confidential treatment. The confidential information is bracketed and will not be disclosed in copies of this ruling made available to the public. We regret the delay in responding to your request.


AISI Grade 304 cold-rolled stainless steel sheet with either a No. 2B finish or a BA finish is produced in Japan and sent to Nippon Metal Services (NIMS) in Singapore, where it is polished to a No. 8 mirror surface finish. The descriptive literature from NIMS indicates that the mirror finish Grade 304 stainless steel sheet ranges in thickness from 0.8 to 3.0 mm, with a width of less than 1524 mm, and in lengths of less than 8000 mm.

Although you have submitted no information regarding what is involved in making the stainless steel in Japan, the National Import Specialist for steel products, provided us with the following information: stainless steels contain at least 10 percent chromium, with or without the addition of other elements, and have a principal use in applications requiring resistance to oxidation and/or corrosion. Type 304 stainless steel falls within that group of steels known as austenitic stainless steel. Because stainless steels are sensitive to thermal and mechanical operations, the control of which is complicated by the varying effects of different chemical combinations, they require care during fabrication. The production of stainless steel, therefore, requires exacting steel making practices. Stainless steel sheets are produced from semifinished slabs. The slabs are surface conditioned by grinding or turning. Sheets produced on continuous mills from slabs are rolled into coils and are further processed by annealing (heat treating), descaling and cold reducing to a specified thickness. They are then further annealed and descaled. Coils or lengths cut from coils may then be subject to light cold-rolling for a finish on dull or bright rolls.

The making of the stainless steels begins with the particular type of melting methods used for stainless steels and proceeds through the semifinished stage, the hot-rolled stage and through to the cold-rolled stage. Great care is taken to preserve a good surface during the heating, cleaning, and rolling processes so that the final surface will have good stainless quality. During the cold-rolling stage, the required thickness and strength is achieved. A "skin pass" between highly polished rolls produces one of the more frequently used rolled surfaces.

You contend that converting the sheets of stainless steel with a 2B or BA finish into the stainless steel sheets with a No. 8 finish is a multi-step process, which involves a great deal of skilled labor and is also very capital intensive. You describe the processing as follows: the first step in this processing is a raw material inspection in which the stainless steel sheets are thoroughly checked for surface defects such as scratches, pits, streak flaws, and chatter marks. Taper gauges and various other instruments are used in this inspection because visual inspection only reveals prominent surface defects. The edges of the sheet of stainless steel are then deburred with a mechanical disk grinder to remove roughened ridges caused during the cutting of the sheet.

In the next step, the surface of the 2B sheets is ground off with three types of stones which have a progressively lower level of abrasion. A total of 14 polishing passes are involved in this step. The edges and whole surfaces are passed separately three times each through stone grit No. 400. The edges and whole surfaces are then passed twice each through stone grits No. 800 and No. 1500. The thickness of the sheets are reduced by the multiple passes used in this stage. This step is accomplished through a unique "wet polishing" process not believed to be available in the United States. Specifically, water is continuously injected onto the surface of the raw material to prevent excessive heat generation and to rinse away abrasive metal chips and particles that may scratch the surface.

An intermediate inspection is then conducted to ensure that any correctable surface impairments discovered in the original examination have been corrected; and to determine whether the use of the abrasive stone resulted in new scratches or other flaws.

Removing the surface with the abrasive stones leaves a rough marred pattern on the new surface. This is corrected by black wool felt polishers treated with an abrasive chemical compound. The whole surface of both sheets undergoes two passes during this step, which takes ten minutes. This procedure is accomplished by a wet polishing technique in which water, nitric acid and aluminum oxide particles are continuously injected between the polisher and the material. Again the water reduces friction and prevents a heat reaction that activates the material surface. Surface activation readies the material for finer polishing that is required for the No. 8 finish. Aluminum oxide particles are required in the No. 8 finish.

The steel is next polished to a semi-finished surface using white wool felt treated with a less abrasive chemical compound. Seventeen passes and 50 minutes are required for this step. It is during this stage that the stainless steel begins to take on its glossy mirror-like finish. The wet polishing process using water, nitric acid, and aluminum oxide particles is repeated during this step. This is followed by a second intermediate inspection to detect fine defects such as seams, fine pits, and scratches. The surface is then glossed to a No. 8 mirror finish with a specially made rubber sheet designed for this process. A third intermediate inspection is conducted to ensure that there are no defects. This is followed by another inspection by a team leader. The product is next laminated with PVC strips to protect its mirror finish from corrosion, fading, scratching and damage during storage, shipment, and machining in the U.S. to the end use. The majority of the No. 8 finish sheets are covered with two laminated strips. The sheet is cut and packaged for export.

It takes a minimum of 161 minutes to put the No. 8. mirror polished finish on the stainless steel sheets with the 2B finish and 105 minutes to put the No. 8 polished finish on the stainless steel sheets with the BA finish. All of the machinery used during this processing is used exclusively in the production of the No. 8 mirrored surface stainless steel sheet imported by Okura and is not capable of producing any other type of finish. There are no high productivity methods available. NIMS purchases the 2B and BA stainless steel sheets for [$ ] per metric ton and sells the finished No. 8 sheets to Okura for [$ ] per metric ton, which equals about a [ ] increase in the cost. The product is then sold in the U.S. to ultimate purchasers for a higher price. The processing of the sheets of stainless steel results in a change of tariff classification from a "non-further worked" category to a "further worked" category under the Harmonized Tariff Schedule of the United States for steel production operations of substantial magnitude.

AISI Steel Products Manual, Stainless and Heat Resisting Steels, December, 1974 (including Supplementary Information, March, 1979), indicates that the No. 8 finish is one of several polished finishes that can be applied to stainless steel. It is the most reflective finish that is commonly produced. It is free of grit lines, and it is widely used for press plates, as well as small mirrors and reflectors. We have also reviewed the samples and note that the sample stainless steel sheet with the No. 8 finish is highly reflective with a mirror like appearance. The sample stainless sheet with the 2B finish also is somewhat reflective, but it is much duller than the No. 8 finish and is not as smooth and could not be said to be a mirror.


Are the sheets of stainless steel with a BA or 2B finish substantially transformed by the processing done in Singapore which applies a No. 8 mirror polished finish to the stainless steel sheets?


Country of origin means the country of manufacture, production, or growth of any article of foreign origin entering the U.S. (19 CFR 134.1). A commodity's country of origin for U.S. tariff purposes is the country in which the last substantial transformation took place. A substantial transformation occurs when, as a result of processing, a new article of commerce is created. In Uniroyal, Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026, aff'd 1 Fed. Cir 21, 702 F.2d 1022 (1983), the Court of International Trade emphasized two factors for determining when an article was substantially transformed. One, a substantial transformation occurs when an article has a name, character or use different than that possessed by the article as it originally entered the country. Two, a substantial transformation will not result from manufacturing or combining processes that are in minor nature and leave the identity of the imported article intact. A comparison of the processing performed in the various countries is also pertinent.

In HQ 080139, May 28, 1987, Customs ruled that the polishing of stainless steel was a minor processing operation which did not substantially transform the article because the identity of the material was not altered. Counsel for the importer contends that the processing completed in this case should not be considered ordinary polishing because of the extensive and complex processing involved in applying the No. 8 finish. In this case, sheets of stainless steel are exported from Japan into Singapore where they are given the mirror polished finish. Although the processing may be complex involving considerable time, skill, and complicated machines, the basic character of the stainless steel does not change. The commodity is still a sheet of stainless steel. The Court of International Trade has stated in National Hand Tool Corp. v. United States, Slip Op. 92-61, April 27, 1992, that character is defined:

"as one of the essential of structure, form materials or function that together make up and us[ually] distinguish the individual." Webster's Third New International Dictionary (1981).

The importer has not shown that the underlying chemical, physical, and mechanical properties or structure of the stainless steel was changed by the polishing operation in Singapore. Although the article does have a somewhat different appearance, it is only a change in its surface. The article remains a sheet of stainless steel. We have carefully reviewed the samples submitted and note that the major difference in appearance between the 2B and No. 8 stainless steel is a matter of degree. The 2B sample also is somewhat reflective but is much duller than No. 8 finish. The effect of the No. 8 finish is just an alteration of the veneer of the stainless steel sheet. Such cosmetic changes in metal products are generally not considered significant in light of predetermined qualities and specifications of the stainless steel sheets. See Superior Wire v. United States 11 CIT 608, 669 F.Supp. 472, aff'd, 7 Fed.Cir. 431, 867 F.2d 1409 (1989). We also note that there is no change in the shape or form of the sheets of stainless steel.

Although there might be a change in the use of the stainless steel sheets, it is not the kind of change in use that would establish that the product was substantially transformed. The use of the stainless steel is changed only to a minor degree. Both before and after polishing, the stainless steel can perform the same physical function. Although buyers of the No. 8 stainless steel sheet may buy it partly for its reflective properties and its appearance, the buyers are also purchasing it for the other inherent properties of the stainless steel. This is illustrated by the fact that if customers only wanted a reflective surface, they could buy other reflective products such as mirrored glass. They are also buying the product because of the other attributes of the stainless steel. The finish is only one of several factors used in ordering stainless steel. These other factors include the grade, condition (hot-rolled, cold- rolled, etc.) dimensions, form (plate, sheet, and strip). The grade of steel is especially significant because it relates to the durability of the product.

It is contended that the No. 8 stainless steel has very limited specialized use by architects on the front of buildings and that it is too expensive to be used in another way. There has been no showing that BA or 2B stainless steel could not be used in the same way except that architects and builders find the No. 8 finished stainless steel to be more aesthetically pleasing. However, the polishing does not change the functional capability of the stainless steel. In other words the products can be used interchangeably, and grade 304 stainless steel can be put to the same structural function whether it has a 2B, BA or No. 8 finish applied to it. We cannot accept that because there is a particular aesthetic preference for the No. 8 finish, there is a change in use. Under such a view any finishing or cosmetic change in the appearance of an article which creates an aesthetic preference would amount to a change in use for substantial transformation purposes.

We note that in a brochure submitted by the importer, the product is described as stainless steel for construction that can be given different exterior finishes such as mirror finish, chemicolor, etching art, gp finish, and desta. The main use of this product remains that of sheets of stainless steel for construction. Putting on the No. 8 finish on the sheets of stainless steel is only an enhancement of an already commercially identifiable product.

There is also no real change in the name of the article. The article will primarily be called a sheet of stainless steel. The fact that it has a mirror polish finish applied to it does not change the name of the article any more than changing the color of an article would.

Counsel also deals at length about the complexity of the polishing process, and the increase in the value of the product to establish it is substantially transformed. Although the processing may be complex and add significant value, these are secondary criteria which are not dispositive of a substantial transformation. See C.S.D. 91-7 (no substantial transformation of jewelry as a result of electroplating despite added value.) See also HQ 733604 February 15, 1991 (complexity of the processing is a factor to consider but not determinative as to whether replacement automotive glass was substantially transformed when it was installed). Moreover, the processing involved in polishing the steel in Singapore is far less involved than the making of the cold rolled stainless steel in Japan. See Uniroyal Inc. v. United States, supra

Likewise, a change in a tariff classification, while supportive of a substantial transformation does not itself demonstrate that the processing has resulted in a substantial transformation. See Belcrest Linens v. United States, 6 CIT 204 ---F.Supp. (1983), aff'd, 2 Fed.Cir. 105, 741 F.2d 1368 (1984), concerning the change in tariff classification consideration.

Accordingly, despite the complex processing that may have been done to the 2B and BA finished stainless steel sheets to put on the No. 8 mirror polished finish, the products do not lose their identity and remain sheets of stainless steel. There has been no distinctive change in name, character, or use of the product. Therefore, we find that the grade 304 sheets of stainless steel are not substantially transformed by the processing in Singapore and their country of origin is Japan.


The processing in Singapore of putting a No. 8 mirror polish finish on sheets of grade on 304 stainless steel with a 2B or a BA finish is not a substantial transformation. The country of origin of the stainless steel sheet is Japan.


John Durant, Director
Commercial Rulings Division

cc: Area Director
New York Seaport
Att: NIS Division
Paula Illardi