CLA-2 OT:RR:CTF:TCM H006976 KSH
TARIFF NO.
MinJoo Kim
Osstem Implant Co., Ltd.
426-5 World Meridian 8th Fl. Gasan-dong
Geumcheon-gu, Seoul, Korea
RE: Reconsideration of New York Ruling (NY) N004527, dated January 12, 2007; Country of origin marking of an Osstem Implant System.
Dear Mr. Kim:
This is in reference to your letter dated February 1, 2007, on behalf of Osstem Implant Co., Ltd., requesting reconsideration of New York Ruling Letter (NY) N004527, dated January 12, 2007, concerning the classification of an Osstem Implant System under the Harmonized Tariff Schedule of the United States (HTSUS). In NY N004527, it was determined that the country of origin marking of the Osstem Implant System was South Korea. Your request has been forwarded by the National Commodity Specialist Division in New York to this office for a response.
FACTS:
The merchandise at issue is an Osstem dental Implant System that consists of implant fixtures, screws, mounts and abutments. The implant fixtures, screws, mounts and abutments are formed by cutting and milling U.S. origin titanium bars in South Korea. The cutting and milling consists of cutting the titanium bars to size, depositing in water to remove oil, ultrasonic cleaning and inspection. The components are then shipped back to the United States where they will undergo a cleaning process which consists of, among other things, ultrasonic cleaning, flushing, drying, boiling, heat and gamma sterilizing.
The implant fixture will also be blasted and steam and air injected. The screws and abutment will also be deburred and the mounts will be anodized.
The components will also be further processed by assembling the implant fixtures, screws and mounts together, insetting the dental implant in an ampule, blister packaging and final inspection.
ISSUE:
Whether the cleaning, assembly and packing of the various imported dental implant package components in the United States constitutes a substantial transformation, thereby excepting the components from country of origin marking.
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. Part 134, Customs and Border Protection (CBP) Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. 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).
Section 134.1(b), CBP 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.
A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). 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. Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp.1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). See also C.S.D. 85-25. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis. CBP ruled in C.S.D. 80-111, dated September 24, 1979, that a ceiling fan assembled in the United States in assembly line procedures was not substantially transformed in the United States. CBP considered factors such as the nature of the assembly, the amount of skilled labor and specialized equipment involved and the cost of the assembly process.
In T.D. 74-12(3), November 1, 1973, CBP determined that the processing of fully machined components of socket wrench sets by heat treating, grinding, vibrating, polishing to remove scale or blemishes resulting from the heat treatment, plating, assembly, inspection and identification marking, does not result in a substantial transformation of the imported components within the meaning of 19 CFR 134.35. This decision was affirmed in a subsequent Headquarters Ruling Letter (HQ) 711320, dated March 6, 1981. In that case, socket blanks from Japan were to be processed in the U.S. in the following manner: removal of minor imperfection from the imported socket blanks by a grinding or wrenching process, die-stamping the blanks with an appropriate logo, a multi-step heat treatment, vibratory roto-finishing, chrome plating, and further assembly and packing. CBP determined that none of these processes substantially transformed the imported articles. In National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the Court of International Trade considered sockets and flex handles which were either cold formed or hot forged into their final shape prior to importation, speeder handles which were reshaped by a power press after importation, and the grip of flex handles which were knurled in the U.S. The imported articles were heat treated, cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components were assembled together which the court stated required some skill and dexterity. The court determined that the imported articles were not substantially transformed and that they remained products of Taiwan. In making its determination, 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 HQ 559847, dated January 2, 1997, CBP considered forceps and scissors which were hot forged into their final shape in the U.S. and exported to Pakistan. In Pakistan, the forgings underwent milling operations in which the box, rachet and jaw serrations were cut into the forceps. The milled forgings were assembled and the assembled instruments underwent grinding, filing, inspection and heat treatment, including tempering and testing for hardness. The instruments were also subjected to an acid pickling process, polishing, and chemical cleaning, final setting and adjustment operations, buffing and ultrasonic cleaning. Relying on National Hand Tool, it was held that inasmuch as the forgings resembled the shape and size of the completed instruments upon importation into Pakistan, the operations performed in Pakistan did not substantially transform the forgings into a new and different article of Pakistani origin. Therefore, the country of origin of the finished forceps and scissors was the U.S. See also HQ 558747, dated January 20, 1995.
In HQ 558881, dated March 3, 1995, we determined the assembly of a hollow wall anchor which involved screwing the imported screw into the U.S.-origin housing in the U.S. did not constitute a substantial processing of the imported component. We noted it was a simple combining operation entailing only the screwing together of two components. Additionally, the ultimate purchaser had to remove the screw from the housing before the hollow wall anchor could be placed into the wall. Although the screw was claimed to only represent 8 percent of the cost of the hollow wall anchor, we found that the screw was an important component of the hollow wall anchor, without which an object cannot be affixed to the wall.
You argue that the process of cutting the titanium bar to size and threading in South Korea does not constitute a substantial transformation because upon importation into the United States the components have no use as parts of artificial teeth and are merely titanium pieces with a burr. You maintain the titanium pieces become a dental implant after deburring, surface coating and cleaning. You state these processes constitute more than 70% of the total process.
We have considered this argument and conclude that while these processes make the components into a useable form and add value to it, they do not substantially transform the imported article into a new article with a new name, character and use. As imported, the components are the shape and size of the completed articles, are recognizable as such and remain in the same shape and size after undergoing the cleaning and packing operations in the United States. Accordingly, pursuant to National Hand Tool, we find that there is no substantial transformation of the dental implant components in the United States. Therefore, we find that the country of origin of the dental implant system is South Korea.
The fixtures, screws, mounts and abutments are types of screws and nuts. Articles of a class or kind of bolts, nuts, washers and screws are on the so-called "J" list of marking exceptions. This list is found under section 134.33, CBP Regulations (19 CFR 134.33) and provides that "[a]rticles of a class or kind listed [under this section] are excepted from the requirements of country of origin marking in accordance with the provision of section 304(a)(3)(J), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)(3)(J)). However, in the case of any article described in this list which is imported in a container, the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked to indicate the origin of its contents. ..."
19 CFR 134.25 provides that if a J-List article is intended to be repacked in new containers for sale to an ultimate purchaser after release from CBP custody, or if the port director, having custody of the article, has reason to believe that such article will be repacked after its release, the importer shall certify to the port director that: 1) if the importer does the repacking, the new container shall be marked to indicate the origin of its contents; or that 2) if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify the purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements.
Similarly, section 134.32(d), CBP Regulations (19 CFR 134.32(d)), provides an exception to the country of origin marking requirements for "[a]rticles for which the marking of the containers will reasonably indicate the origin of the articles." Articles for which the marking of the containers will reasonably indicate their origin are excepted from individual marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). This exception applies only if the article in question is imported in a properly marked container and CBP is satisfied that the article will reach the ultimate purchaser in this original marked unopened container. Relevant factors regarding whether an article is likely to remain in its original container include the chain of distribution, the type of container, and the nature of the article. When the imported article is to be repackaged and the container in which an article is to be repackaged after release from CBP custody will be marked with the article’s proper country of origin, the provisions of 19 CFR 134.34 should be used. Section 134.34, CBP Regulations (19 CFR 134.34), provides that, at the discretion of the port director, an exception from individual marking may be authorized for imported articles which are to be repacked after release from CBP custody when: (1) the containers in which the articles are repacked will indicate the origin of the articles to the ultimate purchaser in the U.S. and (2) the importer arranges for supervision of the marking of the containers by CBP officers at the importer's expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry.
The outermost container in which the dental implant package reaches the ultimate purchaser is the container into which the fixtures, mounts, screws and abutments are assembled and repackaged in the U.S. with the ampule. Accordingly, the individual components of the dental implant package can be excepted from marking provided the CBP officials at the port of importation are satisfied that the packaging in which the components will be sold to the ultimate purchaser is properly marked to indicate the country of origin of the fixtures, mounts, screws, abutments and ampule and provided the requirements of 19 CFR 134.25 and 19 CFR 134.34 are followed.
HOLDING:
NY N004527 is hereby affirmed. Based upon the information provided, the dental implant components do not undergo a substantial transformation by the processing operations performed in the United States. Therefore, the country of origin of the dental implant is South Korea. In accordance with 19 CFR 134.32(d) and 19 CFR 134.33, the individual components of the dental implant package need not be marked. The container or packaging (in this case blister wrap) in which the dental implant package is sold to the ultimate purchaser, must be marked to indicate the country of origin of the fixtures, mounts, screws, abutments and ampule and provided the port director at the port of entry is satisfied that the components of the dental implant package will be sold only in a properly marked container, and the other provisions of 19 CFR 134.25 and 19 CFR 134.34 are followed. The marking of the dental implant package “Made in the USA” is not appropriate.
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 CBP officer handling the transaction.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division