OT:RR:CTF:FTM H305966 TJS
Ms. Christi Roos
Mallory Alexander International Logistics
P.O. Box 30209
4294 Swinnea Rd
Memphis, TN 38118
RE: Country of Origin Marking; Screwdrivers; Substantial Transformation
Dear Ms. Roos,
This is in response to your request for a binding ruling, dated September 23, 2019, and submitted on behalf of your client, GreatNeck, concerning the country of origin of certain screwdrivers identified as the GreatNeck 6-in-1 Screwdriver (SKU SD4B). Your request was forwarded to this office by the National Commodity Specialist Division for review. Our ruling is set forth below.
FACTS:
The subject screwdriver, the GreatNeck 6-in-1 Screwdriver (SKU SD4B), is a multifunctional hand tool used for tightening and loosening screws and nuts. The GreatNeck Screwdriver set includes a plastic handle, a tubular steel shaft, and two double-ended bits each including a slotted head (1/4 inch or 3/16 inch) and a Phillips head (#1 or #2). The shaft has openings at each end into which the interchangeable screwdriver bits may be inserted. Additionally, each end of the shaft can be used as a nut driver (1/4 inch and 5/16 inch) without a bit. When not in use, one bit can be stored in the handle for easy accessibility. The tool measures approximately 7.5 inches in length.
According to your submission, the shaft and collar are manufactured from raw steel in China and then shipped in bulk to Taiwan. In Taiwan, the bits are manufactured and the handle is produced from acetate plastic during an injection molding process. The Chinese-origin collar is pressed into the handle. A bit is inserted into the shaft, which is then inserted into the handle. The finished product is labeled, packaged, and shipped to the United States from Taiwan.
ISSUE:
What is the country of origin of the GreatNeck 6-in-1 Screwdriver?
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 C.C.P.A. 297, 302, C.A.D. 104 (1940).
The country of origin marking requirements and the exceptions of 19 U.S.C. § 1304 are set forth in Part 134, Customs Regulations (19 C.F.R. Part 134). 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 is said to have occurred when an article emerges from a manufacturing process with a name, character, and use which differs from the original material subjected to the process. United States v. Gibson Thomsen Co., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (1982).
In determining whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of the operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 C.I.T. 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one that leaves the identity of the imported article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, or use are primary considerations in such cases. No one factor is determinative.
The Court of International Trade (“CIT”) has also looked at the essential character of an article to determine whether its identity has been substantially transformed through assembly or processing. For example, in Uniroyal, Inc. v. United States, 3 C.I.T. at 225, the court held that imported shoe uppers added to an outer sole in the United States were the “very essence of the finished shoe” and thus the character of the product remained unchanged and did not undergo substantial transformation in the United States. Similarly, in National Juice Products Association v. United States, 10 C.I.T. 48, 61, 628 F. Supp. 978, 991 (1986), the court held that imported orange juice concentrate “imparts the essential character” to completed orange juice and thus was not substantially transformed into a product of the United States when blended with water, oils, and essences.
In National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the CIT determined that certain hand tool components used to make flex sockets, speeder handles, and flex handles were not substantially transformed in the United States. The components were cold-formed or hot-forged into their final shape in Taiwan prior to importation, with the exception of speeder handle bars, which were reshaped by a power press after importation, and the grips of the flex handles, which were knurled in the United States. The imported items were heat treated to strengthen the components, sand-blasted to clean the components, and electroplated to better enable the components to resist rust and corrosion. In making this determination, the court noted that the processing that occurred in the United States did not alter the name of the imported components, the character of the parts remained substantially unchanged upon the completion of such processing, and the intended use of the articles was predetermined at the time of importation. Although the court recognized that a predetermined use for imported articles does not preclude a finding of substantial transformation, the court noted that each component was intended to be incorporated in a particular finished mechanic’s hand tool. Moreover, National Hand Tool dismissed as a basis for a substantial transformation the value of the processing, stating that the substantial transformation test utilizing name, character and use criteria should generally be conclusive in country of origin marking determinations, and that such a finding must be based on the totality of the evidence.
It is your position that the country of origin is Taiwan. You assert that the essential character of the screwdriver is imparted by the bits because the finished good is not considered a screwdriver without the bits, and the bits can be used by hand without the handle and shaft. To support your argument, you claim that New York Ruling Letter (“NY”) N024981, dated March 20, 2008, states that the “blade” constitutes the essential character of the screwdriver. NY N024981 concerned the country of origin of a screwdriver of which the blade was produced in Taiwan and then shipped to China to be assembled with a handle that was manufactured in China. CBP determined that the screwdrivers did not become an article with a new name, character, or use because of the attachment of the handles in China. For marking purposes, the country of origin of the finished screwdrivers was Taiwan. We note that NY N024981 did not discuss essential character and pertained to a product that was not analogous to the GreatNeck 6-in-1 Screwdriver at issue here.
In Headquarters Ruling Letter (“HQ”) 731460, dated May 26, 1989, CBP determined that reversible screwdriver bits were not substantially transformed when imported in bulk to the United States and repackaged into sets containing screws and a cordless screwdriver. In making its determination, CBP noted that the imported article arrived in the United States in its finished form and was not modified or affixed to any other object. CBP further noted that the repackaging process was nothing more than a minor manufacturing process that did not change the character or use of the article.
Here, the shaft and collar from China and the handle and bits from Taiwan are simply assembled and packaged together in Taiwan. In Taiwan, a bit is inserted into the shaft which is then inserted into the handle to form the finished product. Without any special training or tools, the user is able to perform the same assembly of the bits, shaft, and handle that occurs in Taiwan. The finished product is designed to be easily disassembled and reassembled based on the user’s needs. For example, to tighten a Phillips screw, the user places the appropriate bit into the shaft and handle. To tighten a nut, the user removes the bit and inserts the appropriate shaft end into the handle. Additionally, the handle can be removed so the user can store the unused bit. The only component that is not removable appears to be the collar, which is simply pressed into the handle. The removable bits, shaft, and handle are merely temporarily affixed to each other in Taiwan. We find that the processes in Taiwan are not sufficiently complex and meaningful as to result in a substantial transformation, such that the components lose their individual identities.
Furthermore, we note that there are two distinct functions of the finished good. It can be used as a screwdriver to turn screws or as a nut driver to tighten nuts and bolts. Thus, while the finished good is named the “GreatNeck 6-in-1 Screwdriver,” it is in fact both a screwdriver and a nut driver. None of the individual components share the same name or meaning as a screwdriver. The interchangeable bits may be identifiable as screwdriver tips, but they alone are not identifiable as a whole screwdriver. However, the shaft, which is fully formed upon importation into Taiwan, can be identified as a nut driver, and only requires the attachment of the handle to be fully functional. Unlike the bits, the shaft is intended to be used for both functions. The consumer does not purchase the GreatNeck 6-in-1 Screwdriver solely for the bits, but for the multifunctional ability of the hand tool, which is provided by the shaft. Accordingly, we find that the shaft is the most significant component of the completed hand tool because it constitutes the final shape and core of the finished good and enables the tool to fully function. The shaft makes up the body of the finished product, distinguishing it as a hand tool. Therefore, since we find that the shaft is not substantially transformed into an article with a distinct name, character, or use by virtue of the operations in Taiwan, the country of origin of the GreatNeck 6-in-1 Screwdriver is China.
HOLDING:
Based on the facts provided, the country of origin of the GreatNeck 6-in-1 Screwdriver is China.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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,
Yuliya A. Gulis, Chief
Food, Textiles and Marking Branch