CLA-2 RR:TC:SM W559422 MLR
Mr. William Westhusing
Ms. Paula Westhusing
The Alaska Souvenir Company
2000 E. Dowling Road, #15
Anchorage, Alaska 99507-1956
RE: Country of Origin Marking on Ulu knife; Blade; Handle; Substantial Transformation; Made in Alaska; HRL 559366; 19 CFR 134.46
Dear Mr. and Ms. Westhusing:
This is in reference to your letter of September 6, 1995, requesting a reconsideration of Headquarters Ruling Letter (HRL) 559366 dated August 29, 1995, which concerned the country of origin marking for ulu knives. Samples of blades and handles were submitted with your request and a meeting was held at the Office of Regulations and Rulings.
FACTS:
HRL 559366 is herein incorporated by reference; however, the pertinent facts are as follows: The good at issue is an ulu knife consisting of a semi-circular blade and a handle. The term “ulu” is stated to mean “Alaska.” The ulu knife may be used in the kitchen for culinary and cutlery purposes, and some of the knives are sold with chopping boards. It is also stated that the ulu knife is a collector’s item, and some of the knives are sold with display stands.
There are three basic types of ulu knives, all of which are made from imported blades. The first two types of ulu knives considered in HRL 559366 consist of blades with two pre-drilled holes and a U-shape form on the top of the blade which create a hole in the center of the knife when the handle is attached. In the U.S., the blades are secured to handles measuring approximately 4 ½ inches, which are made out of Alaskan birch, maple, or walnut wood, or from Corian. These materials are milled into the form of a handle, after which they are sanded, bored, oiled, and dried on racks. Some of the handles are inlaid with designs such as a fish. In the U.S., some of the blades, whether attached to plain or inlaid handles, are acid etched with designs, cured, honed, and polished. One of the blades submitted is etched with an airplane and the word “Alaska,” and another depicts landscape scenery of Anchorage, Alaska. The third type of ulu knife consists of a blade formed in a triangular shape. The samples of these ulu knives all have inlaid handles measuring approximately 3 inches.
The retail packaging submitted contains the words “Alaskan Ulu Knife [measuring approximately ½ inch], the historic utility knife of the arctic [measuring approximately 3/16 inch].” The packaging also contains the symbol of a polar bear with “Made in Alaska” [measuring approximately 2/16 inch] below this symbol. Immediately beside this symbol, a sticker is affixed with the marking “Blade made in Japan” [measuring approximately 2/16 inch]. On one side flap of the retail packaging the following words are printed: “A genuine Alaskan artifact and collector’s item manufactured in Alaska. Pac-West, Inc.-Anchorage, Alaska.” Beside these words, there is a sticker with the words “Blade made in Japan” in a comparable size.
ISSUE:
What are the country of origin marking requirements of the ulu knives?
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. 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 CFR Part 134) implements the country of origin marking requirements and 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 transformation in order to render such other country the “country of origin” within the meaning of the marking laws and regulations.
For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. If such substantial transformation occurs, then the manufacturer is the “ultimate purchaser" of the imported article, and the article is excepted from marking and only the outermost container is required to be marked. See 19 CFR 134.35. On the other hand, 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 and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 1029 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).
In HRL 559366, we considered HRL 735181 dated May 17, 1994, where ulu knives were made from imported blades and handles manufactured in the U.S. In HRL 735181, the imported blades were polished, embellished with a depiction of a mountain and the words “Mt. McKinley,” and sharpened, after which they were affixed to U.S.-origin handles containing no design and measuring 4 ½ inches. In HRL 735181, Customs analyzed HRL 732057 dated April 16, 1990 (where Customs determined that the attachment of circular knife blades to handles of a rotary cutting instrument did not constitute a substantial transformation) and HRL 709090 dated June 19, 1978 (where Customs found that a manufacturer who completes a kitchen knife in the U.S. by riveting the imported knife blades to handles and grinding the blade would be the ultimate purchaser of the imported knife blade stubs). Following HRL 732057, Customs determined that since the ulu knives are utility knives, they were required to be marked with their country of origin because the blades were not substantially transformed in the U.S. Furthermore, it was noted that the marking “Made in Alaska” on the retail packaging may violate the laws of the Federal Trade Commission.
In reaching the conclusion in HRL 709090, Customs reviewed ORR Ruling 163-69 dated May 6, 1969, which found that the mere assembly of imported kitchen shanks containing drilled holes to receive a domestic handle did not constitute a substantial transformation, and File RM 363.2 W dated January 29, 1965, which held that the manufacturer of knives in the U.S. using imported cutlery stubs was considered the ultimate purchaser of the imported stubs.
In reaching the conclusion in HRL 732057 that the circular knife blade did not lose its separate identity when it was combined to a domestic handle of a rotary cutting instrument, Customs considered six factors:
1) whether the article is completely finished;
2) the extent of the manufacturing process of combining the article with its counterparts as compared with the manufacturing of the subject article;
3) whether the article is permanently attached to its counterparts;
4) the overall importance of the article to the finished product;
5) whether the article is functionally necessary to the operation of the finished article, or whether it is an accessory which retains its independent function; and
6) whether the article remains visible after the combining.
These factors are not exclusive and there may be other factors relevant to a particular case and no one factor is determinative. Consequently, in finding no substantial transformation of the blade, Customs determined that the circular knife blade was a finished product, the attachment of the blade to the handle was not an extensive process when compared to the amount of processing involved in producing the blade itself, the blade was easily replaced, and the blade was absolutely necessary to the operation of the rotary cutting instrument.
In HRL 720065 dated October 21, 1982, Customs considered raw knife blade blanks. The blank required molded or slab handles, rivets, finish shaping, and sharpening. All parts added to the blade were manufactured in the U.S. It was held that the additional work performed on the raw knife blade constituted a substantial transformation. Customs has also determined that U.S.-made knife blade blanks and wooden or plastic handles and rivets shipped to Mexico where they were assembled together and the blade was sharpened did not constitute a substantial transformation as the assembly of the parts into a finished knife was a minor operation. See HRL 733301 dated August 8, 1990. Finally, in HRL 735470 dated November 16, 1994, Customs determined that imported components of a sword, i.e., blade, handle, scabbard and hilt were not substantially transformed after assembly, polishing, and plating operations. While each component became an essential part of a completed sword, each component was still referred to by its respective name after assembly. Additionally, the use of the imported components was predetermined at the time of importation, and the overall shape, form, and size of the finished sword was essentially the same as the imported unassembled sword parts.
In reconsidering HRL 559366, it appears that the distinction between finding a substantial transformation or not in the rulings cited above was the condition in which the blades were imported. In HRL 709090, HRL 720065, and File RM 363.2, it appears that the imported blades required finish shaping, sharpening, and rivets in order to be assembled with handles; whereas in HRL 733301, HRL 732057, HRL 735181, and ORR Ruling 163- 69, the blades contained pre-drilled holes so that they were ready for assembly with handles upon importation, and only some required sharpening. It is also noted that in all of the rulings cited above, the blades were attached to plain handles.
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 ruled on the amount and kind of further processing required to substantially transform tools. In National Hand Tool, hand tool components, cold-formed or hot forged into their final shape, were imported into the U.S. where they were used to produce flex sockets, speeder handles, and flex handles. In the U.S., the speeder handles were reshaped by a power press, the grip of the flex handles were knurled, the articles were subjected to a heat treatment which strengthened the surface of the steel, and they were cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components required some assembly. Although the court stated that a predetermined use would not preclude the finding of a substantial transformation, which must be based on the totality of the evidence, no substantial change in name, character or use was found. The court discounted plaintiff's argument that a substantial transformation should be found based on the value of the processing performed in the U.S., but decided the issue based solely on the criteria of name, character, and use.
Based upon National Hand Tool, we affirm our decision in HRL 559366 that the ulu knives are not substantially transformed in the U.S. It is clear that the function of the imported blades is for cutting. While we note that the ulu knives made with the larger U-shaped blades are more suitable for cutting than the ulu knives made with the triangular-shaped blades because the 4 ½ handles fit more comfortably in the hand; and while the ulu knives with the triangular-shaped blades, etched blades, or inlaid handles may be more suitable as collector’s items, both types of blades are already imported with pre-drilled holes so that they are ready for assembly with a handle. Furthermore, neither the etching of the blade nor the decoration in the handle diminishes the ulu knife’s use as a cutting tool. The addition of the Alaskan-made handle clearly adds value to the blade. However, the blade’s use as a cutting tool is not changed by the etching or addition of a decorated handle; the blade’s character is not changed as the shape and holes are already present at the time of importation and only a minimal amount of sharpening is performed in the U.S. which leaves the blade’s identity intact; and although the assembly of the blade with a handle results in a knife, the blade is still referred to as a blade after assembly. Accordingly, it is our determination that it would be misleading not to require the ulu knife to be marked when the very essence of the ulu knife is imparted by the blade which performs the cutting function of the knife.
The retail container contains the references “Alaskan Ulu Knife...,” “Made in Alaska,” and “A genuine Alaskan artifact and collector’s item manufactured in Alaska. Pac-West, Inc.-Anchorage, Alaska.” Documentation regarding the “Made in Alaska” program is submitted. It states that “a finished product that is only partially manufactured within the state may be authorized to use the MADE IN ALASKA emblem if: ... the majority of the value-added processes are accomplished in the state.” The doctrine of preemption, adopted by the U.S. Supreme Court, holds that certain matters are of such a national, as opposed to local, character that federal laws preempt or take precedence over state laws. See M'Culloch v. Maryland, 17 U.S. 316 (1819). Thus, a federal regulation can render an inconsistent state law ineffective. Id. See also English v. G.E. Co., 496 U.S. 72, 78-9 (1989) .
Customs has recognized that the presence of a geographic location other than the country in which the article was produced on an imported article or its container may mislead the ultimate purchaser as to the true country of origin. Therefore, in cases where the name of a location in the U.S. or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appears on an imported article or its container, 19 CFR 134.46 provides that there shall appear, legibly and permanently, in close proximity to such words, letters, or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” “Product of,” or other words of similar meaning. Customs has ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. The purpose of this section is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the actual origin of the imported good.
In this case, it is our opinion that the words “Made in Alaska,” “Alaskan Ulu Knife, ” and “A genuine Alaskan artifact and collector’s item manufactured in Alaska. Pac-West, Inc.-Anchorage, Alaska” will mislead the ultimate purchaser into believing that the ulu knife is made in the U.S.A. Therefore, the word “Handle” will be required before “Made in Alaska,” and the sticker with the marking “Knife made in Japan” or just “Made in Japan” will be required to be placed in a comparable size immediately beside the “Handle Made in Alaska” marking. Since the “Made in Japan” sticker will be on the same panel as “Alaskan Ulu Knife,” the requirements of 19 CFR 134.46 will be satisfied. Furthermore, the marking on the side panel of the retail container must be changed because the artifact is not manufactured in Alaska. Rather, in addition to the sticker “Knife made in Japan,” the word “manufactured” could be changed to “assembled,” or the statement should only refer to the handle. Once these changes are made, Customs will be satisfied that the requirements of 19 U.S.C. 1304 are met.
HOLDING:
Based upon the information provided, it is our opinion that the imported blades are not substantially transformed in the U.S. Therefore, the retail container must be clearly marked to indicate to the ultimate purchaser the country of origin of the ulu knives. The word “Handle” will be required before “Made in Alaska,” and the sticker with the marking “Knife made in Japan” or “Made in Japan” will be required to be placed in a comparable size immediately beside the “Handle Made in Alaska” marking. Furthermore, the marking on the side panel of the retail container must be changed because the artifact is not manufactured in Alaska.
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 Customs officer handling the transaction.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division