CLA-2-90:OT:RR:NC:1:135
Ms. Orisia K. Gammell
Arent Fox LLP
1717 K Street, NW
Washington, DC 20006
RE: The country of origin of a surgical power tool
Dear Ms. Gammell:
In your letter dated April 3, 2018, on behalf of Stryker Corporation, you requested a country of origin ruling of a surgical power tool.
The product at issue is a hand-held surgical power tool used in large bone surgery and is fully assembled in the United States from domestic and foreign components. Major components of the product are of U.S. origin and identified as shaft, clutch, handle, rotary housing, and motor housing. The origin of over 100 other components is unknown. For the purpose of this ruling, we presume that the imported components are from non-NAFTA (the North American Free Trade Agreement) countries.
You explain that the assembly production of the surgical power tool starts with over 100 individual components. The components are generally assembled into four subassemblies: the drivetrain subassembly, [xx] subassembly, front end rotary subassembly, and motor subassembly. Many of individual components require assembly into lower lever subassemblies first before integration into one of the four subassemblies (“top level subassemblies”). The drivetrain subassembly was provided as an example. It is assembled from four lower level subassemblies: the spindle, rotary housing, clutch bearing housing, and output coupler. Each of these lower level subassemblies is made from various individual components. For instance, the spindle subassembly requires assembly with bearings, springs, and washers, among other components before it can be assembled with the rotary housing subassembly (“lower level subassembly”). Likewise, the rotary housing subassembly needs assembly with bearings and rings before it can be integrated with the spindle subassembly (“lower level subassembly”).
At the final assembly, the motor controller is wired to the motor and the wires are soldered to the batter plate, and additional components, including a yoke housing, rotating collar, cannula, actuating pin, front ring nut, o-rings, decorative screws, a shrink tube, and kapton tube are assembled into the other subassemblies to complete the assembly of the tool. All of these assembly processes are arranged into eight stations, taking approximately 90 minutes and over 100 individual steps to complete the hand held tool. During the assembly process, die sets, installation fixtures, and other machinery are utilized. After the tool is completely assembled, it is also programmed with domestic software to enable integration with compatible components that analyze the device’s performance data in order to facilitate optimal usage during surgery.
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, CBP Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304.
Section 134.1(b) of the regulations, 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 this Part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
A substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). The issue of whether a substantial transformation occurs is determined on a case by case basis. See HQ 561353, dated September 19, 2002.
Under the described assembly process, the foreign components lost their individual identities and became an integral part of the surgical power tool possessing a new name, character and use. The country of origin of the surgical power tool is the United States. Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC directly.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Fei Chen at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division