CLA-2-84:OT:RR:NC:N1:104
Andrew Bisbas
Lowenstein Sandler
220 Pennsylvania Avenue
Washington, DC 20037
RE: The country of origin of a ratchet handle
Dear Mr. Bisbas:
In your letter dated July 13, 2020, you requested a country of origin ruling on behalf of your client, Tractor Supply Company.
The subject ratchet handle is a hand tool composed of a long handle/neck with a circular ratcheting head that is used to tighten fasteners. The tool’s ratcheting head fits onto fasteners via ratchet handle socket attachments of various sizes that are not imported with this product or included with this product when it is sold (the sockets are bought separately and used in association with the ratchet handle). When the tool’s ratcheting head (with socket) is attached to a fastener and the tool is grasped by the handle and turned in one direction it turns freely, and when it is turned in the other direction, it engages to tighten the fastener.
The applicable subheading for the ratchet handle will be 8466.10.0175, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Parts and accessories suitable for use solely or principally with the machines of headings 8456 to 8465, including work or tool holders, self-opening dieheads, dividing heads and other special attachments for the machines; tool holders for any type of tool for working in the hand: Tool holders and self-opening dieheads: Other”. The rate of duty will be 3.9 percent ad valorem.
You indicate that the cut, steel bar is sourced from China and then shipped to South Korea, where it will be forged into the final shape of the ratchet handle, including its handle/neck and circular head. Then the ratchet handle is sent to China where it is further machined, heat-treated, plated, and where China-origin steel components are added to the head to complete the ratcheting mechanism.
With regard to your request for the appropriate country of origin of the ratchet handle, 19 C.F.R. § 134.1(b) provides in pertinent part as follows:
Country of origin means 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 this part;
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character and use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character, and use has been produced. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation.
In this instance, it is this office’s opinion that the ratchet handle’s manufacturing operations in South Korea provide the essence of the ratchet handle. The forged ratchet handle is dedicated for use as a ratchet handle upon export from South Korea. Based on the provided description of the assembly and processing operations performed in China, the ratchet handle is not substantially changed by the addition of the remaining components nor are the assembly operations complex enough so as to transform the ratchet handle into a new article. It is not substantially changed by the addition of the Chinese fabrications or the minor assembly operations performed in China. In view of these facts, the country of origin is South Korea.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 Denise Hopkins at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division