CLA-2:OT:RR:NC:N1:116
Mr. Scott Fine
Fab-Tech, Inc.
480 Hercules Drive
Colchester, VT 05446
RE: The country of origin and marking determination of steel duct elbows
Dear Mr. Fine:
In your letter dated February 24, 2020, you requested a country of origin and marking determination of steel duct elbows from China.
The product under consideration is described as a corrosion resistant steel duct elbow. In its condition as imported into the United States (U.S.), you have stated the raw elbow is classified under subheading 7307.29.0090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: other, of stainless steel: other: other.
According to your submission, the raw steel elbow is imported from China. In the U.S. an eleven step process that includes coating and testing is performed resulting in a corrosion-resistant elbow as the final product. The first step is to blast the interior surface of the elbow to increase the adherence of the coating material. The elbow is then washed and dried. Next the elbow is coated, cured, inspected, and sanded for a specified number of times. If needed, additional coatings are applied until Fab-Tech’s thickness requirements are met. The coating does not change the chemistry of the elbow. The elbows are then tested for quality. Once the quality inspections are complete, the elbow is packaged together with installation hardware and gaskets of various origin for final sale to the customer.
You have suggested that the finished elbow is a U.S. origin product because the raw elbow is substantially transformed as a result of complex U.S. processing. You have provided the manufacturing process that takes place in the U.S., as well as the cost of all manufacturing processes in both China and the U.S. You have also suggested that because the imported components are substantially transformed in the U.S., that Fab-Tech is the ultimate purchaser and that the imported goods are exempt from marking requirements with only the outermost container marked with the appropriate country of origin.
Section 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 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 Part 134. A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. An imported article is not a product of a country unless it has been substantially transformed there into a new and different article of commerce with a name, character, or use different from that of the article or articles from which it was transformed.
In HQ 558847, rigid steel conduits manufactured in Korea are shipped to Saudi Arabia where they undergo a coating operation of polyvinyl chloride to allow the conduits to be used in hazardous sites. The ruling found that the coating process performed in Saudi Arabia does not substantially transform the steel conduits and fittings into a product of Saudi Arabia. Instead, it found the coating operation to be a finishing operation which does not result in a change in the name, character or use of the steel conduits or fittings.
Also, in HQ 733579, pots and pans were imported from Venezuela to be further manufactured and finished by operations of deburring, polishing, painting, coating with a non-stick surface, and attaching handles in the U.S. The ruling found that the U.S. operations did not substantially transform the pots and pans into articles with a new name, character, or use. The only change in character took place as a result of the coating of the surface of the already formed pot or pan, and that, while a non-stick pan may be more convenient to clean, it still retains its use as a cooking implement.
The product is imported as a steel duct elbow and after the U.S. operations it remains a steel duct elbow. Like the pots and pans in HQ 733579 and the conduits in HQ 558847, the only change in character takes place as a result of the coating of the surface of an already formed steel duct elbow. The U.S. processing does not change its function as a duct elbow. Therefore, we find a substantial transformation does not occur with the processing done in the U.S. The country of origin of the duct elbows is China.
You have also inquired as to the country of origin marking for the steel duct elbows. 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. The marking will be 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 Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. In general, as provided at 19 C.F.R. 134.1, the country of origin of an article is the country in which it was manufactured, produced, or grown. Additional processing, manufacture, 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. See 19 C.F.R. § 134.1(b). We found a substantial transformation did not occur with the processing done in the U.S., therefore we find that the steel duct elbow should be marked with a phrase that indicates its country of origin is China. This marking must be conspicuously, legibly and permanently marked in satisfaction of the marking requirements of 19 U.S.C. § 1304 and 19 C.F.R. Part 134.
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 Angelia Amerson at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division