CLA-2-82:OT:RR:NC:N1:118
Mr. John A. Bessich
33 Walt Whitman Road
Suite 310
Huntington Station, NY 11746
RE: The tariff classification and country of origin of a Twist Drill Bit
Dear Mr. Bessich:
In your letter dated March 10, 2021, on behalf of your client, Stanley Black & Decker, Inc., you requested a tariff classification and country of origin ruling.
The merchandise under consideration is a twist drill bit that will be imported into the United States in various sizes, from 1/16" to 1/2", and made with either round or flat-sided (e.g., hex) shanks. The bit is made of high-speed steel alloy, with cutting parts incorporating by weight more than 0.2% molybdenum and tungsten. The shank of the drill bit will be either a round shank or a flat-sided shank (e.g., a hex shank, which incorporates six identical flat sides in order to be more securely gripped during use). You have stated that the bit will be available in various point styles. Twist drill bits are interchangeable tools which are characterized by spiral grooves or flutes cut lengthwise into and around one end of a cylindrical steel shaft or rod. The bits are designed for use with a power hand drill, drill press, or other rotating action tools.
The applicable subheading for the twist drill bit will be 8207.50.2055, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Interchangeable tools for hand tools, whether or not power operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof: Tools for drilling, other than for rock drilling, and parts thereof: With cutting part containing by weight over 0.2 percent of chromium, molybdenum, or tungsten or over 0.1 percent of vanadium: Twist drills: Other. The general rate of duty will be 5 percent ad valorem.
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.
You also requested a country of origin determination for the twist drill bit. The production of the twist drill bit involves several processing steps undertaken in several countries, including China and Germany or Thailand. The manufacturing process begins with raw material consisting of long, high-speed steel rod that is sourced in China. Tool blanks are then cut from the steel rod and subjected to heat treatment in order to harden the blanks. This is followed by grinding the blank to remove any scale which forms on the blanks during the heat treatment process. After this grinding step, the cylindrical blanks are shipped from China to either Thailand or Germany. In either of these countries, the spiral flutes or grooves along one end of the blank will be machine-grinded into the cylindrical blanks. During the grinding of the flutes, a rough tip is also created in the twist drill bit. Although it is not finished, the bit will be capable of drilling material.
Additional finishing steps are also undertaken in the second country to which the drill bit is shipped (i.e., Thailand or Germany), or in China after being returned there for such purpose. The finishing steps performed in Thailand, Germany or China include clearance grinding of the angle behind the cutting edge of the drill bit, precise grinding of the twist drill diameter, and tip sharpening. Optionally, there may be an additional machining step in order to reduce the diameter of the round shank portion or to form flats in the shank (e.g., hex shank), or to add a separate hex shank end by bonding it to the twist drill bit. A coating (e.g., black oxide) or surface treatment (e.g., polishing) may also be applied to the finished twist drill to improve performance. Finally, the drill bit is marked with a brand name and/or size and covered with oil to protect the drill bit during shipping.
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 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;”
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. A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940); and National Juice Products Association v. United States, 628 F. Supp. 978 (Ct. Int’l Trade 1986).
It is our view that the country of origin of the twist drill bit is the country in which the spiral flutes are formed in the tool blank, thereby creating the tool identified as a twist drill bit. The spiral flutes of the twist drill are the product of grinding that takes place solely in Germany or Thailand. It is the grinding of the characteristic twist drill flutes in Germany or Thailand that establishes the identity of the tool as a twist drill bit. We also note that during the grinding of the flutes, a rough tip is created in the twist drill bit. It is therefore the opinion of this office that, for tariff and duty purposes, the country of origin for the twist drill bit is Germany or Thailand, dependent on where the spiral flutes are machine grinded.
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, National Import Specialist Anthony E. Grossi at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division