CLA-2-82:OT:RR:NC:N4:415
Mr. Andre Fiebig
Quarles & Bradley, LLP
300 North LaSalle Street
Chicago, IL 60654
RE: The country of origin of a snap-blade utility knife from China.
Dear Mr. Fiebig:
In your letter dated April 7, 2020, you requested a country of origin ruling on behalf of your client, Komelon USA Corporation.
The product under consideration is a handheld utility knife that features a replaceable disposable steel blade that is retractable into the handle through the use of a sliding control knob. The blade is perforated to allow the user to snap-off the tip once the point of the blade becomes dull. Each blade has eight perforations. After the last section of the blade is consumed, the user can insert a replacement blade into the same handle. You also indicate that the blades are sold individually and are interchangeable with other handles.
In your submission, you state the blades are produced wholly in South Korea. This includes the sourcing of the raw steel used to produce the blades, and the processing, sharpening, and perforating of this steel to achieve the cutting and snap-off abilities. The finished blades are then labeled, per the provided documentation, with “Komelon Korea.”
The finished blades are then shipped from South Korea to China. In China, the blades are inserted into the handles, which include the thermoplastic polyurethane (TPU) case, a guide, and the slide button assembly, and then packaged for shipment. The finished utility knives are then exported from China to the United States. No further processing occurs in the United States.
With regard to the appropriate country of origin marking of this utility knife, section 304, Tariff Act of 1930, as amended (19 USC 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.
Certain types of articles must be marked in a specified manner as required by 19 CFR 134.43. Knives are specifically identified in this regulatory provision as articles that must be marked legibly and conspicuously by die stamping, cast-in-the-mold lettering, etching, or engraving. However, U.S. Customs and Border Protection (CBP) has previously ruled that such articles may be excepted from individual marking if the marking of their containers will reasonably indicate the origin of the articles pursuant to 19 CFR 134.32(d). Please note, depending on how the blades/knives are packaged, “Komelon Korea” may be of concern as the name of the country of origin must be preceded by “Made in,” “Product of,” or words of similar meaning in close proximity and in comparable size print to the company name.
Pursuant to Part 134, Customs Regulations (19 CFR 134) implements the country of origin marking requirements and exceptions of 19 USC 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines “country of origin” as: “[t]he 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 National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In order to determine whether a substantial transformation occurs when components 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/manufacturing operations that are minimal will generally not result in a substantial transformation.
As part of this analysis, we must also consider the definition of a knife. As per Merriam-Webster, a knife is defined as “a cutting instrument consisting of a sharp blade fastened to a handle” or “a weapon or tool resembling a knife.” An article without a blade or the ability to cut would not be a knife. Similarly, in regards to this utility knife, it must also consist of a handle, as the handle provides a means to grasp and use this type of knife. Without either the blade or handle, in this instance, the unfinished components could not be considered a finished knife.
In Headquarters Ruling Letter (HQ) 559782, dated May 24, 1996, CBP considered the origin of a utility knife. All of the knife’s parts were of U.S.-origin, except the two parts that made up the knife body. CBP found that, as a result of having been assembled with the domestic parts, the imported casting parts underwent a change in name to a utility knife. CBP also found that the imported parts underwent a change in character as it was only after the domestic assembly of the imported casting parts with other domestic parts that the essence of a knife was created - meaning the body became an article capable of carrying and retracting the blade to a useable or safe position and housing extra blades. CBP noted that, although the two imported parts were dedicated to become the body of the utility knife, they did not themselves represent the very essence of the finished utility knife. CBP also stated that while the blade was necessary in the operation of the utility knife, for this type of metal utility knife, neither the blade, nor the body alone imparted the very essence of the utility knife.
In your submission, you stated that the country of origin for this utility knife would be South Korea. Taking the above into consideration, we disagree. The handle and its parts are wholly products of China, per your submission, and would be considered a major component as the handle, containing the blade guide and slide button assembly, allows for the utility knife to function as intended. Additionally, the two distinct and individual elements, the blade and handle, are assembled together and thus become the finished and functioning utility knife in China. Weighing the totality of these factors, this office is of the opinion that the country of origin for the completed utility knife would be China.
This office would not disagree with the proposed classification for this utility knife under subheading 8211.93.0060, Harmonized Tariff Schedule of the United States (HTSUS). Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8211.93.0060, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8211.93.0060, HTSUS.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 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 Kristopher Burton at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division