CLA-2-84:OT:RR:NC:N1:104
M. Jason Cunningham
Sonnenberg & Cunningham PA
780 Fifth Avenue South
Suite 200
Naples, FL 34102
RE: The country of origin and marking of a ratchet handle
Dear Mr. Cunningham:
In your letter dated May 24, 2022, you requested a country of origin ruling and marking on behalf of your client, Great Star Industrial USA, LLC.
The subject steel ratchet handle contains a drive that allows the user to attach a variety of sockets so that it can turn screws, bolts, and nuts. The ratchet handle is being imported for further assembly.
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.
Your letter describes two proposed scenarios for production of the ratcheting device, outlined as follows:
In the first scenario, the fully formed, chrome-plated steel ratchet handle is manufactured in China and exported to the United States. The ratchet wheel, spring, and ball bearing are manufactured in the United States. In the United States, final assembly operations are performed.
In the second scenario, the fully formed, chrome-plated steel ratchet handle is manufactured in China and exported to the United States. The inner-core of the ratchet wheel is manufactured in the United States and then is assembled with the final wheel components. In the United States, final assembly operations are performed.
The only difference between the two ratchet handles is that in scenario one, there is a paddle-switch to control the ratcheting direction. In scenario two, the ratcheting gear is reversed by turning the cap.
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.
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; As stated in HQ 735009 dated July 30, 1993, “The country of origin is the country where the article last underwent a “substantial transformation”, that is, processing which results in a change in the article's name, character, or use”. In addition, the court has held that “A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing.” 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.
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. 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 China renders the end-use of the ratchet handle predetermined, as the handle could not be used for any other purpose. The ratchet handle provides the essence of the finished product because it is chiefly responsible for the functional aspect of the ratchet by providing the needed torque and leverage of the ratchet. Further, it is not substantially changed by the addition of the United States fabrications or the minor assembly operations performed in the United States. In view of these facts, the ratchet handle described in scenarios one and two is considered a product of China for origin and marking purposes.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8466.10.0175, 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., 9903.88.01, in addition to subheading 8466.10.0175, HTSUS, listed above.
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