OT:RR:NC:N1:104
Yan Chen
Weihai Maxpower Advanced Tool CO.,LTD
No.8-9, 8-22 Huizhou Road, Wendeng Weihai 264400 China
RE: The country of origin of a pear head extendable ratchet tool
Dear Mr. Chen:
In your letter dated July 4, 2023, you requested a country of origin ruling for a pear head extendable ratchet tool produced in two countries, China and South Korea.
The subject ratchet tool is a hand tool composed of a long handle/neck with a pear-shaped ratcheting head that is used to tighten fasteners. The tool’s ratcheting head fits onto fasteners via socket attachments of various sizes that are not imported with this product or included with this product when it is sold (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 tool’s handle is extendable to enhance leverage.
The applicable subheading for the ratchet handle will be 8466.10.0175, Harmonized Tariff Schedule of the United States, 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.
Country of Origin
You indicate that raw steel bar is sourced from China and cut, then shipped to South Korea, where it will be forged into the final shape of the main ratchet handle, including its handle/neck and pear head. The forged ratchet handle is then returned to China where it is further machined, heat-treated, plated, and where China-origin steel components are added to the pear head to complete the ratcheting mechanism. Additionally, a China-origin pipe sleeve is assembled over the forged handle which allows the handle to be extended, and a China-origin grip is added to the handle. Finally, the ratchet tool is packaged and shipped to the United States.
With regard to your request for the appropriate country of origin of the ratchet tool, 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, “[t]he 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, “[a] substantial transformation occurs when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process.” Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (CCPA 1982). 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. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
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, the manufacturing operations in South Korea determine the ratchet tool’s character. The shaped and forged ratchet handle is dedicated for use as a ratchet tool 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.
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.
The “country of origin” is defined in 19 C.F.R. 134.1(b) 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.”
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or 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 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Arthur Purcell at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division