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HQ 731652


February 16, 1989

MAR-2-05 CO:R:C:V 731652 jd

CATEGORY: MARKING

John N. Politis, Esq,
Sandler & Travis, P.A.
3435 Wilshire Boulevard
Los Angeles, California 90010

RE: Country of origin marking requirements applicable to pruning shears, hedge shears and loppers

Dear Mr. Politis:

This is in reply to your letter of July 25, 1988, concerning the country of origin marking requirements applicable to pruning shears, hedge shears and loppers.

FACTS:

According to your submission, your client, a domestic manufacturer of hand tools, is seeking an exception to country of origin marking requirements for certain hand tools it will be importing from Mexico. The manufacturing process involved in producing these tools is as follows. The two main components of each tool (pruning shears, hedge shears and loppers) are forged from steel bar stock of U.S. origin. The forged components are then annealed, trimmed, coined (shaped), indexed (drilled, tapped, countersunk and milled), hand ground, heat treated and machine ground. All these steps occur in the U.S.

The finished forged components are then sent to Mexico for assembly. Pruning shears are assembled with a bolt, nut, spring and retainer of U.S. origin. After assembly, the pruning shear handles are dipped in molten plastic to cover the handles. The finished forged components for the hedge shears and loppers are assembled with connecting hardware and have wooden handles attached. We understand that the articles will not be entered under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (formerly item 807.00 TSUS).

ISSUE:

Are finished forged components of pruning shears, hedge shears and loppers of U.S. origin substantially transformed by assembly into finished articles in Mexico so as to make the articles products of Mexico for country of origin marking purposes?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires 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 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 term "country of origin" is defined in { 134.1(b), Customs Regulations (19 CFR 134.1(b)), 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 this part.

By definition, only merchandise which is "of foreign origin," i.e., of a country of origin other than that of the U.S., is subject to the requirements of 19 U.S.C. 1304. Stated differently, products of the U.S. are not subject to these requirements. Since 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, if a U.S. product is sent abroad for processing, it remains a product of the U.S. (and not subject to the requirements of 19 U.S.C. 1304 upon its importation) unless prior to its importation, the U.S. article is substantially transformed into an article of foreign origin. However, pursuant to { 10.22, Customs Regulations (19 CFR 10.22), articles assembled abroad in whole or in part from U.S. components and entered under subheading 9802.00.80, HTSUS, are considered products of the country of assembly for purposes of 19 U.S.C. 1304, whether or not the assembly constitutes a substantial transformation.

Section 134.32(m), Customs Regulations (19 CFR 134.32(m)), specifically excepts from country of origin marking requirements U.S. products exported and returned. In applying this section, Customs has ruled that U.S. products which are sent abroad for further processing are not subject to country of origin marking upon importation of the article into the U.S., provided the further processing in the foreign country does not constitute a substantial transformation.

In order for a substantial transformation to be found, an article having a new name, character, or use must emerge from the processing. See United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267, C.A.D. 98 (1940).

It is the opinion of this office that the minor assembly operations which are performed in Mexico do not substantially transform the finished forged components of U.S. origin into
articles with a new name, character, or use. The components are easily recognizable as parts of the finished article prior to assembly and no change occurs to the parts during the assembly process. We consider the plastic coating applied to the handles of the pruning shears an enhancement of the existing pruning shears and not the creation of a new article for marking purposes.

This determination is consistent with several prior Customs rulings granting an exception to marking requirements for U.S. articles that were exported and returned. For example, ruling 731482 (December 9, 1988) held that U.S. rack and pinion steering assemblies sent to Mexico for disassembly, cleaning, installation of new components, reassembly and testing, were excepted from marking upon their return to the U.S. In ruling 728269 (July 20, 1985) three dimensional greeting cards were printed, folded, scored for further folding, die-cut and perforated in the U.S. The cards were then sent to Mexico where the die-cut portions were pressed out, folded and glued. The cards as returned to the U.S. were considered a U.S. product and excepted from marking. Ruling 553197 (February 11, 1985) involved U.S. origin forgings for surgical instruments which were sent to Pakistan for further processing. The processing in Pakistan (polishing, removal of a thin layer of metal, shaping, curving and heat treating) involved more than the mere assembly performed on the finished hand tool forgings in this case. However, the finished surgical instruments were still excepted from marking upon their return to the U.S. as U.S goods exported and returned.

HOLDING:

Pruning shears, hedge shears and loppers, manufactured and assembled as described above, are excepted from country of origin marking requirements as articles of the U.S. exported and returned, pursuant to { 134.32(m), Customs Regulations.

Sincerely,

Marvin M. Amernick

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