HQ 0733565 - The country of origin marking requirements for household shears; scissors; forgings; substantial transformation; 19 CFR 134.35; 19 CFR 134.32(m) - United States International Trade Commision Rulings

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HQ 733565

September 20, 1990

MAR-2-05 CO:R:V:C 733565 RSD

CATEGORY: MARKING

Mr. Ernest Hoesterey, President
Medical Devices of Fall River, Inc.
594 Airport Road
P.O. Box 2567
Fall River, Massachusetts 02722

RE: The country of origin marking requirements for household shears; scissors; forgings; substantial transformation; 19 CFR 134.35; 19 CFR 134.32(m)

Dear Mr. Hoesterey:

This is in response to your letter dated July 10, 1990, requesting a ruling on the country of origin marking requirements of household shears.

FACTS:

Medical Devices of Fall River, Inc. imports 8 inch straight household shears from Pakistan for sale to the U.S. General Services Administration. The steel for the shears is mined in the U.S., and then delivered to a U.S. forging company. The steel is then forged, trimmed, and straightened by the U.S. forging company. The forgings are then delivered to Medical Devices' factory for drilling and tapping. The screws used in the shears are also manufactured to specification in the U.S. The sheers are then packed and exported to Pakistan. At the time they are exported from the U.S., the shears have the appearance of an unfinished pair of scissors. The metal is not smooth and the blades are dull, but they have basic size and shape of the finished shears.

In Pakistan, subcontractors grind, polish, nickel plate, heat treat, and assemble the shears. The shears are then returned to the U.S. for further processing. This processing includes branding, edging, honing, adjusting, peaning, degreasing, oiling, inspecting, testing, wiping, and packaging. The finished item is then shipped to G.S.A. depots throughout the U.S. The total cost of domestic processing is $1.84 and foreign processing cost is $.92. Four samples illustrating the various stages of production were submitted.

ISSUE:

Whether U.S. shears which are further processed in Pakistan are excepted from marking pursuant to 19 CFR 134.32(m), pertaining to U.S. articles exported and returned.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co. 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. 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 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 the meaning of the marking laws and regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed.

U.S. products exported and returned are specifically excepted from country of origin marking requirements under section 134.32(m), Customs Regulations (19 CFR 134.32(m)). With certain exceptions not applicable here, Customs has ruled that products of the U.S. which are exported for further processing and subsequently returned, are not subject to country of origin marking upon importation to the U.S. unless the further processing in the foreign country constituted a substantial transformation of the product. See HQ 732480, (July 31, 1989).

In determining whether there has been a substantial transformation when forged blanks are processed into finished or semi-finished instruments, Customs has looked at the extent and effect of the specific processing operations. In HQ 732615, C.S.D. 90-101 (June 6, 1990), a case involving surgical scissors and other surgical instruments, Customs recently ruled that the milling and the intricate cutting of forged blanks that create the ratchet, teeth, inside rings and boxlock on the surgical instruments are extensive operations. These operations with the addition of heating treating and polishing give the surgical instruments their basic character and result in a substantial transformation. Similarly, Customs ruled in HQ 732844 (February 12, 1990), that U.S. made forgings that were not yet machined to their actual dimensions and lack the essential characteristics such as the capacities to grip, close, lock in place and to be adjusted were substantially transformed by the extensive machining, bending, cutting, riveting, assembly and polishing operations done in Pakistan. We noted that these operations gave the instruments their basic characteristics. In contrast, Customs ruled in HQ 553197 (February 11, 1985), that rough polishing, hand shaping and curving, heat treatment and final polishing of instruments in Pakistan did not constitute a substantial transformation.

In this particular case, after reviewing the samples provided and steps involved in processing the shears, we find that the processing done in the U.S. gives the shears their basic characteristics. The foreign processing does not involve extensive cutting or machining. The article leaving the U.S. very much resembles the finished shears, and the processing done in Pakistan are finishing operations, which although important, do not alter the basic character of the shears. In addition, we note that most of the cost involved in producing the shears comes from processing done in the U.S. Consequently, we find that the foreign processing of the shears does not result in an article with a new name, character, or use, and that there is no substantial transformation. Accordingly, the shears are excepted from country of origin marking under 19 CFR 134.32(m).

HOLDING:

The processing of the U.S. made household shears in Pakistan does not result in a substantial transformation. Therefore, the shears are excepted from country of origin marking under 19 CFR 134.32(m).

Sincerely,

Marvin M. Amernick

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