HQ 0734904 - Country of Origin Marking of Surgical Instruments; Substantial Transformation, HQ 732615; 19 CFR 134.46, Mfg. not acceptable. - United States International Trade Commision Rulings

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HQ 734904

April 30, 1993

MAR-2-05 CO:R:C:V 734904 RC

CATEGORY: MARKING

Mr. B. J. Kalman
Fine Surgical Instrument Corp.
741 Peninsula Blvd.
Hempstead, NY 11550

RE: Country of Origin Marking of Surgical Instruments; Substantial Transformation, HQ 732615; 19 CFR 134.46, Mfg. not acceptable.

Dear Mr. Kalman:

This is in response to your letter of October 6, 1992, requesting a ruling on the country of origin marking requirements for foreign-manufactured surgical instruments. Your letter submitted to the Area Director, New York Seaport was forwarded to us for reply.

FACTS:

B.J. Kalman of Fine Surgical Equipment Corp. imports sponge forceps and Rochester Ochsners, clamp-like surgical instruments. Samples of the forged products and the finished products have been submitted. In Germany, strip stainless steel is forged. Then the forged parts are exported to Pakistan for the second stage. In Pakistan, the raw forged products are milled, machined, or forged. The parts are assembled, riveted, adjusted, heat treated, annealed, polished, passivated, stamped or marked, ultrasonically cleansed, and packaged.

ISSUE:

Whether marking the surgical instruments on one leg (the clamping portion) "GERMAN STAINLESS" and on the opposite side of the same leg "Mfg PAKISTAN" would be acceptable.

LAW AND ANALYSIS:

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 for marking purposes is defined by section 134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean the country of manufacture, production, or growth. 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" for marking purposes. An article used in manufacture resulting in a new article having a different name, character, or use will be considered substantially transformed.

In determining whether processed forged blanks underwent a substantial transformation, Customs has looked at the specific processing operations. In HRL 055703 (September 24, 1979), a German forging was sent to Malaysia for milling and machining, including widening the holes for joining matching pieces, machining small ridges for locking or gripping and machining to define the edges and surfaces. There, Customs ruled the German forging was substantially transformed into a surgical instrument and Malaysia was the country of origin. In HRL 553197 (February 11, 1985), Customs determined that the machining of forged blanks in the U.S., consisting of deburring, milling, assembly and riveting constituted a substantial transformation. In that same ruling, the subsequent rough polishing, hand shaping and curving, heat treatment and final polishing of the instruments in Pakistan was not a substantial transformation.

In HQ 732844 (February 12, 1990), Customs ruled that even though U.S.-made forgings resembled the size and shape of the finished surgical instruments, they were not yet machined to their actual dimensions and lacked essential characteristics of finished products, such as the capacities to grip, close, lock in place and be adjusted. Without the machining, bending, cutting, riveting, assembly and polishing operations performed in Pakistan, the articles could not be used as surgical instruments. Thus, Customs concluded that for purposes of 19 U.S.C. 1304, the country of origin of the surgical instruments was Pakistan.

In HQ 732615 (June 6, 1990), Customs found raw forgings produced in West Germany did not possess the essential characteristics of surgical instruments until further extensive processing in Pakistan such as milling, cutting, machining, more milling, heat treating, polishing, and other significant amounts of processing. There, Customs found the extensive processing done in Pakistan, refining crude raw forgings into finished surgical instruments capable of being used by hospitals, constituted a substantial transformation. Therefore, for purposes of 19 U.S.C. 1304, the country of origin of the surgical instruments is Pakistan.

Under section 134.46, Customs Regulations (19 CFR 134.46), any case in which ... the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, appear on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning. The "close proximity" requirement has been interpreted in many rulings to mean on the same side or surface in which the name of the locality other than the country of origin appears. See HQ 708994 (April 24, 1978). The purpose of 19 CFR 134.46 is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the origin of the imported article.

In HQ 732615, Customs addressed inter alia the specific wording acceptable as a marking on similar surgical instruments. The words "German Stainless" on one leg and "Made in Pakistan" on the other were acceptable as long as the requirements of 19 CFR 134.46 were met. There, the marking satisfied the close proximity requirement because "Made in Pakistan" on one leg appeared on the same side as "German Stainless" on the other leg and both markings could be seen at the same time. Moreover, the "Pakistan" was preceded by the words "Made in". Finally, "Pakistan" was legible and in lettering in at least comparable size to "German Stainless". Thus, the proposed marking satisfied 19 CFR 134.46.

The facts in HQ 732615 are directly on point with the facts of the instant case. Likewise, we find that the country of origin of the surgical instruments to be Pakistan. However, with respect to the proposed marking of the surgical instruments on one leg "GERMAN STAINLESS" and on the opposite side of the same leg "Mfg PAKISTAN", the requirements of 19 CFR 134.46 are not met. Here, the marking does not satisfy the close proximity requirement because "Mfg PAKISTAN" does not appear on the same side as "GERMAN STAINLESS" and both markings cannot be seen at the same time. Secondly, "PAKISTAN" is not preceded by the words "Product of", "Made in", or words of similar meaning. We are of the opinion the letters "Mfg" do not form an acceptable abbreviation constituting "words of similar meaning" under 19 CFR 134.46.

HOLDING:

The German forged blanks processed as described above in Pakistan undergo a substantial transformation in the latter. Thus, the country of origin is Pakistan. The proposed method of marking, "GERMAN STAINLESS" on one leg of the surgical instrument and "Mfg PAKISTAN" on the opposite side, does not satisfy the requirements of 19 CFR 134.46. In order to be acceptable the marking "GERMAN STAINLESS" and "PAKISTAN" must be preceded by the words "Product of", "Made in", or words of similar meaning. Additionally, the country references must appear on the same side or surface of the instruments so both may be viewed at the same time.

Sincerely,

John Durant, Director

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