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HQ 952033


November 4, 1992

CLA-2 CO:R:C:M 952033 LTO

CATEGORY: CLASSIFICATION

TARIFF NO.: 7615.10.30

Ms. Elizabeth L. Hintz
Meyer Manufacturing Co., Ltd.
382 Kwun Tong Road
Kowloon, Hong Kong

RE: Aluminum cookware ("Circulon"); GRI 2(a); EN to GRI 3(b); HQ 084845; HQ 086555; HQ 733579; HQ 734321; HQ 734734; Anheuser-Busch Brewing Association v. U.S.; EN 76.15; 7606.91.30; 7606.92.30

Dear Ms. Hintz:

This is in response to your letter of July 21, 1992, requesting a ruling as to the classification and country of origin for aluminum cookware under the Harmonized Tariff Schedule of the United States (HTSUS). In response to your letter of June 8, 1992, by letter dated October 20, 1992 (HQ 734734), the Chief, Value and Marking Branch of Customs Headquarters, provided you with general information concerning the country of origin marking of this cookware.

FACTS:

The articles in question are non-stick, hard anodized aluminum pans sold under the name, "Circulon." You state that you intend to locate a plant in the U.S. to produce these pans. Your intended plan is to provide aluminum circles from your Hong Kong plant to your Thailand plant.

In Thailand, the aluminum circles will go through the following manufacturing processes: (1) bottom mark stamping; (2) scroll trimming (grooves cutting); (3) drawing (forming of pan); (4) edge trimming; (5) holes punching (for handle assembling); (6) machine etching (cleaning); (7) interior sandblasting; (8) exterior sunray polishing; (9) packing.

These pans will then be sent to the U.S., where the
following will occur: (1) hard anodizing; (2) sealing; (3) washing; (4) interior non-stick PTFE coating; (5) sealing; (6) handle riveting (assembling); (7) cleaning; (8) packaging with cover and knob (if lid is stainless steel, rather than glass, a screw must be welded onto the lid). The complete pans will then be packaged and ready for sale.

ISSUE:

1. Whether the cookware, as imported into the U.S., is classifiable as an aluminum table, kitchen or other household article, under Heading 7615, HTSUS.

2. What is the country of origin of the cookware?

LAW AND ANALYSIS:

1. Classification

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states in pertinent part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the [remaining GRI's]." Heading 7615, HTSUS, provides for aluminum table, kitchen or other household articles and parts thereof.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Co-operation Council's official interpretation of the Harmonized System. While not legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System, and are generally indicative of the proper interpretation of these headings.

EN 76.15, pg. 1069, states that Heading 7615, HTSUS, covers the same types of articles as are described in the ENs to Heading 7323, HTSUS (table, kitchen or other household articles of iron or steel). EN 73.23, pg. 1035, states that Heading 7323, HTSUS, covers articles for kitchen use such as "frying pans."

As imported into the U.S., the articles in question are aluminum pans that have been stamped, trimmed, grooved, sandblasted, polished and have had holes punched for handle assembly. The pans have not been hard anodized, sealed, or non- stick coated. The handles have not yet been assembled, nor have the pans been fitted with lids (glass or stainless steel).

GRI 2(a) states that "[a]ny reference in a heading to an article shall be taken to include a reference to that article
incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article." Thus, if the pans in question have the essential character of complete or finished pans, they would be classifiable under Heading 7615, HTSUS.

For an item to have the essential character of the finished product, it must be recognizable as such a product. In determining an article's essential character, one must look to the merchandise in question--as it changes, so too may the factors which determine its essential character. Factors found to be relevant in other contexts include the significance of the imported component (bulk, quantity, weight), its role in relation to the use and overall functioning of the complete article and, to the extent it validates the comparison, the cost or value of the complete article versus the cost or value of the imported component. See HQ 084845, dated November 24, 1989; HQ 086555, dated April 16, 1990; EN to GRI 3(b), pg. 4.

It is our opinion that the pans in question are recognizable as the finished product. Although it is necessary to attach the handles, and to perform both the hard anodizing and non-stick coating processes, the imported articles can only be used to manufacture pans to be used for cooking. Moreover, the formed pans are the major part of the end product, as the U.S. processing is relatively minor. The formed pan "is the very essence of the finished product and the fundamental character of the pot/pan is not changed in the U.S." HQ 733579, dated August 20, 1990. (Since specific cost information was not submitted, it is not possible to compare the cost of the foreign and domestic processing.)

The articles in question have the essential character of complete, aluminum pans. The finished aluminum pans would be classified under Heading 7615, HTSUS, which provides for aluminum kitchen articles. Specifically, they would be classifiable under subheading 7615.10.30, HTSUS, which provides for aluminum cooking and kitchen ware containing non-stick interior finishes. Thus, according to GRI 2(a), the unfinished aluminum pans are likewise classifiable under subheading 7615.10.30, HTSUS.

2. Country of origin

In order for the aluminum circles from Hong Kong to be considered substantially transformed by the described processing as to be regarded as a product of Thailand for tariff purposes, the evidence must show that the processing results in a product other than or materially different from the merchandise entering Thailand. That is, a new and different article of commerce must
emerge from the processing, one having a new name, character or use. Anheuser-Busch Brewing Association v. United States, 207 U.S. 556 (1908).

Your intended plan is to provide aluminum circles from your Hong Kong plant to your Thailand plant. In Thailand, the aluminum circles will be manufactured into aluminum pans that have been stamped, trimmed, grooved, sandblasted, polished and have had holes punched for handle assembly. After importation into the U.S., the handles will be assembled and the pans will be fitted with lids (glass or stainless steel). The pans also will be hard anodized, sealed, and coated with interior non-stick coating in the U.S.

The raw aluminum circles from Hong Kong are substantially transformed in Thailand into an article having a name, character and use different than that possessed by the article as it originally entered Thailand. As shown above, the aluminum circles are transformed into unfinished, aluminum pans which have the essential character of complete, aluminum pans.

The unfinished, aluminum pans from Thailand are not, however, substantially transformed in the U.S. In HQ 733579, dated August 20, 1990, this office held that a formed pan that was shipped to the U.S., where it was de-burred (the removal of rough edges and surfaces of the pot or pan), polished, painted, coated with a non-stick surface and where its handle was attached, was not substantially transformed in the U.S. While the hard anodizing process performed in the U.S. on the articles in question was not performed on the pan involved in HQ 733579, and while the articles in question cannot be used as pans prior to the processing performed in the U.S., the following reasoning found in HQ 733579 applies to the instant case:

The imported aluminum pot/pan is not substantially transformed in the U.S. into a new article with a new name, character or use. Although it is necessary to attach the handle in order for the pot/pan to be functional, the imported article could only be used to make a pot/pan to be used for cooking. The name, character and use of the pot/pan would not change when the handle is attached. The aluminum pot/pan is the very essence of the finished product. A significant amount of work is not done on the pot/pan itself; the processing done on the pot/pan in the U.S. is merely finishing and coating the pot/pan.

The imported aluminum pans are substantially transformed in Thailand, and therefore, the country of origin for the imported articles is Thailand. Moreover, because the imported articles
are not substantially transformed in the U.S., the country of origin of the finished aluminum pans is also Thailand.

In your ruling request, you state that if the hard anodizing process is not sufficient to qualify the pans as products of the U.S., you may send the aluminum circles from Hong Kong to Thailand for stamping and groove cutting only, and then on to the U.S. (for drawing, trimming, hole punching, etching, sandblasting, polishing, hard anodizing, sealing, washing, non- stick coating, handle riveting, cleaning and packaging). You then ask for the classification and country of origin marking requirements for these flat, stamped, grooved aluminum disks.

In this instance, the imported articles would not have the essential character of complete or finished, aluminum frying pans, according to GRI 2(a). Thus, they would not be classifiable under Heading 7615, HTSUS.

The flat, stamped, grooved aluminum disks would be classifiable under Heading 7606, HTSUS, which provides for "[a]luminum plates, sheets and strip, of a thickness exceeding 0.2% mm." If the disks are of aluminum, not alloyed, not clad, they would be classifiable under subheading 7606.91.30, HTSUS. If they are of aluminum, alloyed, not clad, they would be classifiable under subheading 7606.92.30, HTSUS.

With regard to the articles' country of origin, it is our opinion that the aluminum disks are not substantially transformed in Thailand by the stamping and grooving operation. However, they are substantially transformed in the U.S., and, therefore, the country of origin of the finished pans is the U.S.

The Federal Trade Commission (FTC) has jurisdiction concerning the use of the phrase "Made in the U.S.A." See HQ 734321, dated April 13, 1992. Consequently, any inquiries regarding the use of such phrase should be directed to the FTC. The address is as follows:

Federal Trade Commission
Division of Enforcement
6th and Pennsylvania Ave., N.W.
Washington, D.C. 20508

HOLDING:

With regard to your initial proposal, the unfinished Circulon pans are classifiable under subheading 7615.10.30, HTSUS, which provides for "[t]able, kitchen or other household articles and parts thereof, of aluminum . . . [c]ooking and kitchen ware . . . [e]nameled or glazed or containing nonstick
interior finishes . . . [o]ther." The corresponding rate of duty for articles of this subheading is 5.7% ad valorem. This provision is eligible for a free rate of duty under the Generalized System of Preferences. See sections 10.171-10.178 of the Customs Regulations (19 CFR 10.171-10.178).

The described processing operations in Thailand result in a substantial transformation of the aluminum circles, or a product having a new name, character and use, namely, the unfinished pans. Thus, the imported articles are products of Thailand.

The subsequent processing of the imported articles in the U.S. does not result in a substantial transformation of these articles. Thus, the country of origin of the finished pans is also Thailand.

With regard to your alternative proposal, the flat, stamped, grooved aluminum disks are classifiable under Heading 7606, HTSUS, which provides for "[a]luminum plates, sheets and strip, of a thickness exceeding 0.2 mm." If the disks are of aluminum, not alloyed, not clad, they would be classifiable under subheading 7606.91.30, HTSUS. If they are of aluminum, alloyed, not clad, they would be classifiable under subheading 7606.92.30, HTSUS. The corresponding rate of duty for articles of these subheadings is 3% ad valorem.

Aluminum circles from Hong Kong which are stamped and groove cut only in Thailand are not substantially transformed in Thailand. Thus, these articles are products of Hong Kong.

However, the subsequent processing in the U.S. results in a substantial transformation of the flat, stamped, grooved aluminum disks. Thus, for Customs purposes the country of origin of the finished pans under this proposal is the U.S. The pans may not be marked "Made in the U.S.A." unless authorized by the Federal Trade Commission.

Sincerely,

John Durant, Director

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