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HQ 735363

July 18, 1994

MAR-2-05 CO:R:V:C 735363 RSD

CATEGORY: MARKING

Ms. Sandra Haupt
Tower Group International, Inc.
128 Dearborn Street
Buffalo, New York 14207-3198

RE: country of origin marking requirements for stainless steel tubes originating in Canada and electropolished and further processed in Sweden; NAFTA country of origin marking rules; polishing; finishing; substantial transformation; material; foreign materials; essential character; 19 CFR 134.1(b); 19 CFR 102 (Interim Regulations); T.D. 94-4

Dear Ms. Haupt:

This is in response to your letter dated September 15, 1993, on behalf of Avesta Shefield regarding the country of origin marking requirements for stainless steel tubes manufactured in Canada and shipped to Sweden for electropolishing and other processing. Our ruling on this matter is set forth below. We regret the delay.

FACTS:
Sandvik Tube inc. of Canada manufactures steel tubing in Canada. They make two different types of tubes known as PQE and CQE. The tubes are made from the same base material but different finishing processes are used. The tubes involved in this case are the PQE tubes. They are used for gas transport systems in the semiconductor industry. After the work is done in Canada, the tubing is sent to Sweden for electropolishing and other processing. The electropolishing process is an electro-chemical method of removing surface metal from the tubes which leaves behind a very high standard of surface finish. Electropolishing is described, by the literature which accompanied your request, as an electrochemical metal removal method, resulting in an extremely high surface finish on the inside of the tube. This literature further indicates that in contrast to mechanical methods, electropolishing causes no distortion after treatment, no contamination and does not promote any detrimental chemical attack. Therefore the electropolished tube is more resistant to corrosion with less risk of contamination. All types PQE product are electropolished on the inside. Minimum material removal from the inside wall is 20 fm (790 f inch).

Several rinsing operations follow the electropolishing. Some of the washing is carried out with the "plug-shot" method. De- ionized water rinsing is controlled and documented. Finally, a high pressure rinsing is followed by the white-paper test checking and control. The final cleaning and packing is carried out with the following:

-Rinsing with highly filtered deionized water

-purging with nitrogen gas

-tube end sealing

-individual packing.

The tube ends are protected by end caps or a plastic cover. Every type PQE tube has an identification (ID) number. The tubes are marked to show steel grade, heat and lot number, dimension, and manufacturer.

To the untrained observer, there seems to be no difference in appearance between the sample tubing manufactured in Canada before electropolishing and sample tubing which has been sent to Sweden for electropolishing.

ISSUE:

What is the country of origin of the stainless steel tubes which originate in Canada and are sent to Sweden for electropolishing and other processing?

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 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 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA. The Marking Rules required under Annex 311 to be used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (interim amendments to various provision of Part 134, Customs Regulations). For the purposes of this ruling because you have indicated that the tubes are manufactured in Canada, in order to determine the country of origin marking requirement for the tubes, it is necessary to apply the NAFTA marking rules to determine if the tubes are goods of a NAFTA country.

Section 134.(b) of the interim regulations, 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 of the "country or origin"; however, for a good of a NAFTA country, the NAFTA MARKING Rules will determine the country of origin (emphasis added).

Section 134.1(j) of the interim regulations, provides that the "NAFTA MARKING Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.(g) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the interim regulations, provides that "a good of a NAFTA country may be marked with the name of the county of origin in English, French or English."

Part 102 of the interim regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the interim regulations, sets forth the required hierarchy for determining country origin for marking purposes. Section 102.11(a) of the interim regulations states that "[t]he country of origin of a good is the country in which:

(1) The good is wholly obtained or produced;

(2) The good is produced exclusively from domestic materials; or

(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."

In this case, the applicable rule is section 102.11(a)(3) of the interim regulations. "Foreign material" is defined in section 103.1(e) of the interim regulations as "a material whose country origin as determined under these rules is not the same country as the country in which the good is produced." Therefore, in order to determine the country of origin of the electro-polished tubes under section 102.11 (a)(3), we must look at those materials whose country of origin is other than Sweden. We will assume that based on your representation, that this material, the unpolished tubes, are products of Canada.

Based on the samples and the enclosed literature we find that the subject articles, electropolished stainless steel tubes, are classified under subheading 7304.41.30 HTSUS. Therefore the change in tariff classification must be made in accordance with section 102.20(o), Section XV: Chapters 72 through 83, 73.01-73.07 which states that:

A change to heading 7301 through 73.07 from any other heading including within that group.

Thus, in order to have a change in the country of origin, the electropolished steel tubes must come from a subheading outside of 7304.41.30, HTSUS. Since the steel tubing made in Canada is classifiable under the same subheading as the tubes that are electropolished and further processed in Sweden, a change in tariff classification does not occur pursuant to section 102.20(o), Section XV: Chapters 72 through 83, 73.01-73.07.

Because the country of origin cannot be determined under 19 CFR 102.11(a), (incorporating section 102.20) of the interim regulations, we must proceed to section 102.11(b) of the interim regulations hierarchy to determine if the country of origin can be decided under that section. Section 102.11(b) provides:

(b) except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country origin cannot be determined under paragraph (a), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good

"Material" is defined in section 102.1(1) of the interim regulations as "a good that is incorporated into another good as a result of production with respect to that other good, and includes parts, ingredients, subassemblies, and components."

Because the articles in question, the electro-polished tubes, are made from only one material, it is clear that the "single material which imparts the essential character" of the electro- polished stainless steel tube processed in Sweden is the stainless steel tubes originating from Canada. Therefore, pursuant to section 102.11(b)(1) of the interim regulations, the country of origin of the finished electropolished stainless steel tubes is Canada, and they must be marked with their country of origin, "Canada", in accordance with the special requirements for pipe and tubes of 19 U.S.C. 1304(c). (See our information letter of June 25, 1993).

HOLDING:

Pursuant to section 102.11(b)(1) of the interim regulations, the country origin of the electropolished stainless steel tubes is Canada for purposes of country of origin marking. The tubes must be marked to indicate that Canada is their country of origin in accordance with special marking requirements for pipes and tubes set forth in 19 U.S.C. 1304(c).

Sincerely,

John Durant, Director

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