HQ 559346 - Country of Origin Marking; Nitrile Rubber Aprons; Substantial Transformation; 19 CFR 134.35(a); HRL 733565; HRL 730949; HRL 729316 - United States International Trade Commision Rulings

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HQ 559346

October 27, 1995

MAR-2-05 R:C:S 559346 DEC

Mr. Saul L. Sherman
Attorney at Law
P.O. Box 820
Water Mill, New York 11976

RE: Country of Origin Marking; Nitrile Rubber Aprons; Substantial Transformation; 19 CFR 134.35(a); HRL 733565; HRL 730949; HRL 729316

Dear Mr. Sherman:

This is in response to your letter dated July 28, 1995, in which you seek a ruling with respect to the appropriate country of origin marking for certain aprons.

FACTS:

Your client, Armstrong World Industries, Incorporated (Armstrong), is contemplating various changes with respect to their current process of manufacturing nitrile rubber aprons. You state that the aprons are a kind of small conveyor belt used on machines that spin textile fibers into yarn. The imported aprons are vulcanized rubber tubes that are roughly 1000 millimeters (mm) long, with inside diameters ranging from 32 to 162 mm, and a thickness of 1.0 to 1.5 mm. The tube is actually a sandwich composed of two layers of rubber with a layer of a cotton and polyester yarn between. You noted that the cotton/polyester aprons are currently the subject of a classification question as to whether the yarn contains more or less than 50 percent cotton.

You describe the manufacturing of the aprons in the following three stages.

STAGE A:
A shapeless nitrile rubber inner liner tube is extruded and placed on a mandrel (a metal rod that acts as a core). A layer of cotton or cotton/polyester cord is wound around the outside of the inner liner. An outer layer of nitrile rubber is extruded and then inflated with air so that it can be slipped over the liner and the cord. Mylar is wrapped around the tube. The tube is then placed in an autoclave and vulcanized. The mandrel is removed and the nitrile rubber retains a tubular shape.

STAGE B:
The tube with mylar wrap still in place to protect the outer surface is dipped in a treatment tank containing a chlorine solution that ages the inner lining to give it a proper surface. The outer surface is then buffed and ground to produce the correct thickness and smoothness. This buffing and grinding will remove the mylar wrapping. The tube is then dipped again in chlorine to age both the outer surface and the inner surface.

STAGE C:
The tube is stamped with the company's trademarks, country of origin, and other identifying data. If the product is destined for the United States, it is packed and exported at this point. Sometimes, the tube is first sliced into belts and imported as sized aprons.

You have provided Customs with samples at each stage of the above-described manufacturing process.

You state that Armstrong is currently contemplating the division of the manufacturing operations in the following four configurations:

STAGE A STAGE B STAGE C
1. Germany Czech. Rep. Germany (cut to size in U.S.) 2. Germany Czech. Rep. Germany (cut to size in Germany) 3. India India Germany (cut to size in U.S.) 4. India India Germany (cut to size in Germany)

ISSUE:

What is the country of origin of the imported nitrile rubber aprons under the four scenarios described above?

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. The United States Court of International Trade stated in Koru North America v. United States, 701 F. Supp. 229, 12 CIT 1120 (CIT 1988), "[i]n ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which
the term is used in the statute, giving reference to the purpose of the particular legislation involved. The purpose of the marking statute is outlined in United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940), where the court stated that: "Congress intended that the ultimate purchaser should be able to know by an inspection of the marking on 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."

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(d), Customs Regulations (19 CFR 134.1(d)), states that the ultimate purchaser is generally the last person in the United States who will receive the article in the form in which it was imported. It is not feasible to state who will be the ultimate purchaser in every circumstance; however, examples are provided in 19 CFR 134.1(d). Section 134.35(a), Customs Regulations (19 CFR 134.35(a)), provides that "[a]n article used in the United States in manufacture which results in an article having a name, character or use differing from that of the imported article, will be within the principle of the decision in the case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98). Under this principle, the manufacturer or processor in the United States who converts or combines the imported article into the different article will be considered the "ultimate purchaser" of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part. The conclusion as to whether or not a particular article is substantially transformed is determined on a case-by-case basis.

In this case, operations that are described in Stage A will be performed in either Germany (see scenarios 1 and 2) or India (see scenarios 3 and 4). In Stage A, the nitrile rubber inner tube will be extruded, a layer of cotton/polyester cord will be wound around the outside of the inner liner, an outer layer of nitrile rubber will be extruded and then fit over the liner and cord, mylar wrap will then be wound around the tube, and the tube placed in an autoclave and vulcanized.

Customs finds that these processing operations that will be done to the nitrile rubber tube will effect a substantial transformation. Based on our examination of the samples that were provided, Customs is satisfied that the name, character, and use of the articles will change as a result of the processing described in Stage A, The nitrile rubber material is lifeless, limp, and not suited for its intended use as an apron (small conveyor belt used on machines that spin textile fibers into yarn) prior to the processing detailed in Stage A. After processing, the nitrile rubber material is made into a vulcanized tube that is wound with a cotton/polyester cord and an outer layer of nitrile
rubber wrapped with mylar. An inspection of the samples readily reveals that the item after it is subjected to the Stage A processing is a substantially different article. As a result of the processing, the nitrile rubber has taken on a new tubular shape. It is stronger as a result of the wrapped cord and addition of the outer layer of nitrile rubber. These qualities prepare the article for its intended purpose as an apron. Based on the information provided, Customs finds that the operations that will be performed during Stage A confers origin to the finished aprons.

The processes performed during Stage B described above will be origin-conferring operations only if they substantially transform the article that results from the processing detailed in Stage A. During Stage B, the nitrile rubber tube will be dipped in a chlorine solution, buffed, ground, and the mylar protective wrap will be removed. None of these processes has a substantial impact on the name, character, or use of the article after it emerges from the Stage A processes. The operations described in Stage B are nothing more than mere finishing operations and will not confer origin.

In Headquarters Ruling Letter (HRL) 733565, dated September 11, 1990, Customs ruled that unfinished household scissors exported to Pakistan for further processing including grinding, polishing, nickel plating, heat treating, and assembly did not constitute a substantial transformation. It was determined that these processes were nothing more than finishing operations which did not alter the basic character of the shears.

Similarly, the operations that are to be performed during Stage B, which will occur in Czechoslovakia (see scenarios 1 and 2) or India (see scenarios 3 and 4), are finishing operations that will not alter the basic character of the tube from which the individual aprons will be cut. Accordingly, these operations do not substantially transform the nitrile rubber tube that emerges from the processing that will occur during Stage A.

Regardless of where the Stage C printing of product-related information and cutting to size operations will be performed, these process will not result in an origin-conferring substantial transformation. These operations do not alter the article's name, character, or use. Customs has held that low insertion force jumpers made of cables that underwent a minor cutting manufacturing operation which took place in Mexico did not undergo a substantial transformation in part because the articles were dedicated for use prior to export to Mexico. HRL 730949, dated July 18, 1988. Similarly, in HRL 729316, dated April 20, 1989, abrasive rolls underwent similar processing in Mexico. Like the cables addressed in HRL 730949, the abrasive rolls were cut to a specified length (and in some cases, width) with some additional grinding or cutting away of the ends. Splicing of the ends was the only additional operation performed. None of these processes changed the name, character or use of the product. The processes were minor operations which merely rendered the product ready for use.

HOLDING:

Based on the information provided, the processing operations described in Stage A described above constitute an origin conferring operation. However, no substantial transformation results from the processing performed during Stage B or C. Therefore, the country of origin of the finished aprons described in scenarios 1 and 2 will be Germany and the country of origin of the finished aprons described in scenarios 3 and 4 will be India. The imported aprons must be marked accordingly.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant
Director

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