HQ 559782 - Country of Origin Marking on hand tools; trowel; utility knife; pole sander; handle; blade; sander base; sander subassembly; substantial transformation. - United States International Trade Commision Rulings

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HQ 559782

May 24, 1996

CLA-2 RR:TC:SM 559782 MLR

CATEGORY: MARKING

Frederick L. Ikenson, Esq.
Larry Hampel, Esq.
Joseph A. Perna, V, Esq.
Frederick L. Ikenson, P.C.
1621 New Hampshire Avenue, N.W.
Washington, D.C. 20009

RE: Country of Origin Marking on hand tools; trowel; utility knife; pole sander; handle; blade; sander base; sander subassembly; substantial transformation.

Dear Mr. Ikenson, Mr. Hampel, and Mr. Perna:

This is in reference to your letter of April 10, 1996, requesting a ruling on behalf of Hyde Manufacturing Company ("Hyde"), concerning the country of origin marking on certain hand tools. Samples of the hand tools were submitted with your request.

FACTS:

Hyde produces surface preparation and industrial hand tools in the U.S. The hand tools at issue are a curved stainless steel professional trowel, a top slide utility knife, and a pole sander. It is stated that Hyde uses all U.S.-origin parts except certain imported parts which are not from a NAFTA party. It is also stated that Hyde directly deals with the supplier so that Hyde is informed as to the origin of the imported parts.

The trowel is a curved-blade drywall trowel which is designed to bridge untapered drywall joints. The trowel is comprised of a hardwood handle with a contoured grip and flat sides, a stainless steel trowel plate, seven threaded studs, one nut, all of U.S.-origin, and an imported lightweight aluminum alloy frame. In the U.S., stainless steel material is flattened and cut to the size of the trowel plate. The studs are welded to the plate in the locations that correspond to cavities of the imported handle frame. The trowel plate is curved, and the frame and plate are permanently joined by pressing the frame onto the threaded studs. This assembly operation is performed on a mechanical flywheel press with a die which maintains the trowel plate's curved shape. Lastly, the wooden handle is fitted to the frame with the nut.

The utility knife is a 3-position top slide utility knife, designed to fit the palm of the hand. It features a die-cast aluminum alloy construction, a push button top slide blade adjustment, and two cutting/blade positions. The side screw can be removed to replace the blade and to access blade storage. The purpose of the knife is for cutting drywall, floor covering, roofing, and for general cutting. The utility knife consists of six parts. The knife's body, referred to as a right and left "casting," is actually two parts and is imported as a single part. The other parts, all of U.S.-origin, are the knife blade, blade carrier, thumb button, and screw. The assembly in the U.S. is conducted by placing one body half into an air-operated press assembly fixture, along with the blade carrier and thumb button. Following a swedging of these parts together, utilizing the press, a blade is placed into the carrier and the other body half is placed over the assembly for insertion of a screw, using an automatic screw driver.

The pole sander is used to sand ceilings and walls from the floor level. It is comprised of a die-cast aluminum head with a foam rubber sanding pad on the underside around which sandpaper is positioned and held in place at the top of the sander head by two clamps. A 48-inch hardwood pole, with a standard Acme thread, screws into the swivel. The pole sander consists of eleven parts: a pole, a rubber pad, two wing nuts, two sandpaper clamps, one roll pin, and two threaded pins, all of U.S.-origin, and an imported sander base, and an imported swivel assembly. The assembly is conducted by attaching the swivel assembly to the sander base using the roll pin. Two threaded pins are pressed into the sander base, i.e., an air-operated press seats the threaded pins into holes in the sander base with an interference fit. Two sandpaper clamps are attached over the threaded pins and secured with two wing nuts. The rubber pad is attached manually to the bottom of the sander plate. A pole is packed loose in the carton with the sander head assembly.

ISSUE:

What are the country of origin marking requirements of the trowel, utility knife, and pole sander?

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. 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. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).

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(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.

For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. If such substantial transformation occurs, then the manufacturer is the "ultimate purchaser" of the imported article, and the article is excepted from marking and only the outermost container is required to be marked. See 19 CFR 134.35. On the other hand, if the manufacturing or combining process is merely a minor one which leaves the identity of the imported article intact, a substantial transformation has not occurred and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 1029 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).

You contend that Hyde is the ultimate purchaser of the imported parts, as they are substantially transformed in the U.S. when they are assembled with domestic parts into the trowel, utility knife, or pole sander. A number of rulings are cited as support. See Headquarters Ruling Letter (HRL) 707286 dated May 4, 1977 (imported side plates assembled with U.S. roller, bushings, and pins into a roller chain were substantially transformed for country of origin marking purposes); HRL C.S.D. 79-312 dated October 26, 1978 (assembly, by riveting, drive and side lengths to cutter components substantially transformed all parts into a saw chain for purposes of the Generalized System of Preferences); HRL 709321 dated October 27, 1978 (plastic handle, electrode blade, cord, and terminal socket were substantially transformed when assembled into disposable electric scalpel for marking purposes); C.S.D. 90-51 dated January 30, 1990 (valve bodies, adapters, and fasteners were substantially transformed when combined with U.S. ball, seat, stem, handle, and fasteners for marking purposes); and HRL 733171 dated July 2, 1990 (razor handle and knob assemblies lost their identity when they were assembled with U.S. razor head and cartridge subassemblies for marking purposes).

In regard to the utility knife, its parts are all domestic, except the two parts which make up the knife body. Among the rulings cited by you, none of them consider the country of origin marking for the type of metal utility knife in this case, and it does not appear that Customs has issued any such rulings. As a result of being assembled with the domestic parts, the imported casting parts undergo a change in name to a utility knife. We also find that the imported parts undergo a change in character. It is only after the domestic assembly of the imported casting parts with other domestic parts that the essence of a knife is created, capable of carrying and retracting the blade to a useable or safe position and housing extra blades. Furthermore, although the two imported parts are dedicated to become the body of the utility knife, they do not themselves represent the very essence of the finished utility knife. [While the blade is necessary in the operation of the utility knife, for this type of metal utility knife, we would find that neither the blade, nor the body alone imparts the very essence of the utility knife.] Accordingly, we find that the imported casting parts are substantially transformed in the U.S., and, therefore, Hyde is the ultimate purchaser of these imported parts.

In regard to the trowel and pole sander, all of the parts are domestic, except the trowel contains an imported frame, and the pole sander contains an imported sander base and swivel assembly. You also do not cite HRL 734521 dated September 17, 1992, which appears relevant to this case. In HRL 734521, Customs considered a vise handle imported from Taiwan which was combined with U.S.-made vise parts, namely, the vise body, movable jaw, reversible jaw plates, nut, screw, retaining collar, screw support, and thrust bearings. In HRL 734521, two courts cases were specifically cited as being relevant to the operations under consideration, United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940), and Uniroyal, Inc. v. United States. In Gibson-Thomsen, the court held that imported wood brush blocks and toothbrush handles which had bristles inserted into them in the U.S. lost their identity as such and became new articles having a new name, character, and use. However, in Uniroyal, imported uppers were found to be the "essence of the completed shoe" and, therefore, were not substantially transformed.

Accordingly, in HRL 734521, Customs found that the imported vise handle was substantially transformed after importation into the U.S. The vise handle was only a less important part among the various parts of the vise, and the key parts of the vise were the body and jaws which were made in the U.S. This determination was also based upon HRL 733804 dated November 9, 1990, where Customs ruled that attaching a U.S. handle to an imported broom head did not substantially transform the imported broom head, but instead, the broom had to be marked with the country of origin of the "essential element of the finished article." This was true "whether it is assembled with a foreign or U.S.-made handle." Similarly in HRL 733196 dated August 10, 1990, Customs compared the manufacturing costs of different pieces in determining that an imported ratchet handle was substantially transformed because the U.S.-made pawl and parts were the "very essence of the finished product."

In the case of the trowel, we find that the imported frame loses its identity when it is attached to the U.S.-made trowel plate, as it is the trowel plate which is the essential part for use in bridging untapered drywall joints. Therefore, Hyde is the ultimate purchaser of the imported frame. However, in regard to the pole sander, we find that the sander base and swivel assembly are the critical parts which make the pole sander useful in sanding ceilings and walls. Without the solid base of the sander, the sandpaper would not be flat and firm in order to perform the sanding function. Furthermore, the swivel action of the sander, as opposed to a rigid position, enables the user to perform the sanding function especially on ceiling areas. Accordingly, we find that the sander base and swivel assembly are not substantially transformed, and Hyde is not the ultimate purchaser of these parts. This is also supported by the fact that less than 50 percent of the pole sander's value is attributed to the U.S. parts. Additionally, while the rubber pad is necessary to pad the sandpaper and the clamps hold the sandpaper in place, the rubber pad can be pealed off and replaced, and it is the firmness of the sander base and the swivel action which makes the pole sander functional. We also note that the other U.S. component which enables the sander to be used on the ceiling is the pole; however, as stated, any standard pole may be used.

Additionally, Hyde claims that because it deals directly with the supplier of the imported parts, imports the parts, and is the ultimate purchaser of the imported parts, Hyde is informed of the origin of the imported parts. Therefore, Hyde claims that the outermost containers in which the foreign parts are imported are not required to be marked with the foreign article's country of origin pursuant to 19 U.S.C. ?1304(a)(3)(H) and 19 C.F.R. ?134.32(h).

The above statutory section provides that an exception from the country of origin marking requirements for any article may be allowed if:

An ultimate purchaser, by reason of the character of such article or by reason of the circumstances of its importation, must necessarily know the country of origin of such article even though it is not marked to indicate its origin.

In this case, we find that the outermost containers in which the foreign handle body parts for the utility knives and the foreign frames for the trowels are imported may be excepted from country of origin marking pursuant to 19 U.S.C. ?1304(a)(3)(H) and 19 C.F.R. ?134.32(h), provided documentary evidence is submitted at the time of importation to the satisfaction of the Port Director demonstrating that Hyde necessarily knows the country of origin of the foreign parts based on the circumstances of the importation, as required under this provision. However, in regard to the imported sander bases and swivel assemblies, since Hyde is not the ultimate purchaser, no exception under 19 CFR 134.32(h) may be granted.

HOLDING:

Based upon the information provided, it is our opinion that the imported handle body parts for the utility knives and the imported frames for the trowels are substantially transformed in the U.S. Therefore, Hyde is the ultimate purchaser of the imported handle body parts and imported frames. Accordingly, provided documentary evidence is submitted at the time of importation to the satisfaction of the Port Director demonstrating that Hyde necessarily knows the country of origin of the foreign parts based on the circumstances of the importation, the outermost containers in which the foreign handle body parts for the utility knife and the foreign frames for the trowels are imported may be excepted from country of origin marking pursuant to 19 U.S.C. ?1304(a)(3)(H) and 19 C.F.R. ?134.32(h). In regard to the imported sander bases and swivel assemblies, we find that they are not substantially transformed by the processes performed in the U.S. Accordingly, since Hyde is not the ultimate purchaser, no exception from marking may be granted under 19 CFR 134.32(h).

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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