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HQ 560172

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March 11, 1997

MAR-2-05 RR:TC:SM 560172 MLR

CATEGORY: MARKING

Cheryl Ellsworth, Esq.
Jennifer de Laurentiis, Esq.
Harris & Ellsworth
2600 Virginia Avenue, N.W., Suite 1113
Washington, D.C. 20037-1905

RE: Country of Origin Marking for Manganese-Aluminum tablets; Substantial Transformation

Dear Ms. Ellsworth and Ms. de Laurentiis:

This is in reference to your letters of October 30 and November 13, 1996, requesting a ruling on behalf of Shieldalloy Metallurgical Corp. ("Shieldalloy"), concerning the country of origin marking for manganese-aluminum tablets. A sample was submitted with your request.

FACTS:

It is stated that manganese powder, either a product of South Africa, China and/or other countries, and aluminum powder, either a product of France and/or other countries, are imported into England and processed into manganese-aluminum tablets ("tablets"). In England, the manganese and aluminum powder are combined in a mixture which is 85 percent manganese and 15 percent aluminum, by weight. The mixture is measured and then cold-compacted to produce uniform tablets which are approximately four inches in diameter and two inches thick, and which weigh two pounds.

These tablets are imported into the U.S. and are used by primary and secondary aluminum producers for use in the production of container sheet ingot for aluminum beverage cans. The tablets are stated to be a precisely measured, consistently sized and conveniently packaged manganese-aluminum additive used to increase the ductility of the container sheet ingot. Such enhanced ductility is stated to be necessary to deep draw the ingot for use in the production of beverage cans.

ISSUE:

What is the country of origin of the imported manganese-aluminum tablets for purposes of 19 U.S.C. 1304?

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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

I. Substantial Transformation

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. See 19 CFR 134.35.

It is claimed that the manganese and aluminum powder undergo a substantial transformation in England, and that the tablets are new and different articles of commerce that possess a different name, character and use from the individual constituent powders.
A change in name is suggested since "manganese and aluminum powder is imported into England and "manganese-aluminum tablets" are exported from England. A change in character is claimed because the tablets are "downstream" products that differ from the individual powders in composition, physical form, and shape. A change in use is suggested because the tablets are used in different applications than manganese and aluminum powders. The downstream articles of commerce are stated to be used virtually exclusively in the aluminum industry, citing Manganese Metal from the People's Republic of China, Inv. No. 731-TA-714 (Final), USITC Pub. 2939 at 4 (December 1995). Additionally, it is stated that the tablets are typically sold to primary and secondary aluminum producers for use in the production of container sheet ingot for aluminum beverage cans. It is stated that the precise composition and physical dimensions of the tablets are distinguishing characteristics which enable the tablets to be used in exact quantities, and to be dissolved uniformly, thereby maximizing recovery rates. In contrast, it is stated that manganese powder and aluminum powder are primary materials used for different applications than the tablets, i.e., manganese powder is used in the manufacture of welding rods or in the production of manganese-aluminum briquettes and tablets and is virtually never used directly in the production of aluminum, because it does not dispense uniformly in the aluminum solution. Accordingly, it is claimed that manganese-aluminum tablets and manganese powder are viewed as distinct inputs by aluminum producers. Aluminum powder is stated to be used primarily for solid propellant for booster rockets and in the production of paints, pigments and bombs.

In Headquarters Ruling Letter (HRL) 071341 dated August 24, 1983, Customs discussed the applicability of the Generalized System of Preferences (GSP) to non-alloy and alloy aluminum ingots and billets imported from a beneficiary developing country. Customs held in HRL 071341 that, in the case of non-alloy aluminum, the siphoning off of molten aluminum and placing it in a casting mold did not constitute a separate manufacturing process since the procedure was a necessary consequence of the production of aluminum and required nothing more than the passive dissipation of heat. It was also stated that the conversion of molten aluminum to a solid ingot or billet form merely by allowing it to cool in a mold did not result in a new and different article of commerce, since the product was identified as non-alloy aluminum in bulk form both before and after casting.

However, a different result was reached in HRL 071341 with regard to the aluminum alloy ingots and billets. Molten aluminum, produced by substantially transforming the imported alumina, was passed to a holding furnace where other materials were added in order to produce aluminum alloy. Customs held that since aluminum alloy had different characteristics and uses from non-alloy aluminum and was recognized in the trade as a different product, the molten aluminum could be considered to have been substantially transformed into a new and different article of commerce in the holding furnace by the addition of the alloying materials.

In 556407 dated March 12, 1992, unlike the molten aluminum in HRL 071341, cast iron material molten from steel scrap did not constitute an intermediate product which qualified as a substantially transformed constituent material used in the production of cast iron articles. Rather, the production process which involved the addition of ferroalloys to the molten steel and the subsequent casting of the molten steel into specific iron articles, represented a continuous, necessary production sequence, which did not result in an identifiable, separate article of commerce (molten cast iron) which became physically and economically isolated before it was processed into the final article.

In HRL 557046 dated May 17, 1993, Customs found that the melting of magnesium, the addition of flux, manganese, zinc, and aluminum, and pouring the alloyed magnesium into a mold to form a cast ingot constituted a substantial transformation. Furthermore, it was found that melting these ingots, pouring the liquid into a mold around a preheated steel rod, and trimming and smoothing the rough edges, substantially transformed the ingots into anodes for purposes of the GSP.

Although this case does not pertain to the eligibility for GSP, the priniciples of substantial transformation articulated in the rulings above may be applied for purposes of determining the country of origin of the imported manganese-aluminum tablets. While this case does not involve the melting of the powders in order to create the tablets, but instead involves a cold compaction process, it is our opinion that a new and different article of commerce is created by the process performed in England. As the rulings above indicate, when the materials only were melted down into the same material and then into a solid form, a substantial transformation was found. In the scenarios when the materials were mixed to create a different composition of materials, which in turn were made into a finished article, such as an anode, a double substantial transformation was found. Here, we only must find a single substantial transformation which we find occurs since the powders consist of manganese and aluminum and the finished tablets not only are in a different shape but they are also different in composition from the original unmixed materials. Additionally, the powders are mostly used for different purposes from the tablets. Accordingly, we find that the manganese and aluminum powders are substantially transformed when made into manganese-aluminum tablets which are considered a product of England for country of origin marking purposes.

HOLDING:

Based upon the information and sample provided, it is our opinion that the manganese powder and aluminum powder are substantially transformed in England when they are made into manganese-aluminum tablets. Therefore, upon importation into the U.S., the manganese-aluminum tablets are considered a product of England for country of origin marking purposes. 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
Tariff Classification Appeals

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