HQ 560214 - Reconsideration of NYRL A86836; country of origin marking requirements for wire rope logging chokers; 19 U.S.C. ?1304; 19 CFR Part 134; substantial transformation. - United States International Trade Commision Rulings

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HQ 560214

September 3, 1997

MAR-02 RR:TC:SM 560214 JML

CATEGORY: MARKING

Mr. Robert J. Hirschfield
General Manager
Wallingford's Inc.
263 Main Street
Tilton, New Hampshire 03276

RE: Reconsideration of NYRL A86836; country of origin marking requirements for wire rope logging chokers; 19 U.S.C. ?1304; 19 CFR Part 134; substantial transformation.

Dear Mr. Hirschfield:

This is in response to your letter of November 22, 1996, requesting reconsideration of New York Ruling Letter ("NYRL") A86836, dated October 3, 1996. Specifically, the matter at issue involves a country of origin marking determination for logging chokers manufactured in the United States ("U.S.").

FACTS:

Wallingford's, Inc. ("Wallingford's"), is a U.S. manufacturer of logging chokers for sale in the U.S. domestic market. Logging chokers are used in the harvesting of trees to transport them from the harvest site to the processing yard.

The chokers are made from wire rope cable imported from several countries (including India, S. Korea, Mexico and Turkey). All other components are of U.S. origin. The rope is cut on an automatic cutting machine to the specific length required by the model of choker being built. Sliding hooks are put on the rope, and end ferrules are swaged on using 500 ton electro-hydraulic presses. Additionally, certain models of the chokers have chain attachments and sleeves pressed on. Upon completiton of all operations, the chokers are pull tested for quality control.

You state that the operations performed in the U.S. to produce the logging chokers are such that the wire rope is substantially transformed into a domestic good, and can be marked "Made in the U.S.A."

ISSUE:

What is the country of origin of the finished logging chokers?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 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 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., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the 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 this part; however for a good of a NAFTA country, the
NAFTA Marking Rules will determine the country of origin. (Emphasis added.)

GOODS OF NON-NAFTA COUNTRIES

With respect to goods of non-NAFTA countries for country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in manufacture which results in an article having a name, character, or use differing from that of the imported article. In such circumstances, the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered 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(a). United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940) On the other hand, section 134.1(d)(2), Customs Regulations (19 CFR 134.1(d)(2)) states that if the manufacturing process is minor and the identity of the imported article is left intact, the consumer or user of the article will be regarded as the ultimate purchaser.

In Headquarters Ruling Letter ("HRL") 731953 dated April 27, 1990, no substantial transformation was found when connector heads were attached to the ends of wire rope cable because the cable was already made to specifications, and once the cable was cut and fittings were attached, its use was determined. In HRL 555774, dated December 10, 1990, it was held that cutting Japanese-origin wire to length in the U.S., and crimping electrical connectors onto the ends of the wire was not a substantial transformation. In HRL 555892, dated October 10, 1991, Korean wire rope was imported into Canada where it was fitted with Canadian-origin hardware, such as eyelets and dies, to produce wire rope slings or swifters. The operations generally entailed forming the ends of the wire rope into a loop and crimping Canadian hardware onto the neck of the loop, or threading the wire rope into the hardware to create an intertwined loop. For Voluntary Restraint Arrangement (VRA) purposes, it was held that the wire rope maintained its essential character throughout the process and did not lose its identity and become an integral part of a new article when attached with the hardware.

Consistent with the above, we are of the opinion that processing foreign origin (non-NAFTA) wire rope in the U.S. by cutting it to length, sliding on hooks, affixing end ferrules, and pressing on chain attachments and sleeves to make logging chokers, does not substantially transform the wire rope. Rather, the wire rope maintains its character throughout the process and does not lose its identity and become an integral part of a new article when attached with the hardware. The cutting to length and simple attachment of the various components are minor operations which do not change the rope into a new and different article of commerce. As such, the chokers must be marked with their foreign country of origin in accordance with 19 U.S.C.

WIRE ROPE FROM MEXICO

Section 134.1(j), Customs Regulations (19 CFR 134.1(j)), provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. A "good of a NAFTA country" is defined in Section 134.1(g), Customs Regulations (19 CFR 134.1(g)), as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at Part 102, Customs Regulations (19 CFR Part 102).

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. Paragraph (a) of this section states that the 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 applicable requirements of these rules are satisfied.

Because the finished chokers are made from both Mexican and U.S. origin materials, they can not be considered wholly obtained or produced or produced exclusively from domestic materials. In such circumstances, the applicable rule is 19 CFR 102.11(a)(3). Customs notes that the completed logging chokers are classifiable under subheading 7312.10, HTSUS. Likewise, the wire rope is classifiable in heading 7312, HTSUS. The requisite change in tariff classification for headings 7309-7314 set out in section 102.20(n), Section XV, Chapters 72 through 83, provides:

7309-7314............ A change to heading 7309 through 7314 from any other heading, including another heading within that group.

The finished logging chokers and the wire rope are both classifiable in heading 7312, HTSUS. Therefore, the imported forgings will not undergo the requisite tariff shift, and section 102.11(b), Customs Regulations (19 CFR 102.11(b)) must be applied, which in pertinent part provides that:

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 of 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 ...

When determining the essential character of a good under section 102.11, section 102.18(b)(1), Customs Regulations (19 CFR 102.18(b)(1)) provides that only those domestic and foreign materials that are classified in a tariff provision from which a change is not allowed shall be taken into consideration. Section 102.18(b)(1)(iii), Customs Regulations (19 CFR 102.18(b)(1)(iii)), provides that if there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed, then that material will represent the single material that imparts the essential character to the good under section 102.11.

Pursuant to section 102.18(b)(1)(iii), the single material that imparts the essential character of the finished logging chokers is the wire rope. The country of origin of the logging chokers is the country of origin of the wire rope -- Mexico. Thus, the logging chokers must be marked accordingly under 19 U.S.C. ?1304.

HOLDING:

On the basis of the information provided, Customs is of the opinion that non-NAFTA foreign origin wire rope is not substantially transformed into a good of the U.S. upon the wire being cut to length, attaching sliding hooks, affixing end ferrules, and pressing on chain attachments and sleeves to make logging chokers. Such operations are minor which do not change the identity of the rope. Accordingly, the logging chokers must be marked with their foreign country of origin in accordance with 19 U.S.C. ?1304.

Similarly, the essential character of the logging chokers made from wire rope of Mexican origin is the wire rope. Thus, pursuant to the NAFTA Marking Rules, the country of origin of the logging chokers for marking purposes is the country of origin of the wire rope -- Mexico -- and must be marked accordingly. NYRL A86836, dated October 3, 1996, is hereby affirmed.

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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