United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 2000 HQ Rulings > HQ 561409 - HQ 561657 > HQ 561498

Previous Ruling Next Ruling
HQ 561498

---

March 22, 2000

MAR-2-05 RR:CR:SM 561498 KSG

CATEGORY: MARKING

Louise N. Howe, Esq.
Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004

RE: Country of origin of surgical instruments; forging; forceps; needle holder; substantial transformation

Dear Ms. Howe:

This is in reference to your letter of September 1, 1999, requesting a ruling on behalf of J. Jamner Surgical Instruments, Inc., concerning the country of origin of certain surgical instruments. Samples were submitted with your request. We have also incorporated the information presented in your letter of March 10, 2000.

FACTS:

The surgical instruments are forged either in Germany from stainless steel made in Germany or in the U.S. from stainless steel made in the U.S. The various surgical instruments involved include forceps, surgical scissors, and clamps. The forged articles are shaped to the required, specified shape for the particular instrument. The following forgings and their respective finished products of various surgical instruments were submitted with this request:

(1) a forging which is made into forceps; (2) a forging which is made into tissue forceps; and (3) a forging which is made into a needle holder.

The U.S. or German forgings are shipped to Pakistan for further working and finishing. In Pakistan, the forgings are machined. The box, ratchet and jaw serrations will be cut into the forceps. The boxlock pins will be inserted into the hinge joint of the instruments. The instruments will be mounted, filed, heat treated, riveted, polished, electropolished and passivated. The instruments will be hardened by new state–of-the-art equipment which will insure more precise hardening results and better control of the quality of the articles. The instruments will be packaged in Germany; the packaging of the German- forged instruments will be marked “Made in Germany,” “Stainless Germany,” or “Product of Germany” and have the “Jarit” name and U.S. address. The packaging of the instruments made from U.S. forgings will be marked “Made in USA,” “Stainless United States,” or “Product of United States.” The country of origin will also be etched permanently, legibly and conspicuously on the instruments themselves.

ISSUE:

What is the country of origin of the surgical instruments manufactured as 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 (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.

Section 134.46, Customs Regulations (19 CFR 134.46), as revised by T.D. 97-72, dated August 20, 1997, provides:

In any case in which the words “United States,” or “American,” the letters “U.S.A.,” any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” “Product of,” or other words of similar meaning.

For country of origin marking purposes, a substantial transformation of an
article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing However, if the manufacturing or combining process is merely a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).

Counsel argues that the surgical instruments are products of the country where the forgings are made based on National Hand Tool Corp. v. United States, 3 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), and Headquarters Ruling Letter (HRL) 561002 dated May 21, 1998; HRL 560441 dated November 18, 1997; HRL 560239 dated June 17, 1997; and HRL 559847 dated January 2, 1997.

In National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the court considered sockets and flex handles which were either cold formed or hot forged into their final shape prior to importation, speeder handles which were reshaped by a power press after importation, and the grip of flex handles which were knurled in the U.S. The imported articles were then heat treated which strengthened the surface of the steel, and cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components were assembled together which the court stated required some skill and dexterity. The court determined that the imported articles were not substantially transformed and that they remained products of Taiwan. In making its determination, the court focused on the fact that the components had been coldformed or hotforged “into their final shape before importation,” and that “the form of the components remained the same” after the assembly and heattreatment processes performed in the U.S. Although the court stated that a predetermined use would not necessarily preclude a finding of a substantial transformation, it noted that such determination must be based on the totality of the evidence. The court then concluded that no substantial change in name, character or use occurred as a result of the processing performed in the U.S.

In HRL 559847, dated January 2, 1997, Customs considered U.S.origin stainless steel sheets cut into strips of suitable width, which were further cut into blanks. The blanks were then heated and hammer forged. The forgings were annealed and trimmed, and cold stamped to straighten the trimmed forgings. The forgings were then shipped to Pakistan where they underwent milling operations to cut the box, ratchet, and jaw serrations into the forceps; assembled; ground; filed; heat treated, including tempering and testing for hardness; acid pickled; polished; chemical cleaned; and buffed. It was held that inasmuch as the forgings resembled the shape and size of the completed instruments upon importation into Pakistan, the operations performed in Pakistan did not substantially transform the forgings into a new and different article of Pakistani origin. Accordingly, the origin of the finished instruments was the U.S. In HRL 560441 dated November 18, 1997, it was held that German rough forgings of surgical and medical instruments sent to Hungary where they were machined, assembled, rough polished, heat treated and cleaned, did not undergo a substantial transformation in Hungary.

Similarly, in HRL 561189, dated November 5, 1998, Customs concluded that surgical instruments forged in Germany and processed into completed articles in Pakistan were a product of Germany.

We find the finishing processes performed in Pakistan in this case to be similar to those considered in HRL 559847, HRL 560441 and HRL 561189. Accordingly, pursuant to those rulings and National Hand Tool, we find that there is not a substantial transformation of the forgings in Pakistan, and the country of origin of the finished instruments will be Germany or the U.S.--the country of origin of the forging. We note that, prior to the finishing operations performed in Pakistan, each forging has the final shape of the finished surgical instrument. As in HRL 560441, HRL 561189 and HRL 559847, the surgical instrument forging is not changed in Pakistan to such a degree to result in a new and different article with a new name, character or use.

We note that the U.S. address on the packaging of the German-origin instruments triggers the special marking requirements of 19 CFR 134.46. Therefore, the proposed marking “Stainless Germany” would not be acceptable. The word Germany must be preceded by the phrase “Made in, “ “Product of,” or similar language. With regard to the finished surgical instruments whose origin is the U.S., 19 U.S.C. 1304 is inapplicable and no country of origin marking is required by this provision. The Federal Trade Commission (“FTC”) has jurisdiction concerning the use of the phrase “Made in the U.S.A.,” or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to the FTC, at the following address: Federal Trade Commission, 6th & Pennsylvania Avenue, N.W., Washington, D.C. 20508.

We note that you reference a ruling previously issued to J. Jamner Surgical Instruments, Inc. (NY 813021, dated August 28, 1995) concerning the eligibility of certain surgical instruments processed in Pakistan for duty-free treatment under the Generalized System of Preferences. However, we believe that ruling is distinguishable from the instant case because it did not address the proper country of origin marking of surgical instruments and involved somewhat different production scenarios and processing than are involved here. Therefore, no further discussion or consideration of NY 813021 is deemed necessary in connection with this case.

HOLDING:

Based on the facts and samples presented, we find that the processing in Pakistan does not result in a substantial transformation of the German or U.S. forgings. Therefore, the country of origin of the finished surgical instruments is Germany or the U.S. The German surgical instruments may be marked “Product of Germany,” or “Made in Germany. There is no marking requirement in accordance with 19 U.S.C. 1304 with regard to surgical instruments made in the U.S.

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
Commercial Rulings Division

Previous Ruling Next Ruling