HQ 562191 - Country of Origin Marking on ductile iron saddle castings; machining; coating; assembly; substantial transformation - United States International Trade Commision Rulings

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HQ 562191

March 21, 2002

MAR-2-05 RR:CR:SM 562191 MLR

CATEGORY: MARKING

Mr. Donald S. Simpson
Barthco Trade Consultants
7575 Holstein Avenue
Philadelphia, PA 19153

RE: Country of Origin Marking on ductile iron saddle castings; machining; coating; assembly; substantial transformation

Dear Mr. Simpson:

This is in reference to your letter of June 11, 2001, to Customs in New York requesting a ruling on behalf of Southland Metals, concerning the country of origin marking on certain ductile iron saddle castings. Brochures were submitted with your request.

FACTS:

It is stated that Southland plans to import ductile iron saddle castings manufactured in either Brazil or China. The castings are imported exclusively for Southland’s U.S. client Smith-Blair, Inc. who processes the saddle castings into service saddles that are used to tap pipes to provide service connections. Smith-Blair machines the castings creating a NPT or CC threaded outlet, applies an epoxy coating, and assembles the casting with other components to form a service saddle. Based on the brochure, it appears that the imported saddle body will be assembled with a stainless steel strap, nuts and washers, studs, and gaskets to create the service saddles. Smith-Blair has provided a letter indicating that it is aware of the origin of the imported saddle castings, and as such, a marking exception under 19 CFR 134.32(h) is requested.

ISSUE:

Whether the imported saddle castings undergo a substantial transformation in the U.S.

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.

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 manufacture, which results in an article having a name, character, or use differing from that of the imported article. 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, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).

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 Headquarters Ruling Letter (HRL) 079359 dated December 10, 1987, Customs classified a saddle body of ductile iron as an unfinished pipe and tube fitting for tariff purposes under item 610.82, Tariff Schedules of the United States (TSUS) (now heading 7307, Harmonized Tariff Schedule of the United States, HTSUS). Articles under this tariff number are subject to the special marking requirements of 19 U.S.C. 1304(c). See T.D. 86-15 (January 22, 1986). Pipes and pipe fittings of iron or steel must be marked to indicate the proper country of origin by means of die stamping, cast-in-mold lettering, etching, engraving, or continuous paint stenciling. 19 U.S.C. 1304(c)(1). No exception from the marking requirements of 19 U.S.C. 1304(c)(1) may be made under 19 U.S.C. 1304(a)(3) (which includes an exception if the container is properly marked) for these products.

In HRL 081868 dated March 10, 1988, Customs considered ductile iron, single strap service saddles which consisted of a saddle body, a single strap threaded at each end, and two nuts. It was stated that after importation, the body was threaded and a gasket was added, and the outside diameter of the body was increased by flattening in a press. As in HRL 079359, Customs stated that saddle bodies and straps imported together, or saddle bodies alone, would be classifiable under item 610.82, TSUS. However, if the straps were imported alone, they would be classifiable in item 657.2550, TSUS, as other articles of iron or steel. Furthermore, Customs stated that articles classifiable in item 610.82, TSUS, as pipe and tube fittings, either finished or unfinished, would not be further processed after importation into new and different articles of commerce, and must, therefore, be marked to indicate their country of origin. However, articles classifiable in item 657.2550, TSUS, would lose their separate identity and become integral components of pipe and tube fittings when processed with other components in the U.S. This rationale concurs with subsequent rulings, namely HRL 731307 dated February 23, 1990, where an imported follower ring combined with U.S. components to form flanged coupling adaptors was found to lose its separate identity, such that the manufacturer who assembled the follower ring was the ultimate purchaser. See also HRL 558008 dated November 16, 1994, (imported valve body castings underwent a substantial transformation when a U.S.-origin resilient wedge assembly, consisting of rough iron and brass castings, were installed inside the valve body).

In this case, we find that the imported saddle castings do not undergo a substantial transformation by the operations performed in the U.S. As imported, the articles are referred to as “saddle castings” or “saddle bodies”, and, when completed, they are referred to as “service saddles.” Furthermore, other than threading and coating, the saddle bodies are imported in their final shape, and that form remains the same after assembly with the strap to form the finished service saddles. The intended purpose of the imported saddle casting is to make a service saddle, such that the use is not changed by the U.S. processing. Accordingly, pursuant to National Hand Tool, and HRL 081868, we find that there is no substantial transformation of the imported saddle castings in the U.S. Furthermore, as they are subject to the special marking requirements of 19 U.S.C. 1304(c), the saddle castings must be marked by one of the specified methods at the time of importation and the finished service saddles are also subject to these requirements. Therefore, as the saddle castings do not undergo a substantial transformation in the U.S. when made into service saddles, no exception under 19 CFR 134.32(h) is warranted.

HOLDING:

Based upon the information provided, imported saddle castings processed in the U.S. by threading, coating, and assembly with other components to make service saddles do not undergo a substantial transformation. The imported saddle castings and finished service saddles are both subject to the special marking requirements of 19 U.S.C. 1304(c). Articles subject to the marking requirements of 19 U.S.C. 1304(c) are not eligible for any of the marking exceptions in 19 U.S.C. 1304(a)(3), which includes 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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