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HQ 968137

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May 30, 2006

CLA-2 RR:CTF:TCM 968137 KBR

CATEGORY: MARKING

Pete Mento
Expeditors Tradewin, LLC
1015 Third Avenue, 12th Floor
Seattle, WA 98104

RE: Country of Origin; Saw Blade Blanks

Dear Mr. Mento:

This is in reference to your letter on behalf of The M.K. Morse Company, dated January 25, 2006, to the Bureau of Customs and Border Protection (“CBP”), Director, National Commodity Specialist Division, New York, in which you requested a binding ruling concerning the country of origin marking of saw blade blanks. You provided four samples for our review.

FACTS:

The article involved is a saw blade blank. The finished saw blade is used in a circular rotary saw. You provided a sample of the blank as imported and describe it as a circular carbon steel plate. The plate has a circular cutout or “arbor” that will allow the blade to be secured to the circular saw. The outer circumference of the blade is cut with the shape of cutting teeth. Each tooth has a pocket, later to be finish ground for placement of cutting tips. On the forward slope of each of the rough pockets a cutting tip will be attached to form the cutting edge of each tooth. You state that the blade will not function in its imported form.

You state on page one of your submission that the saw blade blanks will be imported from Taiwan. However, on page three of your submission you state that you have not yet determined from where you will source the saw blade blank. After importation to the United States, the saw blade blank undergoes what you describe as “finishing processes”. Each seat pocket is ground to the proper specification depending on the type of material the blade is intended to be used to cut. You state that different materials require the tooth to be ground to a slightly different “rake” or angle. Soft metals use a forward or “positive” rake, compared to hard metals for which a neutral or “zero” rake is preferred.

Once ground the pockets will be cleaned of residue prior to brazing (soldering) the cutting tips onto the tooth pocket. You state that you may use one of several different types of cutting tips depending on the type of material the blade is intended to cut. The types of cutting tips include: tungsten carbide, titanium carbide cermets, diamonds, or high speed steel. The blade is then sandblasted to remove any residue from the brazing process. The cutting tips will be ground to complete the specified rake of the tooth and form the proper width or flare of the tips. Finally the blade is printed with the product information and logos.

You provided four samples: one saw blade blank as imported, one saw blade after grinding but before attachment of the cutting tips, carbide cutting tips, and a completed saw blade in its retail packaging.

ISSUES:

Is the saw blade blank substantially transformed by the processing undertaken after importation into the United States?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930 (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin imported into the United States 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 United States 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. Friedlander & Co., 27 C.C.P.A. 297 at 302 (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 United States. 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. The case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed and, as a result, the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35(a).

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). You cite three rulings where CBP found there was a substantial transformation, HQ 740134 (February 5, 1991), HQ 707233 (February 8, 1977) and HQ 733882 (July 25, 1991). However, subsequent to those cases, the court in National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993), determined that imported forgings were not substantially transformed. In making its determination, the court focused on the fact that the components had been forged "into their final shape before importation," and that "the form of the components remained the same" after the processes performed in the U.S. The court also found that there was no change in use as a result of the processing 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 the instant situation, the saw blade blank is cut to shape prior to importation. The basic shape of the individual teeth are already cut into the saw blade blank. When comparing the “before” and “after” samples provided there is no visible difference between the blades. Although the cutting tips must still be attached to each tooth, this is a minor processing operation and does not amount to a substantial transformation. The blade already has its final shape and its use as a circular saw blade is predetermined prior to importation.

In HQ 734062 (April 22, 1991), CBP determined that grinding teeth into key blanks was not a substantial transformation. CBP found that the key blank had “the appearance of an unfinished key and the processing of grinding teeth into the key blanks is nothing more than a finishing process, which although important, does not alter its basic character” and, therefore, does not constitute a substantial transformation.

In a prior CBP decision involving the substantial transformation of a saw blade blank, HQ 730134 (February 6, 1987),

This ruling is mistakenly cited as “HQ 740134” in several CBP decisions. See HQ 735086 (October 20, 1993), HQ 733837 (February 5, 1991) and HQ 734062 (April 22, 1991). You cite to this ruling with both the incorrect case number and the incorrect date as “HQ 740134 (February 5, 1991)” CBP found that the blank was substantially transformed by the U.S. processing. However, in that instance, the specified number, style and shape of the teeth were cut into the blank after importation. In the instant case, your blank already has the teeth cut into it. Similarly, in HQ 733837 (February 5, 1991), a hacksaw blade blank was imported without any rough cuts for the teeth. After importation to the U.S., the teeth were ground into the hacksaw blank and sharpened. CBP found that the hacksaw blade blank was substantially transformed in the U.S. In the instant case the circular saw blade blank already has the cuts for the teeth prior to importation.

HQ 735086 (October 20, 1993), also involved imported circular saw blade blanks. Similar to the instant case, these saw blade blanks already had the rough cuts for teeth prior to importation. CBP found that those saw blade blanks with pre-existing rough cut teeth was not substantially transformed by the further processing. CBP stated:
the sharpening the carbide tips of the blades through grinding is a minor change to the blades. The identity of the article is already established before the U.S. processing takes place. Unlike HQ [730134] and 733387, the imported articles have all the basic characteristics of saw blades. The U.S. processing of the blades only further refines the products but does not change their character. The imported blades are readily recognizable as rotary blades and cannot be used to make any other products. The basic size and shape of the blades are unchanged by the U.S. processing operations. Even though the tips are unsharpened as imported, the blades would still be called saw blades, and thus the U.S. processing does not change the name of the article. There is no indication that the U.S. processing involves highly skilled or complex operations. We find that the name character or use of the saw blades are unchanged by the U.S. processing operation.

See also, HQ 735410 (April 27, 1994)(tacitly approving the decision in HQ 735086, supra).

Although in HQ 735086 the carbide tips (of U.S. origin) were attached prior to importation, which is different than the instant blanks, the reasoning in HQ 735086 was based on the blade having all the characteristics of the finished article upon importation. Such is also the case in the instant situation. The instant saw blade blanks are imported with the teeth already cut into the blank. Holding the “before” and “after” samples against each other shows no visible difference between the blades. Many circular saw blades are used without any attached tips, just using the sharpened metal teeth of the blades itself. Attaching the cutting tips to the saw blade blanks does not provide a change in name, character and use. The cutting tips are simply better able to cut than the unsharpened teeth of the instant blank. Therefore, pursuant to National Hand Tools, supra, we do not find the instant saw blade blanks to be substantially transformed.

It is unclear from your submission whether the imported saw blade blanks will be imported from Taiwan or another undetermined location. In either case, the country of origin of the finished saw blade is the country of the imported saw blade blank and the finished blade must be marked with that country of origin accordingly.

HOLDING:

In accordance with the above discussion, the saw blade blanks are not substantially transformed by the processing performed after importation into the United States. The country of origin of the finished saw blade is the country of the imported saw blade blank and the finished saw blade must be marked with the country of origin accordingly.

Sincerely,

Gail A. Hamill, Chief
Tariff Classification and Marking Branch

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