H310108

HQ H310108 August 13, 2020 OT:RR:CTF:VS H310108 EGJ CATEGORY: Origin Peter Quinter Gray Robinson 333 S.E. 2nd Ave., Suite 3200 Miami, FL 33131 RE: Country of Origin Marking of Certain Hydraulic Couplings Dear Mr. Quinter: This is in response to your letter, dated March 30, 2020, filed on behalf of RYCO Hydraulics, Inc. (“RHI”), requesting a prospective ruling on the country of origin of metal hydraulic couplings. RHI is seeking a country of origin determination for the purposes of marking. FACTS: RHI manufactures hydraulic and industrial hoses and fittings. Its products are used in a range of different applications, such as in forestry, mining, construction, and agriculture. You state that the subject merchandise consists of metal hydraulic couplings. The finished couplings are made up of three major components: an insert, a ferrule, and a nut. In your ruling request, you note that RHI sources all of its raw materials for the couplings from Germany. You have asked us to make a country of origin determination under three different manufacturing scenarios. In the first scenario, the source material is steel tube which is cut to length in Poland. In the second scenario, the source material is steel coil which is formed into blanks in Poland. In the third scenario, the nut and the ferrule are formed into blanks in Poland, but the insert is formed into a blank in China. You have provided us with a picture of the three individual components, as well as the finished product, which is provided below: 
 You have provided us with the two manufacturing processes for each component and for the finished couplings. We have set forth each manufacturing process below: Scenario One – Steel Tube as Source Material The Ferrules RHI sources steel tube from Germany, and then ships it to Poland. In Poland, the tube is cut to length. Then, RHI ships the cut tubes to China, where workers place the tubes into a machine which forms them into their final shape. Next, workers place the ferrules into a turning machine which shapes the internal profile cut. Then the ferrules are annealed using a heat treatment. Finally, the ferrules are plated and finished. The Inserts RHI sources steel tube from Germany, and then ships it to Poland for processing. In Poland, workers cut the tube to length. Then, the tubes are shipped to China where they are placed into a machine which forms them into their final shapes. Next, the formed blanks are placed into a rolling machine and rolled. You note that 85% of the inserts are straight and do not require bending. These inserts are sent directly to plating, while the remaining 15% are placed into a bending machine and bent. The bent inserts are then sent to plating, which is the final step of the manufacturing process. The Nuts Similar to the other two processes, RHI sources steel tubes from Germany and ships them to Poland for processing. In Poland, the tubes are cut to length. Then, RHI sends the cut tubes to China. In China, the tubes are placed into a machine which forms them into their final shape. Next, workers place the nuts into a tapping machine which threads them. Finally, the nuts are plated and finished. To assemble the finished metal coupling, the process will either be automated or manual. In the manual process, a worker will take one insert and push it through one ferrule. Then, the worker will screw the nut onto the end of the insert, which will secure the three components together. Then, the ferrule is pressed into the other components to form the finished coupling. In the automated process, machines will form the three components into a finished coupling. The couplings are then packaged and prepared for export to the United States. Scenario Two – Steel Coil as Source Material The Ferrules RHI sources steel coil from Germany and ships it to Poland. In Poland, workers feed the coil into a machine which cuts the coil into billet and forms a ferrule blank into the shape of the finished ferrule. The ferrule blanks are shipped to China for further processing. In China, workers place the ferrule blanks into a turning machine which cuts the internal profile. Next, the ferrules are heat treated, plated, and finished. The Inserts Similar to the ferrules, RHI sources the steel coil from Germany and ships it to Poland. In Poland, the coil is fed into a machine which cuts a billet and forms an insert blank in the final shape of the insert. Then, the insert blanks are shipped to China for further processing. In China, the insert blanks are placed into a rolling machine and rolled. Approximately 85% of the inserts are straight and do not require bending. The remaining 15% are sent to a bending machine, where they are bent. Afterwards, all of the inserts are plated and finished. The Nuts Just like the other two processes, RHI ships the steel coil from Germany to Poland. In Poland, a worker places the coil into a machine where it is cut and formed into a nut blank. The nut blanks are shipped to China, where a worker places them into a tapping machine and they are threaded. Then, the nuts are plated and finished. The final assembly of the finished metal coupling is the same as Scenario One. After the metal couplings are assembled, they are packaged and shipped to the United States. Scenario Three – Steel Coil and Steel Tube as Source Material The Ferrules – Steel Coil Here the production of the ferrules is the same as in Scenario Two. RHI sources steel coil from Germany and ships it to Poland. In Poland, the coil is cut and formed into the ferrule blanks. Next, the blanks are shipped to China where they have internal profiles cut on a turning machine. Then, they are heat treated, plated, and finished. The Inserts - Tube The production of the inserts is the same here as in Scenario One. RHI sources steel tube from Germany, and then ships it to Poland for processing. In Poland, workers cut the tube to length. Then, the tubes are shipped to China where they are formed into insert blanks. Then, they are rolled, after which some of them are bent. All of the inserts are then plated and finished. The Nuts – Steel Coil Again, the process here is the same as for the nuts under Scenario Two. Using steel coil sourced from Germany, the facility in Poland cuts the coil and forms it into blanks. The nut blanks are shipped to China, where they are placed into a tapping machine and threaded. Then, the nuts are plated and finished. The final assembly of the coupling under Scenario Three is the same as for Scenarios One and Two. It is undisputed that the metal couplings are classified under subheading 7307.92.30 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Tubes or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel: Threaded elbows, bends and sleeves: sleeves (couplings).” ISSUE: For Scenarios One, Two, and Three, what is the country of origin of the metal hydraulic couplings for the purposes of marking? 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 imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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. Friedlaender & Co. Inc., 27 C.C.P.A. 297, 302, C.A.D. 104 (1940). The country of origin marking r

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 imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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. Friedlaender & Co. Inc., 27 C.C.P.A. 297, 302, C.A.D. 104 (1940).   The country of origin marking requirements and the exceptions of 19 U.S.C. § 1304 are set forth in Part 134, Customs Regulations (19 C.F.R. Part 134). Section 134.1(b), Customs Regulations (19 C.F.R. § 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. A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, and use which differs from the original material subjected to the process. United States v. GibsonThomsen Co., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments, Inc. v. United States, 681 F.2d 778, 782 (1982). We have set forth our analysis for both proposed scenarios below. The first question presented is whether t