H313087

HQ H313087 May 27, 2021 OT:RR:CTF:VS H313087 AP CATEGORY: Origin Larry T. Ordet, Member Sandler, Travis & Rosenberg, P.A. 5835 Blue Lagoon Dr, Suite 200 Miami, FL 33126 RE: Country of origin of finished golf clubs assembled in Mexico; Section 301 trade remedy; 9903.88.15, HTSUS Dear Mr. Ordet: This is in response to your July 13, 2020 ruling request, filed on behalf of Dynasty Manufacturing (“importer”), regarding the country of origin of golf clubs imported from Mexico for purposes of Section 301 trade remedies. A virtual meeting with counsel and the importer was held on September 3, 2020. FACTS: The goods at issue are finished golf clubs classified in subheading 9506.31.00, Harmonized Tariff Schedule of the United States (“HTSUS”). Each golf club has a Chinese shaft, a Chinese grip, and a head produced in Mexico from raw Chinese castings. The golf clubs will be assembled in Mexico. The assembly performed in Mexico involves bonding of the club head to the shaft, attaching of the rubber grip to the upper portion of the shaft, and polishing and painting of the club. To produce the club head, raw one-piece or two-piece Chinese castings will be shipped to Mexico. The castings have the rough design of a club head. During the processing in Mexico, metal from the castings will be removed. The castings will be heat-treated in Mexico to harden the metal and increase its durability. After the heat treatment, the castings will undergo face welding (for the two-piece head), hosel machining and hosel reaming, top line machining, score line machining, face machining, loft and lie adjustment, initial grinding to establish beginning profile, sandblasting, heavy polishing in preparation of plating, weight check and adjustments to meet specifications, final polishing, masking, painting, logo engraving, ink fill for sole plate, machine buffing, and decal application, and quality control lab performance testing. The machining of the castings consists of score line, hosel, top line, and screw machining. The score line machining involves the production of lines on the face of the club. The hosel machining/reaming includes the creation of a hole in the hosel by drilling and precision reaming the diameter to fit a shaft. The top line machining refers to the creation of a slot at the top of the iron where a cosmetic carbon fiber insert will be later added. The screw machining results in the creation of a port for insertion of interchangeable weighted screws. Various materials such as a nylon frame, aluminum strip, tape, some or all of which are produced in Mexico, will be added to complete the club head. The head will be assembled in Mexico with a Chinese shaft and grip to form a finished club, which will then be imported into the United States. You believe that the country of origin of the finished golf clubs is Mexico because the shafts and grips are produced in China, the Chinese castings used to produce the heads purportedly “undergo significant processing” in Mexico, and the final assembly is in Mexico. ISSUE: What is the country of origin of the finished golf club for purposes of Section 301 trade remedies? LAW AND ANALYSIS: The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 7.5 percent will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20(r), HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s)(i), HTSUS. Among the subheadings listed in U.S. Note 20(s)(i) of Subchapter III, Chapter 99, HTSUS, is 9506.31.00. When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 681 F.2d 778 (CCPA 1982). The courts consider the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. See Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). In Nat’l Hand Tool Corp. v. United States, 16 CIT 308, aff’d per curiam, 989 F.2d 1201 (Fed. Cir. 1993), hand tool components used to make flex sockets, speeder handles, and flex handles were cold-formed or hot-forged into their final shape prior to importation, with the exception of speeder handle bars, which were reshaped by a power press after importation, and the grips of the flex handles, which were knurled in the U.S. After entry, the imported items were heat treated, sand-blasted, and electroplated. The court found no substantial transformation because the processing within the U.S. did not alter the name of the imported components, the character of the parts remained substantially unchanged upon the completion of such processing, and the intended use of the articles was predetermined at the time of importation. U.S. Customs and Border Protection (“CBP”) has consistently ruled on the origin of golf clubs, taking into consideration the different origin of the materials and where they were assembled. Headquarters Ruling Letter (“HQ”) 734256, dated July 1, 1992, explained that a simple assembly of already finished components into golf clubs would not result in a substantial transformation: … the making of the golf club is a simple assembly process of basically finished parts. We note that there is a hole on the top of the head so no drilling is necessary. The combining of the head and shaft is a relatively simple operation which does not take a great deal of time and skill and not a complex assembly. Basically, all that is needed to make the finished club is to insert the shaft into the head and to glue them together … Although U.S. made grips are added to the golf clubs, the grips are much less significant components as compared with the heads and shafts and their insertion onto the golf clubs is fairly simple. In other words, we find because the most important components are foreign and the assembly process is very simple there is no substantial transformation of the shafts and heads. The ruling concluded that heads made in Taiwan and Japan, and shafts made in Japan were not substantially transformed by assembly in the United States. As a result, the country of origin of each of these components had to be separately marked to indicate its own country of origin. HQ H313537, dated Oct. 16, 2020, concluded that where the golf club head or shaft was of the same origin as the country where the assembly of the golf club driver occurs, the country of origin of the club was the country of its assembly. However, where the club head or the shaft originated from a country other than the country of assembly of the finished golf club, no substantial transformation occurred in the country of assembly and the country of origin of each foreign component had to be indicated on the club or the container. See also HQ H313495, dated Dec. 2, 2020 (reaching the same conclusion). In New York Ruling (“NY”) N310895, dated Apr. 17, 2020, iron golf club heads of forged steel were manufactured in Taiwan using raw steel bars sourced from Taiwan or Japan. The raw bars were cut to precise lengths and were bent by forging. When the shape forging process was complete, tungsten cap was tack welded in place onto the forged articles. Once fully welded and polished, the

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 7.5 percent will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter 99, Subchapter III, U.S. Note 20(r), HTSUS. The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s)(i), HTSUS. Among the subheadings listed in U.S. Note 20(s)(i) of Subchapter III, Chapter 99, HTSUS, is 9506.31.00. When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 681 F.2d 778 (CCPA 1982). The courts consider the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. See Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). In Nat’l Hand Tool Corp. v. United States, 16 CIT 308, aff’d per curiam, 989 F.2d 1201 (Fed. Cir. 1993), hand tool components used to make flex sockets, speeder handles, and flex handles were cold-formed or hot-forged into their final shape prior to importation, with the exception of speeder handle bars, which were reshaped by a power press after importation, and the grips of the flex handles, which were knurled in the U.S. After entry, the imported items were