H317432

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H317432 April 29, 2021 OT:RR:CTF:VS H317432 EE CATEGORY: Origin Center Director Industrial & Manufacturing Materials Center of Excellence and Expertise U.S. Customs and Border Protection 726 Exchange Street, Suite 400 Buffalo, NY 14210 RE: Internal Advice; Application for Further Review of Protest No. 4772-20-100684; Industrial Diamond Superabrasives; Country of Origin Dear Center Director: We are providing internal advice with regard to Protest No. 4772-20-100684 concerning the country of origin of certain industrial Superabrasives products (“Superabrasives”) produced in Romania from Chinese origin feedstock. The issues raised by this protest were the subject of a request for a prospective ruling, dated May 20, 2019, submitted by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, on behalf of their client, Lands Superabrasives, Co. (“Lands”). In the ruling request submitted by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, counsel stated that “[t]o the best of our knowledge, neither the instant transaction nor one identical to it has ever been considered, or is currently being considered by U.S. Customs and Border Protection…” However, it has come to our attention that at the time the ruling request was submitted, the same or identical transactions had already occurred, and the entries were liquidated from September to November 2019 at the Industrial & Manufacturing Materials Center of Excellence and Expertise. We note that counsel’s request for a ruling was not proper pursuant to section 177.1(a)(2)(ii), U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 177.1(a)(2)(ii)); rather, the proper course of action was to file a request for internal advice in accordance with 19 C.F.R. § 177.11. A meeting between Lands, counsel, CBP Laboratory, and this office occurred on December 16, 2020. We have taken into consideration the discussion and arguments presented during that meeting in reaching our decision set forth below. Counsel for Lands has asked that certain information submitted in connection with this request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in the request will not be released to the public and will be withheld from published versions of this ruling. FACTS: Lands imports Superabrasives from Romania that are used in a wide array of high precision commercial applications, including precision grinding, sawing, cutting, polishing, lapping, drilling, machining, and industrial tooling. The products that are the subject of this ruling request are as follows: Product No. Description/Name:  STK600S Ultra Fine Sized Synthetic Graded Industrial Diamond Superabrasives Micronpowder  STK600 Fine Sized Graded Synthetic Industrial Diamond Superabrasives Micronpowder  STK100S Finer than 80 Mesh Synthetic Industrial Diamond Superabrasives Powder  STK126NPC Synthetic Industrial Diamond Superabrasives coated with Nickel or Copper (50%-60% by weight metal)  STK103N Synthetic Industrial Diamond Superabrasives coated with Nickel (30% by weight metal)  STK126CBN Cubic Boron Nitride Superabrasives coated with Nickel or Copper (60% by weight metal)  STK50 Purified Sorted Synthetic Industrial Diamond Superabrasives Powder   Lands states that each Superabrasives product is specifically manufactured to meet certain technical specifications (size, shape, hardness, blend, etc.), depending on the required application. The Superabrasives are used in many industries including aerospace, automobile, consumer hardware, electronics, medical, and construction. Some examples of the Superabrasives applications include: • Precision machining of automobiles; • Production of oil and gas bits, engine blocks, concrete, medical tools, ceramic ball bearing parts for wind turbines, and direct consumer tools; • Precision cutting of copper/fiber optic wires or sapphire ingots used in electronics; • Sensitive polishing of glasses and telescope lenses. Lands states that synthetic industrial feedstock raw material used to produce the Superabrasives is sourced in China, the only country that manufactures the material in commercial quantities. The production of feedstock results in crystals that are irregular in shape, size, and contain various impurities, which are a byproduct of the manufacturing process. Lands states that in this condition, the unrefined feedstock cannot be used for any of the Superabrasives applications. To produce the Superabrasives, Lands sends the raw feedstock to Supertek SRL (“Supertek”), an abrasive product manufacturing facility in Romania. The manufacturing process in Romania can take at the minimum 5 days, and often several months to over a year in the aggregate to complete production using Lands proprietary formula, processes, and technology to produce each of the Superabrasives with their specific applications. Lands states that the exact processing operations in Romania required depends on the ultimate intended use for the Superabrasives; however, they undergo a combination of many of the below processes: Sourcing: Raw material feedstock is sourced and shipped to Romania. Raw Material Qualification: The feedstock is qualified through comprehensive quality testing, which includes, but is not limited to testing for the following: • Crystal strength (Toughness Index (TI), Thermal Toughness Index (TTI) • Crystal micro-fracturing characteristic (MC Micro Chipping) • Crystal crush strength SCCI (Single Crystal Crushing Index) • SEM (Scanning Electron Microscopy) • EDX (Energy Dispersive X-Ray) analysis • Crystal structure evaluation, crystal shape testing, crystal size distribution (PSD Particle Size Distribution), internal metallic impurities/magnetic contents, surface cleanliness. Purification: As a byproduct of producing the feedstock, impurities that contaminate the product such as sand, dirt, etc. are created. The impurities can scratch, damage, prevent bonding, or cause inefficiencies to a tool, and must be removed. Feedstock is processed through various filters to eliminate the impurities and extract the crystals. Grading, Sieving, Filtering: As produced, feedstock is ungraded, with crystals of mixed sizes and shapes. Supertek conducts various grading, sieving, and filtering operations to separate the crystals into usable uniform sizes and shapes. Lands states that this step involves complex and time-consuming processing that can take over a year for ultrafine grading, and requires specialized equipment. Specialized electroformed ultrasonic sieves using ultrasonic waves separate the various crystal sizes to meet international ISO/ANSI standards. Dedicated vibrating tables and screen banks separate crystals based on crystal shape. Magnetic Separation, Shape Separation: Customized magnetic separating machinery is used to extract crystals with a magnetic (metal) content. The vibrating tables and screen banks may also be used in this step to separate crystals based on crystal shape. Feedstock that undergoes this process may be further processed into micron powders (i.e., from 10 mesh to [X]). Crystal Alteration, Heat Shock, [X]: The crystals (measured in TI), may be too hard for the intended applications. A high level of heat ([X]) is applied to change and weaken the original crystal structure, fracturing it to expose new sharp edges for cutting. For example, after heating, feedstock with an original TI of 135 may result in a TI of 104 with a change of crystal structure. In some cases, [X] / Surface Texturing processes are required because the feedstock crystal surface may be too smooth to adhere to a metal or other coating or bonding system. A proprietary [X] treatment is applied to penetrate the surface and “rough” the smooth surface to expose crevices in the

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty 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”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(s), HTSUS. When determining the country of origin for purposes of applying trade remedies under Section 301, the substantial transformation analysis is applicable. A substantial transformation occurs when an article emerges from a process with a new name, character, and use different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). While the name of the crude material purchased in China changes from feedstock to various Superabrasives when processed in Romania, as noted by the Court in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (Ct. Int’l Trade 2016), “[c]ourts have primarily focused on changes in use or character”. Precision Specialty Metals v. United States, 116 F. Supp. 2d 1350, 1364 (Ct. Int’l Trade 2000). “The name criterion is generally considered the least compelling of the factors which will support a finding of substantial transformation.” Ferrostaal Metals Corp. v. United States, 664 F. Supp. 535, 541 (Ct. Int’l Trade 1987) (“Ferrostaal Metals”); see also Superior Wire, Div. of Superior Prods. Co. v. United States, 669 F. Supp. 472, 480 (Ct. Int’l Trade 1987) (“Superior Wire”), aff’d 867 F.2d 1409 (Fed. Cir. 1989) (when only a change in name is found, “such a change has rarely been dispositive”).The courts have held that when the properties and uses of a product are predetermined by the material from which it was made, no substantial