Railway or Tramway Transition Rails; Country of Origin

HQ 083426 May 24, 1989 CLA-2:CO:R:C:G 083426 JAS CATEGORY: Classification TARIFF NO.: None Klaus Koelling Voest-Alpine International Corporation 60 East 42nd. Street New York, New York 10165 RE: Railway or Tramway Transition Rails; Country of Origin Dear Mr. Koelling: In your letter of January 17, 1989, you inquire as to the country of origin of transition rails fabricated in Austria from rail sections produced in different EC countries. Our New York office has already ruled on the tariff classification issue. At our request, you provided additional information on the processing in Austria which we received on April 13, 1989. FACTS: Each railroad normally utilizes track with rails of one cross section. Transition rails serve to connect or splice together rails of one cross section with those of another cross section. They permit rail cars of one railroad to travel on the track of another railroad. You state that American Railway Engineering Association (AREA) rail sections are utilized in the process. These rail sections are sourced in different EC countries and stockpiled in Austria. In this instance, 115 RE (denoting a rail weight of 115 lbs. per 3-foot length) and 132 RE rail sections are used. In Austria, one end of the 115 RE section is forged and machined if necessary to the dimensional cross-section of the 132 RE section. The forged end of the 115 RE section is then flash butt welded to the 132 RE section and the weld area finished machined to remove burrs and excess metal. Ultrasonic and dye penetration tests detect defects in the welded area. Transition rails produced from this process range in length from 10 to 20 feet. You state that the forging, welding, machining and testing adds approximately 44.2 percent - 2 - to the cost of the EC rail sections, inclusive of the cost of a stress pulsation test performed on randomly selected samples. ISSUE: Does the described processing substantially transform the EC rail sections so that Austria is the country of origin of the transition rails for purposes of the U.S.-Austria steel arrangement? LAW AND ANALYSIS: In order for the EC rail sections to be considered as having been substantially transformed in Austria by the described processing, the record must establish that the processing resulted in a product other than or materially different from the rail sections of EC origin. A new and different article must emerge from the processing, one having a new name, character or use. Anheuser-Busch Brewing Association v. United States, 207 U.S. 556 (1908). A mere change in a product's name, without more, is a relatively unimportant consideration in most instances. United States v. International Paint Co., 35 CCPA 87, C.A.D. 376 (1948). As to character and use, however, there must be evidence to show that the processing in Austria transforms the EC rail sections in such a way that they are no longer the essence of the final product as imported, and also dedicates that product to a specific use not associated with the rail sections. The record here supports a finding that the processing in Austria results in a new and different article of commerce, one commercially recognizable as a transition rail. The article, as imported, has lost the identifying characteristics of its constituent components, the rail sections, and has taken on a new use - to permit the rail cars of one railroad to pass onto the track of another railroad - distinct from that of the rail sections. It is our opinion, therefore, that the processing in Austria results in a substantial transforma- tion of the EC rail sections. - 3 - HOLDING: Transition rails produced from rail sections in Austria by the described processing, are products of Austria for purposes of the steel arrangements. Sincerely, John Durant, Director Commercial Rulings Division