Country of origin marking requirements applicable to stainless steel surgical instruments forged in the U.S. and exported to Pakistan for finishing and assembly; scissors; forceps; tweezers; substantial transformation; milling; drilling; filing; heat treating; assembly; polishing; testing; cleaning; boiling; National Hand Tool; HRL 558747; HRL 559236; HRL 559847; HRL 560239; 19 CFR 134.32(m)

HQ 561086 March 8, 1999 MAR-05 RR:CR:SM 561086 KKV CATEGORY: Marking Peter Buck Feller, Esq. McKenna & Cuneo, LL.P. 1900 K Street, N.W. Washington, D.C. 20006-1108 RE: Country of origin marking requirements applicable to stainless steel surgical instruments forged in the U.S. and exported to Pakistan for finishing and assembly; scissors; forceps; tweezers; substantial transformation; milling; drilling; filing; heat treating; assembly; polishing; testing; cleaning; boiling; National Hand Tool; HRL 558747; HRL 559236; HRL 559847; HRL 560239; 19 CFR 134.32(m) Dear Mr. Feller: This is in response to your letter dated July 17, 1998, requesting a binding ruling regarding the country of origin marking requirements applicable to stainless steel surgical instruments forged in the United States and exported to Pakistan for finishing and assembly prior to importation into the U.S. No samples of the instruments were submitted for examination. FACTS: You indicate that your client plans to import stainless steel surgical scissors and forceps (including thumb/tissue forceps also known as tweezers) into the United States from Pakistan. You state that the finished articles undergo multi-country processing as follows. In the United States, rough blanks are cut from steel plate and annealed to remove any stresses. After annealing, the forgings are sand blasted and trimmed to remove excess material or “flash” and the middle coin for the finger ring is cut. After a second sand blasting, the forgings, which are asserted to have the size and shape of the final instrument, are tested to ensure compliance with the requisite Rockwell Hardness. In Pakistan, the forgings undergo milling operations in which the box, rachet and jaw serrations are cut into the forceps. The forgings are filed to remove additional flash and burrs, and holes for pins or screws are drilled. After filing and drilling, the forgings are heat treated, assembled and polished. Once assembled, the finished instruments are tested, cleaned and boiled prior to their return to the U.S. ISSUE: Whether stainless steel surgical instrument forgings of U.S. origin are substantially transformed by milling, drilling, filing, heat treating, assembly, polishing, testing, cleaning and boiling operations performed in Pakistan, thereby subjecting the imported instruments to country of origin marking when returned to the United States. LAW AND ANALYSIS: Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. 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 CCPA 297, 302, C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. "Country of origin" is defined in section 134.1(b), Customs Regulations (19 CFR 134.1(b)), 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 this part. For country of origin marking purposes, a substantial transformation of an article occurs when it is used in manufacture which results in an article having a name, character, or use differing from that of the article before the processing. As provided in 19 CFR 134.32(m), products of the U.S. exported and returned are specifically excepted from country of origin marking requirements. Therefore, if a U.S. product is sent abroad for processing, the article remains a product of the U.S. excepted from the country of origin marking requirements unless prior to its return it is substantially transformed in that country and, therefore, becomes an article of foreign origin. In National Hand Tool Corp. v. United States, 16 CIT 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the court considered imported sockets and flex handles which had been either cold formed or hot forged into their final shape prior to importation, imported speeder handles which were subsequently reshaped by a power press after importation, and the grip of the flex handles which were knurled in the United States after importation. The imported parts were then heat treated which strengthened the surface of the steel, and cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components were assembled together which the court stated required some skill and dexterity. The court determined that the imported components were not substantially transformed by the strengthening, cleaning, and assembly performed in the U.S.; therefore, they remained products of Taiwan. In making its determination, the court focused on the fact that the components had been coldformed or hotforged "into their final shape before importation," and that "the form of the components remained the same" after the assembly and heattreatment 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. The court stated that although a predetermined use would not preclude the finding of a substantial transformation, the determination must be based on the totality of the evidence. No substantial change in name, character or use was found to have occurred as a result of the processing performed in the U.S. In Headquarters Ruling Letter (HRL) 558747, dated January 20, 1995, Customs considered German surgical instrument forgings which underwent a variety of manufacturing processes in the U.S. Relying upon the analysis set forth in National Hand Tool, supra, Customs held that the additional work of assembling the surgical instrument, cutting the ratchet teeth and the scaling down operations were not extensive enough operations to effect a substantial transformation. In HRL 559236, dated October 26, 1995, Customs considered German manufactured forgings in which the boxlock was formed and the ratchet teeth and serrations were cut prior to exportation to Pakistan for hardening, polishing and assembly. Customs held that the final shape and essential characteristics of the instruments were imparted by the operations performed in Germany and that the hardening, polishing and assembly of the two pieces in Pakistan did not effect a substantial transformation. Likewise, in HRL 559847, dated January 2, 1997, Customs held that stainless steel forgings which were hot forged into the final shape of surgical instruments in the U.S. were not substantially transformed into new and different articles by milling, assembly, heat treating, cleaning and polishing and inspection operations performed in Pakistan. In HRL 560239, dated June 17, 1997, Customs held that imported “semimanufactured” forgings were not substantially transformed in the U.S., where the boxlock pin was inserted and the forgings were finish ground, beveled, bent, heat treated, and cleaned. Despite the completion of additional processing operations in the U.S., Customs stated that “the country of origin of the finished surgical instrument is the country of origin of the raw forging.” With regard to the scissors, forceps and tweezers at issue, we note that, similar to the facts presented in National Hand Tool, supra, the instrument forgings are cut into their final shape prior to exportation to Pakistan. Although the forgings undergo additional processing and are further refined and assembled into finished instruments, the form of the components remains the same. Inasmuch as the forgings in their condition as exported from the U.S., are already dedicated to a single use and closely resemble the shape and size of the completed instruments, the operations performed in Pakistan do not substantially transform the forgings into new and different articles of Pakistani origin. Accordingly, the origin of the finished instruments is the United States. Because the surgical instruments are products of the U.S. that are exported and returned without undergoing a substantial transformation, they are excepted from country of origin marking requirements pursuant to 19 CFR 134.32(m) and may re-enter the United States without any reference to Pakistan. For your information, we note that a claim of U.S. origin made in connection with the marking of the instruments is a matter within the jurisdiction of the Federal Trade Commission. Therefore, if you desire to mark the instruments with the phrase “Made in the U.S.A.” or similar wording, you should contact this agency at the following address regarding the appropriate use of this phrase: Federal Trade Commission Division of Enforcement 6th and Pennsylvania Avenue, N.W. Washington, D.C. 20508 HOLDING: On the basis of the information provided, it is our determination that stainless steel surgical instrument forgings which have been cut into the final shape of surgical instruments in the U.S. are not substantially transformed into new and different articles by additional milling, drilling, filing, heat treating, assembly, polishing, testing, cleaning and boiling operations performed in Pakistan. Therefore, upon reimportation, the surgical instruments are exempt from marking as products of the United States exported and returned. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer. Sincerely, John Durant Director Commercial Rulings Division