Country of origin of Bar Clamp and Pipe Clamps

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H309984 September 11, 2020 OT:RR:CTF:VS H309984 RSD CATEGORY: ORIGIN M. Jason Cunningham, Esq. Sonnenberg & Cunningham 30 Wacker Drive Suite 220 No. 41 Chicago, Il 60606 RE: Country of origin of Bar Clamp and Pipe Clamps Dear Mr. Cunningham: This is in response to your letter dated February 25, 2020, submitted on behalf of Great Star Industrial USA, LLC (hereinafter “Great Star”) requesting a ruling concerning the tariff classification and the country of origin of Bar Clamps, and Pipe Clamps produced from Vietnamese and Chinese components. Your request for a ruling was originally sent to the National Commodity Specialist Division, but the portion of the request concerning country of origin was forwarded to the Office of Regulations and Rulings at Customs and Border Protection Headquarters, for a response. The National Commodity Specialist Division will answer your inquiry concerning the tariff classification of the product in a separate cover. FACTS: Great Star seeks a ruling regarding the origin for two types of clamps. PRODUCT ONE -- BAR CLAMP The first product under consideration is a bar clamp. The subject bar clamp is a hand tool also known as an F-clamp because its shape resembles the letter “F.” It is commonly used for woodworking in order to temporarily hold pieces of wood together while more permanent attachments, e.g. screws, can be applied or glue is allowed to dry. It consists of two vertical steel clamps, known as heads or jaws, with protective pads at the top that are attached to a horizontal steel bar. In operating the F-clamp, one vertical clamp (the “stationary head”) is fastened into a fixed position at the end of the horizontal bar, while the other vertical clamp (the “sliding head”) can slide along the length of the bar. The sliding head is locked into place by a disc clutch anywhere along the horizontal bar. There is also a threaded steel screw that tightens and loosens the clamp. To make the F-clamps, aluminum is molded into both the stationary heads and the sliding heads in Vietnam. Then, each head is polished before they are sent to China. These are the working parts of the hand tool and these two parts have the final shape, size, and form of either the stationary head or the sliding head. After the aluminum molded heads are formed in Vietnam, they are shipped to China, where two holes are drilled into the sliding head to match the size of the steel bar to which it will be attached and to allow the insertion of the steel swivel pad’s screw. Both heads are powder coated before final assembly and retail packaging. The heads are attached to the steel bar, the swivel pad is screwed into the sliding head, soft handles and pads are applied, and the disc clutch and spring are inserted. Except for minor drilling, painting, and minor assembly, the work performed in China does not change the basic nature of the jaws made in Vietnam. You indicate that the bar clamp has a different cost breakdown for the four different sizes of clamps (which range from 6 inches to 36 inches). One of the components of the bar clamp is a steel bar. It has a cold-drawn form that connects the fixed clamping head to the sliding clamping head. For the different sized bar clamps, you submit that the Chinese steel bar’s size greatly impacts the relative share of the costs involved in producing the bar clamp that can be attributed to either Vietnam or China. In other words, there is a range of costs involved in making the bar clamp that can be attributed to either Vietnam or China for the different sizes of the bar clamp.  For the 6 inch bar clamp, the relative value of the costs of producing the bar clamps that can be attributed to Vietnam is 47 percent and 52 percent to China, but for the 36 inch bar clamp, the relative value is 30/70 (Vietnam/China).   PRODUCT TWO -- PIPE CLAMP The subject pipe clamp is functionally similar to the bar clamp, supra, except that instead of clamp heads sliding along a flat steel bar, the heads are mounted and slide along a pipe, normally with a standard ½ inch or ¾ inch diameter that is purchased separately or otherwise supplied by the ultimate user. In other words, the subject article is imported into the United States without a pipe. In Vietnam, aluminum is molded into final size, shape, and form of the four key pipe clamp components. In China, the pre-cast holes are drilled and tapped before the four parts are powder coated. Final assembly consists of joining these four components with a Chinese origin screw, spring, and clutch disc. As with the bar clamp, the pipe clamp’s Chinese assembly consists of minor drilling, painting, and assembly. According to Great Star, for the ¾ inch pipe clamp, 50 percent of the costs involved in producing the product are attributable to the work performed in Vietnam and 50 percent of the costs are attributable to the work performed in China, but for the smaller ½ inch pipe clamp, a relative cost breakdown between Vietnam and China is 47/53 percent.   ISSUE:      What is the country of origin of the clamps? LAW AND ANALYSIS: Section 304 of the 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 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 an ultimate purchaser in the United States the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, U.S. Customs and Border Protection Regulations (19 C.F.R. Part 134). 19 C.F.R. § 134.1(b) provides as follows: “Country of origin” means 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... A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. GibsonThomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982). In order to determine whether a substantial transformation occurs when components of various origins are assembled into finished products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative. In National Hand Tool Corp. v. United States, 16 CIT 308, 310, aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the court examined whether post-importation processing in the United States substantially transformed certain tools, that is, flex sockets, speeder handles, and flex handles, that had been cold-formed or hot-forged in Taiwan into their final shape prior to importation, with the exception of the speeder handle bars which were reshaped by a large power press after importation. The tools were subjected to a heat treatment which strengthened the steel followed by cleaning which consisted of sand-blasting, tumbling and/or chemical vibration to prepare their surfaces for electroplating. For some of the tools, the heat treatment and cleaning occurred in the United States, but for others, these processes were performed in Taiwan. After cleaning, the tools were electroplated with nickel and chrome to resist rust and corrosion. As with the cleaning, the electroplating took place either in Taiwan or the United States, depending on the tool. After the post importation processing was completed, various components were assembled to produce the tools. In determining that the processing in the United States did not substantially transform the imported tools, the court considered whether there had been a change in the name, character, or use of each tool. The court found that there was no change in the name of the components; and, the character of the articles remained unchanged after the heat treatment, electroplating and assembly as each, with the exception of the speeder handle bars, left Taiwan in its final shape. Further, the use of each tool was pre-determined at the time of exportation, with the exception of one component that could be used as either a universal joint or a flex socket. The court noted that a pre-determined use does not preclude a finding of substantial transformation, but “the determination of substantial transformation must be based on the totality of the evidence.” See National Hand Tool, 16 CIT at 312. As the court stated in National Hand Tool, we must look at the totality of the evidence. We also must consider the product at issue, how it functions and the purpose of the components within it in carrying out its function. In this case, the two types of clamps under consideration, the bar clamps and pipe clamps, are used in wood working for temporarily holding pieces of wood together until they can be permanently fastened together by means such as screws or through gluing. The actual parts of the clamps that perform the function of holding the pieces of wood together are the clamp heads. The two clamp heads grasp the pieces of wood and press upon them to keep them in place until they permanently fasten together. The other components of the clamps are the horizontal metal bar and the disc clutch which are made in China. These components serve as a means to adjust the heads into the desired position and maintain pressure. In the case of the bar clamps, the Chinese components that are added, the bar, the disc clutch and the spring basically, assist the heads in holding the pieces of wood together, but they do not perform that basic function of the clamps. The same situation applies to the pipe clamps, except that the two clamp heads slide along a pipe instead of bars. Thus in our opinion, the Vietnamese made heads impart the essence of the finished clamps. The Vietnamese molded aluminum clamp heads are not changed in name, character, and use as a result of the processing performed in China. In China, the processing operations consist of finishing steps, such as heat treatment, coating, and a simple assembly all of which are not complex operations. The clamp heads retain the same shape, form and size when they are put together with the other components in the making of the finished clamps. At the time they are produced in Vietnam, the two heads of the clamps, the stationery head and the sliding head have a pre-determined use in the production of bar or pipe clamps and they do not have any other function. Therefore, in our judgment the origin of the clamp heads dictates the origin of the finished bar and pipe clamps, and thus we find that the Vietnamese heads are not substantially transformed by the processing performed in China to make the finished clamps. Accordingly, we find that the country of origin of the pipe clamps and bar clamps is Vietnam. HOLDING: The country of origin of the pipe clamps and bar clamps for the marking requirements of 19 U.S.C. 1304 and for duty purposes is Vietnam. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy of this ruling, it should be brought to the attention of the CBP officer handling the transaction.                             Sincerely,                              Monika R. Brenner, Chief                             Valuation and Special Programs Branch