Country of Origin of Knives

HQ H313367 September 17, 2021 OT:RR:CTF:VSP H313367 TMF CATEGORY: Origin Mr. Jason Cunningham Sonnenberg & Cunningham, P.A. 780 Fifth Avenue, South, Suite 200 Naples, FL 34102 RE: Country of Origin of Knives Dear Mr. Cunningham:   This is in response to your correspondence, dated July 16, 2020, filed on behalf of your client, Great Star Industrial USA, LLC. (“Great Star”), requesting a prospective ruling pursuant to 19 C.F.R. § 177, regarding the country of origin of knives. The National Commodity Specialist Division forwarded your client’s request to this office for our consideration. Our ruling is set forth below. FACTS: Great Star and/or one of its customers, which includes a large, well-known national retailer will be the importer of record. Great Star is a global manufacturer of tools and toolsets located in Huntersville, North Carolina. Two production scenarios are presented for a fixed knife. Three production scenarios are provided for a folding pocketknife. The subject knives are comprised of the handle, blade, blade's edge and blade’s point. Fixed Knife You provided an illustration of the fixed knife shown without the retail packaging. You describe the blade as a “spear point” because it is a symmetrically shaped blade with a point aligned with the centerline of the blade’s long axis. It has a double edge with the bottom serrated and the top plain, and non-serrated. There may be alternative versions of the subject blade including some with only a bottom blade and no top blade or a serrated blade, or with varying blade length. The blade and tang are made from a single piece of steel, which is a design feature that makes this knife strong in terms of concentrating force from the user to the blade. You state the handle is made of injection molded material for increased comfort when using the fixed knife.  Production Scenarios: Scenario 1: Fixed Blade Knife In Vietnam, raw steel strips from Vietnam (or other non-named third countries) are cut to size, stamped into the final shape and size of a blade with two blade edges and a tang. It is deburred in Vietnam and exported to China for blade sharpening, hole drilling, heat treatment, and blade edge milling to improve blade edge sharpness. Finally, a handle covering is applied, and it is packaged for retail sale. The knife is made for various retail brands and the packaging varies as well. Scenario 2: Fixed Blade Knife All the production is the same except the Vietnamese knife blade’s edges would be subject to a sharpening process in Vietnam before being sent for finishing in China. Pocketknife This knife is a folding knife. The top of the pocketknife does not have a cutting edge; the bottom of the blade has serration from the midpoint of the blade and back toward the handle, but the blade is not serrated from the midpoint to the point. The nail-nick is used to open the retracted pocketknife blade by the user. When the blade is fully extended, the subject pocketknife has a locking mechanism that locks the blade into it fully opened position. Production Scenarios: Scenario 1: Folding Pocketknife In Vietnam, raw steel strips from Vietnam (or other non-named third countries) are cut to size, stamped into final shape and size of the pocketknife’s blade with a single edge and point. It is deburred and die cut in Vietnam and then exported to China for blade sharpening, heat treatment, milling and polishing to add serration to part of the blade. Then, it is assembled with a Chinese origin handle. Scenario 2: Folding Pocketknife You indicate that this processing is the same as Scenario 1, except the edge sharpening occurs in Vietnam before the other steps occur in China. Scenario 3: Folding Pocketknife The production process is the same as Scenario 1, except that the handles are formed in Vietnam. The sharpening, heat treatment, milling and serration and assembly occurs in China.  ISSUE: What is the country of origin of the fixed knife and pocketknife? LAW AND ANALYSIS: The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. § 1304) provides that, unless excepted, every article of foreign origin 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 the ultimate purchaser in the United States 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 C.F.R. Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. § 1304. Section 134.1(b), Customs Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” 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 the marking laws and regulations. A “substantial transformation” occurs when an article loses its identity, and a new and different article emerges from the processing having a distinctive name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940) (the Court held that imported wood brush block and toothbrush handles which had bristles inserted into them in the United States lost their identity as such and became new articles having a new name, character and use). See also National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), in which the court focused on the fact that the components had been cold formed or hot forged "into their final shape before importation", and that "the form of the components remained the same" after the assembly and heat treatment processes performed in the U.S. In this case, you present five different assembly scenarios for the fixed knife and the pocketknife. You argue that in all scenarios, the blade is formed in Vietnam, then finished in China and that the essential identity of the knives is imparted by the Vietnamese production of making raw steel into blades. You also claim that the finishing operations in China do not substantially change the articles, resulting in the country of origin as Vietnam. U.S. Customs and Border Protection (“CBP”) has long held that the assembly of a knife by attachment of a handle to a blade, minor etching or sharpening of the blank, does not constitute a substantial transformation. In Headquarters Ruling Letter (“HQ”) 559366, dated August 29, 1995, CBP discussed a series of CBP rulings, which found that operations such as sharpening and affixing a handle to a blank did not result in a new product with a  new character, identity or use. Instead, the decision in HQ 559366, explained that the overall shape, form and size of the blades (or blanks) were unaltered by the assembly of the finished product. HQ 559366 citing HQ 733301 dated August 8, 1990; HQ 735181, dated May 17, 1994; and HQ 709090, dated May 6, 1969. With each of the five production scenarios, the knife blanks are formed in Vietnam from raw steel, then the finishing processes such as heat treatment, milling and polishing the top edge; serrating the bottom edge; attaching the handle to the tang; and sharpening the blade occur in China or Vietnam. Consistent with National Hand Tool, we find these processes in China are minor compared to those performed in Vietnam and there is no substantial transformation in China. In sum, we find the “overall shape, form and size of the blades [are] unaltered” during the finishing processes in China. See HQ 559366, supra. Therefore, we find Vietnam is the country of origin of the knives. HOLDING: Based on the facts provided, the knife blanks from Vietnam are not substantially transformed by the processes taking place in China. As such, the country of origin of the knives is Vietnam. With respect to the country of origin marking of the fixed blade knife and pocketknife, the country of origin marking requirements are met if they are marked as “Made in Vietnam” or “Product of Vietnam.” 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 CBP officer handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation & Special Programs Branch