The country of origin of a bone reconstruction plate implant

N299243 August 6, 2018 CLA-2-90:OT:RR:NC:1:135 CATEGORY: Country of Origin Ms. Orisia K. Gammell Arent Fox LLP 1717 K Street, NW Washington, DC 20006 RE: The country of origin of a bone reconstruction plate implant Dear Ms. Gammell: In your letter dated July 20, 2018, on behalf of Howmedica Osteonics Corp., DBA Stryker Orthopaedics, you requested a country of origin ruling of a bone reconstruction plate implant. The images of a raw blank and final product in Exhibit 1 and the images of the product at different processing steps in Exhibit 2 were provided. The subject bone reconstruction plate implant is said to be “a locking plate system intended for treating distal fibula fractures. The reconstruction and fixation of distal fibula fractures may be enhanced through the polyaxial locking mechanism of the plate which allows the surgeon to insert locking or non-locking screws at variable angles with respect to the plate, so that they may be targeted to address the location and geometry of a given fracture. The size and shape of the plate is carefully designed to cater to the orthopedic features of the fibula.” Based on the information submitted, a Germany-made titanium raw material blank (crude blank) will be sent to Switzerland. At the time of importation to Switzerland, “the size and shape of the blank is configured for ease of use in the complex milling machine that produces the finished plate implants - it has neither the size, width, [n]or specific shape of the final implant. One size raw material blank is used for 11 different size gradations of plates. Depending on the size of the final plate, up to six plates can be made from a single raw material blank. The size and shape of [the subject blank] … allows two plates to be made from a single raw material blank” You state, “[i]n Switzerland, the raw material blank is milled to produce the exact specifications of size, width, curvature and holes of two … plates. The milling process removes approximately 77% of the material from the blank to produce two plates, each constituting approximately 11.5% of the original raw material blank by weight. The milled plates, now imparted with their final size and shape, are subjected to deburring and tumbling steps to remove sharp edges and burrs around the edges and in the holes where the screws will be inserted. The plates are then anodized … to increase the thickness of the natural oxide layer on the surface of the titanium plate[s] thereby improving their quality and durability. Finally, the plates are cleaned and laser marked. All of these processes involve specialized manufacturing steps requiring highly trained professional orthopedic engineers. The value added in Switzerland constitutes 69% of the total cost of production.” You further claim that “[t]he process of manufacturing the plates from the raw material blanks in Switzerland is the process that defines the name, character, and use of the finished product: the blanks need to milled to exacting lengths, diameters, and specifications to be anatomically contoured to the extremely complex anatomies of the different bones for which they are designed. Processing in Switzerland alters the appearance, character and use and adds substantial value – it is not minor, it is substantial and intricate, imparting the distinctive, exacting characteristics that enable the plates to be used for implantation in the human body.” 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 (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 (or its container) 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. Part 134, CBP Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b) of the regulations, defines "country of origin" as: the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this Part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. A substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). The issue of whether a substantial transformation occurs is determined on a case by case basis. See HQ 561353, dated September 19, 2002. In our opinion, the process described above effects a “substantial transformation” creating two separate bone reconstruction plate implants from one single titanium raw material blank (crude blank). The country of origin of the bone reconstruction plate implant imported into the U.S. will be Switzerland. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Fei Chen at fei.chen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division