The country of origin of Rotary Burs and the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS)

N306255 October 3, 2019 CLA-2-82:OT:RR:NC:N1:118 CATEGORY: Country of Origin Ms. Melissa M. Brewer Kelley Drye & Warren LLP 3050 K Street NW, Suite 400 Washington DC 20007 RE: The country of origin of Rotary Burs and the applicability of subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS) Dear Ms. Brewer: In your letter dated September 11, 2019, on behalf of your client, ATA Tools Inc., you requested a ruling on the country of origin of two Rotary Burs and the applicability of 9802.00.60, HTSUS. You identify your products as “Rotary Bur 1” and “Rotary Bur 2.” A rotary bur is a rotating tungsten carbide tool that is used in manual and automated applications, generally to cut, shape, grind, polish, or remove material from the surface of an object (“deburring”). To make Rotary Bur 1, your client sources the carbide rod raw material (which you refer to as a “blank”) from a supplier in China and imports the carbide rod into Ireland. There is no manufacturing or processing of the carbide rod in China before it is shipped to Ireland. After the rod is made in China, it is shipped to a facility in Ireland for further processing. In Ireland, the carbide rod undergoes grounding down to accomplish a “pre-ground” rod profile. This processing involves grinding down the carbide rod into a “pre-form” that will later take the shape of the final rotary bur product. The “pre-form” operation is done at the facility’s automated grinding center that is designed for the blank preparation of precision cutting tools such as the burs. This grinding center allows for both roughing and finishing operations. It uses a diamond grinding wheel to grind away carbide from the rod until the shape of the pre-form is achieved. Your client then imports the pre-ground rod from Ireland into the United States, where it undergoes finishing processes including cutting flutes and final grinding, etching, and coating. To make Rotary Bur 2, your client imports three raw materials from three different countries into Ireland: the carbide blank from China; the braze disc from Germany; and the steel shank from the United States. To create the steel shank in the United States, and prior to importation into Ireland, a steel rod is cut into sections that range from 1 inch to 3 inches in length. These pieces are then fed into a press and one end is plunged to form the (wider) head of the shank, increasing the surface area of the end that will be then brazed with the carbide blank. Once the shank is formed, it is heat treated to improve its mechanical properties. Finally, the shanks are cleaned and treated with chemicals to prevent rust and are then imported into Ireland. These three raw materials are then brazed together at the facility in Ireland to form the “ready-bur”. You state that the further processing done in Ireland takes significant expertise by technicians that have undergone significant training. It also requires the use of expensive capital machinery. After brazing, a testing process is done to ensure the quality of the braze. The ready-bur is then imported from Ireland into the United States as a semi-finished product and then undergoes finishing processes, including cutting flutes and final grinding, etching, and coating. We note that in your request you list tariff classifications for some of the unfinished articles. As your request only concerns the country of origin of the Rotary Burs and the applicability of subheading 9802.00.60, HTSUS, this ruling does not address the correctness of the tariff provisions you identify. With regard to your request for the appropriate country of origin of the Rotary Burs, 19 C.F.R. § 134.1(b) provides in pertinent part 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; The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character and use has been produced. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation. It is our view, based on the provided description of the assembly and processing operations, that the two Rotary Burs undergo a substantial transformation at the Ireland facility, where the carbide rod blanks are ground down, formed into profiles of the finish Burs, and undergo significant value-added processing, causing the original blanks and steel shanks to lose their identities. Therefore, it is the opinion of this office that the Rotary Bur 1 and Rotary Bur 2 are country of origin Ireland. You have also requested a ruling about the eligibility of subheading 9802.00.60, HTSUS, for the steel shank that is used to produce Rotary Bur 2. Subheading 9802.00.60, HTSUS provides a partial duty exemption for: [a]ny article of metal . . . manufactured in the United States or subject to a process of manufacture in the United States, if exported for further processing, and if the exported article as processed outside the United States, or the article which results from the processing outside the United States, is returned for the United States for further processing. Subheading 9802.00.60, HTSUS, therefore imposes four requirements: (1) the merchandise must be an article of metal; (2) the metal must either be manufactured in the United States or subject to a process of manufacture in the United States; (3) the metal must be exported for further processing; and (4) the metal must be returned to the United States for further processing. For purposes of subheading 9802.00.60, HTSUS, “metal” includes “base metals enumerated in note 3 to section XV,” which in turn includes steel. Therefore, the steel shank will qualify as an “article of metal” under subheading 9802.00.60, HTSUS, satisfying the first requirement. The steel shank is of U.S. origin and is exported to Ireland to undergo further processing. The article that results from that further processing is the semi-finished ready bur, which is then returned to the United States for final processing, including cutting flutes and final grinding, etching, and coating. Accordingly, steel shank sourced in the United States that is used for Rotary Bur 2 may be entered under subheading 9802.00.60, HTSUS, with duty only upon the value of the foreign processing contingent upon compliance with applicable regulations. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. § 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 Anthony E. Grossi at anthony.e.grossi@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division