The classification and country of origin of S-CUT cutting tools and replacement part kits.

N310410 March 30, 2020 CLA-2-82:OT:RR:NC:N1:118 CATEGORY: Classification; Country of Origin TARIFF NO.: 8205.59.5560 Mr. Juan Cienfuegos Southwest Synergistic Solutions, LLC 215 N. Center San Antonio, TX 78202 RE: The classification and country of origin of S-CUT cutting tools and replacement part kits. Dear Mr. Juan Cienfuegos: In your letter dated February 17, 2020, you requested a ruling on the classification and country of origin of S-CUT cutting tools and replacement part kits. The merchandise under consideration is S-CUT models 501, 701, QE, and a replacement part kit, identified as ACP kits. The S-CUT models 501, 701 and QE are functionally similar in design. Each is comprised of a circular steel blade recessed into a flat, hook-shaped singular stainless steel or plastic molded handle, depending on the model. Each model includes a plastic support that attaches to end of the tool opposite the blade. The plastic support facilitates the material being cut from bunching up and clogging the blade. The models will be imported within a textile holster that is specifically designed to hold the S-CUT model. Each ACP kit contains four steel replacement cutting blades and four replacement plastic supports. The kit is packaged for retail sale at the time of importation. The S-CUT models are advertised as an emergency cutting tool for rescue services. Based on the documents provided and online research, the S-CUT can be used in hospitals for accident and emergency situations; ambulance services; police force and prisoner care; military field medics; fire and rescue services; and industrial applications. S-CUT applications may include cutting patients’ clothing, seat belts, and other materials in rescue situations as well as emergency situations in hospitals, prisons, raceways, etc.; splitting a fire hose; using as hunting equipment; cutting plastic covers, IKEA packaging, and straps, etc. As indicated on websites and in the submitted documents, the S-CUT cutting tools are also described as all-round cutting devices for those who need to cut through different materials, almost everything but metal, regardless of application. You have suggested classification of the S-CUT with holster sets in 9018.90.8000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “other” instruments and appliances and parts and accessories thereof used in the medical, surgical, dental or veterinary sciences. However, the S-CUTs are multiple purpose cutting tools, for example, cutting injured people’s clothes in hospitals and in the field, cutting seat belts during an accident, “cutting down people trying to commit suicide in mental wards and prisons,” etc.  They are not the same class or kind of articles of cutlery for medical or surgical use as identified in the Explanatory Notes to heading 9018 by reason of their shape, withstanding sterilization, the nature of constituent materials or by their get-up (frequently  packed in cases or boxes containing a set of instruments for a particular treatment …).  As such, the subject merchandise is not classifiable as a medical instrument or appliance under heading 9018, HTSUS. You mentioned that the S-CUT models are designated as medical devices by the FDA, however, we note “articles are classified by the FDA to protect public safety, not as guidance for classification of imported merchandise... Recognition by the FDA… that the subject merchandise can be used [in medical applications] does not constitute a determination of its tariff classification.”  See Headquarters Ruling Letter H265244 (June 1, 2015). Therefore, FDA designation as a medical device does not dictate classification in heading 9018. The textile holsters, which are imported with the S-CUT models, satisfy all of the requirements of GRI 5(a). As specially fitted containers suitable for long-term use, they must be classified with the articles for which they are intended. The holsters are intended to contain the S-CUT models 501, 701 and QE. Therefore, the textile holsters are classifiable with the S-CUT models 501, 701 and QE. Concerning the classification of the replacement part kit (ACP kits), this item is imported in a single retail package that contains articles that are classifiable under different headings of the tariff. The Explanatory Notes represent the official interpretation of the Harmonized Tariff Schedule at the international level. GRI 3 applies when goods are put up for sale collectively and are classifiable under two or more headings of the tariff. GRI 3(b) covers goods put up in sets for retail sale. Explanatory Note X to GRI 3(b) defines “goods put up in sets for retail sale”. Such goods: (a) consist of at least two different articles that are classifiable in different headings, (b) consist of products put up together to meet a particular need or carry out a specific activity, and (c) are put up in a manner suitable for sale directly to users without repacking. The subject articles in the replacement part kit (ACP kits), in our opinion, meet the criteria for sets as the terms are defined in the Explanatory Notes. For the purposes of the HTS, the merchandise constitutes a set. Having determined that the items constitute a set for tariff classification purposes, we must decide which article imparts the essential character to the set. According to the Explanatory Notes to GRI 3(b), essential character may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods. Inasmuch as no essential character can be determined for the instant item, GRI 3(b) does not apply. GRI 3(c) states that when the essential character of a set cannot be determined, classification is based on the heading that occurs last in numerical order among those which equally merit consideration. In this case, the steel replacement cutting blades fall last within heading 8205, HTSUS, in accordance with GRI 3(c). The applicable subheading for the S-CUT models 501, 701, QE, and the replacement part kit (ACP kits) will be 8205.59.5560, HTSUS, which provides for Handtools (including glass cutters) not elsewhere specified or included; blow torches and similar self-contained torches; vises, clamps and the like, other than accessories for and parts of machine tools or water-jet cutting machines; anvils; portable forges; hand- or pedal-operated grinding wheels with frameworks; base metal parts thereof: Other handtools (including glass cutters) and parts thereof: Other: Other: Other: Other (including parts). The rate of duty will be 5.3 percent ad valorem. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current. You have stated that the S-CUT models 501, 701 and QE are fully assembled in Sweden. Most of the principal components for the assembly of the S-CUT models are produced in Sweden from raw materials of other countries. For example, the production of the steel handles and washers for models 501 and 701 is completed in Sweden using base steel material sourced in Romania and Italy, respectively. Those production operations include cutting, machining, and deburring if necessary. The plastic injection-molded supports are produced in Sweden from raw material of German origin. For model QE, the plastic handle/blade holder is made in Sweden from South Korean raw material, using an injection-molding process. The plastic injection-molded supports for the QE are produced in Sweden from raw material of German origin. While the blades used in all models and kits are manufactured in Taiwan or Japan, you state that the value of the blades represent a small percentage as compared to the total cost to manufacture the S-CUT models. The ACP kit includes the Taiwanese or Japanese blades. They are then packaged, along with the plastic covers that are made in Sweden, in a container designed to hold each blade separately before being shipped to the US. With regard to your request for the appropriate country of origin for the S-CUT models and the replacement part kit, 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. We consider most of the components of the S-CUT models 501, 701 and QE to be products of Sweden based on their completion and final assembly in Sweden from foreign materials. It is also our view that the overall processing and assembly in Sweden constitutes a substantial transformation of the Taiwanese and Japanese circular blades. While standing alone, the assembly of the blades to the handles using washers and screws is not particularly complex. However, their incorporation into the tool, together with all other assembly operations, creates a new and different article of commerce with a distinct character and use that is not fully realized when they are imported into Sweden. Furthermore, not only is the assembly process done in Sweden complex and meaningful, but also the vast majority of the components and value involved in producing the S-CUTs are from Sweden. It is therefore the opinion of this office that, for tariff purposes, the country of origin for the S-CUT models 501, 701, QE is Sweden. In regard to the replacement part kit (ACP kits), it is our view that the Taiwanese and Japanese blades are not substantially transformed in Sweden. Although they are packaged with the Swedish plastic covers in Sweden, we are of the opinion that the country of origin of the replacement part kit (ACP kits), is either Taiwan or Japan, depending on the origin of the blades. 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