The tariff classification, country of origin, and marking of a 350-piece mechanics tool set from China.

N317105 February 18, 2021 CLA-2-84:OT:RR:NC:N1:104 CATEGORY: Classification TARIFF NO.: 8466.10.0175; 9903.88.01 Jason Kinnebrew Director, Global Customs Compliance Apex Tool Group 1000 Lufkin Road Apex, NC 27539 RE: The tariff classification, country of origin, and marking of a 350-piece mechanics tool set from China. Dear Mr. Kinnebrew: In your letter dated January 22, 2021, you requested a tariff classification, country of origin, and marking ruling. Item number H350MTSB is identified as a Husky 350-Piece Mechanics Hand Tool Set. The tool set is imported packaged for retail sale and nothing will be added to the set subsequent to importation. The contents of the set include: 3 72-tooth Ratchet Drives 4 Extensions 3 Adapters 1 Magnetic Bowl 212 Sockets 48 Combination Wrenches 1 Magnetic Bit Driver 26 Driver Bits 12 Nutsetters 40 Metric Hex Keys In your request you suggest the tool set is properly classified in accordance with GRI 3(c), in subheading 8505.19.3000, Harmonized Tariff Schedule of the United States, (HTSUS), which provides for “Electromagnets; permanent magnets and articles intended to become permanent magnets after magnetization; electromagnetic or permanent magnet chucks, clamps and similar holding devices; electromagnetic couplings, clutches and brakes; electromagnetic lifting heads; parts thereof: Permanent magnets and articles intended to become permanent magnets after magnetization: Other: Other”. Furthermore, you indicate that Section 301 duties do not apply to the tool set because the Magnetic Bowl of heading 8505, HTSUS, is made in Taiwan. This office disagrees. We concur that this product would be a set for classification purposes, but disagree that this product could be potentially classified in Chapter 85. General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), states in part that for legal purposes, classification shall be determined according to the terms of the headings, any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. Goods that are, prima facie, classifiable under two or more headings, are classifiable in accordance with GRI 3. GRI 3(a) states that the heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings refer to part only of the items in a composite good, those headings are to be regarded as equally specific in relation to the goods, even if one of them gives a more complete or precise description of the good. As such, they are regarded as equally specific and classification of the composite good is to be determined by GRI 3(b) or GRI 3(c) taken in the appropriate order in which they are set out in GRI 3. GRI 3(b) states in part that composite goods, which cannot be classified by reference to GRI 3(a), are to be classified as if they consisted of the component which gives them their essential character. GRI 3(c) provides that when goods cannot be classified by reference to GRI 3(a) or 3(b), they are to be classified in the heading that occurs last in numerical order among the competing headings which equally merit consideration. This office considered the importance of the components of the tool set which consists of articles put together to carry out a specific function (i.e., tightening/fastening). It is our opinion that no one item provides the essential character, so GRI 3(b) does not apply. We also note that due to its low comparative value and function, which does not contribute to tightening or fastening, the Magnetic Bowl does not merit equal consideration. Therefore, the ratchet drives of heading 8466 provide the classification of this set, as they occur last in numerical order, GRI 3(c) noted. The applicable subheading for Item number H350MTSB, Husky 350-Piece Mechanics Hand Tool Set, will be 8466.10.0175, HTSUS, which provides for “Parts and accessories suitable for use solely or principally with the machines of headings 8456 to 8465, including work or tool holders, self-opening dieheads, dividing heads and other special attachments for the machines; tool holders for any type of tool for working in the hand: Tool holders and self-opening dieheads: Other”. The rate of duty will be 3.9 percent ad valorem. In your letter, you also request a country of origin determination. You did not provide any specific manufacturing processes; however, according to the submission, all the components of the set are made in China with the exception of the (40) Metric Hex Keys and (1) Magnetic Bowl, which are made in Taiwan. Item number H350MTSB, Husky 350-Piece Mechanics Hand Tool Set is then packaged and shipped to the United States from China. The "country of origin" is defined in 19 CFR 134.1(b) 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 this part.” It is noted that a substantial transformation test is also used to determine the country of origin for purposes of the Section 301 measures. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. The courts have held that 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. See 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); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).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. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (“Uniroyal”). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, dated January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987). In the Uniroyal case, the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe". Based on the information provided, the addition of the (40) Metric Hex Keys and (1) Magnetic Bowl do not substantially transform the tool set. The tool set maintains its name, character, and use and therefore, the country of origin of the complete tool set will be China. Products of China classified under subheading 8466.10.0175, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8466.10.0175, HTSUS, listed above. See U.S. Note 20 to Subchapter III, Chapter 99, HTSUS. Guidance in a situation where sets packaged for retail sale are involved is provided on the CBP website in “CBP Section 301 Trade Remedies Frequently Asked Questions”. The answer to “How are the Section 301 duties assessed in respect to sets packaged for retail sale, which contain components covered by the Section 301 remedy,” reads, in pertinent part, as follows: When importing goods put up in sets for retail sale (in accordance with General Rule of Interpretation 3) that contain articles subject to the Section 301 remedy, if the product that imparts the essential character to the set (i.e. the HTSUS provision under which the entire set is classified) is covered by the Section 301 remedy, then the entire set will be subject to the additional 25% duties. The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the Section 301 trade remedy, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively. 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.As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable. Regarding the marking of the subject Husky 350-Piece Mechanics Hand Tool Set, Treasury Decision (T.D.) 91-7, published in Volume 25, Customs Bulletin and Decisions, at 6 (January 16, 1991), addressed, among other things, the application of country of origin marking requirements to sets. It states therein, at 16: . . . in most cases, the mere inclusion of an item in a collection will not substantially transform it into an article with a new name, character or use and, therefore, each item must be separately marked with its own country of origin. (Where the marking of the container will reasonably indicate the country of origin to the ultimate purchaser, the container may be marked instead of the individual articles. See 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d)). This result is consistent with the purpose of the marking statute since the ultimate purchaser’s decision as to whether to buy the set might be influenced by the country of origin of any of the items in the set, whether or not an item gives the set its essential character. Considering this, we find that the addition of the (40) Metric Hex Keys and (1) Magnetic Bowl mentioned do not substantially transform the individual components and the origin of all items within the kit must be identified. As such, all components in the kit must be individually marked with their country of origin provided such marking is visible through the retail packaging, or the packaging must identify the origin of each of these items. 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 the World Wide Web at https://hts.usitc.gov/current. 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 Denise Hopkins at denise.hopkins@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division