The country of origin of medical drill bits

N341537 August 2, 2024 OT:RR:NC:N3:135 CATEGORY: Origin Gregory Grasher Jr. Stryker Corporation (Stryker Instruments) 1941 Stryker WayPortage, MI 49002 RE:  The country of origin of medical drill bits Dear Mr. Grasher: In your letter dated July 23, 2024, you requested a country of origin of medical drill bits.  Additional information was provided via email dated July 26, 2024.   The drill bits under consideration are cylindrical steel articles with spiral grooves cut along the main body with two notches on the reduced end and recessed on the other end.  They are fitted in the Stryker handpieces to drill, cut, and grind bone during orthopedic and neurosurgical procedures.  The manufacturing process of the drill bits starts in China where the steel rods are manufactured, cut to length, and machined with a Swiss turn lathe that will cut and grind bars into drill bit blanks.  The blanks are shipped to Ireland to complete the drill bits.  In Ireland, the drill blanks go into Rollomatic cutters/grinders where the spiral cutting edges or grooves are added to the heads (main bodies) of the blanks (cutting process).  You state “[t]his process is very precise with tight tolerance machining to enable the blank to become a precise cutting accessory.”  After the cutting heads of the drill bits have been machined, the distal ends of the drill bits are fine-tuned or processed (notching process) ensuring the correct depth for inserting the drill bits into the handpieces.  You state “[t]he notching process also uses the Rollomatic grinder and notch machine to insure precision for insertion into the handpiece.”  After that, the finished surgery bits are cleaned, deburred, and laser marked for branding and part identification.  The drill bits are then polished, marked with country of origin, cleaned, packaged, and sterilized before importation into the United States. "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.” 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 HQ W968396, dated December 21, 2006, U.S. origin raw stainless steel rod was cut to lengths.  The cut length rods were turned on a lathe that cut and ground the steel rods into drill bit blanks.  The blanks were sent to China for further processing into the finished drill bits.  The processing that was done in China includes adding grooves by fluting, straightening, polishing, heat treating, and cleaning the drill bit blanks.  The ruling states: we believe that the processing operations that will be conducted in China are basically finishing operations that will not change the basic nature of the drill bits. The drill bit blanks made in the United States will have the same size and shape as the finished drill bits.  Significantly, the drill bit blanks shipped to China are clearly dedicated to use for making the finished drill bits, and they cannot be used for any purpose other than for making the finished drill bits.  It is our opinion that the drill bit blanks and the finished drill bits represent “different stages of the same product.”  Like the wire rod in Superior Wire and the hand tool components in National Hand Tool, we find that the drill bit blanks undergo no significant change in character or use when they are processed into the finished drill bits in China.  In other words, the drill bit blanks have the very essence of the finished drill bits and the processing that will be performed in China does not change the shape, character or predetermined use of the drill bits … we find that the drill bit blanks are not substantially transformed by the proposed processing to make them into finished drill bits that will be done in China. Likewise, in this case the drill bit blanks produced in China have the same size and shape of the finished drill bits.  The cutting and notching performed in Ireland complete the manufacturing process enabling the finished drill bits to be used for its intended purpose.  The processing does not change the shape, character, or predetermined use of the drill bits.  We find that the drill bit blanks are not substantially transformed by the proposed processing in Ireland.  Therefore, the country of origin of the finished drill bits will be China. The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request.  This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1).  This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect.  In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Fei Chen at fei.chen@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division