Country of orig'in marking requirements for drill bits and router bits

HQ 731996 May 10, 1989 MAR-2-05 CO:R:C:V 731996 jd CATEGORY: Marking James R. Fena President, Minnesota Twist Drill, Inc. Box 31 611 Industrial Park Chisholm, Minnesota 55719 RE: Country of orig'in marking requirements for drill bits and router bits Dear Mr. Fena: This is in reply to your letter of December 14, 1988, concerning the country of origin marking requirements for drill bits and router bits. FACTS: You inquired as to the marking requirements for three products. They are: 1. Small drill bits You used harden blanks of foreign origin to produce drill bits. The steps performed a're grinding of flutes, clearance grinding of the flutes and sharpening of a point on the drill bit. The finished bit is then steam homo tempered at 1000~ for approximately two hours to produce a black Oxide finish for added life of the cutting edges. The bits are sold as "Made in U.S.A." 2. TCT router bits You form and mill the body of these articles and finish grind the relief into the body and tip. A small bearing of foreign origin is attached to the arbor of the finished router bit. The finished bit is sold as "Made in U.S.A." 3. Aircraft extension drills You manufacture these articles starting with a drill bit of foreign origin which you then repoint with a precise angle and then split point with a secondary cutting edge. This prevents the drill from "walking" when starting a hole and'allows the drill to operate at 2-3 times normal speed. The drill is also extended .rom an average of 4" in length to 12' by welding a piece of rod to the shank of the original drill. The extended-2- drill is then tempered at 1000~ for two hours to produce a black oxide coating for improved life of the bit. The finished bit is sold as "Made in U.S.A." ISSUES: Are the finished drill bits and router bits described above subject to the country of origin marking requirements of 19 U.S.C. 1304? May the finished drill bits and router bits described above be sold as "Made in U.S.A."? LAW AND ANALYSIS Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Section 134.35, Customs Regulations (19 CFR 134.35), provides that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be considered substantially transformed, and therefore the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304(a). Accordingly, the article shall be excepted from marking. However, in accordance with 19 U.S.C. 1304(b) and S 134.22, Customs Regulations (19 CFR 134.22), the outermost container of the imported article shall be marked to indicate the country of origin of the article. Section 134.14, Customs Regulations (19 CFR 134.14), states that when an imported article is of a kind usually combined with another article after importation but before delivery to an ultimate purchaser and the name indicating the country of origin of the article appears in a place so that the name will be visible after such combining, the marking shall include, in addition to the name of the country of origin, words or symbols which shall clearly show that the origin indicated is that of the imported article only and not that of any other article with which the imported article may be combined after importation. It is the opinion of this office that you substantially transform the foreign origin hardened blank used to make small drill bits by grinding of flutes, sharpening of a point and tempering. Accordingly, you are the ultimate purchaser of the -3- blanks and the blanks are not subject to individual country of origin marking. However, the outermost container reaching you must be marked to indicate the country of origin of the blanks. Customs officers at the port of entry must be satisfied the blanks will reach you in the original, marked container as imported and that the blanks will be used only by you in the manufacture of bits and not otherwise sold. Similarly, we believe you substantially transform the foreign drill bits used to make aircraft extension drills by repointing, split pointing, extending the length and tempering. Therefore, you are the ultimate purchaser of the foreign drill bits and they are excepted from individual country of origin marking provided they are imported under the conditions described in the preceding paragraph. Based on your description of the TCT router bits, it appears the small bearing is the only foreign component used. If that is the case, the bearing is not subject to individual country of origin marking since the bearing loses it separate identity by incorporation into a finished router bit. The bearings must be imported under the conditions described above. If the bearing is marked with its country of origin, and the marking will remain visible after assembly into the router bit, the marking must indicate that the origin marked is the origin of the bearing only. With regard to your request that Customs rule it permissible to marked your finished products, "Made in U.S.A." we are unable to do so. Such a ruling is within the jurisdiction of the Federal Trade Commission, Division of Enforcement, 6th & Pennsylvania Avenue, NW, Washington, D.C. 20508. We strongly urge you to contact that agency before you undertake to mark your finished products in that fashion since it is our understanding of FTC regulations that finished articles containing foreign components cannot be labeled "Made in U.S.A" without also revealing the presence of the foreign components. -4- HOLDING; Based on the above considerations, the small drill bits, TCT router bits and aircraft extension drills you sell are not subject to country of origin marking requirements. The foreign components you import for use in the manufacture of such products are subject to marking of the outermost containers. You must contact the Federal Trade Commission concerning use of the phrase "Made in U.S.A." Sincerely, Marvin M. Amernick Chief, Value, Special Programs and Admissibility Branch