The country of origin of drill bits.

N324897 April 1, 2022 CLA-2-82:OT:RR:NC:N1:118 CATEGORY: Country of Origin Alma Arabelovic Robert Bosch, LLC Oakbrook Terrace Tower 1 Tower Lane Oakbrook Terrace, IL 60181 RE: The country of origin of drill bits. Dear Ms. Arabelovic: In your letter dated March 20, 2022, you requested a ruling on the country of origin of drill bits produced in China, Vietnam and the United States. Your company plans to manufacture certain drill bit products in China, Vietnam, and the United States, using raw materials and components sourced from China and Vietnam. The drill bits (Impact and Rotary Drill Bits) are used in masonry materials like bricks and cement blocks for low duty anchoring and fixings. The drill bits include a shank, a spiral body and a head with a cutting tip. The materials used in the drill bits are carbon steel for the shank, spiral body and head and a hard metal for the cutting tip. The following four production scenarios are proposed for the drill bits: Scenario #1 The steel rod is manufactured in China and undergoes the following operations to create the drill bits: Steel rod is cut into drill bit blanks Spiral/Shank is machined into the drill bit blanks A slot is prepared on the tip of the drill bit blanks China-origin Tungsten Carbide (TC) tip is inserted into the slot and brazed Drill bit undergoes heat treatment and straightening Drill bits are shipped to the U.S. for finish grinding, painting, and packaging Scenario #2 The steel rod is manufactured in China and sent to Vietnam where it undergoes the following operations to create the drill bits: Steel rod is cut into drill bit blanks Spiral/Shank is machined into the drill bit blanks A slot is prepared on the tip of the drill bit blanks China-origin Tungsten Carbide (TC) tip is inserted into the slot and brazed Drill bit undergoes heat treatment and straightening Drill bits are shipped to the U.S. for finish grinding, painting, and packaging Scenario #3 The steel rod is manufactured in Vietnam and undergoes the following operations to create the drill bits: Steel rod is cut into drill bit blanks Spiral/Shank is machined into the drill bit blanks A slot is prepared on the tip of the drill bit blanks China-origin Tungsten Carbide (TC) tip is inserted into the slot and brazed Drill bit undergoes heat treatment and straightening Drill bits are shipped to the U.S. for finish grinding, painting, and packaging Scenario #4 Same as Scenario #3, except the drill bits are shipped from Vietnam to China for finish grinding, painting, and packaging. Regarding your request for the appropriate country of origin for the finished drill bits, 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. Regarding Scenario #1, the spiral milling process to create the drill bit blanks takes place in China and the finishing operations takes place in the U.S. (grinding and painting). Therefore, we believe this would not effect a substantial transformation and the country of origin of the drill bits is China. However, for Scenarios #2, #3 and #4, the drill bit blanks are made outside of China (i.e., the spiral milling process to create the drill bit blanks). The finishing operations (grinding and painting), whether performed in the U.S. or China, would not effect a substantial transformation. Therefore, we believe the country of origin is Vietnam. 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 [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division