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HQ 733006

June 28, 1990

MAR-2-05 CO:R:C:V 733006 EAB


Roy S. Lange
Gerber (Conforming) Inc.
855 Avenue of the Americas
New York, NY 10001

RE: Country of origin of rough machined locomotive axle forgings.

Dear Mr. Lange:

This is in reply to your letter dated December 21, 1989 regarding the country of origin marking requirements of rough machined locomotive axle forgings.


Your company purchases rough machined locomotive axle forgings made in South Africa. There is no parastatal involve- ment in either the making of the forgings in South Africa or the exporting of the forgings to the U.S.

In the U.S., the axle is centered for purposes of finishing the ends, and it is ultrasonically tested. Upon satisfactory testing, the axle is identified with the finisher's serial num- ber. If the axle requires a spline bushing, it is bored and a spline bushing is installed. The axle is then turned to remove excess metal, sufficient to meet specifications for grinding. It is transferred to a cylindrical grinder, and all diameters are ground between centers in one operation. The axle is again transferred to a burnishing lathe, and the traction motor support area is burnished. The axle is then inspected to meet specifica- tions, and the results of the inspection are recorded in a perma- nent inspection report. After inspection, two locomotive wheels, one gear and two bearings are hydraulically pressed onto the axle, creating a mounted locomotive wheel set. Depending on the size of the locomotive, two or three of such locomotive wheel sets are mounted into the locomotive truck, and two trucks are mounted on each locomotive.


Are foreign locomotive axle forgings further machined in the U.S. and combined with U.S. components substantially transformed, such that the U.S. manufacturer is the ultimate purchaser?


Section 304 of the 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 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. The pri- mary purpose of the country of origin marking statute is to "mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy the product, if such marking should influence his will." United States v. Friedlaender & Co., 27 CCPA 297 (1940), as quoted with approval in National Juice Products Association v. United States, 10 CIT 48, 628 F. Supp. 978 (1986).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of and exceptions to 19 U.S.C. 1304. The "ultimate purchaser" is defined in 19 CFR 134.1(d) as generally the last person in the U.S. who will receive the article in the form in which it was imported. It is specifically provided in 19 CFR 134.35 that a manufacturer is the ultimate purchaser if he converts or combines an imported article into an article with a new name, character or use. In such case, the article shall be excepted from marking under 19 U.S.C. 1304(a)(3)(D), if the marking of its outermost container will reasonably indicate the country of origin.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 CCPA 267, 270 (1940); National Juice Products Association v. United States, 10 CIT 48 (1960); Koru North America v. United States, 12 CIT , 701 F.Supp. 229 (CIT 1988).

Customs has ruled in HQ 709253 (August 9, 1978) that imported W. German crankshaft forgings which underwent further processing in France were substantially transformed in France and, therefore, considered to be a product of France for country of origin marking purposes. The processing in France included turning the main and rod bearing journals, drilling oil feed holes, drilling and tapping the flange of the crankshaft, and additional heat treatment. In Customs Ruling HQ 732923, dated December 13, 1989, similar processing of crankshafts in the U.S. was held to be a substantial transformation. Further, the crankshafts were installed in engines after the processing, and, once installed, lost their separate identities and became integral parts of a new or different article having a new name, character and use. Customs has previously ruled that as the
result of a manufacturing process consisting of the combination of imported follower rings with other U.S. components, the follower rings lose their separate identity and become integral components of a new and different article of commerce. The manufacturer who assembled the follower rings into flanged coupling adaptors was held to be the ultimate purchaser, and the imported follower rings were excepted from marking. Only the outermost containers of the follower rings had to be marked, see Customs Ruling HQ 080135, dated June 29, 1987.

In this case, we find that the significant machining that is performed on the axle forging coupled with its combination with other components, including two locomotive wheels, and finally, its incorporation into a locomotive truck substantially transforms the axle forging into a new and different article with a new name, character or use. After such processing, the imported article is not merely a forging but an integral part of a locomotive truck. The U.S. manufacturer is, therefore, the ultimate purchaser of the forgings.


The U.S. manufacturer who uses imported locomotive axle forgings in the manufacture of locomotive trucks is the ultimate purchaser of the imported articles. Pursuant to 19 CFR 134.35, the articles are excepted from marking. Marking of the outermost containers pursuant to 19 CFR 134.32(d) is acceptable provided that Customs officials at the port of entry are satisfied that the U.S. manufacturer will receive the axle forgings in their original unopened marked containers.


Marvin M. Amernick, Chief
Value, Special Programs and

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