United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2004 HQ Rulings > HQ 562825 - HQ 563026 > HQ 562965

Previous Ruling Next Ruling
HQ 562965

April 15, 2004

MAR-2-05 RR:CR:SM 562965 KSG


Brad A. Brooks-Rubin, Esq.
LeBoeuf, Lamb, Greene & MacRae LLP
1875 Connecticut Avenue, N.W.
Suite 1200
Washington, D.C. 20009-5728

RE: Country of origin of locking nuts; substantial transformation

Dear Mr. Brooks-Rubin:

This is in reference to your letter of January 28, 2004, requesting a binding ruling on behalf of Alcoa Global Fasteners, Inc., concerning the country of origin marking of certain locking nuts. Samples were submitted with your request. At the request of counsel, a conference was held at Headquarters.


This case involves certain non-threaded extruded forms imported from Hungary and processed in the U.S. to produce finished threaded locking nuts. The primary application for the locking nuts at issue is in aerospace engines. The non-threaded extruded forms are entered into the Port of Los Angeles International Airport.

The extruded forms may be made from stainless steel or Waspaloy, which is a nickel-based metal. The forms are produced in Hungary by cutting metal bars into smaller slugs on a single-spindle screw machine and then forming the slugs into the rough shape of a nut. The slugs are then lubricated with minimal silver plating and are then moved to a press. On the press, a die punches each slug into a non-threaded extruded form that has the general shape of a nut. A slug may pass through the press one or more times in order to form the slug into the proper shape. The extruded form is either ground (if the form is too tall) or its hole is reamed in order to insure that the hole is in the general shape and dimensions required. Finally, each form is countersunk, which adds a slight slanting to the sides. Counsel states that the machinery used to produce the extruded forms is valued at approximately $35,000.

Once imported into the U.S., the processing of the extruded forms includes tapping, crimping, heat treating and plating/lubing. After inspection, a machine uses a tap to insert a thread into the hole previously created. Alcoa contends that the tapping performed by it is more expensive and precise than usual tapping in order to meet the aerospace industry- established standard.

Crimping takes the still-round threaded fastener and compresses/depresses it , with a die, at 2-3 points along the head and body of the nut. Once it has been crimped, the nut is no longer free-running, thereby minimizing movement and vibration. Alcoa states that it builds its own crimping machinery in-house, at a cost of approximately $30,000 per machine, so that they can adjust every aspect of the crimping process to ensure that the locking nut will possess the necessary characteristics.

The locking nut is then heat-treated to such a level that the metal recrystallizes in order to harden and strengthen the nut to customer specification.

The locking nut is tested to insure that it does not contain any cracks or fractures. After testing, the locking nut is coated through either electroplating (60-65% of locking nuts) or lubing (30-35% of locking nuts). The coating/lubing acts as a lubricant and prevents degrading of the underlying raw material. Electroplating occurs in a multiple-line bath; lubing takes place in an apparatus similar to a cement mixer. The final locking nut is x-rayed to validate coating thickness and examine for cracks, fractures and other imperfections.

Alcoa contends that the machinery used in the U.S. processing is valued at approximately $2.4 million dollars.


What is the country of origin of the locking nuts manufactured as described above?


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 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. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose 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 them, if such marking should influence his will.” United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations {19 CFR 134.1(b)), defines “country of origin” as the country of manufacture, production or growth of any article of foreign origin entering the U.S. 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 the marking laws and regulations.

For country of origin marking purposes, a substantial transformation of an
article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing However, if the manufacturing or combining process is merely a minor one which 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).

In National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the court considered sockets and flex handles which were either cold formed or hot forged in Taiwan into their final shape prior to importation, speeder handles which were reshaped by a power press after importation, and the grip of flex handles which were knurled in the U.S. In the U.S., the imported articles were then heat treated which strengthened the surface of the steel, and cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components were assembled together which the court stated required some skill and dexterity.

The court determined that the imported articles were not substantially transformed in the U.S. and that they remained products of Taiwan. In making its determination, the court focused on the fact that the components had been coldformed or hotforged “into their final shape before importation,” and that “the form of the components remained the same” after the assembly and heattreatment processes performed in the U.S. The court also found that there was no change in use as a result of the processing performed in the U.S. Although the court stated that a predetermined use would not necessarily preclude a finding of a substantial transformation, it noted that such determination must be based on the totality of the evidence. The court then concluded that no substantial change in name, character or use occurred as a result of the processing performed in the U.S. In Headquarters Ruling Letter (“HRL”) 556932, dated January 14, 1993, Customs held that steel rod manufactured into fasteners (nuts, bolts, rivets and screws) constituted a single substantial transformation.

In HRL 559847, dated January 2, 1997, Customs considered U.S.origin stainless steel sheets cut into strips of suitable width, which were further cut into surgical instrument blanks. The blanks were then heated and hammer forged into their final shape and size. The forgings were annealed and trimmed, and cold stamped to straighten the trimmed forgings. The forgings were then shipped to Pakistan where they underwent milling operations to cut the box, ratchet, and jaw serrations into the forceps; assembled; ground; filed; heat treated, including tempering and testing for hardness; acid pickled; polished; chemical cleaned; and buffed. It was held that inasmuch as the forgings resembled the shape and size of the completed instruments upon importation into Pakistan, the operations performed in Pakistan did not substantially transform the forgings into a new and different article of Pakistani origin. Accordingly, the origin of the finished instruments was determined to be the U.S.

Counsel contends that the tapping, which creates the internal threading, crimping, which makes the fastener self-locking, and heat treating the fastener, which increases its strength, substantially transforms the extruded form in the U.S.

We have considered this argument and conclude that while these processes make the fastener into a useable form and add value to it, they do not substantially transform the imported article into a new article with a new name, character and use. Based on the analysis in HRL 556932, we believe that the processing in Hungary where stainless steel or Waspaloy into the extruded form is a substantial transformation. We believe that the finishing processes performed in the United States in this case are similar to those considered in HRL 559847. We note that, prior to the operations performed in the U.S., each non-threaded extruded form has the final shape of the finished locking nut and is essentially an unfinished locking nut. Accordingly, pursuant to those rulings and National Hand Tool, we find that the extruded forms do not undergo a substantial transformation in the United States, and therefore, the country of origin of the finished locking nuts will be Hungary--the country where the extruded form is manufactured.


Based on the facts and samples presented, we find that the country of origin of the finished locking nuts is Hungary.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


Myles B. Harmon, Director
Commercial Rulings Division

Previous Ruling Next Ruling