Importer Says Its Steel Wire Is Product of Japan Under Prior Use of 'Substantial Transformation' Test
Importer Monarch Metals told the Court of International Trade that its stainless steel wire imports are products of Japan and not China, meaning its goods were improperly subjected to Section 301 and Section 232 tariffs. In a complaint filed June 13, Monarch Metals said that under CBP's prior application of the substantial transformation test to steel wire, no substantial transformation occurs by drawing steel rod into steel wire (Monarch Metals v. United States, CIT # 24-00266).
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As a result, the "country of origin of the drawn wire" is "the same as the steel rod from which it was drawn." Thus, because Monarch Metals' steel rod was made in Japan, the company's stainless steel wire is a product of Japan, the brief said.
The subject wire was made by being drawn into wire in China from stainless steel rod that had been "melted, alloyed, poured, and cast into rod in Japan by Japanese steel manufacturer Nippon Steel Stainless Steel," the importer said. The Nippon Steel-made steel rod used in making the subject wire was identifiable by "unique cast numbers," known as "heat numbers," which were assigned by Nippon Steel to "each batch of cast stainless steel rod" at the "time of melting, alloying, pouring, and casting, and which are always in a form beginning with the letter 'E' followed by five numerical digits," the brief said.
These cast numbers appear on the subject wire's entry and related commercial documents prepared by Nippon Steel, the Chinese drawing company and the Chinese shipping company, Monarch Metals said. The importer claimed that its use of the Nippon Steel cast number identification system "assures that the provenance, alloy content, and other technical specifications of the steel rod can be traced from the stainless steel rod through to the finished stainless steel wire drawn from the rod that is then imported into the United States and ultimately delivered to Monarch."
The use of the Nippon Steel cast number for all the rods used in making the subject wire allows the wire to be traced back to the production of the original rod, the brief said.
As a result, CBP is able to apply the "substantial transformation" test to Monarch Metals' wire entries as it has done to other stainless steel wire imports, the importer argued. Monarch Metals cited prior CIT cases and CBP rulings to back its claim that CBP determines the country of origin of steel wire by looking at the country of origin of the steel rods.
Monarch Metals said at the time of entry, the company and its customs brokers "reasonably believed that steel wire that had been drawn from rod into wire in China would be considered to originate from China under applicable U.S. country of origin laws." Thus, CBP erred in finding the products' country of origin to be China, improperly subjecting the goods to Section 301 and Section 232 duties, the company argued.