What constitutes a substantial transformation in product classification?

A substantial transformation in product classification refers to a significant change in a product's identity such that it is regarded as a new item for tariff purposes. This process generally incorporates the idea that the transformation must result in the product having a new name, character, and use compared to its original form.

By requiring that a product has a new identity, the concept of substantial transformation emphasizes core attributes such as functionality and manufacturing processes. When a product is fundamentally altered to the point where it serves a different purpose or is recognized distinctly in the marketplace, it qualifies as a substantial transformation, which is essential for correct classification in customs.

In contrast, other options do not align with the established criteria for substantial transformation. For instance, merely increasing the price or changing packaging does not denote a change in the product’s inherent qualities. Similarly, local assembly that does not involve significant modification does not meet the threshold needed to classify a product as substantially transformed. Changing ownership and documentation, while important for trade operations, does not alter the product's character and use, and therefore, does not constitute a substantial transformation.