CLA-2 CO:R:C:G 087439 WAW
Mr. Geoff Phillips
Tic-La-Dex Business Systems, Inc.
3443 Camino Del Rio South
Suite 326
San Diego, CA 92108-3901
RE: Unassembled Imitation Leather Travel Organizer; Portfolio;
Travel Planner
Dear Mr. Phillips:
This letter is in response to your inquiry, dated June 28,
1990, requesting a tariff classification of an imitation leather
portfolio with accessories, imported from Taiwan, under the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA). You have also requested a determination that the
article be marked "Made in the United States."
FACTS:
The sample article, designated as Style Number 61010, is a
portfolio designed to contain the following items: a two year
monthly calendar (planner), a built-in calculator, 100 color
assorted "calendar" cards (3 inches by 5 inches), a removable
credit card wallet, an 8 inches by 10 inches writing pad, a full
sized file folio section, and pockets for business cards and
other papers. The portfolio is closed by means of a lock and
key. The outer surface of the portfolio is manufactured of a
fabric backed cellular plastics material.
The importer has indicated that the various components will
be imported into the United States in separate cartons in the
same import container. The components which make up the
portfolio such as the portfolio outer cover, the portfolio main
body and the hardware will be assembled in the United States into
a finished portfolio. The separate components will be assembled
in the United States by means of simple fixing devices such as
sewing and gluing. The remaining components are separate
articles which are inserted into the finished portfolio.
ISSUES:
(1) What is the proper classification of the subject
merchandise under the HTSUSA?
(2) What is the country of origin of the subject merchandise
for marking purposes?
LAW AND ANALYSIS:
Classification
The General Rules of Interpretation (GRI's) set forth the
manner in which merchandise is to be classified under the HTSUSA.
GRI 1 requires that classification be determined first according
to the terms of the headings of the tariff and any relative
section or chapter notes and, unless otherwise required,
according to the remaining GRI's, taken in order.
GRI 3 provides for goods which may be classifiable under two
or more headings. GRI 3(b) states that goods put up in sets for
retail sale shall be classified as if they consisted of the
component which gives them their essential character. The
Explanatory Notes to GRI 3(b) indicate, in pertinent part, that
"goods put up in sets for retail sale" means goods which:
(a) consist of at least two different articles
which are prima facie classifiable in
different headings;
(b) consist of products or articles put up
together to meet a particular need or carry
out a specific activity; and
(c) are put up in a manner suitable for sale
directly to users without repacking.
The sample merchandise meets criteria (a), (b), and (c) set
forth above. The portfolio, the planner, the credit card wallet
and the pad are all classifiable in heading 4202, HTSUSA, while
the calculator is classifiable in heading 8470, HTSUSA. All of
the articles in the portfolio are put up together to carry out a
specific activity of planning and organizing ones' thoughts,
activities and personal travel agenda. Moreover, the entire unit
is put up in a manner suitable for sale directly to consumers
without any need for repacking.
Since we find that the subject merchandise qualifies as a
set under the HTSUSA, we must next determine which component
gives the set its essential character. Explanatory Note VIII to
GRI 3(b) provides that the essential character may be determined
by "the nature of the material or component, its bulk, quantity,
weight or value, or by the role of a constituent material in
relation to the use of the goods." Essential character has been
construed to mean the attribute which strongly marks or serves to
distinguish an article.
In the instant case the component of this set which
constitutes the most distinctive feature of the article and which
plays the major role in its function as a tool for organizing and
planning one's activities is the portfolio. It is the portfolio
which plays an indispensable and central role in relation to the
overall use of the goods. The portfolio is much more than a
simple container, but rather it functions to bring together all
the component goods to enable a consumer to use the entire unit
to organize, in a coordinated and comprehensive fashion, one's
activities.
The above-discussed role of the portfolio in relation to the
overall use of the set demonstrates that the portfolio is central
to the function and intended purpose of the goods. Therefore,
the portfolio gives the set its essential character, and the
entire set is classifiable under the subheading for that
component. Any other accessories, whether assembled or not,
imported with the portfolio will be considered to constitute part
of the set classifiable with the portfolio.
The importer has indicated that the portfolio will be
imported unassembled into the United States. Classification of
unfinished or incomplete articles is controlled by GRI 2(a) which
provides as follows:
Any reference in a heading to an article shall be taken
to include a reference to that article incomplete or
unfinished, provided that, as entered, the incomplete
or unfinished article has the essential character of
the complete or finished article. It shall also be
taken to include a reference to that article complete
or finished (or falling to be classified as complete or
finished by virtue of this rule), entered unassembled
or disassembled.
Under the first sentence in GRI 2(a), an incomplete article
having the essential character of the complete or finished
article is classified under the heading for the complete article.
The second sentence in GRI 2(a) extends this tariff treatment to
the same article that is entered unassembled or disassembled.
In the instant case, the articles are both incomplete and
unassembled. The first question, therefore, is whether they have
the essential character of the complete article, and the second
question is whether they are "unassembled" as the term is used in
GRI 2(a).
The Explanatory Notes (EN) to the Harmonized Commodity
Description and Coding System, although not legally binding,
represent the official interpretation of the tariff at the
international level. The EN's offer guidance in understanding
the scope of the provisions within each chapter of the schedule.
EN 2(a)(I), (V), and (VII) provide some guidance on the intent of
GRI 2(a):
(I) The first part of Rule 2(a) extends the scope
of any heading which refers to a particular
article to cover not only the complete
article but also that article incomplete or
unfinished, provided that, as presented, it
has the essential character of the complete
or finished article. [underscoring added for
emphasis]
* * * * * *
(V) The second part of Rule 2(a) provides that
complete or finished articles presented
unassembled or disassembled are to be
classified in the same heading as the
assembled article. When goods are so
presented, it is usually for reasons such as
requirements or convenience of packing,
handling or transport. [underscoring added
for emphasis]
* * * * * *
(VII) For the purposes of this Rule [2(a)],
"articles presented unassembled or
disassembled" means articles the components
of which are to be assembled either by means
of simple fixing devices (screws, nuts,
bolts, etc.) or by riveting or welding, for
example, provided only simple assembly
operations are involved. [underscoring added
for emphasis]
EN (I) does not provide much instructive language on the GRI
2(a) requirement that an incomplete article must have the
essential character of the complete article. However, it is
reasonable to say that in order to have the essential character
of a portfolio, the imported components must be advanced to the
point that they are recognizable as a portfolio, i.e., having
the essential features of a portfolio. Based on our examination
of the merchandise, it is clear that the constituent components
constitute an incomplete portfolio which has the essential
character of a portfolio under GRI 2(a).
If an incomplete article is also unassembled, EN (V) and
(VII) describe the usual circumstances surrounding the
"unassembled" state at the time of presentation: (1) the article
is usually presented unassembled for convenience or for
requirements necessitated by considerations arising from
packaging, transport, or handling, and (2) it is put together by
simple assembly operations involving simple fixing devices.
Shipment of the separate components in an "unassembled" condition
would appear to be related to the convenience in the packing,
handling or transport of the merchandise. In the instant case,
the individual components are assembled by means of a simple
fixing devices such as sewing and gluing of the outer vinyl cover
to the welded insert. Moreover, the subsequent insertion of the
other accessories such as the books and calculator are incidental
to the assembly of the portfolio as a whole.
Country of Origin Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that, unless excepted, every article of foreign
origin imported into the United States 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 United
States 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., 27 CCPA 297 at 302 (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 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. 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 at 270 (1940),
National Juice Productions Association v. United States, 10 CIT
48, 628 F. Supp. 978 (1986), Koru North America v. United
States, 12 CIT 48, 701 F. Supp. 229 (1988).
Section 134.35 of the Customs Regulations, however, provides
an exception to the marking requirement when imported articles
are subjected to further processing in the United States. When
further processing results in a substantial transformation of the
imported products, the domestic manufacturer or processor will be
considered the ultimate purchaser of the imported products under
the principle of United States v. Gibson-Thomsen Co., Inc., 27
CCPA 267 (C.A.D. 98).
In C.S.D. 80-111 (September 24, 1979) we held that the
manufacturing processes used to produce ceiling fans from
foreign components did not constitute a substantial
transformation of the imported parts. Furthermore, Customs
stated that:
For purposes of applying section 134.35, substantial
transformation is a process by which an imported
article acquires a new use, name, or character. While
it is not necessary that a new article be produced, the
mere assembly of parts will not constitute a
substantial transformation. [Emphasis added]
As indicated above, the portfolio is assembled in the U.S.
from various components including the portfolio outer cover, the
portfolio main body and the hardware. These components will be
assembled in the U.S. by means of simple fixing devices such as
sewing and gluing. We find that the imported components are not
substantially transformed as a result of the assembly process.
At the time of importation, although the portfolio is unfinished,
it lacks none of its essential characteristics. The mere
assembly of these components by gluing and sewing into a finished
portfolio does not change the name, character or use of the
product. Accordingly, for purposes of 19 U.S.C. 1304, the
country of origin of the portfolio is the country where the
components are manufactured. Assuming they are manufactured in
Taiwan, the portfolio must be marked accordingly.
Similarly, the remaining components (a planner, a
calculator, 100 color assorted "calendar" cards, a removable
credit card wallet, a writing pad) are not substantially
tranformed as a result of their inclusion in the portfolio.
Accordingly, these items must be conspicuously marked to indicate
their country of origin. No information was provided regarding
the origin of these components.
In view of our finding that the imported articles are not
substantially transformed in the U.S., the Customs Service would
consider a "Made in the United States" marking to be a false
designation of origin within the meaning of 15 U.S.C. 1125.
Merchandise which is introduced or attempted to be introduced
into the United States contrary to this provision is considered
prohibited or restricted merchandise.
It should be noted that there are special country of origin
marking requirements that apply when an article or its container
includes a U.S. address or some other reference to a place other
than its country of origin. Specifically, section 134.46,
Customs Regulations (19 CFR 134.46), provides that the name of
the country of origin, preceded by the words "Made in", "Product
of" or words of similar meaning, must appear in close proximity
to and in comparable size letters as the U.S. reference. These
provisions would apply to the container, the calculator and the
planner, which refer to San Diego, California.
HOLDING:
Based on the foregoing analysis, the merchandise is
classifiable as a set under subheading 4202.12.2030, HTSUSA,
which provides for trunks, suitcases, vanity cases, attache
cases, briefcases, school satchels and similar containers: With
outer surface of plastics. . .Attache cases, brief cases, school
satchels, occupational luggage cases and similar containers.
Articles classified in this subheading are subject to a duty rate
of 20 percent ad valorem.
The imported components comprising the portfolio and its
accessories are not substantially transformed in the U.S.
Therefore, they must be marked to indicate their foreign country
of origin. The marking "Made in the United States" is
unacceptable.
Sincerely,
John Durant, Director
Commercial Rulings Division