MAR-2-05 CO:R:C:V 732692 KG
William J. Maloney
Rode & Qualey
295 Madison Avenue
New York, N.Y. 10017
RE: Country of origin marking of footwear uppers
Dear Mr. Maloney:
This is in response to your letter of May 24, 1989, to the
office of the Area Director of Customs, New York, requesting a
country of origin ruling on two samples of footwear in various
stages of completion. Your letter was referred to this office
for a direct reply. By letter dated July 31, 1989 (HQ 084859),
you were provided a tariff classification ruling on these
samples.
FACTS:
The first sample is an imported leather open back moccasin
upper. The bottom of the upper is completely closed and a
midsole is sewn to the bottom. The upper is sewn in the
Dominican Republic. The upper that is shipped from the Dominican
Republic has the appearance of a moccasin and has a closed
bottom. The list submitted of the operations performed in the
U.S. includes: pick unit soles, case unit soles, set up lasts,
load shoes, load bottoms, slip last form shoe, trim back tab
laces, bottom cement, spot sole and press, scour sole, pull last,
apply moc pod, clean and inspect, stuff and stick shoe, spray
upper, make shoe box, make box lid, stamp box, cement box lapel,
load box for packing and pack shoes.
The second sample is an imported leather closed backed
moccasin upper. The bottom of the upper is open at the heel.
There is a midsole partially attached to the bottom of the upper
except at the heel. It is shipped to a U.S. manufacturer for
performance of the same operations listed above for sample one
plus the following operations: tack tails at heel, heel seat last
upper, pull tacks, heat set and rough bottom.
ISSUE:
Whether the two samples are substantially transformed in the
U.S. and therefore, are exempt from individual country of origin
marking.
LAW AND ANALYSIS:
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 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 Court of
International Trade stated in Koru North America v. United
States, 701 F.Supp. 229, 12 CIT (CIT 1988), "In ascertaining
what constitutes the country of origin under the marking statute,
a court must look at the sense in which the term is used in the
statute, giving reference to the purpose of the particular
legislation involved. The purpose of the marking statute is
outlined in United States v. Friedlaender & Co., 27 CCPA 297,
302, C.A.D. 104 (1940), where the court stated that: "Congress
intended that the ultimate purchaser should be able to know by an
inspection of the marking on 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."
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. The ultimate purchaser is defined in section
134.1(d), Customs Regulations (19 CFR 134.1(d)), as generally the
last person in the United States who will receive the article in
the form in which it was imported. If the imported article will
be used in manufacture, the manufacturer may be the ultimate
purchaser if he subjects the imported article to a process which
results in a substantial transformation of the article. In such
case, the article itself is excepted from marking pursuant to
section 134.35, Customs Regulations (19 CFR 134.35), and only the
outermost container of the imported article must be marked.
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
C.C.P.A. 267 at 270 (1940), National Juice Products Association
v. United States, 10 CIT ___, 628 F.Supp. 978 (CIT 1986), Koru
North America v. United States, 12 CIT ___, 701 F.Supp. 229
(CIT 1988). In a country of origin marking case involving
imported shoe uppers, Uniroyal, Inc. v. United States, 3 CIT 220,
542 F. Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983),
the Court of International Trade considered whether the addition
of an outsole in the U.S. to imported uppers lasted in Indonesia
effects the substantial transformation of the uppers. The court
described the imported upper, which resembled a moccasin, and the
process of attaching the outsole to the upper. The factors
examined included: a comparison of the time involved in attaching
the outsole versus the time involved in manufacturing the upper,
a comparison of the cost involved in the process of attaching the
outsole versus the cost involved in the process of manufacturing
the upper, a comparison of the cost of the imported upper versus
the cost of outsole and a comparison of the number of highly
skilled operations involved in both processes. The court
concluded that a substantial transformation of the upper had not
occurred since the attachment of the outsole to the upper is a
minor manufacturing or combining process which leaves the
identity of the upper intact. The upper was described as a
substantially complete shoe and the manufacturing process taking
place in the U.S. required only a small fraction of the time and
cost involved in producing the upper.
In HQ 084859 (July 31, 1989), Customs ruled that the
submitted samples are formed uppers for tariff classification
purposes. The classification ruling was based on several
factors; "the stitching on the separate, fairly rigid leather
midsole gives these uppers much of their ultimate shape, form and
size and the process was far more than simply closing at the
bottom. It is our observation that both bottoms are mostly
closed." The fact that the uppers are not back-lasted was not
determinative.
For purposes of marking, we find that these formed uppers
are not substantially transformed as a result of the additional
U.S. processing performed in the U.S. First, these samples are
very similar in appearance and in regard to the processing
performed abroad to samples three and four discussed in HQ 732490
(September 20, 1989), in which Customs held that no substantial
transformation occurred.
Second, as noted in the classification ruling, despite the
uppers not being back-lasted, they already have much of their
ultimate shape, form and size. As such, the uppers have the
basic appearance of shoes. Although sample two does not have a
completely closed bottom, the opening is on the seam at the heel
and no additional material is required to closed the bottom.
Sample one has a completely closed bottom. As in Uniroyal, and
in HQ 732490, we consider the formed uppers to be substantially
complete footwear which are not substantially transformed in the
U.S. into an article with a new name, character or use by the
addition of the sole and other minor processing.
HOLDING:
The sample imported leather moccasin uppers are not
substantially transformed as a result of the U.S. processing.
Therefore, the uppers must be marked to indicate the country of
origin in a location where the marking will remain visible after
the U.S. processing.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch
cc: New York Seaport
(084859)