CLA-2 OT:RR:CTF:TCM H005728 HkP
Mr. Joseph F. Donohue, Jr.
Donohue and Donohue
Counsellors at Law
26 Broadway
New York, NY 10004
RE: Country of Origin and Marking Requirements for certain purses partly produced in Italy and China
Dear Mr. Donohue:
This is in response to your letter of January 17, 2007, on behalf of your client Burberry Limited of London (“Burberry”), in which you requested a binding ruling. At issue is the country of origin and marking requirements for certain leather purses produced partly in Italy and partly in China.
FACTS:
You have described the articles at issue as two small leather purses: the Credcoin Purse (style 11776457) and the Credit Purse (style 11776481). Both feature a PVC exterior with leather trim, separate coin pocket, decorative brass buckle snap closure, leather interior with bill compartment(s), six credit card slots and two side slots. The Credcoin Purse measures approximately 10 x 11 x 2 cm and the Credit Purse measures approximately 10.5 x 14 x 2 cm. Each is produced for a different Burberry collection. You have included samples of the finished items as well as samples of the merchandise after each stage of their production process. We note that although you refer to the articles as “purses”, the samples provided are of articles more commonly referred to as “wallets”, in that, they are flat folding cases with compartments used to carry paper money and have slots for credit cards and other items of a similar nature.
Material components of the merchandise are: 100% genuine leather originating in Italy; fabric produced in Italy and purchased in bulk rolls; cotton canvas coated on one side with PVC (polyvinylchloride) produced in the U.K. and purchased in bulk rolls; and hardware (e.g. closures, snaps, etc.) produced in Italy and purchased in bulk quantities.
Italy Operations – Stage 1
The leather, fabric and PVC coated canvas are cut to shape and scored (i.e., marking with lines, grooves, notches, etc.) and guide holes are made to facilitate assembly operations in China (described below). The cutting operations, which you describe in detail and which utilize a cutting press or computerized cutting machinery, produce materials of a precise and predetermined size, shape and dimension that will form the component parts of the specific style article. The following equipment is used in the pre-cutting and cutting operations: CAD Program (including specialized technician); CAD printer; Tooling equipment (knives); Leather presses; Fabric measurement machine; Skiving machines; Cutting presses; and, computerized cutting machine linked to the CAD program.
The cut sections of leather and fabric are sorted by shape, gathered into bundles of 100 and shipped to China for partial assembly. The PVC-coated canvas and leather trim that will later form the outer portions of the purse remain in Italy.
China Operations – Stage 2
The leather pieces are skived (that is, pared to reduce thickness). The pre-cut materials are then folded, creased, glued and stitched and the outer buckle and the snap button poppers are attached. Skiving, sewing, and turned edge construction machines are utilized during these operations. The semi-finished pieces are then returned to Italy for final processing.
Italy Operations – Stage 3
The PVC-coated canvas and leather trim are glued and stitched to the subassembly to form the outer section of the purse and the snap button holders attached. The coin section flap is turned and stitched to the side sections of the coin purse. Other finishing operations include cleaning and coloring the purse and trimming the external raw edges, as well as stamping the “Burberry” name and the country of origin on the purse. During this stage tooling equipment, sewing machines, presses, and raw edge construction machines are used.
You have indicated that Burberry is considering two options for marking the country of origin which will appear on an interior panel above the mouth of the coin pocket. They are:
Option 1: Blind embossing in lettering approximately 1/16 inch high (shown on sample 1 - style 11776457).
Option 2: Contrasting gold or silver foil in lettering approximately 1/16 inch high (shown on sample 2 - style 11776481).
You have asked whether either or both of these options comply with the marking requirements of 19 C.F.R. § 134.41.
ISSUE:
What is the country of origin for marking purposes of the Credcoin Purse and Credit Purse?
Does each marking option meet the requirements of the marking rule?
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 (or its container) imported into the United States 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 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, 302, C.A.D. 104 (1940). Part 134, U.S. Customs and Border Protection Regulations (19 C.F.R. §134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304.
Origin
Section 134.1(b), CBP Regulations (19 C.F.R. § 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 [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 that 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).
You argue that following the cutting operations in Italy (stage 1), the leather skins and bulk rolls of material are dedicated solely for use as components of a specific style of purse. According to the information and sample provided, every part of each purse is cut in Italy so that each piece of material corresponds to either the exterior surface, coin pocket, trim, interior surface, bill compartments, credit card slots or side slots. You further argue that, taken together, the pre-cut materials constitute an unassembled purse or have the essential character of a finished purse. For these reasons, you believe that the country of origin of the Burberry purses is Italy.
We agree. CBP has previously held that cutting materials to defined shapes or patterns suitable for use in the assembly of a finished article, as opposed to mere cutting to length and/or width which does not render the article suitable for a particular use, constitutes a substantial transformation. See, for e.g., Headquarters Ruling Letter (“HQ”) 562156, dated July 5, 2001, and HQ 734539, dated June 8, 1992. Based on the information provided, we find that the component materials undergo a substantial transformation in Italy as a result of the cutting to shape to form the purse components for later assembly into the finished articles.
Furthermore, we find that the operations performed in China do not constitute a further substantial transformation of the Italian pre-cut components. The China operations consist of merely assembling, paring, gluing, folding, creasing and stitching (turned-edge construction). CBP has long held that the mere assembly of parts will not necessarily constitute a substantial transformation. See C.S.D. 80-111, dated September 24, 1979, in which the U.S. Customs Service (now, CBP) found that the U.S. assembly of imported ceiling fan components on an assembly line did not constitute a substantial transformation. Ceiling fan motors underwent a 20-step assembly and the fan blades underwent a 5-step assembly. See also HQ 734539, dated June 8, 1992, regarding the country of origin of ladies’ clutches and men’s wallets. Since stage two of the operations does not amount to a further substantial transformation of the Italian origin pre-cut components, it is unnecessary to decide if the final assembly operations performed in Italy also constitute substantial transformation. Accordingly, we find that the country of origin of the purses is Italy.
Marking
19 C.F.R. §134.41(b) requires that the degree of permanence and visibility of marking should at least be sufficient to insure that in any reasonably foreseeable circumstance, the marking shall remain on the article (or its container) until it reaches the ultimate purchaser unless it is deliberately removed. The marking must survive the normal distribution and store handling. The ultimate purchaser in the United States must be able to find the marking easily and read it without strain.
CBP has found certain factors to be indicative but not conclusive of compliance with the requirements of 19 C.F.R. §134.41 and 19 U.S.C. §1304. Among the factors that we consider are the size, location, and legibility of the marking, and whether or not the marking stands out. CBP has generally found that the size of the marking should be large enough so that the ultimate purchaser can easily see the marking without strain. The location of the marking should be in a place where the ultimate purchaser could expect to find the marking or where he/she could easily notice it from a casual inspection. Whether the marking stands out is generally dependent on where it appears in relationship to other print on the article and whether it is in contrasting letters to the background. Overall, CBP has found that the totality of the circumstances determines whether or not the marking conforms to the marking rules. See, for e.g., HQ 733940, October 24, 1991.
You argue that an inspection of the samples bearing the different marking options under consideration reveals that the “Made in Italy” marking is in a conspicuous location. It is on the inside panel of each article above the mouth of the coin pocket. You believe that while inspecting the merchandise a potential purchaser would naturally look at the coin purse feature, at which point the marking would be “readily visible”. Further, you assert that each marking option can be read easily without strain.
We respond first to your contention that each marking option can be read easily without strain. Option 1, blind embossed lettering 1/16 inch high, is not in a contrasting color and does not stand out. While, as you correctly state, neither the regulations nor customs precedent requires contrasting lettering, CBP has in the past found that, generally, blind marking of a small size that is not in a contrasting color does not satisfy country of origin marking requirements. See NY L88035, October 20, 2005, in which CBP discussed blind markings of different sizes. After examining the sample in this case, we find that the Option 1 marking cannot be read easily without strain.
With regard to Option 2, contrasting gold foil, we note that even though the lettering is small, the use of contrasting colors makes the letters stand out so that the marking is easy to read.
Next, we address whether or not the marking options presented are in a conspicuous location. In both options under consideration, the country of origin marking will appear on an interior panel located under the flap for the coin section. CBP has previously found that checkbook wallets marked on the inside of the checkbook cover were not conspicuously marked. HQ 734314 (January 27, 1992). In HQ 732100 (January 18, 1990), Customs found that a label partly obscured by the side fold of a wallet failed to meet the requirements of 19 CFR 134.41. In light of these rulings, CBP asked you to address the conspicuousness of the proposed location of the marking.
In explaining why HQ 734314 is not applicable to the Burberry purses, you argue that CBP must take into account the differences in construction between the checkbook wallets in HQ 734314 and the purses. The checkbook wallet had an outer cover that folded over the checkbook compartment and, within the checkbook compartment was a separate checkbook cover that had an outer surface and an inner surface. The country of origin was located on the inside surface. The Burberry purses have no such separate inside cover. Thus, you argue, when the purchaser of the Burberry item unsnaps and opens the outer cover to the coin purse compartment, the country of origin marking is immediately visible. Further, you believe it a reasonable presumption that a potential purchaser of your merchandise will unsnap and open the coin purse compartment to examine the coin purse features. It is your belief that during even a casual inspection the buyer will see the “Made in Italy” marking above the mouth of the coin purse. You note that CBP has, in the past, found that a coin purse with the country of origin die stamped in a contrasting color on the interior front panel of the purse was visibly and conspicuously marked. NY K87673, July 28, 2004.
You distinguish your merchandise from that in HQ 732100, pointing out that the label in HQ 732100 was located at the far edge of the pocket whereas the Burberry marking is in the center of the panel. Second, because of its location, the label in HQ 732100 was obscured by one of the side folds of the wallet whereas the Burberry marking is not obscured in any way.
After examining your merchandise, and considering your arguments and all the circumstances, we find that Option 1 does not satisfy the requirements of 19 CFR §134.41(b) because the blind embossed small lettering is not able to be read easily without strain.
We find that Option 2 meets the requirements of 19 CFR §134.41(b) because the use of contrasting colors makes the lettering stand out and easy to read. Further, because it is likely that a potential purchaser will open the coin compartment in a casual inspection of the item before purchase, we find that the marking is placed in a conspicuous location.
HOLDING:
The country of origin of the Burberry Credcoin and Credit Purses is Italy.
Option 2, as reflected by sample 2, satisfies the country of origin marking requirements of 19 C.F.R. §134.41(b). Option 1, as reflected by sample 1, does not meet the requirements of 19 C.F.R. §134.41(b).
A copy of this ruling letter should be attached to 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 CBP officer handling the transaction.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch