CLA-2 CO:R:C:G 085726 WAW
Teresa M. Polino, Esquire
Sandler, Travis & Rosenberg, P.A.
1120 19th Street, N.W.
Washington, D.C. 20036-3605
RE: Moccasin-type footwear uppers
Dear Ms. Polino:
This is in response to your letter of October 3, 1989, on
behalf of the Stride Rite Corporation, concerning the
classification of certain types of footwear under the Harmonized
Tariff Schedule of the United States Annotated (HTSUSA). The two
samples that were submitted for our review have been produced in
either the Dominican Republic or in Haiti and will be imported
from San Juan, Puerto Rico.
FACTS:
The samples submitted consist of style number 0299123 which
is a two eyelet moccasin-type upper and style number 0679407
which is a slip-on style upper. Both uppers are produced from
leather which has been soaked, placed on a last, sewn, dried and
then removed from the last. The samples submitted to this office
have openings in the rear portion of the bottom of the upper.
The opening in the bottom of style number 0299123 measures
approximately 3/4 inch in width by 2-1/4 inches in length and
extends to the heel of the upper. The opening in the bottom of
style number 0679407 measures approximately one inch in width by
2-1/2 inches in length and also extends to the heel of the upper.
In their description of the sample merchandise, counsel for
the importer maintains that in each case, the upper has been
front part lasted but not back part lasted (i.e., heel seat
lasted). They further maintain that the upper as imported into
the United States cannot be completed into the finished product
without first being back part lasted. Counsel states that this
back part lasting process is performed after importation on a
machine specifically designed for, and known as, a heel seat
lasting machine. In addition, counsel contends that the
condition of the leather coming down from the heel at the time of
importation is not determinative of whether the upper is formed
or not because when the material is back part lasted the leather
is pulled and then shaped to form the usual rounded heel shape.
ISSUE:
(1) Whether the sample merchandise is classifiable as
"formed uppers" under subheading 6406.10.1000, HTSUSA, or as
"other than formed uppers" under subheading 6406.10.6500, HTSUSA?
(2) Does the merchandise at issue meet the country of origin
marking requirements?
LAW AND ANALYSIS:
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.
Issue 1 - Classification of Footwear Uppers
The first issue presented in this case is whether the sample
merchandise is a "formed upper" or an upper that is "other than
formed." U.S. Note 4 to Chapter 64 of the HTSUSA sets forth the
criteria for determining whether an upper is "formed" or "other
than formed." U.S. Note 4 provides in pertinent part the
following:
. . .[p]rovisions for formed uppers cover uppers, with
closed bottoms, which have been shaped by lasting,
molding or otherwise but not simply closing at the
bottom.
It is the position of counsel for the importer that these
articles are classifiable as "uppers, other than formed" for two
reasons. First, the upper has not been back part lasted and
therefore requires further processing to attain its final shape.
Second, they argue that the sample uppers have open bottoms which
cannot be closed by simply stitching them together. We agree
with the position that these uppers are not closed in accordance
with Additional Note 4 to Chapter 64, HTSUSA, and therefore do
not constitute "formed" uppers for tariff purposes.
In Headquarters Ruling Letter (HRL) 082075, dated December
1, 1988, this office stated that "[w]e construe the phrase closed
bottoms as uppers which are substantially closed. It is our view
that substantially closed means that more of the lower surface
that is intended to cover the bottom of the foot is present, than
is absent." In HRL 082075, Customs held that two moccasin style
footwear uppers under review were classifiable under subheading
6406.10.0500, HTSUSA, as parts of footwear, removable insoles,
heel cushions and similar articles, uppers and parts thereof:
formed uppers, of leather or composition leather, for men, youths
and boys. After reconsideration of this position, Customs has
modified this ruling to hold that those uppers which have
substantial openings cut out of the bottom are not considered to
be closed within the meaning of Additional Note 4 to Chapter 64,
HTSUSA.
In the instant case, the sample uppers have a substantial
portion of the bottoms cut out and have not been back part
lasted. Accordingly, it is Customs position that they are not
"formed uppers" under Additional Note 4 to Chapter 64, HTSUSA.
Issue 2 - Country of Origin
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), requires that:
Except as hereinafter provided, every article of
foreign origin (or its container, as provided in
subsection (b) hereof) 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 manner as to
indicate to an ultimate purchaser in the United States
the English name of the country of origin of the
article.
The Court of International Trade stated in Koru North America v.
United States, 12 CIT ___, 701 F. Supp. 229 (1988), that: "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 primary purpose of the
country of origin marking statute 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." National Juice
Products Association v. United States, 10 CIT 48, 628 F. Supp.
978 (1986), and United States v. Friedlaender & Co., 27 CCPA 297,
302, C.A.D. 104 (1940).
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 CCPA 267 at 270
(1940), National Juice Products Association v. United States, 10
CIT 48, 628 F. Supp. 978 (1986), Koru North America v. United
States, 12 CIT ___, 701 F. Supp. 229 (1988).
In Headquarters decision dated August 23, 1983, file No.
721106, we held that similar moccasin uppers not fully sewn or
closed upon importation, and which must be closed prior to force
lasting and bottoming, was considered by the totality of those
operations to be substantially transformed in the United States.
In the instant case, we have determined that the uppers at
issue contain a substantial opening or cut-out which can be
closed only with additional material in an additional
manufacturing process performed in the United States that is
costly and complex enough so that, with the additional material
involved, the substantial transformation test is met. Uniroyal,
Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982).
Furthermore, since the importer substantially transforms the
sample uppers, the importer is the last person in the United
States to receive the article in the form in which it was
imported. The importer, thus, qualifies as an "ultimate
purchaser" pursuant to 19 CFR 134.1(d) and 19 CFR 134.35.
Accordingly, the subject uppers are excepted from individual
marking since, according to 19 U.S.C. 1304(a)(3)(D), the marking
of the container of such article will reasonably indicate the
origin of the uppers to the ultimate purchaser.
HOLDING:
The sample uppers are classifiable under subheading
6406.10.6500, HTSUSA, as parts of footwear, uppers and parts
thereof, other, of leather. The applicable rate of duty is at
the general rate of 3.7 percent ad valorem and may be entitled to
free entry under the General System of Preferences or the
Caribbean Basin Economic Recovery Act, if otherwise qualified.
Based on the foregoing analysis, Customs has determined that
Styles 0299123 and 0679407, described above, are excepted from
the requirements of individual marking, and only the outermost
container in which these imported styles are contained must be
marked with the appropriate country of origin.
Sincerely,
John Durant, Director
Commercial Rulings Division