MAR-2-05 CO:R:C:V 732490 KG
Gregory B. Peckham
Peckham Industries
617 Farnsworth Avenue
Oconto, WI 54153
RE: Country of origin marking of a boot liner and footwear uppers
Dear Mr. Peckham:
This is in response to your letter of February 10, 1989, to
the office of the Area Director of Customs, New York, requesting
a country of origin ruling on 5 samples of footwear in various
stages of completion. Your letter was referred to this office
for a direct reply. By letter dated May 26, 1989 (HQ 083926),
you were provided a tariff classification ruling on these 5
samples.
FACTS:
The first sample is a imported boot liner whose purpose is
to form a thermal heat source around the foot while it is inside
the boot. It is made of quilted cambrelle combined to thinsulate
with vinyl covering on the bottom, toe and heel portions. The
U.S. boot maker inserts the liner in the boot and then ships the
boots to a retail store.
The second sample is a imported leather sandal upper. It is
sewn and assembled, including lasting, in Mexico. The sole is
prepared and attached in the U.S. Then the completed sandals are
shipped to retail stores.
The third sample is a imported leather moccasin upper. The
moccasin is sewn in Mexico but the midsole is left open. A U.S.
manufacturer completes the shoe, including lasting, sole laying,
cleaning, packing and shipping the completed shoes to retail
stores.
The fourth sample is also a imported leather moccasin upper
identical to sample three except the midsole is closed. After
inspection, it is shipped to a U.S. manufacturer for completion
as with sample three.
The fifth sample is a imported cold weather boot upper which
includes no pieces that cover the foot. Although it is called a
upper, this sample is really a leather shaft that covers the
ankle and lower leg. The leather and man-made material upper is
sewn in the U.S. onto a rubber foot, cleaned, packed and shipped
to retail stores.
ISSUE:
Whether any of the 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 United States 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, even
though the process may not result in a new or different 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.
For a substantial transformation to be found, an article
having a new name, character, or use must emerge from the
processing. United States v. Gibson-Thomsen Co., Inc. 27
C.C.P.A. 267 (1940). 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 United States 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
comparision of the time involved in attaching the outsole versus
the time involved in manufacturing the upper, a comparision of
the cost involved in the process of attaching the outsole versus
the cost involved in the process of manufacturing the upper, a
comparision of the cost of the imported upper versus the cost of
outsole and a comparision 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.
An examination of the factors enumerated in Uniroyal is
relevant to determine whether or not the imported samples
involved in this case are substantially transformed. However, no
cost figures or details concerning the production of the five
samples were submitted. Therefore, it is not possible to apply
the factors related to cost figures, labor involved or the
complexity of the manufacturing process set forth in Uniroyal.
Sample two presents the most similar fact pattern to
Uniroyal; the sample is a lasted formed upper. No evidence was
submitted concerning the processing of the formed upper required
to make a finished sandal; therefore, we cannot consider the
complexity of the process involved in the U.S. or overseas. The
fact that the upper is a sandal upper rather than a moccasin
upper would not affect the conclusion that sample two is not
substantially transformed in the U.S. when attached to a sole.
Samples three and four are formed uppers which are not
permanently lasted. Lasting is the process of shaping or
forming the upper to fit the foot. Under the Tariff Schedules of
the United States (TSUS), a lasted leather upper was considered
substantially complete footwear, which was a particular tariff
classification. See T.D. 79-100. Under the new Harmonized
Tariff Schedule of the United States (HTSUS), implemented January
1, 1989, footwear is organized differently. Additional U.S. Note
4 for Chapter 64, HTSUS, which is titled "Footwear, Gaiters And
The Like; Parts Of Such Articles", states that provisions for
"formed uppers" covers uppers, with closed bottoms, which have
been shaped by lasting, molding or otherwise but not by simply
closing at the bottom. This approach puts less emphasis on
whether or not the upper is lasted. Formed uppers are made into
completed footwear by attachment of an outer sole. In Uniroyal,
the attachment of an outer sole to a formed moccasin upper was
held to not constitute a substantial transformation.
There was no information submitted to indicate that
anything more than lasting and attachment of an outer sole would
be done in the U.S. to make samples three and four into completed
shoes. Therefore, there is no basis for a determination of
substantial transformation in the U.S. for samples three and
four.
Sample one is a boot liner. Even though it is placed
inside a boot, it is not permanently attached or affixed to the
boot and therefore, it does not lose its separate identity and
name. It is inserted into a boot in order to serve its function
of keeping the foot warm. There is only one use for a boot liner
which does not change. Further, there is no change in character.
Therefore, the boot liner is not substantially transformed and
must be individually marked with the country of origin in
accordance with 19 U.S.C. 1304 and 19 CFR Part 134.
It was noted in tariff classification ruling HQ 083926 (May
26, 1989), that sample five is a shaft that does not cover any
part of the foot. It is a part of the upper but not a upper per
se. Sample five must be sewn onto or otherwise attached to a
bottom with substantial upper portions in order to become a boot.
Once it is permanently attached to the boot bottom, sample five
becomes a new article with a different name, character and use.
Therefore, sample five is substantially transformed in the U.S.
We note however, that this sample is marked "Made in USA."
Although this sample is substantially transformed in the U.S., it
is an imported article and cannot be marked as made in USA.
Further, the Federal Trade Commission, Washington, D.C. 20580,
must be consulted as to the proper use of the phrase "Made in
USA."
HOLDING:
Samples one,two,three and four are not substantially
transformed in the U.S. and must be marked with the country of
origin in accordance with 19 U.S.C. 1304 and 19 CFR Part 134.
Sample five is substantially transformed in the U.S. when it is
permanently attached to a boot bottom. Therefore, pursuant to 19
CFR 134.35, sample five need not be individually marked but the
outermost container in which it is imported must be marked with
the country of origin.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch
cc: New York Seaport
(083926)