CLA-2 OT:RR:CTF:TCM H025104 GC
Joseph F. Donohue, Jr., Esq.
Donohue and Donohue
26 Broadway, Suite 2300
New York, New York 10004
RE: Country of origin marking requirements for certain hand bags partly produced in Italy and another country
Dear Mr. Donohue:
This letter pertains to your correspondence of March 19, 2008, on behalf of your client Burberry Limited of London (Burberry), in which you requested a binding ruling on the country of origin marking requirements for two styles of women’s handbags produced partly in Italy and some other country.
FACTS:
You submitted two samples: the Regent (style 3200977) and the Rydal (style 3201001). The Regent is approximately 9.5 x 14 x 5 inches, and the exterior surface is constructed of a polyvinyl chloride (PVC) coated fabric with the Burberry trademarked equestrian knight and check pattern. Two leather straps measuring approximately 22 inches in length are attached to the front and back by metal D-rings that are secured by leather loops. The top and bottom are trimmed in leather. A zipper at the top extends the width of the bag and may be closed and opened by a leather tab attached to the zipper by a metal D-ring. Four small metal “feet” are affixed to the bottom. The hand bag has a fabric inner lining with two open pockets on one inner wall and one pocket with a zipper closure on the other inner wall. Stitched to the face of the zippered pocket approximately 2 ½ inches from the top of the bag is a leather tab with the Burberry name and trademark in gold foil. On the opposite side, stitched to the top of one pocket approximately 2 inches from the top of the bag, is a leather tab with the country of origin marking “Made in Italy” in gold letters approximately one eighth of an inch in height.
The Rydal is approximately 9.5 x 16 x 6 inches, and the exterior surface is also constructed from PVC coated fabric bearing the Burberry trademark. A leather strap measuring approximately 19 inches in length is secured to the top by metal D-rings, which are attached to a handle trim assembly. The top, sides and bottom are trimmed in leather. A zipper at the top extends the width of the bag, and may be closed and opened by a leather tab attached to the zipper by a metal D-ring. The interior of the handbag is similar to that of the Regent.
The materials comprising the handbags consist of the following: 100% genuine leather originating in Italy purchased in the form of skins measuring approximately 16.5 square feet; fabric produced in Italy and purchased in bulk rolls; PVC-coated cotton canvas produced in the United Kingdom and purchased on bulk rolls; and hardware (zippers, D-rings, etc.) produced in Italy and purchased in bulk quantities.
In Italy, 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 (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 corresponding style of handbag. 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 components of the Regent and Rydal styles are then sorted by shape, bundled, and shipped to another location for partial assembly. The leather piece to be used for binding the top collar of both styles and the fabric piece that will form the bottom of the inner lining are retained in Italy for use in final assembly.
The assembly operations taking place outside of Italy for both styles employ the use of skiving machines, sewing machines and turned edge construction machines. After these assembly operations, the components, in partially completed form, are packaged for shipment back to Italy. The following describes of the operations taking place outside of Italy specific to each style:
Regent
The leather pieces are skived (pared to reduce thickness). The pre-cut leather handles are glued and stitched. The pre-cut leather handle attachments and D-rings are attached to the pre-cut PVC front and back panels by gluing and stitching. The pre-cut inside lining pieces are combined by stitching, forming the interior pockets and stitched at the top to the zipper assembly (the lining’s sides and bottoms remain unstitched). The exterior bottom panel is formed by gluing the blotter-like reinforcing material to the pre-cut PVC bottom panel, attaching the pre-supplied brass feet and stitching the leather trim. Leather tabs are attached to the top zipper and pocket zipper.
Rydal
The leather pieces are skived. The pre-cut inside lining pieces are stitched to form the interior pockets. One panel of PVC-coated fabric is stitched to the PVC-coated fabric gusset panel, including the leather trim (piping). The leather trim is stitched to the other PVC-coated fabric panel. The buckle subassembly is created by stitching together the pre-cut leather pieces to hold the D-ring and buckle. The components of the leather handle are stitched together. The handle trip assembly is stitched together. The leather tabs are attached to the top zipper and the pocket zipper.
The hand bags are completed in Italy. This involves various steps ranging from inspection to gluing or stitching the bags together, as well as gluing and stitching the leather piece used for binding the top collar of both styles and the fabric piece used to form the bottom of the inner lining. In addition, the straps are added to the bags, the Burberry name and logo are stamped onto the leather tab located on the interior of the bag, and the country of origin is stamped onto the leather tab located on the opposite interior wall. The handbags are then packed and shipped. You have stated that the final assembly operations require the use of tooling equipment, sewing machines, presses and raw edge construction machines.
ISSUE:
What is the country of origin for marking purposes of the handbags?
Does the proposed country of origin marking 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 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. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, U.S. Customs and Border Protection (CBP) Regulations (19 C.F.R. §134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. 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 making 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. See, Uniroyal, Inc. v. United States, 3 CIT 220, 543 F.Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
As the facts above reflect, you note that after the initial manufacturing operations in Italy, the leather skins and bulk rolls of materials are dedicated solely for use as components of either the Regent or Rydal style. According to the information that you submitted, every part of the purse is cut in Italy so that each piece of material corresponds with a particular style of handbag. The components for one handbag are not interchangeable with components from another. Based on this, you posit that the pre-cut materials constitute an unassembled handbag or have the essential character of the finished product. For these reasons, you assert that the country of origin of the Burberry purses is Italy.
We concur. 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, e.g., Headquarters Ruling Letter (HQ) H005728, dated April 19, 2007, 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 handbag components for later assembly into the finished articles.
Furthermore, the operations performed outside of Italy do not constitute a further substantial transformation of the Italian pre-cut components. These operations consist of merely assembling, paring, gluing, 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. Since the manufacturing outside of Italy 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.
Per 19 C.F.R. §134.41(b), the country of origin marking is considered to be conspicuous if the ultimate purchaser in the United States is able to find the marking easily and read it without strain. The marking must survive the normal distribution and store handling. 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 HQ 733940, October 24, 1991.
You argue that with regards to the location of the marking, the purchaser is likely to find the country of origin marking while inspecting the bag. As the words “Made in Italy” are located on a leather tab stitched to the top of one of the pockets on the inside of the bag, you conclude that a buyer will notice the country of origin marking when he or she views the inside of the bag for the purpose of inspecting the handbag’s capacity, pockets and other features in the same manner that a buyer notices the country of origin marking when he or she inspects luggage. See C.S.D. 89-91 (March 31, 1989) (where the U.S. Customs Service (now CBP) found the sewn-in country of origin label, at the inside seam of a suitcase, to be conspicuous given that an ultimate purchaser will unzip luggage to inspect the interior before the purchase). You also posit that the lettering, measuring approximately one eight of an inch, satisfies the legibility requirement under 19 C.F.R. §134.41(b) by virtue of the fact that the contrasting effect of the gold lettering makes the country of origin marking stand out as well as easy to read.
As to the conspicuousness of the location of the marking (on one side of the inside of the handbag, within 2 inches of the top), we agree that a purchaser likely would open the handbag in order to examine the handbag’s capacity and other features. Upon such an inspection, the user would notice the country of origin marking label displayed towards the top of the bag’s interior. Moreover, the contrasting gold coloring would also serve to catch the eye of the purchaser. With regards to legibility of the country of origin marking, we note that while the lettering is very small, the use of contrasting colors makes the letters stand out so that the marking is easy to read. We also agree with your assessment of the permanence of the country of origin label. The leather label securely sewn to the inside of the handbags would survive normal distribution and store handling. Accordingly, we find that the proposed country of origin marking for the Regent and Rydal styles of handbags meet the requirements of 19 C.F.R. §134.41(b).
HOLDING:
The country of origin of the Burberry Regent and Rydal handbags is Italy. The proposed country of origin marking for both styles satisfies the marking requirements of 19 C.F.R. §134.41(b).
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch