CLA-2-46:OT:RR:NC:4:434
Gail Cumins
Law Offices of Sharretts, Paley, Carter & Blauvelt
75 Broad Street
New York, NY 10004
RE: A country of origin determination of elephant grass tote bags
Dear Ms. Cumins:
In your letter, dated March 24, 2021, you requested a country of origin ruling on two styles of tote bags. A detailed description of the manufacturing operations, values, and photos of the items were submitted for our review.
Styles 82541 and 82595 are tote bags that measure approximately 11” high by 21” wide at their widest point by 7” deep and have no closure at the top. They consist of a woven basket of elephant grass forming the body of the bag. Attached are leather handles, a leather logo patch and a small interior leather pocket that is lined and includes a zipper closure. Style 82595 differs from 82541 with the addition of five dark horizontal stripes running around the circumference of the tote.
First, we will address tariff classification. Note 1 of Chapter 46, Harmonized Tariff Schedule of the United States (“HTSUS”), states as follows:
“In this chapter the expression "plaiting materials" means materials in a state or form suitable for plaiting, interlacing or similar processes; it includes straw, osier or willow, bamboos, rattans, rushes, reeds, strips of wood, strips of other vegetable material (for example, strips of bark, narrow leaves and raffia or other strips obtained from broad leaves), unspun natural textile fibers, monofilament and strip and the like of plastics and strips of paper, but not strips of leather or composition leather or of felt or nonwovens, human hair, horsehair, textile rovings or yarns, or monofilament and strip and the like of chapter 54.”
The elephant grass comprising the body of the tote bags meet the definition of plaiting materials.
Therefore, the applicable subheading for the tote bags will be 4602.19.2940, HTSUS, which provides for “Basketwork, wickerwork and other articles, made directly to shape from plaiting materials or made up from articles of heading 4601…Of vegetable materials: Luggage, handbags and flatgoods, whether or not lined: Other: Other.” The rate of duty will be 5.3 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
You further inquire about the country of origin for the finished tote bags.
You state that the bags are made in Vietnam of both imported and domestic (Vietnamese) materials and components.
The factory in Vietnam produces the tote bags by obtaining woven baskets of elephant grass from Ghana. The baskets have been woven to specified dimensions to be used as the bodies of the tote bags. The amount of time required to produce the basket in Ghana was not provided.
Leather is sourced from Germany; microfiber nubuck from Italy; logo patches, rivets, glue, and paint from China; zipper components from China and Japan; and thread from Vietnam.
Per your submission, the finished tote bags are produced in Vietnam by performing the following steps:
1) Leather is cut by machine into pieces to be used for the handles, inside pockets, and logo patch.
2) The microfiber nubuck material is cut by machine into pieces to be used for the inside lining of the pockets.
3) Continuous zipper chain is cut to length, stoppers and sliders for the zippers are added.
4) The studs (rivets) are wrapped in leather by hand on the front and back panels.
5) The raw edges on the leather pieces are polished.
6) The polished edges of the leather pieces are hand painted.
7) The leather pieces for the handles are stitched.
8) The leather pieces for the handles are woven together by hand.
9) The completed handles are attached to the baskets.
10) The microfiber nubuck lining material is sewn to the leather panels for the inside pockets.
11) The lined leather panels for the inside pockets are sewn together to form the inside pocket.
12) The zippers are sewn to the inside pockets, and the pull tabs are attached to the zipper sliders.
13) The inside pockets are attached to the baskets using the leather-wrapped studs (rivets).
14) The logo designs (The “T”s) are hand stitched to the logo patch.
15) Logo patches are assembled to the baskets by hand stitching around the logo.
You also state that to produce one bag, the factory in Vietnam advises that the above fifteen steps take approximately two hours and fifty minutes to complete. When the bags are finished, hangtags are attached, the bags are wrapped with paper, placed into plastic bags, UPC stickers are added, and the bags are placed in cartons for shipping.
Section 304 of the Tariff Act of 1930 (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 its 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.
Part 134, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements of 19 U.S.C. § 1304. Title 19, Section 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 this part; ….” A substantial transformation occurs “when as a result of a process an article emerges, having a distinctive name, character or use” from the original material subjected to the process. Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). If the manufacturing process is a minor one, which leaves the identity of the imported article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d per curiam, 702 F.2d 1022 (Fed. Cir. 1983).
It can also be informative to research existing rulings. Headquarters ruling HQ 562799, dated 9/11/03, states, “In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (CIT 1983), aff’d, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See C.S.D. 85-25, dated September 25, 1984. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis. In Uniroyal, Inc. v. United States, 542 F. Supp.1026 (CIT 1982), the court held that an upper was not substantially transformed when attached to an outsole to form a shoe and that the upper was "the very essence of the completed shoe".”
You propose that the country of origin is Vietnam. However, in Vietnam the assembly operations are relatively minimal or simple and do not substantially alter the identity of the basket. Like the shoe upper in the above cited example, the elephant grass basket is the “very essence” of the finished product, the portion of the tote bag capable of holding belongings. Its premade dimensions also help determine its ultimate use as a tote bag. Attaching the handles and inner pocket and other incidental parts in Vietnam does not constitute a substantial transformation.
The country of origin of the finished tote bags will be Ghana, the country in which the essential portion of each tote bag was manufactured.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported.
If you have any questions regarding the ruling, contact National Import Specialist Charlene Miller [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division