CLA-2-64:RR:NC:3:346
Mr. E. Rodriguez
Nestor Reyes, Inc.
POB 4528
San Juan, PR 00902-4528
RE: The Country of Origin Marking and Classification of Heel Pads, CBI-2, Made in USA, Misleading Marking?
Dear Mr. Rodriquez:
This is in response to your seven page letter for G.H. Bass Caribbean, Inc., dated April 15, 1996, requesting a marking and classification ruling. Six samples were also forwarded with your letter.
You indicate that 100 percent of the direct materials (presumably rolls of textile, plastics, leather hides, etc.) that will be used in the Dominican Republic to produce these uppers will be products of the US and that you will claim "CBI-2" status at time of entry.
All 6 items will be classified in HTS 9802.00.5010, free of duty, as articles, which were returned to the US after having been exported for repairs or alterations, not made pursuant to a warranty, and which meet the conditions of US note 2-b to Subchapter II of Chapter 98 of the HTS. We assume that you will be able to supply the port of entry with whatever documents or other evidence it deems necessary to confirm that those conditions have, in fact, been met. CR 10.26 does not indicate what evidence is normally required, and the requirements in CR 10.8 for articles classified in 9802.00.50 are inappropriate since they were written for items that were actually repaired or altered, not manufactured, as is the actual case here. Thus, it would likely be useful to discuss the documentation and evidence required with the Customs personnel in each port in which you may make entry.
9802.00.8040 does not apply, contrary to your claim, because cutting out the leather or plastic pads is "more than" assembly. Note HRL 557512, 5-6-94.
Items classified in 9802.00.5010 do not need to have any country of origin marking when imported into the US. You, however, wish to mark them "Made in U.S.A." in large letters on the heel seat.
You claim that these heel pads, all marked G.H. Bass, will be substantially changed by further processing in the US (Puerto Rico) to become a small part of finished footwear. Your claim to that effect is supported both by the fact that they are not the type that are usually sold at retail and that they have the G.H. Bass logo in larger letters on the heel seat. However, due to the presence of the "Made in U.S.A." reference, the usual country of origin marking exemption for imports substantially changed in the US and, we believe, for imports classifiable in 9802.00.5010 does not apply per CR 134.36-b. We consider the Made in U.S.A. to be a "misleading marking" for the purposes of CR 134.36-b even when 9802.00.5010 applies since the "actual country of origin" of the heel pad is clearly the Dominican Republic under both the "substantial transformation" test and the NAFTA tariff change test in CR 102.20-l. Since the importer, G.H. Bass or one of its subsidiaries, will be the "ultimate purchaser" of these heel pads, the actual country of origin marking "Made In the Dominican Republic" need not be in a location or of a permanence that it will be seen by the purchaser of the finished footwear. The required individual marking of "Heel pads made in the Dominican Republic from American materials", or similar, on, for example, their underside, ensures that anyone who may happen to purchase the heel pads by themselves from the importer, even though such resale is not his current plan, will not be misled. That is clearly the intent of CR 134.36-b.
We note that the Office of Regulations and Rulings(ORR), Washington D.C., has ruled that marking of the cartons in conjunction with certifications of knowledge of the origin of the shipment was acceptable in circumstances similar to, but distinguishable from , yours. If you object to marking these heel pads as indicated above, you may wish to pursue the possibility of a similar exemption from CR 134.36-b directly with ORR.
Regarding the "Made in U.S.A.", per se, whether or not the subject heel seat may be so marked without any qualification is a question that must be directed to the Federal Trade Commission (FTC), Division of Enforcement, 6th and Pennsylvania Avenue, NW, Washington, DC, 20508. Although the country of origin of the finished shoe will be the USA under the Customs statutes, the FTC has the primary responsibility under statutes which require the identification of certain foreign components if a "Made in USA" claim is made. It is clear that the USA reference is to the finished shoe once the heel pad is cemented into a shoe. You must submit a copy of your inquiry to the FTC with their reply, if any, to the responsible Customs officer at the port of entry prior to the release of your shipment(s).
Per Statistical Note 2 to Subchapter II of Chapter 98, you must split out on the Customs entry, "the dutiable value, i.e., the value of the foreign processing" and assign to it the classification that would ordinarily apply in the absence of US note 2-b to that Subchapter. Note that in this context there is never any duty actually payable on this "dutiable value". The classifications that would ordinarily apply to these heel pads are, we agree, 6406.99.3060 (plastic) and 6406.99.6000 (leather), based on the samples and the information you have supplied.
This ruling is being issued under the provisions of Section 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 J. Sheridan at 212-466-5889.
Sincerely,
Roger J. Silvestri
Director
National Commodity
Specialist Division