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HQ 085726


March 6, 1990

CLA-2 CO:R:C:G 085726 WAW

CATEGORY: CLASSIFICATION

TARIFF NO.: 6406.10.65000

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

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