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HQ 732692

January 16, 1990

MAR-2-05 CO:R:C:V 732692 KG


William J. Maloney
Rode & Qualey
295 Madison Avenue
New York, N.Y. 10017

RE: Country of origin marking of footwear uppers

Dear Mr. Maloney:

This is in response to your letter of May 24, 1989, to the office of the Area Director of Customs, New York, requesting a country of origin ruling on two samples of footwear in various stages of completion. Your letter was referred to this office for a direct reply. By letter dated July 31, 1989 (HQ 084859), you were provided a tariff classification ruling on these samples.


The first sample is an imported leather open back moccasin upper. The bottom of the upper is completely closed and a midsole is sewn to the bottom. The upper is sewn in the Dominican Republic. The upper that is shipped from the Dominican Republic has the appearance of a moccasin and has a closed bottom. The list submitted of the operations performed in the U.S. includes: pick unit soles, case unit soles, set up lasts, load shoes, load bottoms, slip last form shoe, trim back tab laces, bottom cement, spot sole and press, scour sole, pull last, apply moc pod, clean and inspect, stuff and stick shoe, spray upper, make shoe box, make box lid, stamp box, cement box lapel, load box for packing and pack shoes.

The second sample is an imported leather closed backed moccasin upper. The bottom of the upper is open at the heel. There is a midsole partially attached to the bottom of the upper except at the heel. It is shipped to a U.S. manufacturer for performance of the same operations listed above for sample one plus the following operations: tack tails at heel, heel seat last upper, pull tacks, heat set and rough bottom.


Whether the two samples are substantially transformed in the U.S. and therefore, are exempt from individual country of origin marking.


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 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. 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 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT ___, 628 F.Supp. 978 (CIT 1986), Koru North America v. United States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988). 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 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 comparison of the time involved in attaching the outsole versus the time involved in manufacturing the upper, a comparison of the cost involved in the process of attaching the outsole versus the cost involved in the process of manufacturing the upper, a comparison of the cost of the imported upper versus the cost of outsole and a comparison 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.

In HQ 084859 (July 31, 1989), Customs ruled that the submitted samples are formed uppers for tariff classification purposes. The classification ruling was based on several factors; "the stitching on the separate, fairly rigid leather midsole gives these uppers much of their ultimate shape, form and size and the process was far more than simply closing at the bottom. It is our observation that both bottoms are mostly closed." The fact that the uppers are not back-lasted was not determinative.

For purposes of marking, we find that these formed uppers are not substantially transformed as a result of the additional U.S. processing performed in the U.S. First, these samples are very similar in appearance and in regard to the processing performed abroad to samples three and four discussed in HQ 732490 (September 20, 1989), in which Customs held that no substantial transformation occurred.

Second, as noted in the classification ruling, despite the uppers not being back-lasted, they already have much of their ultimate shape, form and size. As such, the uppers have the basic appearance of shoes. Although sample two does not have a completely closed bottom, the opening is on the seam at the heel and no additional material is required to closed the bottom. Sample one has a completely closed bottom. As in Uniroyal, and in HQ 732490, we consider the formed uppers to be substantially complete footwear which are not substantially transformed in the U.S. into an article with a new name, character or use by the addition of the sole and other minor processing.


The sample imported leather moccasin uppers are not substantially transformed as a result of the U.S. processing. Therefore, the uppers must be marked to indicate the country of origin in a location where the marking will remain visible after the U.S. processing.


Marvin M. Amernick
Chief, Value, Special Programs

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