HQ 0734658 - Country of Origin Marking for Leather Jackets; Substantial Transformation; Assembly; Part 134, Customs Regulations (19 CFR part 134); Sections 134.1(d), 134.1(b), 134.35, 134.46; HRL 732066; T.D. 55015(4); T.D. 54640(6); T.D. 71-264(3); CSD 88-38. - United States International Trade Commision Rulings

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HQ 734658

August 24, 1992

MAR-2-05 CO:R:C:V 734658 RC

CATEGORY: MARKING

Area Director of Customs
National Import Specialist Division, Branch 3 Six World Trade Center
New York, New York 10048

RE: Country of Origin Marking for Leather Jackets; Substantial Transformation; Assembly; Part 134, Customs Regulations (19 CFR part 134); Sections 134.1(d), 134.1(b), 134.35, 134.46; HRL 732066; T.D. 55015(4); T.D. 54640(6); T.D. 71-264(3); CSD 88-38.

Dear Sir:

This is in response to your memorandum requesting internal advice on the country of origin marking requirements for imported leather jackets combined with United States (U.S.)-made linings pursuant to a letter you received from Abe M. Knipper, Inc., on behalf of Cooper Sportswear Manufacturing Company, Inc.

FACTS:

Your office received a letter from Abe M. Knipper, Inc., on behalf of Cooper Sportswear Manufacturing Company. Inc., requesting a marking ruling on semi-completed leather jackets imported from India. The jackets are further processed in the U.S. by assembling the imported unfinished jackets with U.S.- made linings.

Three samples were submitted with the request: 1) a finished leather jacket; 2) an unfinished leather jacket, minus the lining and front zipper; and 3) a U.S.-made lining.

The imported unfinished jackets are marked at the napes of the necks with small black labels. On the backside of the labels, "Made in India" appears in gold print. In the U.S., the imported unfinished leather jackets are permanently combined with synthetic linings which are U.S.-made. The linings are each conspicuously marked, "Made in USA," with a depiction of the American flag.

When viewing the finished jackets, it is noted that the printed words "Made in India" are obscured. Furthermore, the importer states in his letter that he intends to cover the "Made in India" labels with the U.S.-made linings.

The submitted samples show the "Made in USA" sewn on label only on the lining, not on the finished jacket. Instead, the finished jacket is marked by a hang tag on one of the sleeves. It indicates that the garment was "Made in India." The hang tag also contains other garment information, such as, fiber content, size, and style number.

The jackets are to be sold at retail.

ISSUES:

1) Whether the imported leather jacket is substantially transformed and excepted from marking because of the U.S. processing.

2) Whether marking the leather jacket by a hang tag alone is sufficient to satisfy the marking statute.

3) Whether or not the requirements of section 134.46 are satisfied.

LAW AND ANALYSIS:

The Marking Statute

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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 the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

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. United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 C.A.D. 104 (1940).

Section 134.1(d) defines the "ultimate purchaser" generally as the last person in the United States who will receive the article in the form in which it was imported. The marking must be conspicuous to the ultimate purchaser.

The country of origin for marking purposes is defined by section 134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 above-mentioned definition.

Substantial Transformation

Section 134.35, Customs Regulations (19 CFR 134.35), states that the manufacturer or processor in the U.S. who converts or combines the imported articles into articles having a new name, character or use will be considered the ultimate purchaser of the imported article within the scope of 19 U.S.C. 1304 and the article will be excepted from marking.

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); Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988). The question of when a substantial transformation occurs for marking purposes is a question of fact to be determined on a case-by-case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022 (1983).

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, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (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 (September 25, 1984).

In Uniroyal, Inc., v. U.S., 542 F.Supp. 1026, 3 CIT 220 (CIT 1982), imported shoe uppers combined with domestic soles in the U.S. were held to be the "essence of the completed shoe" and therefore, not substantially transformed. The same analysis applies to the instant case where the jacket lining is merely attached to the shell. By attaching the lining to the leather jacket shell, the imported parts do not lose their identity and become an integral part of a new article. The imported shell is clearly shaped like and has most of the characteristics of a leather jacket. The sewing together of the pieces is a simple assembly operation and minimal in comparison to the work performed on the jacket as a whole. After importation, the jacket shell is combined with the U.S. lining to make a finished jacket. It is not transformed into a new and different article.

One may reasonably assume that the "essence" of a leather jacket is the leather shell. Consumers generally think of jackets in terms of the material in which the shell is made. They buy leather jackets because they are made of leather. The jacket lining is not the primary consideration. Because the imported jackets are not substantially transformed by the addition of the U.S. made lining, the ultimate purchaser is not the U.S. manufacturer, but rather, the retail purchaser. Accordingly, the jackets must be marked in a manner which clearly indicates the country of origin to the ultimate purchaser.

Therefore, it follows that the leather jackets are not excepted from marking and must be marked to indicate India as the country of origin.

Sufficiency of Hang Tag Marking

Customs has long held the position, articulated in T.D. 54640(6), dated July 2, 1958, that as on and after October 1, 1958, wearing apparel, such as coats, shirts, blouses, etc. must be legibly and conspicuously marked with the name of the country of origin by means of a fabric label or label made from natural or synthetic film sewn or otherwise permanently affixed on the inside center of the neck midway between the shoulder seams or in that immediate area or otherwise permanently marked in that area in some other manner. Button tags, string tags and other hang tags, paper labels and other similar methods of marking will not be considered acceptable after that date. [T.D. 54640(6); C.S.D. 88-38].

As stated above, the finished jacket must be marked legibly, conspicuously, and permanently by a label sewn in or otherwise permanently affixed at the nape of the neck midway between the shoulder seams or in that immediate area. Marking by hang tag alone, as the sample, is clearly unacceptable. [T.D. 54640(6); T.D. 71-264(3); CSD 88-38].

In HRL 732066, dated March 3, 1989, Customs ruled on the country of origin marking requirements for jackets with removable liners. In that case, it was concluded that hang tags with the wording "Liner is made in the U.S.A., Shell is made in ..." would meet the requirements of 19 CFR 1304. However, this case differs, in that, the U.S.-made lining is not removable; it will be permanently affixed to the leather shell. In T.D. 55015(4), Customs allowed certain reversible garments to be marked by means of a hang tag if attached with sufficient permanence. The rationale is that the country of origin marking need not be on display when the jacket is worn on either given side. Here, there is no reason why a sewn in label could not be used.

Therefore, a label must be sewn in at the nape of the jacket midway between the shoulders or in the immediate area indicating India as the country of origin for the leather shell. The importer may also indicate that the U.S. is the country of origin for the lining if the import complies with the requirements of section 134.46, Customs Regulations. However, marking by hang tag alone is unacceptable, here.

Section 134.46

Under section 134.46, any case in which the words "U.S." or "American," or the letters "U.S.A.," any variation of such words or letters, or the name of any city or locality in the U.S., or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, appear on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.

The submitted sample lining contains a proposed "Made in U.S.A." marking label. The importer intends to affix the U.S. marking label to the lining of the finished jacket. Such marking invokes the provisions of section 134.46. Pursuant to section 134.46, the country of origin marking, "Made in India," must appear conspicuously, legibly, and permanently, in close proximity to and in at least comparable size as any U.S. marking. The presence of the American flag makes the U.S. marking very conspicuous. Therefore, the "Made in India" marking must be equally or more conspicuous.

The country of origin marking must appear in close enough proximity to the U.S. reference in order that it can be seen by the ultimate purchaser without having to turn the jacket. Here, an ultimate purchaser will see the U.S. marking and flag on the jacket very easily. In order to satisfy section 134.46, in the instant case, both markings should appear adjacent to each other so that one is able to read them without turning the garment. The country of origin marking on the hang tag does not satisfy the close proximity requirement of 19 CFR 134.46.

HOLDING:

The country of origin of the leather jacket is India. It is not excepted from marking, because the U.S. processing does not constitute a substantial transformation. Therefore, the jacket must be conspicuously marked with a label sewn in the nape area containing the words "Made in India." The "Made in India" label must remain visible after the addition of the lining. If this is not possible, then the importer must re-mark the jacket after the addition of the lining. The importer may add the words "Lining made in the U.S.A.," provided the requirements of section 134.46 are met.

Sincerely,

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