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HQ 559812

July 30, 1996

CLA-2 RR:TC:SM 559812 KBR


Jaqueline Paez
Sonnenberg & Anderson
200 South Wacker Drive
33rd Floor
Chicago, Illinois 60606

RE: Country of origin marking of a leather covered desk; substantial transformation; 19 CFR ?134.35

Dear Ms. Paez:

This is in response to your letters received March 29, 1996, and May 1, 1996, as well as a meeting held on June 14, 1996, on behalf of your clients Henredon Furniture Industries Inc. ("Henredon") requesting a ruling regarding the country of origin marking of a leather covered desk imported into the U.S. for finishing.


Henredon imports desks for its "Tuscany Collection" from the Philippines. At the time of importation, the desk is completely assembled except for the drawer pulls (handles). The desk is a leather covered desk. The raw leather is attached with glue to the desk prior to the importation into the U.S. The operations performed in the U.S. are to finish the leather covering on the desk, to drill holes in the front of the drawers to attach the drawer pulls, and attaching the drawer pulls.

The desk is totally covered by the raw leather, including the tops sides and legs. The leather at the time of importation is unfinished and is pink' in color. Henredon states that it goes through 56 steps in changing the pink leather to the precisely matching colors and texture of the "Tuscany Collection". You state that these steps are precisely controlled and highly labor intensive. During our meeting on June 14, 1996, you stated that you were not concerned with the country of origin of the furniture, and agreed that the country of origin of the desk was the Philippines. Instead, your concern was that you wished to know how to mark the desks on importation. You stated that because of the labor performed on the desks, any country of origin appearing on the desk itself prior to the finishing of the leather would be destroyed, or damaging to the desk.


1. Whether the imported unfinished leather desk is substantially transformed by the finishing process in the U.S.

2. Whether the unfinished leather desk must be marked with its country of origin upon importation and what the appropriate method of marking would be.


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 imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the 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." United States v. Friedlaender & Co. Inc., 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 the exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as 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 marking laws and regulations. For country of origin marking purposes, a substantial transformation of an article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing. See HQ 558747 (January 20, 1995).

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).

Henredon imports a leather covered desk from the Philippines for finishing. As we discussed in the meeting on June 14, 1996, while the desk is undeniably a much more beautiful desk after the extensive labor and detail applied by Henredon in the U.S., the article starts and remains a leather covered desk. We, therefore, find that there is no substantial transformation, and the desk remains a product of the Philippines after the U.S. processing. Therefore, the leather desk must be marked with its country of origin, the Philippines.

Articles for which the marking of the containers will reasonably indicate the origin of the article are excepted from marking under 19 U.S.C. 1304(a)(3)(D). For an exception to be granted under 19 U.S.C. 1304(a)(3)(D), the article must be imported in the container and that container must reach the ultimate purchaser unopened. See also 19 CFR ?134.32(d).

In this situation, the processing of the leather performed after importation by Henredon, will remove any country of origin marking appearing on the leather desk prior to importation, unless the country of origin marking was placed in a manner that would ultimately detract from the appearance of the desk. Therefore, Customs finds that the container of the desk may be marked with its country of origin as long as the ultimate purchaser will receive the desk in this container. However, because the desk must be finished after importation, the container in which the imported desk is shipped will be opened prior to its reaching the ultimate purchaser in the U.S..

Section 134.34, Customs Regulations, (19 CFR ?134.34), provides that an exception may be authorized in the discretion of the district director under 19 CFR ?134.32(d) for imported articles which are to be repacked after release from Customs custody under the following conditions: (1) The containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the U.S.; (2) The importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or to secure such verification, as may be necessary by certification and the submission of a sample or otherwise, of the marking prior to liquidation of the entry.

The discretion of the district director is quite broad under 19 CFR ?134.34, allowing him to determine whether district supervision, certification, verification, or review of a sample is necessary to accomplish the purposes of 19 U.S.C. 1304 and to extend the 60 day liquidation period. See HQ 732808 (December 12, 1989); HQ 734420 (March 31, 1992). It is within the scope of the district director's discretion to determine that the 19 U.S.C. 1304(a)(3)(D) exception may be approved for all entries made over an extended or indefinite period of time, rather than on an entry-by-entry basis. An important element in the exercise of the district director's discretion is his/her assessment of whether the company requesting the exception can be relied upon to carry through on its undertakings. Another factor to be considered is whether the district has adequate resources to provide the continuing supervision necessary to ensure proper country of origin marking after importation. Additional factors that the district director could consider are the importer's history of violations and record in complying with Customs procedures and regulations, whether the importer is doing the repacking himself, or having another party do the repacking, and whether the repacking is done on the importer's premises within the Customs district in which the merchandise was imported. When it is determined that the importer may not utilize the certification procedure of 19 CFR ?134.34, the district director must be able to articulate a specific reason for this decision. See HQ 734420 (March 31, 1992).

Another method of marking which would be appropriate in this situation would be the attachment to the desk of a card which would contain the country of origin in a conspicuous manner. In HQ 734420 (March 31, 1992), concerning earrings, Customs ruled that using retail cards containing the country of origin is a common means of selling and marking earrings with their country of origin. Customs found that the repacker was not likely to sell the earrings without the retail card, and that since the importer was also the repacker the supervision by Customs of the repacking operation should be feasible. Desks and other furniture are commonly sold by displaying the furniture on a showroom floor. Such furniture often has cards attached to it which contains information concerning the size, manufacturer, materials and other important information. The country of origin marking for the desk could be placed on this card and the card attached to the finished desk.


Based upon the information provided, we find that for purposes of 19 U.S.C. 1304, the processing in the U.S. of the imported leather covered desk does not constitute a substantial transformation; therefore, after finishing in the U.S., the leather covered desk must be marked with its country of origin, the Philippines. After finishing, the country of origin of the leather desk may be indicated either by using a card attached to the desk or on the container in which the desk reaches the ultimate purchaser in the U.S.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


John Durant, Director

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