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HQ 560505




June 19, 1997

MAR-2-05 RR:TC:SM 560505 MLR

CATEGORY: MARKING

Mark R. Sandstrom, Esq.
Thompson Hine & Flory, L.L.P.
1920 N Street, N.W.
Washington, D.C. 20036-1601

RE: Country of origin marking of notebook binders; substantial transformation

Dear Mr. Sandstrom:

This is in reference to your letter of June 5, 1997, requesting a ruling on behalf of Mead School and Office Products Division of the Mead Corporation ("Mead"), regarding the country of origin marking requirements of certain notebook binders. Samples were submitted with your request.

FACTS:

Two articles at issue are referred to as the "Reebok Trapper Keeper" and "Reebok School Binder Ensemble". Each article consists of a three ring notebook binder mechanism riveted to a plastic board containing three paper portfolios and 100 sheets of lined filled paper that is inserted into a pocket inside a bifold textile cover with velcro closure. It is stated that the filler paper and paper portfolios are manufactured entirely in the U.S. Mead purchases rolls of paper produced in the U.S., and further processes the rolls into the various paper products for the notebook binders. The manufacturing process of the rolls of paper includes cutting, printing, folding, glueing, and hole-punching. The textile covers for the notebook binders are imported from China, where they are cut, sewn and fabricated from fabric sourced in Taiwan. The metal three ring mechanisms for the notebook binders are also imported from China. These metal three ring mechanisms are riveted in the U.S. to plastic boards sourced in the U.S., and then inserted into the textile covers. The U.S.-origin paper products are then assembled with the covers and rings to create the finished products.

Another article at issue is referred to as the "Space Place Binder" which is a three ring notebook binder that contains five tabbed paper dividers and 100 sheets of lined filler paper. The processing operation for the Space Place Binder is stated to be the same as for the Reebok Trapper Keeper and Reebok School Binder Ensemble, except that tabbed paper dividers are substituted for the portfolios contained in the latter two articles. These paper dividers are manufactured in the U.S. by Mead from U.S. origin paper stock.

The third article at issue is referred to as the "Reebok Zipper Binder" which is a three ring notebook binder that contains only five tabbed dividers. The processing operation for the Reebok Zipper Binder is stated to be the same as for the three binders described above, except that no lined filler paper or paper portfolios are included with the five tabbed dividers.

You propose to mark the finished notebooks either "Assembled in the U.S.A. Cover Made in China", or "Made in Taiwan."

ISSUE:

Whether the finished binders are subject to the marking requirements of 19 U.S.C. 1304.

LAW AND ANALYSIS:

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 (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. 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.

Two court cases have considered whether imported parts combined in the U.S. with domestic parts were substantially transformed for country of origin marking purposes. In the first case, United States v. Gibson-Thomsen Co., 27 CCPA 267, 270 (1940), the court held that imported wood brush block and toothbrush handles which had bristles inserted into them in the U.S. lost their identity and became new articles having a new name, character and use. The second case involved imported shoe uppers which were combined with domestic soles in the U.S. In Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (CIT 1982), the imported uppers were held to be the "essence of the completed shoe" and, therefore, not substantially transformed.

It is alleged that the textile covers in the Reebok Trapper Keeper, the Reebok School Binder, and the Space Place Binder are substantially transformed in the U.S. by Mead in the production of these finished products. It is claimed that there is a change in name from a miscellaneous textile article to a notebook after the U.S.-origin paper products and the ring assembly are produced and assembled into the finished article. A change in character is claimed because the imported component is a non-descriptive textile cover, while the finished product is a specific notebook binder. It is claimed that once the paper documents are added to Mead's textile covers in the U.S., a specific, entirely new product is created and defined. A change in use is also claimed because as a mere textile cover, with no rings or paper, the imported product has no determined use. It is stated that depending on what is assembled with the cover, a number of products could be created, including a photo album (with the addition of plastic magnetic sheets), a carrying case (with the addition of pockets, handles and straps), or the notebook binders in question. In this case, it is claimed that the finished product is used for writing, note taking, and carrying school assignments, while the textile cover cannot be used for any of these activities. You cite Headquarters Ruling Letter (HRL) 956754 dated August 9, 1994, as support that Mead's notebook binders are essentially paper products since Customs reasoned that the "primary purpose" of the products was derived from the paper, i.e., to "provide a convenient and organized method to take notes," and that the covers made of various materials "merely emphasize" that purpose. Accordingly, you claim that the essential character of the finished notebook binders is derived from the U.S.-origin paper.

It does not appear that Customs has ruled upon whether the textile covers or three-ring mechanisms described in this case are substantially transformed when they are combined with a U.S.-origin plastic board and paper to form the finished notebook binders. However, in HRL 544017 dated May 15, 1989, Customs considered whether unfinished filler paper produced in Mexico from imported materials were substantially transformed constituent materials of photo albums for purposes of the Generalized System of Preferences (GSP). In HRL 544017, the photo albums were made from filler pages produced in Mexico using imported paper, film, and glue; a book cover from either Korea, Mexico or Singapore; metal rings imported from either Hong Kong or Korea; two PVC protectors from Korea or Mexico; labels imported from Korea or the U.S.; and rivets from the U.S. In Mexico, the filler paper was produced and the photo album was assembled by riveting the three ring metal section to the center of the binder cover and placing the finished filler papers in the rings. While HRL 544017 pertained to whether the imported paper underwent a "double substantial transformation" and did not necessarily hold that the finished photo albums were a product of Mexico, we are presuming that the photo albums were a product of Mexico as otherwise it would be irrelevant to further determine whether the unfinished filler paper was an intermediate constituent material. See also M.B.I. Merchandise Ind. v. United States, No. 92-95, slip op. at 22 (CIT June 26, 1992), where the court stated that the combination of various parts (cover, pages, binder, and label) resulted in an item having a new identity.

In this case, an imported three-ring mechanism is riveted to a U.S.-origin plastic board, and paper, portfolios and/or paper dividers manufactured in the U.S. are inserted into the three-ring binder which is inserted into an imported textile cover. While HRL 544017 considered the eligibility for the GSP, as in that case where the filler paper was produced in Mexico and imported metal rings were riveted to an imported book cover, in this case the paper is also produced in the same country where the binder was produced by riveting an imported three-ring mechanism to a U.S.-origin plastic board. Accordingly, we find that the combination of a three-ring mechanism with a U.S. plastic board and U.S. paper products which are slipped into a textile cover results in a product of the U.S. All three components, the cover, three-ring binder and paper are important to the ultimate use of the finished notebook. Therefore, it is also our opinion that the imported textile covers and the imported three-ring mechanism, combined with the U.S.-origin plastic board and paper inserts to make the final "Reebok Trapper Keeper", "Reebok School Binder Ensemble", and "Space Place Binder" products, undergo a substantial transformation in the U.S. Consequently, these finished notebooks will not require any marking for purposes of 19 U.S.C. 1304.

In regard to marking the "Reebok Trapper Keeper", "Reebok School Binder Ensemble", and "Space Place Binder" with the phrase "Assembled in the U.S.A. Cover Made in China", although this marking states that the cover is a product of China, it also can imply that the finished notebook is a product of China. However, since the finished notebooks are not subject to the marking requirements of 19 U.S.C. 1304 as they are products of the U.S., Customs will not object to this marking. The Federal Trade Commission, however, should be contacted to address any marking issues within their jurisdiction.

With regard to the "Reebok Zipper Binder", it will only contain tabbed dividers which in our opinion does not direct the notebook towards a specific use different from its imported condition. Therefore, as sold to the ultimate purchaser in the U.S., the article will be classifiable under subheading 6307.90.99, which is a textile product subject to the general rules set forth in 19 CFR 102.21(c)(1) through (5), which implement section 334 of the Uruguay Round Agreements Act.

As the finished notebook is not wholly obtained or produced in a single country, territory, or insular possession, 19 CFR 102.21(c)(1) is inapplicable.

Paragraph (c)(2) provides:

[w]here the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section.

As determined above because the finished notebooks only contain tab dividers, the notebooks are classifiable under subheading 6307.90, HTSUS. The rule set forth under paragraph (e) for subheading 6307.90, HTSUS, provides:

6307.90 The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

As you state, the notebooks are cut, sewn and fabricated from fabric sourced in Taiwan. Accordingly, pursuant to section 102.21, the "Reebok Zipper Binder" will be considered products of Taiwan and they will be subject to the marking requirements of 19 U.S.C. 1304. The proposed marking "Made in Taiwan" for the "Reebok Zipper Binder" will be acceptable.

HOLDING:

On the basis of the information and samples submitted, we find that the imported textile covers used to produce the "Reebok Trapper Keeper", "Reebok School Binder Ensemble", and "Space Place Binder" undergo a substantial transformation when they are combined with three-ring binders and paper or portfolios to form these finished notebooks. Therefore, these finished notebooks will not be subject to the marking requirements of 19 U.S.C. 1304. As the finished notebooks are not subject to the requirements of 19 U.S.C. 1304, Customs does not object if the finished notebooks are labeled "Assembled in the U.S.A. Cover Made in China."

However, since the "Reebok Zipper Binder" remain textile products, pursuant to 19 CFR 102.21, they will be considered to be products of Taiwan and may be marked "Made in Taiwan".

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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.

Sincerely,

John Durant, Director

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