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NY 810407

June 25, 1995

CLA-2-41:S:N:N5:353 810407


TARIFF NO.: 4104.31.4000

Mr. Harold Freiman c/o
Italian Leather USA
P.O. Box 245
Randelman, North Carolina 27317

RE: The tariff classification of upholstery leather from Argentina which has been finished in Italy

Dear Mr. Freiman:

In your letter dated May 10, 1995, received in our office on May 17, 1995, you requested a tariff classification ruling. Two sets of samples of upholstery leather were submitted for examination with your request. One set of Samples "A" are samples of upholstery leather produced in Argentina and ready for shipment from Argentina to Italy. Samples "B" are the same pieces of leather subsequent to being finished in Italy and ready for shipment to the United States.

You state that Curtarsa S.A., an Argentine company belonging to the Italian Leather SPA group of Italy, owns a fully equipped tannery in Argentina. Curtarsa purchases raw hides from Argentine slaughterhouses and produces upholstery leather which is shipped to Italy for the final finishing process done at Italian Leather's finishing plants in Italy. Subsequent to finishing, the leather is shipped to the United States, primarily to Italian Leather USA, a US corporation.

It is your contention that the leather shipped from Italy to the United States is an Argentine product exported from Argentina and thus should be exempt from U.S. duty under the Generalized System of Preferences (GSP) because:

1. The leather shipped from Argentina does not undergo a substantial transformation in Italy as it already upholstery leather when it leaves Argentina. The entire transformation process takes place in Argentina, where the raw hides are converted to upholstery leather using the tanning equipment and processes.

2. The leather is exported from Argentina to Italy under the same customs code category, i.,e. upholstery leather, under which it is exported from Italy to the United States.

3. More than 80% of the value of the finished product is Argentina value. The value of the leather when it leaves Argentina, $1.38/sq. foot represents more than 80% of thevalue of the leather when it is shipped to the U.S. from Italy which is $1.70/sq. foot.

4. The industrial process which transforms the hides into upholstery leather takes place in Argentina, while the Italian finishing process only embellishes the leather for final sale principally by embossing, coloring and dyeing it.

You have submitted the following processes which takes place in Argentina and Italy in respect to the samples at issue:


1. Fresh hides are delivered from slaughterhouse to Curtarsa factory in Argentina.

2. Processing starts with soaking hides in rotating drums.

3. Hides are limed and hair is removed using chemical processes. Hides remain in drum for approx. 24 hours.

4. Hides are removed from drums and pass through fleshing machine for removal of fat tissue or meat that has remained on hides.

5. Hides are placed in other rotating drums for deliming and bathing processes in which enzymes are used to remove natural fats from the grain side of the hides.

6. Chemicals complete the deliming process and to pickle the hides preparing them for the tanning process.

7. Final chemical process occurs by tanning with chrome, which makes the hides bacteria resistant. In this way the hides become termostated. The hides are now called Wet Blue. During these last processes the hides remain in the drums for approx. 24 hours.

8. Hides are dried in the samming machine where excess liquids are drained off.

9. Hides are split into two parts, the "grain" and a sub-product called "split" The splits are sold separately.

10. The hides ("grains") are shaved to a desired thickness in a "shaving machine".

11. Hides are placed in special drums for retanning and color dyeing. This process may take 8 or more hours after which the hides are fully tanned and colored.

12. Hides pass a "combined" machine to remove excess water an to stretch.

13. Hides are dried in a "toggling" machine, a temperature controlled frame.

14. Hides are softened in a "perching" machine

15. "Stucco work" on the hides is accomplished whereby cracks, holes and other defects are filled with a plaster type material.

16. Hides are buffed which sands the grain to provide a cosmetic effect.

17. Hides are trimmed and shipped to Italy.


1. Hides are color coated in a "kela coating" machine where a dye application is made using a roll.

2. Hides are lightly embossed in an "embossing" machine to stamp a design over defects.

3. Hides are given a final color in a "spray dyeing" machine where pigments and adhesives are used.

4. Hides are ironed to stretch and flatten them.

5. Hides are placed in rotating drums to soften.

6. Hides are measured and shipped to the U.S.

The courts have established factors to determine what constitutes a substantial transformation.

In determining if an article emerges with a new character or use, Customs and the courts have examined several factors. Superior Wire Products Co. vs. U.S., 669 F. Supp. 472 (CIT 1987), aff"d 867 F.2nd 1409 (Fed. Cir.1989), wire rod, processed through a drawing process into wire which is used as concrete mesh wire, was held not to have been substantially transformed. The court determined that the use and qualities of the wire are predetermined by the wire rod. The court stated that the changes appear to be cosmetic in nature and concluded that the "wire rod and wire may be viewed as different stages of the same product." Superior Wire 669 F.Supp at 479. An additional factor the court examined, citing Midwood Industries vs. U.S., 313 F.Supp. 952 (1970), is whether the processing transforms the article from a producers' good to a consumers' good, thereby indicating a change in character and use.

In the present case, the leather being imported into the United States from Italy and the leather shipped from Argentina to Italy are both used in the manufacture of other goods and, therefore, no transformation of a producer good to a consumer good occurs. In addition, the operations performed in Italy, where the upholstery leather is colored, embossed and softened, is of a cosmetic nature and, consistent with the view of the court in Superior Wire, that processing which is cosmetic in nature does not constitute a change in character and use. Here, as in Superior Wire, it would appear that the upholstery leather from Argentina and the finished upholstery leather from Italy are the same product at different stages of production. These factors, considered together, indicates that there is no substantial transformation of the upholstery leather in Italy.

The upholstery leather imported into the United States does not undergo a substantial transformation and, therefore the finished upholstery leather is not considered a product of Italy. The upholstery leather is considered a product of Argentina.

The applicable subheading for the upholstery leather will be 4104.31.4000, Harmonized Tariff Schedule of the United States (HTS), which provides for Leather of bovine or equine animals, without hair on, other than leather of heading 4108 or 4109: Other bovine leather and equine leather, parchment-dressed or prepared after tanning: Full grain and grain splits: Other: Upholstery leather. The rate of duty will be 3.9 percent ad valorem. The upholstery leather is subject to a free rate of duty under the Generalized System of Preferences (GSP) upon compliance with all applicable regulations.

This ruling is being issued under the provisions of Section 177 of the Customs Regulations (19 C.F.R. 177).

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


Jean F. Maguire
Area Director

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