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NY B85960

June 4, 1997

MAR-2 RR:NC:2:224 B85960


Bob Link
Impax Limited
3851-J Charter Park Drive
San Jose CA 95136


Dear Mr. Link:

This is in response to your letter dated May 22, 1997, requesting a ruling on the country of origin of imported toy animal skins or shells that are further processed in the United States.

You state that your company's factory in China will conduct what is termed a Phase One Production, a process which consists of cutting individual pieces from plush material that has been screened with toy figure patterns, sewing together the individual pieces of each pattern, adding facial features and applying various quality control checks to the products.

Upon importation into the United States, a Phase Two Production schedule consists of stuffing the skin with polyester filler material, sewing the small opening through which the stuffing was inserted, adding labels, tags and any final accessories to the toy and administering final quality and safety checks.

You propose that by creating this finishing operation in the United States, the country of origin for marking purposes of the finished plush stuffed toys that are destined for exportation to Mexico can be the United States rather than China, and the toys can benefit from NAFTA eligibility.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an 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. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35.

The Customs Service has already determined (in HQ 089832 dated October 21, 1991) that operations similar to your Phase One Production process, namely the cutting in a foreign country of silk-screened fabric squares into doll parts and the assembly of those parts by sewing, substantially transformed the fabric into a product of the country in which these processes take place. Accordingly, the country of origin of the imported unfinished plush toys is China.

It is further our opinion that the instant merchandise subject of the Phase One Production operation in China can be described as unfinished plush toys in the form of finished toy skins or shells in their condition as imported into the United States. The applicable subheading for toy animal skins will be 9503.41.0030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "...stuffed toys and parts and accessories thereof, other." The rate of duty is free.

The next question presented is whether the finished toy animal skins shipped from China undergo a later substantial transformation in the U.S., whereupon they can be marked for purposes of origin with a geographical reference to the United States. The imported toy skins will be stuffed, final sewn and packaged for export to Mexico as described in your Phase Two Production. Customs ruled in HQ 733838 (February 7, 1991) that the country of origin of a stuffed doll was the country where the shell or skin was made, cut and sewn together inasmuch as the later stuffing and final sewing operations were not a substantial transformation of the product. Similarly, in this case the process of stuffing the finished toy animal skins in the U.S. is not a substantial transformation and the country of origin of the stuffed animal skins remains China and they should be so marked. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Tom McKenna at 212-466-5475.


Gwenn Klein Kirschner
Chief, Special Products Branch
National Commodity

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