HQ 0952886 - Country of origin of footwear manufactured in Korea using uppers sewn in the People's Republic of China - United States International Trade Commision Rulings

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HQ 952886

December 8, 1992

CLA-2 CO:R:C:M 952886 DFC

CATEGORY: COUNTRY OF ORIGIN

TARIFF NO.: N/A

John B. Pellegrini, Esq.
Ross & Hardies
Park Avenue Towers
65 East 55th Street
New York, New York 10022-3219

RE: Country of origin of footwear manufactured in Korea using uppers sewn in the People's Republic of China

Dear Mr. Pellegrini:

In a letter dated September 30, 1992, addressed to the Area Director of Customs in New York, N.Y., you inquired as to the country of origin of certain footwear to be produced in Korea for the Timberland Company using uppers manufactured in the Peoples Republic of China (PRC). Your letter has been referred to this office for a direct reply. A sample of the upper along with the completed shoe was submitted for examination.

FACTS:

The sample designated as style no. 92055 is a man's over- the-ankle, lace-up shoe with a leather upper, EVA midsole, rubber outsole, a lining of non-woven man-made fiber and an elasticized gusset.

The sample upper which was sewn in the PRC is completely open at the bottom and has not been lasted.

You state that uppers represented by the sample will be exported to Korea where they will be combined with bottoms of Korean origin to produce complete footwear which will be exported into the U.S.

ISSUE:

What is the country of origin of the completed footwear?

LAW AND ANALYSIS:

It is your position that because the uppers are completely open and have no shape, they are not complete footwear nor do they have the appearance of footwear. Thus, assembly of the uppers sewn in the PRC with bottoms of Korean origin constitutes a "substantial transformation" of these footwear parts into finished footwear which is the product of Korea. In order for a substantial transformation to be found, an article having a new name, character, and use must emerge from the processing. See United States v. Gibson-Thomsen v. United States, 27 CCPA 267, C.A.D. 98 (1940).

In the case of Uniroyal Inc. v. United States, 3 CIT 220, 542 F. Supp.1026 (1982), aff'd, 702 F.2d 1022 (Fed Cir. 1983), decided under the Tariff Schedules of the United States (TSUS), the Court of International Trade examined whether the addition of an outsole in the United States to imported uppers lasted in Indonesia changed the fundamental character of the imported article. After carefully examining both the imported upper and the finished shoe, the court concluded that the imported upper did not lose its distinct identity in the finished shoe, and to the contrary was the very essence of the completed shoe. This was so even though the imported upper could not be sold at retail without the rubber outsole being attached, and even though following attachment of the rubber outsole the shoe was called by a different name, a deck shoe, rather than an upper or a moccasin.

Under the HTSUS, the Uniroyal upper lacking an outsole would not be considered as having the essential character of footwear described in headings 6401 through 6405, HTSUS, since classification as footwear under those headings requires the presence of both soles and uppers. For example. in Headquarters Ruling Letter 732769 dated February 9, 1990, Customs took the position that two styles of baby shoe uppers with open bottoms exported from the Dominican Republic to the U.S. were not substantially complete shoes until the soles were attached in the U.S. At that time the uppers were substantially transformed in the U.S. into baby shoes, an article with a new name and characteristics from the imported unformed uppers.

In this instance the combining of the unformed uppers with the unattached bottoms in Korea constitutes a "substantial transformation" resulting in a new and different article having a new name and use i.e., uppers to footwear.

HOLDING:

The country of origin of style no. 92055 is Korea.

Sincerely,

John Durant, Director
Commercial Rulings Division

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