NY N025519 - Country of Origin for certain wallets produced in Italy and Moldova - United States International Trade Commision Rulings

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NY N025519

April 30, 2008

CLA2-OT:RR:NC:N3:341

CATEGORY: COUNTRY OF ORIGIN

Mr. Garth Atchley
Expeditors Tradewin, LLC
150 Raritan Center Parkway
Edison, NJ 08837

RE: Country of Origin for certain wallets produced in Italy and Moldova

Dear Mr. Atchley:

This is in reply to your letter dated March 14, 2008, requesting a country of origin determination for wallets which will be imported into the United States. Your request was on behalf of Tivoli Group, S.P.A., of Rome, Italy. The samples which you submitted are being returned as requested.

FACTS:

The subject merchandise is two wallets referred to as style “Credit Coin Purse” and “Credit Purse.” The articles are constructed from a polyvinyl chloride (PVC) coated fabric. Both feature leather exterior trim, exterior coin pockets, decorative buckle snap closures, and leather interior with bill compartments and credit card slots. You have included samples of the finished items as well as samples of the merchandise at each stage of production. The material components of wallets are 100% leather originating from Italy, PVC coated cotton fabric produced in Italy and purchased in bulk rolls, hardware (snaps, buckles, etc.) produced in Italy and purchased in bulk quantities. The finished samples are marked on the inside with the phrase “Made in Italy” in gold lettering.

The manufacturing operations for the wallets are as follows:

Italy Operations – Stage One

The leather, fabric and PVC coated cotton canvas are cut to shape and scored (i.e., marking with lines, grooves, notches, etc.) and guide holes are made to facilitate assembly operations in Moldova (described below). The cutting operations, which you describe in detail and which utilize a cutting press or computerized cutting machinery, produce materials of a precise and predetermined size, shape and dimension that will form the component parts of the specific style article. The following equipment is used in the pre-cutting and cutting operations: CAD Program (including specialized technician); CAD printer; Tooling equipment (knives); Leather presses; Fabric measurement machine; Skiving machines; Cutting presses; and, computerized cutting machine linked to the CAD program.

The cut sections of leather and fabric are sorted by shape, gathered into bundles of 100 and shipped to Moldova for partial assembly. The PVC-coated canvas and leather trim that will later form the outer portions of the purse remain in Italy.

Moldova Operations – Stage Two

The leather pieces are skived (that is, pared to reduce thickness). The pre-cut leather pieces are glued to the pre-cut pieces of lining. The leather pieces are then folded creased and stitched (Turned Edge Construction) by machine using as a reference the guide marks made in Italy. The individual pre-cut leather pieces which become the credit card holders are folded and glued to the pre-cut pieces of lining. These are then glued to the backing lining. This section is then partially edged and stitched. The inside flap is assembled (gluing and stitching) and the snap button is attached. The back billfold section is assembled (gluing and stitching). The buckle flap is assembled (stitching and gluing) and the outer buckle and snap buttons are attached. The semi- finished pieces are then returned to Italy for final processing.

Italy Operations – Stage Three

All items are checked for damage and imperfections and a quality control check is undertaken. All items are counted, packed and distributed for final production. The country of origin is stamped on the leather. The unattached sections of the inner coin pockets are glued to the inner lining and leather sections. The outer section of the purse is glued and then pressed to the inner section of the purse. The outer and inner trim sections of the purse are then stitched together (gluing and stitching). The product is then cleaned and the external edge trimmed and colored. A special machine than scores the internal section of the purse where the “turned” sections of the leather have been cut. The product is cleaned again and subject to additional quality control. The product is packed and shipped.

ISSUE:

What is the country of origin of the subject merchandise? Does the proposed country of origin marking meet the requirements of the marking rule?

LAW AND ANAYSIS:

Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines "country of origin" as "the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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. However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).

You argue that following the cutting operations in Italy (stage 1), the leather skins and bulk rolls of material are dedicated solely for use as components of a specific style of purse. According to the information and sample provided, every part of each purse is cut in Italy so that each piece of material corresponds to either the exterior surface, coin pocket, trim, interior surface, bill compartments, credit card slots or side slots. You further argue that, taken together, the pre-cut materials constitute an unassembled purse or have the essential character of a finished purse. For these reasons, you believe that the country of origin of the wallets is Italy.

We agree. CBP has previously held that cutting materials to defined shapes or patterns suitable for use in the assembly of a finished article, as opposed to mere cutting to length and/or width which does not render the article suitable for a particular use, constitutes a substantial transformation. See, for e.g., Headquarters Ruling Letter ("HQ") H005728, dated April 19, 2007, HQ 562156, dated July 5, 2001, and HQ 734539, dated June 8, 1992. Based on the information provided, we find that the component materials undergo a substantial transformation in Italy as a result of the cutting to shape to form the wallet components for later assembly into the finished articles.

Furthermore, we find that the operations performed in Moldova do not constitute a further substantial transformation of the Italian pre-cut components. The Moldova operations consist of merely assembling, paring, gluing, folding, creasing and stitching (turned-edge construction). CBP has long held that the mere assembly of parts will not necessarily constitute a substantial transformation. See C.S.D. 80-111, dated September 24, 1979, in which the U.S. Customs Service (now, CBP) found that the U.S. assembly of imported ceiling fan components on an assembly line did not constitute a substantial transformation. Ceiling fan motors underwent a 20-step assembly and the fan blades underwent a 5-step assembly. See also HQ 734539, dated June 8, 1992, regarding the country of origin of ladies’ clutches and men’s wallets. Since stage two of the operations does not amount to a further substantial transformation of the Italian origin pre-cut components, it is unnecessary to decide if the final assembly operations performed in Italy also constitute substantial transformation.

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 (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its 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.

As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.

HOLDING:

The country of origin of the wallets is Italy.

The proposed marking of imported wallets, as described above, is conspicuously, legibly and permanently marked in satisfaction of the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134 and is an acceptable country of origin marking for the imported wallets.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

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 Vikki Lazaro at 646-733-3041.

Sincerely,

Robert B. Swierupski
Director,

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