**HQ 561499**

**November 26, 2001**

**CLA-02** RR:CR:SM 561499 BLS

**CATEGORY:** Marking

# Port Director

U.S. Customs Service

P.O. Box 55580

Portland, Oregon 97238

**RE:** Country of origin marking of sandals imported from England

Dear Sir:

This is in reference to letters dated August 27, 1999, and July 13,
2001, from counsel, on behalf of R. Griggs Group, Ltd. ("Griggs"),
requesting a ruling concerning the country of origin marking
requirements of certain sandals imported from England. Samples of the
completed sandals and sandal components have been submitted.

**FACTS:**

The sandals, identified as "Dr. Martens Airware sandals" ("Doc
Martens"), are produced in Thailand and England. The initial process
begins in England, where the design for the sandals is developed and
tested to ensure that the footwear is properly balanced, the design is
fully functional, and will ensure foot comfort. A full set of working
patterns for the shoe is then produced, so that sample footwear can be
made. The sample footwear is produced in England, tested, and
specifications are amended as necessary. Once the footwear is ready for
full production, final specifications are communicated to the other
production facilities.

*[Thailand]{.underline}*

The upper production begins with leather from the U.S. and England
shipped by the supplier to Thailand, where it is cut into leather pieces
and straps. Very thin pieces of suede leather from England are also cut
for the lining of the sandal. The leather and/or the lining is skived (a
process which evens out the thickness of the leather) where necessary.
Components for the sandal upper are then stitched, and various
attachments and fasteners are added. The suede lining is attached to the
inside of the upper components with adhesive and trimmed, and the
components of the upper are assembled and stitched together. As part of
this process, a strip of leather is attached as the bottom perimeter of
the upper. This strip hangs straight down the outside of the upper, and
will extend over and beyond the footbed, once the footbed has been
added.

> 2

The footbed is a piece of polyurethane next to the foot in the shoe. It
is designed to provide the first layer of comfort to the foot. Counsel
states that it does not function as a sole and is not intended to have
any use as a wearing surface, as it would abrade very quickly if it were
subjected to any friction or wear. In this regard, counsel notes that
under the ball of the foot, for example, the footbed is only about 3/16"
thick.

The footbed is supplied to the Thai contractor by a subcontractor. It is
molded in a mold that has a thin piece of fabric material called the rib
placed around the inside perimeter of the mold bottom. Polyurethane
materials from England are poured into the mold, with this rib in place.
The liquids react and harden in a few minutes. A paper-thin strip of
suede lining material is then glued to the top of the footbed.

The leather upper is then given its first attachment to the footbed by
gluing the inside edges of the leather strip hanging down the sides of
the upper to the parallel outside edges of the footbed, using a cement
adhesive. A form is inserted into the upper, because this will allow the
upper to be clamped into a sidewall press. The leather strip is pressed
against the footbed using the sidewall pressing process to allow the
adhesive cement to bond under pressure. No part of the upper is attached
to the bottom of the footbed, so no part of the upper is bent inward to
a horizontal position in the bottom closing process.

The uppers are then placed heel to toe on top of each other and packed,
compressed, for shipping to Griggs' facilities in England. The Thai
production process is said to involve both skilled labor operations
([e.g.]{.underline}, cutting leather, skiving, stitching), as well as
unskilled operations ([e.g.]{.underline}, production of the footbed,
gluing of the upper to the footbed).

*[England]{.underline}*

1\. [Manufacture of Welt Compound and Welt]{.underline}

The welt compound is manufactured by measuring the proprietary mix of
ingredients in the formula and blending them together in a high-speed
internal mixer at carefully calibrated temperatures. The material is
then heated to form a molten "spaghetti." The "spaghetti" is cut into
pellets and cooled for use in the actual welt manufacture.

The welt itself is manufactured on a profile extrusion machine designed
to produce the exact size, shape and thickness of welt needed. The
extruded welt is then used in a Goodyear welting process, with the added
step patented by the original

> 3

German inventor of these shoes. Counsel states that the welt is critical
to the proper design and construction of all Doc Martens' shoes. It
connects the upper unit to the sole unit, while simultaneously trapping
an air cushion between the two parts of the shoe, and also gives the
shoe its distinctive durability, as well as creating a joint that is not
weakened by immersion in water.

2.  [Manufacture of Sole Compound and Outer Sole]{.underline}

The process of producing the outer sole begins with production of sole
compound, using a sophisticated process analogous to that used for
producing welt compound, and employing a secret formula of ingredients.

Once produced, the sole compound, which is made up of thermoplastic
granules, is moved to a hopper on the plastic molding machines. These
machines contain specially designed molds for each particular size and
style of Doc Martens bottom being produced at that time. The mold
designs, made in England by Griggs, include a specially shaped well on
the inside of the sole to accommodate the cushioning component which
must be added to produce the proper Doc Martens bottom, as well as U.K.
registered designs on the bottom wearing surface of the outer sole.

The granules are fed into machines and carefully heated as they move
toward the front end of a machine barrel. When they plasticise, they are
injected from the machine nozzle under pressure into the mold cavity.
The mold is locked and cooled, until the sole reaches the consistency
required for the Doc Martens air cushion outer sole. At this point, the
outer sole component is demolded and made ready for the next
manufacturing step.

3.  [Manufacture of Felt Bottom Pads and Foam Inserts]{.underline}

The shaped felt bottom pads and the shaped foam inserts are cut for the
well of the outsole from large sheets of material. Both the felt and the
foam sheets are sourced in England. Computer-controlled cutting pressers
are used to cut the felt and the foam into their respective patterns,
which are shaped precisely to the shoe into which they must fit.

4.  [Force Lasting and Heat Setting]{.underline}

Initiation of force lasting of the uppers, followed by heat setting on
most sandal models, are the next key manufacturing steps. (Lasting is
the process of shaping or forming the upper to fit the foot; heat
setting assists and improves shape retention.)

4

The force lasting is done by hand. It requires the operator to select
the specific last used for the sandal model -- all of these lasts are
made in England -- and force the forepart of the last into the upper
sandal. The last is shortened, and the back part of the upper is
positioned over the seat of the last. Most of the lasts are then locked
and lengthened, tightening the upper onto the last, and conforming the
leather to the shape of the last. (A few lasts are merely forced,
without lengthening.) The force lasting process continues through the
subsequent manufacturing steps, until the shoe is fully produced.
Counsel states that this process is the only means to ensure that the
upper is well formed to the foot, and is not distorted by the subsequent
manufacturing steps needed to construct the whole shoe.

Heat setting follows the initiation of the force lasting described
below. After the last has been forced into the upper, the heat setting
machine provides a successive application of moisture and heat which
relaxes the leather, and subsequently helps both to conform the uppers
very tightly to the shape of the last, and to retain that shape. The
upper is allowed to cool following the heat setting, and then proceeds
to the next manufacturing step.

5.  [Staple Lasting, Trimming and Welt Sewing]{.underline}

Staple lasting, trimming and welt sewing are key steps in the final
closing of the upper and the intricate construction of the actual
sandal. The specially designed PVC welt is prepared for sewing using the
Goodyear welting process. A skilled operator uses a technique called
staple lasting, which carefully staples through the piece of leather on
the side of the upper, and into the rib of the footbed. This bends the
upper

leather toward the horizontal for the first time, and further secures
the upper to the footbed.

Once the staple lasting is complete, another skilled operator does a
preliminary trimming operation on the bottom strip of the upper, using
an upper trimmer. This is necessary to allow the welt sewing. A third
skilled operator uses a welt sewing machine

to sew the welt to both the overhanging piece of the leather on the
upper and to the rib on the footbed, using welt thread made in England.

The operator then cuts the welt and carefully stitches over the welt
joint. This process provides the final securing of the upper to the
footbed, and provides the high quality, sturdy connection between the
welt and the upper needed for this shoe.

5

6.  [Cutting Upper Leather and Welt]{.underline}

Once this process is complete, another skilled operator takes the upper
and uses an inseam trimmer to cut the upper leather and the welt very
carefully, so that they are level with the top of the rib. This step is
critical, because if it is not done properly, the sole unit will not fit
correctly to the welt, and the shoe will not be securely constructed.

7\. [Shoe Component Assembly and Welding of Welt]{.underline}

At this point, the first component of the cushioning feature in the
sandal bottom is introduced. Hot molten adhesive is run down the middle
of the bottom side of the footbed, and a specially sized felt pad that
has been cut for the shoe is glued on and allowed to cool. Next, a
second bottom-cushioning element is introduced. The specially cut foam
pad is placed into the "well," [i.e.]{.underline}, the specially shaped
inside cavity, of the sole unit.

The partially cushioned sole unit is now placed into a position where it
can be temporarily secured to the welt. In this skilled operation, an
operator attaches the welt to the sole in precisely the correct location
at four points on the sandal, spot welding the welt and sole unit
together. Care is needed in this operation to ensure that the upper and
bottom are fully and correctly aligned. An error here will distort the
shape of the shoe.

The next skilled operation makes a permanent, full connection between
the sole unit and the welt. This processing operation, which was
patented by the original manufacturers, also has the effect of trapping
a cushion of air in the sole that provides further cushioning. A
sophisticated and unique piece of machinery called a heat sealing
machine that Griggs manufactures itself, holds the welt and sole
components together, and the skilled operator uses a heated blade to
seal the welting and sole together around the entire shoe in a manner
that traps the air cushion between the sole unit and the upper unit.

8\. [Production of Sole Edge]{.underline}

The next operation, which also requires use of a skilled machine
operator, creates the distinctive grooved sole edge pattern across the
outside of the welting and

the sole, and finishes the sole edge. This grooved sole edge, together
with the yellow stitching, is at the heart of Doc Martens' trade dress.

6

8\. [Testing]{.underline}

The last is now opened and the shoe is released. The welt seal is tested
to ensure it is proper. If it is not, the shoe is returned to the
manufacturing line for correction. If the welt is secure, the shoe moves
to the next stage.

9.  [Toning, Cleaning and Other Operations]{.underline}

The leather is toned and cleaned by hand to correct creases and ensure a
uniform surface. Then, the sandal is packed with paper or cardboard to
assist in shape retention, a label is attached, and the shoe is
inspected by quality control personnel. Footwear passing inspection is
boxed and packed for shipping.

**ISSUE:**

What are the country of origin marking requirements for the sandals
imported from England?

**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 (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. Part 134, Customs Regulations (19 CFR
Part 134) implements the country of origin marking requirements and
exceptions of 19 U.S.C. §1304.

Section 134.1(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 this part; however for a good of a
> > NAFTA country, the NAFTA Marking Rules will determine the country of
> > origin.

A substantial transformation occurs \"when an article emerges from a
manufacturing process with a new name, character, or use which differs
from that of

7

the original material subjected to the process. [The Torrington Company
v. United States]{.underline}, 764 F.2d 1563 (Fed. Cir. 1985).

Accordingly, in order to ascertain the country of origin marking
requirements for the imported sandals, we must determine whether the
sandal uppers imported into England from Thailand undergo a substantial
transformation as a result of the operations performed in England.

In [Uniroyal Inc. v. United States]{.underline}, 3 C.I.T. 220, 542 F.
Supp. 1026 (1982), [aff\'d]{.underline}, 702 F.2d 1022 (Fed Cir. 1983),
the merchandise before the Court of International Trade consisted of
lasted \"footwear uppers consisting of complete shoes except for an
outsole\...,\" manufactured in Indonesia and imported into the U.S.
where a pre-shaped rubber outsole was affixed and the complete shoe
(moccasins) was sold to retailers. The issue before the court was
whether the addition of the outsoles substantially transformed the
uppers so that the uppers did not have to be individually marked as a
product of Indonesia.

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 moccasin and was the very essence of the
completed shoe. This was so even though the imported upper could not be
sold to or worn by consumers without the heavy 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. In reaching its decision, the court compared the time,
cost of materials and labor involved in producing the upper abroad
versus the process of attaching the outsole in the U.S., including the
number of highly skilled operations performed in the U.S. and abroad.
The court concluded that "the manufacturing operation performed by \[the
U.S. processor\] is a minor assembly operation which requires only a
small fraction of the time and cost involved in producing the uppers."
Consequently, the court found that a substantial transformation of the
upper had not occurred since the attachment of the outsole to the upper
was a minor manufacturing or combining process which left the identity
of the upper intact.

Counsel believes that [Uniroyal]{.underline} lends support to Griggs'
position that the sandal uppers undergo a substantial transformation in
England, in view of the significant cost of material and labor which
accrue in that country versus such costs in Thailand, plus the
complexity and sophistication of the operations which take place in
England in comparison to the operations in Thailand.

It appears that in [Uniroyal]{.underline}, the court was concerned that
processing in the U.S. which resulted in an article with a different
name, character and use than the

8

imported article should not be regarded as a substantial transformation
if the cost, material or added value associated with the domestic
processing is negligible or insignificant compared to the cost, material
or value added abroad. However, [Uniroyal]{.underline} did not preclude
the use of other tests used by the courts to determine the issue of
substantial transformation. Thus, in [National Hand Tool Corp. v. United
States]{.underline}, 16 CIT 308, 312 (1992), [aff'd]{.underline}, 989
F.2d 1201 (Fed. Cir. 1993), the court stated that

the determination of a substantial transformation must be based on the
totality of the evidence, and applied a 3-pronged test utilizing name,
character, and use, in

determining whether a substantial transformation had occurred. In that
case, the court discounted plaintiff\'s argument that a substantial
transformation should be found based on the value of the processing
performed in the U.S., which plaintiff described as significant, but
decided the issue based solely on name, character and use.

Counsel argues that the sandal uppers as imported into England are
"unformed," as at this point they are not lasted or molded, or, counsel
states, otherwise given shape in Thailand to the form of a human foot.
Counsel contends that the principles set forth in Customs rulings on
footwear as well as the NAFTA country of origin marking rules further
support a finding that the "unformed" uppers undergo a substantial
transformation as a result of the processing in England.

In Headquarters Ruling Letter (HRL) 721106 dated August 23, 1983,
Customs held that moccasin uppers that were fully sewn and closed
abroad, were not considered to have undergone a substantial
transformation in the U.S. as a result of force lasting and "bottoming"
(attachment of the sole). In that case, the imported uppers were
described as "fully constructed, sewn and closed prior to the force
lasting." We noted that the "force lasting" which occurred in the U.S.
after the upper was fully constructed could not be compared to lasting
which occurs during construction of the upper as that type of lasting
provided a measure of substantiality or completion of the articles upon
importation. In HRL 953017 dated January 29, 1993, Customs held that the
attachment of an outer sole in the U.S. did not result in a substantial
transformation as the boot upper which was "fully closed and sewn" had
attained its final shape upon importation although it had not been
shaped by "lasting, molding or otherwise." [See]{.underline} also HRL
732692 dated January 16, 1990 (formed uppers used in the production of
moccasins were not substantially transformed as a result of the
additional processing performed in the U.S. Although not back-lasted,
upon importation the uppers had much of their ultimate shape, form and
size and thus the basic appearance of shoes); and HRL 732490 dated
September 22, 1989 (two sample leather moccasin uppers - one with an
open midsole the other with a closed midsole - were not substantially
transformed although the U.S. processing included lasting and sole
laying.)

9

However, in HRL 555431 dated April 9, 1990, Customs held that the
joining of unlasted, unformed slipper uppers to outersoles in an insular
possession constituted a substantial transformation. In that case, we
stated that the "parts" of footwear imported into the insular possession
underwent a complex assembly process (lasting, stitching, inverting the
inner sole and stitching the toe closed) in order to transform the parts
into completed slippers. [See]{.underline} also HRL 735338 dated January
28, 1994 (completely open and unlasted uppers of athletic footwear
imported into Italy did not have the very essence of a completed shoe,
and were substantially transformed as a result of the processing
performed in Italy.)

*[NAFTA Marking Rules -- Formed Uppers]{.underline}*

Counsel states that the NAFTA Marking Rules support its position that
the uppers are unformed upon importation into England since if imported
from a NAFTA country (Canada or Mexico), the subject uppers would
undergo a tariff shift as a result of the additional processing in the
exporting country, and the country of origin would be the country where
the uppers were finished.

It is our opinion that the imported sandals are properly classifiable in
heading 6403, Harmonized Tariff Schedule of the United States (HTSUS).
The applicable change in tariff classification set out in section
102.20(k), Section XII, Chapters 64 through 67, 6401-6405 of the
regulations provides:

> 6401-6405 \.... A change to heading 6401 through 6405 from any other
> heading
>
> outside that group, **except from formed uppers**. \[Emphasis added.\]

Additional U.S. Note 4 to chapter 64, HTSUS, provides as follows:

> Provisions of subheading 6406.10 for \"[formed uppers]{.underline}\"
> cover uppers, with closed bottoms, which have been shaped by lasting,
> molding **or otherwise** but not by simply closing at the bottom.
> \[Emphasis added.\]

We have consulted with the Chief, Textile Branch, as to whether the
footwear components imported into England are "formed" uppers. The
following reflects the response of that office:

> The goods imported into England consist of uppers with closed bottoms.
> Although the upper at issue has not been shaped by **lasting**,
> examination of the sample indicates that it has been shaped by
> **other** significant means which appear to satisfy what the legal
> note requires of articles that are classified in subheading 6406.10,
> HTSUS. The subject upper has been shaped by the
>
> 10
>
> substantial and intricate sewing together of numerous pieces and
> straps of precision-cut (in Thailand), high quality leather into a
> shape which conforms to
>
> the contours of the heel, sides, and top portions of a human foot.
> This assembled upper (with Dr. Martens® buckle, hole-punched strap,
> and embossed AirWair® logo) is then bonded with adhesive around the
> entire perimeter of a sturdy footbed (also referred to as an
> \"underfoot\"). The footbed is composed of molded polyurethane plastic
> and features an exterior rib that is typical of an insole for welted
> footwear. The molded plastic footbed is shaped like the sole of a
> human foot. The downward projecting rib runs just inside and parallel
> to the footbed\'s perimeter. The rib is designed to be secured
> together (eventually) with a PVC welt and the leather upper by a
> strong chainstitch (a key feature of high quality, machine welted
> construction).
>
> The imported article also has a thin piece of suede leather attached
> with adhesive to, and completely covering, the top of the footbed
> where the foot will rest. Pieces of suede are also glued and stitched
> to the interior of the upper. All the suede pieces are cut in
> Thailand. Together they form the lining of what will become the
> sandal. The exterior (bottom) of the plastic footbed is marked with an
> \"8\" to indicate a U.K. size 8 (which equates to a U.S. size 9).
> Counsel refers to this hard molded plastic as merely a \"foam
> footbed\.... not intended to have any use as a wearing
> surface\....\[which\] would abrade and pit very quickly if it were
> subjected to any friction or wear.\" The material is not composed of
> foam plastic, however, and its suitability for use in walking is
> irrelevant. The material is extremely durable, as evidenced by the
> fact that it will anchor the innermost stitching of the sandal\'s
> machine welted construction. Further, the plastic surface can barely
> be scratched by rubbing it with a sharp metal object. Although the
> leather of the imported \"formed upper\" is not rigid or in the shape
> of a last, it clearly possesses the shape of a size 8 (U.K.) human
> foot. The National \[Commodity\] Import Specialist notes that the
> leather upper materials of the sample he examined retained their shape
> even after removal of the plastic footbed (a step not taken in any of
> the actual manufacturing processes).
>
> The manufacturing processes performed in England which affect the
> upper essentially consist of \"force lasting,\" stapling the upper to
> the rib, \"heat setting,\" trimming of upper material extending below
> the footbed, stitching the upper to the rib and welt, and cutting the
> upper and welt to the level of the rib. Griggs contends that it is the
> bending of the upper \"inward to the horizontal\" through \"force
> lasting\" and \"heat setting\" which causes the upper to be
> \"formed.\" In this case, the bend to the **horizontal** is barely
> perceptible due to the fact that the construction of welted footwear
> requires attachment of the upper material to the **vertically**
> oriented rib. The written submission and presentation, however,
>
> 11
>
> make much of the \"intentional\" shaping and molding effects of force
> lasting and heat setting. Force lasting essentially involves a \"hand
> operation\" to force the
>
> last into the upper. Heat setting involves the application of moisture
> and heat to relax the leather and conform it to the shape of the last.
> These lasting processes are intended to help the sandal retain the
> shape of the last for as long as possible. It appears, however, that
> exposure to elements such as sun and water, through normal use of the
> finished sandal beside the pool, walking in the rain, river rafting,
> etc., would soon cause the stiffened shape of the force lasted, heat
> set upper to resemble the \"broken in\" look of the \"formed uppers\"
> imported into England. For the convenience of transport, the uppers
> are imported into England packed heel to toe in a compressed state.
> Although they have not yet assumed the shape of the last, the uppers
> have already been formed in the shape of a foot of certain size and
> shape.
>
> Griggs relies upon certain guidance contained in Treasury Decision
> (T.D.)
>
> 93-88, particularly a part in which the term \"formed uppers\" is
> defined in the negative. The selected guidance states:
>
> \"Formed uppers\" does not include:
>
> 2\. Any upper which is completely unlasted, i.e., no part of it has
> been bent (lasted) inward to the horizontal.
>
> This cited excerpt, however, is applicable to uppers that are intended
> to attain their shape only by lasting, not by molding or by the other
> means provided for in Additional U.S. Note 4 to chapter 64, HTSUS.
> Further, in the first paragraph of T.D. 93-88 it is stated that
> \"\[t\]hese definitions are provided merely as guidelines. They are
> not to be construed as Customs rulings.\" Counsel makes no reference
> to other guidance contained in T.D. 93-88, particularly where it is

stated that the term:

> \"Formed uppers\" includes:
>
> 1\. In general, all items which have a layer of material between most
> of the foot and the ground, and which, after lacing or buckling, if
> needed, will stay on the foot if worn in the condition as imported and
> which are shaped to fit the human foot.
>
> As previously noted, the subject articles have a complete layer
> between the foot and the ground, and would, after buckling, stay on
> most feet, which measure size 8 (U.K.) because they are shaped to fit
> the human foot.
>
> 12
>
> In light of the above, it is our conclusion that the articles imported
> into England from Thailand constitute \"formed uppers.\" As such, they
> are classifiable in subheading 6406.10.05, which provides for "Parts
> of footwear (including uppers whether or not attached to soles other
> than outer soles)...: Uppers and parts thereof, other than stiffeners:
> Formed uppers: Of leather or composition leather: For men, youths and
> boys."

The opinion of the Textile Branch that the uppers are "formed" and
classifiable in subheading 6406.10.05, HTSUS, represents the position of
the Customs Service. In accordance with this opinion, we find that
despite the uppers not being back-lasted, they have much of the ultimate
shape, form and size of the completed sandals. As in
[Uniroyal]{.underline}, and in HRL 732692, above, we consider the formed
uppers imported from Thailand to be substantially complete footwear,
which constitutes the very essence of the completed product.
Accordingly, we find that these uppers do not undergo a substantial
transformation as a result of the additional processing performed in
England.

Therefore, the origin of the imported sandals for country of origin
marking purposes is Thailand and they should be so marked.

## 

## Alternative Upper Construction

As an alternative to the upper construction described above, Griggs
requests that Customs provide guidance with respect to a manufacturing
process as follows:

> The footbed would be molded to contain a hole of one to two inches.
> The shape of the hole likely would mimic the shape of a filled in "U."
> After importation into England, the hole would be filled using a plug
> constructed outside of England, and imported separately from the
> upper. The sandal upper would also be lasted in England, as is
> currently the case, and it would be turned into a welted sandal using
> the same basic manufacturing steps that were outlined in Griggs'
> August 27, 1999 ruling request.

As noted, the sample sandal uppers, which are the subject of this ruling
request, are fully closed at the bottom through staple lasting and welt
sewing.

Griggs asks whether as a result of such alternative upper construction,
Customs would consider the sandal uppers imported from Thailand to be
"unformed" uppers for purposes of classification. Further, Griggs asks
whether under this alternative construction, Customs would find that the
uppers undergo a substantial transformation in England.

13

In HRL 087458 dated September 19, 1990, the sample consisted of a two
eyelet moccasin-type leather upper designed for a man\'s right foot with
an elliptical hole in the bottom approximately 2 1/2 inches long and
approximately 7/8 inch wide at one end of

the hole and approximately 5/8 inch wide at the opposite end of the
hole. We found in that case that since the sample upper had a
substantial opening in its bottom, which could only be closed with
additional material, it could not be considered a "formed upper" for
tariff purposes, as Additional U.S. Note 4 provides for formed uppers
with closed bottoms. Therefore, we held that the operations in the U.S.,
which included closure of the bottoms with additional material,
constituted a substantial transformation of the imported unformed
uppers. [See]{.underline} also HRL 085573 dated December 28, 1989 and
HRL 085291 dated March 1, 1990.

In accordance with the principles set forth in HRL 087458 and the other
cases cited, Customs would consider the sandal uppers imported into
England under the alternative manufacturing operation which Griggs has
proposed to be "unformed" uppers for tariff purposes. The sandal uppers
would be closed with additional material in an additional manufacturing
process performed in England. Under this alternative construction, the
closure of the bottoms with additional material in England followed by
the additional processing as described above will result in a formed
upper and will satisfy the substantial transformation test. Accordingly,
under this alternative construction the country of origin of the
completed sandals will be England and the sandals should be so marked
upon importation.

**HOLDING:**

##  Based on the information and samples provided:

## 

## Scenario No. 1

Sandal uppers which are fully closed at the bottom imported from
Thailand into England are considered "formed" uppers as they have much
of the ultimate shape, form and size of the completed sandals. As in
[Uniroyal]{.underline} and in HRL 732692, above, we consider the formed
uppers imported from Thailand to be substantially complete footwear,
which constitutes the very essence of the completed product.
Accordingly, we

find that these uppers do not undergo a substantial transformation as a
result of the additional processing performed in England and the country
of origin of the completed sandals will be Thailand.

##  14

## 

## 

## 

## 

## Scenario No. 2

Sandal uppers imported from Thailand into England with a footbed molded
to contain a hole of one to two inches are not considered "formed
uppers" for tariff purposes. The operations in England, which include
closure of the bottoms and additional processing leading to the
completed sandals, constitutes a substantial transformation of the
imported unformed uppers. [See]{.underline} HRL 087458, above.
Accordingly, under this scenario, the country of origin of the completed
sandals will be England.

It should be noted, however, that Customs is reviewing HRL 087458 and
other similar cases with regard to what constitutes a formed upper for
purposes of Additional U.S. Note 4. Any proposed change in these
decisions would require notice and comment in the Customs Bulletin
pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)).

Please advise Claire E. Reade, Esq., of Arnold & Porter (555 Twelfth
Street, N.W., Washington, D.C., 20229) of this decision within 60 days
and include a copy with your notice.

> Sincerely,

John Durant, Director

Commercial Rulings Division