CLA-2 CO:R:C:G 087439 WAW

Mr. Geoff Phillips
Tic-La-Dex Business Systems, Inc.
3443 Camino Del Rio South
Suite 326
San Diego, CA 92108-3901

RE: Unassembled Imitation Leather Travel Organizer; Portfolio; Travel Planner

Dear Mr. Phillips:

This letter is in response to your inquiry, dated June 28, 1990, requesting a tariff classification of an imitation leather portfolio with accessories, imported from Taiwan, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). You have also requested a determination that the article be marked "Made in the United States."


The sample article, designated as Style Number 61010, is a portfolio designed to contain the following items: a two year monthly calendar (planner), a built-in calculator, 100 color assorted "calendar" cards (3 inches by 5 inches), a removable credit card wallet, an 8 inches by 10 inches writing pad, a full sized file folio section, and pockets for business cards and other papers. The portfolio is closed by means of a lock and key. The outer surface of the portfolio is manufactured of a fabric backed cellular plastics material.

The importer has indicated that the various components will be imported into the United States in separate cartons in the same import container. The components which make up the portfolio such as the portfolio outer cover, the portfolio main body and the hardware will be assembled in the United States into a finished portfolio. The separate components will be assembled in the United States by means of simple fixing devices such as sewing and gluing. The remaining components are separate articles which are inserted into the finished portfolio.


(1) What is the proper classification of the subject merchandise under the HTSUSA?

(2) What is the country of origin of the subject merchandise for marking purposes?



The General Rules of Interpretation (GRI's) set forth the manner in which merchandise is to be classified under the HTSUSA. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes and, unless otherwise required, according to the remaining GRI's, taken in order.

GRI 3 provides for goods which may be classifiable under two or more headings. GRI 3(b) states that goods put up in sets for retail sale shall be classified as if they consisted of the component which gives them their essential character. The Explanatory Notes to GRI 3(b) indicate, in pertinent part, that "goods put up in sets for retail sale" means goods which:

(a) consist of at least two different articles which are prima facie classifiable in different headings;

(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and

(c) are put up in a manner suitable for sale directly to users without repacking.

The sample merchandise meets criteria (a), (b), and (c) set forth above. The portfolio, the planner, the credit card wallet and the pad are all classifiable in heading 4202, HTSUSA, while the calculator is classifiable in heading 8470, HTSUSA. All of the articles in the portfolio are put up together to carry out a specific activity of planning and organizing ones' thoughts, activities and personal travel agenda. Moreover, the entire unit is put up in a manner suitable for sale directly to consumers without any need for repacking.

Since we find that the subject merchandise qualifies as a set under the HTSUSA, we must next determine which component gives the set its essential character. Explanatory Note VIII to GRI 3(b) provides that the essential character may be determined by "the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods." Essential character has been construed to mean the attribute which strongly marks or serves to distinguish an article.

In the instant case the component of this set which constitutes the most distinctive feature of the article and which plays the major role in its function as a tool for organizing and planning one's activities is the portfolio. It is the portfolio which plays an indispensable and central role in relation to the overall use of the goods. The portfolio is much more than a simple container, but rather it functions to bring together all the component goods to enable a consumer to use the entire unit to organize, in a coordinated and comprehensive fashion, one's activities.

The above-discussed role of the portfolio in relation to the overall use of the set demonstrates that the portfolio is central to the function and intended purpose of the goods. Therefore, the portfolio gives the set its essential character, and the entire set is classifiable under the subheading for that component. Any other accessories, whether assembled or not, imported with the portfolio will be considered to constitute part of the set classifiable with the portfolio.

The importer has indicated that the portfolio will be imported unassembled into the United States. Classification of unfinished or incomplete articles is controlled by GRI 2(a) which provides as follows:

Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.

Under the first sentence in GRI 2(a), an incomplete article having the essential character of the complete or finished article is classified under the heading for the complete article. The second sentence in GRI 2(a) extends this tariff treatment to the same article that is entered unassembled or disassembled. In the instant case, the articles are both incomplete and unassembled. The first question, therefore, is whether they have the essential character of the complete article, and the second question is whether they are "unassembled" as the term is used in GRI 2(a).

The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, although not legally binding, represent the official interpretation of the tariff at the international level. The EN's offer guidance in understanding the scope of the provisions within each chapter of the schedule. EN 2(a)(I), (V), and (VII) provide some guidance on the intent of GRI 2(a):

(I) The first part of Rule 2(a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article. [underscoring added for emphasis]

* * * * * *

(V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport. [underscoring added for emphasis]

* * * * * *

(VII) For the purposes of this Rule [2(a)], "articles presented unassembled or disassembled" means articles the components of which are to be assembled either by means of simple fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only simple assembly operations are involved. [underscoring added for emphasis]

EN (I) does not provide much instructive language on the GRI 2(a) requirement that an incomplete article must have the essential character of the complete article. However, it is reasonable to say that in order to have the essential character of a portfolio, the imported components must be advanced to the point that they are recognizable as a portfolio, i.e., having the essential features of a portfolio. Based on our examination of the merchandise, it is clear that the constituent components constitute an incomplete portfolio which has the essential character of a portfolio under GRI 2(a).

If an incomplete article is also unassembled, EN (V) and (VII) describe the usual circumstances surrounding the "unassembled" state at the time of presentation: (1) the article is usually presented unassembled for convenience or for requirements necessitated by considerations arising from packaging, transport, or handling, and (2) it is put together by simple assembly operations involving simple fixing devices. Shipment of the separate components in an "unassembled" condition would appear to be related to the convenience in the packing, handling or transport of the merchandise. In the instant case, the individual components are assembled by means of a simple fixing devices such as sewing and gluing of the outer vinyl cover to the welded insert. Moreover, the subsequent insertion of the other accessories such as the books and calculator are incidental to the assembly of the portfolio as a whole.

Country of Origin Marking

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 CCPA 297 at 302 (1940).

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 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 this part. A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 CCPA 267 at 270 (1940), National Juice Productions Association v. United States, 10 CIT 48, 628 F. Supp. 978 (1986), Koru North America v. United States, 12 CIT 48, 701 F. Supp. 229 (1988).

Section 134.35 of the Customs Regulations, however, provides an exception to the marking requirement when imported articles are subjected to further processing in the United States. When further processing results in a substantial transformation of the imported products, the domestic manufacturer or processor will be considered the ultimate purchaser of the imported products under the principle of United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267 (C.A.D. 98).

In C.S.D. 80-111 (September 24, 1979) we held that the manufacturing processes used to produce ceiling fans from foreign components did not constitute a substantial transformation of the imported parts. Furthermore, Customs stated that:

For purposes of applying section 134.35, substantial transformation is a process by which an imported article acquires a new use, name, or character. While it is not necessary that a new article be produced, the mere assembly of parts will not constitute a substantial transformation. [Emphasis added]

As indicated above, the portfolio is assembled in the U.S. from various components including the portfolio outer cover, the portfolio main body and the hardware. These components will be assembled in the U.S. by means of simple fixing devices such as sewing and gluing. We find that the imported components are not substantially transformed as a result of the assembly process. At the time of importation, although the portfolio is unfinished, it lacks none of its essential characteristics. The mere assembly of these components by gluing and sewing into a finished portfolio does not change the name, character or use of the product. Accordingly, for purposes of 19 U.S.C. 1304, the country of origin of the portfolio is the country where the components are manufactured. Assuming they are manufactured in Taiwan, the portfolio must be marked accordingly.

Similarly, the remaining components (a planner, a calculator, 100 color assorted "calendar" cards, a removable credit card wallet, a writing pad) are not substantially tranformed as a result of their inclusion in the portfolio. Accordingly, these items must be conspicuously marked to indicate their country of origin. No information was provided regarding the origin of these components.

In view of our finding that the imported articles are not substantially transformed in the U.S., the Customs Service would consider a "Made in the United States" marking to be a false designation of origin within the meaning of 15 U.S.C. 1125. Merchandise which is introduced or attempted to be introduced into the United States contrary to this provision is considered prohibited or restricted merchandise.

It should be noted that there are special country of origin marking requirements that apply when an article or its container includes a U.S. address or some other reference to a place other than its country of origin. Specifically, section 134.46, Customs Regulations (19 CFR 134.46), provides that the name of the country of origin, preceded by the words "Made in", "Product of" or words of similar meaning, must appear in close proximity to and in comparable size letters as the U.S. reference. These provisions would apply to the container, the calculator and the planner, which refer to San Diego, California.


Based on the foregoing analysis, the merchandise is classifiable as a set under subheading 4202.12.2030, HTSUSA, which provides for trunks, suitcases, vanity cases, attache cases, briefcases, school satchels and similar containers: With outer surface of plastics. . .Attache cases, brief cases, school satchels, occupational luggage cases and similar containers. Articles classified in this subheading are subject to a duty rate of 20 percent ad valorem.

The imported components comprising the portfolio and its accessories are not substantially transformed in the U.S. Therefore, they must be marked to indicate their foreign country of origin. The marking "Made in the United States" is unacceptable.


John Durant, Director
Commercial Rulings Division