CLA-2 CO:R:C:G 083359 JS
Mr. Schon Chen
Apex International
110 E. 9th Street, A525
Los Angeles, CA 90079
RE: The assembly of trousers sewn in one country from parts cut
in a second does not constitute a substantial transformation
as required by 19 CFR 12.130.
Dear Mr. Chen:
This is in response to your letter of January 6, 1989,
requesting a country of origin determination for men's pants
designed and cut in Taiwan and finished in Thailand. Samples of
the cut panels and completed articles were submitted.
FACTS:
The sample at issue is a pair of men's pants and pant panels
made of 100 percent cotton. The pants have two side pockets in
front, a zippered fly, and several pleats at the waist. There
are two rear pockets, each having a slit opening with a button
closure. The bottom of the pants legs have a 1 3/8 inch cuff.
The panels are cut material of the same pattern as the pants,
which have not been sewn into the completed garment.
You state that the production flow is as follows: all
designing, pattern making (including choice of fabric and
trimmings), size grading, marking and cutting of the material is
done in Taiwan, from Taiwanese materials. The fabric panels and
trimmings are then shipped to Thailand where they are sewn,
finished and packaged. The finished articles will be shipped
directly from Thailand to the United States.
Furthermore, you advise that materials represent 50 percent
of the value of the finished clothing, while the design work and
other operations performed in Taiwan, as well as the sewing and
finishing operation undertaken in Thailand each represent 25
percent of the value of the finished trousers.
ISSUE:
Whether the sewing and finishing in Thailand of parts cut in
Taiwan constitutes a substantial manufacturing or processing
transformation such that the completed trousers would be
considered a manufacture of Thailand for the purposes of 19 CFR
12.130.
LAW AND ANALYSIS:
The country of origin of textiles and textile products is
determined by the application of Section 12.130 of the Customs
Regulations. In determining the country of origin of textile
and textile products which consist of materials produced or
derived from, or processed in, more than one country, the
imported article is considered to be a product of the country in
which the last substantial transformation took place. A
substantial transformation of a textile or textile product is
said to occur if a commodity undergoes a transformation by means
of substantial manufacturing or processing into a new and
different article of commerce.
Section 12.130 (d) establishes criteria for determining
whether an article has been substantially transformed. However,
the criteria set forth in 19 CFR 12.130(d) are not exhaustive;
one or any combination of these criteria may be determinative,
and additional factors may be considered.
In accordance with 19 CFR 12.130(d)(2), the following
factors are to be considered in determining whether merchandise
has been subjected to substantial manufacturing or processing
operations: the physical change in the material or article, the
time involved in the manufacturing or processing operations, the
complexity of the operations, the level or degree of skill and/or
technology required, and the value added to the article.
Under 19 CFR 12.130(e)(v), an article is a product of a
particular country if it has undergone in that country a
substantial assembly by sewing and/or tailoring of all cut pieces
of apparel articles which have been cut from fabric in another
foreign country, into a completed garment.
According to T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714),
the final document rule establishing 19 CFR 12.130:
[T]he assembly of all the cut pieces of a garment usually is
a substantial manufacturing process that results in an
article with a different name, character or use than the
cut pieces. It should be noted that not all assembly
operations of cut garment pieces will amount to a
substantial transformation of those pieces. Where either
less than a complete assembly of all cut pieces of a garment
is performed in one country, or the assembly is a relatively
simple one, then Customs will rule on the particular factual
situations as they arise, utilizing the criteria in section
12.130(d).
Based on the information provided, the sewing together of the
trousers at issue does not appear to require any tailoring.
Rather, the facts indicate that the joining of the cut parts is a
simple assembly operation which does not involve a high degree of
skill and workmanship. The trousers at issue are designed,
patterned, sized and cut in Taiwan, which operations, together
with the cost of the material sourced in Taiwan, represent 75
percent of the value of the finished articles, while sewing,
finishing and packing in Thailand comprise the remaining 25
percent. Thus a significant percentage of the articles' value
added occurs as a result of work performed or material sourced in
Taiwan.
We also note that the sewing and related operations in
Thailand comprise the same percentage of value added as do the
cutting and related operations performed in Taiwan. However,
absent any additional data concerning the complexity of the
sewing operation vis a vis the cutting operation, Customs deems
cutting to be the more complex of the two. As we stated in HRL
081155 dated February 3, 1988:
It is our understanding that the apparel cutter is the most
highly paid and highly skilled production worker in the
apparel production process. One mistake can be costly in
wasted fabric and can delay a planned production run.
Since there is nothing to suggest that the assembly of the
cut parts is in any degree a complex operation as regards, for
example, the time or level of skill required, or that the
assembly requires anything more than a simple joining of the cut
parts by machine stitching, it is Custom's view that the trousers
have not undergone a substantial manufacturing or processing
operation. See also, HRL 082747 (February 23, 1988), concerning
the country of origin of jeans. Consequently, the trousers have
not been substantially transformed in Thailand. Wherever the
fabric is cut is therefore the country of origin pursuant to 19
CFR 12.130 for quota and country of origin marking purposes.
HOLDING:
The assembly operations performed in Thailand do not
constitute a substantial transformation as required by 19 CFR
12.130. The country of origin for the merchandise at issue is
Taiwan, and a Taiwanese visa must accompany the goods when
shipped to another country.
Sincerely,
Jerry Laderberg, Acting Director
Commercial Operations Division