CLA-2 CO:R:C:G 083461 CRS
Mr. Alpha Chou
Sales Manager
Ho Sing Clothing Co., Ltd.
7-1 FL
695, Tung Hwa South Road
CTCI Tower
Taipei, Taiwan
Republic of China
RE: The assembly of shorts and 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. Chou:
This is in reply to your letter dated January 14, 1989, in
which you enquired as to the country of origin of shorts and
trousers (style 72296) designed and cut in Taiwan and finished in
Thailand. Samples of the cut panels and the completed articles
were submitted.
FACTS:
You state that the shorts and trousers will be designed,
patterned and cut in Taiwan from Taiwanese materials, including
fabric and accessories. The cut panels and accessories will then
be shipped to Thailand or a third country, where they will be
sewn, finished and packaged. The finished articles will be
shipped directly from Thailand or the country of finishing 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 operations undertaken in Thailand each represent 25
percent of the value of the finished shorts and trousers.
Style 72296 consists of a pair of men's 32 inch waist,
pleated trousers of 65 percent polyester, 35 percent rayon. The
trousers are hemmed, have a zipper fly, and fasten by means of a
button and a metal clasp. There are two side and two rear
pockets, and eight belt loops.
The shorts (style number not provided) are made from 99
percent cotton. They are pleated and have two back and two rear
pockets, five belt loops, a zipper fly, and fasten by means of a
button.
ISSUE:
Whether the sewing and finishing in Thailand of parts cut in
Taiwan constitutes a substantial manufacturing or processing
operation transformation such that the completed shorts and
trousers would be considered a manufacture of Thailand for the
purposes of 19 CFR 12.130.
LAW AND ANALYSIS:
Pursuant to section 12.130, Customs Regulations (19 CFR
12.130), a textile or textile product which consists of materials
produced or derived from, or processed in, more than one foreign
territory or country shall be a product of that foreign territory
or country where it last underwent a substantial transformation.
A textile or textile product will be considered to have undergone
a substantial transformation if it has been transformed by means
of substantial manufacturing or processing operations 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.
According to 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.
Section 12.130(e), Customs Regulations (19 CFR 12.130(e))
provides further guidance as to what constitutes substantial
manufacturing or processing operations. In particular, 19 CFR
12.130(e)(1)(v) provides that an article will usually be the
product of that country in which it has been sewn or tailored
from fabric pieces cut in another country, as for example, with
the complete assembly and tailoring of all cut pieces of suit-
type jackets, suits and shirts.
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
12.130(d).
Based on the information provided, the sewing together of the
shorts and trousers in question does not appear to require any
tailoring. Rather, the facts would seem to 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
shorts and 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 (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 Customs' view that the shorts and
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
shorts and 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 of the shorts and trousers at
issue is Taiwan.
Sincerely,
Jerry Laderberg, Acting Director
Commercial Rulings Division