MAR-2-05 CO:R:C:V 733269 RSD
Sherry Singer, Esq.
Soller, Singer & Horn
No. 10, The Mews
421 Hudson Street
New York, N.Y. 10014
RE: Country of origin marking of imported bed linens; 19 CFR
12.130; cutting and hemming; bed sheets; pillow cases.
Dear Ms. Singer:
This is in response to your letter of July 12, 1990,
requesting a country of origin ruling on behalf of Ostrow
International Ltd., regarding imported bed linen sets. A
conference was held at your request and a second meeting in which
the video tape was viewed.
FACTS:
The printed fabric is produced in Country A and shipped to
Country B in rolled stock form. In Country B the fabric is cut
and sewn into sheets. The flat sheet is hemmed at the top and
bottom and may require side stitching. The fitted sheet is
stitched on both sides. Pockets are cut and formed at all four
corners, into which an elastic tape is sewn. The pocket is then
stitched closed. The pillow case is stitched across the top and
bottom and hemmed completely around the open end. You submitted
a sample sheet set. The sample fitted sheet is sewn at the
pockets only which suggests that the sheet is only cut on two
sides. The flat sheet is sewn on four sides. A videotape
showing bed linen sets being made in a foreign country was also
submitted for examination.
ISSUE:
Whether the processing of the fabric performed in Country B
to make bed sheets and pillow cases would constitute a
substantial transformation in accordance with the requirements
set forth at 19 CFR 12.130.
LAW AND ANALYSIS:
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 U.S. 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 U.S. the English name
of the country of origin of the article.
Section 12.130, Customs Regulations (19 CFR 12.130), sets
forth the principles for making country of origin determinations
for textile and textile products subject to section 204 of the
Agricultural Act of 1956, as amended (7 U.S.C. 1854)("section
204"). According to T.D. 90-17, published in the Federal
Register on March 1, 1990, (55 FR 7303), the principles of
country of origin for textiles and textile products contained in
19 CFR 12.130 are applicable to such merchandise for all
purposes, including duty and marking.
Pursuant to 19 CFR 12.130, the standard of substantial
transformation governs the determination of the country of origin
where textiles and textile products are processed in more than
one country. The country of origin of textile products is deemed
to be that foreign territory, country, or insular possession
where the article last underwent a substantial transformation.
Substantial transformation is said to occur when the article has
been transformed into a new and different article of commerce by
means of substantial manufacturing or processing operations. In
other words, for textiles governed by 19 CFR 12.130 there is a
two part test for substantial transformation: 1) a new different
article of commerce and 2) a substantial manufacturing or
processing operation.
Section 12.130(d)(1) states that a new and different article
of commerce will usually result from a manufacturing or
processing operation if there is a change in: (i) commercial
designation or identity, (ii) fundamental character or (iii)
commercial use.
The factors to be applied in determining whether or not a
manufacturing operation is substantial are set forth in 19 CFR
12.130(d) and (e). Section 12.130(d)(2) lists some of the
factors considered in determining whether a substantial
manufacturing or processing operation has occurred. These
factors include: the physical change in the material or article;
the time involved in the processing; the complexity of the
operation; the level or degree or skill and technology required
in the operation; and the value added to the article or material
in the non-U.S. based operation versus the value added to the
article or material in the U.S.
I. Bed sheets
In this case, fabric is transformed into both flat and
fitted bed sheets in a second foreign country, both of which are
new and different articles of commerce. Both flat and fitted
bedsheets differ from bolts of fabric in commercial designation,
fundamental character and commercial use. Therefore, the first
prong of the substantial transformation standard is satisfied for
the fabric which is maded into both flat and fitted bed sheets.
The second prong of the substantial transformation standard,
which requires that the article undergo a substantial
manufacturing or processing operation in the second foreign
country, must also be satisfied in order for the fabric to be
considered substantially transformed.
Section 12.130(e)(iv) states that a textile article will
usually be a product of a particular country if the cutting of
the fabric into parts and the assembly of those parts into the
completed article has occurred in that country. However, 19 CFR
12.130(e)(2)(ii) creates an exception for material merely having
undergone cutting to length or width and hemming or overlocking
fabrics which are readily identifiable as being intended for a
particular commercial use. T.D. 85-38, the final rule document
for 19 CFR 12.130 explains that "where fabric which is readily
identifiable as being intended for a particular commercial use
(e.g. toweling or bed linen material) is merely cut to length or
width, with the edges then being either hemmed or
overlocked...the foreign territory or country which produced the
fabric is the country of origin and not the country where the
fabric was cut." 50 FR 8714.
Customs held in HQ 086523 (April 25, 1990), that bed
sheets made out of material woven, dyed and printed in Pakistan
were considered to be from Pakistan even though the material was
cut to length and hemmed in Dubai. We noted in the ruling that -
the processes performed in Dubai, i.e. cutting to length and
hemming, do not constitute a substantial transformation. This
ruling is in conformity with the example set forth at 19 CFR
12.130(e)(2)(ii). Recently, Customs ruled in HQ 733180 (December
13, 1990), that fabric cut on four sides and hemmed in a second
country and made into a flat bed sheet was not substantially
transformed because the manufacturing or processing operation
involved in that second country was not a substantial
manufacturing operation.
In other rulings which did not involve sheets specifically,
Customs has addressed the issue of whether the cutting to length
and width and hemming of material constitutes a substantial
manufacturing or processing operation. Customs recently ruled in
HQ 733746 (November 14, 1990), that cotton surgical cloth cut to
both length and width and hemmed on all four sides in a second
country was not substantially transformed in that second country.
In HQ 733250 (August 10, 1990), Customs ruled that cloth cut and
hemmed on all four sides to make a napkin did not constitute a
substantial transformation. Cloth cut and hemmed on all four
sides to make napkins and table cloths was held by Customs not to
constitute a substantial transformation in HQ 733600 (November
16, 1990).
In the case of the flat sheets involved in this case, the
manufacturing operation involved in making them is not
substantial. The manufacturing process involved in making a flat
bed sheet is a relatively simple process, involving little time
and skill and which is indistinguishable in terms of the cutting
and hemming operations from the making of surgical cloth, cloth
napkins and cloth tablecloths, all of which have been held not to
be a substantial transformation because the manufacturing or
processing operation was not substantial. Further, the
processing involved here is virtually identical to the
processing involved in HQ 733180 which was not considered a
substantial manufacturing operation. There has no been no
showing that a lot of time is involved in the processing, that
the manufacturing is complex, that a great degree of skill is
involved or any comparison of value added in the various
countries. Based on all the above considerations, we conclude
that the fabric is not substantially transformed in Country B
because the manufacturing operation in Country B in which the
fabric is made into a flat bed sheet does not constitute a
substantial manufacturing process. Since this prong of the test
set forth at 19 CFR 12.130 has not been satisfied, the country of
origin of the flat bed sheets remains Country A.
The manufacturing operation involved in making fitted sheets
differs from the process involved in making flat sheets and is a
more complex operation. The fabric used to make the fitted sheet
must be cut at the corners and elastic is sewn into the cloth so
that the corners will fit over the mattress. This requires
additional cutting and stitching and is more complex than merely
sewing a straight hem. Further, this operation does take more
time than merely hemming. The corners must be sewn in precisely
the correct manner so that the finished fitted sheet will
properly and securely fit over the four corners of a standard
mattress for a particular size bed. Customs held in HQ 733180
that this operation is a substantial manufacturing operation.
Based on these factors, we conclude that the fabric which is made
into fitted sheets in Country B does undergo a substantial
manufacturing operation in that country. Since both prongs of
the substantial transformation standard have been satisfied in
the case of fabric made into fitted sheets, the fitted sheets are
considered a product of Country B.
II. Pillow cases
In Belcrest Linens v. U.S., 741 F2d 1368 (Fed. Cir. 1984),
the Court of International Trade held that the process of making
a bolt of woven fabric into a pillow case with a scalloped edge
was a substantial transformation. The court reached that
conclusion because the bolts of fabric were cut, the pieces were
scalloped and then sewn with decorative stitching and the sides
were sewn up in the second foreign country. We note that
Belcrest was decided by the court prior to the implementation of
19 CFR 12.130.
Belcrest and HQ 086523 both held that fabric made into
pillow cases in a second foreign country are substantially
transformed. Clearly, fabric which is transformed into pillow
cases results in the creation of a new and different article of
commerce. Pillow cases differ from bolts of fabric in commercial
designation, fundamental character and commercial use.
Therefore, the first prong of the substantial transformation
standard is satisfied for the fabric which is made into pillow
cases.
Further, in the case of the pillow cases, the second prong
of the substantial transformation standard, requiring a
substantial manufacturing or processing operation in the second
foreign country, is satisfied. The manufacturing process
involved here in making pillow cases involves substantially
similar cutting and sewing operations that were involved in
Belcrest and HQ 086523. The material is cut, folded, sewn and
hemmed on 3 sides, including the open side which requires hemming
both ends. Some precision is required to sew a pillow case
properly to fit over a standard size pillow and the processing
involves folding and sewing five hems per pillow case. Based on
these factors and HQ 086523, we conclude that the fabric which is
made into pillow cases does undergo a substantial manufacturing
or processing operation. Since both prongs of the standard are
satisfied, the fabric made into pillow cases is substantially
transformed in Country B.
HOLDING:
The fabric, which is cut to length and width and hemmed in
Country B to make flat bed sheets, does not undergo a substantial
manufacturing process and therefore, pursuant to 19 CFR 12.130,
is not substantially transformed in Country B. Therefore, the
country of origin for flat sheets for marking, quota and duty
purposes would be Country A, where the fabric is made.
The fabric which is used to make fitted sheets and the
pillow case does undergo a substantial manufacturing process into
a new and different article of commerce in Country B. Both the
fitted sheets and the pillow case are considered substantially
transformed in Country B. Therefore, the country of origin for
the fitted sheets and pillow cases for marking, quota and duty
purposes would be Country B.
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
177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1)). This
section states that a ruling letter is issued on the assumption
that all of the information furnished in connection with the
ruling request and incorporated in the ruling letter, either
directly, by reference, or by implication is accurate and
complete in every material respect. Should it subsequently be
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, it is
recommended that a new ruling request be submitted in accordance
with section 177.2, Customs Regulations (19 CFR 177.2).
Sincerely,
John Durant, Director
Commercial Rulings Division