CLA-2 CO:R:C:V 733848 KG
Mr. R. Gus Provost
Ragus Trading Corporation
P.O. Box 526372
Miami, Florida 33152
RE: Modification of HQ 555590; country of origin of surgical
towels; 19 CFR 12.130.
Dear Mr. Provost:
On May 21, 1990, we issued to you HQ 555590 concerning
whether surgical towels processed in the Dominican Republic are
entitled to duty-free treatment under the Caribbean Basin
Economic Recovery Act and what country would be considered the
country of origin. Upon further review, we have determined that
the country of origin determination in HQ 555590 was incorrect
and must be modified.
FACTS:
The fabric was to be imported into the Dominican Republic
where it would be dyed, bleached, washed, cut to length and
width, and hemmed to create finished surgical towels. We ruled
in HQ 555590 that the country of origin of the towels would be
the Dominican Republic. This conclusion is in conflict with
Customs current position as reflected in several rulings which
are directly on point and which hold that the country of origin
of the surgical towels would be the country where the fabric was
made.
ISSUE:
Whether the country of origin of the surgical towels in HQ
555590 would be the country where the fabric is made.
LAW AND ANALYSIS:
In HQ 555590, we relied on HQ 086665 (March 23, 1990),
which dealt with the country of origin of diapers. The
processing involved in making diapers includes: cutting unmarked
fabric to both length and width; folding the top and bottom of
the fabric to create a fabric 6 ply in the center panel and 2 ply
in the two end panels; insertion of additional panels in the
center; sewing the fabric lengthwise 1/3 and 2/3 of the distance
from the top; hemming on all four sides and packaging. Upon
further review, we have concluded that the processing involved in
making diapers is significantly more involved and different than
the processing involved in making surgical towels. Further, we
have several rulings directly on point that deal with the country
of origin of surgical towels. Customs has consistently ruled
that the country of origin of surgical towels is the country
where the fabric is made. For instance, in HQ 086132 (February
22, 1990), Customs ruled that a surgical towel which was cut from
cloth, washed, seamed, folded and packaged in Honduras was not
substantially transformed there. In HQ 733601 (July 26, 1990),
Customs ruled that surgical towels are not substantially
transformed in the country where the material is cut to length
and width, hemmed, washed and shrunk, and folded. Customs
concluded in HQ 087477 (August 30, 1990), that surgical towels
cut, sewn and finished in American Samoa from Chinese cotton
fabric was considered to be a product of China. The rationale
supporting this conclusion is that the cutting, sewing and
finishing operations performed to make a surgical towel are not
considered to be substantial manufacturing processes as required
by section 12.130, Customs Regulations (19 CFR 12.130).
Consistent with Customs position on this issue, the country of
origin of the surgical towels in your case would be the country
where the fabric is made.
HOLDING:
Pursuant to section 177.9(d), Customs Regulations (19 CFR
177.9(d)), we hereby modify HQ 555590 in regard to the country of
origin determination. Consistent with Customs position on this
issue, the country of origin of the surgical towels in your case
would be the country where the fabric is made.
This notice should be considered a modification of HQ 555590
(May 21, 1990), pursuant to 19 CFR 177.9(d)(1). Although HQ
555590 will not be valid with respect to the country of origin
issue for future transactions, this modification will not be
applied retroactively. We recognize that pending transactions
may be adversely affected by this ruling. If it can be shown
that you have relied on HQ 555590 to your detriment, e.g.,
ordered merchandise after the receipt of HQ 555590 that will be
imported after the date of this ruling, you may notify this
office and apply for relief from the effects of this
modification. We regret any inconvenience this matter has caused
you.
Sincerely,
John Durant
Director,
Commercial Rulings Division