MAR-2-05 CO:R:C:V 733952 KG
Robert B. Silverman, Esq.
Grunfeld, Desiderio, Lebowitz & Silverman
12 East 49th Street
New York, N.Y. 10017
RE: Country of origin marking of imported children's two-piece
tracksuits; substantial transformation; 19 CFR 12.130
Dear Mr. Silverman:
This is in response to your letter of November 21, 1990,
requesting a country of origin ruling on behalf of Cradle Togs,
Inc., regarding imported children's two-piece tracksuits.
Samples were submitted for examination.
FACTS:
The following operations will be performed in Hong Kong: (1)
the fleece and ribbed-knit fabric will be knit; (2) the fabric
will be dyed; (3) the fleece fabric and ribbed-knit fabric will
be wound on bolts ready for shipment; (4) a portion of the fleece
fabric and all of the ribbed-knit fabric will be shipped to St.
Lucia; and (5) a portion of the fleece fabric is cut to form the
front panel for tracksuit top of styles 73206 and 73254A, and one
of two front panels for the tracksuit top of styles 73200A and
73209A. These front panels are shipped to the People's Republic
of China("PRC").
The front panels will be decorated with plastic ornaments,
appliques and embroidery in the PRC and then shipped to St.
Lucia.
In St. Lucia, the following operations will be performed:
(1) the fleece fabric will be cut into component parts; (2) the
ribbed-knit fabric will be cut into component parts; (3) the
components will be screen printed; (4) the tops and pants will be
assembled by machine sewing; and (5) the garments will have
labels sewn in, be inspected, folded and packed.
ISSUE:
What is the country of origin for the purposes of 19 CFR
12.130 of the imported tracksuits described above?
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").
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 T.D. 85-38 there is a discussion of how the examples and
the factors enumerated in the regulation are intended to operate.
"Examples set forth in 19 CFR 12.130(e) are intended to give
guidance to Customs officers and other interested parties.
Obviously, the examples represent clear factual situations where
the country of origin of the imported merchandise is easily
ascertainable. The examples are illustrative of how Customs,
given a factual situation which fall within those examples, would
rule after applying the criteria listed in 12.130(d). Any
factual situation not squarely within those examples will be
decided by Customs in accordance with the provisions of 12.130(b)
and (d)." The factors to be applied in determining whether or
not a manufacturing operation is substantial are set forth in 19
CFR 12.130(d).
Section 12.130(e)(1)(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.
Bolts of fabric and embellished shirt fronts are shipped to
St. Lucia to be cut and sewn into finished tracksuits. Making
bolts of fabric and embellished shirt fronts into finished
tracksuits is a change in fundamental character. Therefore,
there is a new and different article of commerce created in St.
Lucia.
The second prong of the substantial transformation standard
set forth in 19 CFR 12.130 requires that the merchandise has been
subjected to substantial manufacturing or processing operations.
This case is not squarely within the example set forth in 19 CFR
12.130(e)(1)(iv). Therefore, the factors set forth at 19 CFR
12.130(d)(2) will be considered to determine if the operations
performed in St. Lucia would be considered to be a substantial
manufacturing or processing operation or not. The factors set
forth at 19 CFR 12.130(d)(2) are: (1) the physical change in the
material or article as a result of the manufacturing or
processing operations in each foreign country; (2) the time
involved in the manufacturing or processing operations in each
foreign country; (3) the complexity of the manufacturing or
processing operations in each foreign country; (4) the level or
degree of skill and/ or technology required in the manufacturing
or processing operations in each foreign country; and (5) the
value added to the article or material in each foreign country
compared to its value when imported into the U.S.
As you noted, all of the components except the shirt front
panels are cut in St. Lucia and the complete assembly by sewing
of both the top and pants of the tracksuit are done in St. Lucia.
The cutting operations performed in St. Lucia account for 75% of
the total cutting time required to cut the components for the
tops and 67% of the total cutting cost. In addition, all of the
sewing operations which form the tracksuit pants and the tops are
done in St. Lucia. Customs ruled in HQ 087532 (November 7,
1990), that the country of origin of a fleece top in which all
the cutting except the shirt front was done in Panama and all of
the sewing of the top was done in Panama was considered to be
from Panama although the shirt front panel was cut and
embellished in Malaysia. The facts presented in HQ 087532 are on
point with the facts presented in this case for the top. The
pants involved in this case are both cut and assembled by sewing
in St. Lucia.
Based on these factors, we conclude that the merchandise has
been subjected to substantial manufacturing or processing
operations in St. Lucia. Since both prongs of the substantial
transformation standard have been satisfied, the fabric and
embellished shirt front panels are considered substantially
transformed in St. Lucia. Pursuant to 19 CFR 12.130, the country
of origin of the tracksuits is St. Lucia.
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of the
tracksuits is St. Lucia.
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