MAR-2-05 CO:R:C:V 734467 GRV
John B. Pellegrini, Esq.
Ross & Hardies
529 Fifth Avenue
New York, N.Y. 10017-4608
RE: Country of origin and quota treatment of knit golf shirts
from Singapore, processed in Singapore and Indonesia from
foreign fabric and trim components from Hong Kong. Textile
products; 19 CFR 12.130; T.D. 85-38; T.D. 90-17; Substantial
Transformation; cutting to shape; 19 CFR 12.130(d)(2);
731036; 733841; C.S.D. 90-19; C.S.D. 90-20; 086229; 083359;
734215; partial assembly; 082747
Dear Mr. Pellegrini:
This is in response to your letter of January 14, 1992, on
behalf of The Van Heusen Company, requesting a ruling on the
country of origin, for marking and quota purposes, of two types
of knit golf shirts. Two assembled golf shirt samples--one of
each type and each marked "MADE IN SINGAPORE"--were submitted for
examination.
FACTS:
Two styles of knit golf shirts (denominated "RAM" and
"EDITION") will be imported from Singapore. The production of
these shirts involves fabric-processing operations in two
countries (Singapore and Indonesia), and include attaching
certain trim items from another country (Hong Kong).
In Singapore, foreign fabric and interlining will be cut to
shape and the collars for the respective shirt styles will either
be top fused to the interlining or separated. The cut fabric
components will then be sent to Indonesia where they will be
partially assembled: the placket, pocket and collar will be made
and set, and the shoulder seams will be joined. The shirts will
then be returned to Singapore where final assembly operations
will be performed on the fabric components, including the attach-
ment of certain trim items (buttons, tread and fabric labels from
Hong Kong), to complete the shirts. These assembly operations
include setting and hemming the sleeves, closing the side seams,
making buttonholes and setting the buttons, and in the case of
one of the shirt styles ("RAM") embroidering a logo onto the
shirt. The relative processing costs per dozen shirts for each
shirt style in each country are estimated as follows:
(1) for the "RAM" golf shirt, the Singapore operations
total over $60.00 and the Indonesian operations total
less than $3.00, and
(2) for the "EDITION" golf shirt, the Singapore operations
total over $35.00 and the Indonesian operations total
less than $2.00.
Following inspecting, pressing and packaging steps, the completed
shirts will be exported to the U.S.
Based on our findings and determination in Headquarters
Ruling Letter (HRL) 731036 dated July 18, 1989, which dealt with
polo-style shirts processed in multiple countries, you believe
that the country of origin, for marking and quota purposes, of
the knit golf shirts is Singapore and ask that we confirm this
view.
ISSUE:
What is the country of origin of the two types of knit golf
shirts, for marking and textile quota purposes, under 19 U.S.C.
1304 and 19 CFR 12.130(b)?
LAW AND ANALYSIS:
The General Country of Origin Marking Requirement
The marking statute, 304 of the Tariff Act of 1930, as
amended (19 U.S.C. 1304), provides that, unless excepted, every
article of foreign origin (or its container) imported into the
U.S. shall be marked in a conspicuous place as legibly, indelibly
and permanently as the nature of the article (or its container)
will permit in such manner as to indicate to the ultimate pur-
chaser the English name of the country of origin of the article.
Part 134, Customs Regulations (19 CFR Part 134), implements the
country of origin marking requirements and exceptions of 19
U.S.C. 1304.
The primary purpose of the country of origin marking statute
is to "mark the goods so that at the time of purchase the ulti-
mate purchaser may, by knowing where the goods were produced, be
able to buy or refuse to buy them, if such marking should influ-
ence his will." United States v. Friedlaender & Co., 27 CCPA
297, 302, C.A.D. 104 (1940).
The Country of Origin Requirements Applicable to Textiles and
Textile Products
For textiles and textile products subject to 204 of the
Agricultural Act of 1956, as amended (7 U.S.C. 1854), the
principles for determining the country of origin are provided at
12.130, Customs Regulations (19 CFR 12.130). For purposes of
12.130, where a textile or textile product consists of materials
produced or derived from, or processed in, more than one foreign
territory or country, or insular possession of the U.S., the
country of origin is defined as that foreign territory or coun-
try, or insular possession 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
into a new and different article of commerce. 19 CFR 12.130(b).
Thus, the substantial transformation test for textiles embraces
two separate findings: (1) whether there has been a new and
different article of commerce created, and (2) whether the new
article was created by means of a substantial manufacturing or
processing operation. See, Mast Industries, Inc. v. United
States, 11 CIT 30, 652 F.Supp. 1531 (1987), aff'd, 5 Fed.Cir.
105, 822 F.2d 1069 (1987).
Factors indicating whether or not a particular manufactur-
ing/processing operation is substantial are set forth in 19 CFR
12.130(d)-(e). Section 12.130(d)(2) provides that in determining
whether merchandise has been subjected to substantial manufactur-
ing/processing operations, (1) the physical change to the
material/article, (2) the relative time involved in the foreign
operation, (3) the relative value added to the material/article,
(4) the complexity of the foreign operation, and (5) the level/
degree of skill/technology required for the foreign operation
will be considered. Section 12.130(e)(1)(iv) provides that
fabric material usually will be a product of the particular
country where it has been cut and those parts assembled into the
completed article, however, 12.130(e)(2)(i) provides that the
fabric material usually will not be considered a product of the
particular country where simple combining operations occur.
As the merchandise imported is classifiable in HTSUS section
XI and was processed in more than one foreign country, the coun-
try of origin rules of 12.130(b) are applicable, and Customs has
stated that the principles of origin contained in 12.130 are
applicable to such merchandise for all Customs purposes,
including the assessment of duties and marking. T.D. 85-38, 19
Cust. Bull. 58, 68 (1985), and T.D. 90-17, 24 Cust. Bull. ___
(1990). Regarding the substantial transformation criteria and
examples found at 12.130, Customs has stated that "[a]ny factual
situations not squarely within those examples will be decided by
Customs in accordance with the provisions of section 12.130(b)
and (d)." T.D. 85-38, at p. 72. In general, Customs has also
stated that "[c]utting garment parts from fabric will result in a
substantial transformation of the fabric, T.D. 85-38, at p. 67,
and that garment parts partially assembled in one country after
an intervening assemble in another country are not substantially
transformed, HRL 082747 dated February 23, 1989.
In the referenced Headquarters Ruling Letter (HRL 731036
dated July 17, 1989), Customs considered whether the complete
assembly in country B of cotton knit polo-style shirt component
panels that had been cut in country A constituted a substantial
transformation of the cut fabric components for marking and quota
purposes. Applying the criteria at 12.130(d), we found that the
processing operations that took place in country B did not affect
a substantial transform of the cut garment panels, as the
assembly process was not complex, it took very little time and
did not require highly skilled workers. (See also, HRL 733841
dated February 7, 1991 (8 garment components cut in Taiwan and
assembled in China were determined to be Taiwanese for country of
origin marking, quota and duty purposes), and C.S.D. 90-20
(foreign assembly of cotton work gloves from fabric purchased and
cut into pieces in first country not substantially transformed),
upheld on reconsideration in HRL 086229 dated April 11, 1990).
In discussing the provisions at 19 CFR 12.130(d) and (e), we
stated that where either less than a complete assembly of all the
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.
In C.S.D. 90-19, we considered whether sweatshirts,
assembled from cut panels in a country other than the country
where the knit fabric was produced and cut, were substantially
transformed by the foreign assembly operation. Interpreting the
polo shirt ruling above, we similarly found that the assembly of
sweatshirts panels did not require highly skilled workers nor
that putting together a sweatshirt was any more difficult than
putting together a polo-style shirt. Accordingly, we held that
the sweatshirt had not been substantially transformed by the
assembly operations and that the country where the fabric was
purchased and cut would be the country of origin, pursuant to 19
CFR 12.130. See also, HRLs 083359 dated May 18, 1990 (sewing
and finishing in second country of trouser parts cut in first
country where fabric originated does not substantially transform
the finished trousers, which remain a product of the first
country) and 734215 dated November 13, 1991 (assembly in second
country of sweater parts cut in first country where fabric
originated does not substantially transform the finished
sweaters, which remain a product of the first country).
After examining the textile samples submitted and for the
reasons which follow, we find that the two styles of knit golf
shirts will be a product of Singapore when imported into the
U.S. First, the cutting of the fabric to shape in Singapore
transforms the foreign fabric into a product of Singapore.
Second, we find that the partial assembly operations in Indonesia
and the finish assembly operations in Singapore do not further
transform the Singapore-cut fabric components. Applying the
criteria at 12.130(d), we find that the assembly operations--in
either Indonesia or Singapore--do not involve a high degree of
skill and workmanship; the physical change to the material/
article is minor; the relative values added to the shirts by
means of the assembly operations is not substantial--averaging
approximately 30%, and; the complexity of the foreign operation
appears to be simple rather than complex. These findings are in
accordance with the above rulings concerning sweater and polo-
style shirt assemblies. Accordingly, no substantial transforma-
tion of the Singapore-cut fabric occurs in either Indonesia or
Singapore, as the respective assembly operations are simple, not
complex, combining operations.
HOLDING:
The country of origin of the two types of knit golf shirts
is Singapore, for marking and textile quota purposes, under 19
U.S.C. 1304 and 19 CFR 12.130(b), as the assembly operations
performed in Indonesia and Singapore do not substantially
transform the Singapore-cut fabric.
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)), which
provides 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