CLA-2 CO:R:C:T 952579 CAB
Mr. Harry Gross
Britannica Home Fashions
214 West 39th Street
New York, NY 10018
RE: Country of origin of flat sheets
Dear Mr. Gross:
This letter is in response to your inquiry of August 14,
1992, requesting a country of origin determination of flat
sheets. Samples were submitted for examination.
FACTS:
You refer to the countries where processing will occur as
Country "A", Country "B", and Country "X". The flat sheets will
be constructed of 100 percent woven cotton fabric. They will be
manufactured as follows:
Country "A" - The cotton fabric is manufactured and sent to
Country "B".
Country "B" - The fabric is bleached and printed and sent to
Country "X".
Country "X" - The fabric is brushed, pre-shrunk, cut,
hemmed, labeled, folded, packed, and exported to the United
States.
The following cost percentages for the direct processing
done in each country were submitted.
Country "A" - 42%
Country "B" - 16%
Country "X" - 42%
ISSUE:
What is the country of origin of the merchandise in
question?
LAW AND ANALYSIS:
Country of origin determinations for textile products are
subject to Section 12.130, Customs Regulations (19 CFR 12.130).
Section 12.130 provides that a textile product that is processed
in more than one country or territory shall be a product of that
country or territory where it last underwent a substantial
transformation. A 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), Customs Regulations, sets forth criteria
for determining whether a substantial transformation of a textile
product has taken place. This regulation states these criteria
are not exhaustive; one or any combination of criteria may be
determinative, and additional factors may be considered.
Section 12.130(d)(1), Customs Regulations, 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.
Section 12.130(d)(2), Customs Regulations, states that for
determining whether merchandise has been subjected to substantial
manufacturing or processing operations, the following will be
considered.
(i) The physical change in the material or article
(ii) The time involved in the manufacturing or processing
(iii) The complexity of the manufacturing or processing
(iv) The level or degree of skill
(v) The value added to the article of material
Section 12.130(e), Customs Regulations, further provides, in
pertinent part:
(1) An article or material usually will be a product of a
particular foreign territory or country,...when it has
undergone prior to the importation into the U.S. in that
foreign territory or country...any of the following:
(i) Dyeing of fabric and printing when accompanied by two
or more of the following finishing operations: bleaching,
shrinking, fulling, napping, decating, permanent stiffening,
weighting, permanent embossing, or moireing.
When applying the above criteria to the merchandise in
question, it appears that the merchandise will not be
substantially transformed in Country "X" or Country "B". Customs
has consistently ruled that in order to comply with Section
12.130(e)(1)(i), a fabric must be both dyed and printed, as well
as being subjected to the other required processing. See
Headquarters Ruling Letter (HRL) 089230 of May 10, 1991. In this
case, the instant fabric is not subject to both dyeing and
printing in Country "B" or Country "X".
This interpretation of Section 12.130 was upheld by the
United States Court of International Trade in Mast Industries
Inc. v. United States, 652 F. Supp. 1531 (1987); aff'd 822. F.2d
1069 (CAFC, 1989). That case involved greige cotton fabric
produced in China and sent to Hong Kong for singeing, desizing,
scouring, bleaching, mercerizing, dyeing, softening, and
tentering. The court stated that in determining the meaning of a
agency's regulation, it would defer to that agency's
interpretation unless the interpretation is plainly erroneous or
inconsistent with the regulation. The court found that Custom's
interpretation was reasonable and approved of Customs denying
entry to the finished fabric without a visa from the Government
of China.
The cutting and sewing processing performed in Country "X"
is not considered to be substantial processing within the purview
of Section 12.130(d)(2). It does not require much time and the
processing operations are not complex nor do they require a high
degree of skill or technology. The value derived from the
processing in Country "B" is not significant in this case.
The manufacturing process in Country "A" creates the fabric.
Since the cutting and sewing process in Country "X" does not
result in a substantial transformation, the forming of the fabric
in Country "A" is considered the time at which the last
substantial transformation occurred. Consequently, the country
of origin of the merchandise in question is Country "A".
HOLDING:
The country of origin of the merchandise in question is
Country "A".
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