CLA-2 CO:R:C:T 953378 CAB
Mr. Joseph A. Gleicher
Poly-Commodity Corporation
175 Great Neck Road
Great Neck Plaza, NY 11021
RE: Modification of HRL 952070; Country of origin determination
of flat sheets that contain piping, capping, and ruffles
Dear Mr. Gleicher:
This letter is in reference to Headquarters Ruling Letter
(HRL) 952070 dated September 24, 1992, issued to you from this
office, regarding the country of origin of flat sheets with
capping, piping, and ruffles. Upon further review Customs has
determined that its holding in HRL 952070 with regard to the
country of origin of the merchandise is in error.
FACTS:
HRL 952070 concerned the country of origin of flat sheets
containing capping, piping, and ruffles. Woven fabric was
manufactured, bleached, brushed, and printed in Pakistan. The
rolls of fabric were then shipped to Thailand where they were cut
to length and width, hemmed, and contrasting fabric sewn onto the
sheets' top edge forming a seam. The first sample had capping
sewn along the top edge of the seam. The second sample had
piping inserted into the seam of the top edge. The third sample
had two overlapping ruffles sewn to the edge. In HRL 952070,
Customs determined that the processing operations in Thailand
were not sufficiently complex to amount to a substantial
transformation in compliance with Section 12.130.
ISSUE:
What is the country of origin for 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
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.
Headquarters Ruling Letter (HRL) 952579 dated November 25,
1992, confronted the issue of where the last substantial
transformation occurred when flat sheets had been processed in
three countries. Customs concluded that the last substantial
transformation occurred in Country "A" where the fabric had been
manufactured; and not in either Country "B" where the fabric was
bleached and printed, or Country "X" where the fabric was
brushed, shrunk, cut, and hemmed. See also, HRL 086523 dated
April 25, 1990, where Customs determined that bed sheets made out
of material woven, dyed and printed in Pakistan were considered
to be products of Pakistan even though the material was cut to
length and hemmed in Dubai. The processes performed in Dubai,
(i.e., cutting to length and hemming), did not constitute a
substantial transformation.
In this instance the woven fabric was manufactured,
bleached, brushed, and printed in Pakistan. This fabric was then
sent to Thailand where it was cut to length and width, hemmed,
and had either capping, piping, or ruffles added to the finished
product. The issue presented is whether the processing in
Thailand, was substantial enough to result in a new and different
article of commerce. If the processing was sufficiently complex
to warrant such a result, then the merchandise in question will
have undergone its last substantial transformation in Thailand.
As emphasized in the cited rulings, Customs has consistently
held that minor processing (cutting and hemming) of flat bed
sheets does not constitute a substantial transformation within
the meaning of Section 12.130. However, in the instant case, the
fabric in question has been cut to both length and width, hemmed
and had capping, piping, or ruffles added to the finished
product. The processing required to add capping and piping to a
flat sheet involves sewing a band of fabric to finish the sheet's
top edge, forming a seam. The side edges of the band are sewn to
the sheet's edges. Finally, capping or piping are sewn along the
top edge of the seam. The processing necessary to add a ruffle
to a flat sheet includes hemming the exposed edge of the ruffle,
hemming the side edges of the ruffle, and sewing the bottom edge
of the ruffle to the top edge of the sheet. This additional
processing done on the instant merchandise is more complex and
time-consuming, then merely cutting flat sheets on four sides and
hemming them.
HOLDING:
When fabric is cut to length and width and hemmed in order
to construct a flat sheet, a new and different article of
commerce is created. However, in order for a substantial
transformation to result within the purview of Section 12.130,
there must be additional processing that is sufficiently complex
so as to constitute a substantial manufacturing operation. In
this case, cutting the fabric to length and width coupled with
the additional processing required to attach the capping, piping,
or ruffles to the flat sheets is sufficiently complex so as to
constitute a substantial transformation. Therefore, the country
of origin of the flat sheets is Thailand.
This notice to you should be considered a modification of
HRL 952070 under 19 CFR 177.9(d)(1). It is not to be applied
retroactively to HRL 952070 (19 CFR 177.9(d)(2)) and will not,
therefore, affect past transactions for the importation of your
merchandise under that ruling. However, for the purposes of
future transactions of merchandise of this type, HRL 952070 will
not be valid precedent. We recognize that pending transactions
may be adversely affected by this modification, in that current
contracts for importations arriving at a port subsequent to this
decision will be affected pursuant to it. If such a situation
arises, you may at your discretion, notify this office and apply
for such relief from the binding effects as may be warranted by
the circumstances. However, please be advised that in some
instances involving import restraints, such relief may require
separate approvals from other government agencies.
Sincerely,
John Durant, Director
Commercial Rulings Division