CLA-2 CO:R:C:T 953698 SK
James H.C. Kuo
Tuntex Incorporation
No. 99, Sec. 2, Tunhwa South Road, 34th Fl.
Taipei, Taiwan 106 R.O.C.
RE: Country of origin of ladies' shorts, pants and skirt; weaving
of fabric, cutting and manufacture of trim performed in Taiwan;
simple assembly in second country; 19 CFR 12.130(b)(d)(e);
cutting constitutes substantial transformation.
Dear Mr. Kuo:
This is in response to your letter of March 16, 1993,
requesting a country of origin determination for ladies' shorts,
pants and skirt. Samples of the garments, plus bundles
consisting of the garments' constituent parts, were submitted to
this office for examination.
FACTS:
You have requested a country of origin determination for
three ladies' garments: shorts, pants and skirts. All the
garments are affixed with two sets of hangtags. One hangtag
references each of the garments as style number P323A. The other
hangtag references each garment as style number P502 and bears
the legend "Petites by Fundamental Things."
The shorts are constructed from a woven 100 percent cotton
khaki fabric. The shorts have an internal drawstring which, when
pulled tight, creates a wrinkled waistline effect. The shorts
feature seven belt loops, two front pockets with one smaller
change pocket, and two rear pockets. The pockets have steel
rivets and the shorts have a one button front closure with a
zipper. The shorts extend to the upper thigh area.
The ladies' pants are made of woven 100 percent cotton khaki
fabric. They feature cuffed leg bottoms, a pleated front, seven
belt loops, two front pockets with one smaller change pocket and
two rear pockets which close with button flaps. The front of the
pants has a single button closure and zipper.
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The skirt is also constructed from woven 100 percent cotton
khaki fabric. It extends to approximately mid-calf and has a
full front opening with placket which closes by means of nine
buttons. The skirt features a partially elasticized waist with
seven belt loops and two rear pockets with have button flaps.
The skirt is cut full and is made up of four panels.
The shorts, pants and skirt are all constructed in similar
fashion to the extent that the fabric for these garments is spun
and woven in Taiwan, and this is also where the garments'
patterns are designed and where the fabric is cut. It is also in
Taiwan that various articles of trim for these garments (i.e.,
labels, hangtags, zippers, buttons and interlining) are made.
You did not provide Customs with the name of the second
country in which these articles will undergo assembly. For
purposes of this ruling, we shall hereafter refer to the second
country as "country B." In country B, all the component parts of
the garments, except for the trim, are assembled. Specifically,
assembly of the front and back panels, pockets, back yokes, front
rise/fly, back rise, waistband and belt loops (and sweep and
placket in the case of the skirt) takes place. It is in country
B where the inseam, outseam and hems are sewn and where the
garments are pressed and packed for exportation.
In your submission you provide a cost/labor ratio which
breaks down the percentage of the total value of the garment that
is imparted in each country and how much labor is involved in
each respective country. This data follows:
TOTAL COST OF GARMENT VALUE ADDED: "A" "B"
SHORTS: $6.84 $4.74(69.3%) $2.10(30.7%)
PANTS: $8.48 $6.38(75.2%) $2.10(24.8%)
SKIRT: $8.75 $6.35(72.6%) $2.40(27.4%)
TOTAL PROCESSING TIME (minutes): "A" "B"
SHORTS: 58.28 33.28(57.1%) 25(42.9%)
PANTS: 66.02 40.02(60.6%) 26(39.4%)
SKIRT: 68.9 39.90(57.9%) 29(42.1%)
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ISSUE:
What is the country of origin for the subject merchandise?
LAW AND ANALYSIS:
Country of origin determinations for textile products are
subject to Section 12.130 of the Customs Regulations (19 CFR
12.130). Section 12.130(b) 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) of the Customs Regulations sets forth
criteria in determining whether a substantial transformation of a
textile product has taken place. This regulation states that
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) 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;
(iii) Commercial use.
Section 12.130(d)(2) of the Customs Regulations states that
in 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 and/or technology
required in the manufacturing or processing
operations;
(v) The value added to the article or material;
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Section 12.130(e)(1)(v) of the Customs Regulations describes
manufacturing or processing operations by which an article will
usually be considered a product of the country in which these
operations occur:
(v) substantial assembly by sewing and/or tailoring of
all cut pieces of apparel articles which have been
cut from fabric in another foreign territory or
country, or insular possession, into a completed
garment (e.g. the complete assembly and tailoring of
all cut pieces of suit-type jackets, suits, and
shirts). [emphasis added]
According to T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714),
the final document rule establishing 19 CFR 12.130:
[T]he assembly of all the cut pieces of a garment
usually is a substantial manufacturing process that
results in an article with a different name, character,
or use than the cut pieces. It should be noted that
not all assembly operations of cut garment pieces will
amount to a substantial transformation of those pieces.
Where either less than 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, utilizing the criteria in section 12.130(d).
[emphasis added]
This office has consistently held that the mere assembly of
goods entailing simple combining operations, trimming or joining
together by sewing is not enough to substantially transform the
components of an article into a new and different article of
commerce. See Headquarters Ruling Letters (HRL's) 082747, dated
February 23, 1989; 086665, dated March 23, 1990; 951169, dated
April 1, 1992; 951437, dated July 17, 1992; 952647, dated January
27, 1993.
In the instant case, the assembly operations to be performed
in country B are mere combining and sewing operations and do not
possess the requisite degree of complexity to be deemed
substantial manufacturing processes for purposes of conferring
country of origin status. No great degree of skill or advanced
technology is required, nor is tailoring involved. The cutting
in Taiwan for the shorts, pants and skirt materially alters the
fabric into designated garment pieces. This constitutes a
substantial transformation of that fabric. The cost/labor ratios
set forth above also serve to support this position. The value
added to these garments in Taiwan is, in all cases, at least
twice as much as that added in country B. The processing these
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garments undergo in Taiwan is of a longer duration and the work
involved is of greater complexity requiring 15 laborers as
opposed to the five laborers who process these garments in
country B.
HOLDING:
The country of origin of the shorts, pants and skirt is
Taiwan. It is during the cutting process in Taiwan that these
textile products undergo a substantial transformation and are
transformed into new and different articles of commerce by means
of substantial manufacturing operations.
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 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