CLA-2 RR:CR:TE 959871 RH
Port Director of Customs
Attn: Chief, Residual Liquidation
& Protest Branch
6 World Trade Center, Room 761
New York, NY 10048-0945
Re: Protest No. 1001-96-103380; 19 CFR 12.130; finishing operations; shrinkage;
country of origin; notice to redeliver; 19 CFR 141.113(b); 19 CFR 113.62; dyeing;
bleaching; printing; singeing; steaming; fulling; oxidation; substantial transformation;
Customs laboratory testing methods and testing standards; ASTM; industry standard;
rayon fabric
Dear Sir:
This is in response to your memorandum dated October 11, 1996, regarding the Application for Further Review of Protest (AFR) filed by the law firm of Follick & Bessich, on behalf of Hi-Fashion Fabrics. The protestant timely filed the AFR on April 26, 1996, and headquarter’s review is warranted pursuant to 19 CFR 174.24(b).
The Protest contests a Notice to Redeliver alleging that the fabrics in question are products of China for which a visa is required. The Protestant does not dispute the classification of the merchandise under subheading 5516.14.0010 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).
Members of my staff met with Mr. Bessich on July 10, 1997, and April 28, 1999, to discuss the issues in this case.
We are returning the samples and your memorandum, as requested, under separate cover.
FACTS:
On September 25, 1995, the Protestant entered into the United States 100 percent spun woven rayon fabrics (designs Jolly and Julie). The merchandise was released from Customs custody on the same day.
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Customs requested additional information and a sample of the merchandise from the protestant on October 16, 1995 and December 5, 1995. Both requests for information stated that the merchandise was “conditionally released pending lab analysis.”
After Customs discovered that the fabric underwent processing in more than one country, the protestant was required to file Multi-Country Declarations in accordance with 19 C.F.R. §12.130(f)(2). The protestant submitted two out of the three samples requested on November 17, 1995, and a revised country of origin declaration on February 7, 1996. The protestant, however, maintained that Turkey was the country of origin of the fabrics because they underwent singeing, desizing, bleaching, dyeing, printing, steaming, fulling, and shrinking in that country.
A Customs laboratory issued report number 2-96-10394-001 on April 1, 1996, finding that the fabrics were bleached, dyed and printed in Turkey. Shrinkage of the fabrics exceeded the maximum allowable percentage set forth in the American Society for Testing and Materials (ASTM) D 4038 test method and specifications. Based on that information, Customs issued a Notice to Redeliver on March 28, 1996, and required the protestant to submit textile visas for the Chinese fabrics.
Customs liquidated the entry on May 31, 1996. The protestant failed to redeliver the merchandise and the case was forwarded for liquidated damages. The protestant seeks cancellation of the Notice to Redeliver and confirmation that the fabrics are products of Turkey.
ISSUES:
1. Were the Chinese greige fabrics in question substantially transformed in Turkey pursuant to
19 CFR 12.130?
2. Did Customs issue the Notice to Redeliver in a timely manner?
LAW AND ANALYSIS:
At the time the fabrics in question entered the United States, Section 12.130 of the Customs Regulations (19 C.F.R. §12.130(b)) governed the country of origin determinations for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C.
§1854). Under that provision, the country of origin of textile products is deemed to be that foreign territory or country 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.
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Counsel asserts that Turkey is the country of origin of the Chinese greige fabrics at issue because they were substantially transformed there. In a Multiple Country Declaration, Italteks Ekspo GrupTekstil Sanayl A.S., declared that the Chinese greige fabrics underwent the following manufacturing and/or processing operations at their facility in Turkey: singing; desizing; bleaching; dyeing; printing; steaming; fulling; oxidation, washing, drying, stentering, setting; shrinking.
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) provides:
[A]n article or material usually will be a product of a particular foreign territory or country, or insular possession of the U.S., when it has undergone prior to importation into the U.S. in that foreign territory or country, or insular possession 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.
Section 12.130(e)(2) further provides:
An article or material usually will not be considered to be a product of a particular foreign territory or country, or insular possession of the U.S. by virtue of merely having undergone any of the following:
* * *
(iv) One or more finishing operations on yarns, fabrics, or other textile articles, such as showerproofing, superwashing, bleaching, decating, fulling, shrinking, mercerizing, or similar operations; or
(v) Dyeing and/or printing of fabrics or yarns.
Customs does not contest that the fabric was dyed, printed and bleached in Turkey. However, a Customs laboratory found no indication that the fabric underwent any of the other finishing operations enumerated in 19 CFR 12.130(e)(2).
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Customs Laboratory Report Number 2-96-10394-001, dated February 20, 1996, contains the following findings with regard to the subject fabrics:
the sample, a plain woven fabric, is composed wholly of single ply staple rayon yarns.
Based on our examinations performed on the sample, we are of the opinion that the sample has been bleached, dyed and printed.
There are no indications that the fabric was fulled, napped, moired, permanently stiffened, permanently embossed, decated, weighted or pre-shrunk.
In determining that the fabrics had not been subjected to a shrinking process, Customs relied upon the standards set forth in the American Society for Testing and Materials (ASTM) Standard D 4038. This performance specification covers woven women’s and girls’ dress and blouse fabrics composed of any textile fiber or mixture of textile fibers. Section 1.1, ASTM 4038 (Emphasis added). The standard instructs that dimensional change be determined in accordance with the procedure set out in the AATCC (American Association of Chemists and Colorists) Test Method 135. The maximum allowable dimensional change recommended by the ASTM 4038 standard is 3 percent.
Congress granted Customs the statutory authority to verify the nature of imports using, among other methods, laboratory testing. 19 U.S.C. 1499 (1994). Additionally, It is well established that the methods of weighing, measuring, and testing merchandise used by Customs officers and the results obtained are presumed to be correct. See, Exxon v. United States, 462 F. Supp 378 (1978), 81 Cust. Ct. 87, Cust. Dec. 4772. The burden of proof rests with the importer to overcome the presumption that Customs has the expertise and knowledge to use standard methods and analysis techniques to obtain accurate results. HQ 950794, dated March 25, 1992.
In this case, the 3 percent maximum allowable dimensional change used by the Customs laboratory to determine if the imported fabrics were preshrunk is a recognized industry standard. The ASTM standards are recognized by both the government and the industry. HQ 224349, dated February 18, 1994. Recognition by Customs of the ASTM standards for weighing, measuring and testing merchandise is exhibited by an array of Customs rulings, a small sampling of which include: HQ 085912, dated February 6, 1990 (Customs is of the opinion that the use of the ASTM standards will properly fulfill Congressional intent regarding the definition of a tariff term); HQ 081157, dated April 25, 1989 (it has always been Customs practice, as well as an industry practice, that any product which does not meet the ASTM D 439 specifications may not
be considered automotive gasoline for either Customs or commercial purposes); HQ 086218, dated March 26, 1990 (it has consistently been the position of Customs to utilize substantiality of construction as essential to a finding that an article is designed for travel and thus could be designated as luggage - Customs Service has used the ASTM designation D1593-91 as the
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basis for determining substantiality); HQ 111846, dated April 28, 1992 (Customs has adopted for most cases standards established by the ASTM to determine whether the gasoline or blending components of gasoline are transformed into new and different products because such standards represent industry developed criteria for characterizing fuel oils); HQ 224340, dated May 25, 1994 (Customs uses the ASTM standards to determine fungibility for certain products); HQ 953997, dated January 24, 1994 (ASTM D3597-89 has been adopted by Customs as the proper
test method which sets forth the abrasion standards for woven upholstery fabrics); HQ 954018, dated September 23, 1993 (in considering whether a product consisting of 75 percent gray Portland cement and 25 percent calcium carbonate is classifiable as Portland cements, Customs consulted several standards established by the ASTM).
Under its statutory authority to verify the nature of imports using laboratory testing, Customs has a long history of relying on industry standards for its methods of weighing, measuring and testing merchandise. Thus, we disagree with the protestant’s claim that Customs arbitrarily imposed the ASTM D 4038 standard of 3 percent to measure shrinkage of the fabrics.
There is also a presumption that the test methods and analysis technique of the Customs laboratory was correct. The AATCC 135 is a test method intended for the determination of dimensional changes in woven and knit fabrics when subjected to repeated automatic laundering procedures commonly used in the home. “Dimensional change” is defined in section 3.1 of the test method as “a generic term for changes in length or width of a fabric specimen subjected to specified conditions. The change is usually expressed as a percentage of the initial dimension of the specimen.” Section 3.4 describes “shrinkage” as “a dimensional change resulting in a decrease in the length or width of a specimen.”
The AATCC 135 test method provides that delicate fabrics shall be machine washed on delicate cycle for 8 minutes at a temperature of 120 +/- 5º F. It then provides that the fabrics be tumble dried on delicate cycle or line, drip or screen dried.
Because the Customs laboratory which did the test is not equipped with a washing machine, Customs also consulted TEXTILE TESTING Physical, Chemical and Microscopical (1949) by John H. Skindle, Associate Professor of Textile Chemistry, Lowell Textile Institute. This text describes in detail the ASTM test methods for rayon woven goods. At page 117 the author states that the “Wash Wheel Testing Method” and “Launderometer Method” type of tests are suitable for laboratories doing a lot of shrinkage testing, but another method requiring no special
apparatus would be desirable for laboratories making only occasional tests. An example of such a method is described at page 118. The sample fabric is immersed in a beaker containing 0.3 percent soap solution in water at 40 degrees C for at least two hours. The sample is then rinsed, squeezed as dry as possible and dry-ironed. The sample is rewet, wrung out, ironed until dry, conditioned several hours and then measured again.
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The author states that:
A guaranteed shrinkproof or 100% shrinkproof fabric should have no appreciable shrinkage; a pre-shrunk fabric should have only a small amount of shrinkage (1-2%). A Sanforized label implies not over 1% shrinkage in any direction and should be so understood. In general, we may say that, even without any label or claim, a shrinkage of more than 5% in either direction is excessive, except in the case of wool.
Customs tailored its test after the AATCC 135 and Testing Textile methods. The method Customs used was as follows:
A 12" x 12" test sample from the submitted fabric was tested for shrinkage. The sample was marked 10" apart in the warp and filling direction with an indelible ink marker. The marked sample was treated at 38 ([plus minus] 1) degree centigrade or 100 ([plus minus] 2) degrees fehrenheit for 15 minutes with a 0.5% soap solution (1:30 material to liquor ratio). Then the treated sample was washed with water (38 c or 100 f) for 5 minutes followed by a warm wash (25 c or 77 f) for 5 minutes and then a cold wash also for 5 minutes. The sample was dried flat. The distances between two markings were measured and the percent shrinkage calculated.
In support of its claim that the fabric was preshrunk in Turkey, the protestant submitted numerous exhibits, including a 1997 price list for Hi-Fashion’s fabrics. All of the rayon fabric and linen blend fabrics on the list are referenced as code 3, which the protestant claims refers to its “dry-clean” only fabric. The protestant further maintains that it has received no returns of the fabrics at issue due to excessive shrinkage.
The protestant also submitted two letters from its largest U.S. customers. One letter from the president of Caribou Ltd., states that he is a manufacturer specializing in the apparel market and has been a customer of Hi-Fashion Fabrics for six years. He purchased approximately $2 million of fabric from them, mostly rayon prints. Moreover, he states that he has “never had a single complaint or claim on any Hi-Fashion fabric, based on shrinkage. Their products consistently meet all industry requirements.”
Another letter from a representative of Smart Novelty Blouse Co., Inc., states that in the past three years they purchased approximately $5 million of fabric from Hi-Fashion Fabrics which they used to make thousands of garments. The representative further avers that he has “never experienced a single return, due to excessive shrinkage, on any of these garments.”
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Additionally, the protestant also submitted evidence of the shrinking process performed in Turkey, including a Monfortex booklet describing the machine, as well as photographs and a video tape of the machinery in operation. The Turkish manufacturer used a Monfortex rubber belt shrinkage machine. The protestant furnished a copy of the purchase order and certificate of receipt for this machinery. The literature states that “Monfortex shrinks your woven goods to sanfor standard!” The shrinking process is performed between the rubber belt and the heated shrinking drum. The rubber belt presses against the heated shrinkage drum with a pressure roller causing the belt to stretch and then contract. The fabric is forced to contract at the same time the rubber belt is released.
Counsel submits that the fabrics should have been subjected to a dry-cleaning performance standard, although he states that the fabrics were preshrunk by the Monfortex machine. However, we contacted a representative in Germany from the manufacturer of the Monfortex machine, Monfort Gmbh & Co. Moreover, the literature we received from Monfort stated that “[a]s a rule, residual shrinkage should not exceed +/- 1%.”
The literature provided by counsel states that “[a]t almost every stage in their long production process woven goods are subjected to longitudinal tensions. These tensions are released during washing [emphasis added] and cause the undesirable shrinking of the finished articles or garments. On the MONFORTEX range, these tensions can be eliminated before making up with the SANFOR process. The literature further states that the “Monfortex shrinks your woven goods to sanfor standard!” SANFORIZED is a trademark owned by Cluett, Peabody and Company, Inc. We contacted a representative from that company who advised us that Cluett, Peabody and Company, Inc., recognizes two test methods to determine shrinkage of SANFORIZED fabrics. One is the Federal Test Method Standard No. 191A, which allows for shrinkage of +/- 1%. The other is the AATCC 135 which allows for +/- 3%.
Customs test method is comparable to both the AATCC 135, the Federal Test Method Standard No. 191A, and the Monfortex standard, although Customs adopted less strenuous methods (cooler water temperature, shorter wash cycle, no dry-ironing, no wringing). Thus, in spite of the evidence submitted regarding the Protestant’s success with its imported rayon fabrics in the past, and the fact that the protestant claims the fabrics will not shrink if dry cleaned, the fabrics at issue shrunk in excess of the +/- 1 percent MONFORTEX standard and the +/- 3 percent industry standard set forth in the ASTM, used by Customs. We further find no evidence that Customs test method was erroneous.
Additionally, Customs has ruled previously that the presumption of correctness attached to a Customs laboratory analysis was not overcome by conflicting results from independent laboratory analyses, even when the same method of testing was utilized by both Customs and the independent laboratories. See HQ 070173, dated December 27, 1982.
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Based on the foregoing, we find that the fabrics did not satisfy the requirements of shrinking purposes of 19 CFR 12.130(e)(1).
The Customs Regulations governing the recall of textiles and textile products released from Customs custody are found in 19 CFR 141.113 and more generally in 113.62(d). Paragraph (b) of section 141.113 provides as follows:
For purposes of determining whether the country of origin of textiles and textile products subject to the provisions of §12.130 of this chapter has been accurately represented to Customs, the release from Customs custody of any such textile or textile product shall be deemed conditional during the 180-day period following the date of release. If the port director finds during the conditional release period
that a textile or textile product was not accurately represented to Customs, he shall
promptly demand its return to Customs custody. Notwithstanding the provision of paragraph (h) of this section and §113.62(k)(1) of this chapter, a failure to comply with a demand for return to Customs custody made under this paragraph shall result in the assessment of liquidated damages equal to the value of the merchandise involved.
Section 113.62 contains the basic importation and entry bond conditions. Section 113.62(d) reads, in part:
[It] is understood that any demand for redelivery will be made
no later than 30 days after the date that the merchandise
was released or 30 days after the end of the conditional
release period (whichever is later).
Counsel contends that section 141.113(b) is not applicable to this entry because it is intended to apply to transshipping cases where little or no processing occurred in the claimed country of origin. Counsel claims that the governing regulation is 19 CFR 141.113(d), and that the notice to redeliver was untimely because it was issued more than thirty days after Customs received the requested sample and/or after the date of entry. That provision reads:
If the importer has not promptly complied with a request for samples or additional examination packages made by the port director pursuant to §151.11 of this chapter, the port director may demand the return of the necessary merchandise to Customs custody.
We disagree with counsel that section 141.113(b) is not applicable in this case. The background information on section 141.113(b), published in the Customs Bulletin, Vol. 28, No. 50, on December 14, 1994, makes clear that the regulation was adopted because of a significant enforcement problem regarding textiles and textile products that are imported into the United States in violation of quota restrictions or without the appropriate visa from the country of origin. The regulation was enacted to cover situations where importers declare improper country of
origin whether by incorrect processing, as in this case, or by deceit. The 180 day period was
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implemented to provide Customs with an opportunity to verify that country of origin claims are “accurately” represented to Customs. Under the facts of this case, the importer stated that the country of origin was Turkey, but Customs discovered that there was insufficient processing in that country to confer origin under 19 CFR 12.130. Thus, this case is a form of transhipment which falls within the purview of 19 CFR 141.113(b).
Customs has held that where a Request for Information (CF 28) or any other action is taken to establish a “different conditional release period” the conditional release period may be extended for an additional 30 days. HQ 224872, dated July 5, 1994. More specifically, in HQ 226089, dated February 9, 1996, Customs determined that T.D. 94-95 (amending the Customs Regulations to establish a conditional release period of 180 days on entries of textiles and textile products) “will permit Customs to issue Notices of Redelivery to importers of textiles and textile products within 30 days after the end of the conditional release if investigation or information reveals that the merchandise was claimed to originate in a country where little or no manufacturing process occurred in order to avoid quota or visa admissibility requirements.” (Emphasis added).
In this case, the 180-day regulatory conditional release period commenced on September 25, 1995, the date the merchandise was released from Customs custody. Customs issued requests for information (CF 28) on October 16, 1995 and December 5, 1996, requesting additional information and advising the protestant that the merchandise was “conditionally released pending lab analysis.” The laboratory report was completed on April 1, 1996, although Customs issued the notice to redeliver when the results were available a few days earlier on March 28, 1998. Accordingly, Customs demanded redelivery of the merchandise within 30 days of the end of the conditional release period.
HOLDING:
The proetest should be DENIED. The fabrics in question were dyed, printed and bleached in Turkey. However, they did not meet the requirements for substantial transformation set forth in 19 C.F.R. §12.130(e)(2). Moreover, Customs issued the notice to redeliver in a timely manner.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to the mailing of this decision.
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Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division