CLA-2 CO:R:C:T 089155 CRS
Mr. Ricky Chow
Oceanic Knitting Factory Ltd.
Rua Cinco do Bairro da Areia Preta
No. 3-4 andar
Macau
RE: Cutting patterned sweater fabric consisting of three panels
along lines of demarcation and assembly of parts into finished
sweaters is not a substantial manufacturing or processing
operation under 19 CFR 12.130.
Dear Mr. Chow:
Your letter dated March 26, 1991, to the American Consulate
General, Hong Kong, concerning the country of origin of coarse
gauge sweaters assembled in Macau, has been forwarded to this
office for reply. A sample sweater and sample knit fabric were
submitted.
FACTS:
Front, back and sleeve panels for sweaters are knit from 55
percent ramie, 45 percent cotton patterned "fabric" in countries
other than Macau, e.g., Hong Kong, the People's Republic of
China. The finished patterned fabric consisting of three panels
each is sent to Macau where it is cut along pre-existing lines of
demarcation into individual panels or sleeves. The panels and
sleeves, together with collars produced in Macau, are then sewn,
linked, looped and stitched into a complete sweater. The
finished article is then washed, ironed, labeled and packed for
export.
ISSUE:
Whether the sweaters have been substantially transformed as
a result of the operations performed in Macau.
LAW AND ANALYSIS:
Pursuant to section 12.130, Customs Regulations (19 CFR
12.130), a textile or textile product which consists of materials
produced or derived from, or processed in, more than one foreign
territory or country shall be a product of that foreign territory
or country 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 operations into a new
and different article of commerce.
According to 19 CFR 12.130(d)(2), the following factors are
to be considered in determining whether merchandise has been
subjected to substantial manufacturing or processing operations:
the physical change in the material or article, the time involved
in the manufacturing or processing operations, the complexity of
the operations, the level or degree of skill and/or technology
required, and the value added to the article. These criteria are
not exhaustive; one or any combination of these criteria may be
determinative and additional factors may be considered.
In the instant case, the fabric is demarcated into readily
identifiable sweater parts which are then cut and linked in
Macau. In Customs' opinion, the cutting and assembly of pre-
marked fabric is a simple manufacturing process that does not
result in a substantial transformation. HRL 088069 dated January
25, 1991.
Furthermore, 19 CFR 12.130(e)(2), provides in pertinent part
that a material usually will not be considered a product of a
particular foreign country merely by having undergone:
(ii) Cutting to length or width and hemming or
overlocking fabrics which are readily identifiable as
being intended for a particular commercial use;
(iii) Trimming and/or joining together by sewing,
looping, linking or other means of attaching otherwise
completed knit-to-shape component parts produced in a
single country, even when accompanied by other
processes (e.g., washing, drying, mending, etc.)
normally incident to the assembly process.
At the time it is exported to Macau, the patterned "fabric" is
readily identifiable for use as sweaters. The fabric is a
series of three panels bordered on one side with an elasticized
rib-knit band, and on the other, by loose stitches temporarily
hooking the panels together. All that remains to be done in
Macau is to separate the panels and then assemble the component
parts into sweaters. Construing sections 12.130(e)(2)(ii) and
12.130(e)(2)(iii) together, it is Customs' opinion that the
intent of 19 CFR 12.130 was to exclude the cutting of "fabrics,"
similar to those at issue, that are readily identifiable for a
particular commercial use, and that are subsequently joined by
sewing, looping and/or linking.
Finally, based on the information provided, the assembly
process appears to be little more than the assembly of knit-to-
shape components, a relatively simple operation that does not
require a great deal of time. Customs Regulations Amendments
Relating to Textiles and Textile Products, 50 Fed. Reg. 8710,
8715 (1985) (final document rule establishing 19 CFR 12.130).
You have provided no information of the type set forth in 19 CFR
12.130(d)(2) that would suggest that the Macau assembly process
constitutes something more than a relatively simple manufacturing
operation. Accordingly, in Customs' opinion the cutting and
sewing of the patterned, pre-marked, three panel fabric in Macau
does not constitute a substantial manufacturing or processing
operation.
HOLDING:
The manufacturing operations performed in Macau do not
constitute a substantial transformation under 19 CFR 12.130. The
country of origin of the sweaters is the country where the fabric
is produced.
The holding in this ruling 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. In such a case, 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