CLA-2 CO:R:C:S 557813 MLR
Mr. P. F. Wegener
M. G. Maher & Company, Inc.
One Canal Place
Suite 2100
New Orleans, LA 70130
RE: Reconsideration of HRL 953672; U.S. Note 2(b), Subchapter II,
Chapter 98, HTSUS; 19 CFR 12.130(c); Match-a-Patch hole and
tear mender set; circular and rectangular cut fabric patches;
T.D. 85-38; T.D. 90-17
Dear Mr. Wegener:
This is in reference to your letter of October 22, 1993,
written on behalf of Singer Sewing Company ("Singer"), requesting
reconsideration of the portion of Headquarters Ruling Letter (HRL)
953672 dated August 16, 1993, concerning the country of origin of
the U.S.-manufactured fabric cut in China, for quota, visa, and
duty assessment purposes.
FACTS:
The articles at issue are the fabric patches included in a
Match-A-Patch hole and tear mender set. Bolts of fabric woven in
the U.S. are cut into rectangular and circular patches in China.
In HRL 953672, it was determined that these cutting operations
constitute an advancement in value of the bolts of U.S.-made
fabric, thereby rendering the patches products of China.
Singer contends, pursuant to T.D. 85-38, that the U.S.-made
fabric remains a product of the country where it was woven for
quota, visa, and duty assessment purposes, since it is merely cut-
to-length or width in China.
ISSUE:
Whether the cutting of the bolts of U.S.-made fabric into
patches in China, constitutes an advancement in value or
improvement in condition, and, therefore, renders the patches
products of China for purposes of the Tariff Act of 1930, as
amended, and section 204 of the Agricultural Act of 1956, as
amended (7 U.S.C. 1854).
LAW AND ANALYSIS:
By T.D. 85-38, Customs amended Part 12, Customs Regulations
(19 CFR Part 12), by adding a new section 12.130 which established
criteria to be used in determining the country of origin of
imported textiles and textile products for purposes of multilateral
or bilateral textile agreements entered into by the U.S. pursuant
to 7 U.S.C. 1854. Singer contends, pursuant to T.D. 85-38, that
since the U.S.-made fabric is merely cut-to-length or width in
China, the fabric remains a product of the country where it was
woven for quota, visa, and duty assessment purposes. Singer cites
the example in T.D. 85-38:
... where fabric which is readily identifiable as being
intended for a particular commercial use (e.g. toweling
or bed linen material) is merely cut to length or to
width, with the edges then being either hemmed or
overlocked. In this example, the foreign territory or
country, or insular possession which produced the fabric
is the country of origin, and not the country where the
fabric was cut.
However, in order to have a single definition of the term
"product of", and, therefore, a single country of origin for a
textile or textile product, T.D. 85-38 also added 19 CFR 12.130(c)
which provides that notwithstanding 19 CFR 12.130(b) which
discusses substantial transformation, merchandise which falls
within the purview of Chapter 98, Subchapter II, Note 2(a),
Harmonized Tariff Schedule of the United States (HTSUS), may not,
upon its return to the U.S., be considered a product of the U.S.
Chapter 98, Subchapter II, Note 2(a), HTSUS, provides that any
product of the U.S. which is returned after having been advanced
in value or improved in condition abroad, or assembled abroad,
shall be a foreign article for the purposes of the Tariff Act of
1930, as amended. Furthermore, pursuant to T.D. 90-17, 19 CFR
12.130 is applicable for country of origin determinations for all
Customs purposes.
Consequently, the country of origin determination for quota,
visa, and duty assessment purposes of U.S.-made fabric cut abroad,
is not based on the substantial transformation test applied to
foreign items processed in another foreign country, but rather the
test is whether the fabric was advanced in value or improved in
condition by any process or other means while abroad. In this
case, the U.S-made fabric is cut either into a rectangular shape
or into a circular shape. There is no doubt that the cutting
advances the bolt fabric to a condition suitable for its intended
use as patches. Consequently, the cirucular and rectangular
patches cut from U.S.-made fabric in China, are products of China
for quota, visa, and duty assessment purposes.
HOLDING:
Based on the additional information submitted, HRL 953672 is
affirmed. We find that the cutting of the bolts of U.S.-made
fabric into patches in China constitutes an advancement in value
and improvement in condition, thereby rendering the patches
products of China. Consequently, the Match-A-Patch hole and tear
mender kit is classifiable under subheading 8516.79.00, HTSUS, at
a duty rate of 5.3 percent ad valorem, and for the purposes of
establishing the quota and visa categories applicable, the circular
cut patches are classifiable under subheading 6307.90.99, HTSUS,
with a duty rate of 7 percent ad valorem. Furthermore, if the
rectangular patches are sheeting, they are classifiable under
subheading 5513.21.0040, HTSUS. If the patches are printcloth,
they are classifiable under subheading 5513.21.0060, HTSUS.
Sincerely,
John Durant, Director