MAR-2-05 CO:R:C:V 734124 AT
Harvey A. Isaacs, Esq.
One Whitehall Street
New York, New York 10004
RE: Country of origin marking of imported men's turtleneck long
sleeve shirts; 19 CFR 12.130; cutting components; sewing
Dear Mr. Isaacs:
This is in response to your letter of April 5, 1991,
requesting a country of origin ruling for quota and marking
purposes on behalf of regarding imported men's
turtleneck long sleeve shirts.
FACTS:
plans to import men's 100 percent cotton (or
65% polyester, 35% cotton) turtleneck long sleeve shirts into the
port of Charleston, South Carolina. The shirts feature an
attached rib knit turtleneck collar, rib knit sleeve cuffs and
hemmed bottoms. The shirts are a combination of a jersey knit
body fabric and rib knit fabrics forming the turtleneck collar
and sleeve cuffs. Samples of the completed shirt and the cut
components which will be used to create the shirt were submitted.
You state that the production of the shirts will involve
processing operations performed in three countries and/or insular
possessions, hereinafter referred to as "Country A", "Country B"
and "Country C". For purposes of this ruling "Country B" will be
Guam.
The two types of fabric will be knitted in Country A and
exported to Country B for cutting.
In Country B, the fabric will be cut into seven garment
components. This cutting operation will involve spreading large
fabric pieces by hand one on top of the other so as to form a
number of plies, placing a pattern on the top ply and cutting
around the pattern and through all plies with an electric knife.
This will result in the following components: 1) essentially
rectangular front panels with a semicircular neck outline at the
top, 2) essentially rectangular back panels with a slight neck
outline at the top, 3) flat left sleeves and 4) flat right
sleeves. The neck and sleeve cuffs for each garment will be
produced separately by cutting the rib knit fabric to sizes
required for incorporation in the garments. After cutting, the
components for the shirts will be bundled and packed for shipment
to Country C.
In Country C, the seven garment components will be sewn
together by machine to create the completed turtleneck shirt
along with various finishing operations. The assembly operation
will consist of the following sequential steps for each garment:
joining the front and back panels at the shoulders, making
(closing) and setting the two sleeves, closing and setting the
turtleneck collar, stitching down labels, closing and setting the
sleeve cuffs, mounting and turning the garment on a lock table
and hemming the bottom of the garment. After trimming off excess
material and inspecting each garment, hang tags will be attached
to the garments and the garments will be placed in polybags and
packed in boxes for shipment to the U.S.
ISSUE:
What is the country of origin of the imported men's
turtleneck shirt?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304), provides that, unless excepted, every article of
foreign origin imported into the U.S. shall be marked in a
conspicuous place as legibly, indelibly, and permanently as the
nature of the article (or container) will permit, in such a
manner as to indicate to the ultimate purchaser in the U.S. the
English name of the country of origin of the article.
Section 12.130, Customs Regulations (19 CFR 12.130), sets
forth the principles for marking country of origin determinations
for textile and textile products subject to section 204 of the
Agricultural Act of 1956, as amended (7 U.S.C. 1584) ("section
204").
Pursuant to 19 CFR 12.130, the standard of substantial
transformation governs the determination of the country of origin
where textiles and textile products are processed in more than
one country. The country of origin of textile products is deemed
to be that foreign territory, country, or insular possession
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 operations. In
others words, for textiles governed by 19 CFR 12.130 there is a
two part test for substantial transformation: 1) a new different
article of commerce and 2) a substantial manufacturing or
processing operation.
In T.D. 85-38, published in the Federal Register on March 5,
1985 (50 CFR 8714), which is the final rule document which
established 19 CFR 12.130, there is a discussion of how the
examples and the factors enumerated in the regulation are
intended to operate. "Examples set forth in 19 CFR 12.130(e) are
intended to give guidance to Customs officers and other
interested parties. Obviously, the examples represent clear
factual situations where the country of origin of the imported
merchandise is easily ascertainable. The examples are
illustrative of how Customs, given factual situations which fall
within those examples, would rule after applying the criteria
listed in 19 CFR 12.130(d). Any factual situation not squarely
within those examples will be decided by Customs in accordance
with the provisions of 19 CFR 12.130(b) and (d). The factors to
be applied in determining whether or not a manufacturing
operation is substantial are set forth in 19 CFR 12.130(d) and
(e).
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 or (iii)
commercial use.
Section 12.130(d)(2) lists some of the factors considered in
determining whether a substantial manufacturing operation has
occurred. These factors include: (1) the physical change in the
material or article as a result of the manufacturing or
processing operations in each foreign country; (2) the time
involved in the manufacturing or processing operations in each
foreign country; (3) the complexity of the manufacturing or
processing operations in each foreign country; (4) the level or
degree or skill and/or technology required in the manufacturing
or processing operations in each foreign country; and (5) the
value added to the article or material in each foreign country
compared to its value when imported into the U.S.
You state that the fabric for these shirts is knitted and
made in Country A. One of the examples enumerated is 19 CFR
12.130(e)(iii), which states that weaving, knitting or otherwise
forming fabric is an example of a manufacturing or processing
operation which would qualify under 19 CFR 12.130 as a
substantial transformation. Clearly, making poly/cotton fabric
out of yarn or thread results in a new and different article of
commerce. Further, the forming of the fabric by knitting the two
fabrics (polyester and cotton) together would qualify as a
substantial manufacturing operation under 19 CFR 12.130.
Therefore, the making of the fabric for these turtleneck shirts
in Country A constitutes a substantial transformation.
The second question presented is whether the fabric
undergoes a later substantial transformation in Country B, where
the fabric is cut into seven garment components by the operations
mentioned above. Customs has held under certain circumstances
that the cutting of fabric into specific patterns and shapes
suitable for use to form the completed article constitutes a
substantial transformation.
In Headquarters Ruling Letter (HRL) 731028 dated July 18,
1988, Customs ruled that the cutting of fabric into garment parts
constitutes a substantial transformation of the fabric and the
parts become a product of the country where the fabric is cut.
In Headquarters Ruling Letter (HRL) 555489 dated May 14, 1990,
Customs ruled that the cutting of fabric into glove pattern
pieces results in a substantial transformation. Customs further
stated that the cutting of fabric into glove pieces involves a
complex operation and that the apparel cutters must be skilled
since mistakes can be costly in terms of wasted fabric and can
delay or prevent a planned assembly run. In Headquarters Ruling
Letter (HRL) 555693 dated April 15, 1991, Customs ruled that
cutting of fabric to create pattern pieces for infant carrier
results in a substantial transformation.
However, we have ruled that surgical towel fabric which is
cut to length and width, and then hemmed is not substantially
transformed into a product of the country where the operations
were performed. See, HRL 555719 dated November 5, 1991 (cotton
fabric for surgical towels cut to length and width, sewn,
trimmed, prewashed, and dried is not substantially transformed),
HRL 733601 dated July 26, 1990 (toweling cut, hemmed, washed,
shrunk, and folded in Mexico or the Philippines does not
constitute a substantial transformation, so the country of origin
of the surgical towels is China--the country where the fabric was
manufactured), and C.S.D. 90-29, 24 Cust. Bull. (1990) (HRL
732673 dated November 6, 1989) (greige terry toweling which was
bleached, cut to length and width, hemmed, desized, and dyed to
create beach towels was not substantially transformed).
In this case, the fabric is not cut into lengths and
widths, as in the towel cases cited above, but is cut into seven
individual garment pieces which, when assembled, create the
finished turtleneck shirt. Each piece represents a intricate
part of the finished turtleneck shirt having its own shape and
form. Clearly, cutting seven garment pieces from fabric results
in a new and different article of commerce. Further, for the
reasons stated in HRL 555489 regarding the complexity of apparel
cutting operations, the cutting of the fabric into seven garment
pieces would qualify as a substantial manufacturing operation
under 19 CFR 12.130. Therefore, the cutting of the fabric into
seven garment pieces in Country B constitutes a substantial
transformation.
The third question presented is whether the assembly of the
seven garment pieces in Country C by sewing them together
constitutes yet another substantial transformation. The specific
operations include: joining the front and back panels at the
shoulders, making (closing) and setting the two sleeves, closing
and setting the turtleneck collar, stitching down labels, closing
and setting the sleeve cuffs, mounting and turning the garment on
a lock table and hemming the bottom of the garment. After
trimming off the excess material and inspecting each garment,
hang tags will be attached to the garments and the garments will
be placed in polybags and packed in boxes for shipment to the
U.S.
Assembly by sewing is considered in 19 CFR 12.130(e)(v) as
usually resulting in a article being deemed a product of the
country in which the sewing was done where the assembly is
substantial such as the complete assembly and tailoring of all
cut pieces of suit-type jackets, suits, and shirts. After
considering all the comments received on the interim regulation
regarding assembly by sewing, Customs concluded that "factors
such as time, nature of the sewing operation, and the skill
required to sew together a tailored garment should be considered
in determining whether the merchandise was substantially
transformed.... Where either less than a 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)." 50 Fed. Reg. 8,715 (March 5,
1985), T.D. 85-38.
In Headquarters Ruling Letter (HRL) 731036 dated July 18,
1989, Customs ruled that the sewing together of 12 component
parts into a men's polo style shirt in a second foreign country
was not a substantial transformation under 19 CFR 12.130. The
factors considered were the simplicity of the operations
performed in the second country, and the lack of time and skilled
required to perform the operations. In Headquarters Ruling
Letter (HRL) 733841 dated February 7, 1991, Customs ruled that
the sewing of 8 component parts into a men's polo style shirt in
a second foreign country was not a substantial transformation
under 19 CFR 12.130. We stated that the sewing assembly did not
require tailoring or detail work, required very little time and
did not require highly skilled workers. The present case
involves similar processing performed in Country C as the two
cases previously mentioned. Also, in this case there are only 7
components as compared to 12 in HRL 731036 and 8 components in
HRL 733841 which are being assembled by means of sewing the
individual components together. Further, the assembly of these
seven garment pieces does not involve any tailoring or detailed
work and is a simple operation not requiring highly skilled
workers. Based on these considerations, we conclude that the
seven garment pieces do not undergo substantial manufacturing in
Country C and therefore, are not substantially transformed in
Country C. Accordingly, the country of origin of the turtleneck
shirts is Country B (Guam).
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of these
men's turtleneck long sleeve shirts for country of origin
marking and quota purposes would be Country B (Guam).
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 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. 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
Commercial Rulings Division