MAR-2-05 CO:R:C:V 734274 AT
Harvey A. Isaacs, Esq.
Siegel, Mandell & Davidson, P.C.
One Whitehall Street
New York, New York 10004
RE: Country of origin marking of imported men's polo shirts;
19 CFR 12.130; cutting components; sewing
Dear Mr. Isaacs:
This is in response to your letter of July 23, 1991,
requesting a country of origin ruling for quota and marking
purposes on behalf of [Sigallo Ltd.,] regarding imported men's
polo shirts. You have also requested that certain information in
the ruling be given confidential treatment. The confidential
information is bracketed and will not be disclosed in copies of
this ruling made available to the public.
FACTS:
[Sigallo Ltd.,] plans to import men's 100 percent cotton (or
65% polyester, 35% cotton) polo shirts into the ports of
Charleston, South Carolina, Los Angeles Airport, and Los Angeles-
Long Beach. The shirts feature a pointed rib knit collar, short
sleeves with rib knit sleeve cuffs, a hemmed bottom and a pocket
on the left chest. The shirts have a partial opening, extended
from the neckline; this opening contains a placket with two
buttons for closure. 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 and "Country C" will be the Republic of the Philippines (or
alternative country and/or insular possessions other than Taiwan
or Guam).
The three types of fabric will be knitted in Country A and
exported to Country B for cutting. Also the rib knit collars and
cuffs will be knit to their required shapes in country A and then
exported to Country B.
In Country B the fabric will be cut into nine 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) front panels
with a semicircular neck outline and sleeve and shoulder
outlines, 2) back panels with a slight neck outline at the top
and with sleeve/shoulder outlines, 3) flat left sleeves and 4)
flat right sleeves, 5) pockets, 6) left inside placket places, 7)
right inside placket pieces and 8) neck tapes. Also, the
interlining fabric for the placket will be cut to rectangular
shape in Country B. After cutting, these components along with
the collar and sleeve cuffs which were knit in Country A will be
bundled and packed for shipment to Country C.
In Country C, the garment components will be sewn together
by machine to create the completed polo 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 sides, sleeves and
sleeve cuffs, attaching the pocket, mounting and turning the
garment on a lock table and hemming the bottom of the garment,
opening the button holes, sewing the buttons and adding the
labels. After trimming off excess material and inspecting each
garment, the garment will be pressed and folded, 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 polo
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 country of origin marking determinations
for textiles 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
other 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 Fed. Reg. 8714), which is the final rule document which
established 19 CFR 12.130, Customs discussed 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 three fabric types for these shirts are
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 the three fabric
types out poly/fabric yarn or thread results in a new and
different article of commerce. Further, the forming of the
fabric types by knitting the two fabrics (polyester and cotton)
together would qualify as a substantial manufacturing operation
under 19 CFR 12.130. Moreover, the cuffs and sleeve cuffs are
knit in Country A. Therefore, the making of the fabric types for
these polo 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 nine 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 (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 (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 (April 15, 1991), Customs ruled that cutting
of fabric to create pattern pieces for an infant carrier results
in a substantial transformation.
In this case, the fabric is cut into nine individual garment
pieces which, when assembled, create the finished polo shirt.
Each piece represents a intricate part of the finished polo shirt
having its own shape and form. Clearly, cutting nine
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 nine garment pieces would qualify as a
substantial manufacturing operation under 19 CFR 12.130.
Therefore, the cutting of the fabric into nine garment pieces in
Country B constitutes a substantial transformation.
The third question presented is whether the assembly of the
nine garment pieces along with the rib knit collars and sleeve
cuffs 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,
attaching the collar, making (closing) and setting the two
sleeves, closing and setting the sides, sleeves and sleeve cuffs,
attaching the pocket, 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, garments will be pressed and folded
and 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 skill
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. In Headquarters Ruling Letter (HRL) 734124
dated July 16, 1991, Customs ruled that the sewing of 7 component
parts into a men's turtleneck long sleeve 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. The assembly of these 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 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 polo shirts is Country B (Guam).
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of these
men's polo 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