MAR-2-05 CO:R:C:V 734394 AT
Patrick D. Gill, Esq.
Rode & Qualey
295 Madison Avenue
New York, New York 10017
RE: Country of origin marking of imported women's sweaters,
blouses and T-shirts; substantial transformation; 19 CFR
12.130; knitting and assembly in Sri Lanka, dyeing and
packaging in Hong Kong
Dear Mr. Gill:
This is in response to your letter of October 23, 1991, on
behalf of your client Laws Garment and Knitting Factory Ltd.
(Laws Garment), requesting a ruling on the country of origin of
imported women's sweaters, blouses and T-shirts for tariff, quota
and marking purposes.
FACTS:
You state that Laws Garment intends to import women's
sweaters, blouses and T-shirts from Hong Kong. You also state
that the production of the sweaters, blouses and T-shirts will
involve processing operations performed in two countries, Sri
Lanka and Hong Kong.
The sweaters will be subject to the following manufacturing
and finishing operations. In Sri Lanka, the sweater parts will
be knit and assembled into completed sweaters. The completed
sweaters will then be sent to Hong Kong where they will be dyed,
washed, ironed and packaged for export to the U.S.
With respect to the blouses and T-shirts, the operations to
be performed in Sri Lanka will consist of cutting all the
necessary parts for each garment and the sewing of those parts
into the completed blouses and T-shirts. Thereafter, the
completed blouses and T-shirts will be sent to Hong Kong where
they will be dyed, washed, ironed and packaged for export to the
U.S.
You claim that the operations performed in Sri Lanka, the
knitting and assembly of the completed sweaters and the cutting
and assembly of the completed blouses and T-shirts constitutes a
substantial transformation for all country of origin purposes and
that the finishing operations dying, washing, ironing and
packaging, performed in Hong Kong do not constitute a substantial
transformation of either the sweaters, blouses or T-shirts.
Based on this you contend that the country of origin for the
sweaters, blouses and T-shirts is Sri Lanka for tariff, quota and
marking purposes.
ISSUE:
What is the country of origin of the imported women's
sweaters, blouses and T-shirts for marking, tariff and quota
purposes?
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. 19 CFR 12.130(b), provides
that a textile product that is processed in more than one country
or territory shall be a product of that country or territory
where it last underwent a substantial transformation. A 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.
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) states that in determining whether
merchandise has been subjected to substantial manufacturing or
processing operations, the following will be considered:
(i) The physical change in the material or article as a
result of the manufacturing or processing operations in each
foreign country.
(ii) The time involved in the manufacturing or processing
operations in each foreign country.
(iii) The complexity of the manufacturing or processing
operations in each foreign country.
(iv) The level or degree or skill and/or technology
required in the manufacturing or processing operations in each
foreign country.
(v) The value added to the article or material in each
foreign country compared to its value when imported into the U.S.
Section 12.130(e)(1) provides that an article or material
usually will be a product of a particular foreign territory or
country, or insular possession of the United States, when, prior
to importation into the United States, it has undergone in that
foreign territory or country or insular possession, any of the
following:
(iii) weaving, knitting or otherwise forming fabric.
(iv) cutting of fabric into parts and the assembly of
those parts into the completed article.
With respect to the sweaters, the processes to be performed
in Sri Lanka will consist of knitting the sweater panels and the
assembly of those panels into the completed sweater. In HQ
950287 (October 30, 1991), Customs ruled that women's sweaters
which were finished and assembled in Macau from machine-knit
component parts from Macau (back panel, sleeves and collar) and
an unspecified foreign country (front panel with flower leaf
pattern) last underwent a substantial transformation in Macau.
Customs stated that the sweater had been subjected to
substantial processing in Macau in that this was where the
article underwent a significant change into a completed assembled
sweater and the time involved in knitting and assembling the back
sleeves and collar was significantly longer than that of
processing the front panel. In the present case, all the
components are knit and assembled into the completed sweater in
Sri Lanka. Based on HQ 950287 and the factors enumerated in 19
CFR 12.130, it is clear that Sri Lanka is the country of origin.
Although the completed sweaters are then exported to Hong Kong
for dyeing, washing, ironing and packaging for export to the U.S.
these are only finishing operations which do not substantially
transform the completed sweaters. 19 CFR 12.130(e)(2) states in
part that an article will usually not be considered to be a
product of a particular territory or country by virtue of merely
having undergone simple combining operations, labeling, pressing,
cleaning or packaging operations, or any combination thereof or
dyeing and/or printing of fabrics or yarns. Since the only
operations to be performed in Hong Kong consist of dyeing,
washing, ironing and packaging these are considered to be
finishing operations which do not substantially transform the
completed sweaters. Accordingly, the sweaters last undergo a
substantial transformation in Sri Lanka where the sweater panels
are knit and then assembled into the completed sweaters.
The imported blouses and T-shirts also undergo a substantial
transformation in Sri Lanka. In Sri Lanka, the fabric is cut
into the necessary parts and then assembled into the completed
article. 19 CFR 12.130 (e)(1)(iv) states that the cutting of
fabric into parts and the assembly of those parts into the
completed article constitutes a substantial transformation.
Clearly, in this case, making a completed blouse or T-shirt out
of fabric results in a new and different article of commerce.
Although the completed blouses and T-shirts are shipped to Hong
Kong for dyeing, washing, ironing and packaging for export to the
U.S., like the sweaters, these processes are only considered to
be finishing operations which do not substantially transform the
completed articles. Accordingly, the country of origin of the
blouses and T-shirts is Sri Lanka.
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of these
imported sweaters, blouses and T-shirts for country of origin
marking, tariff and quota purposes is Sri Lanka.
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