MAR-2-05 CO:R:C:V 734576 RSD
Mr. David E. Goldstone
Daruth Agency Ltd.
1105 - 35 Wynford Heights Cres.
Toronto, Canada M3C 1k9
RE: Country of origin marking requirements for wiping cloths;
textiles; cutting of fabric to length and width; overcast
stitching; substantial transformation; textiles; disposable
containers; 19 CFR 12.130; 19 CFR 134.24; 19 CFR 134.22; 19 CFR
134.46; 19 CFR 134.41
Dear Mr. Goldstone:
This is response to your letters dated January 27, February
6, and February 21, 1992, submitted to Customs at the New York
Seaport, concerning the country of origin marking requirements
for cleaning cloths. On June 11, 1992, the Textile
Classification Branch issued a ruling, HQ 951338, on the
classification of this merchandise and its eligibility under the
Canadian Free Trade Agreement. Samples were submitted for
examination.
FACTS:
You intend to import wiping cloths from Canada that are used
to clean lenses. You have submitted two sample cloths. Both of
the samples are constructed of Japanese origin herringbone weave
fabric that is made of 100 percent polyester filament yarns. The
fabric measuring 137 centimeters by 50 meters is imported into
Canada, where it is cut to length and width. Sample 1 is cut
with the dimensions of approximately 12 centimeters by 13
centimeters and has pinked edges. Sample 2 is cut to dimensions
of 9 centimeters by 19 centimeters and has edges finished with an
overcast stitch. Each cloth is individually packaged in a
plastic pouch which measures approximately 12 1/2 centimeters by
10 centimeters. The pouch contains two pockets which open toward
the item's central fold. You estimate the cost of the fabric
cloth for each item is about $0.35, cutting costs at about $0.30,
overcasting costs at about $.030, and the packing costs at about
$0.20 per unit.
The sample cloth with the pinked edges has an adhesive label
attached to the lower right hand corner with the marking "TEXTILE
MADE IN JAPAN" in black letters of about a 1/2 centimeter against
a white background. You also indicated to the National Import
Specialist in a telephone conversation that some of the cloths
are packaged in clear plastic bags, such as submitted the sample,
but other cloths will be imported in a pouch with a clear plastic
pocket stamped "Made in Canada" on its back side.
ISSUES:
Is the Japanese Fabric substantially transformed by the
cutting and sewing operations performed in Canada?
Does the method of marking the cleaning cloths through the
use of an adhesive label and putting them in a clear plastic
pouch satisfy the country of origin marking law?
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.
Congressional intent in enacting 19 U.S.C. 1304 was "that the
ultimate purchaser should be able to know by an inspection of the
marking on the imported goods the country of which the goods is
the product. The evident purpose is to mark the goods so that at
the time of purchase the ultimate purchaser may, by knowing where
the goods were produced, be able to buy or refuse to buy them, if
such marking should influence his will." United States v.
Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR
134.41(b)), mandates that the ultimate purchaser in the U.S. must
be able to find the marking easily and read it without strain.
Section 12.130, Customs Regulations (19 CFR 12.130), sets
forth the principles for making 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. 1854)("section
204"). According to T.D. 90-17, published in the Federal
Register on March 1, 1990, (55 FR 7303), the rules of origin for
textiles and textile products contained in 19 CFR 12.130 are
applicable to such merchandise for all purposes, including duty
and marking. Customs has determined that 19 CFR 12.130 will be
applied to determine the country of origin of all imported
articles which are classified in Section XI, Harmonized Tariff
Schedule of the United States, or to any imported article
classified outside of Section XI, HTSUSA, under a subheading
which has a textile category number associated with it. Because
the subject merchandise would be classified under Section XI,
HTSUSA, 19 CFR 12.130 will be used in making the country of
origin determination.
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 and
different article of commerce and 2) a substantial manufacturing
or processing operation.
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.
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)(2) lists some of the
factors considered in determining whether a substantial
manufacturing or processing operation has occurred. These
factors include: the physical change in the material or article;
the time involved in the processing; the complexity of the
operation; the level or degree or skill and technology required
in the operation; and the value added to the article or material
in the non-U.S. based operation versus the value added to the
article or material in the U.S.
19 CFR 12.130(e)(2)(ii) states that mere cutting to length
or width and hemming or overlocking fabrics which are
identifiable as being intended for a particular commercial use
would not substantially transform the article. The submitted
descriptive literature indicates that the cloth's fiber and weave
impart the properties of high surface contact, high dirt storage
capacity, a balance between wiping friction and ease of movement
over the surface to be cleaned, absorbency, and soil resistance.
Based on this information, it appears that the fabric is highly
specialized and intended for use in cleaning. The fabric imparts
the most important properties of the finished wiping cloth. In
comparison, in Canada, the fabric is merely cut to length and
width, and in some cases overcast stitched and packaged. These
operations do not constitute substantial processing. They do not
require much time; are not complex; and do not require a high
degree of skill or technology as compared with the forming of the
fabric. See HQ 089230 (May 10, 1991), (concerning the country of
origin of bed sheets). Accordingly, we find that the fabric is
not substantially transformed in Canada and the country of origin
of the wiping cloths for all purposes including marking is Japan.
The remaining question is whether the proposed method of
marking indicated on the samples would be acceptable. 19 CFR
134.41(b) provides that the degree of permanence of a marking
should be at least sufficient to insure that in any reasonably
foreseeable circumstance, the marking shall remain on the article
until it reaches the ultimate purchaser unless deliberately
removed. The cloths are marked by an adhesive label which reads
"TEXTILE MADE IN JAPAN". The cloths will be sold in plastic
pouches. The adhesive label appears to be firmly attached to the
cloth and is likely to remain on the cloth until it reaches the
ultimate purchaser especially if the cloth is sold in the sample
plastic pouch. Because the plastic pouch is transparent, the
ultimate purchaser will be able to see the label through the
clear plastic pouch. Accordingly, we find that marking on the
sample cloth is acceptable.
We have been advised that some of the plastic pouches will
be marked "Made in Canada". This marking on the pouch is
misleading, because the ultimate purchaser could conclude that
the country of origin of the wiping cloth is Canada and when it
is actually Japan. Therefore, the "Made in Canada" marking
cannot remain on the pouch by itself. Since the pouch is a usual
disposable container and the marking on the cloth is visible
through it, in accordance with 19 CFR 134.24(d)(3), it is not
necessary to have any marking on the pouch. However, if you want
to indicate the country of origin of the pouch, it is necessary
to make sure that the marking on the pouch refers only to the
pouch and not the wiping cloth. For example, "Pouch Made in
Canada" or "Case Made in Canada, Contents made in Japan". If
there is a marking regarding the pouch, there also must be a
marking regarding the cloth which is in compliance with 19 CFR
134.46. 19 CFR 134.46 requires that if the name of a foreign
country or locality other than the country of or locality in
which the article was manufactured or produced, appear on an
imported article or its container, there shall appear...in close
proximity to such words... in a comparable size the name of the
country of origin preceded by "Made in," "Product of," or other
words of similar meaning.
We also suggest that you contact the Federal Trade
Commission regarding the marking requirements under the Textile
Fiber Products Identification Act. HOLDING:
The cutting and sewing of the Japanese fabric in Canada to
make the wiping cloths does not constitute a substantial
transformation. The country of origin of the wiping cloth is
Japan. The proposed method of marking on the sample cloth by an
adhesive label as shown is acceptable. Any marking regarding the
pouch must be accompanied with a marking regarding the cloth
which is in compliance with 19 CFR 134.46, and it should be clear
that it refers only to the pouch and not to the cloth.
Sincerely,
John Durant, Director
Commercial Rulings Division
cc: Area Director
New York Seaport