CLA-2 CO:R:C:T 952009 HP
Mr. John M. Peterson
Neville, Peterson & Williams
39 Broadway
New York, NY 10006
RE: Country of origin of diapers.
Dear Mr. Peterson:
This is in reply to your letter of June 11, 1992. That
letter concerned the country of origin determination of diapers,
produced in either China or Guatemala. Please reference your
file 1606-01-C, Pro Diaper, Inc.
FACTS:
The merchandise at issue consists of 100% cotton woven
fabric piece goods made in the People's Republic of China (PRC)
and shipped to Guatemala, where they are manufactured into
reusable cotton diapers for infants. The fabric is two ply,
woven 34 inches wide, in alternating bands of single ply and
double ply material. The different plys are made by stitch
changes in automatic looms. The fabric is exported to Guatemala
in festoons measuring approximately 10 yards in length. Diapers
will be made from this fabric in three basic styles: (1) four by
10 ply, (2) four by six ply, and (3) four by eight ply. Styles 1
and 2 will measure approximately 201/2 inches in length and 151/2
inches in width; style 3 will measure approximately 16 inches in
length by 12 inches in width.
In Guatemala, the "shell" fabric is cut to width and length.
The fabric is spread on a cutting table layer upon layer, until
it reaches a depth of approximately six inches. Lines are then
drawn of the top layer of fabric showing where the fabric is to
be cut to the length of one diaper. The fabric is then cut to
length, using a straight knife cutting machine, to form a diaper
"shell."
For four by eight ply and four by ten ply diapers featuring
"inserts," additional fabric is spread on a cutting table in the
manner described above, and cut into "inserts" measuring
approximately six inches in length using a straight knife cutting
machine.
After the shell and the insert fabrics have been cut to
length, they are removed to a folding table, where a worker
begins by peeling away layers of shell fabric one at a time. The
layer of shell fabric is placed on a folding table, and a layer
of insert fabric is placed on top of it. One side of the shell
fabric is then folded towards the center two-thirds of the
distance to the other side, and the other side of the shell
fabric is folded identically. This creates a four ply fabric in
the end panels of the diapers, and a thicker ply in the center,
where greater softness and absorbency is desired.
The fabrics thus assembled are then moved to the first
sewing operation, where a single needle lockstitch straight
sewing machine is used to sew seams down the two lines of the
center panel where the fabrics have been folded. This sewing
operation assembles the shell and insert fabrics together, and
forms the center panels of the diapers.
The diaper is then transferred to a second sewing station,
where the edges are sewn closed. The first end of the diaper is
sewn with a double needle overlock sewing machine, which trims
the edge of the fabric and wraps the thread around the edge to
secure it. This operation is repeated on the opposite end of the
diaper. Each of the thread tails left by the end stitching is
sewn down with a bar tack machine in order to fasten the tails to
the body of the diaper and prevent the tails from unraveling.
Each diaper is then inspected and folded. The diapers are
then packaged into bales of 25 diapers and shipped to the United
States, where they are sold to diaper service companies.
The cost of the PRC-origin cotton fabric is approximately
631/2 cents per square yard (delivered to Guatemala). The cost
of the Guatemalan cutting, sewing and finishing operations
amounts to approximately 15 cents per square yard. The finished
diapers sell for a price equal to approximately $1.32 per square
yard.
The fiber staple length, yarn characteristics, and fabric
weave of the diapers are controlled within narrow tolerances.
Thread used in sewing the diapers must be either a three ply spun
yarn containing a minimum of 50% polyester, or a textured false
twist or airjet continuous yarn; in either even, of a specified
denier. Colored threads may only be used if they do not bleed
into the diapers or lose color after one hundred launderings, and
threads must not exhibit inconsistent shrinkage.
Center panel stitching is specified as two rows of either a
401 chain stitch or a 301 lock stitch which does not pucker, lose
or skip stitches. Stitch density is controlled at between ten
and twelve stitches per inch, and stitching tolerances are
specified for the sides of the diaper, where the weaving selvages
are exposed. End panel stitching must be by overlock type, which
trims and wraps around the raw edges. Colored thread is used in
end-panel stitching, with a different color designated for each.
Overlock thread tails are bar tacked.
ISSUE:
What is the country of origin of the diapers for quota/visa
purposes?
LAW AND ANALYSIS:
Textile commodities produced in more than one foreign
country are subject to the country of origin requirements
delineated in section 12.130 of the Customs Regulations
(19 C.F.R. 12.130). These regulations provide that:
. . . a textile product . . . which consists
of materials produced or derived from, or
processed in, more than one foreign . . .
country shall be a product of that foreign .
. . country where it last underwent a
substantial transformation.
12.130(b). A textile product undergoes a substantial
transformation when it is ". . . transformed by means of
substantial manufacturing or processing operations into a new
and different article of commerce."
Section 12.130 of the regulations outlines the criteria used
to determine the country of origin for textiles and textile
products. Specifically, this provision of the regulations is
considered in determining whether a textile product has undergone
substantial manufacturing or processing operations, and what
constitutes a new and different article of commerce. The factors
considered are not exhaustive. In fact, "one or any combination
of criteria may be determinative, and additional factors may be
considered." In determining whether merchandise has undergone
substantial manufacturing or processing operations, we consider
the (1) physical change in the material or the article; (2) time
involved; (3) complexity of the operations; (4) level or degree
of skill and/or technology required; and (5) value added to the
article in each country.
Customs has long held that producing diapers from plain
cotton fabric suitable for multiple uses is considered a
substantial transformation when the manufacturing and processing
operations include, inter alia, cutting to length and width or
length alone, complex folding to create the diaper's unique
multi-layer middle portion, hemming and/or overlocking the edges,
and finishing and packaging. HRL 950849 of March 24, 1992; HRL
953078 of January 25, 1993. Contra HRL 087950 of January 9,
1991; HRL 088321 of March 7, 1991 (merely cutting fabric into
squares and hemming insufficient to constitute substantial
manufacturing process). The alternating single and double woven
sections of the cloth facilitate the cutting, folding and sewing
of the fabric into a diaper. The double woven sections are
manufactured in this way to increase absorbency and prevent
leakage throughout the diaper. The alternating single woven
sections provide markers (lines of demarcation) for folding and
provide a more dense and solid base for sewing the diaper.
It is our opinion that the weave structure of the fabric
confirms the fact that the material is intended for use as
diapers. The changing of the weaves is performed at additional
cost and for the specific purpose of creating markers for
folding. As a result, no substantial transformation takes place.
The diapers are therefore considered a product of China.
HOLDING:
As a result of the foregoing, the instant merchandise is
considered woven cotton diapers of China.
The holding in this ruling applies only to the specific
factual situation and merchandise identified in the ruling
request. This position is clearly set forth in 177.9(b)(1),
Customs Regulations (19 C.F.R. 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 C.F.R. 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. In such a case, it is recommended that a
new ruling request be submitted in accordance with 177.2,
Customs Regulations (19 C.F.R. 177.2).
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is imported. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division