CLA-2 CO:R:C:T 952639 BC
Y.C. Ko, President
Kingtex Garment Mfg. Co., Ltd.
No. 270 Nanking E. Rd. Sec. 3
Taipei, Taiwan, R.O.C.
RE: Country of origin for men's and women's lined water-resistant
jackets, assembled in Country B from pieces of fabric produced,
cut, and made up in Country A; substantial assembly; minor
subassembly; substantial transformation; 19 C.F.R. 12.130
Dear Mr. Ko:
This responds to your letter of September 12, 1992, requesting
a ruling on the country of origin of men's and women's lined water
resistant jackets. Samples of the finished jackets and cut pieces
that are assembled to make them were submitted for examination.
We have reviewed the matter and our decision follows.
FACTS:
Men's and women's lined water resistant jackets are produced
from processes performed in two countries. According to the
information you submitted, the following processes occur in Country
A, identified as Taiwan, for the men's jackets: 1) design, weave,
spin, dye, finish, and otherwise produce the fabrics
(polyester/cotton, nylon taffeta, blended wool, polyester/olefin
filler); 2) make the patterns and mark the fabrics; 3) cut the
fabrics (by computer) into all pieces for the shell, lining,
filler, and zip-in warmer, including the collar, front and back
panels, yokes, pockets, sleeves, and cuffs; 4) make up the collar;
5) make up the cuffs; 6) make up the sweep bottom; 7) make up the
front placket; and 8) make up the warmer quilting. The made up
components and the remaining cut pieces are shipped to Country B
where the pockets are made up and the complete assembly by sewing
of all components and pieces into the shell, lining, and warmer is
performed. The finished jacket is then pressed and packaged for
shipment to the United States.
According to the information you submitted, the following
processes occur in Country A for the women's jackets: 1) design,
weave, spin, dye, finish, and otherwise produce the fabrics,
(except the shell fabric that is imported from the United States),
including nylon taffeta and polyester/olefin filler; 2) make the
patterns and mark the fabrics; 3) cut the fabrics (by computer)
into all pieces for the shell, lining, filler, and zip-in warmer,
including the collar, front and back panels, yokes, pockets,
sleeves, and cuffs; 4) make up the collar and the collar quilting;
5) make up the front and back yokes and the front and back yoke
quilting; 6) make up the quilting for the warmer. (We note that
the documents you submitted indicate that the front quarter panels
of the women's jacket are also made up in Country A. This is
indicated on the diagram but not on the step-by-step production
sheet.) The made up components and the remaining cut pieces are
shipped to Country B where the warmer is made up and the complete
assembly by sewing of all components and pieces into the shell,
lining, and warmer is performed. The finished jacket is then
buttoned and packaged for shipment to the United States.
ISSUE:
Given the foregoing facts, what is the country of origin for
the men's and women's lined water-resistant jackets?
LAW AND ANALYSIS:
Section 12.130 of the Customs Regulations governs country of
origin determinations for textiles and textile products that are
subject to section 204 of the Agricultural Act of 1956, as amended
(7 U.S.C. 1854). 19 CFR 12.130(a). The section 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." 19 CFR 12.130(b).
Subsection 12.130(d)(1) provides 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. Subsection 12.130(d)(2) provides 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 or territory, or insular possession of the United
States; (ii) the time involved in the manufacturing or processing
operations; (iii) the complexity of the manufacturing or processing
operations; (iv) the level or degree of skill and/or technology
required in the manufacturing or processing operations; and (v) the
value added to the article or material. 19 CFR 12.130(d). Under
both subsections 12.130(d)(1) and 12.130(d)(2), any combination of
criteria may be determinative and additional factors may be
considered.
Subsection 12.130(e) describes various processes that will
usually be productive of a product of the country, territory, or
insular possession where the processing takes place. One of those
processes is relevant to the instant set of facts and is described
in subsection 12.130(e)(1)(v) as follows: "Substantial assembly by
sewing and/or tailoring of all cut pieces of apparel articles which
have been cut from fabric in another foreign country or territory,
or insular possession, into a completed garment." 19 CFR
12.130(e)(v). This is to be contrasted with one of the processes
described in subsection 12.130(e)(2), a provision that describes
processes which usually are not considered to be productive of a
product of the country or territory where the processing takes
place. Subsection 12.130(e)(2)(iii) includes the joining together
by sewing of otherwise completed knit-to-shape component parts
produced in another country, territory, or insular possession. 19
CFR 12.130(e)(2)(iii).
The difference between subsections 12.130(e)(1)(v) and
12.130(e)(2)(iii) has to do with the nature of the assembly
operation. If there is substantial sewing involved (or tailoring)
of the kind performed in the sewing of suit jackets, suits, and
shirts, the process usually will fall within the former subsection.
If the sewing involved is characterized as simple - of the kind
employed where "otherwise completed knit-to-shape component parts"
are merely sewn together - the process usually will fall within the
latter subsection. In this latter regard, Customs has long held
that the mere assembly of goods entailing simple combining
operations, trimming, or joining by sewing is not enough to
substantially transform the components of an article into a new and
different article of commerce. (See HRL 951259, dated April 3,
1992, HRL 082787, dated March 9, 1989, and HRL 082747, dated
February 23, 1989.)
If an assembly operation is determined to fall within
subsection 12.130(e)(1)(v), it will be considered a procedure
productive of a substantial transformation. If it is determined
not to fall within subsection 12.130(e)(1)(v), because, for
example, the sewing operation involved is not of the same
substantial nature as that required to assemble a suit (one of the
examples in 12.130(e)(1)(v)), the substantial transformation
determination will be made by applying the factors set forth in
subsection 12.130(d). (See HRL 086229, dated April 11, 1990.) In
this regard, Customs stated the following in Treasury Decision
(T.D.) 85-38, the final rule implementing section 12.130 (also
published in the Federal Register on March 5, 1985 (50 Fed. Reg.
8714 (1985))):
After reviewing all the information available, Customs
is persuaded that the assembly of all cut pieces making
up a garment [12.130(e)(1)(v)] is sufficiently more
complex and requires greater skill, time, and effort than
the assembly of knit-to-shape components into a garment
[12.130(e)(2)(iii)] to warrant a distinction between the
two assembly operations. Accordingly, Customs believes
that the assembly of all the cut pieces of a garment
usually is a substantial manufacturing process that
results in an article with a different name, character,
or use than the cut pieces. It should be noted that not
all assembly operations of cut pieces will amount to a
substantial transformation of those pieces. 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).
19 Cust. Bull. 58, 70 (1985).
We have previously held that the cutting of fabric into
pattern pieces constitutes a substantial transformation of the
fabric, resulting in the apparel pieces becoming a product of the
country where the fabric is cut. (See HRL 081320, dated April 14,
1989; HRL 086696, dated June 8, 1990; HRL 082924, dated March 26,
1990; HRL 085611, dated January 17, 1990; and HRL 951426, dated
April 8, 1992.) Thus, the cutting operation performed in Country
A in the instant case entitles the cut pieces and made up
components there produced to be considered a product of Country A.
In order for the finished jackets assembled in Country B to be
considered a product of Country B, there must be a substantial
transformation there.
Previously, we have held that any subassembly (of pieces cut
in country A) taking place in country A, resulting in the assembly
of both cut pieces and subassembled components in country B, would
preclude the finished article from being considered a product of
country B. As above, T.D. 85-38 concerned the complete assembly
in country B of all the cut pieces from country A, not made up
(that is, subassembled) pieces or both cut and made up pieces. A
subassembly of even the collar and/or cuffs in country A would
usually preclude a determination that country B was the country of
origin.
Recently, however, we have permitted some minor subassembly
of cut pieces in country A. In HRL 953640, dated August 19, 1993,
we determined that origin of a men's dress shirt was in country B,
despite the fact that the collar and the cuffs were made up
(subassembled) in country A. Also, in HRL 952774 and HRL 954448
(both dated August 19, 1993, and both involving men's shirts), we
determined that origin was in country B, despite the fact that the
collar, in the former case, and the cuffs, in the latter case, were
made up in country A. In each of these cases, the subassembly that
took place in country A was considered a minor part of the complete
assembly of the garment and, as such, it was deemed non-
controlling. In HRL 954448, we stated the following regarding the
subassembly issue:
Though a sub-assembly operation does take place in
Scenario II and III in Country A, it is a minor part of
the complete assembly of the garment and should not
control the country of origin determination of the shirt.
The assembly process in Country B, the time at which all
component parts, including the sub-assembled collar and
cuffs, are sewn together, is viewed by Customs as a
substantial assembly resulting in a completed garment.
(Emphasis supplied.)
The effect of this reasoning is that it is not necessary (to
confer origin in country B) that all cut pieces be assembled in
country B. Minor subassembly operations in country A will not
necessarily preclude a determination of origin in country B,
provided that there is in country B a complete assembly of the
component parts that make up the garment and it is a substantial
assembly (as opposed to a simple sewing procedure).
The assembly of the men's and women's jackets in the instant
case involves the sewing in Country B of both cut pieces and
subassembled components from Country A. The subassembly operations
in Country A are minor operations, producing several components of
the finished product. No further assembly of these subassembled
components takes place in Country A. All individual components are
assembled (attached together by sewing) into the finished jackets
in Country B. Thus, a complete assembly of the components that
make up the garment is performed in Country B. Since the assembly
in Country B is considered a complex sewing procedure, it is
considered a substantial assembly productive of a substantial
transformation.
HOLDING:
Based on the foregoing, we conclude that the country of origin
for the men's and women's lined water-resistant jackets is Country
B, since a substantial transformation last occurs there.
This ruling is issued pursuant to the provisions of Part 177
of the Customs Regulations (19 CFR Part 177). The holding in this
ruling applies only to the specific factual situation presented and
the merchandise identified in the ruling request. If the
information furnished is not accurate or complete, or there is a
change in the factual situation, this ruling will no longer be
valid. In such an event, a new ruling request should be submitted.
Sincerely,
John Durant, Director