CLA-2 CO:R:C:T 953488 NLP
Mr. Allan H. Kamnitz
Sharretts, Paley, Carter & Blauvelt, P.C.
67 Broad Street
New York, NY 10004
RE: Country of origin of a knit turtleneck made of 65% polyester
and 35% cotton or rayon; yarn is knit, dyed and cut in
Taiwan; garment components are assembled by sewing in China;
19 CFR 12.130(b),(d) and (e)(iii)-(v); HRLs 951437, 082747,
951426 and 733841
Dear Mr. Kamnitz:
This is in response to your letter dated January 20, 1993,
on behalf of your client, Petrie Stores Corporation, in which you
requested a binding ruling addressing the country of origin of
women's knit turtlenecks. Samples of the component fabric pieces
and the completed turtleneck were submitted for our examination
and will be returned to you under separate cover.
FACTS:
The article at issue is a woman's knit turtleneck pullover
with long sleeves, style #301. Both the sleeve ends and the
bottom of the garment are hemmed. The turtleneck will be
composed of 65% polyester and 35% of either cotton or rayon.
In Taiwan, domestic yarn is knitted into fabric and dyed.
The fabric is cut into seven garment components: rectangular
front panels with a semicircular neck outline at the top,
rectangular back panels with a slight neck outline at the top, a
flat right sleeve, a flat left sleeve, a ribbed neck piece and
ribbed sleeve cuffs. After cutting, the components are bundled
with accessories and sent to China where they are assembled into
turtleneck pullovers.
According to your letter, the production in Taiwan is
estimated to exceed 47 minutes per dozen. The costs of
performing these operations are as follows:
FABRIC COST IN US$/DOZEN
yarn 11.50
knit 2.00
dying 8.50
CUTTING
layups 0.40
cutting 1.25
bundling 0.40
PROVIDED ACCESSORIES
label 0.40
hangtag 0.30
polybag 0.40
big polybag 0.25
SHIPPING TO CHINA 1.00
Total $26.40
In China, the seven components will be sewn together by
machine to create the completed turtleneck. The assembly
process and the cost and time expended for each operation are as
follows:
1. Joining the front and back panels at the shoulders.
This operation costs $0.15 per dozen and takes 10
minutes per dozen.
2. Making (closing) and setting the two sleeves.
This operation costs $0.15 per dozen and takes
10 minutes per dozen.
3. Double needle stitching on the armhole.
This operation costs $0.20 per dozen and takes
15 minutes per dozen.
4. Closing and setting the turtleneck collar.
5. Closing and setting the sleeve cuffs.
Operations 4 and 5 cost $0.15 per dozen and
together they take 10 minutes per dozen.
6. Double needle stitching on the cuff and neck.
This operation costs $0.20 per dozen and takes 15
minutes per dozen.
7. Stitching down the labels.
This operation costs $0.10 per dozen and takes 8
minutes per dozen.
8. Double needle stitching on the bottom.
This operation costs $0.15 and takes 10 minutes
per dozen.
9. Mounting and turning the garment on a lock table and
hemming the bottom of the garment.
After trimming off excess material and inspecting each
garment, hangtags are attached to the garments and they are
placed in polybags and packed in boxes for shipment to the U.S.
The total time allotted for the Chinese assembly operation is 123
minutes per dozen and the cost is US $2.30 per dozen.
ISSUE:
What is the country of origin of the knit turtleneck?
LAW AND ANALYSIS:
Country of origin determinations for textile products are
subject to Section 12.130 of the Customs Regulations (19 CFR
12.130). Section 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 or 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.
Section 12.130(d) of the Customs Regulations sets forth
criteria for determining whether a substantial transformation of
a textile product has taken place. This regulation states that
these criteria are not exhaustive; one or any combination of
criteria may be determinative, and additional factors may be
considered.
Section 12.130(d)(1) of the Customs Regulations 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) of the Customs Regulations 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 territory or country, or insular
possession of the U.S.
(ii) The time involved in the manufacturing or
processing operations in each foreign territory or
country, or insular possession of the U.S.
(iii) The complexity of the manufacturing or processing
operations in each foreign territory or country, or
insular possession of the U.S.
(iv) The level or degree of skill and/or technology
required in the manufacturing or processing operations
in each foreign territory or country, or insular
possession of the U.S.
(v) The value added to the article or material in
each foreign territory or country, or insular
possession of the U.S., compared to its value when
imported into the U.S.
Section 12.130(e) of the Customs Regulations sets forth
criteria which aid us in determining whether an article has been
subjected to certain manufacturing or processing operations which
serve to substantially transform an article into a new and
different article of commerce. Specifically, Section
12.130(e)(iii), (iv) and (v) are relevant in the instant case.
This Section provides that:
An article or material usually will be a product of a
particular foreign territory or country, or insular
possession of the U.S., when it has undergone prior to
importation into the U.S. 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 articles; or
(v) Substantial assembly by sewing and/or tailoring of all
cut pieces of apparel articles which have been cut
from fabric in another foreign territory or country,
or insular possession, into a completed garment (e.g.
the complete assembly and tailoring of all cut pieces
of suit-type jackets, suits, and shirts).
We have previously held that 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. Customs has also held that the mere
assembly of goods entailing simple combining operations, trimming
or joining together by sewing is not enough to substantially
transform the components of an article into a new and different
article of commerce. For example, in Headquarters Ruling Letter
(HRL) 951437, dated July 17, 1992, Customs held that the assembly
process of women's pants in Malaysia, which involved the sewing
together of components that were cut from fabric in Singapore,
did not involve sufficient skill or complexity to constitute a
substantial transformation as defined by Section 12.130(e)(v).
Therefore, the country of origin for the pants was found to be
Singapore as that was where the piece goods were cut into
specific parts and where the articles last underwent a
substantial transformation. See also, HRL 082747, dated February
23, 1989, in which Customs determined that the assembly of jeans
was not a substantial transformation; HRL 733841, dated February
7, 1991, in which fabric for a polo shirt was made and cut into
components pieces in Taiwan and was assembled by sewing into a
garment in China. The country of origin for the shirt was
determined to be Taiwan.
In the instant case, the yarn is knitted into fabric, dyed
and cut into seven garment components in Taiwan. The assembly
process in China involves the sewing together of several cut
pieces to form the turtleneck. The sewing does not involve
sufficient skill or the complex sewing operations required when
manufacturing a suit, suit jacket or tailored shirt. In
addition, the value added to the fabric is relatively small.
Therefore, a substantial transformation of the fabric has not
occurred in China. The country of origin of these articles is
Taiwan as that is where the fabric was knit and cut into specific
parts and where the articles last underwent a substantial
transformation. See, HRL 951426, dated April 8, 1992, which
dealt with the country of origin of a shirt. The fabric for the
shirt was woven and printed in Taiwan, cut into garment
components in Singapore and was assembled by sewing in Malaysia.
The finished garment was returned to Singapore for packing and
export to the U.S. HRL 951426 held that the country of origin
for the shirt was Singapore as that was where the fabric was cut
into its component parts and the assembly operation in Malaysia
did not involve the complex sewing operation required by the
Section 12.130(e)(v).
HOLDING:
The country of origin for the knit turtleneck is Taiwan.
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 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