CLA-2 CO:R:C:T 953641 jb
Jerry P. Wiskin, Esq.
Freeman, Wasserman & Schneider
90 John Street
New York, NY 10038
RE: Country of Origin determination for a men's sports shirt;
substantial transformation where assembly occurs; sub-
assembly of minor parts in Country A does not confer
country of origin
Dear Mr. Wiskin:
This letter is in response to your inquiry of
February 16, 1993, on behalf of your client, Daewoo Corporation
requesting a country of origin determination for a men's sports
shirt. A completed sample of the shirt after assembly and an
uncompleted shirt and its constituent parts before assembly were
submitted to this office for examination.
FACTS:
The submitted sample is a men's long sleeve sports shirt,
constructed from woven fabric of cotton or various compositions
of cotton and polyester. You state that this shirt is not
normally worn with a necktie. The shirt has a collar, full
frontal opening with a placket, a yoke across the back extending
to the shoulders, a left breast pocket, and cuffs with one or two
buttons on each cuff. The shirt size is delineated by collar
size and sleeve length.
You state that the shirt may be manufactured in either of
two circumstances:
SCENARIO I:
The unmarked fabric is:
(1) woven and finished in Country A;
(2) woven in Country B and finished in Country A;
or
(3) woven and finished in Country B
The finishing operations in Country A include dyeing
(and printing for certain fabrics), mercerizing,
sanforizing, washing and tentering.
In Country A, the following operations take place:
a. A pattern for each part of the shirt is
computer drawn and a pattern marker for each
part is produced upon the computer drawing.
Sizes are graded and a layout is computer drawn
for each size;
b. Following the pattern markers and layouts, the
finished fabric is cut into 28 different parts,
including collar, band, yoke, cuffs, pocket,
right and left panels, placket, a rear panel,
sleeves, and sleeve plackets. The parts are
cut to shape and are ready for sewing
assembly;
c. The parts of the collar and cuffs consist of
front and back panels, an interlining and two
fixing stays. The parts of the cuff consists
of front and back panels. The parts of the
collar and cuff are assembled into completed
collar and cuff components. The assembly work
for the collar consists of sewing the front and
back panels for the collar together, turning
over the sewn panels, inserting the interlining
and the stays into the panels, pointing the
tips of the panels with an awl and heat
pressing the panels. The assembly work for the
cuff consists of sewing the front and back
panels together, turning over the sewn cuff
panels, and heat pressing the cuff panels;
d. The collar and cuff components and the other
unassembled parts of the shirt are shipped to
Country B, together with accessory materials
consisting of buttons, sewing threads, pins,
hang tags, labels and folding and packing
materials.
In Country B the following operations take place:
a. The left panel for the shirt body and the
placket are sewn together and button holed;
b. Following a pattern, the pocket panel is
folded, shaped and pressed and is sewn onto the
panels for the shirt body;
c. Buttons are attached to the right front panel
for the shirt body;
d. The yoke parts and the rear panel are sewn
together;
e. The cuffs are button-holed and buttons are
attached;
f. The front panels and the rear panel, the
collar, sleeves and cuffs are sewn together;
g. The assembled garment is ironed and packed with
folding material in a polybag.
SCENARIO II:
This scenario is identical to SCENARIO I above, except
that the collar and cuff components are also assembled
in Country B.
ISSUE:
What is the country of origin of the merchandise at issue?
LAW AND ANALYSIS:
Section 12.130 of the Customs Regulations (19 CFR 12.130),
sets forth the principles of country of origin for textiles and
textile products subject to section 204 of the Agricultural Act
of 1956, as amended (7 U.S.C. 1854).
Section 12.130(b) of the Customs Regulations 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.
Section 12.130(d) of the Customs Regulations sets forth
criteria in 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) 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)(1) of the Customs Regulations describes
manufacturing or processing operations from which an article will
usually be considered a product of the country in which those
operations occurred. Section 12.130(e)(1)(v) provides the
following:
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). Emphasis added
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 (See, HQ 081320, dated April 14, 1989;
HQ 086696, dated June 8, 1990; HQ 082924, dated March 26, 1990;
HQ 085611, dated January 17, 1990; HQ 951426, dated
April 8, 1992).
Section 12.130(e)(i)(v) makes note that there must be
substantial assembly by sewing or tailoring of a suit-type
garment for substantial transformation to occur. To determine
whether origin is conferred when an article is transformed from
its numerous constituent parts to what is eventually recognized
as the completed garment, i.e., a shirt, one must first define
"substantial assembly."
Substantial assembly can be defined as that operation,
whether by sewing or tailoring, when all the components of the
garment are attached together to form that completed shirt.
Succinctly stated, substantial transformation occurs at the time
of assembly of the individual component parts into a long sleeve
shirt with collar, cuffs, full-front opening with plackets, and
shoulder yokes.
In your letter you refer to several rulings in support of
your claim that the country of origin of the subject article
should be Country A. In particular, you refer to HQ 951541,
dated July 30, 1992, HQ 734489, dated August 4, 1992, HQ 086696,
dated June 8, 1990, HQ 089539, dated April 22, 1992 and
HQ 952081, dated October 8, 1992.
The sub-assembly operations involved in HQ 951541 and
HQ 734489 have been the subject of discussion and review with
Customs and other government agencies. As a result, the position
taken in these earlier rulings is now viewed as in error.
Customs is currently in the process of modifying these rulings to
conform to the holding of the subject ruling.
The garments which were the subject of HQ 086696 are
distinguishable from the subject garment. In the former, the
facts of the case, i.e., the description of the garment and the
assembly process described therein are not identical to the
latter. As such, a determination that the assembly process in
HQ 086696 was simple was based on information provided by that
importer, regarding that particular article.
The holding in HQ 089539 was not solely based on a finding
that the added value in Country B was greater than Country C.
Though value was a consideration, it was only one factor in the
determination as a whole. Of great importance was also the fact
that the assembly of the garment in Country C involved a simple
sewing operation, neither requiring a high degree of skill nor
tailoring.
HQ 952081 is also distinguishable in that it concerned
women's pajamas (not shirts), and involved a relatively simple
sewing operation with no tailoring.
Sewing the individual components of the shirt together,
particularly the long sleeves, collars, yokes and plackets, to
form the completed shirt, necessitates careful and skilled sewing
in the assembly. It is the opinion of this office that the
complete assembly in Country B is beyond a simple sewing
operation and thus qualifies as a substantial assembly process.
In addition, a determination that substantial assembly occurs at
the time of assembly of the individual component parts is in
adherence to the terms set by Section 12.130(e)(1) of the Customs
Regulations. We also refer you to several rulings which have
held that substantial transformation occurs at the time of
complete assembly, e.g., HQ 075323, dated April 1, 1985;
HQ 555608, dated January 27, 1990, and HQ 952750, dated
October 16, 1992.
A review of these and other cases involving shirts, thus
looks to both the type (structure) of the shirt and the
complexity of the assembly process. In Scenario I all of the
components are cut in Country A, there is a sub-assembly of the
collar and cuff components into completed collar and cuffs, and
then all parts are sent to Country B for assembly of the
completed shirt. In Scenario II all of the components are cut in
Country A, in Country B the collar and cuff components are
assembled into completed collar and cuffs, and the remaining
assembly of the completed shirt occurs.
In both situations there is a substantial transformation at
the time of assembly of the component parts into the completed
garment. Though a sub-assembly operation does take place in
Scenario I 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 the 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.
In a recent meeting discussing the country of origin
determination, you referred to the issue of what constituted a
"position" for purposes of Section 177.10(c)(2) Customs
Regulations. In Superior Wire v. United States et al.,
11 C.I.T. 608; 669 F. Supp 472; 1987 Ct. Intl Trade 460;
Slip Op. 87-98, the court treated directly the issue of a
position for purposes of the Customs Regulations. The court
therein, referring to Arbor Foods, Inc. v. United States,
9 C.I.T. 119, 607 F. Supp. 1474 (1985), stated that a series of
ruling letters, oral assurances from various Customs officials,
and remissions of liquidated damages claims did not constitute a
position, where the exact merchandise was not covered by a ruling
letter.
The instant circumstances are similar to those described in
Arbor Foods. Here there was a reliance on previous ruling
letters, most of which did not regard garments identical to the
submitted article. Those ruling letters were only available to
the public via diskette, an indication that Customs did not
consider the ruling letters to be of widespread applicability.
Rulings regarded by Customs to be of broad precedential value are
generally published in the Customs Bulletin. The previous
rulings to which you refer were never published in the Customs
Bulletin.
Thus, country of origin is conferred in Country B; this is
when a substantial assembly of the completed garment takes place.
HOLDING:
Based on the information provided, the country of origin for
the submitted sports shirt in both Scenario I and Scenario II is
Country B.
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 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