CLA-2 CO:R:C:T 954729 SK
Donna B. Van Malder
Koret of California
611 Mission Street
San Francisco, CA 94105
RE: Country of origin; women's knit vest; substantial
transformation of garment's component parts occurs in more than one
country; assembly into completed article is not sufficient to
constitute a substantial transformation within purview of 19 CFR
12.130; country of origin determination based on which component
imparts garment's essential character; essential character imparted
by the hand knit front panel; significant visual effect.
Dear Ms. Van Malder:
This is in response to your letter of July 23, 1993,
requesting a country of origin determination for a women's knitted
vest. A sample of the subject merchandise was submitted to this
office for examination.
FACTS:
The article at issue, referenced style 655723, is a women's
knitted vest made from silk and cotton fibers. The garment
features a V-neck with a full front opening secured by faux pearl
buttons. The vest's front panel is hand knit and features a
decorative design with trios of "holes" interspersed from the waist
up and a floral pattern from the bust area down. Hand sewn top
embroidery adds decorative accents to the floral portion of the
front panel and hand crocheted edging in a contrasting color is
affixed to the armholes, neckline and placket.
The yarn and accessories are sourced in Korea. In China, the
vest's front panel is hand knit and the top embroidery is sewn to
the front panel by hand. In Korea, the back solid-colored panel
is machine knit, the front and back panels are joined by sewing,
the buttons are affixed and hand crocheted edging is added to the
garment. The garment is labeled and packed in Korea.
The following cost/labor ratios were submitted to this office
from your agent in Korea:
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1) YARN (KOREA) COST (PIECE) TIME
$4.08
2) ACCESSORIES (KOREA) $0.42
3) HAND KNITTING AND HAND TOP $1.40 30 hrs.
EMBROIDERY OF FRONT PANEL
(CHINA)
4) HAND CROCHETING OF FRONT $1.50 3 hrs.
PANEL (NECKLINE AND PLACKET
(KOREA)
5) MACHINE KNITTING OF BACK $0.15 10 min.
(KOREA)
6) HAND CROCHETING OF ARMHOLES $1.43 1.5 hrs.
(KOREA)
7) FINISHING AND PACKING (KOREA) $1.30 30
min.
ISSUE:
What is the country of origin for the subject garment?
LAW AND ANALYSIS:
Section 12.130 of the Customs Regulations (19 CFR 12.130) is
applicable to the merchandise at issue. 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 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) 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.
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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) 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;
(ii) The time involved in the manufacturing or processing;
(iii) The complexity of the manufacturing or processing;
(iv) The level or degree of skill and/or technology
required in the manufacturing or processing
operations;
(v) The value added to the article or material;
Section 12.130(e)(1) provides that an article or material
usually will be a product of a particular foreign territory or
country, or insular possession of the United States, when, prior
to importation into the United States, it has undergone in that
foreign territory or country or insular possession, any of the
following:
(i) Dyeing of fabric and printing when accompanied by two
or more of the following finishing operations:
bleaching,
shrinking, fulling, napping, decating, permanent
stiffening,
weighting, permanent embossing, or moireing;
(ii) Spinning fibers into yarn;
(iii) Weaving, knitting or otherwise forming fabric;
(iv) Cutting of fabric into parts and the assembly of those
parts into the completed article; 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 country into a
completed
garment.
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As set forth above, the front panel of the women's vest at
issue is hand knit in China and it is also in that country that top
embroidery is hand sewn to the article. Section 12.130(e)(1)(iii)
states that an article will usually be a product of a country where
it has undergone "knitting or otherwise forming fabric." As yarn
is knit in China so as to form the front panel of the vest, a
substantial transformation is deemed to have occurred in this
country.
In Korea, the back panel of the vest is machine knit, the
front and back panels are sewn together, decorative edging is hand
crocheted to the neckline, armholes and placket, buttons are
affixed, labels are attached and the vests are packaged for export.
As with the knitting operation performed in China, the knitting of
the back panel in Korea "forms fabric" and, pursuant to Section
12.130(e)(1)(iii), the back panel of the vest undergoes substantial
transformation in Korea.
With regard to the assembly operations performed in Korea, we
note that the sewing of the front and back panel into the completed
garment is not a substantial transformation for purposes of Section
12.130(e)(1)(v). That Section requires that the assembly process
effected by sewing or tailoring be substantial. In T.D. 85-38 (19
Cust. Bull. 58, 70; 50 FR 8714), the final document rule
establishing 19 CFR 12.130, it was stated that:
[T]he 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 garment pieces will
amount to a substantial transformation of those pieces.
Where either less than 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).
[emphasis added]
This office has consistently held that the mere assembly of goods
entailing simple combining operations by sewing, as is the case
here, is not enough to substantially transform the components of
an article into a new and different article of commerce. See
Headquarters Ruling Letters (HRL's) 082747, dated February 23,
1989; 951169, dated April 1, 1992; 951437, dated July 17, 1992;
952647, dated January 27, 1993; 953488, dated May 14, 1993. In the
instant case, the assembly operations performed in Korea are mere
combining and sewing operations and do not possess the requisite
degree of complexity to be deemed substantial manufacturing
processes for purposes of conferring country of origin status. No
great degree of skill or advanced technology is required, nor is
tailoring involved.
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The addition of the hand crocheted edging to the vest in
Korea, while relatively labor-intensive (4.5 hours of work per
vest) does not serve to create a new and different article of
commerce for purposes of conferring country of origin. The edging
merely serves to adorn an already existing vest.
If assembly to completion of various components is not
sufficient to constitute a substantial transformation within the
purview of Section 12.130, and the component parts of an article
have been substantially transformed prior to assembly in different
countries, a different test must be applied to determine the
country of origin of the garment. In Customs Memo 088778, dated
March 25, 1991, this office held that in manufacturing situations
which are not covered by 19 CFR 12.130, a country of origin
determination shall be predicated on the portion of the article
which imparts the essential character to that garment. Explanatory
Note VIII to GRI 3(b), which sets forth the standards used in an
essential character determination, reads:
The factor which determines essential character will
vary as between different kinds of goods. It may,
for example, be determined by the nature of the
material or component, its bulk, quantity, weight
or value, or by the role of a constituent material
in relation to the use of the goods.
In the instant case, there are several persuasive factors
which lead this office to the conclusion that it is the front panel
of the vest which imparts this garment's essential character.
First, the amount of work, and the degree of skill required to make
the front panel, is far greater than that required by the rest of
the garment. Although the costs incurred in Korea are greater,
this is but one factor to consider and is not determinative of the
country of origin of this garment. Hand knitting the front panel
and top embroidering by hand takes approximately 30 hours, while
the remainder of the garment requires just over 5 hours of
processing. The floral pattern hand knit into the front panel of
the vest, with the top embroidery providing additional adornment,
creates a significant visual effect which serves to impart this
garment's essential character.
HOLDING:
The country of origin of style 655723, based on the essential
character imparted by the hand knitted front panel, is China.
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
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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