CLA-2 CO:R:C:T 955125 NLP
Mr. S. Richard Shostak
Stein, Shostak, Shostak & O'Hara
3580 Wilshire Blvd.- Suite 1240
Los Angeles, CA 90010-2597
RE: Country of origin determination for men's knit and/or woven
short sleeve sport shirts; 19 CFR 12.130; substantial
transformation
Dear Mr. Shostak:
This is in response to your letter of October 1, 1993, on
behalf of your client, Glint, Inc., in which you requested a
country of origin determination for men's knit and/or woven short
sleeve sport shirts. Samples of the garments were submitted for
our review and will be returned to you with this ruling letter.
FACTS:
The garments at issue will be made from knit and/or woven
fabric of Taiwanese origin. The fabric will be cut in Taiwan into
all of the shirts' component pieces and these pieces will be
shipped to the People's Republic of China (China) for assembly by
sewing, followed by ironing, folding, packing and exportation to
the United States (U.S.). Thirteen samples were submitted for
country of origin determination and they are each described below.
1) STYLE: FLAT COLLAR Y.D. GOLF-#41560
Style 41560 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket, a collar and short ribbed sleeves.
The fabric is manufactured, knitted, dyed and cut into 11 garment
pieces in Taiwan. The garment pieces are then sent to China for
assembly by sewing, ironing and folding. The finished shirt is
then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 8 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and
cuff.
3. 3 minutes/KG for dyeing and finishing.
4. 0.8 minutes/PC for cutting.
5. 0.8 minutes/PC for inspection and folding.
6. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 8 minutes/PC for assembly into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.2 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $2.81, including the total yarn costs,
knitting costs, dyeing costs, other labor costs and accessories.
The total cost in China is $0.89, including transportation and
accessories.
2) STYLE: Y.D. GOLF-#41559
Style 41559 is a men's knit shirt made of 65% polyester and
35% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket with a button, a collar and short
ribbed sleeves. The fabric is manufactured, knitted and cut into
14 component pieces in Taiwan. The garment pieces are then sent
to China for assembly by sewing, ironing and folding. The finished
shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 8 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and
cuff.
3. 0.8 minutes/PC for cutting.
4. 0.8 minutes/PC for inspection and folding.
5. 0.5 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 8 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.2 minutes/PC for packing.
10-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $2.81, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $0.89, including
transportation and accessories.
3) STYLE: SOLID GOLF-#41563
Style 41563 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket, a collar and short ribbed sleeves.
The fabric is manufactured, knitted, dyed and cut into 14 garment
pieces in Taiwan. The garment pieces are then sent to China for
assembly by sewing, ironing and folding. The finished shirt is
then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and the
cuff.
3. 0.5 minutes/PC for cutting.
4. 0.8 minutes/PC for inspection and folding.
5. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 8 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.2 minutes/PC for packing.
10-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $2.69, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $.89, including
transportation and accessories.
4) STYLE-#41301
Style 41301 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
button closure, a collar, short ribbed sleeves and a waistband.
The fabric is manufactured, knitted, dyed and cut into 17 garment
pieces in Taiwan. The garment pieces are then sent to China for
assembly by sewing, ironing and folding. The finished shirt is
then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 9 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and
cuff.
3. 3 minutes for dyeing and finishing.
4. 0.5 minutes/PC for cutting.
5. 0.8 minutes/PC for inspection and folding.
6. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.2 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.27, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China B is $1.05, including
transportation and accessories.
5) STYLE-#41302
Style 41302 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket, a collar, short ribbed sleeves and
a waistband. The fabric is manufactured, knitted and cut into 29
garment pieces in Taiwan. The garment pieces are then sent to
China for assembly by sewing, ironing and folding. The finished
shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 9 minutes/KG for knitting the grey piece goods.
2. 3 minutes/PC set for flat finishing the collar and cuff.
3. 0.6 minutes/PC for cutting.
4. 0.8 minutes/PC for inspection and folding.
5. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.2 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China.
The total cost in Taiwan is $3.71, including total yarn costs,
knitting costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $1.15, including
transportation and accessories.
6) STYLE-#41608
Style 41608 is a men's woven and knitted shirt. The knit
section of the shirt is constructed of 65% polyester and 35% cotton
fabric, while the woven area of the shirt is made of 100% cotton
material. It contains a partial frontal opening and snap button
closure, a breast pocket, a collar, short ribbed sleeves and a
waistband. The fabric is manufactured, knitted, woven, dyed and
cut into 21 garment pieces in Taiwan. The garment pieces are them
sent to China for assembly by sewing, ironing and folding. The
finished shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7.2 minutes/YD for weaving grey piece goods.
2. 7.5 minutes/KG for knitting the grey piece goods.
3. 0.5 minutes/KG for dyeing and finishing woven fabrics.
4. 3 minutes/KG for dyeing and finishing knitted fabrics.
5. 0.5 minutes/PC for cutting.
6. 0.8 minutes/PC for inspection and folding.
7. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
15-18 skilled workers will perform the operations in Taiwan
and 6-9 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.17, including total sheeting costs,
weaving costs, dyeing costs, knitted rib costs, other labor costs,
lining costs and accessories. The total cost in China B is $1.05,
including transportation and accessories.
7) STYLE-#41621
Style 41621 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket, a collar, short ribbed sleeves and
a waistband. The fabric is manufactured, knitted, embroidered and
cut into 29 pieces in Taiwan. The garment pieces are then sent to
China for assembly by sewing, ironing and folding. The finished
shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7 minutes/KG for knitting the grey piece goods.
2. 3.5 minutes/PC set for flat finishing the collar and
cuff.
3. 0.5/PC minutes for cutting.
4. 0.4/PC for embroidering.
5. 0.8 minutes/PC for inspection and folding.
6. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.50, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $1.15, including
transportation and accessories.
8) STYLE-#41623
Style 41623 is a men's knit shirt constructed of
65% polyester and 35% cotton fabric. It contains a partial frontal
opening and button closure, a breast pocket, short ribbed sleeves
and a waistband. The fabric is manufactured, knitted, dyed and cut
into 20 garment pieces in Taiwan. The garment pieces are then sent
to China for assembly by sewing, ironing and folding. The finished
shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7.5 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and
cuff.
3. 3 minutes/KG for dyeing and finishing.
4. 0.5/PC minutes for cutting.
5. 0.8 minutes/PC for inspection and folding.
6. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.29, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $1.05, including
transportation and accessories.
9) STYLE-#41710
Style 41710 is a men's knit and woven shirt constructed of
100% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket, a collar, short ribbed sleeves
and a waistband. The fabric is manufactured, knitted, woven, dyed
and cut into 19 garment pieces in Taiwan. The garment pieces are
then sent to China for assembly by sewing, ironing and folding.
The finished shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7.2 minutes/YD for weaving grey piece goods.
2. 7.5 minutes/KG for knitting the grey piece goods.
3. 0.5 minutes/KG for dyeing and finishing woven fabrics.
4. 3 minutes/KG for dyeing and finishing knitted fabrics.
5. 0.5 minutes/PC for cutting.
6. 0.8 minutes/PC for inspection and folding.
7. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
15-18 skilled workers will perform the operations in Taiwan
and 6-9 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.59, including total sheeting costs,
weaving costs, dyeing costs, knitted rib costs, other labor costs,
lining costs and accessories. The total cost in China is $1.05,
including transportation and accessories.
10) STYLE-#41905
Style 41905 is a men's knit shirt constructed of
65% polyester and 35% cotton fabric. It contains a partial frontal
opening and snap button closure, a breast pocket, a collar, short
ribbed sleeves and a waistband. The fabric is manufactured,
knitted, dyed and cut into 20 garment pieces in Taiwan. The
garment pieces are then sent to China for assembly by sewing,
ironing and folding. The finished shirt is then packaged for
export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 8.5 minutes/KG for knitting the grey piece goods.
2. 3.5 minutes/PC set for flat finishing the collar and
cuff.
3. 0.5/PC minutes for cutting.
4. 0.4/PC for embroidering.
5. 0.8 minutes/PC for inspection and folding.
6. 0.3 minutes/PC for packing.
The time expended in China for the above processing in China
is as follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.68, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $1.05, including
transportation and accessories.
11) STYLE-#41906
Style 41906 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
button closure, a breast pocket, a collar, short ribbed sleeves and
a waistband. The fabric is manufactured, knitted, dyed and cut
into 21 garment pieces in Taiwan. The garment pieces are then sent
to China for assembly by sewing, ironing and folding. The finished
shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 8.5 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and
cuff.
3. 3.5 minutes/KG for dyeing and finishing.
4. 0.5/PC minutes for cutting.
5. 0.4/PC for embroidering.
6. 0.8 minutes/PC for inspection and folding.
7. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.83, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China B is $1.05, including
transportation and accessories.
12) STYLE-#41908
Style 41908 is a men's knit shirt constructed of 65% polyester
and 35% cotton fabric. It contains a partial frontal opening and
a snap button closure, a breast pocket, a collar, short ribbed
sleeves and a waistband. The fabric is manufactured, knitted, dyed
and cut into 25 garment pieces in Taiwan. The garment pieces are
then sent to China for assembly by sewing, ironing and folding.
The finished shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7.5 minutes/KG for knitting the grey piece goods.
2. 3.0 minutes/PC set for flat finishing the collar and
cuff.
3. 0.5/PC minutes for cutting.
4. 0.4/PC for embroidering.
5. 0.8 minutes/PC for inspection and folding.
6. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.2 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.81, including total yarn costs,
knitting costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $1.05, including
transportation and accessories.
13) STYLE-#41909
Style 41909 is a men's knit shirt constructed of
65% polyester and 35% cotton fabric. It contains a partial frontal
opening and button closure, a breast pocket, a collar, short ribbed
sleeves and a waistband. The fabric is manufactured, knitted, dyed
and cut into 21 garment pieces in Taiwan. The garment pieces are
then sent to China for assembly by sewing, ironing and folding.
The finished shirt is then packaged for export to the U.S.
The time expended in Taiwan for the above processing is as
follows:
1. 7.5 minutes/KG for knitting the grey piece goods.
2. 2.5 minutes/PC set for flat finishing the collar and
cuff.
3. 3.0 minutes/KG for dyeing and finishing.
4. 0.5/PC minutes for cutting.
5. 0.4/PC for embroidering.
6. 0.8 minutes/PC for inspection and folding.
7. 0.3 minutes/PC for packing.
The time expended in China for the above processing is as
follows:
1. 10 minutes/PC for assembling into shirts.
2. 0.4 minutes/PC for ironing and folding.
3. 0.3 minutes/PC for packing.
12-15 skilled workers will perform the operations in Taiwan
and 5-8 skilled workers will perform the operations in China. The
total cost in Taiwan is $3.63, including total yarn costs, knitting
costs, dyeing costs, other labor costs, lining costs and
accessories. The total cost in China is $1.05, including
transportation and accessories.
ISSUE:
What is the country of origin of men's short sleeve shirts
that are manufactured, knitted and/or woven and cut into garment
pieces in Taiwan and assembled by sewing in China?
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 onto 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)(1)(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).
According to T.D. 85-38, the final document rule establishing
19 CFR 12.130:
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
garment 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 situation as they arise,
utilizing the criteria in Section 12.130(d).
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) 953697, dated July 26, 1993, Customs held that
the assembly process of three men's knit and/or woven shirts in
China, which involved the sewing together of components that were
manufactured, knitted, woven and cut from fabric in Taiwan, 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 was found to be Taiwan, 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; HRL 086665, dated March 23, 1990; HRL
951169, dated April 1, 1992; HRL 734392, dated August 4, 1992; HRL
952531, dated November 25, 1992; HRL 953489 dated June 14, 1993;
HRL 953698, dated July 19, 1993; HRL 953903, dated August 17, 1993.
In the instant case, the cutting in Taiwan materially alters
the fabric into designated component pieces, which constitutes new
and different articles of commerce. The assembly operations to be
performed in China 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. In assembling the component pieces, no
great degree of skill or advanced technology is required, nor is
tailoring involved. In addition, the value added to all the
subject garments in Taiwan is substantially more than the value
added to the goods in China. Thus, the country of origin of the
13 men's shirts is Taiwan, as that is where the fabric last
underwent a substantial transformation.
HOLDING:
The country of origin for the 13 men's short sleeve shirts 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