CLA-2 RR:CR:TE 959803 RH
Area Director of Customs
Attn: Chief, Residual Liquidation
& Protest Branch
6 World Trade Center, Room 761
New York, NY 10048-0945
Re: Protest No. 1001-96-106405; 19 CFR 12.130; finishing
operations; shrinkage;
country of origin; 19 CFR 113.62; dyeing; bleaching;
printing; preshrinking; substantial
transformation
Dear Sir:
This is in reply to your memorandum of September 25, 1996,
concerning the Application for Further Review of Protest (AFR)
Number 1001-96-106405, filed by the law firm of Porter, Wright,
Morris & Arthur, on behalf of Pacific Printex Corporation
("protestant"), pursuant to 19 CFR 174.24(c) and 174.25(b)(3).
We note that the protestant filed three additional protests
(1001-96-104971; 1001-96-105240; 1001-6-106136) involving the
same issues raised in this case, and has asked us to consider
protest number 1001-96-10497 as the lead protest. However, that
protest was not forwarded to our office.
FACTS:
On April 30, 1996, the protestant imported 5513 meters of 100
percent rayon fabric into the United States and designated Turkey
as the country of origin. Customs issued a Request for
Information on May 17, 1996, asking the protestant to submit a
sample and advising the protestant that the merchandise would be
conditionally released pending laboratory analysis.
After the protestant failed to submit a sample, Customs issued a
Notice to Redeliver the merchandise on July 26, 1996, and
notified the protestant that "[b]ased on previous laboratory
analysis from same manufacturer, fabric is not substantially
transformed." The protestant was also advised that the country
of origin of the fabric was China, for which a visa was required.
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The protestant maintains that it imported Chinese greige fabric
which was bleached, dyed, printed and preshrunk by the Turkish
manufacturer, Ete Mensucat. The protestant seeks cancellation of
the Notice of Redelivery and a finding that the country of origin
of the fabric was Turkey and that no visa was required.
Customs liquidated the entry on October 11, 1996.
Classification of the merchandise under subheading 5408.34.9020
of the Harmonized Tariff Schedule of the United States (HTSUSA)
is uncontested.
ISSUE:
Were the Chinese greige fabrics in question substantially
transformed in Turkey pursuant to
19 CFR 12.130?
LAW AND ANALYSIS:
At the time the fabrics in question entered the United States,
Section 12.130 of the Customs Regulations (19 CFR 12.130)
governed the country of origin determinations for textiles and
textile products subject to Section 204 of the Agricultural Act
of 1956, as amended (7 U.S.C.
1854). Country of origin determinations where textiles and
textile products are processed in more than one country is
governed by the provisions in 19 CFR 12.130(b). Under that
provision, the country of origin of textile products is deemed to
be that foreign territory or country where the article last
underwent a substantial transformation. Substantial
transformation is said to occur when the article has been
transformed into a new and different article of commerce by means
of substantial manufacturing or processing.
The factors to be applied in determining whether or not a
manufacturing operation is substantial are set forth in 19 CFR
12.130(d). Section 12.130(e)(1) provides:
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:
(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.
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Section 12.130(e)(2) further provides:
An article or material usually will not be considered
to be a product of a particular foreign territory or
country, or insular possession of the U.S. by virtue of
merely having undergone any of the following:
* * *
(iv) One or more finishing operations on
yarns, fabrics, or other textile articles,
such as showerproofing, superwashing,
bleaching, decating, fulling, shrinking,
mercerizing, or similar operations; or
(v) Dyeing and/or printing of fabrics or
yarns.
In this case, the protestant failed to provide Customs with a
sample of the fabric. However, a Customs laboratory tested other
fabrics from the same manufacturer, which are alleged to have the
same finishing operations as the instant fabric. The laboratory
found that those fabrics were dyed, printed and bleached in
Turkey. There was no indication that the fabrics underwent any
of the other finishing operations enumerated in 19 CFR
12.130(e)(2).
Customs has been consistent in its determinations that where
dyeing and printing are not accompanied by two or more of the
operations enumerated in 19 CFR 12.130(e)(1)(I), or where
processing involves only one or more finishing operation with no
dyeing and printing, or dyeing and printing alone, substantial
transformation does not occur for country of origin purposes.
See, Headquarters Ruling Letter (HQ) 734262, dated January 6,
1992, wherein Customs held that greige fabric which was treated
by bleaching, dyeing, printing, and resin finishing, including
special coating of the fabric, was not substantially transformed;
HQ 734435, dated January 10, 1991 (greige fabric produced in
Taiwan and processed in Hong Kong by desizing, scouring,
bleaching, dyeing, softening, stentering and calendering, was not
a substantially transformed because the dyeing operation was not
in conjunction with a printing operation); HQ 089230, dated May
10, 1991 (Chinese greige fabric exported to Hong Kong where it
underwent scouring, bleaching, printing, napping and
preshrinking, was not substantially transformed in Hong Kong); HQ
953905, dated July 30, 1993 (fabrics which were dyed and printed
and then underwent scouring, singeing, mercerizing and bleaching
lacked the two additional operations enumerated in 12.130(e) and
were not substantially transformed); HQ 953191, dated May 14,
1993 (a substantial transformation did not occur in Kuwait where
greige fabric was desized and washed, scoured, shrunk, bleached,
dyed, sized and finished and cut on four sides and hemmed); HQ
088901, dated July 5, 1991 (greige fabric shipped to Israel
where it was cut and sewn into 3000 foot lengths, singed and
desized, washed, dried, subjected to thermofixation (heating the
fabric to fix the final elasticity), bleached, printed, placed on
a stentor frame, dyed (a light shading), washed, calendered,
washed, and pressed, was not substantially transformed because
Customs found that the fabric was not printed and dyed).
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Customs interpretation of 19 CFR 12.130 was upheld by the United
States Court of International Trade in Mast Industries Inc. v.
United States, 652 F. Supp. 1531 (1987); aff'd 822.F. 2d 1069
(CAFC, 1989). That case involved greige cotton fabric produced
in China and sent to Hong Kong for singeing, desizing, scouring,
bleaching, mercerizing, dyeing, softening, and stentering. The
court stated that in determining the meaning of an agency's
regulation, it would defer to that agency's interpretation unless
the interpretation is plainly erroneous or inconsistent with the
regulation. The court found that Customs' interpretation was
reasonable and approved of Customs denying entry to the finished
fabric without a visa from the Government of China.
Nevertheless, counsel argues that the fabric was substantially
transformed in Turkey because the greige good and the finished
product are "completely different articles." Counsel states
that the greige fabric would not be suitable for the
manufacturing of clothing that the finished product is ultimate
intended to be transformed into. Moreover, he claims that the
use, the identity and the character of the finished fabric is
different from the greige fabric and the value of the finished
product is higher.
A private laboratory, Albany International Research Company,
tested various fabric samples from different entries and
concluded that they were preshrunk. Albany International's
report #1221, dated August 15, 1996, concerning this entry,
reads, in part.
Laboratory Work and Results
The fabric was subsampled and tested according to
American Association of Textile Chemists & Colorists,
Test Method No. 135, "Dimensional Change in Automatic
Home Laundering of Woven and Knit Fabrics." The test
conditions used were: cold water, machine cycle
delicate, and line dry. The results are shown in the
following table.
Shrinkage (%)
Sample ID Warp
Fill
rayon faille 0.8
0.4
Yarns were removed from the original fabric and
examined with the aid of a binocular microscope. All
the yarns examined exhibit a high degree of crimp which
is typical of fabric that has been pre-shrunk.
Discussion and Conclusion
Based on our examination and testing of the
submitted fabric, it is the opinion of the laboratory
that the fabric had been pre-shrunk.
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Congress granted Customs the statutory authority to verify the
nature of imports using, among other methods, laboratory testing.
19 U.S.C. 1499 (1994). Additionally, It is well established that
the methods of weighing, measuring, and testing merchandise used
by customs officers and the results obtained are presumed to be
correct. See, Exxon v. United States, 462 F. Supp 378 (1978),
81 Cust. Ct. 87, Cust. Dec. 4772. The burden of proof rests with
the importer to overcome the presumption that Customs has the
expertise and knowledge to use standard methods and analysis
techniques to obtain accurate results. HQ 950794, dated March
25, 1992.
In determining that the fabrics had not been subjected to a
shrinking process, Customs relied upon the standards set forth in
the American Society for Testing and Materials (ASTM) Standard D
4038. This performance specification covers woven women's and
girls' dress and blouse fabrics composed of any textile fiber or
mixture of textile fibers. Section 1.1, ASTM 4038. The standard
instructs that dimensional change be determined in accordance
with the procedure set out in the AATCC (American Association of
Chemists and Colorists) Test Method 135. The maximum allowable
dimensional change recommended by the ASTM 4038 standard is 3
percent.
In this case, the 3 percent maximum allowable dimensional change
used by the Customs laboratory to determine if the imported
fabrics were preshrunk is a recognized industry standard. The
ASTM standards are recognized by both the government and the
industry. HQ 224349, dated February 18, 1994. Recognition by
Customs of the ASTM standards for weighing, measuring and testing
merchandise is exhibited by an array of Customs rulings, a small
sampling of which include: HQ 085912, dated February 6, 1990
(Customs is of the opinion that the use of the ASTM standards
will properly fulfill Congressional intent regarding the
definition of a tariff term); HQ 081157, dated April 25, 1989
(it has always been Customs practice, as well as an industry
practice, that any product which does not meet the ASTM D 439
specifications may not be considered automotive gasoline for
either Customs or commercial purposes); HQ 086218, dated March
26, 1990 (it has consistently been the position of Customs to
utilize substantiality of construction as essential to a finding
that an article is designed for travel and thus could be
designated as luggage - Customs Service has used the ASTM
designation D1593-91 as the
basis for determining substantiality); HQ 111846, dated April 28,
1992 (Customs has adopted standards established by the ASTM to
determine whether the gasoline or blending components of gasoline
are transformed into new and different products because such
standards represent industry developed criteria for
characterizing fuel oils); HQ 224340, dated May 25, 1994 (Customs
uses the ASTM standards to determine fungibility for certain
products); HQ 953997, dated January 24, 1994 (ASTM D3597-89 has
been adopted by Customs as the proper test method which sets
forth the abrasion standards for woven upholstery fabrics); HQ
954018, dated September 23, 1993 (in considering whether a
product consisting of 75 percent gray Portland cement and 25
percent calcium carbonate is classifiable as Portland cements,
Customs consulted several standards established by the ASTM).
Under its statutory authority to verify the nature of imports
using laboratory testing, Customs has a history of relying on
industry standards for its methods of weighing, measuring and
testing merchandise.
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There is a presumption that the test methods and analysis
technique of the Customs laboratory was correct. Exxon, supra.
The AATCC 135 is a test method intended for the determination of
dimensional changes in woven and knit fabrics when subjected to
repeated automatic laundering procedures commonly used in the
home. While this may not be conclusive that the fabrics were
subjected to a shrinking process, Customs believes that it is
strongly indicative of whether such a process was performed on
the goods. "Dimensional change" is defined in section 3.1 of the
test method as "a generic term for changes in length or width of
a fabric specimen subjected to specified conditions. The change
is usually expressed as a percentage of the initial dimension of
the specimen." Section 3.4 describes "shrinkage" as "a
dimensional change resulting in a decrease in the length or width
of a specimen."
The AATCC 135 test method provides that delicate fabrics shall be
machine washed on delicate cycle for 8 minutes in 120 +/- 5 F.
It then provides that the fabrics be tumble dried on delicate
cycle or line, drip or screen dried.
Because the Customs laboratory which did the test is not equipped
with a washing machine, Customs also consulted TEXTILE TESTING
Physical, Chemical and Microscopical (1949) by John H. Skindle,
Associate Professor of Textile Chemistry, Lowell Textile
Institute. This text describes in detail the ASTM test methods
for rayon woven goods. At page 117 the author states that the
"Wash Wheel Testing Method" and "Launderometer Method" type of
tests are suitable for laboratories doing a lot of shrinkage
testing, but another method requiring no special apparatus would
be desirable for laboratories making only occasional tests. An
example of such a method is described at page 118. The sample
fabric is immersed in a beaker containing 0.3 percent soap
solution in water at 40 degrees C for at least two hours. The
sample is then rinsed, squeezed as dry as possible and dry-ironed. The sample is rewet, wrung out, ironed until dry,
conditioned several hours and then measured again.
The author states that:
A guaranteed shrinkproof or 100% shrinkproof fabric
should have no appreciable shrinkage; a pre-shrunk
fabric should have only a small amount of shrinkage (1-2%). A Sanforized label implies not over 1% shrinkage
in any direction and should be so understood. In
general, we may say that, even without any label or
claim, a shrinkage of more than 5% in either direction
is excessive, except in the case of wool.
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Customs tailored its test after the AATCC 135 and Testing Textile
methods. The method Customs used was as follows:
A 12" x 12" test sample from the submitted fabric was
tested for shrinkage. The sample was marked 10" apart
in the warp and filling direction with an indelible ink
marker. The marked sample was treated at 38 ([plus
minus] 1) degree centigrade or 100 ([plus minus] 2)
degrees fehrenheit [sic] for 15 minutes with a 0.5%
soap solution (1:30 material to liquor [sic] ratio).
Then the treated sample was washed with water (38 c or
100 f) for 5 minutes followed by a warm wash (25 c or
77 f) for 5 minutes and then a cold wash also for 5
minutes. The sample was dried flat. The distances
between two markings were measured and the percent
shrinkage calculated.
Customs test method is comparable to both the AATCC and Testing
Textile methods, and we find no evidence that it is erroneous.
In fact, Customs adopted the least strenuous AATCC and Textile
Testing methods (cooler water temperature, shorter wash cycle, no
dry-ironing, no wringing). Moreover, Customs has ruled
previously that the presumption of correctness attached to a
Customs laboratory analysis was not overcome by conflicting
results from independent laboratory analyses, even when the same
method of testing was utilized by both Customs and the
independent laboratories. See HQ 070173, dated December 27,
1982.
As the fabrics in question shrunk in excess of the 3 percent
maximum allowable industry standard set forth in the ASTM, they
are not considered to be preshrunk for the purposes of 19 CFR
12.130(e)(1).
HOLDING:
The Chinese greige fabrics in question were not substantially
transformed into products of Turkey. The fabrics were dyed,
printed and bleached in Turkey but lacked one of the additional
operations enumerated in 19 CFR 12.130(e). The protest should be
denied in full.
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In accordance with section 3A(11)(b) of Customs Directive Number
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be attached to the Customs Form
19, Notice of Action, and furnished to the protestant no later
than 60 days from the date of this letter. Any reliquidation of
the entry in accordance with the decision must be accomplished
prior to mailing of the decision. Sixty days from the date of
the decision (o n that date) the Office of Regulations and
Rulings will take steps to make the decision available to Customs
personnel via the Customs Ruling Module in ACS and to the public
via the Diskette Subscription Service, Freedom of Information
Act, and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division