CLA-2 RR:CR:TE 959814 RH
Area Director
Port of New York
ATTN: Chief, Residual Liquidation
& Protest Branch
6 World Trade Center, Room 761
New York, NY 10048-0945
Re: Protest No. 1001-96-106194; country of origin; rayon
fabrics; shrinkage;
19 CFR 12.120; substantial transformation
Dear Sir:
This is in response to your memorandum dated September 26, 1996,
regarding the Application for Further Review of Protest (AFR)
filed by the law firm of Rode & Qualey, on behalf of Sunkyong
America. The AFR is against a Notice to Redeliver dated June 13,
1996.
The AFR was timely filed and review is warranted under 19 CFR
174.24(b).
FACTS:
The merchandise at issue is 1,593.39 yards of 100 percent spun
rayon fabric, style 7679. It was entered into the United States
on January 11, 1996, under subheading 5516.14.0010 of the
Harmonized Tariff Schedule of the United States Annotated. The
importer listed Turkey as the country of origin of the fabric.
The fabric was woven in China and exported to Turkey where the
protestant claims it was printed, dyed, preshrunk, bleached and
fulled by the Turkish manufacturer, Italteks Ekspo Grup Tekstil
SA. Customs requested a sample of the fabric and conditionally
released the merchandise on January 23, 1996.
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Based on a laboratory analysis, Customs determined that the
merchandise was only printed and dyed in Turkey and, therefore,
was not substantially transformed in accordance with 19 CFR
12.130. Thus, Customs issued a Notice to Redeliver on June 13,
1996, advising the protestant that a visa was required for the
Chinese fabric.
ISSUE:
Were the Chinese greige fabrics in question were 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(b) of the Customs Regulations (19 CFR 12.130(b))
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). 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(e). 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.
Customs does not contest that the fabrics were dyed and printed
in Turkey. However, a Customs laboratory found no indication
that the fabric underwent any of the other finishing operations
enumerated in 19 CFR 12.130.
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), or where
processing involves only one or more finishing operation with no
dyeing and printing, or dyeing and printing alone, a 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
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.
Thus, we disagree with counsel that singeing, desizing and
steaming are finishing operations which are considered under 19
CFR 12.130(e)(1). With regard to shrinking, counsel maintains
that the fabrics were marketed as machine washable and that they
were subjected to "shrinking (pre-sanforizing)."
Counsel also submitted results of a test performed in Turkey on a
brown viscose printed fabric by the Department of Textile
Engineering of the Textile University, dated July 16, 1996. The
results are as follows:
Dimensional stability to washing %(40 øC), (ISO 6330)
a) Widthwise +0.5
b) Lengthwise -2.5
Another report from Vartest Laboratorues, Inc., reflects the
following test results on "black/brwn/purple multi" fabrics:
(Machine Wash Cold, Tumble Dry Low, Light Steam Iron)
FIRST CYCLE THIRD CYCLE
LENGTH: -1.5% -1.9%
WIDTH: -5.2% -5.3%
(Machine Wash Cold, Line Dry, Light Steam Iron)
FIRST CYCLE THIRD CYCLE
LENGTH: -1.7& -1.9%
WIDTH: -5.6% -5.9%
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The report concluded that based on the three dimensional change
tests (AATCC 135-95) "this fabric has been pre-shrunk and
stabilized in addition to being bleached." The report further
states that if the fabric had not been pre-shrunk, "the length
and width shrinkages would have averaged 8 to 15% in machine
washing." Evidence to support this statement was not provided.
The Customs laboratory report number 2-96-10436-001 for the entry
in question states:
the sample, a plain woven fabric, is composed wholly of single ply
staple rayon yarns.
Based on our examinations performed on the sample, we are of the
opinion that the sample has been dyed and printed.
There are no indications that the fabric was bleached, fulled,
napped, moired, permanently stiffened, permanently embossed,
decated, weighted or pre-shrunk.
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 preshrunk, 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
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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 for most cases 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 long history of relying
on industry standards for its methods of weighing, measuring and
testing merchandise.
There is also a presumption that the test methods and analysis
technique of the Customs laboratory was correct. 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.
"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.
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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.
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 for 15 minutes with a 0.5% soap
solution (1:30 material to liquor 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 have been subjected to a preshrinking
process 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 and
printed in Turkey but lacked two of the additional operations
enumerated in 19 CFR 12.130(e). Accordingly, 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