CLA 2-RR:NC:TA:349 G83180
Ms. Gail T. Cumins
Sharrets, Paley, Carter & Blauvelt, P.C.
75 Broad Street
New York, NY 10004
RE: Country of origin determination for sheet sets; 19 CFR 12.130; substantial transformation; 19 CFR 102.21(a)
Dear Ms. Cumins:
This is in reply to your letter dated October 4, 2000, on behalf of Zam Cotton Mills Ltd., requesting a classification and country of origin determination for a sheet set which will be imported into the United States.
FACTS:
The subject merchandise consists of a printed sheet set. A pre-production sample was submitted. The set will be made from a 70 percent polyester and 30 percent cotton woven fabric and will consist of a flat sheet, fitted sheet and a pillowcase. The fitted sheet is hemmed on all sides and elasticized at the four corners. The flat sheet is hemmed on three sides. A separate 7 inch wide strip of self fabric is folded and sewn to make a 2 inch wide top hem and then sewn to the top edge of the sheet. This creates an approximately 4 inch wide border. The pillowcase is cut on all sides, folded in half, sewn together and hemmed at the open end. Although hemmed on all sides, the flat and fitted sheets both contain selvage along one side. Counsel advises that the actual production version of the flat and fitted sheets will be cut on all four sides. The submitted sheet set does not contain any embroidery, lace, braid, edging, trimming, piping or applique work.
The manufacturing operations for the sheet set are as follows:
Pakistan:
-fabric is woven.
-fabric is printed and finished.
-rolls of fabric are shipped to Israel.
Israel:
-fabrics are cut to the size and shape of the various components;
-components are sewn/hemmed/elasticized, creating the sheets and pillowcases.
-sheets and pillowcase are packaged together and shipped directly to the United States.
ISSUE:
What are the classification and country of origin of the subject merchandise?
CLASSIFICATION:
Classification of merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.
Heading 6302, HTSUSA, provides for among other things, bed linen. The Explanatory Notes to heading 6302, HTSUSA, include sheets, pillowcases, bolster cases, eiderdown cases and mattress covers as examples of bed linen. GRI 3(b) provides that goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. According to the Explanatory Notes, the official interpretation of the HTSUSA at the international level, "goods put up in sets for retail sale" refers to goods which:
(a) consist of at least two different articles which are, prima facie, classifiable in different headings;
(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and
(c) are put up in a manner suitable for sale directly to users without repacking.
Although referred to as a set, the instant merchandise does not meet the qualifications of "goods put up in sets for retail sale" as the components of the set are classifiable within the same subheading. Therefore, each item in the set will be classified separately.
The applicable subheading for the pillowcase will be 6302.22.2010, HTSUSA, which provides for bed linen, table linen, toilet linen and kitchen linen: other bed linen, printed: of man-made fibers: other… pillowcases. The duty rate will be 12 percent ad valorem.
The applicable subheading for the flat and fitted sheets will be 6302.22.2020, HTSUSA, which provides for bed linen, table linen, toilet linen and kitchen linen: other bed linen, printed: of man-made fibers: other... sheets. The rate of duty is 12 percent ad valorem.
The pillowcase and the sheets fall within textile category designation 666. The designated textile and apparel categories and their quota and visa status are the result of international agreements that are subject to frequent renegotiations and changes. To obtain the most current information, we suggest that you check, close to the time of shipment, the U.S. Customs Service Textile Status Report, an internal issuance of the U.S. Customs Service, which is available at the Customs Web Site at www.customs.gov. In addition, the designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected and should also be verified at the time of shipment.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
EXCEPTION FOR TEXTILE GOODS PROCESSED IN ISRAEL
Section 102.21(a) specifically states that the rules in Section 102.21 shall not apply "for purposes of determining whether goods originate in Israel or are the growth, product, or manufacture of Israel." The basis for the Israeli exception is Section 334(b)(5) of the Uruguay Round Agreements Act. Section 334(b)(5) provides that:
This section shall not affect, for purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product, or manufacture of, a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection (c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.
Israel is the only country which qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 CFR 12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.
Accordingly, applying Section 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. 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.
Section 12.130(d) 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) 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.
The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in Section 12.130(d)(2). 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;
The cutting of the fabric in Israel may have, created a new and different article of commerce, however, in order for a substantial transformation to occur the processing operations must be sufficiently complex so as to constitute a substantial manufacturing or processing operation. Customs has previously ruled that in order for flat and fitted sheets to be deemed to have undergone a substantial manufacturing process in a particular country or foreign territory, the fabric must undergo, at the minimum, the cutting to length and width of fabric, hemming and yet another processing step. The term "cutting to length and width" has been defined as cutting on all four sides of the fabric so as to create a component with no selvage edges. The steps taken to create an elasticized fitted sheet and the addition of four inch borders to flat sheets have been previously considered acceptable as "another processing step".
The production version of the fitted sheet will be cut to length and width (all four sides) and further processed by cutting out the four corners, forming the corner pockets, adding elastic and hemming. The production version of the flat sheet will be cut to length and width (all four sides) and further processed by the addition of a four inch border and hemming. The flat and fitted sheets will undergo a substantial transformation and will be considered products of Israel. The pillowcase has undergone a substantial manufacturing process noting Belcrest Linens v. United States, (741 F.2d 1368, Fed. Cir. 1984) and is considered a product of Israel. Accordingly, as origin is conferred in Israel pursuant to Section 12.130, we do not need to apply the rules in Section 102.21 to determine the country of origin.
HOLDING:
The pillowcase is classified in subheading 6302.22.2010, HTSUSA, which provides for printed man-made fiber pillowcases. The flat and fitted sheets are classified in subheading 6302.22.2020, HTSUSA, which provides for printed man-made fiber sheets.
The country of origin of the pillowcase, flat and fitted sheets is Israel. Products of Israel which are classifiable under the above subheadings are entitled to duty free treatment under the United States-Israel Free Trade Area Implementation Act upon compliance with all applicable regulations.
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 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently 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, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist John Hansen at 212-637-7078.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division