CLA-2 CO:R:C:V 555677 SER
Ms. Marqueritte Jones
Trade Commissioner
JAMPRO
866 Second Avenue
New York, NY 10017
RE: Country of Origin of Surgical Towels from Jamaica
Dear Ms. Jones:
This is in reference to your letter of June 11, 1990, in
which you request a ruling on whether the production of
surgical/hospital towels in Jamaica results in their being
considered products of Jamaica.
FACTS:
You set forth four alternative processes in the production
of the surgical towels.
Process 1 -Rolls of pre-dyed cotton fabric obtained from other
than Jamaican or U.S. sources, e.g., China, India,
Pakistan, with the Jamaican manufacturer cutting and
stitching on all four edges and packaging in polybags.
The polybags are to be obtained from a U.S., non-U.S.
or Jamaican manufacturer.
Process 2 -Rolls of cotton fabric obtained from other than
Jamaican or U.S. sources with the Jamaican
manufacturer dyeing the fabric, cutting and
stitching on all four edges, and packaging in
polybags. Polybags are obtained from a non-U.S., U.S.
or Jamaican manufacturer.
Process 3 -Rolls of pre-dyed cotton fabric obtained from other
than Jamaican or U.S. sources with the Jamaican
manufacturer cutting, hemming on all four edges,
washing, drying, folding, and then packaging in
polybags. The polybags are to be obtained from U.S.,
non-U.S. or Jamaican manufacturers.
Process 4 -Description and processing same as in 1,2 and 3, but
with cotton fabric rolls obtained from the U.S.
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ISSUE:
Whether the processing operations described above will
result in the creation of articles considered to be the product
of Jamaica.
LAW AND ANALYSIS:
Textile articles produced in a foreign country are subject
to the country of origin criteria set forth in section 12.130 of
the Customs Regulations (19 CFR 12.130). According to 19 CFR
12.130(b):
. . . a textile product . . . which consists of materials
produced or derived from or processed in, more than one
foreign . . . country shall be a product of that foreign . .
. country 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.
According to Treasury Decision (T.D.) 85-38, published in
the Federal Register on March 5, 1985, (50 FR 8714), which is the
final rule document which established 19 CFR 12.130, the
principles of country of origin for textiles and textile products
contained in 19 CFR 12.130 are applicable to such merchandise
for all purposes. This regulation came about as a result of
Executive Order No. 12,475, 49 FR 19955 (1984), which directed
the Secretary of Treasury, in accordance with policy guidance
provided by the Committee for the Implementation of Textile
Agreements (CITA), to issue regulations governing the entry, or
withdrawal from warehouse for consumption, of textile and textile
products subject to section 204 of the Agricultural Act of 1956.
The regulations were to include clarifications in or revisions to
the country of origin rules for textiles and textile products,
subject to section 204, in order to avoid circumvention of
multilateral and bilateral textile agreements.
In determining whether merchandise has undergone substantial
manufacturing or processing operations, we consider the (1)
physical change in the material or the article; (2) time
involved; (3) complexity of the operations; (4) level or degree
of skill and/or technology required; and (5) value added to the
article in each country.
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According to 19 CFR 12.130(e)(iv), a textile article will
usually be a product of a particular country if the cutting of
the fabric into parts and the assembly of those parts into the
completed article has occurred in that country. However, 19 CFR
12.130(e)(ii) states that a material will usually not be
considered to be a product of a particular foreign country by
virtue of merely having undergone cutting to length or width and
hemming or overlocking fabrics which are readily identifiable as
being intended for a particular commercial use. T.D. 85-38
explains that "where fabric which is readily identifiable as
being intended for a particular commercial use (e.g., toweling or
bed linen material) and is merely cut to length or width, with
the edges then being either hemmed or overlocked . . . the
foreign territory or country which produced the fabric is the
country of origin and not the country where the fabric was cut."
We recently held, in Headquarters Ruling Letter (HRL)
733601, dated July 26, 1990, that cotton fabric from China which
was imported into Mexico where it was cut by machine to width and
length, hemmed on three or four sides, washed and shrunk, and
folded to specifications for use as surgical towels was not
substantially transformed, and, therefore, was considered a
product of China. We also held in HRL 086132 dated February 22,
1990, that a surgical towel which was cut from cloth, washed,
seamed, folded and packaged in Honduras was not substantially
transformed. Further, in C.S.D. 90-29, we held that greige
terry toweling which was bleached, cut to size, hemmed, desized,
and dyed to create beach towels was not substantially
transformed.
In this case, proposed processes 1,2 and 3 involve
operations which are no more complex than the processes involved
in C.S.D. 90-29 and HRL 733601, which were held not to constitute
a substantial transformation. Dyeing, cutting and stitching,
folding, and washing and drying are not particularly complex
operations, as they do not require a high level of skill or
significant time to perform, and, therefore, they do not result
in the substantial transformation of the fabric.
Regarding process 4, the determination of country of origin
of textile products which use U.S. fabrics is governed by 19 CFR
12.130(c), which states:
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Chapter 98, Subchapter II, Note 2, [HTSUS], provides
that any product of the U.S. which is returned after
having been advanced in value or improved in condition
abroad, or assembled abroad, shall be a foreign article
for the purposes of the Tariff Act of 1930, as amended.
. . . merchandise which falls within the purview of
Chapter 98, . . ., may not, upon its return to the
U.S., be considered a product of the U.S.
The U.S. cotton fabrics would clearly be advanced in value
by the processes which you have described, and, therefore, the
country of origin of these surgical towels would be Jamaica.
The surgical towels would be properly classified in
subheading 6307.90.8710, HTSUSA, which provides for other made up
articles, other, other, surgical towels. The rate of duty
applicable to the surgical towels is 7% ad valorem. It should be
noted that this provision is not an eligible provision under the
Generalized System of Preferences (GSP) or the Caribbean Basin
Initiative (CBI). The textile category designation for these
articles is 369. Due to the changeable nature of quota
agreements, you are advised to contact your local Customs office
prior to any attempt to import, to determine the current status
of any textile agreements with Jamaica. Import restraints are
imposed by the U.S. Customs Serice under directives of CITA, U.S.
Department of Commerce, Washington, D.C. 20230. Further advice
or information pertaining to those agreements may be obtained
from the chairman of that Committee.
HOLDING:
Processes 1,2 and 3 which you describe do not result in the
substantial transformation of the fabric imported into Jamaica
from non-U.S. sources, and, therefore, these surgical towels
would not be considered products of Jamaica. However, surgical
towels processed, as described, from U.S. origin fabric are
considered products of Jamaica pursuant to 19 CFR 12.130(c).
Sincerely,
John Durant, Director
Commercial Rulings Division