MAR-2-05 CO:R:C:V 733713 KG

Ms. Linda G. Baird
Shelby Group, Inc.
P.O. Box 171814
Memphis, Tennessee 38187-1814

RE: Country of origin marking of imported cotton work gloves; 19 CFR 12.130(c); 19 CFR 10.22; HTSUS 9802.00.80; cutting; assembly.

Dear Ms. Baird:

This is in response to your letter of April 18, 1990, requesting a country of origin ruling regarding imported cotton work gloves. We regret the delay in responding to your inquiry.

FACTS:

You plan to import knit cotton fabric into the U.S. from Hong Kong and Japan. The fabric will be cut into glove components in the U.S. These components will be shipped to Grenada to be sewn into finished gloves. Each glove will be made up of at least two pieces. The gloves will then be shipped back to the U.S. You asked if the legend "Assembled in Grenada with U.S. Components" is an acceptable country of origin marking. You also inquire regarding the applicability of subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States ("HTSUS").

ISSUES:

(1) Whether the legend "Assembled in Grenada with U.S. Components" is an acceptable country of origin marking for these imported gloves.

(2) Whether the gloves are entitled to the partial duty exemption under HTSUS subheading 9802.00.80.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textile and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854)"("section 204").

According to 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, including duty and marking. This regulation, which became effective in 1985, 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, to issue regulations governing the entry or withdrawal from warehouse for consumption of textile and textile products subject to section 204. 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.

Section 12.130 provides that generally the country of origin of a textile product is that foreign territory, country or insular possession where the article last underwent a substantial transformation. However, there is an exception to the general rule set forth in section 12.130(c), Customs Regulations (19 CFR 12.130(c)), for U.S. textile articles subject to section 204 of the Agricultural Act of 1956, sent abroad. This section provides that any such product of the U.S. which is returned after having been advanced in value or improved in condition abroad, or assembled abroad within the purview of U.S. Note 2 (now U.S. Note 2(a)), of subchapter II, Chapter 98 of the HTSUS ("U.S. Note 2"), may not, upon its return to the U.S., be considered a product of the U.S.

In order to determine what is an acceptable marking, the first question to be addressed is whether the foreign fabric is substantially transformed in the U.S. In this case, fabric made in either Hong Kong or Japan is cut into glove components in the U.S. Customs stated in T.D. 85-36 that "Cutting garment parts from fabric will result in a substantial transformation of the fabric. This is not to say, however, that the cut pieces will not undergo a later substantial transformation." Prior rulings have discussed the country of origin of cotton work gloves. In C.S.D. 90-20 (November 6, 1989), Customs ruled that where the fabric was made in Country A and cut in Country A into cotton work glove components, Country A was the country of origin of the gloves even though they were sewn in Country B. This ruling was upheld in HQ 086229 (April 11, 1990), which also discussed the importance of cutting the fabric into work glove components. The ruling stated that:"the cutting of fabric into glove pieces is not without complexity. Apparel cutters must also be skilled since mistakes can be costly in terms of wasted fabric and can delay or prevent a planned assembly run." Although in the above cases the fabric was made and cut in the same country, the discussion related to the cost and skill involved in cutting cotton work glove components is persuasive. At least two pieces of material must be cut to make each glove and the pieces must match each other. Further, cotton fabric are designated for use once they are cut into work glove pieces and would have no other identifiable commercial use. Based on these factors, we conclude that the cutting of fabric into work glove components in the U.S. is a substantial transformation. Since the glove components are substantially transformed in the U.S., the cut glove components would be considered a product of the U.S. for the purposes of 19 CFR 12.130(c).

The second question presented is whether the cut glove components are advanced in value, improved in condition or assembled abroad within the meaning of U.S. Note 2. Articles assembled abroad within the meaning of U.S. Note 2 are those articles that fall within the purview of HTSUS subheading 9802.00.80, which provides a partial duty exemption for:

[a]rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubrication, and painting.

All three requirements of HTSUS subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full value of the imported assembled article, less the cost or value of such U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners.

In this case, the method of assembly performed abroad is sewing, which is specified in 19 CFR 10.16(a) as an acceptable assembly operation for the purposes of HTSUS subheading 9802.00.80. Since the gloves are assembled abroad within the meaning of U.S. Note 2, pursuant to 19 CFR 12.130(c), the country of origin of the gloves would be Grenada.

Section 10.22, Customs Regulations (19 CFR 10.22), states that assembled articles entitled to the duty exemption under subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States ("HTSUS"), are considered products of the country of assembly for the purposes of country of origin marking. If an imported assembled article is made entirely of American-made materials, the United States origin of the material may be disclosed by using a legend such as "Assembled in ____ from material of U.S. origin," or a similar phrase.

In this case, the assembled gloves would appear to be entitled to the duty exemption and would be considered a product of Grenada. The assembled articles are made of materials which are a product of the U.S. Therefore, the legend "Assembled in Grenada with U.S. Components" would satisfy the country of origin marking requirements.

HOLDING:

Based on the information provided, the assembled gloves would be entitled to the partial duty exemption under HTSUS 9802.00.80, upon compliance with the documentary requirements of 19 CFR 10.24.

The legend "Assembled in Grenada with U.S. Components" would satisfy the country of origin marking requirements of 19 U.S.C. 1304 for the imported cotton work gloves.

Sincerely,

John Durant
Director,
Commercial Rulings Division