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