MAR-2-05 CO:R:C:V 734275 AT
Ms. Ludene Murphree
Jann Hsin Enterprise Co., Ltd.
No. 43 Ming Chih St.
Pan Chiao City, Taipei
Hsien Taiwan R.O.C.
RE: Country of origin marking of imported men's swimming shorts;
substantial transformation; 19 CFR 12.130; cutting of fabric
in Country A and assembly in Country B
Dear Mr. Jann-hsin:
This is in response to your letter of January 10, 1991,
requesting a ruling on the country of origin of imported men's
swimming shorts. A sample was submitted for examination.
FACTS:
The men's swimming shorts are made of 100 percent nylon
with a 100 percent polyester liner. The shorts have a elastic
waist band with front pockets on each side and a velcro pocket on
the back right side. You state that the fabric will be made and
cut into 17 components in Country A. The 17 garment components
will then be sewn together into finished swimming shorts and
packaged in Country B. About 85% of the processing cost of the
garment will be attributable to the processing done in Country A
and about 15% of the cost will be attributable to the processing
in Country B. According to your submission, the processing time
expended for making, cutting and packaging one pair of swimming
shorts in Country A will be approximately 10.9 minutes and the
processing time expended to assemble the swimming shorts in
Country B will be 9 minutes. You also state that the processing
performed in Country A will require 8 to 10 skill workers and the
assembly processing in Country B will require only 2 to 4 skill
workers. You further state that the sewing assembly performed in
Country B will not require any tailoring or detail work.
ISSUE:
What is the country of origin of the imported men's swimming
shorts?
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 marking 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. 1584) ("section
204").
Pursuant to 19 CFR 12.130, the standard of substantial
transformation governs the determination of the country of origin
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, country, or insular possession
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 operations. In
others words, for textiles governed by 19 CFR 12.130 there is a
two part test for substantial transformation: 1) a new and
different article of commerce and 2) a substantial manufacturing
or processing operation.
In T.D. 85-38, published in the Federal Register on March 5,
1985 (50 CFR 8714), which is the final rule document which
established 19 CFR 12.130, there is a discussion of how the
examples and the factors enumerated in the regulation are
intended to operate. "Examples set forth in 19 CFR 12.130(e) are
intended to give guidance to Customs officers and other
interested parties. Obviously, the examples represent clear
factual situations where the country of origin of the imported
merchandise is easily ascertainable. The examples are
illustrative of how Customs, given factual situations which fall
within those examples, would rule after applying the criteria
listed in 19 CFR 12.130(d). Any factual situation not squarely
within those examples will be decided by Customs in accordance
with the provisions of 19 CFR 12.130(b) and (d). The factors to
be applied in determining whether or not a manufacturing
operation is substantial are set forth in 19 CFR 12.130(d) and
(e).
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.
Section 12.130(d)(2) lists some of the factors considered in
determining whether a manufacturing operation has occurred.
These factors include: (1) the physical change in the material or
article as a result of the manufacturing or processing operations
in each foreign country; (2) the time involved in the
manufacturing or processing operations in each foreign country;
(3) the complexity of the manufacturing or processing operations
in each foreign country; (4) the level or degree or skill and/or
technology required in the manufacturing or processing operations
in each foreign country; and (5) the value added to the article
or material in each foreign country compared to its value when
imported into the U.S.
You state that the fabric for these swimming shorts is made
and cut in Country A. One of the examples enumerated is 19 CFR
12.130(e)(iii), which states that weaving, knitting or otherwise
forming fabric is an example of a manufacturing or processing
operation which would qualify under 19 CFR 12.130 as a
substantial transformation. Further, Customs stated in T.D. 85-
38 that "Cutting garment parts from fabric will result in a
substantial transformation of the fabric. Clearly, making
nylon/polyester fabric out of yarn or thread results in a new and
different article of commerce. Moreover, the forming of the
fabric and the cutting of the garment parts would qualify as a
substantial manufacturing operation under 19 CFR 12.130.
Therefore, the making of the fabric and cutting it into 17
garment components in Country A constitutes a substantial
transformation.
The second question presented is whether the fabric
undergoes a later substantial transformation in Country B, where
the 17 garment components are sewn together into the finished
swimming shorts.
Assembly by sewing is considered in 19 CFR 12.130(e)(v) as
usually resulting in a article being deemed a product of the
country in which the sewing was done where the assembly is
substantial such as the complete assembly and tailoring of all
cut pieces of suit-type jackets, suits, and shirts. After
considering all the comments received on the interim regulation
regarding assembly by sewing, Customs concluded that "factors
such as time, nature of the sewing operation, and the skill
required to sew together a tailored garment should be considered
in determining whether the merchandise was substantially
transformed.... Where either less than a complete assembly of
all the cut pieces of a garment is performed in one country, or
the assembly is a relatively simple one, then Customs will rule
on the particular factual situations as they arise, utilizing the
criteria in section 12.130(d)." 50 Fed. Reg. 8,715 (March 5,
1985), T.D. 85-38.
In Headquarters Ruling Letter (HRL) 731036 dated July 18,
1989, Customs ruled that the sewing together of 12 component
parts into a men's polo style shirt in a second foreign country
was not a substantial transformation under 19 CFR 12.130. The
factors considered were the simplicity of the operations
performed in the second country, and the lack of time and skill
required to perform the operations. In HRL 733841 dated
February 7, 1991, Customs ruled that the sewing of 8 component
parts into a men's polo style shirt in a second foreign country
was not a substantial transformation under 19 CFR 12.130. We
stated that the sewing assembly did not require tailoring or
detail work, required very little time and did not require highly
skilled workers. This case presents similar processing performed
in Country B as the two cases previously mentioned. In this
case, the sewing assembly of the garment is a simple operation
involving only a few skilled workers and not requiring any
tailoring or detail work. Further, 85% of the value of the
finished swimming shorts is attributable to the processing
performed in Country A, as compared to 15% being attributable to
Country B. Based on these considerations, we conclude that the
17 garment components do not undergo substantial manufacturing in
Country B and therefore, are not substantially transformed in
Country B. Accordingly, the country of origin of the swimming
shorts is Country A.
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of these
men's swimming shorts for country of origin marking purposes
would be Country A.
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
177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1). This
section states that a ruling letter is issued on the assumption
that all of the information furnished in connection with the
ruling request and incorporated in the ruling letter, either
directly, by reference, or by implication is accurate and
complete in every material respect. Should it subsequently be
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, it is
recommended that a new ruling request be submitted in accordance
with section 177.2, Customs Regulations (19 CFR 177.2).
Sincerely,
John Durant, Director
Commercial Rulings Division