MAR-2-05 CO:R:C:V 734193 AT
Patrick D. Gill, Esq.
Rode & Qualey
295 Madison Avenue
New York, New York 10017
RE: Country of origin marking of imported stuffed toys;
substantial transformation; cutting of fabric in Korea and
sewing assembly in China
Dear Mr. Gill:
This is in response to your letters of May 13 and September
6, 1991, on behalf of Gund, Inc., requesting a ruling on the
country of origin of imported stuffed toys. A finished stuffed
polar bear, as well as the components as they exist at the
conclusion of each major stage in the production process were
submitted for examination.
FACTS:
You state that Gund, Inc. intends to import stuffed toys
from Korea. You also state that the production of the stuffed
toys will involve processing operations performed in two
countries, Korea and China. The operations to be performed in
Korea will consist of the cutting of Korean fabric into
approximately 12 pieces which form the stuffed toy skin. These
12 pieces will then be exported to China where they will be sewn
together into the skin for the stuffed toy. The skins will then
be sent back to Korea where they will be stuffed with Korean
stuffing material, sewn closed, the eyes and nose will be sewn on
and packaged for shipment to the U.S. You state that the
operations performed in Korea represent approximately 80 percent
of the total value of the finished stuffed toys. You state that
the cutting of the Korean fabric into the 12 pieces in Korea
constitutes a substantial transformation and that the
sewingoperation performed in China does not. Based on this you
contend that the country of origin of the stuffed toys is Korea.
ISSUE:
What is the country of origin of the imported stuffed toys
that are processed under the conditions described above?
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 its 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. Congressional intent in
enacting 19 U.S.C. 1304 was "that the ultimate purchaser should
be able to know by an inspection of the marking on the imported
goods the country of which the goods is the product. The evident
purpose is to mark the goods so that at the time of purchase the
ultimate purchaser may, by knowing where the goods were produced,
be able to buy or refuse to buy them, if such marking should
influence his will." United States v. Friedlander & Co., 27
C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the exceptions of
19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b), defines "country of origin" as the country of
manufacture, production or growth of any article of foreign
origin entering the U.S. Further work or material added to an
article in another country must effect a substantial transform-
ation in order to render such other country the "country of
origin" within the meaning of Part 134. A substantial
transformation occurs when articles lose their identity and
become new articles having a new name, character, or use. Koru
North America v. United States, 12 CIT 1120, 701 F.Supp. 229
(1988). The question of when a substantial transformation occurs
is a question of fact to be determined on a case-by-case basis.
Uniroyal Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026
(1982), aff'd, 1 Fed.Cir. 21, 702 F.2d 1022 (1983). (Although
the stuffed toys consist of textile materials, the rules for
determining the country of origin for textile products set forth
in section 12.130 are not applicable because they are classified
outside of section XI, HTSUS and they are not subject to quota).
In determining whether the assembly of parts or materials
constitutes a substantial transformation, the issue is the extent
of operations performed and whether the parts lose their identity
and become an integral part of the new article. Belcrest Linens
v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2
Fed.Cir. 105, 741 F.2d. 1368 (1984). Assembly operations which
are minimal or simple, as opposed to complex or meaningful, will
generally not result in a substantial transformation. See,
C.S.D.s 80-111, 85-25, 89-110, 89-118, 89-129 and 90-97.
In HQ 734214 (November 18, 1991), we considered whether the
assembly in China of Taiwanese fishing rod components constituted
a substantial transformation and found that it did not, stating
that the assembly of all the foreign components in China did not
result in the manufacture of a new and different article in that
the assembly operation was simple, the foreign component parts
did not lose their identity (no change to the physical dimensions
of the components occurred) and the assembly operation added only
15 percent to the total value of the finished fishing rods.
Accordingly, we ruled that the country of origin of the fishing
rods was the place where the components were made "Taiwan" and
not the place where the simple assembly took place "China".
Similarly, in this case, we find that the sewing in China
of the 12 pieces of fabric into the stuffed toy skin does not
constitute a substantial transformation of the Korean fabric
pieces. Like the fishing rod assembly in HQ 734214, the extent
of the operations performed in China is simple in that it
requires the sewing of only 12 small pieces of fabric, the 12
pieces of fabric do not lose their identity (no change to the
physical dimensions of the fabric pieces occur as a result of
sewing them together) and the assembly operation adds only 20
percent of the total value of the finished stuffed toy which we
consider to be relatively low. Accordingly, the country of
origin of the stuffed toys is Korea.
HOLDING:
The country of origin of the imported stuffed toys processed
in the manner described above is Korea.
Sincerely,
John Durant, Director
Commercial Rulings Division