CLA-2 CO:R:C:T 951481 CRS
Mr. Alan Sutter
J.W. Hampton, Jr. & Co., Inc.
15 Park Row
New York, NY 10038
RE: Nylon knapsacks/backpacks; country of origin; 19 CFR 12.130;
not substantial transformation; HRL 088455.
Dear Mr. Sutter:
This is in reply to your letter of March 24, 1992, on behalf
of Acme Brief Case Co., Inc., regarding the country of origin for
tariff and quota purposes of five styles of knapsacks/backpacks.
Samples of the merchandise in question were provided.
FACTS:
The merchandise in question consists of knapsacks/backpacks
identified as style numbers 7411, 7711, 7430s, 7474 and 76362.
The material components of the knapsacks/backpacks, including
nylon fabric, thread, binding, zippers, webbing, trim and hang
tags, are purchased in Taiwan and are wholly of Taiwanese origin
and manufacture. The fabric is die-cut in Taiwan to the proper
shapes for stitching into knapsacks/backpacks. After cutting,
the die-cut fabric and other parts are shipped to the People's
Republic of China (PRC) where they are assembled into finished
articles. The completed backpacks/knapsacks are then packed into
cartons and shipped to the United States. The manufacturer in
the PRC is Guh Dih Tsuen, Rong Chyi Town, Goang Dong Province.
You state that the facts underlying this transaction are
essentially identical to those stated in Headquarters Ruling
Letter (HRL) 088455, issued to you on behalf of Acme Brief Case
Co., Inc., on March 8, 1991. The differences are that: (1) the
country of assembly in this instance is the People's Republic of
China rather than Indonesia; and (2) while the cost per dozen for
styles 7411, 7711 and 7430s are the same as given for the styles
at issue in HRL 088455, the cost per dozen for styles 7474 and
76362 is different.
You have provided the following cost information per dozen
with regard to the styles in question:
Styles 7411, 7711 and 7430s
PRC
Labor $3.360
Polybag 0.264
Carton 0.144
Inland trucking 0.468
Bank charges 0.240
PRC cost $4.476
Taiwan
Nylon with PVC backing $7.440
PVC sheeting for pocket backing 0.228
Design and dies 0.084
Cutting 0.236
Zippers 1.680
Webbing 0.864
Foam padding for backstraps 0.444
Plastic buckles 0.450
Thread 0.216
Hangtag 0.212
Taiwan cost $11.854
The total cost of the knapsacks/backpacks per dozen for styles
7411, 7711 and 7430s is $16.33 of which 72.6 percent represents
costs incurred in Taiwan, and 27.4 percent, costs incurred in the
PRC.
Style 7474
PRC
Labor $6.390
Polybag 0.264
Carton 0.192
Inland trucking 0.952
Bank charges 0.384
PRC cost $8.182
Taiwan
Nylon with PVC backing $13.500
PVC sheeting for pocket backing 0.360
Design and dies 0.132
Cutting 0.384
Zippers 1.141
Webbing 1.926
Foam padding for backstraps 0.577
Plastic buckles 1.082
Thread 0.216
Hangtag 0.500
Taiwan cost $19.818
The total cost per dozen of style 7474 is $28.00, of which 70.78
percent represents costs incurred in Taiwan, and 29.22 percent
costs incurred in the PRC.
Style 76362
PRC
Labor $6.760
Polybag 0.264
Carton 0.200
Inland trucking 0.952
Bank charges 0.362
PRC cost $8.538
Taiwan
Nylon with PU backing $15.550
PVC sheeting for pocket backing 1.020
Design and dies 0.371
Cutting 0.450
Zippers 3.663
Webbing 0.840
Foam padding backstraps 0.960
Plastic buckles 0.528
Thread 0.480
Hangtag 0.600
Taiwan cost $24.460
The total cost per dozen of style 76362 is $33.00, of which 74.13
percent represents costs incurred in Taiwan, and 25.87 percent,
costs incurred in the PRC.
ISSUE:
The issue presented is whether the assembly of backpacks in
the People's Republic of China from materials of Taiwanese origin
constitutes a substantial transformation under section 12.130 of
the Customs Regulations.
LAW AND ANALYSIS:
The country of origin regulations for textiles and textile
products are contained in section 12.130, Customs Regulations
(19 CFR 12.130. Section 12.130 provides that a textile or
textile product consisting of materials produced or derived from,
or processed in, more than one foreign country, is considered to
be a product of that foreign country where it last underwent a
substantial transformation. Subsection 12.130(d) enumerates the
criteria to be considered in determining country of origin. The
criteria include the physical change in the material or article,
the time involved in the manufacturing or processing operations,
the level or degree of skill and/or technology required, and the
value added to the article. These criteria are not exhaustive;
one or any combination of these criteria, as well as additional
factors, may be considered.
Although the knapsacks/backpacks are assembled and packed in
the PRC, the nylon fabric and other components are wholly of
Taiwanese origin and manufacture. In addition, the design and
cutting operations are performed in Taiwan. The raw material
manufacture, and the design and cutting operations are deemed to
be the factors which contribute most to the creation of the final
product. Furthermore, we note that approximately three-quarters
of the total value of the merchandise stems from operations
performed in Taiwan.
Based on the information provided, Customs is of the opinion
that the work performed in the PRC represents little more than
simple fabrication and therefore does not constitute a
substantial manufacturing or processing operation under 19 CFR
12.130. Accordingly, Taiwan is the country of origin of the
knapsacks/backpacks at issue.
HOLDING:
The country of origin of the knapsacks/backpacks in question
is Taiwan.
The holding in this ruling letter is binding only as it
applies to the particular transaction or issue described in your
request (19 CFR 177.9(a)). Each ruling is issued on the
assumption that all of the information provided is accurate and
complete in every material respect (19 CFR 177.9(b)(1)). In the
event that the information provided should differ from the
circumstances of the actual transaction, or does not comply with
19 CFR 177.9, this ruling will be subject to modification or
revocation and may no longer be relied upon. In particular, the
country of origin determination may be affected. In such a case,
we recommend that a new request for a binding ruling be submitted
in accordance with 19 CFR 177.2.
Sincerely,
John Durant, Director
Commercial Rulings Division