CLA-2 CO:R:C:T 953905 jb
Mr. Matthew Chang
ITOCHU International Inc.
335 Madison Avenue
New York, NY 10017
RE: Country of Origin Request for raw cotton fabric produced in
China and processed in Hong Kong; CFR 12.130(e); substantial
transformation occurs only when printing and dying
operations accompanied by two or more requisite operations
Dear Mr. Chang:
This is in response to your letter, dated April 9, 1993,
regarding a country of origin determination for greige cotton
fabric manufactured in China and processed in Hong Kong. Samples
were submitted to this office for examination.
FACTS:
The Chinese manufacturer will ship unbleached (greige)
cotton fabric to Hong Kong where it will be processed. The
fabric is a plain weave, with a construction of 20 by 20, and a
thread count of 28 by 28 per centimeter. The weight of the
fabric will be approximately 166 grams per square meter. The
average yarn number will be 33 (mn).
In Hong Kong the fabric may undergo any of the following
processes:
1. Scouring, singeing, mercerizing, bleaching, dyeing,
printing and provision of a resin finish to impart a
chintz quality.
2. Scouring, singeing, mercerizing, bleaching, printing and
provision of a resin finish to impart a chintz quality.
3. Scouring, singeing, mercerizing, dyeing (a white color),
printing, and provision of a resin finish to impart a
chintz quality.
ISSUE:
Whether the processing performed in Hong Kong changes the
country of origin of the imported fabric?
LAW AND ANALYSIS:
Section 12.130 of the Customs Regulations (19 CFR 12.130)
sets forth the principles for determining country of origin for
textiles and textile products subject to Section 204 of the
Agricultural Act of 1956, as amended (7 U.S.C. 1854).
Pursuant to 19 CFR 12.130(b), the standard of substantial
transformation governs the country of origin determination 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 or country 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.
The factors to be applied in determining whether or not a
manufacturing operation is substantial are set forth in
19 CFR 12.130(d). Section 12.130(e)(1) provides:
An article or material usually will be a product of a
particular foreign territory or country, or insular
possession of the U.S., when it has undergone prior to
importation into the U.S. in that foreign territory or
country, or insular possession any of the following:
(i) Dyeing of fabric and printing when accompanied by
two or more of the following finishing operations:
bleaching, shrinking, fulling, napping, decating,
permanent stiffening, weighting, permanent
embossing, or moireing;
Emphasis added.
Section 12.130(e)(2) further provides:
An article or material usually will not be considered to be
a product of a particular foreign territory or country, or
insular possession of the U.S. by virtue of merely having
undergone any of the following:
(iv) One or more finishing operations on yarns,
fabrics, or other textile articles, such as
showerproofing, superwashing, bleaching, decating,
fulling, shrinking, mercerizing, or similar
operations; or
(v) Dyeing and/or printing of fabrics or yarns.
Emphasis added.
In HQ 733787, dated March 14, 1991, Customs made clear its
views on whether the listed series of operations noted in 19 CFR
12.130(e)(1)i) are illustrative or exclusive:
In 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, (T.D. 85-38),
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
12.130(d). Any factual situation not squarely within those
examples will be decided by Customs in accordance with the
provisions of 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).
Customs has been consistent in its determinations that where
dyeing and printing are not accompanied by two or more of the
operations enumerated in 12.130(e)(1)(i), or where processing
involves only one or more finishing operations with no dyeing and
printing, or dyeing and printing alone, substantial
transformation does not occur for country of origin purposes
(See, HQ 734351, dated March 2, 1992; HQ 734262, dated
January 6, 1992; HQ 088901, dated July 5, 1991; HQ 734435, dated
January 10, 1991, and Mast Industries, Inc. v. United States, 11
CIT 30, 652 F. Supp. 1531 (1987), aff'd, 5 Fed. Cir. 105, 822
F.2d 1069 (1987)).
In the instant case, though scenario (1) and (3) have the
printing and dyeing operations, they lack the additional two or
more operations enumerated in 12.130(e)(1)(i). Scenario (2) on
the other hand, only has a printing operation without either the
necessary dyeing operation or the additional finishing operations
required by 12.130(e)(1)(i). As such, the processing in Hong
Kong meets the definition provided for in 12.130(e)(2)(iv)(v),
that is, operations not considered to be a substantial
transformation for country of origin purposes.
HOLDING:
The processing performed in Hong Kong does not constitute a
substantial transformation. The operations performed on the
greige fabric do not transform the textile product into a new and
different article of commerce. As such, the country of origin of
the processed fabric remains that of China.
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 the ruling letter,
either directly, by reference, or by implication, is accurate and
complete in every material respect.
Should it be subsequently 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
or 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