CLA-2 CO:R:C:T 954448 jb

Mr. Stephen C. Lee
Great Malaysia Textile
No. 1, Tanglin Halt Close
Singapore 0314

RE: Country of origin determination for men's woven dress and sports shirts; substantial transformation where assembly occurs; sub-assembly of minor parts does not confer country of origin

Dear Mr. Lee:

This letter is in response to your inquiry of February 19, 1992, requesting a country of origin determination for men's woven dress and sports shirts.

FACTS:

You state that the shirts may be manufactured in either of three circumstances:

SCENARIO I:

The piece-goods are marked and cut in Country A. All the cut pieces are sent out to Country B where they are sewn into completed shirts, packed and exported.

SCENARIO II:

The piece-goods are marked and cut in Country A, where the collar is also sewn. The completed collar and all the cut pieces are then sent to Country B where they are sewn into completed shirts, packed and exported.

SCENARIO III:

The piece-goods are marked and cut in Country A, where the cuffs are also sewn. The completed cuffs together with the rest of the unsewn parts are then sent to Country B where they are sewn into completed shirts, packed and exported.

ISSUE:

What is the country of origin of the merchandise at issue?

LAW AND ANALYSIS:

Section 12.130 of the Customs Regulations (19 CFR 12.130), sets forth the principles of 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).

Section 12.130(b) of the Customs Regulations provides that a textile product that is processed in more than one country or territory shall be a product of that country or territory where it last underwent a substantial transformation. A textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing operations into a new and different article of commerce.

Section 12.130(d) of the Customs Regulations sets forth criteria in determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

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) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S.

Section 12.130(e)(1) of the Customs Regulations describes manufacturing or processing operations from which an article will usually be considered a product of the country in which those operations occurred. Section 12.130(e)(1)(v) provides the following:

Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits and shirts). Emphasis added.

We have previously held that cutting of fabric into pattern pieces constitutes a substantial transformation of the fabric, resulting in the apparel pieces becoming a product of the country where the fabric is cut (See, HQ 081320, dated April 14, 1989; HQ 086696, dated June 8, 1990; HQ 082924, dated March 26, 1990; HQ 085611, dated January 17, 1990; HQ 951426, dated April 8, 1992).

Section 12.130(e)(i)(v) makes note that there must be substantial assembly by sewing or tailoring of a suit-type garment for substantial transformation to occur. To determine whether origin is conferred when an article is transformed from its numerous constituent parts to what is eventually recognized as the completed garment, i.e., a shirt, one must first define "substantial assembly."

Substantial assembly can be defined as that operation, whether by sewing or tailoring, when all the components of the garment are attached together to form that completed shirt. Succinctly stated, substantial transformation occurs at the time of assembly of the individual component parts into a long sleeve shirt with collar, cuffs, full-front opening with plackets, and shoulder yokes.

Sewing the individual components of the shirt together, particularly the long sleeves, collars, yokes and plackets, to form the completed shirt, necessitates careful and skilled sewing in the assembly. It is the opinion of this office that the complete assembly in Country B is beyond a simple sewing operation and thus qualifies as a substantial assembly process. In addition, a determination that substantial assembly occurs at the time of assembly of the individual component parts is in adherence to the terms set by Section 12.130(e)(1) of the Customs Regulations. We also refer you to several rulings which have held that substantial transformation occurs at the time of complete assembly, e.g., HQ 075323, dated April 1, 1985; HQ 555608, dated January 27, 1990, and HQ 952750, dated October 16, 1992.

A review of these and other cases involving shirts, thus looks to both the type (structure) of the shirt and the complexity of the assembly process. In Scenario I all of the components are cut in Country A and then sent to Country B for assembly. In Scenario II, the cutting of all the components and the sub-assembly of the collar components into the completed collar occur in Country A, and then all parts are sent to Country B for assembly of the completed shirt. In Scenario III, all of the components are cut in Country A where there is also the sub-assembly of the cuff components into completed cuffs, and then all parts are sent to Country B for assembly of the completed shirt. In all situations there is a substantial transformation at the time of assembly of the component parts into the completed garment. Though a sub-assembly operation does take place in Scenario II and III in Country A, it is a minor part of the complete assembly of the garment and should not control the country of origin determination of the shirt. The assembly process in Country B, the time at which all the component parts, including the sub-assembled collar and cuffs are sewn together, is viewed by Customs as a substantial assembly resulting in a completed garment.

Thus, country of origin is conferred in Country B; this is when a substantial assembly of the completed garment takes place.

HOLDING:

Based on the information provided, the country of origin for the dress and sports shirts in Scenario I, Scenario II and Scenario III is Country B.

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 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