CLA-2 CO:R:C:T 954961 SK
Natouchka Patrice Rampy
Sharretts, Paley, Carter & Blauvelt, P.C.
67 Broad Street
New York, N.Y. 10004
RE: Clarification of HRL 953708 (7/13/93); holding affirmed but
analysis modified; panels of a girls' top processed in different
countries; substantial transformation occurs in two different
countries; assembly into the completed article is not sufficient
to constitute a substantial transformation within the purview of
19 CFR 12.130; country of origin will be predicated on where the
garment last underwent significant processing; if components are
substantially transformed in different countries, and are
classifiable under different headings, a GRI 3(b) or 3(c)
analysis is used; Customs Memo 088778 (3/25/91); Customs Memo
084118 (4/13/89); HRL 952801 (7/13/93); HRL 953698 (7/19/93).
Dear Ms. Rampy:
On July 13, 1993, this office issued you Headquarters Ruling
Letter (HRL) 953708 in which we classified a girls' knit top and
pants and determined the country of origin for these garments.
Upon review, we have determined that although the classification
portion of that ruling is correct, and the holding in which we
stated that the country of origin of both the girls' top and
pants was St. Lucia, an error was made in our analysis of the
country of origin issue with regard to the girls' top. Our
modified analysis follows.
FACTS:
The girls' top at issue is constructed of a knit fabric made
from 60 percent cotton and 40 percent polyester. The top is a
tee-style shirt with a flower-shaped applique affixed to the
front and a ribbed crew-neck collar.
The fabric for this garment is knit in China. The front
shirt panel is cut in China and it is here that the applique is
affixed. The front shirt panel and the fabric required to
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complete the shirt are then shipped to St. Lucia. In St. Lucia,
the fabric required to complete the shirt is cut and the shirt is
assembled to completion.
ISSUE:
On what basis is a country of origin determination made
where the assembly of a garment's various components into a
completed article fails to constitute a substantial
transformation within the purview of Section 12.130 of the
Customs Regulations, where no one component imparts the essential
character to the garment, and where the components are
classifiable in the same heading?
LAW AND ANALYSIS:
Country of origin determinations are made pursuant to
Section 12.130 of the Customs Regulations (19 CFR 12.130).
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)(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;
(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;
(ii) The time involved in the manufacturing or processing;
(iii) The complexity of the manufacturing or processing;
(iv) The level or degree of skill and/or technology
required in the manufacturing or processing
operations;
(v) The value added to the article or material.
Section 12.130(e)(1) provides that an article or material
usually will be a product of a particular foreign territory or
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country, or insular possession of the United States, when, prior
to importation into the United States, it has undergone 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;
(ii) Spinning fibers into yarn;
(iii) Weaving, knitting or otherwise forming fabric;
(iv) Cutting of fabric into parts and the assembly of those
parts into the completed article; or
(v) substantial assembly by sewing and/or tailoring of
all cut pieces... .
In HRL 953708, this office determined that the girls' top at
issue was substantially transformed in St. Lucia. We held that,
pursuant to Section 12.130(e)(1)(v), country of origin status was
conferred to the girls' top in St. Lucia on the basis that
"substantial assembly by sewing ... of all cut parts" transpired
in that country. Upon reconsideration, this office believes that
determination to be in error. Although we still maintain that
the country of origin of the girls' top is St. Lucia, we do not
reach that conclusion on the assumption that the manufacturing
operations performed in St. Lucia meet the criteria for
conferring country of origin as set forth in 19 CFR 12.130.
As set forth above, the front panel of the girls' top is cut
in China and it is also in that country that the flower applique
is manufactured and sewn to the front of the garment. The
cutting of the front panel in China materially alters the fabric
into a designated garment piece and substantially transforms the
fabric into a new and different article of commerce.
In St. Lucia, the back panel and collar are cut and the
garment pieces are assembled into the completed tee-style shirt.
This cutting process similarly serves to substantially transform
the fabric into designated garment pieces. The assembly by
sewing of these component pieces into the completed garment,
however, is not a substantial transformation for purposes of
Section 12.130(e)(1)(v). That Section requires that the assembly
process effected by sewing or tailoring be substantial. In T.D.
85-38 (19 Cust. Bull. 58, 70; 50 FR 8714), the final document
rule establishing 19 CFR 12.130, it was stated that:
[T]he assembly of all the cut pieces of a garment
usually is a substantial manufacturing process that
results in an article with a different name, character,
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or use than the cut pieces. It should be noted that
not all assembly operations of cut garment pieces will
amount to a substantial transformation of those pieces.
Where either less than 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).
[emphasis added]
This office has consistently held that the mere assembly of goods
entailing simple combining operations by sewing, as is the case
here, is not enough to substantially transform the components of
an article into a new and different article of commerce. See
Headquarters Ruling Letters (HRL's) 082747, dated February 23,
1989; 951169, dated April 1, 1992; 951437, dated July 17, 1992;
952647, dated January 27, 1993; 953488, dated May 14, 1993. In
the instant case, the assembly operations performed in St. Lucia
are mere combining and sewing operations and do not possess the
requisite degree of complexity to be deemed substantial
manufacturing processes for purposes of conferring country of
origin status. No great degree of skill or advanced technology
is required, nor is tailoring involved.
If assembly to completion of various components is not
sufficient to constitute a substantial transformation within the
purview of Section 12.130, and the component parts of an article
have been substantially transformed prior to assembly in
different countries, a different test must be applied to
determine the country of origin of the garment. In Customs Memo
088778, dated March 25, 1991, this office held that in
manufacturing situations which are not covered by 19 CFR 12.130,
a country of origin determination shall be predicated on the
portion of the article which imparts the essential character to
that garment. Explanatory Note VIII to GRI 3(b), which sets
forth the standards used in an essential character determination,
reads:
The factor which determines essential character will
vary as between different kinds of goods. It may,
for example, be determined by the nature of the
material or component, its bulk, quantity, weight
or value, or by the role of a constituent material
in relation to the use of the goods.
In the instant case, neither the front panel nor the back panel
imparts the essential character to the girls' top. Both
components are made from the same fabric and perform similar
functions. This office is not prepared to hold that the presence
of the flower applique is significant enough so as to warrant a
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finding that the front panel imparts the essential character to
this garment.
Customs Memo 088778 further provides that in situations where
no one component can be said to impart the essential character,
country of origin will be determined according to the component
which governs the classification of the garment. This
determination is accomplished using a GRI 3(c) analysis which
states that the heading occurring last in numerical order among
those equally meriting consideration will govern classification.
The country of origin of the component which governs
classification using a GRI 3(c) analysis will also determine the
country of origin for the entire article. See HRL 952801, dated
July 13, 1993. In the instant case, however, both components
are made from the same fabric and we are unable to use a GRI 3(c)
analysis in that there are no competing headings.
In situations where components are manufactured in different
countries, where the manufacturing process does not constitute a
substantial transformation for purposes of 19 CFR 12.130, and
where no one component determines the classification of the
article, Customs will determine the country of origin on the
basis of where the article last underwent a significant
processing operation. In the manufacturing scenario presented to
this office in HRL 953708, the girls' top last undergoes a
significant processing operation in St. Lucia as this is the
country where the last cutting occurs and where virtually all of
the cut parts, with the exception of the flower applique, are
sewn and assembled into completed articles. While this
manufacturing scenario does not constitute a substantial
transformation for purposes of 19 CFR 12.130, it nevertheless is
deemed complex enough to confer country of origin to an article
in situations that fall outside of the scope of Section 12.130.
It is using this standard that we determine St. Lucia to be the
country of origin of the girls' top.
HOLDING:
The holding in HRL 953708 is affirmed, however the analysis
section in that ruling is incorrect and is to be interpreted in
the manner set forth in this ruling.
Sincerely,
John Durant, Director
Commercial Rulings Division