CLA RR:TC:TE 959337 jb
Leslie K. Thiele
Whiteman Osterman & Hanna
P.O. Box 22016
Albany, New York 12201
RE: Country of origin determination for coated work gloves; 19
CFR 12.130; substantial transformation occurs at the time of the
coating of the gloves
Dear Ms. Thiele:
This letter is in response to your inquiry of March 4, 1996,
on behalf of your client, Protective Industrial Products, Inc.,
regarding the country of origin of coated work gloves.
FACTS:
The subject coated work gloves are part of a line of work
and protective clothing items sold by your client. The
manufacturing process for these gloves consists of importing
coating shells from Korea to the United States. In the United
States, the coating shells are placed on a hand-form coating
machine which coats the shells with a polyvinyl chloride (PVC)
compound in one of several styles, heats and cures the compound.
The coating shells are specifically knitted to be used to
manufacture the coated work gloves. The shells are a raw
material only suitable for hand protection after being coated
with the PVC compound. You state that your client does not offer
for sale these uncoated shells in their "raw" state.
Additionally, you state that your client occasionally uses
domestic coating shells to manufacture the coated work gloves in
those instances where there is a cost advantage to doing so or
when a shipment of imported shells is delayed. As with the
imported shells, the domestic shells are designed and knitted
specifically for coating, and when finished, are
indistinguishable from the coated work gloves made from the
imported shells.
You state that the manufacturing process and the PVC coating
provide functionality to the shells. The PVC compound applied to
the coating shells renders the working surfaces of the gloves
liquid, cut and abrasion resistant. In addition, coated work
gloves with various grip-enhancing designs are available. These
designs range from a dot pattern to a brick pattern, which may be
applied to the palm area of the glove or both the back and palm
areas. These PVC designs are applied to up to 75 percent of the
surface of the knitted gloves.
There is a broad range of coated work gloves suited for a
variety of purposes. The PVC coated gloves at issue are often
used by construction and manufacturing company employees because
of their enhanced grip and protection from grease and oils. PVC
coated gloves are particularly appropriate for general assembly
line workers who work with heavy tools and/or glass, contributing
to general safety measures. Also available are nitrile coated
gloved which provide an added measure of cut resistance. The
latter are often used by sheet metal workers who need this
particular feature.
Although you have requested that the country of origin of
the subject gloves be determined under Section 12.130 of the
Customs Regulations (19 CFR 12.130), you should be advised that
on and after July 1, 1996, the origin of all textiles and apparel
entered or withdrawn from warehouse, for consumption, will be
determined under the new rules of origin as per the terms of
Section 102.21.
ISSUE:
What is the country of origin of the subject merchandise?
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).
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)(2). The following are 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.
In this instance, the manufacturing operation involving the
coating of the shells qualifies as a substantial transformation
of the good, resulting in a new and different article of
commerce. Without the application of the coating on up to 75
percent of the uncoated shells, the shells would not be able to
perform the intended function of the coated work gloves, that is,
protecting the wearer from cuts, abrasions, and slippage. Thus,
the coating not only adds, or changes, the overall physical
character of the merchandise, but it also contributes greatly to
the value of the gloves. This is consistent with past Customs
rulings which have held that a PVC coating applied to glove
liners constitutes a substantial transformation (See, HQ 729844,
dated October 24, 1986, and HQ 732418, dated February 12, 1990).
Accordingly, a substantial transformation occurs at the time of
the coating of the gloves, that is, in the United States.
However, you should be aware that on December 8, 1994, the
President signed into law the Uruguay Round Agreements Act.
Section 334 of that Act provides new rules of origin for textiles
and apparel entered or withdrawn from warehouse, for consumption,
on and after July 1, 1996. On September 5, 1995, Customs
published Section 102.21, Customs Regulations, in the Federal
Register, implementing 334 (60 FR 46188). 334 generally
provides, with certain exceptions, that the origin of textile
goods will be the country in which they are assembled. Section
102.21 (c)(1) states that, "The country of origin of a textile or
apparel product is the single country, territory or insular
possession in which the good was wholly obtained or produced".
As the subject gloves are not wholly obtained or produced in a
single country, Section 102.21(c)(1) is inapplicable.
Section 102.21(c)(2) states that, "Where the country of
origin of a textile or apparel product cannot be determined under
paragraph (c)(1) of this section, the country of origin of the
good is the single country, territory or insular possession in
which each foreign material incorporated in that good underwent
an applicable change in tariff classification, and/or met any
other requirement, specified for the good in paragraph (e) of
this section. The subject knit to shape gloves are classified in
heading 6116, Harmonized Tariff Schedule of the United States
(HTSUS). Paragraph (e) states that, "The following rules shall
apply for purposes of determining the country of origin of a
textile or apparel product under paragraph (c)(2) of this
section:"
6101-6117 If the good is knit to shape, a change
to heading 6101 through 6117 from any
heading outside that group, provided
that the change is the result of a fabric-making process.
As the gloves are classified in heading 6116, HTSUS, they are not
outside the group that is excepted, and thus, Section
102.21(c)(2) is not applicable.
Section 102.21(c)(3) states that, "Where the country of
origin of a textile or apparel product cannot be determined under
paragraph (c)(1) or (2) of this section:
(i) If the good was knit to shape, the country of origin of
the good is the single country, territory or insular
possession in which the good was knit;
As the subject gloves are knit to shape in a single country, that
is, Korea, the country of origin of the subject gloves is Korea.
Accordingly, based on the facts stated above, effective July 1,
1996, the country of origin of the gloves will be Korea and will
have to be labeled as such.
Additionally, you request that Customs confirm the proposed
markings "Coated gloves made in the U.S.A.", or "Coated gloves
made in the U.S.A. from U.S. or Korean shells". Please be aware
that the use of the marking "Made in the U.S.A." is within the
jurisdiction of the Federal Trade Commission, Division of
Enforcement, located at 6th & Pennsylvania Avenue, N.W.,
Washington, D.C. 20508, and thus any questions regarding marking
bearing the words "Made in the U.S.A." should be directed to that
office.
HOLDING:
The country of origin of the subject gloves under Section
12.130, is the United States.
Effective July 1, 1996, as per the terms of Section 102.21,
the country of origin of the subject gloves is Korea.
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 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 of origin. Accordingly, if there is a change in the
facts submitted to Customs, it is recommended that a new ruling
request be submitted in accordance with 19 CFR 177.2.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division