CLA-2 RR:CR:TE 959871 RH
Area Director of Customs
Attn: Chief, Residual Liquidation
& Protest Branch
6 World Trade Center, Room 761
New York, NY 10048-0945
Re: Protest No. 1001-96-104522; 19 CFR 12.130(e)(1)(i); finishing operations; shrinkage; singeing; tentering; steaming; fulling; country of origin; rayon fabric
Dear Sir:
This is in response to your memorandum dated October 9, 1996, regarding the Application for Further Review of Protest (AFR) number 1001-96-104522, filed by the law firm of Grunfeld, Desiderio, Lebowitz & Silverman, LLP, on behalf of Metro Fabrics, Inc., against a Notice to Redeliver. The protest was timely filed on June 10, 1996, and review is warranted pursuant to
19 CFR 174.24(b).
FACTS:
On January 3, 1996, the protestant entered into the United States 1,426 yards of 100 percent spun rayon fabrics, style numbers 4747, 4743, 4746, 4751. The protestant claimed Turkey as the country of origin of the fabric stating that it underwent substantial finishing operation by the Turkish manufacturer, Italteks Ekspo Grup Tekstil Sanayi A.S.
A Customs laboratory determined that the merchandise was dyed, printed and bleached, but found no indication that the fabric underwent any of the other finishing operations enumerated in
19 CFR §12.130. Thus, a Notice to Redeliver was issued to the protestant on March 11, 1996, stating that the country of origin was China, for which a visa was required.
Customs liquidated the entry on May 17, 1996.
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Counsel claims that the Notice to Redeliver was improperly issued for several reasons. First, counsel argues that Customs only tested one of seven styles of imported fabric and that redelivery must be limited to the tested style. Additionally, counsel argues the fabrics in question are dry-clean only and that the Notice to Redeliver was improper because it was premised on the wrong laboratory test. The protestant further contends that the imported fabrics satisfied the country of origin requirements by undergoing substantial manufacturing and processing operations in Turkey in that they were not only dyed, printed and bleached, but also pre-shrunk (fulling), subjected to chemical embossing, tentering, steaming or decating and singeing.
Classification of the merchandise under subheading 5516.14.0010 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), is uncontested.
ISSUE:
Whether the Chinese greige fabrics in question were substantially transformed in Turkey pursuant to 19 CFR 12.130?
LAW AND ANALYSIS:
At the time the fabrics in question entered the United States, Section 12.130(b) of the Customs Regulations (19 CFR §12.130(b)) governed the country of origin determinations for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C.
1854). Under that provision, 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(e), which provides in part:
[A]n 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.
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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:
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(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.
In his memorandum, counsel claims that the fabrics were dyed, printed, bleached, pre-shrunk (fulling), subjected to chemical embossing, tentering, steaming or decating and singeing. Counsel claims that the finishing processes listed in section 12.130 provide examples of the types of processes that will satisfy the country of origin and that, although the finishing operations performed on the subject fabric do not specifically coincide with the language of section 12.130, they are substantial processes and provide similar, if not the same results.
Customs has been consistent in its determinations that where dyeing and printing are not accompanied by two or more of the operations enumerated in 19 CFR §12.130(e)(1), or where processing involves only one or more finishing operation with no dyeing and printing, or dyeing and printing alone, a substantial transformation does not occur for country of origin purposes. See, Headquarters Ruling Letter (HQ) 734262, dated January 6, 1992, wherein Customs held that greige fabric which was treated by bleaching, dyeing, printing, and resin finishing, including
special coating of the fabric, was not substantially transformed; HQ 734435, dated January 10, 1991 (greige fabric produced in Taiwan and processed in Hong Kong by desizing, scouring, bleaching, dyeing, softening, stentering and calendering, was not substantially transformed because the dyeing operation was not in conjunction with a printing operation); HQ 089230,
dated May 10, 1991 (Chinese greige fabric exported to Hong Kong where it underwent scouring,
bleaching, printing, napping and preshrinking, was not substantially transformed in Hong Kong); HQ 953905, dated July 30, 1993 (fabrics which were dyed and printed and then underwent scouring, singeing, mercerizing and bleaching lacked the two additional operations enumerated in 12.130(e) and were not substantially transformed); HQ 953191, dated May 14, 1993 (a substantial transformation did not occur in Kuwait where greige fabric was desized and washed,
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scoured, shrunk, bleached dyed, sized and finished and cut on four sides and hemmed); HQ 088901, dated July 5, 1991 (greige fabric shipped to Israel where it was cut and sewn into 3000 foot lengths, singed and desized, washed, dried, subjected to thermofixation (heating the fabric to fix the final elasticity), bleached, printed, placed on a stentor frame, dyed (a light shading), washed, calendered, washed, and pressed, was not substantially transformed because Customs found that the fabric was not printed and dyed).
Customs interpretation of 19 CFR §12.130 was upheld by the United States Court of International Trade in Mast Industries Inc. v. United States, 652 F. Supp. 1531 (1987); aff'd 822.F. 2d 1069 (CAFC, 1989). That case involved greige cotton fabric produced in China and sent to Hong Kong for singeing, desizing, scouring, bleaching, mercerizing, dyeing, softening, and stentering. The court stated that in determining the meaning of an agency's regulation, it would defer to that agency's interpretation unless the interpretation is plainly erroneous or inconsistent with the regulation. The court found that Customs' interpretation was reasonable and approved of Customs denying entry to the finished fabric without a visa from the Government of China.
Based on the foregoing, we disagree with counsel that singeing, tentering and steaming constitute finishing operations which satisfy the terms of 19 CFR 12.130(e)(1). We also disagree with counsel that fulling and/or stentering constitute a shrinking operation under 19 CFR §12.130(e)(1). The operations performed on the instant fabrics was different from those listed in 953019. The protestant has not submitted any documentation from the Turkish manufacturer, Italteks, regarding the alleged shrinking operation.
Counsel cited HQ 953019, dated February 9, 1994, to support his claim that tentering constitutes a finishing operation under 19 CFR 12.130(e). It reads, in pertinent part: “The fabric then undergoes its final finishing, which entails its passage on a stenter frame where fulling agents, a softener and crease resistant chemicals are applied and baked into the fabric at a high temperature to shrink it.” That decision is not correct and will be revoked.
In determining that the fabrics had not been subjected to a shrinking process, Customs relied upon the standards set forth in the American Society for Testing and Materials (ASTM) Standard D 4038. This performance specification covers woven women’s and girls’ dress and blouse fabrics composed of any textile fiber or mixture of textile fibers. Section 1.1, ASTM 4038. The standard instructs that dimensional change be determined in accordance with the procedure set out in the AATCC (American Association of Chemists and Colorists) Test Method 135. The maximum allowable dimensional change recommended by the ASTM 4038 standard is 3 percent.
In this case, the 3 percent maximum allowable dimensional change used by the Customs laboratory to determine if the imported fabrics were preshrunk is a recognized industry standard. The ASTM standards are recognized by both the government and the industry. HQ 224349, dated February 18, 1994. Recognition by Customs of the ASTM standards for weighing, measuring and testing merchandise is exhibited by an array of Customs rulings, a small sampling of which include: HQ 085912, dated February 6, 1990 (Customs is of the opinion that the use of
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the ASTM standards will properly fulfill Congressional intent regarding the definition of a tariff term); HQ 081157, dated April 25, 1989 (it has always been Customs practice, as well as an industry practice, that any product which does not meet the ASTM D 439 specifications may not
be considered automotive gasoline for either Customs or commercial purposes); HQ 086218, dated March 26, 1990 (it has consistently been the position of Customs to utilize substantiality of construction as essential to a finding that an article is designed for travel and thus could be
designated as luggage - Customs Service has used the ASTM designation D1593-91 as the
basis for determining substantiality); HQ 111846, dated April 28, 1992 (Customs has adopted for most cases standards established by the ASTM to determine whether the gasoline or blending components of gasoline are transformed into new and different products because such standards represent industry developed criteria for characterizing fuel oils); HQ 224340, dated May 25, 1994 (Customs uses the ASTM standards to determine fungibility for certain products); HQ 953997, dated January 24, 1994 (ASTM D3597-89 has been adopted by Customs as the proper test method which sets forth the abrasion standards for woven upholstery fabrics); HQ 954018, dated September 23, 1993 (in considering whether a product consisting of 75 percent gray Portland cement and 25 percent calcium carbonate is classifiable as Portland cements, Customs consulted several standards established by the ASTM).
Under its statutory authority to verify the nature of imports using laboratory testing, Customs has a long history of relying on industry standards for its methods of weighing, measuring and testing merchandise. There is also a presumption that the test methods and analysis technique of the Customs laboratory was correct. Exxon, supra. The AATCC 135 is a test method intended for the determination of dimensional changes in woven and knit fabrics when subjected to repeated automatic laundering procedures commonly used in the home. “Dimensional change” is defined in section 3.1 of the test method as “a generic term for changes in length or width of a fabric specimen subjected to specified conditions. The change is usually expressed as a percentage of the initial dimension of the specimen.” Section 3.4 describes “shrinkage” as “a dimensional change resulting in a decrease in the length or width of a specimen.”
The AATCC 135 test method provides that delicate fabrics shall be machine washed on delicate cycle for 8 minutes at 120º +/- 5º F. It then provides that the fabrics be tumble dried on delicate cycle or line, drip or screen dried.
Because the Customs laboratory which did the test is not equipped with a washing machine, Customs also consulted TEXTILE TESTING Physical, Chemical and Microscopical (1949) by John H. Skindle, Associate Professor of Textile Chemistry, Lowell Textile Institute. This text describes in detail the ASTM test methods for rayon woven goods. At page 117 the author states that the “Wash Wheel Testing Method” and “Launderometer Method” type of tests are suitable for laboratories doing a lot of shrinkage testing, but another method requiring no special
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apparatus would be desirable for laboratories making only occasional tests. An example of such a method is described at page 118. The sample fabric is immersed in a beaker containing 0.3 percent soap solution in water at 40º C for at least two hours. The sample is then rinsed, squeezed as dry as possible and dry-ironed. The sample is rewet, wrung out, ironed until dry, conditioned several hours and then measured again.
The author states that:
A guaranteed shrinkproof or 100% shrinkproof fabric should have no appreciable shrinkage; a pre-shrunk fabric should have only a small amount of shrinkage (1-2%). A Sanforized label implies not over 1% shrinkage in any direction and should be so understood. In general, we may say that, even without any label or claim, a shrinkage of more than 5% in either direction is excessive, except in the case of wool.
Customs tailored its test after the AATCC 135 and Testing Textile methods. The method Customs used was as follows:
A 12" x 12" test sample from the submitted fabric was tested for shrinkage. The sample was marked 10" apart in the warp and filling direction with an indelible ink marker. The marked sample was treated at 38 ([plus minus] 1) degree centigrade or 100 ([plus minus] 2) degrees fehrenheit for 15 minutes with a 0.5% soap solution (1:30 material to liquor ratio). Then the treated sample was washed with water (38 c or 100 f) for 5 minutes followed by a warm wash (25 c or 77 f) for 5 minutes and then a cold wash also for 5 minutes. The sample was dried flat. The distances between two markings were measured and the percent shrinkage calculated.
Customs test method is comparable to the AATCC 135, although Customs adopted less strenuous methods (cooler water temperature, shorter wash cycle, no dry-ironing, no wringing). We find no evidence that Customs test method was erroneous. Accordingly, we further find that the fabrics were not subjected to a shrinking process for purposes of 19 CFR 12.130(e). Moreover, the protestant has not proven that the fabrics in question should have been subjected to a test method for dry-cleaning.
We do agree with counsel that the Notice to Redeliver must be limited to the sample of fabric tested and not the other styles of fabric entered because all of the fabric underwent the same processing by the same Turkish manufacturer, Italteks.
Finally, we note that the protestant originally filed a single country of origin declaration required by 19 CFR 12.130(f), stating that the goods were wholly produced in a single country. If that declaration was accurate, there would have been no reason for Customs to determine the proper country of origin of the subject goods.
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HOLDING:
The Chinese greige fabrics in question were not substantially transformed into products of Turkey. The fabrics were dyed, printed and bleached in Turkey but lacked one of the additional operations enumerated in 12.130(e). Accordingly, the protest should be denied.
In accordance with section 3A(11)(b) of Customs Directive Number 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be attached to the Customs Form 19, Notice of Action, and furnished to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision (o n that date) the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Ruling Module in ACS and to the public via the Diskette Subscription Service, Freedom of Information Act, and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division