MAR-2-05 CO:R:C:V 734489 AT
Mr. George Wu
HLL-Chiang Garments MFG. Co., Ltd.
15 Floor No.248
Nanking East Road, Sec. 3
Taipei, Taiwan
Republic of China
RE: Country of origin marking of imported men's long and short
sleeve dress shirts; substantial transformation; textile
products; 19 CFR 12.130; T.D 85-35; HQ 086696; HQ 083359;
HQ 734215; HQ 734467
Dear Mr. Wu:
This is in response to your letters of January 11 and March
25, 1992, requesting a ruling on the country of origin of
imported men's woven long and short sleeve dress shirts. Samples
of a finished long sleeve and short sleeve shirt and the
unassembled component parts for each shirt were submitted for
examination.
FACTS:
The sample long sleeve dress shirt has blue stripes, a
collar, front pocket, cuffs, sleeves, a full frontal opening and
button closure. The sample short sleeve dress shirt has coffee
stripes, a collar, front pocket, a full frontal opening and
button closure. According to your submission the production of
the shirts will involve processing operations performed in two
countries, Taiwan and another unspecified foreign country
(Country B). You state that the following operations will be
performed to create each of the finished shirts. In Taiwan, the
fabric will be made and cut into the fabric components necessary
for each shirt (21 pieces for the long sleeve shirt and 15 pieces
for the short sleeve shirt). In addition, make up of the collar,
cuffs and sleeve packets for the long sleeve shirt and make up of
the collar and front panels (including placket, buttoning and
buttonholing) will be performed in Taiwan. These garment
components will then be sent to Country B to be assembled,
pressed and packaged for export to the U.S. You also state that
the cost, time and labor used to produce the shirts in each
country are as follows:
Long Sleeve Shirt
Taiwan Country B
Time Expended 23 minutes 40 seconds 18 minutes
Cost $4.85 $1.70
Labor 9 skilled 3 skilled
Short Sleeve Shirt
Time Expended 18 minutes 18 seconds 12 minutes
Cost $4.25 $1.20
Labor 9 skilled 2 skilled
ISSUE:
What is the country of origin of the imported men's long and
short sleeve shirts processed in the manner described above?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304), provides that, unless excepted, every article of
foreign origin imported into the U.S. shall be marked in a
conspicuous place as legibly, indelibly, and permanently as the
nature of the article (or container) will permit, in such a
manner as to indicate to the ultimate purchaser in the U.S. the
English name of the country of origin of the article.
Section 12.130, Customs Regulations (19 CFR 12.130), sets
forth the principles for determining country of origin for
marking and other purposes for textile and textile products. 19
CFR 12.130(b), 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.
19 CFR 12.130(d) sets forth the criteria to be applied 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) 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.
You state that the fabric for these men's shirts is both
made and cut in Taiwan. One of the examples enumerated is 19
CFR 12.130(e)(iii), which states that weaving, knitting or
otherwise forming fabric is an example of a manufacturing or
processing operation which would qualify under 12.130 as a
substantial transformation. Further, Customs stated in T.D. 85-
38 that "Cutting garment parts from fabric will result in a
substantial transformation of the fabric. Clearly, making woven
fabric out of yarn results in a new and different article of
commerce. Moreover, the forming of the fabric and the cutting of
the fabric into the garment panels necessary for the finished
shirts would qualify as a substantial manufacturing operation
under 19 CFR 12.130. Therefore, the making of the fabric and the
cutting of the fabric into the necessary garment panels in Taiwan
constitutes a substantial transformation.
The second question presented is whether the garment panels
undergo a later substantial transformation in Country B, where
all the panels are sewn and assembled into the finished shirt,
pressed and packaged for export to the U.S.
Assembly by sewing is considered in 19 CFR 12.130(e)(v) as
usually resulting in an article being deemed a product of the
country in which the sewing was done where the assembly is
substantial such as the complete assembly and tailoring of all
cut pieces of suit-type jackets, suits, and shirts. After
considering all the comments received on the interim regulation
regarding assembly by sewing, Customs concluded that "factors
such as time, nature of the sewing operation, and the skill
required to sew together a tailored garment should be considered
in determining whether the merchandise was substantially
transformed.... Where either less than a 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)." 50 Fed. Reg. 8,715 (March 5,
1985), T.D. 85-38.
In HQ 086696 (June 8, 1990), Customs ruled that the sewing
together of cut panels and finished components (collars and front
panels) into finished woven shirts in a second foreign country
was not a substantial transformation under 19 CFR 12.130 and the
country of origin of the shirt was the first country where the
fabric was cut. See also, HQ 083359 (May 18, 1990) (sewing and
finishing in second country of trouser parts cut in first
country where fabric originated does not substantially transform
the finished trousers, which remain a product of the first
country); HQ 734215 (November 13, 1991) (assembly in second
country of sweater parts cut in first country where fabric
originated does not substantially transform the finished
sweaters, which remain a product of the first country); HQ 734467
(April 17, 1992) (garment components cut in Singapore and sent to
Indonesia to be assembled into polo shirts were not substantially
transformed and the country of origin of the shirts was
Singapore).
Similarly, in this case, we find that the garment panels are
not substantially transformed when assembled in Country B into
the finished long and short sleeve shirts. As the facts show, a
majority of the time and cost (57% and 74% for the long sleeve
shirt; 60% and 78% for the short sleeve shirt) is associated with
the processing performed in Taiwan. Also, more skilled workers
are needed to cut and make up the respective shirt components,
such as the collar, cuffs and sleeve packets (long sleeve shirt),
than are needed to sew the garment components into the completed
article. Furthermore, after examining the textile samples
submitted and taking into account that only a few skilled
workers are needed to assemble the shirts, we find that the
sewing operation is simple rather than complex, involving no
tailoring. Accordingly, the country of origin of the long sleeve
and short sleeve shirts is Taiwan where the both the fabric is
made and cut into the necessary garment components.
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of the
sample men's woven long and short sleeve shirts is Taiwan.
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 connection with the
ruling request and incorporated 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. In such circumstances, 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