MAR-2-05 CO:R:C:V 734220 AT
Ms. Jodi Chick
A.N. Deringer, Inc.
1010 Niagara Street
Buffalo, New York 14213
RE: Country of origin marking of imported women's silk scarves;
substantial transformation; 19 CFR 12.130;
Dear Ms. Chick:
This is in response to your letter of May 6, 1991, on behalf
of Designer Scarves by Mindy, Inc., requesting a ruling on the
country of origin of two styles of imported women's hand-
painted 100% silk scarves for marking purposes. A sample of each
style of scarf was submitted for examination.
FACTS:
Designer Scarves by Mindy intends to import two different
styles (Style A and Style B) of women's hand-painted 100% silk
scarves from Canada. Each of the scarf's shorter ends has an
overlock stitch to prevent unravelling and each of the two
longer sides has a narrow selvage edge. As stated in the NIS
(New York Seaport) memorandum dated June 6, 1991 the processing
performed to produce each style of scarf is listed below:
Style A: Chinese made woven 100% silk fabric, in the
form of 45 meter rolls measuring 90
centimeters across, will be imported into
Canada. The cost of the fabric is $3.00 per
yard. In Canada, the fabric, which has no
lines of demarcation, is cut to length, hand-
painted, the edges are sewn, the pleats are
added and set by hand. The wholesale price of
the finished scarf is $23.00.
Style B: A substantially completed scarf manufactured
in China and composed of woven, 100 percent
silk fabric is imported into Canada. The cost
of the unfinished scarf is $2.00. In Canada,
the scarf is dry cleaned, hand-painted, steam
fixed (a process of rolling the scarf in a
piece of fabric and placing the rolled scarf
and fabric in a steam box to permanently set
the paint), washed, ironed and packaged for
exportation to the U.S. The wholesale price
of the finished scarf is $15.00.
ISSUE:
What is the country of origin of the two styles of women
scarves (Styles A and B) processed in the manner described above
for marking purposes?
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),
outlines the criteria used to determine the country of origin for
textiles and textile products. Pursuant to 19 CFR 12.130, the
standard of substantial transformation governs the determination
of the country of origin 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, country,
or insular possession 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 operations. In others words, for
textiles governed by 19 CFR 12.130 there is a two part test for
substantial transformation: 1) a new and different article of
commerce and 2) substantial manufacturing or processing.
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) lists some of the factors considered in
determining whether substantial manufacturing has occurred.
These factors include: (1) the physical change in the material or
article as a result of the manufacturing or processing operations
in each foreign country; (2) the time involved in the
manufacturing or processing operations in each foreign country;
(3) the complexity of the manufacturing or processing operations
in each foreign country; (4) the level or degree or skill and/or
technology required in the manufacturing or processing operations
in each foreign country; and (5) the value added to the article
or material in each foreign country compared to its value when
imported into the U.S.
Section 12.130(e) sets forth specific examples of processes
which would and would not result in a substantial transform-
ation. The examples that are most germane are sections 19 CFR
12.130(e)(1)(i), which provides that dyeing and printing
accompanied by two or more of a series of finishing processes
would result in a substantial transformation and 19 CFR
12.130(e)(2)(ii), which provides that cutting to length or width
and hemming or overlocking fabric which are readily identifiable
as being intended for a particular use would not result in a
substantial transformation. Neither of these examples, nor any
combination of the examples completely describes the processes at
hand in this case.
In HQ 084272 (August 18, 1989), Customs ruled that the
country of origin of scarves consisting of woven rayon Indian
fabric which was cut to length and sewn on all four sides,
labeled, pre-ticketed and pre-packaged in Canada was India as the
Canadian processing did not result in a substantial
transformation. In India, the fabric was ripped to the
approximate dimensions of the finished scarf. The ruling states
that the cutting and hemming operations which take place in
Canada are simple operations which do not significantly change
the scarves. In C.S.D. 90-29 (November 6, 1989), Customs ruled
that the country of origin of towels was the country from where
the greige toweling fabric was made and not where the toweling
material was processed. In that case, greige fabric was
bleached, dyed, dried, painted, cut to size, sewn, mended, and
packaged in the Philippines. In HQ 733787 (March 14, 1991)
Customs ruled that Pakistani greige fabric sent to Sri Lanka,
where it was converted into bleached white fabric which was then
cut and sewn into sheets did constitute a substantial
transformation. In stating that a substantial transformation had
occurred, HQ 733787 distinguished C.S.D. 90-29 by calling
attention to the limited uses of the toweling material used in
C.S.D. 90-29 as opposed to the sheet material in 733787.
In this case, it is our opinion that in the first scenario
(Style A scarf) the imported roles of fabric are substantially
transformed into hand-painted, pleated scarves in Canada. The
rolls of imported fabric have no specific use upon their
importation into Canada. Without lines of demarcation, the
fabric could be used to make a variety of items from scarves or
handkerchiefs to apparel to textile furnishing items. Thus, the
Canadian processing results in a new and different article of
commerce. In addition, while merely cutting and sewing the two
edges would not constitute a substantial manufacturing process,
as was the case in HQ 084272, when the hand-painting and pleating
are considered in conjunction with the cutting and sewing
operations, as well as the value added in Canada, we find that
substantial manufacturing does occur in Canada. Therefore, we
find that the country of origin of the Style A scarf for marking
purposes is Canada.
On the other hand, with respect to the Style B scarf we
find that no substantial transformation occurs in Canada. While
the value added in Canada is considerable, and the hand-painting
provides a significant decoration to the scarf, the items
imported and exported from Canada are essentially 100 percent
silk scarves. Upon exportation from China the merchandise is a
substantially completed scarf in that it has the shape, length
and identity of the completed scarf. Changes to the fundamental
character, commercial use and commercial designation mentioned in
19 CFR 12.130(d)(1) have not been accomplished. Therefore, no
substantial transformation takes place in Canada and the country
of origin of the Style B scarves for marking purposes is China.
HOLDING:
Pursuant to 19 CFR 12.130, the country of origin of the two
hand-painted scarves for marking purposes is Canada for the Style
A scarves and China for the Style B scarves.
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), 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. 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