CLA-2 CO:R:C:T 957340 SK
Arthur Fried
Mainzer Minton Co., Inc.
48 West 38th Street
New York, N.Y. 10018-6296
RE: Country of origin determination; 19 CFR 12.130(e)(1)(i); fabric must undergo
both dying and printing and two or more of the enumerated finishing operations in
12.130(e)(1)(i) to be deemed to have undergone a substantial transformation.
Dear Mr. Fried:
This is in response to your letter of September 19, 1994, in which you request
clarification of Section 12.130(e)(1)(i) of the Customs Regulations as it pertains to
dying, printing and finishing operations and when they constitute a substantial
transformation for purposes of determining the country of origin of textile articles.
FACTS:
You have requested a country of origin analysis for two different
manufacturing scenarios. In the first, you state that fabric will be woven in Country
A and then shipped to Country B where it is dyed a solid color (but not printed) and
subjected to two of the enumerated finishing operations set forth in Section 12.130
(e)(1)(i). You also request a country of origin analysis for manufacturing situations
in which fabric is woven in Country A and then shipped to Country B where it is
printed (but not dyed) and subjected to two of the enumerated finishing operations
set forth in Section 12.130(e)(1)(i).
ISSUE:
When are dying, printing and finishing operations deemed to constitute a
substantial transformation for purposes of determining the country of origin of textile
articles under Section 12.130(e)(1)(i) of the Customs Regulations?
LAW AND ANALYSIS:
Country of origin determinations for textile products are subject to Section
12.130 of the Customs Regulations (19 CFR 12.130). Section 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.
Section 12.130(d) of the Customs Regulations sets forth criteria 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 these 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;
(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 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; ... .
On March 5, 1985, the Commissioner of Customs issued 19 CFR Section
12.130. The Commissioner stated that this regulation was designed to "prevent
circumvention or frustration of visa or export license requirements contained in
multilateral and bilateral agreements to which the U.S. is a party in order to facilitate
the efficient and equitable administration of the U.S. Textile Import Program." 50
Fed. Reg. 8710-8711. In Mast Industries v. United States, 11 C.I.T. 30, 652 F. Supp.
1531 (1987), the Court of International Trade upheld Section 12.130(e)(1)(i) of the
Customs Regulations. The court noted that "the regulation seems clear, under
subsection (e), that in dealing with fabrics ... operations involving less than a
combination of dyeing and printing together with at least two other major finishing
operations will not usually result in a substantial transformation of the fabric."
Neither of the manufacturing scenarios presented to this office satisfy the
requirements set forth in 12.130(e)(1)(i) which explicitly require that an article or
material undergo dyeing and printing and at least two of the enumerated finishing
operations in order to be deemed to have undergone a substantial transformation for
purposes of conferring country of origin status. In the first manufacturing scenario,
no substantial transformation of the fabric is deemed to occur in Country B because
the fabric is only dyed (and not printed) and subjected to two of the enumerated
finishing operations. Similarly, in the second scenario, no substantial transformation
of the fabric is deemed to occur in Country B because the fabric is only printed (and
not dyed) and subjected to two of the enumerated finishing operations.
HOLDING:
The country of origin of the fabric in both of the manufacturing scenarios
presented supra is COUNTRY A, the country where the fabric last underwent a
substantial transformation (weaving).
The holding set forth above applies only to the specific factual situations and
merchandise identified. This position is clearly set forth in section 177.9(b)(1),
Customs Regulations (19 CFR 177.9(b)(1). 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