CLA-2 RR:TC:TE 959365 jb
Margaret R. Polito, Esq.
Neville, Peterson & Williams
80 Broad Street, 34th Floor
New York, NY 10004
RE: Country of origin determination for duvet covers and pillow
shams; Section 334(b)(5), Exception for United States-Israel
Free Trade Agreement; 19 CFR 12.130; 19 CFR 102.21(c)(5); last
country in which an important assembly or manufacturing process occurs
Dear Ms. Polito:
This is in reply to your letter dated May 1, 1996, on behalf
of your client, WestPoint Stevens, Inc., requesting a country of
origin determination for duvet covers and pillow shams which will
be imported into the United States. Samples were submitted to
this office for examination.
FACTS:
The subject merchandise consists of certain duvet covers and
pillow shams which complement various styles of bedding products.
In your original letter you submitted information for four
manufacturing scenarios. Scenarios II through IV were addressed
in Headquarters Ruling Letter 959200, dated July 8, 1996.
Accordingly, this ruling will only address scenario I concerning
the United States and Israel. The manufacturing operations for
this merchandise are as follows:
SCENARIO I
A. Cambria type Duvet covers
United States
- floral pattern fabric is woven.
Israel
- solid colored sateen fabric is woven.
United States
- both fabrics are cut to length and width, the three sides are
sewn together and the cord is attached around the
edges;
- the fourth side is hemmed and buttons attached.
B. Cambria type Pillow sham
United States
- floral pattern fabric is woven.
Israel
- solid colored sateen fabric is woven.
United States
- fiberfill interlining is produced;
- cutting;
- sewing.
ISSUE:
What is the country of origin of the subject merchandise?
LAW AND ANALYSIS:
On December 8, 1994, the President signed into law the
Uruguay Round Agreements Act. Section 334 of that Act (codified
at 19 U.S.C. 3592) 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apparel entered, or withdrawn from warehouse, for consumption, on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 Section 334 (60 FR 46188). Thus, effective July 1,
1996, the country of origin of a textile or apparel product shall
be determined by sequential application of the general rules set
forth in paragraphs (c)(1) through (5) of Section 102.21.
Exception for United States-Israel Free Trade Agreement
In scenario I, regarding the Cambria type duvet covers and
pillow shams, the fabric- making process occurs in both Israel
and the United States. Section 334(b)(5) provides that:
This section shall not affect, for purposes of the customs
laws and administration of quantitative restrictions, the
status of goods that, under rulings and administrative
practices in effect immediately before the enactment of this
Act, would have originated in, or been the growth, product,
or manufacture of, a country that is a party to an agreement
with the United States establishing a free trade area, which
entered into force before January 1, 1987. For such
purposes, such rulings and administrative practices that
were applied, immediately before the enactment of this Act,
to determine the origin of textile and apparel products
covered by such agreement shall continue to apply after the
enactment of this Act, and on and after the effective date
described in subsection (c), unless such rulings and
practices are modified by the mutual consent of the parties
to the agreement.
Israel is the only country which qualifies under the terms of
Section 334(b)(5). As the Section 334 rules of origin for
textiles and apparel products do not apply to Israel, we refer to
the 19 CFR 12.130 rules of origin, the rules of origin applicable
to textiles and textile products before the enactment of Section
334. Section 334(b)(5) makes clear that if country of origin was
conferred in Israel under Section 12.130, Israel will now be
accorded the same treatment. This interpretation of Section
334(b)(5) was confirmed in a Notice of a general statement of
policy, Treasury Decision 96-58, appearing in the Federal
Register, Vol. 61, No. 148, dated July 31, 1996.
Accordingly, applying Section 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;
Section 12.130(e)(1) describes manufacturing or processing
operations from which an article will usually be considered a
product of the country in which those operations occurred:
(iv) Cutting of fabric into parts and the assembly of those
parts into the completed article;
In the case of the subject merchandise a substantial
transformation occurs at the time of the cutting of the fabric
and the assembly of those parts, that is, in the United States.
Accordingly, as Israel does not confer country of origin as
pursuant to section 12.130, we devolve to the Section 334 rules
of origin.
Section 334 Rules of Origin for Textile and Apparel Products
Paragraph (c)(1) of Section 102.21, Customs Regulations,
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 merchandise is not wholly obtained or produced in a
single country, territory or insular possession, paragraph (c)(1)
of Section 102.21 is inapplicable.
Paragraph (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".
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:"
6301- 6306 The country of origin of a good
classifiable under heading 6301 through 6306 is
the country, territory, or insular possession, in which the fabric comprising the good was formed by a
fabric- making process.
The subject merchandise is classifiable in various subheadings of
heading 6302, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), and heading 6304, HTSUSA. As the fabric
comprising the duvet covers and pillow shams was formed by a
fabric making process in two countries, the tariff shift rule is
not applicable.
Paragraph (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; or
(ii) Except for goods of heading 5609, 5807, 5811,
6213, 6214, 6301 through 6306, and 6308, and subheadings
6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was
not knit to shape and the good was wholly assembled
in a single country, territory, or insular
possession, the country of origin of the good is the country,
territory, or insular possession in which the
good was wholly assembled.
As the subject merchandise is not knit, and headings 6302,
HTSUSA, and 6304, HTSUSA, are excepted from provision (ii),
Section 102.21 (c)(3) is inapplicable.
Section 102.21 (c)(4) states, "Where the country of origin
of a textile or apparel product cannot be determined under
paragraph (c)(1), (2) or (3) of this section, the country of
origin of the good is the single country, territory or insular
possession in which the most important assembly or manufacturing
process occurred". In the case of the duvet covers and pillow
shams the most important manufacturing process occurs at the time
of the fabric making. As the fabric for the merchandise is
sourced in more than one country, and no one fabric is more
important than the other, in this case, country of origin cannot
be readily determined based on the fabric making process.
Paragraph (c)(5) states, "Where the country of origin of a
textile or apparel product cannot be determined under paragraph
(c)(1), (2), (3) or (4) of this section, the country of origin of
the good is the last country, territory, or insular possession in
which an important assembly or manufacturing process occurred."
Accordingly, in the case of the duvet covers and pillow shams,
country of origin is conferred by the last country in which an
important assembly occurs, that is, the United States.
HOLDING:
In scenario I the country of origin of the subject duvet
covers and pillow shams is the United States.
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 any 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