CLA-2 RR:TC:TE 959504 CAB
Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway
43rd Floor
New York, NY 10036-8901
RE: Country of origin of a knitted and woven scare, Section
102.21(c)(2); Section 102.21(c)(4); Eligibility of NAFTA TPL
Dear Sirs:
This is in response to your inquiry of July 18, 1996,
requesting a country of origin determination for woven and
knitted scarves pursuant to Section 102.21, Customs Regulations.
This request is on behalf of your client, Liz Claiborne
Accessories, Inc. You also question whether the subject
merchandise is eligible for preferential treatment under the
North American Free Trade Agreement Tariff Preference Levels
(NAFTA TPLS). At this lime, Customs is not issuing determinations
concerning the eligibility of goods qualifying for NAFTA TPLS,
thus, this issue will be addressed in a separate riding at a
later date. Samples were submitted for examination and will be
returned to you under separate cover.
FACTS:
The merchandise at issue is a woven scarf and a knitted
scarf. The woven scarf is square shaped with the center region
comprised of a sheer silk fabric and the border region comprised
of an opaque silk fabric. The knitted scarf is constructed of
polyester polar-fleece fabric, is rectangular shaped, and
contains stitching along the edges.
The fabric for both scarves (i.e., two types of woven fabric
for the woven scarf and one type of knitted fabric for the
knitted scarf) will be produced in the form of rolls in Taiwan.
The sewing thread will be produced in Japan. The rolls of fabric
and the sewing thread will then be shipped to Canada for complete
cutting and sewing into the finished product.
ISSUE:
What is the country of origin of the subject scarves?
LAW AND ANALYSIS:
COUNTRY OF ORIGIN
Pursuant to Section 334 of the Uruguay Round Agreements Act
(codified at 19 USC Section 3592), new rules of origin were
effective for textile products entered, or withdrawn from
warehouse, for consumption on or after July 1, 1996. These rules
were published in the Federal Register, 60 Fed. Reg. 46188
(September 5, 1995). Section 102.21, Customs Regulations (19 CFR
Section 102.21), sets forth the general rules to determine
country of origin. Thus, the country of origin of a textile
product will be determined by a hierarchy of rules set forth in
paragraphs (c)(1) through (c)(5) of Section 102.21.
Section 102.21(e)(1) sets forth the general rule for
determining the country of origin of a textile or apparel product
in which the good is wholly obtained or produced in a single
country, territory, or insular possession. As the subject scarves
are not wholly obtained or produced in a single country,
territory, or insular possession, Section 102.21(e)(1) is
inapplicable.
Section 102.21(c)(2) provides for instances where the country
of origin of a textile or apparel product cannot be determined
under paragraph (c)(1) of this section. Section 102.21 (c)(2)
states:
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.
The woven scarf is classifiable under Heading 6214 of the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA), which provides for, in pertinent part, scarves. The
knitted scarf is classifiable under Heading 6117, HTSUSA, which
provides for other made up knitted clothing accessories.
Section 102.21(e) states "The following rules shall apply for
purposes of determining the country of origin of a textile or
apparel product under paragraph (e)(2) of this section:"
6213-6214 The country of origin of a good classifiable
under heading 6213 through 6214 is the
country, territory, or insular possession in
which the fabric comprising the good was
formed by a fabric-making process.
6101-6117 (1) If the good is not knit to shape and
consists of two or more component parts, a
change to an assembled good of heading 6101
through 6117 from unassembled components,
provided that the change is the result of the
good being wholly assembled in a single
country, territory, or insular possession.
(2) If the good is not knit to shape and does
not consist of two or more component parts, a
change to heading 6101 through 6117 from any
heading outside that group, except from
heading 5007, 5111 through 5113, 5208 through
5212, 5309 through 5311, 5407 through 5408,
5512 through 5516, 5806, 5809 through 5811,
5903, 5906 through 5907, and 6001 through
6002, and subheading 6307.90, and provided
that the change is the result of a fabric-making process.
In this instance, the woven scarf is classifiable under
Heading 6214, HTSUSA, is comprised of fabric sourced in Taiwan,
and is wholly assembled in Canada. Pursuant to the applicable
provision of Sections 102.21(c)(2) and 102.21(e), the country of
origin of the subject woven scarf is Taiwan as this is the
country where the fabric was formed by a fabric-making process.
The knitted scarf at issue is not knit to shape. You contend
that there is an issue as to whether the knitted scarf is
comprised of two components or not. You cite several prior
Customs rulings and a court case, L'Eggs Products, Inc. v. United
States, 13 CIT 40 (1989), to substantiate your claim that the
subject knitted scarf is comprised of two components, namely, the
fabric and the thread.
You assert that Customs has already considered a number of
instances in which seemingly insignificant materials (comparable
to thread) were considered bona fide components for purposes of
the wholly assembled rule. You state the following:
For example, in Ruling no. HQ 958970 of April 25, 1996, the
lining of an otherwise simple one component skirt was
considered a component for purposes of the wholly assembled
rule. Similarly, in Ruling no. HQ 959027 of April 5, 1996, a
belt buckle and related hardware items were considered
components even where they were attached to a fabric belting
strip already recognizable as a belt by virtue of having
been cut to the precise length of width of the finished
belt. Additionally, in a scenario strikingly similar to the
one at issue, Customs considered a backing material attached
to a knitted scarf body to be a component for purposes of
the wholly assembled rule. Ruling no. HQ 959244 of June 6,
1996.
You further contend that the sewing thread used in connection
with the production of the knitted scarf is at least as
significant as the materials considered by Customs to be
components in the cited rulings. You state:
It serves a similar function as a lining, buckle or backing
in that it serves to complete a recognizable yet unfinished
article. Specifically, the secure overlock stitching serves
as a critical fast edge preventing the unraveling of the
knitted scarf body. Moreover, the stitching adds a desirable
texturized feature to the border of the article
Specifically, in considering the sewing of thread to a
pantyhose tube (in the context of former Item 807, TSUS),
the U.S. Court of International Trade specifically
recognized that "the thread is a component.", L'Eggs
Products, Inc. v. United States, 13 CIT 40, 49 (1989)
(emphasis added).
In L'Eggs, knit tubes used as leg plank portions of pantyhose
were exported from the United States to Columbia, where the tubes
were sewn to create the toe-end closing. As you state, the court
in L'Eggs, did conclude that the thread and fabric were two
components and an assembly resulted from the joining of the two
together. The L'Eggs court noted that the tube closing process
prepared the pantyhose for use. Thus, the process has the
utilitarian purpose of making the toe/foot area of the pantyhose
durable. The court in L'Eggs also cites United States v. Baylis
Brothers Company, 59 CCPA 9, 451 F.2d 643 (1971), modified, 474
F.2d 1026 (1973), where. the court held that the process of
joining pre-cut and pre-stenciled fabric with thread was an
assembly operation. It is important to note that in making the
decision that the joining of fabric and thread was an assembly
operation, the Baylis court emphasized that the imported
merchandise was a new article different from its component
materials, the stenciled dress front and the thread used in
making the gathered stitches on the dress front. The components
together became a "smocked dress front". The thread in Baylis is
a component which serves as the joining agent.
When analyzing the aforementioned court cases within the
context of this ruling and issues, it is apparent that this case
is distinguishable from the cited court cases. The thread in both
L'Eggs and Baylis, had the utilitarian purpose of being a joining
agent. In L'Eggs, the thread component joined the open tube-ends
and in Baylis, the thread component joined stenciled dress from
fabric together to make a decorative shirred dress front. In this
case, the thread does not act as a joining agent for any
utilitarian purpose other than to finish an already identifiable
scarf. With or without this additional stitching, the subject
scarf is easily recognizable as a scarf. Thus, the additional
thread does not take on any separate identity as a component
piece with any function or purpose separate from being merely
additional thread added to the scarf for simple finishing and
Moment. The thread is not present in this case to either close or
join material together as in L'Eggs and the thread is not used to
create a new article as in the Baylis case. Moreover, both of
these cited cases were decided within the context of item 807.00
of the Tariff Schedules of the United States (TSUS), which was
replaced by Heading 9802 of the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA). Neither of which are applicable
in making country of origin determinations for textiles and
textile products.
As stated above, you also cite prior Customs rulings to
substantiate your claim that the subject knitted scarf is
comprised of two components. However, your interpretation of the
cited rulings differs significantly with Customs interpretation.
In HRL 959027, a buckle and additional hardware was attached to a
strip of textile material which resulted in a finished belt. In
that case, more than two separate components were joined together
to create the belt. You state "that the fabric belting strip was
already recognizable as a belt by virtue of having been cut to
the precise length and width of the finished belt." Whether
Customs agrees with this statement or not, the joining of the
buckle to the textile fabric dearly results in an assembly of two
components with a practical function. The buckle, in that
instance, was a fastening agent, whereas in this instance, the
thread is not used as a joining agent.
In HRL 958970, a skin body and lining were considered two
components. Customs submits that in that particular instance, the
two components both had a utilitarian purpose that went beyond
merely being an embellishment as in this instance. In HRL 959244,
the article at issue was a scarf with a felt backing. Again,
there were two parts, the textile fabric and the felt material
which were joined together to make the finished scarf.
The knitted scarf at issue is not knit to shape and does not
consists of two or more component parts, therefore the first
tariff shift rule applicable to Heading 6117, HTSUSA is not
applicable. The second tariff shift rule for Heading 6117,
HTSUSA, is also inapplicable since the change to Heading 6117,
HTSUSA, is from either Heading 6001, HTSUSA, or Heading 6002,
HTSUSA, which cover all textile knitted fabrics and both of these
headings are specifically excluded from the tariff shift
provision. Thus, Section 102.21(e)(2) is inapplicable.
This analysis is consistent with recent HRL 959436, dated
August 6, 1996, where Customs determined the country of origin of
a hat comprised of felt material shaped into a conical shape and
a velvet strip of material sewn to the circumference of the felt.
Custom noted that the velvet strip was not a component of the
finished hat and instead was an embellishment added to what
amounted to a "hat".
Section 102.21 (c)(3) provides, the following, in pertinent
part:
(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,
15213, 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 assembled.
Section 102.21(c)(3) is therefore inapplicable to the subject
knitted scarf since it has not been wholly assembled in a single
country, insular possession, or territory, nor is it a knit to
shape good.
Section 102.21 (c)(4) provides the first multi-country rule.
Section 102.21 (c)(4), provides the following:
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 knitted scarf; you contend that the
cutting and sewing operations performed in Canada are of far
greater importance than the knitting operation performed in
Taiwan. You specifically state:
Most significantly, the knitting operation performed in
Taiwan merely results in rolls of fabric which are
susceptible to a number of different potential end uses
(e.g., hats, jackets, shirts, trousers, robes, gloves,
etc.). It is not until after such fabric has been
shipped to Canada that its identity as a scarf begins
to emerge by virtue of the cutting and sewing of the
scarf body in such country. Accordingly, as the
operations performed in Canada are the "most
important", Canada is the country of origin of the
knitted scarf pursuant to 19 CFR Section 102.21(c)(4).
Despite the persuasiveness of your argument and the fact that
the importance of manufacturing operations performed in various
counties are to be compared on a case-by-case basis, we note that
in one particular instance Customs has reached a definitive
conclusion regarding relative importance of manufacturing
processes. This definitive conclusion is presented in the
comments accompanying the issuance of the final rules on
September 5, 1995, where Customs concluded that forming a fabric
is a more important process than cutting the fabric. Thus, the
knitting of the fabric in Taiwan is the most important
manufacturing process. Therefore, in accordance with Section
102.21(e)(4), the country of origin of the knitted scarf is
Taiwan.
HOLDING:
The country of origin of the woven scarf and knitted scarf 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 19 CFR
177.9(b)(1). This section states that 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