Ms. Shirly Strezhevsky
Goldfarb Seligman & Co.
98 Yigal Alon Street
Tel Aviv, 6789141
RE: The country of origin of bed linen; 19 C.F.R. 102.22; substantial transformation; 19 C.F.R. 102.21(c)(2); tariff shift
Dear Ms. Strezhevsky:
In your letter dated July 22, 2020, you requested a ruling on behalf of your client, EC LINEN Ltd., on the country of origin of bed linen and pillow shams which will be imported into the United States. Samples were not provided. A brief description of the processing steps along with some photographs of factory personnel working in the factory were provided.
The subject merchandise is bed linen consisting of duvet covers, pillowcases, fitted sheets and flat sheets and pillow shams of 100 percent cotton woven (percale or satin weave) fabric. You state the fabric is not napped and that the finished items do not contain any embroidery, lace, braid, edging, trimming, piping or applique work. The items will be offered both separately and as a set.
The manufacturing steps of the bed linen is as follows:
- fabric is woven.
- fabric is bleached, dyed and/or printed.
- rolls of fabric are shipped to Israel.
- fabrics are cut to size and shape of the various components. Specifically,
o duvet covers are cut to the needed size. (For purposes of this ruling we assume they will always be cut on all four sides.)
o pillowcases are made from one piece of fabric cut on all four sides.
o pillow shams are made from three pieces of fabric cut on all four sides.
o fitted sheets are cut to needed size on all four sides.
o flat sheets are cut to needed size on all four sides.
- components are sewn/hemmed/elasticized, creating duvet covers, pillowcases, pillow shams, and sheets. Specifically,
o duvet covers are sewn on three sides. Inner ties are added on all four corners to secure the comforter and eight buttons and buttonholes are added.
o pillowcases are sewn to form a standard pillowcase with inner flap.
o pillow shams are sewn to form a standard sham with an overlapping opening on the back.
o fitted sheets are sewn around the edges incorporating an elastic string.
o flat sheets are sewn on all four sides with a 10 centimeter top hem and a 1.5 centimeter hem on the other edges.
- sheets and pillowcase are packaged together or separately, depending on the customer's order, and shipped directly to the United States.
What is the country of origin of the subject merchandise?
Classification of merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.
Heading 6302, HTSUS, provides for among other things, bed linen. The Explanatory Notes to heading 6302, HTSUS, include sheets, pillowcases, bolster cases, eiderdown cases and mattress covers as examples of bed linen. Accordingly, when entered separately, the subject merchandise is properly classified in heading 6302, HTSUS, specifically subheadings 6302.21.90, HTSUS, when printed and 6302.31.90, HTSUS when not printed.
Customs has previously ruled that pillow shams are used to create decorative pillows placed on beds and furniture, and not of the kind used as bed linen. Therefore, when entered separately, the pillow shams are classified as other furnishing articles of heading 6304, HTSUS, specifically 6304.92.0000, HTSUS, which provides for "Other furnishing articles, excluding those of heading 9404: Other: Not knitted or crocheted, of cotton." See HQ 088340, dated January 4, 1990.
In your letter you indicate that the pillow sham, duvet cover, sheets and pillowcases may be imported as a set. The Explanatory Notes, which constitute the official interpretation of the Harmonized Tariff Schedule of the United States at the international level, state in Note (X) to Rule 3 (b) that the term "goods put up in sets for retail sale" means goods which:
(a) consist of at least two different articles which are prima facie, classifiable in different headings;
(b) consist of products or articles put up together to meet a particular need or carry out a specific activity;
(c) are put up in a manner suitable for sale directly to users with repacking
The components of the set consist of at least two different articles which are, prima facie, classifiable in different headings and they are put up together to meet a particular need or carry out a specific activity. You have not provided samples or photographs of the set. Assuming the pillow sham, duvet cover, flat sheet, fitted sheet and pillowcase(s) are packed for sale directly to users without repacking, they will meet the qualifications of "goods put up in sets for retail sale" with the duvet cover imparting the essential character of the set.
COUNTRY OF ORIGIN - LAW AND ANALYSIS:
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by Section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the 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
Section 102.21(a) specifically states that the rules in Section 102.21 shall not apply "for purposes of determining whether goods originate in Israel or are the growth, product, or manufacture of Israel." The basis for the Israeli exception is Section 334(b)(5) of the Uruguay Round Agreements Act, which states 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 that 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 C.F.R. 102.22 rules of origin, which reflect the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if, by application of 19 C.F.R. 102.22, Israel was determined to be the country of origin of a product prior to enactment of Section 334, the same treatment will be accorded after enactment of Section 334. This interpretation of Section 334(b)(5) was confirmed in a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.
In your ruling request, you cite Section 12.130 of the Customs Regulations (19 C.F.R. 12.130) as the basis of your analysis and arguments. Section 12.130 was redesignated under Section 102.22. See Federal Register, Vol. 70, No. 192, dated October 5, 2005. Accordingly, applying Section 102.22(a), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in another country or insular possession in addition to Israel. The country of origin of textile products is deemed to be that foreign territory or country where the articles 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.
Section 102.22(b) sets forth criteria for determining whether a substantial transformation of a textile product has taken place. These criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.
Section 102.22(b)(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 102.22(b)(2) states that for determining whether the merchandise has been subjected to substantial manufacturing or processing operations, the following is 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 102.22(c)(1) states, in pertinent part, that an article will usually be a product of Israel when it has undergone in Israel:
i) finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing;
ii) Spinning fibers into yarn;
iii) Weaving, knitting or otherwise forming fabric;
iv) Cutting of fabric into parts and the assembly of those parts into the completed article; or
v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession of the U.S., into a completed garment. (e.g., the complete assembly and tailoring of all cut pieces of suit-type jackets, suits and shirts).
Conversely, 102.22(c)(2) states, in pertinent part, that an article or material usually will not be considered to be a product of Israel by virtue of merely having undergone any of the following:
i) Simple combining operations, labeling, pressing, cleaning or dry cleaning, or packaging operations, or any combination thereof;
ii) Cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use;
iii) Trimming, and/or joining together by sewing, looping, linking or other means of attaching otherwise completed knit-to-shape component parts produced in a single country, even when accompanied by other processes (e.g., washing, drying, and mending) normally incident to the assembly process.
The cutting of the fabric in Israel may have created a new and different article of commerce, however, in order for a substantial transformation to occur the processing operations must be sufficiently complex so as to constitute a substantial manufacturing or processing operation.
Customs has previously ruled that in order for flat and fitted sheets to be deemed to have undergone a substantial manufacturing process in a particular country or foreign territory, the fabric must undergo, at the minimum, the cutting to length and width of fabric, hemming and yet another processing step. The term "cutting to length and width" has been defined as cutting on all four sides of the fabric so as to create a component with no selvage edges.
The manufacturing operation involved in making the flat sheet is not substantial. See Headquarters Ruling (HQ) 086523, dated April 25, 1990. The manufacturing process involves cutting to length and width and hemming the four sides. Therefore, we conclude that the fabric is not substantially transformed in Israel because the manufacturing operation in Israel in which the fabric is made into a flat bed sheet does not constitute a substantial manufacturing process. Since Israel is determined to not be the country of origin of the flat sheet, in accordance with Section 102.22(d), the country of origin of the flat sheet is determined under the rules of origin set forth in Section 102.21, although application of those rules cannot result in Israel as the country of origin.
The manufacturing operation involved in making fitted sheets differs from the process involved in making flat sheets and is a more complex operation. After being cut to length and width, the fabric is cut at the corners and elastic is sewn into the hem so that the corners fit over the mattress. This requires additional cutting and stitching and is more complex than merely sewing a straight hem. The corners must be sewn in precisely the correct manner so that the finished fitted sheet will properly and securely fit over the four corners of a standard mattress for a particular size bed. Customs previously held in HQ 733180, dated December 13, 1990, that this operation is a substantial manufacturing operation. Therefore, the origin of the fitted sheet is Israel.
Assuming the duvet covers are cut on all four sides, the duvet covers undergo a substantial transformation in Israel after hemming and undergoing the additional steps of adding the inner ties, buttons and buttonholes. Likewise, the pillow shams are assembled from three pieces of fabric after those pieces were cut to length and width (all four sides) and are also substantially transformed in Israel. The pillowcases have, also, undergone a substantial manufacturing process noting Belcrest Linens v. United States, (741 F.2d 1368, Fed. Cir. 1984). Accordingly, origin of the duvet covers, pillow shams and pillowcases is conferred in Israel pursuant to Section 102.22.
SECTION 102.21 ORIGIN DETERMINATION OF THE FLAT SHEET
Since Israel is determined to not be the country of origin of the flat sheets, in accordance with Section 102.22(d), the country of origin of the flat sheets is determined under the rules of origin set forth in Section 102.21, Customs Regulations (19 C.F.R. 102.21).
Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995 in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states, "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 flat sheets are 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, "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 of the foreign materials 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) in pertinent part states,
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:
HTSUS Tariff shift and/or other requirements
6301-6306 Except for goods of heading 6302 through 6304 provided for in paragraph (e)(2) of this section, 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 flat sheet is not a good provided for under paragraph (e)(2); therefore, per the terms of the tariff shift requirement, country of origin of the flat sheet is conferred in the country in which the fabric was formed, that is, India.
The country of origin of the flat sheet is India. The country of origin of the fitted sheet, pillowcase, duvet cover and pillow sham is Israel.
This ruling does not address the status of the merchandise under the United States-Israel Free Trade Area Implementation Act of 1985 (USIFTA). Though you come to the conclusion that the goods qualify under the USIFTA, you have not requested a ruling on the status of the products under the Agreement. Additionally, your ruling request did not provide sufficient information to allow us to issue a ruling on the status of this merchandise under USIFTA. If you would like a ruling addressing the status of this merchandise under USIFTA, please submit a new ruling request and provide the cost or value of the materials and the direct cost of processing operations performed in Israel; samples and more detailed assembly diagrams or photographs to show all of the cut pieces of each finished good.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Kim Wachtel at firstname.lastname@example.org.
Steven A. Mack
National Commodity Specialist Division