HQ 0085299 - Substantial transformation and country of origin of silk fabric - United States International Trade Commision Rulings

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HQ 085299

May 10, 1990

CLA-2 CO:R:C:G 085299 CB

CATEGORY: CLASSIFICATION

Mr. Roger S. Shatafian
Creative Natural Fabrics
110 East Ninth Street, A742
Los Angeles, CA 90079

RE: Substantial transformation and country of origin of silk fabric

Dear Mr. Shatafian:

This is in response to your inquiry of July 31, 1989, requesting a substantial transformation and country of origin determination under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), for certain silk fabric.

FACTS:

Samples of the fabric both prior to and after processing were submitted. One sample is bleached white, a second fabric is dyed blue and a third fabric is printed in a brown floral print design with a blue background. You have stated that the subject fabric is 100% silk fabric woven or knitted in the People's Republic of China (ROC). The fabric is also bleached and de- gummed in the ROC and then exported to Hong Kong. As stated, the fabric will be further processed in Hong Kong. The primary processing will involve dyeing and printing. You have also indicated that the fabric will be subjected to at least two other processes prior to being imported into the United States in 50 yard lengths. Among these finishing processes are re-bleaching, decatizing, pre-shrinking, sponging and sandwashing. You have indicated that the fabric is rebleached in Hong Kong because the bleaching process performed in China produced a fabric of poor quality and the uneven effects will affect the dyeing process.

ISSUE:

Whether the processing taking place in Hong Kong is sufficient to make Hong Kong the country of origin for duty and marking purposes?

LAW AND ANALYSIS:

Section 12.130(b), Customs Regulations, provides that a textile product 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.

In addition, Section 12.130(d), Customs Regulations, provides that a new and different article of commerce will usually result from manufacturing or processing operations if there is a change in (1) commercial identity, (2) fundamental character, or (3) commercial use. That provision also states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, we will consider the physical change in the material or article, the time involved, the complexity of the operation, the level or degree of skill and/or technology involved, and the value added to the article in each country or territory. Any one or a combination of these factors may be determinative and other factors may also be considered.

Our regulations further provide that a fabric will be a product of the country where it is dyed and printed and accompanied by two or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, and moireing. In the instant case the three fabric samples were sent to the Customs Laboratory to determine if the fabric was first dyed and then printed. The Laboratory examination concluded that the fabric had not been dyed prior to printing. Two distinct processes have not been used to produce the printed fabric. It has consistently been Customs position that the dyeing and printing processes must be performed individually accompanied by two or more of the finishing operations listed above. In the instant case, the processes performed in Hong Kong are insufficient to satisfy the substantial transformation requirements. China remains the country of origin for the fabric.

HOLDING:

In view of the above, the subject fabric has not been substantially transformed in Hong Kong and therefore remains a product of China.

Sincerely,

John Durant, Director

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