HQ 0085611 - Country of origin for pants and a shirt - United States International Trade Commision Rulings

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HQ 085611

January 17, 1990

CLA-2 CO:R:C:G 085611 CC

CATEGORY: COUNTRY OF ORIGIN

RE: Country of origin for pants and a shirt

Mr. Harold I. Loring
Grunfeld, Desiderio, Lebowitz & Silverman 12 East 49th Street
New York, N.Y. 10017

Dear Mr. Loring:

This letter is in response to your inquiry of September 20, 1989, on behalf of Mamiye Brothers, Inc., requesting country of origin determinations for pants and a shirt. Samples were submitted for examination.

FACTS:

The shirt will be made from cotton woven poplin fabric made in Country A. The fabric will be sent to Country B where it will be marked with cutting lines and cut into components, which will be ready for assembly by sewing. The following components will be sent to Country C for a partial assembly: the pieces for the beezum-style pocket (i.e. the pocket and pocket lining), the pieces for the collar (i.e. top and under collar leaf, top and under collar stand, and interlinings), and the left front panel. The partial shirt assembly will be sent back to Country B where, together with other components, it will be assembled by sewing into a completed shirt.

For production of the shirt, you state that the cost of processing operations performed in Country B will exceed the cost of operations performed in Country C by a factor of approximately 11:1. The time spent on the operations in Country B will exceed the time spent in Country C by a factor of approximately 2.7:1. The capital investment in Country B will exceed that in Country C by a factor of 10.1:1. The value added (labor plus overhead) to the shirt in Country B will exceed the value added in Country C by a factor of 7.37:1.

The pants will be made from a combination polyester and cotton woven twill fabric made in Country A. The fabric will be sent to Country B where it will be marked and cut into components, which are ready for assembly by sewing. Cut components for the pockets, pocket lining, and two back leg panels will be sent to Country C for assembly. The partial pants assembly will then be sent back to Country B for final assembly with the other components into completed pants.

For production of the pants, you state that the cost of processing in Country B will exceed that in Country C by a factor of 7.2:1. The time spent on processing in Country B will exceed that in Country C by a factor of 1.73:1. The capital investment in County B will exceed that in Country C by a factor of 8.3:1. The value added in Country B will exceed the value added in Country C by a factor of 6.6:1.

ISSUE:

What is the country of origin of the pants and shirt at issue?

LAW AND ANALYSIS:

Section 12.130(b) of the Customs Regulations 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)(1) of the Customs Regulations provides 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 12.130(e)(1) of the Customs Regulations describes manufacturing or processing operations from which an article will usually be considered a product of the country in which the processes occurred. Section 12.130(e)(1)(v) provides the following:

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, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits, and shirts).

For both the pants and shirt, sewing of all cut pieces does not take place in Country C; only partial assemblies are performed there. The pieces sent to Country C have not been substantially transformed into new and different articles of commerce that are indicated by changes in name, character, or use. Thus, Country C would not be considered the country of origin for the shirt and pants.

The last substantial transformation occurs where the fabric is cut into pieces, which is Country B. Cutting the fabric into pieces makes them dedicated for particular commercial uses, which are the pants and shirt in this case. In addition, according to your submissions, the time involved in manufacturing and processing operations and the value added to the shirt and pants are much greater in Country B than to that in Country C. Thus, for classification and quota purposes, the country of origin for both the pants and shirt at issue is Country B.

HOLDING:

The country of origin for the pants and shirt at issue is Country B.

Sincerely,

John Durant, Director

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