HQ 0087950 - Country of origin of diapers. Mere cutting of fabric into squares measuring 27 inches by 27 inches does not constitute a substantial transformation. - United States International Trade Commision Rulings

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HQ 087950

January 9, 1991

CLA-2 CO:R:C:G 087950 CRS

CATEGORY: CLASSIFICATION

Mr. Bryce Haynes
Executive Vice President
The Bibb Company
P.O. Box 4207
Macon, GA 31208

RE: Country of origin of diapers. Mere cutting of fabric into squares measuring 27 inches by 27 inches does not constitute a substantial transformation.

Dear Mr. Haynes:

This is in reply to your letter dated September 6, 1990, in which you requested a ruling concerning the country of origin of cotton diapers.

FACTS:

The merchandise in question consists of a 100 percent cotton birdseye fabric measuring 27 inches by 27 inches. The fabric is made and bleach finished in the People's Republic of China (PRC). From the PRC the fabric is shipped to Thailand in rolls of 300- 400 yards in length where the fabric, which has no lines of demarcation, is cut and sewn into squares. In this state, the fabric is packaged and sold for use as diapers.

With regard to the processing of the fabric in Thailand you have provided the following information:

A. The fabric is unrolled on a table approximately 30 feet in length. Allowing for the surging operation that comes later the "fabric lay" length will be a multiple of 27" up and down the table with a 27" x 55" template. This operation requires about 38 demarcation lines across the 55" width. After the markings are complete the operator will then cut across the 5" or 6" high "fabric lay" at every 27" marking. The sizes of each stack is now 27" x 55". The operator then cuts across each of these stacks at the very center after marking each stack using the template.

B. From the cutting table the stacks of 27" x 27" diapers are transported to a surging operation. This operation entails sewing across each raw-edge on the diaper. After this operation the size of the diaper is approximately 27" x 27".

C. From the surging operation (sewing) the diapers are sent to the inspection and folding stations. The diapers are inspected for fabric and sewing defects at the time they are hand folded. These operators place in stacks of twelve (12) and folds (sic) the stack into a 7" x 9" configuration ready for packaging.

D. The folded stacks are placed onto a trolley and sent to a packaging station. The stacks are then placed into printed polyethylene bags, one dozen diapers per bag. The bag is sealed at the end. As the bags are sealed they drop on a conveyor to be loaded into corrugated boxes for shipment.

After processing the merchandise in question is shipped to the United States through the port of Savannah.

ISSUE:

Whether the cutting and sewing of Chinese fabric in Thailand constitutes a substantial manufacturing operation such that the merchandise is deemed to have been substantially transformed pursuant to 19 CFR 12.130.

LAW AND ANALYSIS:

Pursuant to section 12.130, Customs Regulations (19 CFR 12.130), a textile or textile product which consists of materials produced or derived from, or processed in, more than one foreign territory or country shall be a product of that foreign territory or country where it last underwent a substantial transformation. A textile or 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) establishes criteria for determining whether an article has been substantially transformed. However, the criteria set forth in 19 CFR 12.130(d) are not exhaustive; one or any combination of these criteria may be determinative and additional factors may be considered.

According to 19 CFR 12.130(d)(2), the following factors are to be considered in determining whether merchandise has been subjected to substantial manufacturing or processing operations: the physical change in the material or article, the time involved n the manufacturing or processing operations, the complexity of the operations, the level or degree of skill and/or technology required, and the value added to the article.

Nevertheless, section 12.130(e)(2) provides that an article will usually not be considered to be a product of a particular country merely by having undergone:

(ii) Cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use....

In this case, the fabric is merely cut into squares and the edges hemmed. Consequently, Customs' is of the view that the operation operations to which the fabric is subjected are insufficient to constitute a substantial manufacturing process under 19 CFR 12.130.

HOLDING:

The cutting and sewing operations performed in Thailand do not constitute a substantial transformation as required by 19 CFR 12.130. The country of origin of the instant merchandise is the People's Republic of China.

The holding in this ruling applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 177.9(b)(1), Customs Regulations (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 connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it subsequently be 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. In such a case, it is recommended that a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2).

Sincerely,

John Durant, Director

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