HQ 0088069 - Country of origin of knit sweaters - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0088055 - HQ 0088142 > HQ 0088069

HQ 088069
January 25, 1990

CLA-2 CO:R:C:G 088069 JS

CATEGORY: CLASSIFICATION

Lee Seah Weng
Lee Yin Knitting Factory
10603 Muirfield Drive
Suite 600
Potomac, MD 20854

RE: Country of origin of knit sweaters

Dear Mr. Weng:

This is in response to the letter of August 28, 1990, submitting additional information pursuant to the country of origin request dated May 11, 1990, made by the Singapore Embassy on your behalf.

FACTS:

At issue are two knit sweaters partially constructed in Singapore and completed in Malaysia. For ease of reference, the 100 percent cotton sweater will be designated "sweater A," and the 100 percent acrylic sweater will be designated sweater "B."

Sweater A is a long sleeve crew neck or cardigan style sweater. The 100 percent acrylic yarn originates in Singapore or Malaysia, and is knitted into fabric in Singapore in what is described as a highly complex, two hour, computer manufacturing process. The knit fabric produced in Singapore has been pre- marked into sweater shapes by the computerized knitting machine, as indicated in a December 11, 1990 fax (copy enclosed). According to the information provided in the August 28 letter and a telephone conversation with Catherine Kurz on October 29, 1990, the knit fabric is then manually cut along the pre-marked lines into various sweater parts in Malaysia; these parts are then sewn, linked, and ironed in Malaysia. The completed sweater is sent to Singapore where it is inspected, reworked (if necessary), labeled, handtagged and packaged for shipment. Of the Malaysian manufacturing procedures, it is contended that only the sewing and linking processes constitute complex procedures which require skill. Of the Singapore processes (aside from the knitting) only the repair of rejected garments requires skill and training.

The total value added per dozen garments is $28.00 (or 39.3 percent of total cost) in Singapore and $15.00 (or 21.1 percent of total cost) in Malaysia. Seventy-five percent of the total production time is expended in Singapore and the remaining 25 percent is expended in Malaysia.

Sweater B is also a long sleeve crew neck or cardigan sweater, made of 100 percent cotton. The yarn is sourced in either Malaysia or Hong Kong. The manufacturing processes described above are applicable to the manufacture of this sweater, except for the addition of a simple washing process that takes place in Malaysia after the part fabrics are sewn and linked together.

The total value added per dozen garments of sweater B is $38.00 (or 31.6 percent of total cost) in Singapore and $20.00 (or 16.6 percent of total cost) in Malaysia. Seventy-six point eight percent of the total production time is expended in Singapore and the remaining 23.2 percent is expended in Malaysia.

ISSUE:

What is the country of origin for sweaters assembled in Malaysia of fabric knit in Singapore?

LAW AND ANALYSIS:

The country of origin of textiles and textile products is determined by the application of Section 12.130 of the Customs Regulations (19 CFR 12.130). In determining the country of origin of textile and textile products which consist of materials produced or derived from, or processed in, more than one country, the imported article is considered to be a product of the country in which the last substantial transformation took place. A substantial transformation of a textile or textile product is said to occur if a commodity undergoes a transformation by means of substantial manufacturing or processing 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.

In accordance with 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 in the manufacturing or processing operations, the complexity of the operations, the level or degree of skill and/or technology required, as well as the value added to the article.

Under 19 CFR 12.130(e)(1), a material will usually be considered a product of a particular country if it has undergone such changes as are listed, in part, below:

(iii) weaving, knitting or otherwise forming fabric;

Under 19 CFR 12.130(e)(2), a material will usually not be considered a product of a particular country if it has merely undergone the following changes:

(ii) cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial purpose;

(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, mending, etc.) normally incident to the assembly process;

Since the sweater fabric is formed by knitting in Singapore, and the material is demarcated with readily identifiable sweater shapes, Singapore is established as the country of origin in conformity with part 12.130(e)(1)(iii) above. The cutting and linking in Malaysia of the pre-marked fabric constitutes a simple manufacturing process that does not result in the required substantial transformation. The computerized knitting process, as indicated in the December 11 fax, has predetermined the component sweater shapes which we consider to be completed knit- to-shape parts.

Therefore, the country of origin of the sweaters at issue is the country in which the panels are knit and marked, which in both cases is Singapore.

HOLDING:

The manufacturing operations performed in Singapore constitute a substantial transformation as required by 19 CFR 12.130. The country of origin for both sweaters A and B is Singapore, and a Singapore visa must accompany the goods.

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 Customs

Regulations 19 CFR 177.9 (b)(1), which states that a ruling letter is issued on the assumption that all information furnished in connection with the ruling request and incorporated therein, 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 that there is a change in the facts previously furnished, the country of origin determination may be affected. In such 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
Commercial Operations Division

Previous Ruling Next Ruling