HQ 0089068 - Country of origin of sweaters - United States International Trade Commision Rulings

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HQ 089068

July 1, 1991

CLA-2 CO:R:C:T 089068 CC

CATEGORY: CLASSIFICATION

Ms. Gail T. Cumins
Sharretts, Paley, Carter & Blauvelt, P.C. Sixty-seven Broad Street
New York, NY 10004

RE: Country of origin of sweaters

Dear Ms. Cumins:

This letter is in response to your inquiry of March 5, 1991, on behalf of Polo/Ralph Lauren Corporation, requesting a country of origin determination for sweaters. A sample was submitted for examination.

FACTS:

The submitted sample, style "Polar Bear," is a men's long sleeved sweater, which is constructed from 100 percent wool, knit fabric and contains four stitches per two centimeters measured in the horizontal direction. The sample has a rib knit, crew neckline, rib knit cuffs, a rib knit waistband, and a hand embroidered polar bear design covering the major portion of the front of the sweater.

According to your submissions, the following operations will be performed to create the sweater: wool yarn will be produced in Taiwan; the yarn will be shipped to Hong Kong where the front and back panels and the sleeves will be machine knit to shape; the front panel will be sent to China where the polar bear design will be hand embroidered and the crew neckband will be hand knit; and the embroidered front panel and the neckband will be shipped back to Hong Kong where the panels, the sleeves, and the neckband will be linked and looped to form the finished sweater.

You state that the costs related to the manufacture of the sweater are as follows: Taiwanese yarn-$9.80; Chinese embroidery- $6.00; Chinese neck rib-$1.50; and Hong Kong, knitting, linking and finishing-$12.30.

ISSUE:

What is the country of origin of the merchandise at issue?

LAW AND ANALYSIS:

Section 12.130 of the Customs Regulations (19 CFR 12.130) is applicable to the merchandise at issue. 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) of the Customs Regulations sets forth criteria in determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

Section 12.130(d)(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 12.130(d)(2) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S.

Section 12.130(e)(1) provides that an article or material usually will be a product of a particular foreign territory or country, or insular possession of the U.S., when it has undergone prior to importation into the U.S. in that foreign territory or country, or insular possession any of the following:

(iii) weaving, knitting or otherwise forming fabric

Knitting to shape yarn in Hong Kong to form the front and back panels and the sleeves would create a new and different article of commerce, as these pieces would be identifiable as dedicated for sweaters and would give this merchandise its identity. In addition, these operations would constitute substantial manufacturing or processing operations in application of 12.130(e)(1). Embroidering the polar bear design and knitting the crew neckband in China would not change the identity or fundamental character of this merchandise. In addition, although linking and looping the pieces together in Hong Kong would not of itself be considered substantial manufacturing or processing operations, the last substantial transformation takes place when the panels and sleeves are knit in Hong Kong; the country of origin is Hong Kong.

HOLDING:

The country of origin for the merchandise at issue is Hong Kong.

The sample is being returned under separate cover.

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 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. Accordingly, 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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