HQ 0555677 - Country of Origin of Surgical Towels from Jamaica - United States International Trade Commision Rulings

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HQ 555677

November 5, 1990
CLA-2 CO:R:C:V 555677 SER

CATEGORY: CLASSIFICATION

Ms. Marqueritte Jones
Trade Commissioner
JAMPRO
866 Second Avenue
New York, NY 10017

RE: Country of Origin of Surgical Towels from Jamaica

Dear Ms. Jones:

This is in reference to your letter of June 11, 1990, in which you request a ruling on whether the production of surgical/hospital towels in Jamaica results in their being considered products of Jamaica.

FACTS:

You set forth four alternative processes in the production of the surgical towels.

Process 1 -Rolls of pre-dyed cotton fabric obtained from other than Jamaican or U.S. sources, e.g., China, India, Pakistan, with the Jamaican manufacturer cutting and stitching on all four edges and packaging in polybags. The polybags are to be obtained from a U.S., non-U.S. or Jamaican manufacturer.

Process 2 -Rolls of cotton fabric obtained from other than Jamaican or U.S. sources with the Jamaican manufacturer dyeing the fabric, cutting and stitching on all four edges, and packaging in polybags. Polybags are obtained from a non-U.S., U.S. or Jamaican manufacturer.

Process 3 -Rolls of pre-dyed cotton fabric obtained from other than Jamaican or U.S. sources with the Jamaican manufacturer cutting, hemming on all four edges, washing, drying, folding, and then packaging in polybags. The polybags are to be obtained from U.S., non-U.S. or Jamaican manufacturers.

Process 4 -Description and processing same as in 1,2 and 3, but with cotton fabric rolls obtained from the U.S.

ISSUE:

Whether the processing operations described above will result in the creation of articles considered to be the product of Jamaica.

LAW AND ANALYSIS:

Textile articles produced in a foreign country are subject to the country of origin criteria set forth in section 12.130 of the Customs Regulations (19 CFR 12.130). According to 19 CFR 12.130(b):

. . . a textile product . . . which consists of materials produced or derived from or processed in, more than one foreign . . . country shall be a product of that foreign . . . 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.

According to Treasury Decision (T.D.) 85-38, published in the Federal Register on March 5, 1985, (50 FR 8714), which is the final rule document which established 19 CFR 12.130, the principles of country of origin for textiles and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes. This regulation came about as a result of Executive Order No. 12,475, 49 FR 19955 (1984), which directed the Secretary of Treasury, in accordance with policy guidance provided by the Committee for the Implementation of Textile Agreements (CITA), to issue regulations governing the entry, or withdrawal from warehouse for consumption, of textile and textile products subject to section 204 of the Agricultural Act of 1956. The regulations were to include clarifications in or revisions to the country of origin rules for textiles and textile products, subject to section 204, in order to avoid circumvention of multilateral and bilateral textile agreements.

In determining whether merchandise has undergone substantial manufacturing or processing operations, we consider the (1) physical change in the material or the article; (2) time involved; (3) complexity of the operations; (4) level or degree of skill and/or technology required; and (5) value added to the article in each country.

According to 19 CFR 12.130(e)(iv), a textile article will usually be a product of a particular country if the cutting of the fabric into parts and the assembly of those parts into the completed article has occurred in that country. However, 19 CFR 12.130(e)(ii) states that a material will usually not be considered to be a product of a particular foreign country by virtue of merely having undergone cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use. T.D. 85-38 explains that "where fabric which is readily identifiable as being intended for a particular commercial use (e.g., toweling or bed linen material) and is merely cut to length or width, with the edges then being either hemmed or overlocked . . . the foreign territory or country which produced the fabric is the country of origin and not the country where the fabric was cut."

We recently held, in Headquarters Ruling Letter (HRL) 733601, dated July 26, 1990, that cotton fabric from China which was imported into Mexico where it was cut by machine to width and length, hemmed on three or four sides, washed and shrunk, and folded to specifications for use as surgical towels was not substantially transformed, and, therefore, was considered a product of China. We also held in HRL 086132 dated February 22, 1990, that a surgical towel which was cut from cloth, washed, seamed, folded and packaged in Honduras was not substantially transformed. Further, in C.S.D. 90-29, we held that greige terry toweling which was bleached, cut to size, hemmed, desized, and dyed to create beach towels was not substantially transformed.

In this case, proposed processes 1,2 and 3 involve operations which are no more complex than the processes involved in C.S.D. 90-29 and HRL 733601, which were held not to constitute a substantial transformation. Dyeing, cutting and stitching, folding, and washing and drying are not particularly complex operations, as they do not require a high level of skill or significant time to perform, and, therefore, they do not result in the substantial transformation of the fabric.

Regarding process 4, the determination of country of origin of textile products which use U.S. fabrics is governed by 19 CFR 12.130(c), which states:

Chapter 98, Subchapter II, Note 2, [HTSUS], provides that any product of the U.S. which is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article for the purposes of the Tariff Act of 1930, as amended. . . . merchandise which falls within the purview of Chapter 98, . . ., may not, upon its return to the U.S., be considered a product of the U.S.

The U.S. cotton fabrics would clearly be advanced in value by the processes which you have described, and, therefore, the country of origin of these surgical towels would be Jamaica.

The surgical towels would be properly classified in subheading 6307.90.8710, HTSUSA, which provides for other made up articles, other, other, surgical towels. The rate of duty applicable to the surgical towels is 7% ad valorem. It should be noted that this provision is not an eligible provision under the Generalized System of Preferences (GSP) or the Caribbean Basin Initiative (CBI). The textile category designation for these articles is 369. Due to the changeable nature of quota agreements, you are advised to contact your local Customs office prior to any attempt to import, to determine the current status of any textile agreements with Jamaica. Import restraints are imposed by the U.S. Customs Serice under directives of CITA, U.S. Department of Commerce, Washington, D.C. 20230. Further advice or information pertaining to those agreements may be obtained from the chairman of that Committee.

HOLDING:

Processes 1,2 and 3 which you describe do not result in the substantial transformation of the fabric imported into Jamaica from non-U.S. sources, and, therefore, these surgical towels would not be considered products of Jamaica. However, surgical towels processed, as described, from U.S. origin fabric are considered products of Jamaica pursuant to 19 CFR 12.130(c).

Sincerely,

John Durant, Director
Commercial Rulings Division

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