HQ 0733802 - Country of origin marking of imported denim jeans - United States International Trade Commision Rulings

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HQ 733802
December 10, 1990

MAR-2-05 CO:R:C:V 733802 KG

CATEGORY: MARKING

Mr. Sam Nugent
Direct Import Division
Englishtown Sportswear Ltd.
122 W. First Street, Ste. 202
Port Angeles, Washington 98362

RE: Country of origin marking of imported denim jeans

Dear Mr. Nugent:

This is in response to your letter of September 17, 1990, requesting a country of origin ruling on behalf of Englishtown Sportswear Ltd. regarding imported denim jeans.

FACTS:

The fabric is made in Hong Kong and shipped to the Mariana Islands where it is cut and assembled by sewing into denim jeans. The jeans are then shipped to China for washing and packing. The cost of the material, buttons, thread and pocket lining from Hong Kong is $37.00 per dozen. The cost of cutting and assembling the jeans in the Mariana Islands is $44.00 per dozen. The cost of washing and finishing the jeans in China is $27.00 per dozen.

ISSUE:

What is the country of origin of the denim jeans described above?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making all country of origin determinations for textile and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854)"("section 204").

This regulation, which became effective in 1985, 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, to issue regulations governing the entry or withdrawal from warehouse for consumption of textile and textile products subject to section 204. 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.

Pursuant to 19 CFR 12.130, the standard of substantial transformation governs the determination of the country of origin where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory, country, or insular possession where the article last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing operations.

In 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, there is a discussion of how the examples and the factors enumerated in the regulation are intended to operate. "Examples set forth in 19 CFR 12.130(e) are intended to give guidance to Customs officers and other interested parties. Obviously, the examples represent clear factual situations where the country of origin of the imported merchandise is easily ascertainable. The examples are illustrative of how Customs, given factual situation which fall within those examples, would rule after applying the criteria listed in 12.130(d). Any factual situation not squarely within those examples will be decided by Customs in accordance with the provisions of 12.130(b) and (d)." The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d).

The facts presented in this case are within the example set forth in 19 CFR 12.130(e)(1)(iv), which states that cutting of fabric into parts and the assembly of those parts into a completed garment in a foreign territory or country or insular possession of the U.S. usually would be a qualifying manufacturing or processing operation for the imported article or material to be considered a product of that particular place under 19 CFR 12.130. Therefore, the denim jeans would be considered a product of the Mariana Islands.

Customs has previously ruled in HQ 733592 (August 22, 1990), and in HQ 729704 (September 12, 1986), that the Mariana Islands are considered a territory or possession of the United States. Accordingly, products of the Mariana Islands are excluded from country of origin marking requirements. The Federal Trade Commission has jurisdiction over the Textile Fiber Identification Act and they should be contacted concerning any requirements that the FTC may have regarding these imported jeans.

We note that General Note 3(a)(iv)(A) of the Harmonized Tariff Schedule of the United States provides that articles sought to be admitted duty free must come directly into the U.S. from an insular possession.

HOLDING:

The country of origin of these jeans for the purposes of 19 CFR 12.130 would be the Mariana Islands. Since the Mariana Islands are a territory or possession of the United States, there would be no country of origin marking requirements for the purposes of 19 U.S.C. 1304 for the jeans.

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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