HQ 0733848 - Modification of HQ 555590; country of origin of surgical towels; 19 CFR 12.130. - United States International Trade Commision Rulings

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HQ 733848
October 30, 1990

CLA-2 CO:R:C:V 733848 KG

CATEGORY: CLASSIFICATION

Mr. R. Gus Provost
Ragus Trading Corporation
P.O. Box 526372
Miami, Florida 33152

RE: Modification of HQ 555590; country of origin of surgical towels; 19 CFR 12.130.

Dear Mr. Provost:

On May 21, 1990, we issued to you HQ 555590 concerning whether surgical towels processed in the Dominican Republic are entitled to duty-free treatment under the Caribbean Basin Economic Recovery Act and what country would be considered the country of origin. Upon further review, we have determined that the country of origin determination in HQ 555590 was incorrect and must be modified.

FACTS:

The fabric was to be imported into the Dominican Republic where it would be dyed, bleached, washed, cut to length and width, and hemmed to create finished surgical towels. We ruled in HQ 555590 that the country of origin of the towels would be the Dominican Republic. This conclusion is in conflict with Customs current position as reflected in several rulings which are directly on point and which hold that the country of origin of the surgical towels would be the country where the fabric was made.

ISSUE:

Whether the country of origin of the surgical towels in HQ 555590 would be the country where the fabric is made.

LAW AND ANALYSIS:

In HQ 555590, we relied on HQ 086665 (March 23, 1990), which dealt with the country of origin of diapers. The processing involved in making diapers includes: cutting unmarked fabric to both length and width; folding the top and bottom of the fabric to create a fabric 6 ply in the center panel and 2 ply in the two end panels; insertion of additional panels in the center; sewing the fabric lengthwise 1/3 and 2/3 of the distance from the top; hemming on all four sides and packaging. Upon further review, we have concluded that the processing involved in making diapers is significantly more involved and different than the processing involved in making surgical towels. Further, we have several rulings directly on point that deal with the country of origin of surgical towels. Customs has consistently ruled that the country of origin of surgical towels is the country where the fabric is made. For instance, in HQ 086132 (February 22, 1990), Customs ruled that a surgical towel which was cut from cloth, washed, seamed, folded and packaged in Honduras was not substantially transformed there. In HQ 733601 (July 26, 1990), Customs ruled that surgical towels are not substantially transformed in the country where the material is cut to length and width, hemmed, washed and shrunk, and folded. Customs concluded in HQ 087477 (August 30, 1990), that surgical towels cut, sewn and finished in American Samoa from Chinese cotton fabric was considered to be a product of China. The rationale supporting this conclusion is that the cutting, sewing and finishing operations performed to make a surgical towel are not considered to be substantial manufacturing processes as required by section 12.130, Customs Regulations (19 CFR 12.130). Consistent with Customs position on this issue, the country of origin of the surgical towels in your case would be the country where the fabric is made.

HOLDING:

Pursuant to section 177.9(d), Customs Regulations (19 CFR 177.9(d)), we hereby modify HQ 555590 in regard to the country of origin determination. Consistent with Customs position on this issue, the country of origin of the surgical towels in your case would be the country where the fabric is made.

This notice should be considered a modification of HQ 555590 (May 21, 1990), pursuant to 19 CFR 177.9(d)(1). Although HQ 555590 will not be valid with respect to the country of origin issue for future transactions, this modification will not be applied retroactively. We recognize that pending transactions may be adversely affected by this ruling. If it can be shown that you have relied on HQ 555590 to your detriment, e.g., ordered merchandise after the receipt of HQ 555590 that will be imported after the date of this ruling, you may notify this office and apply for relief from the effects of this modification. We regret any inconvenience this matter has caused you.
Sincerely,

John Durant
Director,

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