HQ 0089539 - Country of origin of shirts: 19 CFR 12.130 - United States International Trade Commision Rulings

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HQ 089539

April 22, 1992

CLA-2 CO:R:C:T 089539 CC

CATEGORY: CLASSIFICATION

Andrew P. Vance
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016

RE: Country of origin of shirts: 19 CFR 12.130

Dear Mr. Vance:

This letter is in response to your inquiry, on behalf of Luen Thai, for the country of origin of shirts. Samples were submitted for examination.

FACTS:

The submitted merchandise, commonly designated as a flannel shirt, is a men's woven cotton shirt with a full frontal opening and button closure, a collar, a front pocket, and cuffs. You have also submitted samples of the components used to make this item.

You have described two scenarios for the manufacture of this merchandise. In Scenario 1, the fabric is made in Country A. In Country B (Hong Kong), the fabric is marked and cut into components. In Country C (China), all of the components are sewn and assembled, ironed, and packed. Scenario 2 is the same as Scenario 1, except that the collars and cuffs are sewn in Hong Kong.

You have also provided the following information concerning the production of the shirts:

Scenario 1

Operation Min/doz Cost/doz($) Country

Fabric 60.00 A

Marking and Cutting 41.82 4.95 B

Accessories 8.88 B

Assembling and Sewing 207.37 2.79 C

Finishing 65.78 .89 C

Scenario 2

Operation Min/doz Cost/doz($) Country

Fabric 60.00 A

Marking and Cutting 41.82 4.95 B

Cutting and Sewing
(collars and cuffs) 77.48 10.43 B

Accessories 8.88 B

Assembling and Sewing 129.89 1.75 C

Finishing 65.78 .89 C

ISSUE:

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

LAW AND ANALYSIS:

Country of origin determinations for textile products are subject to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130 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) of the Customs Regulations describes manufacturing or processing operations from which an article will usually be considered a product of the country in which the processes occurred. Section 12.130(e)(1)(v) provides the following:

Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits, and shirts).

According to T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714), the final document rule establishing 19 CFR 12.130:

[T]he assembly of all the cut pieces of a garment usually is a substantial manufacturing process that results in an article with a different name, character, or use than the cut pieces. It should be noted that not all assembly operations of cut garment pieces will amount to a substantial transformation of those pieces. Where either less than a complete assembly of all the cut pieces of a garment is performed in one country, or the assembly is a relatively simple one, then Customs will rule on the particular factual situations as they arise, utilizing the criteria in section 12.130(d).

Customs has consistently ruled for similar garments that the cutting of fabric into parts to make garments constitutes a substantial transformation. (See, e.g., Headquarters Ruling Letter (HRL) 088235 of March 15, 1991.) Therefore in both scenarios the merchandise is substantially transformed in Hong Kong, where the fabric is cut. The question that remains is whether the assembly operations performed in China constitute a substantial transformation.

In Scenario 1 all of the pieces are assembled in China. Based on the information provided, we do not believe that these operations performed in China require a high degree of skill. In addition the value added in Hong Kong is much greater than the value added in China. The operations performed in China would be considered a simple assembly as opposed to a tailoring operation. Consequently no substantial transformation takes place in China, and the country of origin for Scenario 1 would be Hong Kong. In Scenario 2 less processing is performed in China than is performed in China in Scenario 1. Thus no substantial transformation takes place in China in Scenario 2, and the country of origin in this scenario is also Hong Kong.

HOLDING:

The country of origin of the merchandise at issue in both scenarios 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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