HQ 0734467 - Country of origin and quota treatment of knit golf shirts from Singapore, processed in Singapore and Indonesia from foreign fabric and trim components from Hong Kong. Textile products; 19 CFR 12.130; T.D. 85-38; T.D. 90-17; Substantial Transformation; cutting to shape; 19 CFR 12.130(d)(2); 731036; 733841; C.S.D. 90-19; C.S.D. 90-20; 086229; 083359; 734215; partial assembly; 082747 - United States International Trade Commision Rulings

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HQ 734467

April 17, 1992

MAR-2-05 CO:R:C:V 734467 GRV

CATEGORY: MARKING

John B. Pellegrini, Esq.
Ross & Hardies
529 Fifth Avenue
New York, N.Y. 10017-4608

RE: Country of origin and quota treatment of knit golf shirts from Singapore, processed in Singapore and Indonesia from foreign fabric and trim components from Hong Kong. Textile products; 19 CFR 12.130; T.D. 85-38; T.D. 90-17; Substantial Transformation; cutting to shape; 19 CFR 12.130(d)(2); 731036; 733841; C.S.D. 90-19; C.S.D. 90-20; 086229; 083359; 734215; partial assembly; 082747

Dear Mr. Pellegrini:

This is in response to your letter of January 14, 1992, on behalf of The Van Heusen Company, requesting a ruling on the country of origin, for marking and quota purposes, of two types of knit golf shirts. Two assembled golf shirt samples--one of each type and each marked "MADE IN SINGAPORE"--were submitted for examination.

FACTS:

Two styles of knit golf shirts (denominated "RAM" and "EDITION") will be imported from Singapore. The production of these shirts involves fabric-processing operations in two countries (Singapore and Indonesia), and include attaching certain trim items from another country (Hong Kong).

In Singapore, foreign fabric and interlining will be cut to shape and the collars for the respective shirt styles will either be top fused to the interlining or separated. The cut fabric components will then be sent to Indonesia where they will be partially assembled: the placket, pocket and collar will be made and set, and the shoulder seams will be joined. The shirts will then be returned to Singapore where final assembly operations will be performed on the fabric components, including the attach- ment of certain trim items (buttons, tread and fabric labels from Hong Kong), to complete the shirts. These assembly operations include setting and hemming the sleeves, closing the side seams, making buttonholes and setting the buttons, and in the case of one of the shirt styles ("RAM") embroidering a logo onto the shirt. The relative processing costs per dozen shirts for each shirt style in each country are estimated as follows:

(1) for the "RAM" golf shirt, the Singapore operations total over $60.00 and the Indonesian operations total less than $3.00, and

(2) for the "EDITION" golf shirt, the Singapore operations total over $35.00 and the Indonesian operations total less than $2.00.

Following inspecting, pressing and packaging steps, the completed shirts will be exported to the U.S.

Based on our findings and determination in Headquarters Ruling Letter (HRL) 731036 dated July 18, 1989, which dealt with polo-style shirts processed in multiple countries, you believe that the country of origin, for marking and quota purposes, of the knit golf shirts is Singapore and ask that we confirm this view.

ISSUE:

What is the country of origin of the two types of knit golf shirts, for marking and textile quota purposes, under 19 U.S.C. 1304 and 19 CFR 12.130(b)?

LAW AND ANALYSIS:

The General Country of Origin Marking Requirement

The marking statute, 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit in such manner as to indicate to the ultimate pur- chaser the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The primary purpose of the country of origin marking statute is to "mark the goods so that at the time of purchase the ulti- mate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influ- ence his will." United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940).

The Country of Origin Requirements Applicable to Textiles and Textile Products

For textiles and textile products subject to 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854), the principles for determining the country of origin are provided at 12.130, Customs Regulations (19 CFR 12.130). For purposes of 12.130, where a textile or textile product consists of materials produced or derived from, or processed in, more than one foreign territory or country, or insular possession of the U.S., the country of origin is defined as that foreign territory or coun- try, or insular possession 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 into a new and different article of commerce. 19 CFR 12.130(b). Thus, the substantial transformation test for textiles embraces two separate findings: (1) whether there has been a new and different article of commerce created, and (2) whether the new article was created by means of a substantial manufacturing or processing operation. See, Mast Industries, Inc. v. United States, 11 CIT 30, 652 F.Supp. 1531 (1987), aff'd, 5 Fed.Cir. 105, 822 F.2d 1069 (1987).

Factors indicating whether or not a particular manufactur- ing/processing operation is substantial are set forth in 19 CFR 12.130(d)-(e). Section 12.130(d)(2) provides that in determining whether merchandise has been subjected to substantial manufactur- ing/processing operations, (1) the physical change to the material/article, (2) the relative time involved in the foreign operation, (3) the relative value added to the material/article, (4) the complexity of the foreign operation, and (5) the level/ degree of skill/technology required for the foreign operation will be considered. Section 12.130(e)(1)(iv) provides that fabric material usually will be a product of the particular country where it has been cut and those parts assembled into the completed article, however, 12.130(e)(2)(i) provides that the fabric material usually will not be considered a product of the particular country where simple combining operations occur.

As the merchandise imported is classifiable in HTSUS section XI and was processed in more than one foreign country, the coun- try of origin rules of 12.130(b) are applicable, and Customs has stated that the principles of origin contained in 12.130 are applicable to such merchandise for all Customs purposes, including the assessment of duties and marking. T.D. 85-38, 19 Cust. Bull. 58, 68 (1985), and T.D. 90-17, 24 Cust. Bull. ___ (1990). Regarding the substantial transformation criteria and examples found at 12.130, Customs has stated that "[a]ny factual situations not squarely within those examples will be decided by Customs in accordance with the provisions of section 12.130(b) and (d)." T.D. 85-38, at p. 72. In general, Customs has also stated that "[c]utting garment parts from fabric will result in a substantial transformation of the fabric, T.D. 85-38, at p. 67, and that garment parts partially assembled in one country after an intervening assemble in another country are not substantially transformed, HRL 082747 dated February 23, 1989.

In the referenced Headquarters Ruling Letter (HRL 731036 dated July 17, 1989), Customs considered whether the complete assembly in country B of cotton knit polo-style shirt component panels that had been cut in country A constituted a substantial transformation of the cut fabric components for marking and quota purposes. Applying the criteria at 12.130(d), we found that the processing operations that took place in country B did not affect a substantial transform of the cut garment panels, as the assembly process was not complex, it took very little time and did not require highly skilled workers. (See also, HRL 733841 dated February 7, 1991 (8 garment components cut in Taiwan and assembled in China were determined to be Taiwanese for country of origin marking, quota and duty purposes), and C.S.D. 90-20 (foreign assembly of cotton work gloves from fabric purchased and cut into pieces in first country not substantially transformed), upheld on reconsideration in HRL 086229 dated April 11, 1990). In discussing the provisions at 19 CFR 12.130(d) and (e), we stated that 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.

In C.S.D. 90-19, we considered whether sweatshirts, assembled from cut panels in a country other than the country where the knit fabric was produced and cut, were substantially transformed by the foreign assembly operation. Interpreting the polo shirt ruling above, we similarly found that the assembly of sweatshirts panels did not require highly skilled workers nor that putting together a sweatshirt was any more difficult than putting together a polo-style shirt. Accordingly, we held that the sweatshirt had not been substantially transformed by the assembly operations and that the country where the fabric was purchased and cut would be the country of origin, pursuant to 19 CFR 12.130. See also, HRLs 083359 dated May 18, 1990 (sewing and finishing in second country of trouser parts cut in first country where fabric originated does not substantially transform the finished trousers, which remain a product of the first country) and 734215 dated November 13, 1991 (assembly in second country of sweater parts cut in first country where fabric originated does not substantially transform the finished sweaters, which remain a product of the first country).

After examining the textile samples submitted and for the reasons which follow, we find that the two styles of knit golf shirts will be a product of Singapore when imported into the U.S. First, the cutting of the fabric to shape in Singapore transforms the foreign fabric into a product of Singapore. Second, we find that the partial assembly operations in Indonesia and the finish assembly operations in Singapore do not further transform the Singapore-cut fabric components. Applying the criteria at 12.130(d), we find that the assembly operations--in either Indonesia or Singapore--do not involve a high degree of skill and workmanship; the physical change to the material/ article is minor; the relative values added to the shirts by means of the assembly operations is not substantial--averaging approximately 30%, and; the complexity of the foreign operation appears to be simple rather than complex. These findings are in accordance with the above rulings concerning sweater and polo- style shirt assemblies. Accordingly, no substantial transforma- tion of the Singapore-cut fabric occurs in either Indonesia or Singapore, as the respective assembly operations are simple, not complex, combining operations.

HOLDING:

The country of origin of the two types of knit golf shirts is Singapore, for marking and textile quota purposes, under 19 U.S.C. 1304 and 19 CFR 12.130(b), as the assembly operations performed in Indonesia and Singapore do not substantially transform the Singapore-cut fabric.

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)), which provides 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,

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