HQ 0734274 - Country of origin marking of imported men's polo shirts; 19 CFR 12.130; cutting components; sewing - United States International Trade Commision Rulings

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HQ 734274

January 12, 1993

MAR-2-05 CO:R:C:V 734274 AT

CATEGORY: MARKING

Harvey A. Isaacs, Esq.
Siegel, Mandell & Davidson, P.C.
One Whitehall Street
New York, New York 10004

RE: Country of origin marking of imported men's polo shirts; 19 CFR 12.130; cutting components; sewing

Dear Mr. Isaacs:

This is in response to your letter of July 23, 1991, requesting a country of origin ruling for quota and marking purposes on behalf of [Sigallo Ltd.,] regarding imported men's polo shirts. You have also requested that certain information in the ruling be given confidential treatment. The confidential information is bracketed and will not be disclosed in copies of this ruling made available to the public.

FACTS:

[Sigallo Ltd.,] plans to import men's 100 percent cotton (or 65% polyester, 35% cotton) polo shirts into the ports of Charleston, South Carolina, Los Angeles Airport, and Los Angeles- Long Beach. The shirts feature a pointed rib knit collar, short sleeves with rib knit sleeve cuffs, a hemmed bottom and a pocket on the left chest. The shirts have a partial opening, extended from the neckline; this opening contains a placket with two buttons for closure. Samples of the completed shirt and the cut components which will be used to create the shirt were submitted.

You state that the production of the shirts will involve processing operations performed in three countries and/or insular possessions, hereinafter referred to as "Country A", "Country B" and "Country C". For purposes of this ruling "Country B" will be Guam and "Country C" will be the Republic of the Philippines (or alternative country and/or insular possessions other than Taiwan or Guam).
The three types of fabric will be knitted in Country A and exported to Country B for cutting. Also the rib knit collars and cuffs will be knit to their required shapes in country A and then exported to Country B.

In Country B the fabric will be cut into nine garment components. This cutting operation will involve spreading large fabric pieces by hand one on top of the other so as to form a number of plies, placing a pattern on the top ply and cutting around the pattern and through all plies with an electric knife. This will result in the following components: 1) front panels with a semicircular neck outline and sleeve and shoulder outlines, 2) back panels with a slight neck outline at the top and with sleeve/shoulder outlines, 3) flat left sleeves and 4) flat right sleeves, 5) pockets, 6) left inside placket places, 7) right inside placket pieces and 8) neck tapes. Also, the interlining fabric for the placket will be cut to rectangular shape in Country B. After cutting, these components along with the collar and sleeve cuffs which were knit in Country A will be bundled and packed for shipment to Country C.

In Country C, the garment components will be sewn together by machine to create the completed polo shirt along with various finishing operations. The assembly operation will consist of the following sequential steps for each garment: joining the front and back panels at the shoulders, making (closing) and setting the two sleeves, closing and setting the sides, sleeves and sleeve cuffs, attaching the pocket, mounting and turning the garment on a lock table and hemming the bottom of the garment, opening the button holes, sewing the buttons and adding the labels. After trimming off excess material and inspecting each garment, the garment will be pressed and folded, hang tags will be attached to the garments and the garments will be placed in polybags and packed in boxes for shipment to the U.S.

ISSUE:

What is the country of origin of the imported men's polo shirt?

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 country of origin marking determinations for textiles and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1584) ("section

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 other words, for textiles governed by 19 CFR 12.130 there is a two part test for substantial transformation: 1) a new different article of commerce and 2) a substantial manufacturing or processing operation.

In T.D. 85-38, published in the Federal Register on March 5, 1985 (50 Fed. Reg. 8714), which is the final rule document which established 19 CFR 12.130, Customs discussed 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 situations which fall within those examples, would rule after applying the criteria listed in 19 CFR 12.130(d). Any factual situation not squarely within those examples will be decided by Customs in accordance with the provisions of 19 CFR 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) and (e).

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) lists some of the factors considered in determining whether a substantial manufacturing operation has occurred. These factors include: (1) the physical change in the material or article as a result of the manufacturing or processing operations in each foreign country; (2) the time involved in the manufacturing or processing operations in each foreign country; (3) the complexity of the manufacturing or processing operations in each foreign country; (4) the level or degree or skill and/or technology required in the manufacturing or processing operations in each foreign country; and (5) the value added to the article or material in each foreign country compared to its value when imported into the U.S.

You state that the three fabric types for these shirts are knitted and made in Country A. One of the examples enumerated is 19 CFR 12.130(e)(iii), which states that weaving, knitting or otherwise forming fabric is an example of a manufacturing or processing operation which would qualify under 19 CFR 12.130 as a substantial transformation. Clearly, making the three fabric types out poly/fabric yarn or thread results in a new and different article of commerce. Further, the forming of the fabric types by knitting the two fabrics (polyester and cotton) together would qualify as a substantial manufacturing operation under 19 CFR 12.130. Moreover, the cuffs and sleeve cuffs are knit in Country A. Therefore, the making of the fabric types for these polo shirts in Country A constitutes a substantial transformation.

The second question presented is whether the fabric undergoes a later substantial transformation in Country B, where the fabric is cut into nine garment components by the operations mentioned above. Customs has held under certain circumstances that the cutting of fabric into specific patterns and shapes suitable for use to form the completed article constitutes a substantial transformation.

In Headquarters Ruling Letter (HRL) 731028 (July 18, 1988), Customs ruled that the cutting of fabric into garment parts constitutes a substantial transformation of the fabric and the parts become a product of the country where the fabric is cut. In Headquarters Ruling Letter (HRL) 555489 (May 14, 1990), Customs ruled that the cutting of fabric into glove pattern pieces results in a substantial transformation. Customs further stated that the cutting of fabric into glove pieces involves a complex operation and that the apparel cutters must be skilled since mistakes can be costly in terms of wasted fabric and can delay or prevent a planned assembly run. In Headquarters Ruling Letter (HRL) 555693 (April 15, 1991), Customs ruled that cutting of fabric to create pattern pieces for an infant carrier results in a substantial transformation.

In this case, the fabric is cut into nine individual garment pieces which, when assembled, create the finished polo shirt. Each piece represents a intricate part of the finished polo shirt having its own shape and form. Clearly, cutting nine garment pieces from fabric results in a new and different article of commerce. Further, for the reasons stated in HRL 555489 regarding the complexity of apparel cutting operations, the cutting of the fabric into nine garment pieces would qualify as a substantial manufacturing operation under 19 CFR 12.130. Therefore, the cutting of the fabric into nine garment pieces in Country B constitutes a substantial transformation.

The third question presented is whether the assembly of the nine garment pieces along with the rib knit collars and sleeve cuffs in Country C by sewing them together constitutes yet another substantial transformation. The specific operations include: joining the front and back panels at the shoulders, attaching the collar, making (closing) and setting the two sleeves, closing and setting the sides, sleeves and sleeve cuffs, attaching the pocket, mounting and turning the garment on a lock table and hemming the bottom of the garment. After trimming off the excess material and inspecting each garment, hang tags will be attached to the garments, garments will be pressed and folded and will be placed in polybags and packed in boxes for shipment to the U.S.

Assembly by sewing is considered in 19 CFR 12.130(e)(v) as usually resulting in a article being deemed a product of the country in which the sewing was done where the assembly is substantial such as the complete assembly and tailoring of all cut pieces of suit-type jackets, suits, and shirts. After considering all the comments received on the interim regulation regarding assembly by sewing, Customs concluded that "factors such as time, nature of the sewing operation, and the skill required to sew together a tailored garment should be considered in determining whether the merchandise was substantially transformed.... 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)." 50 Fed. Reg. 8,715 (March 5, 1985), T.D. 85-38.

In Headquarters Ruling Letter (HRL) 731036 dated July 18, 1989, Customs ruled that the sewing together of 12 component parts into a men's polo style shirt in a second foreign country was not a substantial transformation under 19 CFR 12.130. The factors considered were the simplicity of the operations performed in the second country, and the lack of time and skill required to perform the operations. In Headquarters Ruling Letter (HRL) 733841 dated February 7, 1991, Customs ruled that the sewing of 8 component parts into a men's polo style shirt in a second foreign country was not a substantial transformation under 19 CFR 12.130. In Headquarters Ruling Letter (HRL) 734124 dated July 16, 1991, Customs ruled that the sewing of 7 component parts into a men's turtleneck long sleeve shirt in a second foreign country was not a substantial transformation under 19 CFR 12.130. We stated that the sewing assembly did not require tailoring or detail work, required very little time and did not require highly skilled workers. The present case involves similar processing performed in Country C as the two cases previously mentioned. The assembly of these garment pieces does not involve any tailoring or detailed work and is a simple operation not requiring highly skilled workers. Based on these considerations, we conclude that the garment pieces do not undergo substantial manufacturing in Country C and therefore, are not substantially transformed in Country C. Accordingly, the country of origin of the polo shirts is Country B (Guam).

HOLDING:

Pursuant to 19 CFR 12.130, the country of origin of these men's polo shirts for country of origin marking and quota purposes would be Country B (Guam).

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
Commercial Rulings Division

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