HQ 0734576 - Country of origin marking requirements for wiping cloths; textiles; cutting of fabric to length and width; overcast stitching; substantial transformation; textiles; disposable containers; 19 CFR 12.130; 19 CFR 134.24; 19 CFR 134.22; 19 CFR 134.46; 19 CFR 134.41 - United States International Trade Commision Rulings

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HQ 734576
February 17, 1993

MAR-2-05 CO:R:C:V 734576 RSD

CATEGORY: MARKING

Mr. David E. Goldstone
Daruth Agency Ltd.
1105 - 35 Wynford Heights Cres.
Toronto, Canada M3C 1k9

RE: Country of origin marking requirements for wiping cloths; textiles; cutting of fabric to length and width; overcast stitching; substantial transformation; textiles; disposable containers; 19 CFR 12.130; 19 CFR 134.24; 19 CFR 134.22; 19 CFR 134.46; 19 CFR 134.41

Dear Mr. Goldstone:

This is response to your letters dated January 27, February 6, and February 21, 1992, submitted to Customs at the New York Seaport, concerning the country of origin marking requirements for cleaning cloths. On June 11, 1992, the Textile Classification Branch issued a ruling, HQ 951338, on the classification of this merchandise and its eligibility under the Canadian Free Trade Agreement. Samples were submitted for examination.

FACTS:

You intend to import wiping cloths from Canada that are used to clean lenses. You have submitted two sample cloths. Both of the samples are constructed of Japanese origin herringbone weave fabric that is made of 100 percent polyester filament yarns. The fabric measuring 137 centimeters by 50 meters is imported into Canada, where it is cut to length and width. Sample 1 is cut with the dimensions of approximately 12 centimeters by 13 centimeters and has pinked edges. Sample 2 is cut to dimensions of 9 centimeters by 19 centimeters and has edges finished with an overcast stitch. Each cloth is individually packaged in a plastic pouch which measures approximately 12 1/2 centimeters by 10 centimeters. The pouch contains two pockets which open toward the item's central fold. You estimate the cost of the fabric cloth for each item is about $0.35, cutting costs at about $0.30, overcasting costs at about $.030, and the packing costs at about $0.20 per unit.

The sample cloth with the pinked edges has an adhesive label attached to the lower right hand corner with the marking "TEXTILE MADE IN JAPAN" in black letters of about a 1/2 centimeter against a white background. You also indicated to the National Import Specialist in a telephone conversation that some of the cloths are packaged in clear plastic bags, such as submitted the sample, but other cloths will be imported in a pouch with a clear plastic pocket stamped "Made in Canada" on its back side.

ISSUES:

Is the Japanese Fabric substantially transformed by the cutting and sewing operations performed in Canada?

Does the method of marking the cleaning cloths through the use of an adhesive label and putting them in a clear plastic pouch satisfy the country of origin marking law?

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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making 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"). According to T.D. 90-17, published in the Federal Register on March 1, 1990, (55 FR 7303), the rules of origin for textiles and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes, including duty and marking. Customs has determined that 19 CFR 12.130 will be applied to determine the country of origin of all imported articles which are classified in Section XI, Harmonized Tariff Schedule of the United States, or to any imported article classified outside of Section XI, HTSUSA, under a subheading which has a textile category number associated with it. Because the subject merchandise would be classified under Section XI, HTSUSA, 19 CFR 12.130 will be used in making the country of origin determination.

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 and different article of commerce and 2) a substantial manufacturing or processing operation.

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.

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)(2) lists some of the factors considered in determining whether a substantial manufacturing or processing operation has occurred. These factors include: the physical change in the material or article; the time involved in the processing; the complexity of the operation; the level or degree or skill and technology required in the operation; and the value added to the article or material in the non-U.S. based operation versus the value added to the article or material in the U.S.

19 CFR 12.130(e)(2)(ii) states that mere cutting to length or width and hemming or overlocking fabrics which are identifiable as being intended for a particular commercial use would not substantially transform the article. The submitted descriptive literature indicates that the cloth's fiber and weave impart the properties of high surface contact, high dirt storage capacity, a balance between wiping friction and ease of movement over the surface to be cleaned, absorbency, and soil resistance. Based on this information, it appears that the fabric is highly specialized and intended for use in cleaning. The fabric imparts the most important properties of the finished wiping cloth. In comparison, in Canada, the fabric is merely cut to length and width, and in some cases overcast stitched and packaged. These operations do not constitute substantial processing. They do not require much time; are not complex; and do not require a high degree of skill or technology as compared with the forming of the fabric. See HQ 089230 (May 10, 1991), (concerning the country of origin of bed sheets). Accordingly, we find that the fabric is not substantially transformed in Canada and the country of origin of the wiping cloths for all purposes including marking is Japan.

The remaining question is whether the proposed method of marking indicated on the samples would be acceptable. 19 CFR 134.41(b) provides that the degree of permanence of a marking should be at least sufficient to insure that in any reasonably foreseeable circumstance, the marking shall remain on the article until it reaches the ultimate purchaser unless deliberately removed. The cloths are marked by an adhesive label which reads "TEXTILE MADE IN JAPAN". The cloths will be sold in plastic pouches. The adhesive label appears to be firmly attached to the cloth and is likely to remain on the cloth until it reaches the ultimate purchaser especially if the cloth is sold in the sample plastic pouch. Because the plastic pouch is transparent, the ultimate purchaser will be able to see the label through the clear plastic pouch. Accordingly, we find that marking on the sample cloth is acceptable.

We have been advised that some of the plastic pouches will be marked "Made in Canada". This marking on the pouch is misleading, because the ultimate purchaser could conclude that the country of origin of the wiping cloth is Canada and when it is actually Japan. Therefore, the "Made in Canada" marking cannot remain on the pouch by itself. Since the pouch is a usual disposable container and the marking on the cloth is visible through it, in accordance with 19 CFR 134.24(d)(3), it is not necessary to have any marking on the pouch. However, if you want to indicate the country of origin of the pouch, it is necessary to make sure that the marking on the pouch refers only to the pouch and not the wiping cloth. For example, "Pouch Made in Canada" or "Case Made in Canada, Contents made in Japan". If there is a marking regarding the pouch, there also must be a marking regarding the cloth which is in compliance with 19 CFR 134.46. 19 CFR 134.46 requires that if the name of a foreign country or locality other than the country of or locality in which the article was manufactured or produced, appear on an imported article or its container, there shall appear...in close proximity to such words... in a comparable size the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.

We also suggest that you contact the Federal Trade Commission regarding the marking requirements under the Textile Fiber Products Identification Act. HOLDING:

The cutting and sewing of the Japanese fabric in Canada to make the wiping cloths does not constitute a substantial transformation. The country of origin of the wiping cloth is Japan. The proposed method of marking on the sample cloth by an adhesive label as shown is acceptable. Any marking regarding the pouch must be accompanied with a marking regarding the cloth which is in compliance with 19 CFR 134.46, and it should be clear that it refers only to the pouch and not to the cloth.

Sincerely,

John Durant, Director

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