HQ 0734664 - Country of origin marking of imported sheet sets; substantial transformation; textile products; 19 CFR 12.130; T.D 85-38; HQ 083544; HQ 086523; HQ 733180 - United States International Trade Commision Rulings

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HQ 734664

November 23, 1992

MAR-2-05 CO:R:C:V 734664 AT

CATEGORY: MARKING

Mr. Arnold Cohen
Jackson Fabrics Associates, Inc.
350 Fifth Avenue, Suite 2704
New York, New York 10118

RE: Country of origin marking of imported sheet sets; substantial transformation; textile products; 19 CFR 12.130; T.D 85-38; HQ 083544; HQ 086523; HQ 733180

Dear Mr. Cohen:

This is in response to your letter of May 16, 1992, requesting a ruling on the country of origin of imported sheet sets from Columbia. A sample sheet set was not submitted for review.

FACTS:

You state that your company intends to import sheet sets from Columbia which will consist of one flat sheet, one fitted sheet and two pillow cases. According to your submission the production of the sheet sets will involve processing operations performed in two countries, Taiwan and Columbia. You state that the greige fabric used in the manufacture of the sheet sets will be made in Taiwan measuring approximately 70 X 46 with 30/1 in both warp and filling. The greige fabric will then be sent to Columbia where it will be cut to length, bleached, printed, thermofixed, calendared, the seams are sewn, inspected and packaged for export to the U.S.

ISSUE:

What is the country of origin of the imported sheet sets processed in the manner described above?
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 determining country of origin for marking and other purposes for textile and textile products. 19 CFR 12.130(b), 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.

19 CFR 12.130(d) sets forth the criteria to be applied 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) 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.

You state that the greige fabric for these sheet sets is made in Taiwan. 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 12.130 as a substantial transformation. Clearly, making fabric out of yarn results in a new and different article of commerce. Therefore, the making of the greige fabric in Taiwan constitutes a substantial transformation.

The second question presented is whether the greige fabric undergoes a later substantial transformation in Columbia, where the fabric is further processed (cut, bleached, printed, thermofixed, calendared, the seams are sewn, inspected) into the finished sheet sets (flat sheets, fitted sheets and pillow cases) and packaged for export to the U.S.

Customs recently held in HQ 086523 (April 25, 1990), that bed sheets made out of material woven, dyed and printed in Pakistan were considered to be from Pakistan even though the material was cut to length and hemmed in Dubai. The processed performed in Dubai, i.e., cutting to length and hemming, did not constitute a substantial transformation. This ruling is consistent with the example set forth in 19 CFR 12.130(e)(2)(ii). Customs also ruled in HQ 086523 that the pillow cases, which were cut and sewn together in Dubai, were considered to be from Dubai. Further, Customs ruled in HQ 083544 (February 28, 1990), that material cut to both width and length and hemmed to be made into towels and dishcloths was not substantially transformed because after examining the factors set forth in 19 CFR 12.130(d), Customs concluded that the processing operations performed in the second country were not substantial.

In this case, greige fabric made in Taiwan is further processed in Columbia into flat sheets, fitted sheets and pillow cases. Therefore, under 19 CFR 12.130 the question presented is whether the greige fabric has been subjected to substantial manufacturing or processing operations resulting in a new and different article of commerce to constitute a substantial transformation.

When fabric is used to make a completed flat sheet, it is clear that a new and different article of commerce has been created. However, the second prong of the substantial transformation test under 19 CFR 12.130 requires a finding that the textile or textile product has been transformed by means of substantial manufacturing or processing operations. You state that the greige fabric is further processed in Columbia into the finished flat sheets by cutting the fabric on all four sides and hemming all four sides by sewing. As discussed above, the cutting to length only and hemming of a bed sheet has already been held in HQ 086523 not to constitute a substantial manufacturing process. Therefore, we find that the manufacturing operations performed in Columbia in making the flat sheets is not a substantial manufacturing or processing operation. Because the second prong of the substantial transformation test of 19 CFR 12.130 has not been satisfied, the fabric is not considered substantially transformed in Columbia. Accordingly, the country of origin of the flat sheets would be Taiwan.

With respect to the processes performed in Columbia in making the fitted sheets, you state that the imported fabric is cut at the corners and elastic is sewn into the cloth so that the corners will fit over the mattress. In HQ 733180 (December 13, 1990) Customs held that imported fabric from Turkey which was cut at the corners and had elastic sewn into the cloth in Australia into finished fitted sheets was substantially transformed as a result of the manufacturing operations performed in Australia. One of the factors considered by Customs in reaching its conclusion was that the imported fabric underwent a substantial manufacturing or processing operation as a result of the cutting and sewing operations performed because making the fitted sheets required additional cutting and stitching and was more complex than merely sewing a straight hem. Customs also determined that fabric which is made into fitted sheets results in a new and different article of commerce. Similarly in this case, we find that the imported fabric is substantially transformed as a result of the operations performed in Columbia. Accordingly, the country of origin of the fitted sheets would be Columbia.

With regard to the pillow cases, you state that in Columbia the greige fabric is cut, folded, sewn and hemmed on 3 sides, including the open side which requires hemming both sides into the finished pillow cases. As stated above, in HQ 086253 Customs held that fabric made into pillow cases was a substantial transformation. In that case, it was determined that fabric which was processed (cut, folded, sewn and hemmed on 3 sides, including the open side which required hemming both ends) into pillow cases does undergo substantial manufacturing into a new and different article of commerce and therefore was substantially transformed. Similarly, in this case, we find that the operations performed in Columbia in making the pillow cases (fabric is cut, folded, sewn and hemmed on 3 sides, including the open side which requires hemming both ends) constitutes a substantial transformation of the imported greige fabric. Accordingly, the country of origin of the pillow cases would be Columbia.

HOLDING:

The country of origin of the bed sheet sets which are processed in the manner described above and pursuant to 19 CFR 12.130, is Taiwan for the flat sheets and Columbia for the fitted sheets and pillow cases.

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. In such circumstances, 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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