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HQ 952010

March 24, 1993

CLA-2 CO:R:C:T 952010 HP

CATEGORY: CLASSIFICATION

Mr. John M. Peterson
Neville, Peterson & Williams
39 Broadway
New York, NY 10006

RE: Country of origin of diapers.

Dear Mr. Peterson:

This is in reply to your letter of June 11, 1992. That letter concerned the country of origin determination of diapers, produced in either China or Guatemala. Please reference your file 1606-01-D, Pro Diaper, Inc.

FACTS:

The merchandise at issue consists of 100% cotton woven fabric piece goods made in the People's Republic of China (PRC) and shipped to Guatemala, where they are manufactured into reusable cotton diapers for infants. The fabric is two ply, woven 34 inches wide for four by six ply diaper (wider for four by eight), in alternating bands of single ply and double ply material. The different plys are made by stitch changes in automatic looms. The fabric is exported to Guatemala in festoons measuring approximately 10 yards in length. Diapers will be made from this fabric in three basic styles: (1) four by six ply, (2) four by eight ply infant, and (3) four by eight ply regular.

In Guatemala, the fabric is cut to width and length. The fabric is spread on a cutting table layer upon layer, until it reaches a depth of approximately six inches. Lines are then drawn of the top layer of fabric showing where the fabric is to be cut to the length of one diaper. The fabric is then cut to length, using a straight knife cutting machine, to form a diaper "shell." After the fabric has been cut to length, it is removed to a folding table, where a worker begins by peeling away layers of shell fabric one at a time. The layer of shell fabric is placed on a folding table, and the sides of the fabric are folded in toward the middle and overlapped according to specifications. Where a diaper having a thicker center panel is desired, the fabric is woven to a wider width, providing enough fabric for additional folding. This creates a four ply fabric in the end panels of the diapers, and a thicker ply in the center, where greater softness and absorbency is desired.

The fabrics thus assembled are then moved to the first sewing operation, where a single needle lockstitch straight sewing machine is used to sew seams down the two lines of the center panel where the fabrics have been folded. This sewing operation assembles the shell and insert fabrics together, and forms the center panels of the diapers.

The diaper is then transferred to a second sewing station, where the edges are sewn closed. The first end of the diaper is sewn with a double needle overlock sewing machine, which trims the edge of the fabric and wraps the thread around the edge to secure it. This operation is repeated on the opposite end of the diaper. Each of the thread tails left by the end stitching is sewn down with a bar tack machine in order to fasten the tails to the body of the diaper and prevent the tails from unraveling.

Each diaper is then inspected and folded. The diapers are then packaged into bales of 25 diapers and shipped to the United States, where they are sold to diaper service companies.

The cost of the PRC-origin cotton fabric is approximately 631/2 cents per square yard (delivered to Guatemala). The cost of the Guatemalan cutting, sewing and finishing operations amounts to approximately 15 cents per square yard. The finished diapers sell for a price equal to approximately $1.32 per square yard.

The fiber staple length, yarn characteristics, and fabric weave of the diapers are controlled within narrow tolerances. Thread used in sewing the diapers must be either a three ply spun yarn containing a minimum of 50% polyester, or a textured false twist or airjet continuous yarn; in either event, of a specified denier. Colored threads may only be used if they do not bleed into the diapers or lose color after one hundred launderings, and threads must not exhibit inconsistent shrinkage.

Center panel stitching is specified as two rows of either a 401 chain stitch or a 301 lock stitch which does not pucker, lose or skip stitches. Stitch density is controlled at between ten and twelve stitches per inch, and stitching tolerances are specified for the sides of the diaper, where the weaving selvages are exposed. End panel stitching must be by overlock type, which trims and wraps around the raw edges. Colored thread is used in end-panel stitching, with a different color designated for each. Overlock thread tails are bar tacked.

ISSUE:

What is the country of origin of the diapers for quota/visa purposes?

LAW AND ANALYSIS:

Textile commodities produced in more than one foreign country are subject to the country of origin requirements delineated in section 12.130 of the Customs Regulations (19 C.F.R. 12.130). These regulations provide that:

. . . a textile product . . . which consists of materials produced or derived from, or processed in, more than one foreign . . . country shall be a product of that foreign . . . country where it last underwent a substantial transformation.

12.130(b). A textile product undergoes a substantial transformation when it is ". . . transformed by means of substantial manufacturing or processing operations into a new and different article of commerce."

Section 12.130 of the regulations outlines the criteria used to determine the country of origin for textiles and textile products. Specifically, this provision of the regulations is considered in determining whether a textile product has undergone substantial manufacturing or processing operations, and what constitutes a new and different article of commerce. The factors considered are not exhaustive. In fact, "one or any combination of criteria may be determinative, and additional factors may be considered." In determining whether merchandise has undergone substantial manufacturing or processing operations, we consider the (1) physical change in the material or the article; (2) time involved; (3) complexity of the operations; (4) level or degree of skill and/or technology required; and (5) value added to the article in each country.

Customs has long held that producing diapers from plain cotton fabric suitable for multiple uses is considered a substantial transformation when the manufacturing and processing operations include, inter alia, cutting to length and width or length alone, complex folding to create the diaper's unique multi-layer middle portion, hemming and/or overlocking the edges, and finishing and packaging. HRL 950849 of March 24, 1992; HRL 953078 of January 25, 1993. Contra HRL 087950 of January 9, 1991; HRL 088321 of March 7, 1991 (merely cutting fabric into squares and hemming insufficient to constitute substantial manufacturing process). The alternating single and double woven sections of the cloth facilitate the cutting, folding and sewing of the fabric into a diaper. The double woven sections are manufactured in this way to increase absorbency and prevent leakage throughout the diaper. The alternating single woven sections provide markers (lines of demarcation) for folding and provide a more dense and solid base for sewing the diaper.

It is our opinion that the weave structure of the fabric confirms the fact that the material is intended for use as diapers. The changing of the weaves is performed at additional cost and for the specific purpose of creating markers for folding. As a result, no substantial transformation takes place. The diapers are therefore considered a product of China.

HOLDING:

As a result of the foregoing, the instant merchandise is considered woven cotton diapers of China.

The holding in this ruling applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in 177.9(b)(1), Customs Regulations (19 C.F.R. 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 C.F.R. 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 a case, it is recommended that a new ruling request be submitted in accordance with 177.2, Customs Regulations (19 C.F.R. 177.2).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director
Commercial Rulings Division

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