HQ 0953708 - Classification of girls' knit top: 6110.20.2075; sweaters, pullovers and similar articles; classification of girls' knit pants; 6104.62.2025; trousers; country of origin; 19 CFR 12.130(b)(d)(e); substantial transformation occurs in country where substantial manufacturing processes take place and where a new and different article of commerce is created. - United States International Trade Commision Rulings

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HQ 953708

July 13, 1993

CLA-2 CO:R:C:T 953708 SK

CATEGORY: CLASSIFICATION

TARIFF NO.'S: 6110.20.2075; 6104.62.2025

Natouchka Patrice Rampy
Sharretts, Paley, Carter & Blauvelt, P.C. 67 Broad Street
New York, N.Y. 10004

RE: Classification of girls' knit top: 6110.20.2075; sweaters, pullovers and similar articles; classification of girls' knit pants; 6104.62.2025; trousers; country of origin; 19 CFR 12.130(b)(d)(e); substantial transformation occurs in country where substantial manufacturing processes take place and where a new and different article of commerce is created.

Dear Ms. Rampy:

This is in response to your letter, dated March 11, 1993, on behalf of your client, Celebrity International, Inc., requesting a binding classification ruling and a country of origin determination for girls' tops and pants. You have submitted a sample of the completed top and pant for our examination and they will be returned to you under separate cover.

FACTS:

The girls' top at issue is constructed of a knit fabric made from 60 percent cotton and 40 percent polyester. The top is a tee style shirt with extensive front applique work and a ribbed crew-neck collar. The matching full-length pants feature a flower pattern designed to match the flower applique design on the front of the top. The pants have an elasticized waistband.

The fabric for these garments is knit in China. The front shirt panel and applique work are produced in China. The front appliqued shirt panel, the fabric required to complete the shirt, and the pants fabric are shipped to St. Lucia. In St. Lucia, the fabric required to complete the shirt is cut and the shirt is assembled. It is also in St. Lucia that the pants fabric is cut and the pants are assembled.

You state in your submission that the cost of cutting the front shirt panels in China will be approximately $1.50 per dozen and the cost of sewing the appliques onto the front panels will be approximately $3.00 per dozen. The cost of completing the shirt in St. Lucia will be approximately $8.00 per dozen. The cost of processing the pants in St. Lucia will be approximately $18.50 per dozen.

The time required for the manufacturing operations in China is three days. The time required for the manufacturing operations in St. Lucia is four weeks. These costs and processing times do not include the cost and time required to knit the fabric in China.

ISSUES:

What is the proper classification for these garments?

Are the articles at issue products of China or St. Lucia for purposes of determining country of origin?

LAW AND ANALYSIS:

- CLASSIFICATION -

Classification of merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

The girls' top at issue features extensive applique work on its front panel. In Headquarters Ruling Letter (HRL) 087211, dated October 9, 1990, Customs held that applique work was among the features which would preclude classification as a T-shirt or as a garment similar to a T-shirt. Accordingly, it is our position that the girls' top is classifiable as a pullover under heading 6110, HTSUSA, which provides for "sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted."

As the garment which is intended to cover the lower half of the torso fits the commercial definition of trousers, i.e., outerwear garments with leg separations, classification of this garment falls under heading 6104, HTSUSA, which provides for, in pertinent part, "women's or girls' trousers."

- COUNTRY OF ORIGIN -

Country of origin determinations are made pursuant to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130(b) of the Customs Regulations 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.

Section 12.130(d) of the Customs Regulations sets forth criteria in determining whether a substantial transformation of a textile product has taken place. The criteria set forth in this regulation are not exhaustive; one or any combination of these factors 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;
(iii) Commercial use.

Section 12.130(d)(2) of the Customs Regulations 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; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations;
(v) The value added to the article or material; [emphasis added]

Section 12.130(e)(1) provides that an article or material usually will be a product of a particular foreign territory or country, or insular possession of the United States, when, prior to importation into the United States, it has undergone in that foreign territory or country or insular possession, any of the following:

(i) Dyeing of fabric and printing when accompanied by two or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing;
(ii) Spinning fibers into yarn;
(iii) Weaving, knitting or otherwise forming fabric; (iv) Cutting of fabric into parts and the assembly of those parts into the completed article; or
(v) substantial assembly by sewing and/or tailoring of all cut pieces ...
[emphasis added]

As stated above, an article will be deemed a product of a particular country if, in that country, it undergoes a substantial manufacturing operation or process and it thereby becomes a new and different article of commerce. If these criteria are met in a particular country the product is said to have undergone substantial transformation and that country will confer country of origin status to the subject merchandise for purposes of 19 CFR 12.130 of the Customs Regulations.

Section 12.130(e)(1)(iv)(v) states that for purposes of determining country of origin, an article usually will be a product of a particular foreign country where it has undergone "cutting of fabric and the assembly of these parts into the completed article," or "substantial assembly by sewing ... of all cut parts." In the instant case, these criteria are satisfied in St. Lucia; it is in this country that most of the cutting for the garments takes place (with the exception of the front shirt panel) and it is here that all of the cut parts are sewn and assembled into completed articles. Accordingly, application of this section of the Federal Regulations to the manufacturing scenario in the instant case leads to the conclusion that the country of origin of the garments at issue is St. Lucia.

The cost/labor figures you submitted to this office also support this finding. You estimate that the cost of cutting the shirt fabric for the front panels and sewing on the appliques in China costs a total of approximately $4.50 per dozen. The cost of cutting the sleeves and rear panels of the tops, and sewing the tops of the completed tops in St. Lucia, is approximately $8.00 per dozen. The only cost incurred in China for the manufacture of the pants is in the knitting of the fabric. You did not supply this office with any information as to the cost involved in this procedure. The cost of cutting the fabric for the pants in St. Lucia, and sewing them, is approximately $18.50. The total costs incurred in China for the production of the tops and pants (not including the cost of knitting the fabric) is $4.50. The total costs incurred in St. Lucia for the production
of these garments is $26.50. The value added to the garments in St. Lucia is significantly greater than the value imparted to these garments in China.

You further submit that the time involved in performing various manufacturing operations on 5,000 dozen tops and pants in China is three days. By contrast, these garments undergo processing in St. Lucia which takes four weeks until the garments are completed. The amount of processing time that these garments undergo in St. Lucia is significantly greater than the amount of time these goods are processed in China.

The garments at issue undergo substantial manufacturing operations in St. Lucia and therefore our final inquiry is whether the subject merchandise becomes new and different articles of commerce in that country. At the time of export from China, the subject merchandise consists of bolts of fabric and single cut panels with applique work affixed to them. In St. Lucia, the single pre-cut panels and the bolts of fabric are transformed into girls' tops and pants and thereby become new and different articles of commerce. It is assumed for purposes of this ruling that the fabric exported from China to St. Lucia does not contain cutting lines of demarcation.

As the garments at issue undergo substantial manufacturing in St. Lucia, and become new and different articles of commerce in that country, this office is of the opinion that St. Lucia is the country of origin of the subject merchandise; this is the country where most of the value is added to these goods, where the processing operations are significantly more labor intensive than the work performed in China, and where the fabric is transformed into completely assembled girls' garments.

HOLDING:

The country of origin for the girls' top and pants is St. Lucia.

The top is classifiable under subheading 6110.20.2075, HTSUSA, which provides for "sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted: of cotton: other... other: other: women's or girls'," dutiable at a rate of 20.7 percent ad valorem. The applicable textile quota category is 339.

The pants are classifiable under subheading 6104.62.2025, HTSUSA, which provides for "women's or girls' suits, skirts, trousers, bib and brace overalls, breeches and shorts (other than
swimwear), knitted or crocheted: trousers: of cotton: other: trousers and breeches: girls': other," dutiable at a rate of 16.7 percent ad valorem. The applicable textile quota category is 348.

The designated textile and apparel categories may be subdivided into parts. If so, the visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available we suggest your client check, close to the time of shipment, the Status Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service which is updated weekly and is available for inspection at the local Customs office.

Due to the nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, your client should contact his local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

Sincerely,

John Durant, Director

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