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HQ 954451


August 16, 1993

CLA-2 CO:R:C:T 954451 NLP

CATEGORY: CLASSIFICATION

Ming Chun Wu, President
Minn Poe Industry Co., LTD.
12, 205 Lane, Min Tsu St.
Hu Ne Village, Hu Nei Hsiang
Kaohsiung Hsien, Taiwan, R.O.C.

RE: Country of origin determination of "Back Pal"; substantial transformation; 19 CFR 12.130(b) and (e); fabric is woven, cut, printed, inspected, folded, ironed and packed in Taiwan; the component pieces are assembled by sewing into backpacks in China; T.D. 85-38; HRL 951437

Dear Mr. Wu:

This is in response to your letter of February 4, 1993, in which you requested a country of origin determination for "Back Pal" backpacks. A sample of the completed item was submitted for our examination.

FACTS:

The article at issue is a backpack, called "Back Pal", style No. MP9002. The outer shell of the backpack is made of a woven textile fabric. According to your letter, the fabric for the backpack is woven and cut into 12 component pieces in Taiwan. In addition, in Taiwan, the fabric will be printed, pressed, inspected, folded and packed. The fabric components will then be sent to China for assembly by sewing into backpacks.

The time expended per unit and the skill and/or technology required for the above processes are as follows:

1. 1 minute per yard for weaving the fabric. This operation is performed by a weaving and dyeing machine.
2. 3 minutes to cut the fabric into the 12 components. This operation is performed by a computer marker machine, a plotter machine and a cutting machine. 3. 0.5 minutes for printing.
This operation is performed by a printing machine. 4. 0.8 minutes for pressing.
5. 3 minutes for inspection, folding and ironing. This operation is performed by skilled workers and an ironing machine, respectively.

6. 3 minutes for packing into polybags and cartons. This operation is performed by a packaging machine. 7. 15 minutes/PC for assembled into Back Pal. This operation is performed by sewing machines.

8-10 skilled workers operate the machinery used in performing the operations in steps 1-6. 1-3 skilled workers are used in assembling the backpacks in China.

The values added, in U.S. currency, for the above described processes are as follows:

1. $0.80/PC added after weaving. (Taiwan) 2. $0.12/PC added after cutting. " "
3. $0.06/PC added after printing. " "
4. $0.08/PC added after pressing and packaging." " 5. $0.45/PC added after the accessory. " " 6. $0.24/PC added after assembly into Back Pal (China)

ISSUE:

What is the country of origin for the "Back Pals"?

LAW AND ANALYSIS:

Country of origin determinations for textile products are subject to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 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 or 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 for 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) of the Customs Regulations 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) 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 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 onto the U.S.

Section 12.130(e) of the Customs Regulations sets forth criteria which aid us in determining whether an article has been subjected to certain manufacturing or processing operations which serve to substantially transform an article into a new and different article of commerce. Specifically, Section 12.130(e)(1)(iii)(iv) and (v) are relevant in the instant case. This Section provides that:

An article or material usually will be a product of a particular foreign territory or country, or insular possession of the U.S., when it has undergone prior to importation into the U.S. in that foreign territory or country, or insular possession any of the following:

(iii) Weaving, knitting or otherwise forming fabric;

(iv) Cutting of fabric into parts and the assembly of those parts into the completed articles; or

(v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits, and shirts).

According to T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714), the final document rule establishing 12.130:

[T]he assembly of all the cut pieces of a garment usually is a substantial manufacturing process that results in an article with a different name, character, or use than the cut pieces. It should be noted that not all assembly operations of cut garment pieces will amount to a substantial transformation of those pieces. Where either less than 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). [emphasis added]

We have previously held that cutting of fabric into pattern pieces constitutes a substantial transformation of the fabric, resulting in the apparel pieces becoming a product of the country where the fabric is cut. Customs has also held that the mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing is not enough to substantially transform the components of an article into a new and different article of commerce. For example, in Headquarters Ruling Letter (HRL) 951437, dated July 17, 1992, Customs held that the assembly process of women's pants in Malaysia, which involved the sewing together of components that were cut from fabric in Singapore, did not involve sufficient skill or complexity to constitute a substantial transformation as defined by Section 12.130(e)(v). Therefore, the country of origin was found to be Singapore as that was where the piece goods were cut into specific parts and where the articles last underwent a substantial transformation.

In the instant case, the cutting in Taiwan for the backpack materially alters the fabric into designated component pieces. The assembly operations to be performed in China are mere combining and sewing operations and do not possess the requisite degree of complexity to be deemed substantial manufacturing processes for purposes of conferring country of origin status. In assembling the component pieces, no great degree of skill or advanced technology is required, nor is tailoring involved. In addition, the value added to these garments in Taiwan is greater than that added in China. The processing these components undergo in Taiwan is of longer duration and the work involved is of greater complexity requiring 8-10 laborers as opposed to the 1-3 laborers who process these pieces in China. Thus, the country of origin of these articles is Taiwan as that is where the fabric was woven and cut into specific parts and where the articles last underwent a substantial transformation.

HOLDING:

The country of origin for the "Back Pal" backpack is Taiwan.

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 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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