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HQ 557813


April 19, 1994

CLA-2 CO:R:C:S 557813 MLR

CATEGORY: CLASSIFICATION

Mr. P. F. Wegener
M. G. Maher & Company, Inc.
One Canal Place
Suite 2100
New Orleans, LA 70130

RE: Reconsideration of HRL 953672; U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS; 19 CFR 12.130(c); Match-a-Patch hole and tear mender set; circular and rectangular cut fabric patches; T.D. 85-38; T.D. 90-17

Dear Mr. Wegener:

This is in reference to your letter of October 22, 1993, written on behalf of Singer Sewing Company ("Singer"), requesting reconsideration of the portion of Headquarters Ruling Letter (HRL) 953672 dated August 16, 1993, concerning the country of origin of the U.S.-manufactured fabric cut in China, for quota, visa, and duty assessment purposes.

FACTS:

The articles at issue are the fabric patches included in a Match-A-Patch hole and tear mender set. Bolts of fabric woven in the U.S. are cut into rectangular and circular patches in China. In HRL 953672, it was determined that these cutting operations constitute an advancement in value of the bolts of U.S.-made fabric, thereby rendering the patches products of China.

Singer contends, pursuant to T.D. 85-38, that the U.S.-made fabric remains a product of the country where it was woven for quota, visa, and duty assessment purposes, since it is merely cut- to-length or width in China.

ISSUE:

Whether the cutting of the bolts of U.S.-made fabric into patches in China, constitutes an advancement in value or improvement in condition, and, therefore, renders the patches products of China for purposes of the Tariff Act of 1930, as amended, and section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854).

LAW AND ANALYSIS:

By T.D. 85-38, Customs amended Part 12, Customs Regulations (19 CFR Part 12), by adding a new section 12.130 which established criteria to be used in determining the country of origin of imported textiles and textile products for purposes of multilateral or bilateral textile agreements entered into by the U.S. pursuant to 7 U.S.C. 1854. Singer contends, pursuant to T.D. 85-38, that since the U.S.-made fabric is merely cut-to-length or width in China, the fabric remains a product of the country where it was woven for quota, visa, and duty assessment purposes. Singer cites the example in T.D. 85-38:

... where fabric which is readily identifiable as being intended for a particular commercial use (e.g. toweling or bed linen material) is merely cut to length or to width, with the edges then being either hemmed or overlocked. In this example, the foreign territory or country, or insular possession which produced the fabric is the country of origin, and not the country where the fabric was cut.

However, in order to have a single definition of the term "product of", and, therefore, a single country of origin for a textile or textile product, T.D. 85-38 also added 19 CFR 12.130(c) which provides that notwithstanding 19 CFR 12.130(b) which discusses substantial transformation, merchandise which falls within the purview of Chapter 98, Subchapter II, Note 2(a), Harmonized Tariff Schedule of the United States (HTSUS), may not, upon its return to the U.S., be considered a product of the U.S. Chapter 98, Subchapter II, Note 2(a), HTSUS, provides that any product of the U.S. which is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article for the purposes of the Tariff Act of 1930, as amended. Furthermore, pursuant to T.D. 90-17, 19 CFR 12.130 is applicable for country of origin determinations for all Customs purposes.

Consequently, the country of origin determination for quota, visa, and duty assessment purposes of U.S.-made fabric cut abroad, is not based on the substantial transformation test applied to foreign items processed in another foreign country, but rather the test is whether the fabric was advanced in value or improved in condition by any process or other means while abroad. In this case, the U.S-made fabric is cut either into a rectangular shape or into a circular shape. There is no doubt that the cutting advances the bolt fabric to a condition suitable for its intended use as patches. Consequently, the cirucular and rectangular patches cut from U.S.-made fabric in China, are products of China for quota, visa, and duty assessment purposes.

HOLDING:

Based on the additional information submitted, HRL 953672 is affirmed. We find that the cutting of the bolts of U.S.-made fabric into patches in China constitutes an advancement in value and improvement in condition, thereby rendering the patches products of China. Consequently, the Match-A-Patch hole and tear mender kit is classifiable under subheading 8516.79.00, HTSUS, at a duty rate of 5.3 percent ad valorem, and for the purposes of establishing the quota and visa categories applicable, the circular cut patches are classifiable under subheading 6307.90.99, HTSUS, with a duty rate of 7 percent ad valorem. Furthermore, if the rectangular patches are sheeting, they are classifiable under subheading 5513.21.0040, HTSUS. If the patches are printcloth, they are classifiable under subheading 5513.21.0060, HTSUS.

Sincerely,

John Durant, Director

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