HQ 0952639 - Country of origin for men's and women's lined water-resistant jackets, assembled in Country B from pieces of fabric produced, cut, and made up in Country A; substantial assembly; minor subassembly; substantial transformation; 19 C.F.R. 12.130 - United States International Trade Commision Rulings

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HQ 952639

February 22, 1994

CLA-2 CO:R:C:T 952639 BC

CATEGORY: CLASSIFICATION

Y.C. Ko, President
Kingtex Garment Mfg. Co., Ltd.
No. 270 Nanking E. Rd. Sec. 3
Taipei, Taiwan, R.O.C.

RE: Country of origin for men's and women's lined water-resistant jackets, assembled in Country B from pieces of fabric produced, cut, and made up in Country A; substantial assembly; minor subassembly; substantial transformation; 19 C.F.R. 12.130

Dear Mr. Ko:

This responds to your letter of September 12, 1992, requesting a ruling on the country of origin of men's and women's lined water resistant jackets. Samples of the finished jackets and cut pieces that are assembled to make them were submitted for examination. We have reviewed the matter and our decision follows.

FACTS:

Men's and women's lined water resistant jackets are produced from processes performed in two countries. According to the information you submitted, the following processes occur in Country A, identified as Taiwan, for the men's jackets: 1) design, weave, spin, dye, finish, and otherwise produce the fabrics (polyester/cotton, nylon taffeta, blended wool, polyester/olefin filler); 2) make the patterns and mark the fabrics; 3) cut the fabrics (by computer) into all pieces for the shell, lining, filler, and zip-in warmer, including the collar, front and back panels, yokes, pockets, sleeves, and cuffs; 4) make up the collar; 5) make up the cuffs; 6) make up the sweep bottom; 7) make up the front placket; and 8) make up the warmer quilting. The made up components and the remaining cut pieces are shipped to Country B where the pockets are made up and the complete assembly by sewing of all components and pieces into the shell, lining, and warmer is performed. The finished jacket is then pressed and packaged for shipment to the United States.

According to the information you submitted, the following processes occur in Country A for the women's jackets: 1) design, weave, spin, dye, finish, and otherwise produce the fabrics, (except the shell fabric that is imported from the United States), including nylon taffeta and polyester/olefin filler; 2) make the patterns and mark the fabrics; 3) cut the fabrics (by computer) into all pieces for the shell, lining, filler, and zip-in warmer, including the collar, front and back panels, yokes, pockets, sleeves, and cuffs; 4) make up the collar and the collar quilting; 5) make up the front and back yokes and the front and back yoke quilting; 6) make up the quilting for the warmer. (We note that the documents you submitted indicate that the front quarter panels of the women's jacket are also made up in Country A. This is indicated on the diagram but not on the step-by-step production sheet.) The made up components and the remaining cut pieces are shipped to Country B where the warmer is made up and the complete assembly by sewing of all components and pieces into the shell, lining, and warmer is performed. The finished jacket is then buttoned and packaged for shipment to the United States.

ISSUE:

Given the foregoing facts, what is the country of origin for the men's and women's lined water-resistant jackets?

LAW AND ANALYSIS:

Section 12.130 of the Customs Regulations governs country of origin determinations for textiles and textile products that are subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). 19 CFR 12.130(a). The section 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(b).

Subsection 12.130(d)(1) provides 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. Subsection 12.130(d)(2) provides 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 country or territory, or insular possession of the United States; (ii) the time involved in the manufacturing or processing operations; (iii) the complexity of the manufacturing or processing operations; (iv) the level or degree of skill and/or technology required in the manufacturing or processing operations; and (v) the value added to the article or material. 19 CFR 12.130(d). Under both subsections 12.130(d)(1) and 12.130(d)(2), any combination of criteria may be determinative and additional factors may be considered.

Subsection 12.130(e) describes various processes that will usually be productive of a product of the country, territory, or insular possession where the processing takes place. One of those processes is relevant to the instant set of facts and is described in subsection 12.130(e)(1)(v) as follows: "Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign country or territory, or insular possession, into a completed garment." 19 CFR 12.130(e)(v). This is to be contrasted with one of the processes described in subsection 12.130(e)(2), a provision that describes processes which usually are not considered to be productive of a product of the country or territory where the processing takes place. Subsection 12.130(e)(2)(iii) includes the joining together by sewing of otherwise completed knit-to-shape component parts produced in another country, territory, or insular possession. 19 CFR 12.130(e)(2)(iii).

The difference between subsections 12.130(e)(1)(v) and 12.130(e)(2)(iii) has to do with the nature of the assembly operation. If there is substantial sewing involved (or tailoring) of the kind performed in the sewing of suit jackets, suits, and shirts, the process usually will fall within the former subsection. If the sewing involved is characterized as simple - of the kind employed where "otherwise completed knit-to-shape component parts" are merely sewn together - the process usually will fall within the latter subsection. In this latter regard, Customs has long held that the mere assembly of goods entailing simple combining operations, trimming, or joining by sewing is not enough to substantially transform the components of an article into a new and different article of commerce. (See HRL 951259, dated April 3, 1992, HRL 082787, dated March 9, 1989, and HRL 082747, dated February 23, 1989.)

If an assembly operation is determined to fall within subsection 12.130(e)(1)(v), it will be considered a procedure productive of a substantial transformation. If it is determined not to fall within subsection 12.130(e)(1)(v), because, for example, the sewing operation involved is not of the same substantial nature as that required to assemble a suit (one of the examples in 12.130(e)(1)(v)), the substantial transformation determination will be made by applying the factors set forth in subsection 12.130(d). (See HRL 086229, dated April 11, 1990.) In this regard, Customs stated the following in Treasury Decision (T.D.) 85-38, the final rule implementing section 12.130 (also published in the Federal Register on March 5, 1985 (50 Fed. Reg.

After reviewing all the information available, Customs is persuaded that the assembly of all cut pieces making up a garment [12.130(e)(1)(v)] is sufficiently more complex and requires greater skill, time, and effort than the assembly of knit-to-shape components into a garment [12.130(e)(2)(iii)] to warrant a distinction between the two assembly operations. Accordingly, Customs believes that the 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 pieces will amount to a substantial transformation of those pieces. Where either less than a 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).

19 Cust. Bull. 58, 70 (1985).

We have previously held that the 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. (See HRL 081320, dated April 14, 1989; HRL 086696, dated June 8, 1990; HRL 082924, dated March 26, 1990; HRL 085611, dated January 17, 1990; and HRL 951426, dated April 8, 1992.) Thus, the cutting operation performed in Country A in the instant case entitles the cut pieces and made up components there produced to be considered a product of Country A. In order for the finished jackets assembled in Country B to be considered a product of Country B, there must be a substantial transformation there.

Previously, we have held that any subassembly (of pieces cut in country A) taking place in country A, resulting in the assembly of both cut pieces and subassembled components in country B, would preclude the finished article from being considered a product of country B. As above, T.D. 85-38 concerned the complete assembly in country B of all the cut pieces from country A, not made up (that is, subassembled) pieces or both cut and made up pieces. A subassembly of even the collar and/or cuffs in country A would usually preclude a determination that country B was the country of origin.

Recently, however, we have permitted some minor subassembly of cut pieces in country A. In HRL 953640, dated August 19, 1993, we determined that origin of a men's dress shirt was in country B, despite the fact that the collar and the cuffs were made up (subassembled) in country A. Also, in HRL 952774 and HRL 954448 (both dated August 19, 1993, and both involving men's shirts), we determined that origin was in country B, despite the fact that the collar, in the former case, and the cuffs, in the latter case, were made up in country A. In each of these cases, the subassembly that took place in country A was considered a minor part of the complete assembly of the garment and, as such, it was deemed non- controlling. In HRL 954448, we stated the following regarding the subassembly issue:

Though a sub-assembly operation does take place in Scenario II and III in Country A, it is a minor part of the complete assembly of the garment and should not control the country of origin determination of the shirt. The assembly process in Country B, the time at which all component parts, including the sub-assembled collar and cuffs, are sewn together, is viewed by Customs as a substantial assembly resulting in a completed garment. (Emphasis supplied.)

The effect of this reasoning is that it is not necessary (to confer origin in country B) that all cut pieces be assembled in country B. Minor subassembly operations in country A will not necessarily preclude a determination of origin in country B, provided that there is in country B a complete assembly of the component parts that make up the garment and it is a substantial assembly (as opposed to a simple sewing procedure).

The assembly of the men's and women's jackets in the instant case involves the sewing in Country B of both cut pieces and subassembled components from Country A. The subassembly operations in Country A are minor operations, producing several components of the finished product. No further assembly of these subassembled components takes place in Country A. All individual components are assembled (attached together by sewing) into the finished jackets in Country B. Thus, a complete assembly of the components that make up the garment is performed in Country B. Since the assembly in Country B is considered a complex sewing procedure, it is considered a substantial assembly productive of a substantial transformation.

HOLDING:

Based on the foregoing, we conclude that the country of origin for the men's and women's lined water-resistant jackets is Country B, since a substantial transformation last occurs there.

This ruling is issued pursuant to the provisions of Part 177 of the Customs Regulations (19 CFR Part 177). The holding in this ruling applies only to the specific factual situation presented and the merchandise identified in the ruling request. If the information furnished is not accurate or complete, or there is a change in the factual situation, this ruling will no longer be valid. In such an event, a new ruling request should be submitted.

Sincerely,

John Durant, Director

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