HQ 0953019 - Country of origin of rayon challis fabric; substantial transformation; fabric woven into greige goods in Asia; singeing, washing, scouring, bleaching, dyeing, washing, drying, printing, steam setting and shrinking performed in West Germany; 19 C.F.R. 12.130(b) and 12.130(e)(1)(i); HRL 734351 - United States International Trade Commision Rulings

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HQ 953019

February 9, 1994
CLA-2 CO:R:C:T 953019 NLP

CATEGORY: CLASSIFICATION

Area Director
United States Customs Service
J.F.K. Airport
Building 77
Jamaica, NY 11430

RE: Country of origin of rayon challis fabric; substantial transformation; fabric woven into greige goods in Asia; singeing, washing, scouring, bleaching, dyeing, washing, drying, printing, steam setting and shrinking performed in West Germany; 19 C.F.R. 12.130(b) and 12.130(e)(1)(i); HRL 734351

Dear Sir:

This is in response to Politis, Pollack & Doram's request, on behalf of their client, Hi-Fashion Fabrics, Inc., for internal advice on the country of origin of certain greige fabric manufactured in Asia and processed in West Germany. Samples of the merchandise in the greige and after processing were submitted for our examination.

FACTS:

The fabric at issue is a rayon challis cloth which is first woven into greige goods in various countries in Asia. After weaving, the greige goods are shipped to West Germany for further processing.

In West Germany, the greige fabric is finished by subjecting it to a series of processing steps. First, the fabric undergoes a singeing operation which, according to counsel's letter, is necessary to burn away the fiber ends to remove the hairiness from the surface of the fabric. The fabric is then washed, scoured and bleached. According to counsel's letter, these processes are necessary to remove impurities from the greige fabric, to take out the sizing imparted in the weaving process, to obtain a consistent white color and to improve the fabric's color resorption.

Immediately after bleaching, the fabric is reactive dyed on various machines, depending on the color. After dyeing, the fabric is washed and dried. The fabric is then printed by rotary printing machines either in reactive dye stuff colors or vat discharge colors.
After printing, the fabric is steam set and washed. The fabric then undergoes its final finishing, which entails its passage on a stenter frame where fulling agents, a softener and crease resistant chemicals are applied and baked into the fabric at a high temperature to shrink it.

ISSUE:

Whether the finishing operations performed to the greige goods woven in Asia have substantially transformed the fabric according to 19 C.F.R. 12.130 for it to be considered of German origin?

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 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)(i) is 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:

(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.

The subject fabric has been dyed and printed in West Germany. Therefore, the issue is whether these processes have been accompanied by at least two additional finishing operations. Bleaching is one of the named processes in the above Section and it would appear to satisfy one of the two required processes set forth. In order to verify that the process of bleaching the rayon fabric is necessary in the overall finishing of the fabric, we submitted the rayon fabric to the Customs Laboratory for analysis.

The laboratory examined the fabric and pointed out that rayon and other cellulosic fibers, yarns and fabrics require preparation or treatment to remove impurities prior to dyeing or printing. These impurities, whether natural in origin or resulting from contaminants obtained during the spinning and weaving processes, must be removed in order to ensure good absorbency, low sizing content, minimal fiber degredation and whiteness. While the laboratory stated that the degree of bleaching that is necessary to whiten the fabric depends on the desired shade to be obtained in subsequent dyeing processes, it was their position that most fabrics undergo continuous processing in preparation for dyeing and it is common for these operations to include a standard bleaching operation. This enables all fabrics to be prepared to be dyed in a full range of shades. Therefore, the bleaching is a part of the operations performed to prepare the fabric for dyeing and printing and does not appear to be superfluous in the overall finishing of the fabric. As a result, the rayon fabric is subjected to one of the finishing operations enumerated above.

Moreover, as the rayon fabric is also subjected to a shrinking operation, it is has satisfied the requirements set forth in Section 12.130(e)(1)(i). Therefore, the rayon fabric is considered substantially transformed and it will be considered a product of West Germany when imported into the U.S. See, Headquarters Ruling Letter (HRL) 734351, dated March 2, 1992, which dealt with a similar country of origin issue. In that case, a rayon challis fabric in the greige was produced in China and exported to Mexico where the following operations were performed: prewashing, scouring, bleaching, causticizing, singeing, dyeing, framing, printing, steam developing, washing, application of an optical bright solution, drying and framing to width, application of various micro-fiber finishes, sanforizing, re-framing and packaging. HRL 734351 held that since the fabric was dyed and printed in Mexico and was further subjected to two of the finishing operations set forth in 12.130(e)(1)(i)- bleaching and shrinking, the country of origin for the fabric was Mexico.

HOLDING:

The country of origin for the rayon greige fabric is West Germany.

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

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