HQ 0954225 - Country of Origin of Tote Bags and Luggage of Nylon and Rayon; Fabric Manufactured and Cut in Taiwan; Components Stitched Together and Assembled in China; Mere Assembly Is Not Substantial Transformation - United States International Trade Commision Rulings

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HQ 954225
August 30, 1993

CLA-2 CO:R:C:T 954225 jlj

CATEGORY: CLASSIFICATION

Mr. Kevin J. Downey
Sullivan & Lynch, P. C.
156 State Street
Boston, Massachusetts 02109

RE: Country of Origin of Tote Bags and Luggage of Nylon and Rayon; Fabric Manufactured and Cut in Taiwan; Components Stitched Together and Assembled in China; Mere Assembly Is Not Substantial Transformation

Dear Mr. Downey:

In your letter of May 20, 1993, on behalf of your client, The Gem Group, Inc., you requested a country of origin determination for several different sizes and styles of synthetic fiber tote bags and luggage. Samples of each style bag, consisting of cut panels and components, were submitted for our examination.

FACTS:

Eleven samples were submitted to this office. The samples consist of cut panels and components as they exist prior to final assembly of the products. The articles are made of nylon and rayon fabric.

The fabric used in the construction of these articles is manufactured in Taiwan. The fabric is also cut into panels in Taiwan for eventual assembly in China.

The luggage panels are shipped unassembled to China. Included with the fabric panels are zippers, grommets, piping, webbing, labels and packing materials. In China, the fabric panels are stitched together to form the luggage and tote bags. At this time, the zippers, piping and related accessories are added.

Cost sheets were submitted for each style of bag under review. The cost incurred in Taiwan for material and labor ranges from $1.01 to $2.50 per piece. The labor charge for stitching and assembly of the bags in China ranges from $0.12 to $0.25 per piece. The packing charge incurred in China ranges from $0.03 to $0.05 per piece.

ISSUE:

What is the country of origin of the instant merchandise?

LAW AND ANALYSIS:

Section 12.130 of the Customs Regulations (19 CFR 12.130) is the regulation which sets forth the principles for determining the country of origin of textiles. Section 12.130(b) provides that textile products which are processed in more than one country or territory shall be products of that country or territory where they last underwent a substantial transformation.

Customs has long held that mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing, is not enough to transform the components of an article into a new and different article of commerce. See Customs Headquarters Ruling Letter (HRL) 951899 of October 31, 1992, in which Customs determined that the assembly of tote bags and luggage was not a substantial transformation.

In the instant case, the assembly process in China involving the sewing together of components cut from fabric in Taiwan does not involve sufficient skill or complexity to constitute a substantial transformation as defined by the regulations set forth above. In fact, the information regarding this case is so similar to that in HRL 951899, we view 951899 as controlling.

Pursuant to 19 CFR 12.130(d)(2)(v), the "value added" to an article is another factor which aids in determining country of origin. The greatest cost in producing the instant bags is incurred in Taiwan, because that is where the fabric is manufactured. Taking into consideration that the assembly process in China is relatively simple and that the value added is greatest in Taiwan, the country of origin of these articles is Taiwan, because that is where the articles last underwent a substantial transformation.

HOLDING:

The country of origin of the subject merchandise 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 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 Regulation (19 CFR 177.2).

Sincerely,

John Durant, Director
Commercial Rulings Division

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