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HQ 954961


November 2, 1993

CLA-2 CO:R:C:T 954961 SK

CATEGORY: CLASSIFICATION

Natouchka Patrice Rampy
Sharretts, Paley, Carter & Blauvelt, P.C. 67 Broad Street
New York, N.Y. 10004

RE: Clarification of HRL 953708 (7/13/93); holding affirmed but analysis modified; panels of a girls' top processed in different countries; substantial transformation occurs in two different countries; assembly into the completed article is not sufficient to constitute a substantial transformation within the purview of 19 CFR 12.130; country of origin will be predicated on where the garment last underwent significant processing; if components are substantially transformed in different countries, and are classifiable under different headings, a GRI 3(b) or 3(c) analysis is used; Customs Memo 088778 (3/25/91); Customs Memo 084118 (4/13/89); HRL 952801 (7/13/93); HRL 953698 (7/19/93).

Dear Ms. Rampy:

On July 13, 1993, this office issued you Headquarters Ruling Letter (HRL) 953708 in which we classified a girls' knit top and pants and determined the country of origin for these garments. Upon review, we have determined that although the classification portion of that ruling is correct, and the holding in which we stated that the country of origin of both the girls' top and pants was St. Lucia, an error was made in our analysis of the country of origin issue with regard to the girls' top. Our modified analysis follows.

FACTS:

The girls' top at issue is constructed of a knit fabric made from 60 percent cotton and 40 percent polyester. The top is a tee-style shirt with a flower-shaped applique affixed to the front and a ribbed crew-neck collar.

The fabric for this garment is knit in China. The front shirt panel is cut in China and it is here that the applique is affixed. The front shirt panel and the fabric required to
complete the shirt are then shipped to St. Lucia. In St. Lucia, the fabric required to complete the shirt is cut and the shirt is assembled to completion.

ISSUE:

On what basis is a country of origin determination made where the assembly of a garment's various components into a completed article fails to constitute a substantial transformation within the purview of Section 12.130 of the Customs Regulations, where no one component imparts the essential character to the garment, and where the components are classifiable in the same heading?

LAW AND ANALYSIS:

Country of origin determinations are made pursuant to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130(b) of the Customs Regulations 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.

Section 12.130(d)(1) 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;
(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; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations;
(v) The value added to the article or material.

Section 12.130(e)(1) provides that an article or material usually will be a product of a particular foreign territory or
country, or insular possession of the United States, when, prior to importation into the United States, it has undergone 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;
(ii) Spinning fibers into yarn;
(iii) Weaving, knitting or otherwise forming fabric; (iv) Cutting of fabric into parts and the assembly of those parts into the completed article; or
(v) substantial assembly by sewing and/or tailoring of all cut pieces... .

In HRL 953708, this office determined that the girls' top at issue was substantially transformed in St. Lucia. We held that, pursuant to Section 12.130(e)(1)(v), country of origin status was conferred to the girls' top in St. Lucia on the basis that "substantial assembly by sewing ... of all cut parts" transpired in that country. Upon reconsideration, this office believes that determination to be in error. Although we still maintain that the country of origin of the girls' top is St. Lucia, we do not reach that conclusion on the assumption that the manufacturing operations performed in St. Lucia meet the criteria for conferring country of origin as set forth in 19 CFR 12.130.

As set forth above, the front panel of the girls' top is cut in China and it is also in that country that the flower applique is manufactured and sewn to the front of the garment. The cutting of the front panel in China materially alters the fabric into a designated garment piece and substantially transforms the fabric into a new and different article of commerce.

In St. Lucia, the back panel and collar are cut and the garment pieces are assembled into the completed tee-style shirt. This cutting process similarly serves to substantially transform the fabric into designated garment pieces. The assembly by sewing of these component pieces into the completed garment, however, is not a substantial transformation for purposes of Section 12.130(e)(1)(v). That Section requires that the assembly process effected by sewing or tailoring be substantial. In T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714), the final document rule establishing 19 CFR 12.130, it was stated that:

[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]

This office has consistently held that the mere assembly of goods entailing simple combining operations by sewing, as is the case here, is not enough to substantially transform the components of an article into a new and different article of commerce. See Headquarters Ruling Letters (HRL's) 082747, dated February 23, 1989; 951169, dated April 1, 1992; 951437, dated July 17, 1992; 952647, dated January 27, 1993; 953488, dated May 14, 1993. In the instant case, the assembly operations performed in St. Lucia 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. No great degree of skill or advanced technology is required, nor is tailoring involved.

If assembly to completion of various components is not sufficient to constitute a substantial transformation within the purview of Section 12.130, and the component parts of an article have been substantially transformed prior to assembly in different countries, a different test must be applied to determine the country of origin of the garment. In Customs Memo 088778, dated March 25, 1991, this office held that in manufacturing situations which are not covered by 19 CFR 12.130, a country of origin determination shall be predicated on the portion of the article which imparts the essential character to that garment. Explanatory Note VIII to GRI 3(b), which sets forth the standards used in an essential character determination, reads:

The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

In the instant case, neither the front panel nor the back panel imparts the essential character to the girls' top. Both components are made from the same fabric and perform similar functions. This office is not prepared to hold that the presence of the flower applique is significant enough so as to warrant a
finding that the front panel imparts the essential character to this garment.

Customs Memo 088778 further provides that in situations where no one component can be said to impart the essential character, country of origin will be determined according to the component which governs the classification of the garment. This determination is accomplished using a GRI 3(c) analysis which states that the heading occurring last in numerical order among those equally meriting consideration will govern classification. The country of origin of the component which governs classification using a GRI 3(c) analysis will also determine the country of origin for the entire article. See HRL 952801, dated July 13, 1993. In the instant case, however, both components are made from the same fabric and we are unable to use a GRI 3(c) analysis in that there are no competing headings.

In situations where components are manufactured in different countries, where the manufacturing process does not constitute a substantial transformation for purposes of 19 CFR 12.130, and where no one component determines the classification of the article, Customs will determine the country of origin on the basis of where the article last underwent a significant processing operation. In the manufacturing scenario presented to this office in HRL 953708, the girls' top last undergoes a significant processing operation in St. Lucia as this is the country where the last cutting occurs and where virtually all of the cut parts, with the exception of the flower applique, are sewn and assembled into completed articles. While this manufacturing scenario does not constitute a substantial transformation for purposes of 19 CFR 12.130, it nevertheless is deemed complex enough to confer country of origin to an article in situations that fall outside of the scope of Section 12.130. It is using this standard that we determine St. Lucia to be the country of origin of the girls' top.

HOLDING:

The holding in HRL 953708 is affirmed, however the analysis section in that ruling is incorrect and is to be interpreted in the manner set forth in this ruling.

Sincerely,

John Durant, Director
Commercial Rulings Division


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