HQ 0956304 - Country of Origin determination for women's knit long sleeve shirts; 19 CFR 12.130; substantial transformation; fabric is knit, dyed and cut into component parts in Taiwan; component parts are assembled by sewing in China into finished garments - United States International Trade Commision Rulings

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HQ 956304

August 9, 1994

CLA-2 CO:R:C:T 956304 NLP

CATEGORY: CLASSIFICATION

S. Richard Shostak, Esq.
Stein, Shostak, Shostak & O'Hara
3580 Wilshire Boulevard, Suite 1240
Los Angeles, CA 90010-2597

RE: Country of Origin determination for women's knit long sleeve shirts; 19 CFR 12.130; substantial transformation; fabric is knit, dyed and cut into component parts in Taiwan; component parts are assembled by sewing in China into finished garments

Dear Mr. Shostak:

This letter is in response to your inquiry of April 15, 1994, on behalf of your client, BCTC Corporation, requesting a country of origin determination for five styles of women's knit shirts. Samples of the completed shirts were submitted to this office for examination and will be returned to you under separate cover.

FACTS:

The articles at issue are five styles of women's long sleeve knit tops. Style numbers 1401 and 1405 are composed of 85% polyester and 15% cotton knit fabric of Taiwanese origin. Style numbers 1501, 1503 and 1105 are composed of 65% polyester and 35% cotton knit fabric of Taiwanese origin. In all cases the fabric will be cut into component pieces in Taiwan and then shipped to China for assembly by sewing, ironing, folding and packing before exportation to the United States. The five samples submitted are described as follows:

1. Style number 1401
Style number 1401 features a flat knit collar, long sleeves with ribbed knit cuffs and a ribbed knit waistband. The front panel is made of pieced fabric construction. There is an embroidered logo on the upper middle portion of the front panel. Before assembly in China, the fabric is knit, dyed, cut into 11 components and embroidered in Taiwan.

2. Style number 1405
Style number 1405 features a partial front opening with button closures, long sleeves with ribbed knit cuffs and a ribbed knit waistband. The collar has a two button closure, which when buttoned allows the collar to stand up. If left unbuttoned, the collar folds down and the inside of the collar is exposed. The material on the outside of the collar is a flat knit fabric and has a one inch strip of printed fabric where the buttons and buttonholes are. The material on the inside of the collar is a ribbed knit fabric and has an one inch strip of printed fabric where the buttons and buttonholes are located. On the upper left portion of the front panel there is an embroidered logo. Before assembly in China, the fabric is knit, dyed, cut into 12 components and embroidered in Taiwan.

3. Style number 1501
Style number 1501 features a six inch ribbed knit turtleneck, long sleeves with ribbed knit cuffs and a straight hemmed bottom with side vents. Underneath the turtleneck, this garment has an approximately six and a quarter inch curved panel whose fabric has a quilted appearance. Under this panel, there is an embroidered logo. Before assembly in China, the fabric is knit, dyed, cut into 8 components and embroidered in Taiwan.

4. Style number 1503
Style number 1503 features long sleeves with ribbed knit cuffs and a ribbed knit waistband. It has a zipper closure that starts at the top of the mock turtleneck collar and it extends for seven inches. The front panel is made of pieced fabric construction. The upper front panel has three vertical panels; the right and left panels are comprised of a knit fabric that has a quilted appearance and the middle panel is comprised of a flat knit fabric that contains the zipper closure and an embroidered logo. Before assembly in China, the fabric is knit, dyed, cut into 13 components and embroidered in Taiwan.

5. Style number 1105
Style number 1105 features hemmed long sleeves and a straight hemmed bottom. The front panel is constructed of pieced fabric creating a three panel effect in the horizontal direction. The middle panel, which is approximately five and three-quarters inches wide, has an embroidered logo in its center. The garment has a double fabric mock turtleneck collar with a drawstring tie. Before assembly in China, the fabric is knit, dyed, cut into 8 components and embroidered in Taiwan.

ISSUE:

What is the country of origin of the five women's long sleeve knit tops?

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(b) 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)(v) 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:

(v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit- type jackets, suits, and shirts).

We have previously held that 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, Headquarters Ruling Letter (HRL) 955125, dated January 27, 1994; HRL 953697, dated July 26, 1993; and HRL 952531, dated November 25, 1992. Customs has also held that the mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing is not enough to substantially transform the components of an article into a
new and different article of commerce. For example, in HRL 953697, Customs held that the assembly process of three men's knit and/or woven shirts in China, which involved the sewing together of fabric components that were manufactured, knitted, woven and cut in Taiwan, did not involve sufficient skill or complexity to constitute a substantial transformation as defined by Section 12.130(e)(v). Therefore, the country of origin was found to be Taiwan, as that was where the piece goods were cut into specific parts and where the articles last underwent a substantial transformation. See also, HRL 082747, dated February 23, 1989; HRL 086665, dated March 23, 1990; HRL 951169, dated April 1, 1992; HRL 734392, dated August 4, 1992; HRL 953489 dated June 14, 1993; HRL 953698, dated July 19, 1993; HRL 953903, dated August 17, 1993.

In the instant case, the cutting in Taiwan materially alters the fabric into designated component pieces, which constitute new and different articles of commerce. The assembly operations to be performed in China 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. In assembling the component pieces, no great degree of skill or advanced technology is required, nor is tailoring involved. In addition, the value added to all the subject garments in Taiwan is substantially more than the value added to the goods in China. Thus, the country of origin of the five women's long sleeve knit tops is Taiwan, as that is where the fabric last underwent a substantial transformation.

HOLDING:

The country of origin of the submitted merchandise, referenced by style numbers 1401, 1405, 1501, 1503 and 1105 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 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
Commercial Rulings Division

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