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HQ 956428


May 26, 1994

CLA-2 CO:R:C:T 956428

CATEGORY: CLASSIFICATION

Mr. Leonard L. Rosenberg
Sandler, Travis & Rosenberg
The Waterford
5200 Blue Lagoon Drive
Miami, Florida 33126-2022

RE: Country of origin determination of pouches; fabric and components are manufactured and cut in Taiwan and sewn together in China; 19 CFR 12.130; HRLs 952642, 951899, 951481 and 955799

Dear Mr. Rosenberg:

This is in response to your letter of May 5, 1994, in which you requested a country of origin determination for three textile pouches. Samples of the articles were submitted for our examination and they will be returned to you under separate cover.

FACTS:

The articles at issue are three textile pouches. The fabric for all three pouches will be manufactured in Taiwan and the fabric components will also be die cut to shape in that country. The components will then be sent to China for assembly by sewing into completed pouches. The pouches will then be packed in polybags and cartons and shipped to the U.S.

The first article, style L2147-3, is a small dome-shaped pouch made from a woven ramie/polyester fabric with a PVC backing. The pouch measures approximately 7 inches across, 5 inches in length and 1-3/4 inches in width. Extruded piping is stitched into the exterior seams and gives shape to the pouch. The pouch's opening is secured by a nylon zipper with a metal zipper puller.

The cost per piece incurred in Taiwan represents 64.05% of the total cost and includes the cost of the fabric, zipper, label, thread, design, dies and cutting. The cost incurred in China represents 35.95% of the total costs and includes labor, piping, carton and polybag.

The second pouch, style L2151-2, is a small oval-shaped pouch made from a woven ramie/polyester with a PVC backing. The pouch measures approximately 7-3/4 inches across, 4-3/4 inches in length and 1-3/4 inches in width. The exterior seams are reinforced with extruded piping and the opening is secured by a nylon zipper with a metal puller.

The cost per piece incurred in Taiwan represents 65.41% of the total cost and includes the cost of the fabric, zipper, label, thread, design, dies and cutting. The cost incurred in China represents 35.95% of the total cost and includes labor, piping, carton and polybag.

The third pouch, style L2158-2, is a small duffle-type pouch with triangular shaped end panels that are reinforced with extruded piping. It is made of woven ramie/polyester fabric with a PVC backing. The bag measures approximately 6 inches across and 4-1/2 inches in height. The opening is secured by a nylon zipper with a metal puller.

The cost per piece incurred in Taiwan represents 65.68% of the total cost, including the fabric, zipper, label, thread, design, dies and cutting. The cost incurred in China represents 34.32% of the total cost and includes labor, piping, carton and polybag.

ISSUE:

What is the country of origin of the three textile pouches?

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)(iii) and (iv) are 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:

(iii) Weaving, knitting or otherwise forming fabric;

(iv) Cutting of fabric into parts and the assembly of those parts into the completed articles; . . .

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 Rulings Letter (HRL) 951437, dated July 17, 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 952642, dated May 10, 1993, Customs held that the assembly process in China of sports bags, knapsacks and insulated lunch bags, which involved the sewing together of material that was manufactured and cut in Taiwan and components that were manufactured in Taiwan, did not result in a substantial transformation. The operations performed in Taiwan were more extensive than the simple sewing operation performed in China. Furthermore, a significant part of the cost of the bags accrued from the operations performed in Taiwan. Moreover, in HRL 951481, dated July 31, 1992, nylon fabric, thread, binding, zippers, webbing, trim and hang tags were die-cut in Taiwan and these materials were shipped to China for assembly. We held that the manufacture of the raw materials and the designing and the cutting operations were the factors which contributed most to the creation of the knapsacks and the country of origin was determined to be Taiwan.
See also, HRL 951889, dated October 31, 1992, wherein we held that the assembly of luggage panels, zippers, grommets, piping webbing, labels and packaging materials into luggage and tote bags did not involve sufficient skill or complexity to constitute a substantial transformation; HRL 955799, dated April 28, 1994, which held that the assembly in China of fabric and components, that were manufactured and cut in Taiwan, into finished knapsacks, pouches and carry-alls did not " possess the requisite degree of complexity to be deemed substantial manufacturing processes for purposes of conferring country of origin status."

In the instant case, the fabric used to construct the pouches is cut in Taiwan and this materially alters the fabric into designated component pieces. In assembling the component pieces, no great degree of skill or advanced technology is required, nor is tailoring involved. 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." See, HRL 955799. In addition, the greatest cost in producing these articles is
incurred in Taiwan. Therefore, the country of origin of these articles is Taiwan as that is where the fabric was manufactured and cut into specific parts and where the articles last underwent a substantial transformation.

HOLDING:

The country of origin for the pouches 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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