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HQ 557944




June 8, 1995

CLA-2 R:C:S 557944 AT

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Hugh Black
Director of Purchasing
Western Textile Products
3400 Tree Court Industrial Blvd.
St. Louis, Missouri 63177-1139

RE: Substantial transformation of imported finished fabric and various garment components; country of origin; 19 CFR 12.130; 9802.00.80, HTSUS

Dear Mr. Black

This is in response to your request of May 20, 1994, regarding the country of origin of imported finished fabrics and various garment components produced therefrom. Specifically, you have inquired as to whether the processing performed in the United States substantially transforms the goods so as to convey origin in the United States. We regret the delay in responding.

FACTS:

You state that Customs issued HQ 955551 (March 21, 1994), to your company holding that, based upon the information provided, the dyeing and finishing of greige fabric in the U.S. does not result in a substantial transformation of the fabric into a "product of" the U.S., and thus the fabric would not be eligible for a partial duty exemption under subheading 9802.00.80, HTSUS, when returned to the U.S. HQ 955551 also held that cutting fabric into the designated garment parts in the production of the waistbands, pre-made hip pockets, die cut pockets and parts, GERBERcut garment parts and the assembly of the waistbands substantially transforms the imported fabric into a "product of" the U.S.

However, in this ruling request, you state that your company intends to perform the same operations as provided in HQ 955551 with the exception that the various fabric components would be made from either greige fabric or finished fabric imported into the United States. Since the use of finished imported fabric would be a change to the specific factual situation indicated in HQ 955551, you are seeking a ruling for this possible change.

ISSUE:

Whether the cutting of foreign finished fabric into waistbands, pre-made hip pockets, die cut pockets and parts, and GERBERcut parts for apparel products and the assembly of the waistbands in the U.S. results in a substantial transformation of the foreign fabric into products of the U.S. for purposes of subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

[a]rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process, such as cleaning, lubricating and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive the partial duty exemption. An article entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

For a component to be eligible for subheading 9802.00.80, HTSUS, treatment it must first be a "product of" the U.S. According to section 10.12(e), Customs Regulations (19 CFR 10.12(e)), "a product of the United States" is an article manufactured within the customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components and materials. If the article consists wholly of foreign components or materials, as in the instant case (foreign finished fabric), the manufacturing process must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article. A substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See, Texas Instruments, Inc. v. United States, 69 CCPA 152, 681 F. 2d 778 (1982).

Determinations of the country of origin of textiles and textile products are governed by the terms of section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130(b) provides that a textile or textile product which is processed in more than one country will be considered a product of that country where it last underwent a substantial transformation by means of substantial manufacturing or processing operations into a new and different article of commerce.

According to your submission, foreign fabric will be cut in the U.S. into designated garment parts (waistbands, pre-made hip pockets, die cut pockets and parts and GERBERcut garment parts), and exported to a foreign country for assembly. In addition, the waistbands will be assembled in the U.S. prior to exportation. In HQ 955551, Customs held that the cutting of fabric which was dyed and finished in the U.S. into various garment parts and the assembly of the waistbands constituted a substantial transformation of the fabric under 19 CFR 12.130.

Similarly, in this case, we find that the operations of cutting foreign finished fabric into waistbands, pre-made hip pockets, die cut pockets and parts, GERBERcut garment parts and the assembly of the waistbands in the U.S., results in a substantial transformation of the foreign fabric under 19 CFR 12.130. Thus, the various garment parts are considered to be "products of" the U.S. for purposes of subheading 9802.00.80, HTSUS, when exported for foreign assembly.

HOLDING:

Based upon the information provided, the U.S. operations of cutting foreign finished fabric into the various garment parts (waistbands, pre-made hip pockets, die cut pockets and parts and GERBERcut garment parts) and the assembly of the waistbands, substantially transforms the foreign fabric into "products of" the U.S. Thus, these garment components may be eligible for allowances in duty under subheading 9802.00.80, HTSUS, provided that all of the other requirements under this provision are satisfied.

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 of 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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