HQ 558666 - Country of origin of silk panties; cutting in Macau; assembly in People's Republic of China; 19 CFR 12.130 - United States International Trade Commision Rulings

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HQ 558666

December 5, 1994

MAR-2 CO:R:C:S 558666 MLR

CATEGORY: MARKING

Mr. Jose Manuel Franklin Mouzinho
Deputy Director
Manuel Economic Services
Industry Department
1-3, Rua Dr. Pedro Jose Lobo, 25th Floor
P.O. Box 122
Mancau

RE: Country of origin of silk panties; cutting in Macau; assembly in People's Republic of China; 19 CFR 12.130

Dear Mr. Mouzinho:

This is in response to your facsimile of July 26, 1994, to the U.S. Customs Hong Kong office on behalf of foreign enterprises, concerning the country of origin marking requirements of silk panties.

FACTS:

Certain foreign enterprises plan to set up a factory in Macau to manufacture silk panties. Bulk unmarked silk fabric of unknown origin will be marked into patterns and cut to shape in Macau. The cut fabric will then be sent to the People's Republic of China, where it will be sewn into silk panties. The silk panties will then be returned to Macau, where they will be pressed, cleaned, and packed for shipment to the U.S.

ISSUE:

What is the country of origin of the silk panties made from fabric cut in Macau, and assembled in the People's Republic of China?

LAW AND ANALYSIS:

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported in the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textile and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854)("section 204"). According to T.D. 90-17, published in the Federal Register on March 1, 1990, (55 FR 7303), the rules of origin for textiles and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes, including duty and marking.

Section 12.130(b), Customs Regulations {19 CFR 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), Customs Regulations {19 CFR 12.130(d)}, 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), Customs Regulations {19 CFR 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; or
(iii) Commercial Use.

Section 12.130(d)(2), Customs Regulations {19 CFR 12.130(d)(2)}, 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 articles;

(ii) The time involved in the manufacturing or processing operations;

(iii) The complexity of the manufacturing or processing operations;

(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)(v), Customs Regulations {19 CFR 12.130(e)(1)(v)}, describes manufacturing or processing operations by which an article will usually be considered a product of the country in which these operations occur:

(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. 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 Headquarters Ruling Letter (HRL) 954604 dated October 28, 1993, Customs held that the assembly process of women's pants in a country different from the country where they were cut, did not involve sufficient skill or complexity to constitute a substantial transformation as defined by 19 CFR 12.130(e)(v). Therefore, the country of origin was found to be the country where the piece goods were cut into specific parts and where the articles last underwent a substantial transformation. In addition, HRL 951436 dated July 17, 1992, held that the country of origin of pants made from Taiwanese fabric, cut into component pieces in Singapore, and assembled in Malaysia, was Singapore.

Similarly, in the instant case, the cutting of the fabric in Macau materially alters the fabric into designated component pieces. The assembly operations performed in the People's Republic of china are also 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. Therefore, the country of origin of the panties will be Macau, as that is where the fabric is cut into specific parts and where the articles last underwent a substantial transformation.

HOLDING:

On the basis of information submitted, the country of origin of the silk panties will be Macau.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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