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HQ 558855




December 20, 1994

MAR-2-05 CO:R:C:S 558855 WAS

CATEGORY: MARKING

Mr. David L. Seithel
Waters Shipping Company
P.O. Box 216
Charleston, S.C. 29402

RE: Country of origin marking of wearing apparel which is cut to size and sewn in the U.S. from imported fabric; 19 CFR 12.130; 19 CFR 134.35(a)

Dear Mr. Seithel:

This is in reference to your letter dated October 11, 1994, on behalf of Sun West Trading, Inc., concerning the country of origin marking of apparel which is cut to size and sewn in the U.S. from foreign-origin fabric.

FACTS:

You state that dyed or bleached knit cotton jersey fabric from Pakistan will be imported into the U.S. where it will be cut to size and sewn into wearing apparel entirely in the U.S. You state that the imported fabric is classified under subheading 6002.92.9000, Harmonized Tariff Schedule of the United States (HTSUS). You ask whether the finished apparel must be marked "Made in the U.S.A. of imported fabric" or whether "Made in U.S.A." is an acceptable country of origin marking.

ISSUE:

What are the country of origin marking requirements applicable to the above-described wearing apparel?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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 good is the product. The evident purpose is to mark the good 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., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain.

Pursuant to section 134.35(a), Customs Regulations (19 CFR 134.36(a)), an article used in the United States in manufacture which results in an article having a name, character, or use differing from that of the imported article, will be within the principle of the decision in the case of United States v. Gibson-Thomsen Co, Inc., 27 C.C.P.A. 267 (C.A.D. 98). Under this principle, the manufacturer or processor in the United States who converts or combines the imported article into the different article will be considered the "ultimate purchaser" of the imported article within the meaning of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article will be excepted from marking. However, according to this provision, the outermost containers of imported articles which are excepted from marking must be marked in accord with this part.

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 textile and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes, including duty and marking. Customs has determined that 19 CFR 12.130 will be applied to determine the country of origin of all imported articles which are classified in Section XI, Harmonized Tariff Schedule of the United States (HTSUS), or to any imported article classified outside of Section XI, HTSUS, under a subheading which has a textile category number associated with it. Because the subject merchandise would be classified under Section XI, HTSUS, 19 CFR 12.130 will be used in making the country of origin determination.

Pursuant to 19 CFR 12.130, the standard of substantial transformation governs the determination of the country of origin where textile and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory, country, or insular possession where the article last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing operations. In other words, for textiles governed by 19 CFR 12.130, there is a two part substantial transformation test: (1) a new and different article of commerce; and (2) a substantial manufacturing or processing operation.

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 or (iii) commercial use.

The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d) and (e). Section 12.130(d)(2) lists some of the factors considered in determining whether a substantial manufacturing or processing operation has occurred. These factors include: the physical change in the material or article; the time involved in the processing; the complexity of the operation; the level or degree or skill and technology required in the operation; and the value added to the article or material in the non-U.S. based operation versus the value added to the article or material in the U.S.

Section 12.130(e)(1)(iv) states that an article usually will be a product of a particular country, when it has undergone in that country:
cutting of fabric into parts and the assembly of those parts into the completed article

Based on section 12.130(e)(1)(iv), the cutting of the foreign fabric into shapes and sizes suitable for assembly into a garment and the subsequent assembly of those parts by sewing in the U.S. results in a substantial transformation of the foreign fabric. Thus, the country of origin of the wearing apparel under these facts is the U.S. See HRL 956619 dated September 23, 1994 (the country of origin of fabric from either Hong Kong, China or a third country which is cut and sewn into finished garments in Hong Kong is Hong Kong); HRL 956033 dated June 13, 1994 (T-shirts which are cut and sewn in the Dominican Republic from imported fabric constitute a substantial transformation causing the Dominican Republic to be the country of origin of the T-shirts). Accordingly, the wearing apparel is excepted from country of origin marking pursuant to section 134.35, Customs Regulations (19 CFR 134.35), although, the outermost container of the imported fabric must be marked in accord with 19 CFR Part 134.

The use of legends such as "Made in U.S.A." or "Made in U.S.A. of foreign fabric" on textile products is governed by the Textile Fiber Products Identification Act (15 U.S.C. 70), which is administered by the Federal Trade Commission (FTC). Since Customs does not issue rulings or decisions interpreting FTC guidelines, we suggest that you contact the FTC, 6th and Pennsylvania, N.W., Washington, D.C. 20580, for information regarding the propriety of the proposed legends.

HOLDING:

The cutting of the imported foreign fabric into garment parts and the assembly of those parts in the U.S. results in a substantial transformation of the foreign fabric. Therefore, the U.S. processor is the ultimate purchaser and the apparel is excepted from country of origin marking.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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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