HQ 558895 - Country of origin marking of t-shirts knit in China, cut and assembled in the Philippines and dyed in Hong Kong; 19 CFR 12.130; 19 U.S.C. 1304 - United States International Trade Commision Rulings

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HQ 558895

January 30, 1995

MAR-2-05 CO:R:C:S 558895 WAS

CATEGORY: MARKING

Ms. Ruby Chu
Fast King Limited
4/F., Wai Shun Ind'l Bldg.
5 Yuk Yat Street
Tokwawan, Kowloon
HONG KONG

RE: Country of origin marking of t-shirts knit in China, cut and assembled in the Philippines and dyed in Hong Kong; 19 CFR 12.130; 19 U.S.C. 1304

Dear Ms. Chu:

This is in reference to your letter dated October 25, 1994, concerning the country of origin marking of knitted t-shirts, the fabric of which is knit in China, shipped to the Philippines for cutting and sewing, and subsequently shipped to Hong Kong for a dyeing operation, prior to being shipped to the U.S.

FACTS:

You state that fabric will be knit in China and shipped to the Philippines for processing. In the Philippines, the fabric will be cut into component parts suitable for t-shirts and then assembled by means of sewing into the completed garment. The t-shirts will then be packaged and shipped to Hong Kong, where they will undergo a dyeing operation, prior to being imported into the U.S.

ISSUE:

What is the proper country of origin marking for the t-shirts which are manufactured in the above-described fashion?

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.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textiles 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 is relevant in determining the country of origin of the knit t-shirts at issue in this ruling.

Except as provided in section 12.130(c), 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 textile article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing operations. 19 CFR 12.130(b).

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 of skill and technology required in the operation; and the value added to the article or material in each foreign country compared to the value of the article when imported into the U.S.

Section 12.130(e)(1)(iv) states that an article will be a product of a particular foreign country, when it has undergone prior to importation into the U.S. in that foreign country "cutting of fabric into parts and the assembly of those parts into the completed article." See Headquarters Ruling Letter (HRL) 956033 dated June 13, 1994 (cutting of tubular fabric into garments parts in the Dominican Republic and the assembly by sewing of those parts into the finished t-shirt constitutes a substantial transformation). Therefore, based on section 12.130(e)(1)(iv), the cutting of the fabric into garment parts suitable for a t-shirt in the Philippines and the assembly by sewing of those parts into the finished t-shirt in the Philippines constitutes a substantial transformation.

The only issue which remains with respect to the origin of the t-shirts is whether dyeing the t-shirts in Hong Kong constitutes a further substantial transformation, thereby rendering Hong Kong as the country of origin of the t-shirts. Section 12.130(e)(2)(v) states, in pertinent part, that an article usually will not be considered to be a product of a particular foreign country, by virtue of merely having undergone "dyeing and/or printing of fabrics or yarns." Consequently, in this case, as the t-shirts imported into Hong Kong are simply dyed prior to being imported into the U.S., it is clear that, pursuant to 12.130(e)(2)(v), the dyeing operation will not result in a substantial transformation of the t-shirts into a product of Hong Kong. Accordingly, the country of origin of the t-shirts is the Philippines.

With regard to the proposed label bearing the name of the country of origin, since you have not submitted a sample of the label, we cannot rule definitively on whether the marking in this case is in compliance with the country of origin marking requirements. However, a textile label which clearly indicates the Philippines as the country of origin and otherwise satisfies the requirements of 19 U.S.C. 1304 and 19 CFR Part 134, would be acceptable. In your letter, you have also not indicated where on the T-shirt the fabric label will be affixed. Customs ruled in T.D. 54640(6) that shirts, blouses and sweaters must be marked by means of a fabric label sewn on the inside center of the neck midway between the shoulder seams. If, at the time of retail, the T-shirts are packaged in such a way that the fabric label is obscured, the retail package should be marked with the country of origin in compliance with 19 U.S.C. 1304 and 19 CFR Part 134. Please note, however, that Customs is considering modifying the policy in T.D. 54640(6) requiring the use of a sewn-in fabric label for these garments. This notice to the public will appear in the Federal Register in the near future.

HOLDING:

The T-shirts in this case are products of the Philippines and should be marked accordingly by means of a fabric label sewn into the neck area of each T-shirt. Such label must satisfy the requirements of 19 U.S.C. 1304 and 19 CFR Part 134. If the T- shirts are sold in packaging that obscures the fabric label, the packaging must also be marked in compliance with the country of origin marking requirements.

A copy of this ruling 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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