HQ 956320 - Country of origin of down comforters; Section 12.130, Customs Regulations - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1995 HQ Rulings > HQ 956320 - HQ 956470 > HQ 956320

Previous Ruling Next Ruling
HQ 956320

December 12, 1994

CLA-2 CO:R:C:T 956320 CAB

CATEGORY: CLASSIFICATION

Margaret R. Polito, Esq.
Neville, Peterson & Williams
80 Broad Street
Suite 3400
New York, NY 10004

RE: Country of origin of down comforters; Section 12.130, Customs Regulations

Dear Ms. Polito:

This is in response to your inquiry of April 7, 1994, requesting a determination, on behalf of Natural Feather & Textiles, Inc., as to who is the ultimate purchaser of comforter shells imported into the United States and used in the production of down comforters. Customs believes that the issue of who is the ultimate purchaser is contingent upon where the subject merchandise undergoes its last substantial transformation and therefore will make that determination based on Section 12.130, Customs Regulations (19 CFR 12.130). There was no sample submitted for examination.

FACTS:

The importer contemplates importing comforter shells constructed of either cotton or man-made fiber fabric from Hong Kong and/or China. These comforter shells will be sized based on client specifications of twin, full, queen, or king sizes. These comforter shells will be cut and sewn in Hong Kong and/or China and then exported to the United States where they will be filled with either down, feathers, or man-made wadding. The comforter shell edges are sewn together except for one or more fill openings that are left open so that the fill can be placed inside the shell. Shell construction can range from a simple "no sew" bag, to shells that have "blocks" or separate compartments in order to prevent migration of filling material. These compartments or blocks are created by sewing vertical strips called "baffles" through the top and bottom layers of the comforter shell.

The importer has imported empty comforter shells in an unmarked condition into the Port of Chicago, Illinois. These particular shells are the subject of three notices of marking which where issued by the District Director in Chicago.

ISSUE:

Where does the subject merchandise undergo it last substantial transformation?

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 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.

The "ultimate purchaser" is defined generally as the last person in the U.S. who will receive the article in the form in which it was imported. See, 19 CFR 134.1(d). If an imported article will be used in domestic manufacture, the manufacturer may be the "ultimate purchaser" if he or she subjects the imported article to a process which results in a substantial transformation of the article. However, if the manufacturing process is a minor one which leaves the identity of the imported article intact, the consumer or user of the article, who obtains the article after the processing, will be regarded as the "ultimate purchaser." 19 CFR

The issue of who is the ultimate purchaser of the imported comforter shell hinges on whether the shells are substantially transformed in the U.S. as a result of the processing performed there.

Country of origin determinations for textile products are subject to Section 12.130, Customs Regulations (19 CFR 12.130). Section 12.130 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 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, sets forth criteria for determining whether a substantial transformation of a textile product has taken place. This regulation states 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, 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, states that for 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

(ii) The time involved in the manufacturing or processing operation

(iii) The complexity of the manufacturing or processing operation

(iv) The level or degree of skill and/or technology

(v) The value added to the article or material

Section 12.130(e)(1)(iv), Customs Regulations, states that a textile article will usually be a product of a particular country if the cutting of the fabric into parts and the assembly of those parts into the completed article has occurred in that country. However, 12.130(e)(2)(ii), Customs Regulations, states that a material will usually not be considered to be a product of a particular foreign country by virtue of merely having undergone cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use.

The processing of the subject comforters is as follows: Fabric is cut and sewn into comforter shells in Hong Kong and/or China. One or more fill openings is left unattached so that either down, feathers, or man-made wadding can be placed into the comforter shell. The comforter shells are exported to the United States where they are filled with any one of the specified fillers. You assert that the filler and comforter shell undergo substantial manufacturing operations in the United States which results in a new and different article of commerce, a down comforter. You specifically state that the time involved in the operations performed in the United States exceeds the time involved in cutting and sewing the comforter shell. Of significance is the fact the complexity and technological skill required to clean and blow the feathers into the shell far exceeds the complexity and technological skill necessary to make a shell, which is a simple cutting and sewing operation. Recently, Customs confronted a similar issue in Headquarters Ruling Letter (HRL) 955975, dated June 21, 1995, when it determined that a quilt shell cut and sewn in China and filled with a polyester wadding in Indonesia was a product of China. Customs stated the following:

The filling of the quilt shell is, in our view, a simple combining operation. The closing of the quilt shell is nothing more than a simple stitching procedure. The quilting stitching which serves to hold the filling in place and provides a decorative appearance, may be both time consuming and requiring of a certain degree of skill when done by hand. However, (1) the quilting stitching is not sufficiently complex to rise to the status of a "substantial manufacturing or processing operations", and (2) the same quilting stitching is a relatively quick and simple procedure when done by machine.

In this case the stitching of the comforter shell is performed by machine and in accordance with the aforementioned ruling, it is Customs belief that filling a comforter shell with down requires the same level of complexity as filling a quilt shell with polyester wadding. It is a simple combining operation that does not result in a substantial manufacturing operation. As stated above, you argue that filling a shell with down and polyester wadding is substantially different; the technology and skill is more sophisticated in the initial scenario. At this time, Customs, is not prepared to make a distinction between filling a shell with down and filling a shell with polyester wadding. They are both relatively quick and simple manufacturing operations. You provide a very costly figure for the machinery necessary to blow down into a comforter. However, after further investigation, Customs found that the figure cited vastly fluctuated depending on the extra features provided with the machinery. Moreover, the value or the cost of the equipment used to perform the manufacturing operations will not be a persuasive factor in determining whether an article undergoes a substantial manufacturing operation.

You cite numerous rulings as evidence that the subject merchandise is substantially transformed in the United States. One such ruling is HRL 734374, dated April 3, 1992, where Customs determined that the country of origin of vinyl shells used in the manufacture of waterbed mattresses was the United States. The processing for the goods therein is as follows: vinyl shells are imported into the United States; foam and fiber are rolled out onto a cutting table and cut; five layers of fiber, a layer of convoluted foam, and a layer of cell foam are sewn together; the foam and fiber assembly is inserted into the vinyl cavity; and, the vinyl cavity is permanently closed with the use of a bonding machine. The processing involved for the merchandise of HRL 734374 is substantially more complex than the processing involved in the instant case. In HRL 734374, layers of foam and fiber had to be laid out and cut in addition to other processing. In this case, down is blown into a comforter shell, the shell is stitched, and sewn shut. There is no cutting involved in the second country. However, there are cutting and sewing operations involved in the country where the comforter shell is produced. Therefore, the facts of HRL 734374 are distinguishable from the instant facts.

You also refer to HRLs 731837 and 732844, dated August 17, 1989 and February 5, 1990, respectively. HRL 732844 confronted the issue of whether surgical instruments machined, finished, and assembled in Pakistan from stainless steel forged instrument blanks produced in the United States undergo a substantial transformation in the United States. HRL 731837 dealt with whether cassette shells imported into the United States in a condition ready for the insertion of the tape underwent a substantial transformation as a result of the insertion. You specifically state the following:

The processes to which the imported articles are subjected to in the United States do not alter their shape or appearance. Customs has concluded that the insertion of tape into a cassette shell results in a substantial transformation of the shell and the insertion of foam and fiber into a vinyl shell results in a substantial transformation of the shell.
Customs should rule in a consistent manner and hold that insertion of down and feathers into a comforter shell results in a substantial transformation of the shell.

Customs is not swayed by your reliance on these particular cases as they are based on the country of origin marking rules of Section 134.35, Customs Regulations (19 CFR 134.35). These cited cases do not apply to textiles and fail to mention Section 12.130, Customs Regulations, which Customs has interpreted as governing country of origin determinations for textiles and textile products, which are at issue in this case. Consequently, the down comforters at issue undergo their last substantial transformation in the country where the comforter shell is cut and sewn, Hong Kong and/or China.

Accordingly, the imported comforter shells are not substantially transformed when they are used to produce finished comforters in the U.S. Therefore, Natural Feather & Textiles, Inc. is not the ultimate purchaser of the imported comforter shells. Rather, the ultimate purchaser is the person(s) who purchases the down comforters at retail in the U.S., and the comforters must be marked to indicate the country of origin "Hong Kong" or "China" to such person(s).

HOLDING:

The country of origin of the down comforters at issue is the country where the comforter shells are cut and sewn, Hong Kong and/or China, not the U.S. where they are further manufactured into down comforters by Natural Feather & Textiles, Inc. Thus, Natural Feather & Textiles, Inc. is not the ultimate purchaser of the imported shells. Rather, the ultimate purchaser is the person(s) who purchases the down comforters at retail in the U.S., and the comforters must be individually marked to indicate the country of origin "Hong Kong" or "China" to such person(s).

This ruling is issued pursuant to the provisions of Part 177 Customs Regulations (19 CFR Part 177). The holding in this ruling only applies to the specific factual situation presented and the merchandise identified in the ruling request. If the information furnished is not accurate or complete, or there is a change in the factual situation, this ruling will no longer be valid. In such an event, a new ruling request should be submitted.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling