HQ 956494 - Country of origin of knit sweaters; 19 CFR 12.130, Customs Regulations - United States International Trade Commision Rulings

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HQ 956494

September 19, 1994

CLA-2 CO:R:C:T 956494 CAB

CATEGORY: CLASSIFICATION

Mr. Josefa M. Dizon
Embassy of the Philippines
Office of the Commercial Counselor
1600 Massachusetts Ave., N.W.
Washington, D.C. 20036

RE: Country of origin of knit sweaters; 19 CFR 12.130, Customs Regulations

Dear Mr. Dizon:

This is in response to your request for a country of origin determination on May 18, 1994, concerning sweaters. Your request is on behalf of Redson Textile Manufacturing Company. No sample was submitted for examination.

FACTS:

The merchandise at issue is a knit sweater. The manufacturing process is as follows: The importer will import yarn from Country "A" to the Philippines which is referred to as Country "B". In the Philippines, the yarn is knitted into sweater panel pieces. Once the panels are completed, they are sent to China which is referred to as Country "C", where these components are linked and finished resulting in a finished sweater.

ISSUE:

What is the country of origin of the merchandise in question?

LAW AND ANALYSIS:

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 required in the manufacturing or processing operations;

(v) The value added to the article or material

Section 12.130(e)(1), Customs Regulations, provides that an article or material usually will be a product of a particular foreign territory or country, or insular possession of the United States when, prior to importation into the United States, it has undergone in that foreign territory or country or insular possession, the following:

(iii) Weaving, knitting or otherwise forming fabric;

Section 12.130(e)(2), Customs Regulations, states an article or material usually will not be considered to be a product of a particular foreign territory or country, or insular possession of the U.S. by virtue of merely having undergone any of the following:

(iii) Trimming and/or joining together by sewing, looping, linking, or other means of attaching otherwise completed knit- to-shape component parts produced in a single country, even when accompanied by other processes (e.g. washing, drying, mending, etc.) normally incident to the assembly process;

The linking together of the knit-to-shape components parts in China (Country C), falls squarely in 12.130(e)(2)(iii) as an operation that does not confer origin. Knitting fabric into sweater panels, however, does transform the yarn into a new and different article of commerce. Thus, the processing in the Philippines (Country B) does amount to the complex manufacturing operation necessary to substantially transform an article in accordance with Section 12.130(e)(1)(iii). As the linking and finishing operation in China (Country C) is a simple combining operation that does not constitute a substantial manufacturing operation, the processing in the Philippines is considered to be the last substantial transformation that the merchandise undergoes. Therefore, the country of origin of the subject merchandise is the Philippines.

HOLDING:

The country of origin of the sweater at issue is the Philippines.

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

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