HQ 957043 - Country of Origin of Knitted Pants and Shirts; simple assembly; embroidery and application of beads. - United States International Trade Commision Rulings

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HQ 957043

December 13, 1994

CLA-2 CO:R:C:T 957043 GG

CATEGORY: CLASSIFICATION

Steven S. Weiser, Esq.
Arthur W. Bodek, Esq.
Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway, 43rd Floor
New York, New York 10036-8901

RE: Country of Origin of Knitted Pants and Shirts; simple assembly; embroidery and application of beads.

Dear Messrs. Weiser and Bodek:

This is in response to your September 19, 1994, request for a binding ruling on the country of origin of certain knitted pants and shirts your client, Liz Claiborne, Inc., plans to import. Representative samples were enclosed with your request and are being returned to you under separate cover.

FACTS:

The merchandise to be imported is as follows:

Style No. V-5402 - This is a pair of full length pull-on pants made from 65% polyester/35% cotton knitted fabric. The pants have an elasticized waistband and right and left inserted side pockets.

Style No. V-6246B - This is a short-sleeved, crew-necked T- shirt comprised of a 65% polyester/35% cotton knitted fabric. The front of the garment is decorated in several places with a "diamond floral" embroidered design.

Style No. V-6219 - This is a long-sleeved mock turtleneck shirt featuring an opening in the front of the neck secured by a two button closure. The neck band is ornamented by means of a small embroidered crest. This garment is made from a 65% polyester/35% cotton knitted fabric.

Style No. SSII-646 - This is a 100% cotton knit short- sleeved T-shirt, decorated on the upper portion of the front panel with wooden beads attached by means of a sewing thread.

The fabric and trim items used in these garments will be of Taiwanese origin. The components of all four styles will be dyed, finished, and cut to shape and size in Taiwan. Depending upon the style, the garments will have as few as four to a maximum of fourteen distinct pieces.

The cut components will be sent to Vietnam for assembly and finishing. The assembly operation will consist of the garment pieces being joined together by means of a simple machine sewing operation.

The embroidery and application of the beads will take place in Vietnam, either before or after the assembly of the components. All materials used to embroider or embellish the garments will be of Taiwanese origin. The "diamond floral" design featured on the front of Style No. V-6246B will be applied by means of a combination of machine and hand embroidery processes. The small crest featured on the neck bank of Style No. 6219 will be the result of a machine embroidery process while the wooden beads featured on the upper portion of the front panel of Style No. SSII-646 will be applied by hand.

The assembled garments will be pressed and packed in Vietnam and then shipped to the United States.

The percentage of total production costs (inclusive of materials and labor) for each of the captioned garments is as follows:

V-5402 V-6246B V-6219 SSII-646

Taiwan 86% 80% 87% 84%

Vietnam 14% 20% 13% 16%

TOTAL 100% 100% 100% 100%

ISSUE:

What is the country of origin of the knitted shirts and pants?

LAW AND ANALYSIS:

Country of origin determinations for textile products are made pursuant to section 12.130 of the Customs Regulations (19 CFR 12.130). Section 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 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)(1) of the 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) of the Customs Regulations 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 article; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations; and
(v) The value added to the article or material.

Section 12.130(e)(1) describes manufacturing or processing operations from which an article will normally be considered a product of the country in which those operations occurred. Section 12.130(e)(1)(v) provides the following:

Substantial assembly by sewing and/or tailoring of all cut pieces of apparel 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).

According to Treasury Decision (T.D.) 85-38 (19 Customs Bulletin 58, at 70; 50 Federal Register 8417), which is the final document rule establishing 19 CFR 12.130:

The assembly of all the cut pieces of a garment usually is a substantial manufacturing process that results in an article with a different name, character, or use than the cut pieces. It should be noted that not all assembly operations of cut garment pieces will amount to a substantial transformation of those pieces. Where either less than a complete assembly of all the cut pieces of a garment is performed in one country, or the assembly is a relatively simple one, then Customs will rule on the particular factual situations as they arise, utilizing the criteria in section 12.130(d).

Customs has consistently taken the position that cutting fabric into garment pieces constitutes a substantial transformation of the fabric, resulting in the pieces becoming products of the country where the fabric is cut. See Headquarters Ruling Letter (HRL) 956632, dated August 18, 1994; HRL 955123, dated January 27, 1994; HRL 954448, dated August 19, 1993; and HRL 953698, dated July 19, 1993. Customs has also adhered to the view that the mere assembly of goods by simple combining operations, trimming or joining together by sewing is not enough to substantially transform the components of articles into new and different articles of commerce. See HRL 955123; HRL 953697, dated July 26, 1993; and HRL 952647, dated January 27, 1993.

In this instance, the sewing operations performed in Vietnam involve the simple assembly of various garment pieces. The sewing does not rise to the level of complexity associated with the assembly and tailoring of suits, suit-type jackets, or tailored shirts. The cutting process in Taiwan does, however, amount to a substantial manufacturing operation. The cutting materially changes the fabric into designated garment pieces, which constitute new and different articles of commerce.

The embroidery and application of beads are considered finishing operations and, as such, do not change the commercial designation or identity, the fundamental character, or the commercial use of the shirts. See HRL 954424, dated August 11, 1993; HRL 952752, dated February 3, 1993; HRL 089068, dated July 1, 1991; and HRL 081936, dated August 18, 1988. Similarly, pressing and packing the assembled garments will not affect their origin.

HOLDING:

The country of origin of the shirts and pants is Taiwan.

This ruling is issued pursuant to the provisions of Part 177 of the Customs Regulations (19 CFR Part 177). The holding in this ruling only applies to the specific factual situation presented and to 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

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