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HQ 957340





February 23, 1995

CLA-2 CO:R:C:T 957340 SK

CATEGORY: CLASSIFICATION

Arthur Fried
Mainzer Minton Co., Inc.
48 West 38th Street
New York, N.Y. 10018-6296

RE: Country of origin determination; 19 CFR 12.130(e)(1)(i); fabric must undergo both dying and printing and two or more of the enumerated finishing operations in 12.130(e)(1)(i) to be deemed to have undergone a substantial transformation.

Dear Mr. Fried:

This is in response to your letter of September 19, 1994, in which you request clarification of Section 12.130(e)(1)(i) of the Customs Regulations as it pertains to dying, printing and finishing operations and when they constitute a substantial transformation for purposes of determining the country of origin of textile articles.

FACTS:

You have requested a country of origin analysis for two different manufacturing scenarios. In the first, you state that fabric will be woven in Country A and then shipped to Country B where it is dyed a solid color (but not printed) and subjected to two of the enumerated finishing operations set forth in Section 12.130 (e)(1)(i). You also request a country of origin analysis for manufacturing situations in which fabric is woven in Country A and then shipped to Country B where it is printed (but not dyed) and subjected to two of the enumerated finishing operations set forth in Section 12.130(e)(1)(i).

ISSUE:

When are dying, printing and finishing operations deemed to constitute a substantial transformation for purposes of determining the country of origin of textile articles under Section 12.130(e)(1)(i) of the Customs Regulations?

LAW AND ANALYSIS:

Country of origin determinations for textile products are subject 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) of the Customs Regulations sets forth criteria in determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of these criteria may be determinative, and additional factors may be considered.

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;
(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;

(v) The value added to the article or material;

Section 12.130(e)(1) 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, any of the following:

(i) Dyeing of fabric and printing when accompanied by two or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing; ... .

On March 5, 1985, the Commissioner of Customs issued 19 CFR Section 12.130. The Commissioner stated that this regulation was designed to "prevent circumvention or frustration of visa or export license requirements contained in multilateral and bilateral agreements to which the U.S. is a party in order to facilitate the efficient and equitable administration of the U.S. Textile Import Program." 50 Fed. Reg. 8710-8711. In Mast Industries v. United States, 11 C.I.T. 30, 652 F. Supp. 1531 (1987), the Court of International Trade upheld Section 12.130(e)(1)(i) of the Customs Regulations. The court noted that "the regulation seems clear, under subsection (e), that in dealing with fabrics ... operations involving less than a combination of dyeing and printing together with at least two other major finishing operations will not usually result in a substantial transformation of the fabric."

Neither of the manufacturing scenarios presented to this office satisfy the requirements set forth in 12.130(e)(1)(i) which explicitly require that an article or material undergo dyeing and printing and at least two of the enumerated finishing operations in order to be deemed to have undergone a substantial transformation for purposes of conferring country of origin status. In the first manufacturing scenario, no substantial transformation of the fabric is deemed to occur in Country B because the fabric is only dyed (and not printed) and subjected to two of the enumerated finishing operations. Similarly, in the second scenario, no substantial transformation of the fabric is deemed to occur in Country B because the fabric is only printed (and not dyed) and subjected to two of the enumerated finishing operations.

HOLDING:

The country of origin of the fabric in both of the manufacturing scenarios presented supra is COUNTRY A, the country where the fabric last underwent a substantial transformation (weaving).

The holding set forth above applies only to the specific factual situations and merchandise identified. This position is clearly set forth in section 177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1). Should it subsequently be determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, it is recommended that a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2).

Sincerely,

John Durant, Director,
Commercial Rulings Division

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