HQ 957574 - Country of origin of thermal, soft-sided cooler; 19 CFR 12.130; material cut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantial transformation; HRL 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94). - United States International Trade Commision Rulings

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HQ 957574

February 6, 1995

CLA-2 CO:R:C:T 957574 SK

CATEGORY: CLASSIFICATION

Melvin S. Mogil
California Innovations Inc.
4211 Yonge Street, suite 610
Willowdale, Ontario
Canada M2P 2A9

RE: Country of origin of thermal, soft-sided cooler; 19 CFR 12.130; material cut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantial transformation; HRL 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94).

Dear Mr. Mogil:

This is in response to your letter of January 30, 1995, requesting a country of origin determination for the "THERMALWHIZ LC" soft-sided cooler. A sample of the finished article was submitted to this office.

FACTS:

The subject article is marketed as the "THERMAL WHIZ LC" collapsible cooler. It measures approximately 7-1/2 inches by 10-1/4 inches by 3-1/4 inches. The exterior surface of the cooler is covered with a woven fabric. The cooler features a zipper closure which extends across three sides and an adjustable woven strap and handle for easy portability. The handle features an attached loop with a "velcro" strip which enables the cooler to be attached to bicycle bars and the like. The inside of the cooler has a mesh fabric compartment which is fitted with a plastic gel-filled cooling pack.

The materials for the "THERMALWHIZ LC" soft-sided cooler are sourced and cut into component parts in Taiwan and assembled in China. The specific operations are as follows:

MANUFACTURING OPERATIONS:

1) The raw materials are cut into cooler components in Taiwan;

2) The pre-cut components are assembled into the completed cooler in China.

COSTS:

1) The cost of materials and assembly incurred in China represent approximately 15 percent of the total cost ($4.10) of the of the cooler (i.e., 48 cents of materials and 15 cents for assembly costs);

2) Over 84 percent of the total cost of the product is incurred in Taiwan (i.e., cost of raw materials, cutting operations, shipping expenses to transport the component pieces from Taiwan to China).

ISSUE:

What is the country of origin of the subject merchandise?

LAW AND ANALYSIS:

Section 12.130(b) of the Customs Regulations (19 CFR 12.130(b)) provides that textile products that are processed in more than one country or territory shall be products of that country or territory where they last underwent a substantial transformation. Your attention is directed to Section 12.130(e)(v) of the Customs Regulations which states that an article will usually have undergone a substantial transformation (change in country of origin) if it has undergone a substantial assembly of all cut pieces into a completed article.

Customs has long held that the mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing, is not enough to substantially transform the components of an article into a new and different article of commerce. See Headquarters Ruling Letter (HRL) 082747, dated February 23, 1989, in which Customs determined that the assembly of jeans was not a substantial transformation and HRL 082787, dated March 9, 1989, which reached a similar conclusion with regard to a jogging suit.

In the instant case, the assembly process in China involving the sewing together of components cut from fabric in Taiwan does not involve sufficient skill or
complexity to constitute a substantial transformation as defined by the regulations set forth supra. See HRL 951899, dated October 31, 1992, in which Customs issued a country of origin determination for soft-sided luggage manufactured in a similar manner. See also HRL 956634, issued to you on September 29, 1994.

Pursuant to 19 CFR 12.130(d)(2)(v), the "value added" to an article is another factor which aids in determining country of origin. The greatest costs in producing the cooler are incurred in Taiwan as that is where most of the raw materials are sourced and where the material is cut into component parts.

The country of origin of the "THERMALWHIZ LC" cooler is Taiwan as that is the country where the article last undergoes a substantial transformation. It is in Taiwan that the fabric undergoes a substantial manufacturing process (cutting) which transforms the fabric into a new and different article of commerce (luggage components). Taiwan is also where the greatest value is added to the subject merchandise.

HOLDING:

The country of origin of the "THERMALWHIZ LC" collapsible cooler is Taiwan.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. 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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