HQ 958034 - Country of origin determination; 19 CFR 12.130; textile footwear uppers; sandal uppers; cutting to length is not a substantial transformation; simple assembly does not constitute a substantial transformation; article is a product of Taiwan where fabric was formed. - United States International Trade Commision Rulings

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HQ 958034

September 26, 1995
CLA-2 CO:R:C:T 958034 SK

CATEGORY: CLASSIFICATION

William J. Maloney
Rode & Qualey
295 Madison Avenue
New York, N.Y. 10017

RE: Country of origin determination; 19 CFR 12.130; textile footwear uppers; sandal uppers; cutting to length is not a substantial transformation; simple assembly does not constitute a substantial transformation; article is a product of Taiwan where fabric was formed.

Dear Mr. Maloney:

This is in reply to your letter of May 16, 1995, on behalf of your client, Deckers Outdoor Corporation, requesting a country of origin determination for textile footwear uppers. The footwear uppers will be imported into the U.S. and incorporated into finished sandals. Samples of the textile sandal upper were submitted to this office for examination.

FACTS:

The products the subject of this country of origin ruling request are textile sandal uppers. Two styles, identified as "Terradactyl" (TM) and "All-Terrain" (TM) were submitted to this office as representative samples. The sandal uppers are constructed of woven strips of narrow fabric of man-made fiber which are connected by plastic rings and hook and loop tape.

The narrow fabric is woven in Taiwan. The fabric is then sent to Country A where it is cut to length and the ends are heat sealed. Hook and loop tape, manufactured in the U.S., is imported into Country A where it is cut to the precise
rectangular shapes required for incorporation into the sandal uppers. The cut to length narrow fabric, hook and loop tape, and plastic rings are then shipped to Country B where these components are assembled into the completed sandal uppers by means of sewing machine operations. The completed upper is then returned to Country A for packaging and export to the United States.

The time required to cut the narrow fabric and hook and loop tape in Country A is approximately 35 seconds per pair. The labor wage cost incurred in Country A is approximately 14 cents per dozen pairs of uppers.

The time required to sew the components together in Country B is approximately 10 minutes per pair. The labor wage cost incurred in Country B is approximately $2.50 per dozen pairs of uppers.

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. A textile or a textile product will be considered to have undegone a substantial transformation if it undergoes : 1) a substantial manufacturing or processing operation; and 2) is transformed by such manufacturing or processing into a new and different article of commerce.

Section 12.130(d)(2) provides guidelines which assist in determining whether merchandise has been subjected to substantial manufacturing or processing operations. This section states that the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations ...;

(ii) The time involved in the manufacturing or processing operations ...;

(iii) The complexity of the manufacturing or processing operations ...;

(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 country where any of the following manufacturing or processing operations take place:

(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;

(ii) Spinning fibers into yarn;

(iii) Weaving knitting or otherwise forming fabric; [emphasis added]

(iv) Cutting of fabric into parts and the assembly of those parts into the completed article;

(v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles 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). [emphasis added]

Conversely, Section 12.130(e)(2) provides examples of manufacturing or processing operations which are not considered to substantially transform an article. These operations include:

(i) Simple combining operations, labeling, pressing , cleaning or dry cleaning, or packaging operations, or any combination thereof;

(ii) Cutting to length or width and hemming or overlocking fabrics which are readily indentifiable as being intended for a particular commercial use; [emphasis added]

(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;

(iv) One or more finishing operations on yarns, fabrics, or other textile articles, such as showerproofing, superwashing, bleaching, decating, fulling, shrinking, mercerizing, or similar operations; or

(v) Dyeing and/or printing of fabrics or yarns.

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. Therefore, in the instant case, the assembly process in Country B involving the sewing together of components cut from fabric in Country A does not involve sufficient skill or complexity to constitute a substantial transformation as defined by the regulations set forth supra.

You have stated that the following operations take place in Country A: the narrow fabric is cut to length, the ends are sealed and hook and loop tape is cut into rectangular shapes. Section 12.130(e)(2)(ii), set forth supra, states that the "cutting to length and hemming" of fabric is not a manufacturing process that will usually render a textile or a textile material a product of the country where these operations transpire. Although your client intends to cut to length and heat seal the narrow fabric in Country A, this office believes these operations are analogous to cutting and hemming in that both are extremely simple processes and do not involve any great deal of skill or technology. This office also does not consider cutting the hook and loop tape to length and width a substantial manufacturing operation. This finding is supported by the fact that the manufacturing operations performed in Country A take a mere 35 seconds per sandal upper. Based on the foregoing, the operations performed in Country A do not serve to substantially transform the subject merchandise.

As stated above in Section 12.130(b), textile products that are processed in more than one country or territory shall be products of that country or territory
where they last undergo a substantial transformation. You have stated in your submission that the narrow fabric is woven in Taiwan. Section 12.130(e)(1)(iii) provides that an article or material usually will be a product of a country where it undergoes "weaving knitting or otherwise forming fabric." As Taiwan is where the fabric is woven, and this is where the subject merchandise last undergoes a substantial manufacturing process (forming fabric) which serves to create a new and different article of commerce (fiber is transformed into fabric), the country of origin of the textile sandal uppers is Taiwan.

HOLDING:

The country of origin for the textile sandal uppers is Taiwan as this is where the articles last undergo a substantial transformation.

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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