HQ 958042 - Country of origin for certain luggage styles; 19 CFR 12.130; HQ 957872 - United States International Trade Commision Rulings

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HQ 958042

CLA-2 CO:R:C:T 958042 NLP

CATEGORY: CLASSIFICATION

Daniel J. Gluck, Esq.
Serko & Simon
One World Trade Center- Suite 3371
New York, New York 10048

RE: Country of origin for certain luggage styles; 19 CFR 12.130; HQ 957872

Dear Mr. Gluck:

This is in response to your letter of May 30, 1995, on behalf of your client, Airway Industries, Inc., in which you requested a country of origin determination for two styles of luggage.

FACTS:

The first piece of luggage is identified as #36430-29, Upright Pullman, and it measures 29-1/4 inches by 21 inches by 10 inches. The second piece of luggage is identified as #36430-93, Upright Carry On, and it measures 22 inches by 14 inches by 8 inches. The materials comprising the finished pieces of luggage are manufactured and cut to specific size in Taiwan. These components are then shipped to China for assembly and packing before exportation to the United States. You also state that the total cost per unit for the Taiwanese manufacturing process is $27.24 for the 29 inch Pullman and $18.02 for the Carry On. The value of the work performed for each in China is $4.71 and $3.98, respectively. The total manufacturing costs are $31.95 and $22.00, respectively.

In your letter you state that the specific production and assembly of both pieces of luggage are identical to that of style #36430-26, Upright Pullman, which was the subject of HQ 957872, issued to you, also on behalf of Airways Industries, Inc., on April 24, 1995. We have reviewed both the information in your letter of May 30, 1995, and HQ 957872, and have found the production and assembly process for the three pieces of luggage to be the same. Therefore, we refer you to the fact section of HQ 957872 for a detailed description of the production and assembly process of the subject luggage.

ISSUE:

What is the country of origin of luggage styles #36430-29, Upright Pullman, and #36430-93, Upright Carry On?

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 or 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 for 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 criteria may be determinative, and additional factors may be considered.

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 as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S.

Section 12.130(e)(1) sets forth manufacturing or processing operations which will usually constitute a substantial transformation. Section 12.130(e)(2) enumerates instances which will usually not constitute manufacturing or processing operation. In Treasury Decision (T.D.) 85-38, published in the Federal Register on March 5, 1985, (50 FR 8714), the final rule document which established 19 CFR 12.130, there is a discussion of how the examples and factors enumerated in the regulations are intended to operate:

Examples set forth in 19 CFR 12.130(e) are intended to give guidance to Customs officers and other interested parties. Obviously, the examples represent clear factual situations where the country of origin of the imported merchandise is easily ascertainable. The examples are illustrative of how Customs, given factual situations which fall within those examples, would rule after applying the criteria listed in 12.130(d). Any factual situation not squarely within those examples will be decided by Customs in accordance with the provisions of 12.130(b) and (d).

Section 12.130(e) reads as follows:

Manufacturing or processing operations: (1) An article or material usually will be a product of a particular foreign territory or country, or insular possession of the U.S., when it has undergone prior to importation into the U.S. 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;

(ii) Spinning fibers into yarn;

(iii) Weaving, knitting or otherwise forming fabric;

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

(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).

(2) 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:

(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 identifiable as being intended for a particular commercial use;

(iii) Trimming and/or joining 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;

In HQ 957872, dated April 24, 1995, which was issued to you, also on behalf of Airways Industries, Inc., we dealt with the country of origin of luggage style #36430-26, Upright Pullman. In that case, the materials comprising the finished piece of luggage had been manufactured and cut to specific size in Taiwan. The issue presented was whether the assembly and packing of those components in China constituted substantial transformation.
Based on abundant precedent, we held that the assembly and packaging of the luggage in China did not constitute a substantial transformation and, therefore, the country of origin for the luggage was held to be Taiwan. As the manufacturing and assembly operations for the instant styles of luggage are the same as those performed on style #36430-26, Upright Pullman, HQ 957872 serves as precedent for the instant case. Therefore, we hold that the country of origin for the instant pieces of luggage is also considered to be Taiwan.

HOLDING:

The country of origin for luggage style #36430-29 and style #36430-93 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

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