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HQ 559982

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September 18, 1996

MAR-2-05 RR:TC:SM 559982 AT

CATEGORY: MARKING

Mr. Josefa M. Dizon
Officer-in-Charge
Embassy of the Philippines
Office of the Commercial Counselor
1600 Massachusetts Avenue, NW
Washington, DC 20036

RE: Country of origin marking of imported "learning book bags"; substantial transformation; cutting and assembly of fabric in the Philippines; HQ 734149; sewing; assembly;

Dear Mr. Dizon:

This is in response to your letter of March 11, 1996, requesting a ruling on the country of origin of imported learning book bags. A sample book bag was submitted with your letter for our review.

FACTS:

You state that you intend to import into the U.S. learning book bags from the Philippines and would like to verify the country of origin of the imported bags. According to your letter, Chinese-origin fabric is imported into the Philippines where it is cut, embroidered and assembled into finished learning book bags.

ISSUE:

What is the country of origin of the imported learning book bags that are processed under the conditions described above?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304.

Section 134.1(b), Customs Regulations (19 CFR 134.1(b), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of Part 134.

A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. Torrington Co. v. United States, 764 F.2d 1563, 1568 (Fed. Cir. 1985), citing Texas Instruments, Inc. v. United States, 631 F.2d 778, 782 (C.C.P.A. 1982). We note that although the language book bags consist of textile materials, the textile rules of origin set forth in section 334 of the Uruguay Round Agreements Act promulgated in section 102.21, Customs Regulations (19 CFR 102.21), are not applicable because the book bags are classified under Heading 9503 (toys), Harmonized Tariff Schedule of the United States, which isn't considered to be a textile article for purposes of the application of 19 CFR 102.21.

An imported article is not a product of a country unless it has been substantially transformed there into a new and different article of commerce with a name, character, or use different from that of the article or articles from which it was transformed. As stated in your submission, the Chinese-origin fabric is cut, embroidered and assembled into the finished book bags in the Philippines.

Customs has consistently ruled that cutting materials to defined shapes or patterns, which we assume occurs in this case, for use in making finished articles constitutes a substantial transformation. See, HQ 734149 (November 25, 1991) (Customs ruled that operations performed in China, consisting of cutting Korean-origin rolls of fabric into 25 pieces and the assembly of those pieces into finished santa clause shells constituted a substantial transformation of the Korean fabric). The operations of cutting fabric into various pieces and the sewing of the pieces into learning book bags clearly constitute a substantial transformation. The Chinese-origin fabric loses its identity after the cutting and sewing operations are performed in that mere fabric becomes a new and different article--a learning book bag. Thus, the country of origin of the learning book bags is the Philippines. Accordingly, pursuant to the country of origin marking requirements set forth in 19 U.S.C. 1304 and 19 CFR Part 134, the individual learning book bags or their retail containers must be marked to indicate the "Philippines" as the country of origin of the imported bags.

HOLDING:

The country of origin of the imported learning book bags processed in the Philippines as described above, is the Philippines. Accordingly, pursuant to the country of origin marking requirements set forth in 19 U.S.C. 1304 and 19 CFR Part 134, the individual learning book bags or their retail containers must be marked to indicate the "Philippines" as the country of origin of the imported bags.

Sincerely,

John Durant, Director
Tariff Classification

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