HQ 958075 - Country of origin of men's pants and a women's skirt; 19 CFR 12.130; simple assembly is not a substantial manufacturing operation and does not constitute substantial transformation; country of origin is where fabric is cut. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1996 HQ Rulings > HQ 958038 - HQ 958151 > HQ 958075

Previous Ruling Next Ruling
HQ 958075

October 10, 1995
CLA-2 CO:R:C:T 958075

CATEGORY: CLASSIFICATION

Mr. Stanley Yeung
Value Garment Manufacturing Co. Pte. Ltd. 16 New Industrial Road
Singapore 1953

RE: Country of origin of men's pants and a women's skirt; 19 CFR 12.130; simple assembly is not a substantial manufacturing operation and does not constitute substantial transformation; country of origin is where fabric is cut.

Dear Mr. Yeung:

This letter is in response to your inquiry of June 6, 1995, requesting a country of origin determination for three styles of garments processed in Hong Kong, Singapore and Indonesia. You submitted photographs and samples of the completed garments and their fabric components for our review.

FACTS:

The three styles of garments at issue are two pairs of men's pants and a women's skirt. The first garment, style 3236, is a men's 100% cotton twill jean with a heavy chemical sand wash. The second garment, style 5732, is a men's 100% cotton twill pant with a chemical sand wash. The third garment, style 42530105, is a women's skirt made of 55% ramie and 45% cotton sheeting with a chemical sand wash.

Fabric for all the above garment styles is of Hong Kong origin. All the garment accessories (zippers, interlinings, buttons, thread, etc.,) are of Singapore origin. The fabric is sent to Singapore where it is marked and cut. The goods are then sent to Indonesia where various manufacturing operations take place which, according to your submission, range in complexity from "simple" to "fair" with only two operations designated as "complicated". These component pieces are then sent back to Singapore where the rest of the assembly takes place. In your submission, you have designated 6 out of 10 of the operations performed in Singapore as either "complicated" or "highly complicated". The finished garments will then be exported to the United States (U.S.).

You have provided this office with a labor/cost breakdown for the operations that take place in Singapore and Indonesia. This breakdown rates the complexity of the operations, the level of technical skill required and the percentage of the total manufacturing costs that are incurred in each country. The breakdown for each garment style is as follows:

GARMENT STYLE 3236

Manufacturing processes to be carried out in Singapore Complexity/ Technical skill

1) Fabric inspection Complicated/ High
2) Pattern construction Complicated/High
3) Prepare cutting marker Complicated/High 4) Cutting fabric Complicated/ Very high
5) Garment being processed with heavy chemical sand wash Very complicated/ Very high
6) Cut hanging thread ends Simple/Low
7) Attach button on the waistband Simple/ Low 8) Press garment Fair/High
9) Inspect finished garment Complicated/High 10) Packing Fair/Fair

Manufacturing processes to be carried out in Indonesia Complexity/ Technical skill

1) Attach Main/size labels & fuse waistband Simple/Low 2) Sew/attach front pockets including coin pocket Complicated/High 3) Sew/attach back rise and back pockets Fair/Fair 4) Attach/sew zipper on the front panels Complicated/High 5) Join/sew front/back seams Fair/Fair
6) Join/sew side seams Fair/Fair
7) Attach/sew waistband with beltloops Fair/Fair 8) Hem pant bottom Simple/Low
9) Make button hole on waistband Very Simple/Low 10) bartackings Simple/Low

You state that the respective manufacturing cost is 59% Singapore and 41% Indonesia.

GARMENT STYLE 5732

Manufacturing processes to be carried out in Singapore Complexity/ Technical skill

1) Fabric inspection Complicated/High
2) Pattern construction Complicated/High
3) Prepare cutting marker Complicated/High 4) Cutting fabric Complicated/High
5) Garment being processed with chemical sand wash Very Complicated/ Very high
6) Cut hanging thread ends Simple/Low
7) Attach button on the waistband Simple/Low 8) Press garment Fair/High
9) Inspect finished garment Complicated/High 10) Packing Fair/Fair

Manufacturing processes to be carried out in Indonesia Complexity/ Technical skill

1) Attach Main/size labels & fuse/overlock waistband Simple/Low 2) Make pleats on front panels Simple/Low 3) Sew/attach front pockets Complicated/High 4) Attach/sew back pockets Complicated/High 5) Attach/sew zipper on front panels Fair/Fair 6) Join/sew front/back seams Fair/Fair
7) Join/sew side seams Fair/Fair
8) Attach/sew waistband with beltloops Fair/Fair 9) Hem pant bottom Simple/Low
10) Make button holes Simple/Low
11) bartackings Simple/Low

The respective manufacturing costs are 58% Singapore and 42% Indonesia.

GARMENT STYLE 42530105

Manufacturing processes to be carried out in Singapore Complexity/ Technical skill

1) Fabric inspection Complicated/High
2) Pattern construction Complicated/high
3) Prepare cutting marker Complicated/High

4) Cutting fabric Complicated/Very high
5) Garment being processed with chemical sand wash Very complicated/ Very high
6) Cut hanging thread ends Simple/Low
7) Attach button on the waistband Simple/Low 8) Press garment Fair/High
9) Inspect finished garment Complicated/High 10) Packing Fair/Fair

Manufacturing processes to be carried out in Indonesia Complexity/ Technical skill

1) Attach Main/size/care labels & fuse/overlock waistband Simple/Low 2) Sew/attach front pockets Complicated/High 3) Sew/attach back pockets Fair/Fair
4) Attach/sew zipper on the front panels Complicated/High 5) Join/sew front/back seams Fair/Fair
6) Join/sew side seams Fair/Fair
7) Attach/sew waistband with beltloops & elastic Fair/Fair 8) Hem bottom Simple/Low
9) Make button holes Simple/Low
10) bartackings Simple/Low

The respective manufacturing costs are 60% Singapore and 40% Indonesia.

ISSUE:

What is the country of origin of the three styles of garments at issue?

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:

Manufactur ing 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;

We have previously held that cutting of fabric into pattern pieces constitutes a substantial transformation of the fabric, resulting in the apparel pieces becoming a product of the country where the fabric is cut. See, Headquarters Ruling Letter (HRL) 955125, dated January 27, 1994; HRL 953697, dated July 26, 1993; and HRL 952531, dated November 25, 1992.

Customs has also consistently held that the mere assembly of goods by simple sewing, is not enough to substantially transform the components of an article into a new and different article of commerce. See also, HRL 082747, dated February 23, 1989; HRL 086665, dated March 23, 1990; HRL 951169, dated April 1, 1992; HRL 734392, dated August 4, 1992; HRL 953489 dated June 14, 1993; HRL 953698, dated July 19, 1993.

In the instant case, the fabric is cut in Singapore and, after some assembly work in Indonesia, which you describe as simple or only fairly complex, the pieces are returned to Singapore where they undergo more complicated operations which complete the garments. Accordingly, as per Section 12.130(e)(1)(iv) of the Customs Regulations, the garments at issue are products of Singapore as this is where the fabric is cut and where the fabric parts are assembled into completed pants and a skirt.

We further note that an analysis of the cost/labor breakdown statistics you submitted supports this holding and indicates that the preponderance of the total cost involved in the manufacture of these pants and skirt is incurred in Singapore; it is in Singapore that the majority of the complex assembly operations take place and it is here that more than half of the total cost of manufacturing these garments is incurred.

HOLDING:

The country of origin of garment styles 3236, 5732, and 42530105, is Singapore.

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
Tariff Classification Appeals Division

Previous Ruling Next Ruling