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HQ 958132





December 7, 1995

CLA-2 RR:TC:TE 958132 CMR

CATEGORY: CLASSIFICATION

TARIFF NO.: 4202.12.8070

David Eisen, Esq.
Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway
New York, New York 10036-8901

RE: Country of origin of a vanity case; processing in Taiwan and China; 19 CFR 12.130; Section 334

Dear Mr. Eisen:

This is in response to your request of May 31, 1995, on behalf of your client, Avon Products, Inc., for a ruling on the country of origin of a vanity case processed in Taiwan and China. A sample was received with your request and will be returned as requested.

FACTS:

The good at issue, referred to as the "Blockbuster II Bag", is a rectangular-shaped vanity "case". It measures approximately 11 inches by 7 inches by 5 inches. The case has an exterior surface of 100 percent nylon woven fabric and is lined with polyvinyl chloride (PVC) plastic. [The fabric used to form the exterior of the case consists of woven nylon fabric laminated to plastics (PVC).] Foam padding measuring about 1/16th of an inch in width is inserted between the exterior fabric and PVC lining within each of the product's panels (i.e., top, bottom and sides). The case is designed to open from the top by means of a plastic zipper which is sewn into the case about one inch from its top and extends around the perimeter of the case, except for a five-inch space in the rear of the case where the top and bottom components are connected. A same fabric strap handle is sewn to the center of the top of the case. The item is designed to hold cosmetic products and related articles during travel.

The case is produced as a result of processing in Taiwan and China. The woven nylon fabric, zipper, and packing materials are of Taiwanese origin. The fabric is cut to the size and shape of -2-
the case components in Taiwan. The cutting is done by using a die cut mold allowing cutting of multiple layers simultaneously. Most, though not all, of these cut pieces have spaced notches along their edges for matching up components during the sewing process. The PVC sheets and foam padding are also cut to size and shape in Taiwan and also feature spaced notches along their edges. The nylon zippers are cut into 30 inch pieces.

The cut components are shipped to China for assembly into the finished good by sewing. The finished goods are then inspected, packed and shipped to the United States.

Cost comparison information was provided indicating that the costs of labor and materials in Taiwan represent approximately 80 percent of the value of the case, whereas the same costs in China represent 20 percent of the value of the good. No information was provided regarding the time involved in processing the goods in each country. In regard to skill and complexity, the assembly by sewing was referred to as "simple" and lacking the degree of skill and level of complexity required to constitute a substantial transformation. In addition, the assembly in China was argued to "not significantly add value to the finished product."

ISSUE:

What is the country of origin of the vanity case at issue?

LAW AND ANALYSIS:

Presently, the country of origin of textiles and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854) is determined by the principles set forth in section 12.130 of the Customs Regulations, 19 CFR 12.130. The regulation provides that a textile or textile product produced by processing in more than one country will be considered a product of that country in which it last underwent a substantial transformation. 19 CFR 12.130(b). Substantial transformation is defined in 12.130(b) as a transformation "by means of substantial manufacturing or processing operations into a new and different article of commerce."

Customs has issued numerous rulings on the country of origin of similar cases cut into component pieces in one country and assembled into finished goods in a second country. In most if not all cases, Customs has ruled that the country of origin of the finished good was the country in which the component pieces were cut. At the time of cutting, the fabric is transformed and dedicated to a particular use. In this case, the notches on the component edges for alignment with other component pieces serves -3-
as evidence of this dedication to use. The assembly in China is seen as relatively simple sewing and, as such, is not considered a substantial manufacturing operation.

Support for the view expressed above may be found in the following Customs ruling letters: Headquarters Ruling Letter (HRL) 958222 of July 28, 1995; HRL 957985 of July 27, 1995; and HRL 957944 of August 17, 1995. In HRL 958222 and HRL 9587985, soft-sided carrying cases for laptop computers which featured exteriors of man-made textile materials and with foam padding inserted in their panels were ruled to be products of Korea where the materials for the goods were sourced and cut into components. Assembly in China was not deemed sufficient to be a substantial transformation. In HRL 957944, a soft-sided carrying case for compact discs/audio cassettes and a compact disc were ruled to be products of Taiwan where the materials for the cases were cut into component pieces; not China where the components were assembled into the finished goods. See also, HRL 956377 of August 9, 1994 (soft-sided luggage assembled in China of components cut in Taiwan ruled to be of Taiwanese origin); HRL 951899 of October 31, 1992 (tote bags and luggage assembled in China of components cut in Taiwan ruled to be of Taiwanese origin); HRL 956950 of May 11, 1995 (tote bag assembled in China of components cut in Taiwan ruled to be of Taiwanese origin); and HRL 957872 of April 24, 1995 (luggage assembled in China of components cut in Taiwan ruled to be of Taiwanese origin) and rulings cited therein.

Based upon ample precedential rulings on similar goods with similar factual situations, we conclude that the assembly and packaging in China of the vanity case at issue does not constitute a substantial transformation as required by 19 CFR 12.130. Thus, the country of origin of the subject case is Taiwan as that is where the last substantial transformation occurs, i.e, the cutting of the fabric into component parts.

HOLDING:

The country of origin of the subject "Blockbuster II Bag", style PP 128679, is Taiwan.

The classification of the good is not in dispute. It is agreed that it is classified in subheading 4202.12.8070, Harmonized Tariff Schedule of the United States Annotated, which provides for, among other things, vanity cases and similar containers, with outer surface of textile materials, other, other, of man-made fibers. Goods classified in this subheading fall within textile category 670. The vanity case is subject to a duty rate of 19.8 percent ad valorem.

You should be aware that on December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing section 334 (60 FR 46188). Section 334 generally provides, with certain exceptions, that the origin of textile goods will be the country in which they are assembled. The vanity case at issue is wholly assembled in China and is not with the products excepted from the assemble rule. Thus, based upon the facts stated above, effective July 1, 1996, the country of origin of the vanity case at issue will be China.

This ruling is issued pursuant to the provisions of Part 177 Customs Regulations (19 CFR Part 177). The holding in this ruling only applies to the specific factual situation presented and the merchandise identified in the ruling request. If the information furnished is not accurate or complete, or there is a change in the factual situation, this ruling will no longer be valid. In such an event, a new ruling request should be submitted.

Sincerely,

John Durant, Director
Tariff Classification Appeals Division

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