HQ 958305 - Country of Origin determination for cosmetic bags; 19 CFR 12.130; fabric cut in Taiwan; assembly of pre-cut components in China; assembly is not a substantial transformation - United States International Trade Commision Rulings

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HQ 958305

November 6, 1995

CLA R:C:T 958305 jb

CATEGORY: CLASSIFICATION

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

RE: Country of Origin determination for cosmetic bags; 19 CFR 12.130; fabric cut in Taiwan; assembly of pre-cut components in China; assembly is not a substantial transformation

Dear Mr. Gluck:

This letter is in response to your inquiry of August 10, 1995, on behalf of your client, RGA Accessories, requesting a country of origin determination for certain cosmetic bags. Samples were submitted to this office for examination.

FACTS:

The subject samples consist of four Oscar De La Renta cosmetic bag sets featuring five components each. The fabric for these articles is made in Taiwan, where the material is also cut into the component pieces. The cut pieces are then sent to China where final assembly by sewing and combining with other incidental components supplied from Hong Kong and China takes place. The samples are as follows:

Item 1:

The first component is a blue and white striped fabric carrying bag featuring a lining and zipper closure and measuring approximately 13 -1/2 inches by 9-1/2 inches by 4-1/2 inches. Sewn to either side of the top of the bag are two striped fabric carrying handles which allow for the carrying of the bag. The second component is a clear polyvinyl carrying bag measuring approximately 10-1/2 inches by 8 inches by 3-1/2 inches with a zipper closure on the top. In addition, one end of the zipper closure is attached to the bag by a snap closure; the snap closure may be opened providing a carrying strap for this item. The edges of the bag are surrounded with a fabric covering. Printed at different points on the clear polyvinyl sides and bottom of the bag are the words, "OSCAR DE LA RENTA" on top of a line. Printed below the line is the word "STUDIO". The third component is a blue hand held carrying case featuring a lining and a zipper closure measuring approximately 10 inches by 6-1/2 inches by 2 inches. The fourth component is a small blue and white striped fold-over carrying bag measuring approximately 7-1/2 inches by 3-3/4 inches by 1 inch in its closed position. The bag is secured in a closed position by a fabric string which is sewn to the overlapping cover. This string can be wrapped around the exterior of the item and tied, thus holding it closed. The interior of this item contains three zippered compartments and one compartment which cannot be closed. A carrying strap, sewn to the item on one side and secured by a snap closure on the other side, is also located on the inside. When unsnapped, the carrying strap may be held from the outside of the bag. The fifth component is a small blue lipstick holder measuring approximately 3-3/4 inches in length and has a diameter of 1-1/8 inches. It is closed by a single snap closure and, when opened, reveals a small vanity mirror attached to the inside top.

Item 2:

The first component is a black and white polka dot fabric carrying bag measuring approximately 12-1/4 inches by 8-1/4 inches by 4 inches. This bag features a lining and has a zipper closure which extends all the way from the bottom of one end of the bag to the bottom of the other end. Sewn to either side of the top of the bag are two black with white polka dot carrying handles which allow for carrying the bag. The bag opens to reveal, on both sides of the bag, two full zippered compartments enclosed by clear polyvinyl plastic. The second compartment is a clear polyvinyl carrying bag measuring approximately 10-1/2 inches by 8 inches by 3-1/2 inches with a zipper closure on the top. In addition, one end of the zipper closure is attached to the bag by a snap closure. The snap closure can be opened providing a carrying strap for this item. The edges of the bag are surrounded with a fabric covering. Printed at different points on the clear polyvinyl sides and bottom of the bag are the words, "OSCAR DE LA RENTA" on top of a line. Printed below this line is the word "STUDIO". The third component is a black and white striped hand held carrying case featuring a lining and a zipper closure, measuring approximately 10 inches by 7 inches by 2-1/2 inches. The fourth component is a small black with white polka dots fabric hand held carrying bag measuring approximately 8-1/8 inches by 4-1/2 inches by 1-1/2 inches. This bag features a lining and contains a zippered closure on its top and an open pocket on its side. The fifth component is a small black lipstick holder measuring approximately 3-3/4 inches in length and has a diameter of 1-1/8 inches. It is closed by a single snap closure and when opened reveals a small vanity mirror attached to the inside top.

The third item:

The first component is a purple fabric carrying bag measuring approximately 12-1/2 inches by 8-1/4 inches by 4-1/2 inches. This bag is constructed of fabric which is decorated to appear as woven fabric strands on its sides and bottom. These are printed, interwoven strands of green, pink, gold and blue. The ends and top of the bag consist of ruffled purple fabric which extends all the way from the bottom of one end of the bag to the bottom on the other end. The bag features a lining and has a zipper closure which extends all the way from the bottom of one end of the bag to the bottom of the other end. Sewn to either side of the top of the bag are two carrying handles which allow for carrying the bag; these carrying handles are of the same design as the sides of the bag. The bag opens to reveal, on both sides, two full zippered compartments enclosed by clear polyvinyl plastic. The second compartment is a clear polyvinyl carrying bag featuring a zipper closure and measuring approximately 12-1/2 inches by 8-1/12 inches by 2 inches. Printed at different points on the clear polyvinyl sides and bottom of the bag are the words, "OSCAR DE LA RENTA" on top of a line. Printed below the line is the word "STUDIO". The third component is a hand held carrying case featuring a lining and a zipper closure. It is manufactured of purple, ruffled fabric measuring approximately 8 inches by 7 inches by 2-1/4 inches. The fourth component is a small, lined hand held carrying bag made of purple ruffled fabric measuring approximately 7-1/4 inches by 4-3/4 inches by 1-3/4 inches. This bag contains a cover which closes with a snap closure. When opened it reveals a small vanity mirror on the inside of the cover and a zipper. The fifth component is a small purple lipstick holder. It measures approximately 3-3/4 inches in length and has a diameter of 1-1/8 inches. It is closed by a single snap closure and when opened reveals a small vanity mirror attached to its inside top.

The fourth item:

The first component is a carrying bag constructed of fabric consisting of a floral pattern on a black and white striped background, on its sides and bottom, measuring approximately 11-1/2 inches by 8-1/2 inches by 3-3/4 inches. The ends and top of the bag consist of black fabric. The bag features a lining and a zipper closure which extends all the way from the bottom of one end of the bag to the bottom on the other end. Sewn to either side of the top of the bag are two carrying handles which allow for carrying the bag. These carrying handles are of the same design as the sides of the bag. The bag opens to reveal, on both sides, two full zippered compartments enclosed by clear polyvinyl plastic. The second component is a clear polyvinyl carrying bag measuring approximately 8-3/4 inches by 6 inches by 2-1/2 inches with a zipper closure on the top. In addition, one end of the zipper closure is attached to the bag by a snap closure. The snap closure can be opened providing a carrying strap for holding this item. The edges of the bag are surrounded with a fabric covering. Printed at different points on the clear polyvinyl sides and bottom of the bag are the words, "OSCAR DE LA RENTA" on top of a line. Printed below the line is the word "STUDIO". The third component is a lined floral pattern bag featuring a drawstring closure and measuring approximately 7 inches in height by 5-1/2 inches in diameter. The fourth component is a lined black hand held carrying bag with a zippered closure measuring approximately 6-7/8 inches by 4-3/4 inches by 1-1/2 inches. The fifth component is a small black lipstick holder measuring approximately 3-3/4 inches in length and has a diameter of 1-1/8 inches. It is closed by a single snap closure and when opened reveals a small vanity mirror attached to its side and top.

ISSUE:

What is the country of origin of the subject merchandise?

LAW AND ANALYSIS:

Section 12.130 of the Customs Regulations (19 CFR 12.130) sets forth the principles of country of origin for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854).

Pursuant to 19 CFR 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the article last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing.

The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d)(2). The following are considered:

(i) The physical change in the material or article;

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

(iii) The complexity of the manufacturing or processing;

(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;

In this instance, the major operation of cutting the fabric to shape is performed in Taiwan. The cutting operation requires more time and degree of skill than the assembly operation, and converts the component parts dedicated for use into the finished cosmetic bags. The production and labor costs incurred in Taiwan are also greater than those incurred in China.

The operations performed in China appear to be the simple assembly and combining operations identified in subsection 12.130(e)(2). These operations are not considered substantial manufacturing processes for purposes of conferring country of origin status. No great degree of skill or technology is required in the assembly.

Finally, prior Customs country of origin determinations for containers similar to the subject merchandise support the conclusion that these goods originate in Taiwan. See Headquarters Ruling Letter 956377, dated August 9, 1994 (soft sided luggage manufactured and cut into panels in Taiwan which are assembled in China are goods originating in Taiwan); HQ 955477, dated February 16, 1994 (tapestry handbags manufactured and cut into panels in Korea which are assembled in China are goods originating in Korea); HQ 955087, dated December 22, 1993 (textile travel bags and backpacks manufactured and cut into panels in Taiwan which are assembled in China are goods originating in Taiwan); HQ 954225, dated August 30, 1993 (textile tote bags and luggage manufactured and cut into panels in Taiwan which are assembled in China are goods originating in Taiwan); HQ 952642, dated May 10, 1993 (sports bags, knapsacks and insulated lunch bags manufactured and cut to size in Taiwan and assembled/packaged in China are goods originating in Taiwan); HQ 953065, dated April 9, 1993 (bicycle bags consisting of components originating and cut to shape in Taiwan, assembled by simple sewing operations in China, are goods originating in Taiwan); HQ 951899, dated October 31, 1992 (tote bags and luggage with components fabricated and cut to shape in Taiwan, stitched and assembled in China, originated in Taiwan); HQ 088455, dated March 8, 1991 (nylon backpack comprised of components originating and cut to shape in Taiwan, assembled by simple sewing and packaging operations in Indonesia, are products of Taiwan).

Based on the foregoing, we conclude that the cutting process performed in Taiwan is where the merchandise last undergoes a substantial transformation.

HOLDING:

The country of origin of the subject merchandise is Taiwan.

However, 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 ? 334 (60 FR 46188). ? 334 generally provides, with certain exceptions, that the origin of textile goods will be the country in which they are assembled. The subject cosmetic bags are not within the products excepted from the assembly rule. Accordingly, based on the facts stated above, effective July 1, 1996, the country of origin of the cosmetic bags will be China and will have to be labeled as such.

This ruling is issued pursuant to the provisions of sections 181.91 through 181.102, Customs Regulations (19 CFR 181.91-102). If the specific factual situation is not as described above, this ruling may not be valid. In such an event, it is recommended that a new ruling request be submitted.

Sincerely,

John Durant, Director

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