HQ 958541 - Country of origin of thermal, soft-sided coolers; 19 CFR 12.130; material cut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantial transformation; HRL 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94). - United States International Trade Commision Rulings

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HQ 958541

October 19, 1995
CLA-2 CO:R:C:T 958541 SK

CATEGORY: CLASSIFICATION

Melvin S. Mogil
California Innovations Inc.
4211 Yonge Street, suite 610
Willowdale, Ontario
Canada M2P 2A9

RE: Country of origin of thermal, soft-sided coolers; 19 CFR 12.130; material cut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantial transformation; HRL 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94).

Dear Mr. Mogil:

This is in response to your letter of October 10, 1995, requesting a country of origin determination for two styles of thermal soft-sided coolers identified as the "THERMALWHIZ GLC " and the "THERMALWHIZ PC." Samples of the finished articles were submitted to this office.

FACTS:

The subject articles are marketed as "THERMALWHIZ GLC" and the "THERMALWHIZ PC" coolers.

The "THERMALWHIZ GLC" measures approximately 7-1/2 inches by 9 inches by 5-1/2 inches. The exterior surface of the cooler is covered with a woven fabric. The cooler features a zipper closure which extends across three sides of the top flap. The top can also be collapsed and closed by means of a velcro-like strip attached to the front of the cooler. The cooler has an adjustable woven strap for easy portability and the outer front surface of the cooler features a zippered mesh net pocket. The inside of the cooler is lined with plastic.

The "THERMALWHIZ PC" measures approximately 10 inches by 7 inches by 5-1/2 inches. The exterior surface of the cooler is covered with a woven fabric. The cooler features a zipper closure which extends across three sides of the top flap. The cooler has an adjustable woven shoulder strap and the outer rear surface of the cooler features a full-length pocket which closes by means of a velcro-like closure. The inside of the cooler is lined with plastic.

The two styles of coolers are manufactured in the same way. The materials for both coolers are sourced and cut into component parts in Taiwan. The cut component parts are assembled in China.

The respective cost break-downs for the two coolers are as follows:

COSTS:

"THERMALWHIZ GLC"

1) Approximately 84% of the total per unit cost (for both labor and materials) of the cooler is incurred in Taiwan ;

2) Approximately 16% of the total per unit cost (for both labor and materials) of the cooler is incurred in China.

"THERMALWHIZ PC"

1) Approximately 85.5% of the total per unit cost (for both labor and materials) of the cooler is incurred in Taiwan ;

2) Approximately 14.5% of the total per unit cost (for both labor and materials) of the cooler is incurred in China.

ISSUE:

What is the country of origin of the "THERMALWHIZ GLC" and the "THERMALWHIZ PC" soft-sided coolers?

LAW AND ANALYSIS:

Section 12.130(b) of the Customs Regulations (19 CFR 12.130(b)) provides that textile products that are processed in more than one country or territory shall be products of that country or territory where they last underwent a substantial transformation. Your attention is directed to Section 12.130(e)(v) of the Customs Regulations which states that an article will usually have undergone a substantial transformation (change in country of origin) if it has undergone a substantial assembly of all cut pieces into a completed article.

Customs has long held that the mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing, is not enough to substantially transform the components of an article into a new and different article of commerce. See Headquarters Ruling Letter (HRL) 082747, dated February 23, 1989, in which Customs determined that the assembly of jeans was not a substantial transformation and HRL 082787, dated March 9, 1989, which reached a similar conclusion with regard to a jogging suit.

In the instant case, the assembly process in China involving the sewing together of components cut from fabric in Taiwan does not involve sufficient skill or complexity to constitute a substantial assembly as defined by the regulations set forth supra. See HRL 951899, dated October 31, 1992, in which Customs issued a country of origin determination for soft-sided luggage manufactured in a similar manner. See also HRL 956634, issued to you on September 29, 1994.

Pursuant to 19 CFR 12.130(d)(2)(v), the "value added" to an article is another factor which aids in determining country of origin. The greatest costs in producing both coolers are incurred in Taiwan as that is where most of the raw materials are sourced and where the material is cut into component parts.

The country of origin of both the "THERMALWHIZ GLC" and the "THERMALWHIZ PC" coolers is Taiwan as that is the country where both articles last undergo a substantial transformation. It is in Taiwan that the fabric undergoes a substantial manufacturing process (cutting) which transforms the fabric into a new and different article of commerce (cooler components). Taiwan is also where the greatest value is added to both coolers.

HOLDING:

The country of origin of both the "THERMALWHIZ GLC" and the "THERMALWHIZ PC" soft-sided coolers 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
Tariff Classification Appeals Division

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