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HQ 958665




December 1, 1995
CLA-2 RR:TC:TE 958665 SK

CATEGORY: CLASSIFICATION

Stuart Glenwick
Signature Sales & Marketing
One Burrows Court
New City, N.Y. 10956

RE: Country of origin determination; 19 CFR 12.130; compact disc/audio cassette carrying cases; CD player case; material cut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantial transformation; HRL's 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94); 957700 (3/29/95); 958222 (7/28/95).

Dear Mr. Glenwick:

This is in response to your letter of November 20, 1995, in which you request a country of origin determination for four styles of soft-sided compact disc/audio cassette carrying cases and a compact disc and player case. This office was provided with samples of the finished articles, as well as detailed descriptions of the manufacturing processes which occur in Taiwan and the People's Republic of China.

FACTS:

The subject compact disc/audio cassette carrying cases and CD/CD player case are specially shaped and fitted to accommodate compact discs, cassette tapes and a CD player. The cases' outer surfaces are of man-made textile materials which have been laminated with polyurethane and internally padded with foam. All of the cases feature zipper closures on three sides. Four of the cases feature adjustable braided textile handles (the 14 CD organizer does not).

The cases are described as follows:

* 24 CD Organizer (CD Wallet);

* 24 CD Organizer and Player Carrying Case;

* 15 Audio Cassette Carrying Case;

* 30 CD Carrying Case; and

* 15 CD Carrying Case.

Each of the five cases undergoes the same general manufacturing processes, described as follows: TAIWAN
1. Materials are sourced (nylon, tricot, webbing, zipper tape, metal or plastic fittings, slider, zipper, polyvinyl chloride sponge, open cell foam, paper board);

2. Patterns are created;

3. Fabric is cut into component pieces.

PEOPLE'S REPUBLIC OF CHINA
1. Sewing;

2. Assembly of component pieces into the completed article.

Herein follows a list of the respective time/cost breakdowns involved in the manufacture of the five styles of carrying cases:

24 CD Organizer (CD Wallet)
TAIWAN
Time: 16 minutes, 9 seconds
Value Added per Piece: US$2.15

PRC
Time: 7 minutes, 10 seconds
Value Added per Piece: US$0.70

24 CD Organizer and Player Carrying Case
TAIWAN
Time: 22 minutes, 45 seconds
Value Added per Piece: US$2.93

PRC
Time: 10 minutes, 12 seconds
Value Added per Piece: US$1.32

15 Audio Cassette Carrying Case
TAIWAN
Time: 15 minutes, 35 seconds
Value Added per Piece: US$1.24

PRC
Time: 7 minutes, 25 seconds
Value Added per Piece: US$0.51

30 CD Carrying Case
TAIWAN
Time: 28 minutes, 52 seconds
Value Added per Piece: US$2.15

PRC
Time: 12 minutes, 35 seconds
Value Added per Piece: US$1.00

15 CD Carrying Case
TAIWAN
Time: 21 minutes, 18 seconds
Value Added per Piece: US$1.65

PRC
Time: 10 minutes, 50 seconds
Value Added per Piece: US$0.75

ISSUE:

What is the country of origin of the subject merchandise?

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. We note, however, that Customs has long held that the mere assembly of goods entailing simple combining operations (i.e., trimming or joining together by sewing) does not constitute a substantial assembly. 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 the People's Republic of China, which involves 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, dated September 29, 1994. Therefore, the country of origin of all five carrying cases is the country where the articles last undergo a substantial transformation: Taiwan. It is in Taiwan that the articles undergo a substantial manufacturing process (cutting) which transforms fabric into a new and different articles of commerce (components for compact disc/cassette/CD player carrying cases).

HOLDING:

The country of origin of the 24 CD Organizer (CD Wallet), 24 CD Organizer and Player Carrying Case, 15 Audio Cassette Carrying Case, 30 CD Carrying Case and 15 CD Carrying Case is Taiwan.

Be advised, however, 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).

Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21. Paragraph (c)(1) states that "[T]he country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.

Paragraph (c)(2) provides:

"[W]here the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section."

Paragraph (e), in pertinent part, states that the country, territory or insular possession in which "[A] change to subheading 4202.92.15 through 4202.92.30 from any other heading [occurs], provided that the change is the result of the good being wholly assembled in a single country, territory or insular possession," will be the country of origin for the textile articles. The subject cases are classifiable under subheading 4202.92.3030, Harmonized Tariff Schedule of the United States Annotated (HTSUSA) which provides for, in pertinent part, travel, sports and similar containers; other: with outer surface of plastic sheeting or of textile materials: travel sports and similar bags: with outer surface of textile materials: other... other: of man-made fibers. This merchandise is currently subject to a quota/visa category. The cut fabric pieces imported from Taiwan are classifiable in a different heading and the cases have been wholly assembled in China. Accordingly, based on the facts stated above, effective July 1, 1996, the country of origin of all five of the subject articles will be the People's Republic of China and they will have to be labeled as such.

Sincerely,

John Durant, Director
Tariff Classification Appeals Division


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