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HQ 958737



February 22, 1996
CLA-2 RR:TC:TE 958737 SK

CATEGORY: CLASSIFICATION

Brian F. Walsh
Barnes, Richardson & Colburn
200 East Randolph Drive, ste. 7920
Chicago, IL 60601

RE: Country of origin determination; 19 CFR 12.130; compact disc carrying cases; 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); Section 334 of the Uruguay Round Agreements Act; Section 102.21, Customs Regulations.

Dear Mr. Walsh:

This is in response to your letter of January 16, 1996, in which you request a country of origin determination for five styles of soft-sided compact disc carrying cases on behalf of your client, Outer Circle Products, Ltd.. This office was provided with samples of the finished articles as well as samples of the articles in their condition as imported (without the plastic compact disc holder inserts).

FACTS:

The subject carrying cases are intended to accommodate compact discs and/or compact disc players. The outer surface of the cases is made of a man-made textile material internally padded with foam. Styles SFTC12, SFTC24 and SFTC48 feature three-sided top zipper closures, mesh outer pockets, adjustable woven textile shoulder straps and a separate compartment which closes by means of a three-sided zipper. These three styles are designed to store, protect and transport compact discs and a compact disc player. SFTC12 measures approximately 6 by 8-1/2 by 4 inches. SFTC24 measures approximately 12 by 8-1/2 by 4-1/2 inches. Style SFTC48 measures approximately 12 by 8-1/2 by 6 inches. Styles SF12 and SF24 feature
three-sided zipper closures, are designed to protect, store and transport compact discs and measure approximately 6-1/4 by 7-1/2 by 2-1/4 inches and 12 by 7-1/2 by 2 inches respectively.

Each of the five cases undergoes the same general manufacturing operations.

MANUFACTURING OPERATIONS

Materials are sourced and cut into the carrying case components in Taiwan. The pre-cut components are shipped to China where they are assembled and sewn into the completed articles. Webbing used for the handles may be cut and assembled with other components in China.

COSTS

Total costs of the raw materials and manufacturing operations are as follows:

Style Taiwan Costs China Costs

SF12 86.8% 13.2%
SF24 85.9% 14.1%
SFTC12 86.3% 13.7%
SFTC24 87.3% 12.7%
SFTC48 88.7% 11.3%

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. 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 last undergo a substantial manufacturing process (cutting) which transforms fabric into a new and different articles of commerce (components for compact disc/CD player carrying cases).

HOLDING:

The country of origin of styles SF12, SF24, SFTC12, SFTC24 and SFTC48 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 occurs "[A] change to subheading 4202.92.15 through 4202.92.30 from any other heading, 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 into China are classifiable in a heading other than 4202, HTSUSA, 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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