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HQ 559790




October 17, 1996

MAR-2-05 RR:TC:SM 559790 KKV

CATEGORY: MARKING

Mr. Josefa M. Dizon
Officer-in-Charge
Embassy of the Philippines
Office of the Commercial Counselor
1600 Massachusetts Avenue, NW
Washington, DC 20036

RE: Country of origin of certain Christmas tree skirts cut and sewn in the Philippines from fabric made in Hong Kong, Malaysia and the Philippines; substantial transformation; cut; sewn; quilted; floral patchwork design; HQ 559982; HQ 734149

Dear Mr. Dizon:

This is in response to your letter dated March 11, 1996, forwarded to our office for response by the Textiles Branch, which requests a ruling regarding the country of origin of certain Christmas tree skirts cut and sewn in the Philippines from fabric made in Hong Kong, Malaysia and the Philippines. A sample has been submitted for our examination.

FACTS:

The article at issue is a six-pronged, star-shaped patchwork Christmas tree skirt. On the front side of the skirt, upon each of the six prongs features a beige background upon which a different quilted patchwork floral design has been sewn, utilizing a variety of solid and printed fabric in red and green. Contrasting red fabric prongs have been sewn beside the beige patchwork panels, creating a separate six-prong star design. The skirt is finished with solid red piping and a red and white patterned ruffle. The reverse side features a light beige backing upon which the stitching of the quilted floral design is visible. A full-radial midsection opening, secured with hook and eye fastenings, permits insertion of a Christmas tree.

We are informed that each tree skirt utilizes approximately 2.32 meters of beige background fabric from Hong Kong, 2.00 meters of fabric from Malaysia for the patchwork floral design and contrasting red star design, and 1.45 meters of red and white patterned fabric from the Philippines for the ruffle. The amount and origin of the fabric utilized for the reverse backing has not been identified, nor has information been supplied regarding the use of any internal stuffing or filling matter. We are informed that all cutting, patchwork and sewing operations take place in the Philippines. The reverse side of the skirt contains two woven labels sewn into the ruffle, one of which contains cleaning instructions. The second label contains the phrase "House of Hatten Inc." woven and underlined in red fibers. Immediately below, in smaller letters, in contrasting green fiber, is woven "MADE IN PHILIPPINES." Immediately below, in the same size letters and green fiber is woven "65% POLYESTER 35% COTTON."

ISSUE:

What is the country of origin of a Christmas tree skirt which is cut and sewn in the Philippines from fabric made in Hong Kong and Malaysia and the Philippines?

LAW AND ANALYSIS:

Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported in the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of Part 134.

A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. Torrington Co. v. United States, 764 F.2d 1563, 1568
(Fed. Cir. 1985), citing Texas Instruments, Inc. v. United States, 631 F.2d 778, 782 (C.C.P.A. 1982).

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) 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 CFR 46188). Thus, effective July 1, 1996, as a general rule, the country of origin of a textile or apparel product is determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

The textile rules of origin are not applicable to all articles containing fabric components, however, but are applicable only to articles classifiable in Chapters 50 through 63, HTSUS, as well as those articles classifiable under the headings or subheadings listed in 19 CFR 102.21(b)(5). Upon receipt of your request and accompanying sample, the Textiles Branch determined that the subject Christmas tree skirt is classified under subheading 9505.10.50, Harmonized Tariff Schedule of the United States (HTSUS), which is not included in the list set forth in 19 CFR 102.21(b)(5). Therefore, although the subject Christmas tree skirt consists of textile materials, the textile rules of origin set forth in section 334 of the Uruguay Round Agreements Act, promulgated in section 102.21, Customs Regulations (19 CFR ?102.21), are not applicable because the Christmas tree skirt is not considered to be a textile article for purposes of the application of 19 CFR 102.21.

Customs has consistently ruled that cutting materials to defined shapes or patterns, which we assume occurs in this case, for use in making finished articles constitutes a substantial transformation. In HQ 559982, dated September 18, 1996, Customs held that Chinese-origin fabric that is imported into the Philippines where it is cut, embroidered and assembled into finished learning book bags has undergone a substantial transformation. Similarly, in HQ 734149, dated November 25, 1991, Customs found that Korean fabric had undergone a substantial transformation where it was exported to China, cut into 25 pieces and assembled into Santa Claus shells. Likewise, in the case before us, operations in the Philippines which involve cutting fabric into various pieces, the sewing of these pieces into a quilted patchwork floral design and the assembly of such designs into a finished Christmas tree skirt clearly result in a substantial transformation. The fabric from Hong Kong and Malaysia loses its identity after the cutting and sewing operations are performed and becomes a new and different article . Thus, the country of origin of the Christmas tree skirt is the Philippines. Accordingly, pursuant to the country of origin marking requirements set forth in 19 U.S.C. 1304 and 19 CFR Part 134, the individual Christmas tree skirts or their retail containers must be marked to indicate the Philippines as the country of origin of the imported bags. Upon review, it is our determination that the use of the phrase "MADE IN PHILIPPINES" which is woven in contrasting green fiber into a label sewn into the reverse side of the Christmas tree skirt satisfies the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134, provided that this label is readily accessible to the ultimate consumer at the time of purchase.

HOLDING:

Fabric made in Hong Kong and Malaysia which is exported to the Philippines where it is cut, sewn into a quilted patchwork floral design and assembled into a finished Christmas tree skirt is substantially transformed into a new and different article. Accordingly, the country of origin of the finished Christmas tree skirt is the Philippines.

The phrase "MADE IN PHILIPPINES", which is woven in contrasting green fiber into a label sewn into the reverse side of a Christmas tree skirt satisfies the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134, provided that the label is readily accessible to the ultimate purchaser at the time of purchase.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer.

Sincerely,

John Durant, Director

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