HQ 958772 - Country of origin determination for women's shorts, pants, jackets; 19 CFR 12.130; 19 CFR 102.21; HRL 958964 - United States International Trade Commision Rulings

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HQ 958772

May 2, 1996
CLA-2 RR:TC:TE 958772 NLP

CATEGORY: CLASSIFICATION

Ms. Irene Dziubinski
ALPI, Inc.
1111 East Touhy Avenue-Suite 470
Des Plaines, IL 60018

RE: Country of origin determination for women's shorts, pants, jackets; 19 CFR 12.130; 19 CFR 102.21; HRL 958964

Dear Ms. Dziubinski:

This is in response to your letter of December 21, 1995, on behalf of your client, G.B.S., requesting a country of origin determination for women's shorts, pants and jackets. Diagrams of the finished garments were submitted for our review.

FACTS:

The merchandise at issue consists of the following:

Women's woven shorts comprised of 60% wool, 35% polyester and 5% other fibers
Women's woven pants comprised of 80% wool and 20% nylon Women's woven jackets comprised of 80% wool and 20% nylon

According to a letter from G.B.S., all of the above garments will be produced with Italian fabrics, trims, etc.... The actual cutting of the fabric will take place in Italy after which all the cut pieces will be shipped to Bulgaria, where the garments will be assembled. The completed garments will then be shipped directly to the United States (U.S.).

ISSUE:

What is the country of origin for the above described women's shorts, pants and jackets?

What are the proper country of origin marking requirements for the subject merchandise?

LAW AND ANALYSIS:

Country of origin determinations for textile products are subject to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130(b) provides that a textile product that is processed in more than one country or territory shall be a product of that country or territory where it last underwent a substantial transformation. A textile or textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing operations into a new and different article of commerce.

Section 12.130(d) of the Customs Regulations sets forth criteria for determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

Section 12.130(d)(1) of the Customs Regulations states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in:

(i) Commercial designation or identity.
(ii) Fundamental character or
(iii) Commercial use.

Section 12.130(d)(2) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S.

Section 12.130(e)(1) sets forth manufacturing or processing operations which will usually constitute a substantial transformation. Section 12.130(e)(2) enumerates instances which will usually not constitute a substantial transformation. Section 12.130(e) reads as follows:

Manufacturing or processing operations: (1) An article or material usually will be a product of a particular foreign territory or country, or insular possession of the U.S., when it has undergone prior to importation into the U.S. in that foreign territory or country, or insular possession any of the following:

(i) Dyeing of fabric and printing when accompanied by two or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing;

(ii) Spinning fibers into yarn;

(iii) Weaving, knitting or otherwise forming fabric;

(iv) Cutting of fabric into parts and the assembly of those parts into the completed articles; or

(v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits, and shirts).

(2) An article or material usually will not be considered to be a product of a particular foreign territory or country, or insular possession of the U.S. by virtue of merely having undergone any of the following:

(i) Simple combining operations, labeling, pressing, cleaning or dry cleaning, or packaging operations, or any combination thereof;

(ii) Cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use;

(iii) Trimming and/or joining by sewing, looping, linking, or other means of attaching otherwise completed knit-to-shape component parts produced in a single country, even when accompanied by other processes (e.g. washing, drying, mending, etc.) normally incident to the assembly process;

We have previously held that cutting of fabric into pattern pieces constitutes a substantial transformation of the fabric, resulting in the apparel pieces becoming a product of the country where the fabric is cut. See, Headquarters Ruling Letter (HRL) 955125, dated January 27, 1994; HRL 953697, dated July 26, 1993; and HRL 952531, dated November 25, 1992.

Customs has also consistently held that the mere assembly of goods by simple sewing is not enough to substantially transform the components of an article into a new and different article of commerce. See also, HRL 082747, dated February 23, 1989; HRL 086665, dated March 23, 1990; HRL 951169, dated April 1, 1992; HRL 734392, dated August 4, 1992; HRL 953489 dated June 14, 1993; HRL 953698, dated July 19, 1993; HRL 953903, dated August 17, 1993.

In the instant case, the cutting in Italy for the shorts, pants and jackets materially alters the fabric into designated component pieces. The assembly process in Bulgaria, which involves the sewing together of components cut from fabric in Italy, does not involve sufficient skill or complexity to constitute a substantial assembly as defined by the regulations set forth above. See, HRL 951437, dated July 17, 1992, in which Customs held that the assembly process of women's pants in Malaysia, which involved the sewing together of components that were cut from fabric in Singapore, did not involve sufficient skill or complexity to constitute a substantial transformation as defined by Section 12.130(e)(1)(v). Therefore, the country of origin was found to be Singapore as that was where the piece goods were cut into specific parts and where the articles last underwent a substantial transformation.

Thus, the country of origin of the subject shorts, pants and jackets is Italy as that is where the fabric was woven and cut into specific parts and where the articles last underwent a substantial transformation pursuant to 19 CFR 12.130.

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.1304), requires that every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Additional labeling requirements are applicable to textile products under the Textile Fiber Products Identification Act (15 U.S.C. 70).

A label securely and conspicuously affixed to the shorts, pants and jackets indicating Italy as the country of origin will satisfy the requirements of 19 U.S.C. 1304. A label such as "Made in Italy" is acceptable for purposes of this statute.

HOLDING:

The country of origin of the subject merchandise is Italy pursuant to 19 CFR 12.130.

Pursuant to the country of origin marking requirements of 19 U.S.C. Section 1304, markings such as "Shorts or Pants or Jackets (depending on the particular garment) Made in Italy" satisfy the marking requirements.

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.

Please 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. On April 10, 1996, this office issued to you Headquarters Ruling Letter 958964, wherein we provided you with the country of origin for the above merchandise under the new law. We also provided you with the proper country of origin marking requirements for the subject merchandise.

Sincerely,

John Durant, Director

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