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HQ 959365




September 20, 1996
CLA-2 RR:TC:TE 959365 jb

CATEGORY: CLASSIFICATION

Margaret R. Polito, Esq.
Neville, Peterson & Williams
80 Broad Street, 34th Floor
New York, NY 10004

RE: Country of origin determination for duvet covers and pillow shams; Section 334(b)(5), Exception for United States-Israel Free Trade Agreement; 19 CFR 12.130; 19 CFR ?102.21(c)(5); last country in which an important assembly or manufacturing process occurs

Dear Ms. Polito:

This is in reply to your letter dated May 1, 1996, on behalf of your client, WestPoint Stevens, Inc., requesting a country of origin determination for duvet covers and pillow shams which will be imported into the United States. Samples were submitted to this office for examination.

FACTS:

The subject merchandise consists of certain duvet covers and pillow shams which complement various styles of bedding products. In your original letter you submitted information for four manufacturing scenarios. Scenarios II through IV were addressed in Headquarters Ruling Letter 959200, dated July 8, 1996. Accordingly, this ruling will only address scenario I concerning the United States and Israel. The manufacturing operations for this merchandise are as follows:

SCENARIO I

A. Cambria type Duvet covers

United States

- floral pattern fabric is woven.

Israel

- solid colored sateen fabric is woven.

United States

- both fabrics are cut to length and width, the three sides are sewn together and the cord is attached around the edges;
- the fourth side is hemmed and buttons attached.

B. Cambria type Pillow sham

United States

- floral pattern fabric is woven.

Israel

- solid colored sateen fabric is woven.

United States

- fiberfill interlining is produced;
- cutting;
- sewing.

ISSUE:

What is the country of origin of the subject merchandise?

LAW AND ANALYSIS:

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Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996.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 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.

Exception for United States-Israel Free Trade Agreement

In scenario I, regarding the Cambria type duvet covers and pillow shams, the fabric- making process occurs in both Israel and the United States. Section 334(b)(5) provides that:

This section shall not affect, for purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product, or manufacture of, a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection (c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.

Israel is the only country which qualifies under the terms of Section 334(b)(5). As the Section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 CFR 12.130 rules of origin, the rules of origin applicable to textiles and textile products before the enactment of Section 334. Section 334(b)(5) makes clear that if country of origin was conferred in Israel under Section 12.130, Israel will now be accorded the same treatment. This interpretation of Section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.

Accordingly, applying Section 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that foreign territory or country where the article last underwent a substantial transformation. Substantial transformation is said to occur when the article has been transformed into a new and different article of commerce by means of substantial manufacturing or processing.

The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d)(2). The following are considered:

(i) The physical change in the material or article; (ii) The time involved in the manufacturing or processing;
(iii) The complexity of the manufacturing or processing;
(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations;
(v) The value added to the article or material;

Section 12.130(e)(1) describes manufacturing or processing operations from which an article will usually be considered a product of the country in which those operations occurred:

(iv) Cutting of fabric into parts and the assembly of those parts into the completed article;
In the case of the subject merchandise a substantial transformation occurs at the time of the cutting of the fabric and the assembly of those parts, that is, in the United States. Accordingly, as Israel does not confer country of origin as pursuant to section 12.130, we devolve to the Section 334 rules of origin.

Section 334 Rules of Origin for Textile and Apparel Products

Paragraph (c)(1) of Section 102.21, Customs Regulations, states that "The 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) states that "Where 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) states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section:"

6301- 6306 The country of origin of a good classifiable under heading 6301 through 6306 is the country, territory, or insular possession, in which the fabric comprising the good was formed by a fabric- making process.

The subject merchandise is classifiable in various subheadings of heading 6302, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and heading 6304, HTSUSA. As the fabric comprising the duvet covers and pillow shams was formed by a fabric making process in two countries, the tariff shift rule is not applicable.

Paragraph (c)(3) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) or (2) of this section":

(i) If the good was knit to shape, the country of origin of the good is the single country, territory, or insular possession in which the good was knit; or

(ii) Except for goods of heading 5609, 5807, 5811, 6213, 6214, 6301 through 6306, and 6308, and subheadings 6209.20.5040, 6307.10, 6307.90, and 9404.90, if the good was not knit to shape and the good was wholly assembled in a single country, territory, or insular possession, the country of origin of the good is the country, territory, or insular possession in which the good was wholly assembled.

As the subject merchandise is not knit, and headings 6302, HTSUSA, and 6304, HTSUSA, are excepted from provision (ii), Section 102.21 (c)(3) is inapplicable.

Section 102.21 (c)(4) states, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2) or (3) of this section, the country of origin of the good is the single country, territory or insular possession in which the most important assembly or manufacturing process occurred". In the case of the duvet covers and pillow shams the most important manufacturing process occurs at the time of the fabric making. As the fabric for the merchandise is sourced in more than one country, and no one fabric is more important than the other, in this case, country of origin cannot be readily determined based on the fabric making process.

Paragraph (c)(5) states, "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1), (2), (3) or (4) of this section, the country of origin of the good is the last country, territory, or insular possession in which an important assembly or manufacturing process occurred." Accordingly, in the case of the duvet covers and pillow shams, country of origin is conferred by the last country in which an important assembly occurs, that is, the United States.

HOLDING:

In scenario I the country of origin of the subject duvet covers and pillow shams is the United States.

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 19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently 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, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

Sincerely,

John Durant, Director
Tariff Classification Appeals

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