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NY 809518





May 19, 1995

CLA-2-61:S:N5:354 809518

CATEGORY: CLASSIFICATION

Mr. Harold I. Loring
Grunfeld, Desiderio, Lebowitz & Silverman 245 Park Avenue
New York, NY 10067-0002

RE: The Country of origin determination of ladies' man-made fiber knit panties; 19 CFR 12.130

Dear Mr. Loring:

This is in response to your letter of April 20, 1995, on behalf of your client, Mast Industries Inc, requesting the country of origin determination on a pair of knit panties. The item will be produced in a multiple-country operation. Our analysis follows.

FACTS

The article at issue, is a ladies' panty constructed from finely knit 79% nylon 21% spandex fabric. The garment is constructed with a three panel front, a one panel back and a crotch panel with a knit cotton gusset. The leg openings and waist are elasticized. The man-made fabric may be sourced from different countries including the United States. This fabric without lines of demarcation or cutting lines will be shipped to the Maldives in bolts. In the Maldives the fabric will be cut into component parts for ladies' panties. The parts will be shipped to Sri Lanka for assembly and finishing. The cotton gusset lining material may be produced in Sri Lanka or another country and either cut into gusset pieces in Sri Lanka or shipped to the Maldives for cutting.

ISSUE

What is the country of origin the garment at issue?

LAW AND ANALYSIS:
Section 12.130 of the Customs Regulations (19 CFR 12.130), sets forth the principles of country of origin for textile and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). According to T.D. 85-38, the final rule document which established 19 CFR 12.130, the principles of country of origin for textiles and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes, including duty and marking (50 FR 8714 (1985)). This regulation, which became effective in 1985, came about as a result of Executive Order No. 12475 (49 FR 19955 (1984)), which directed the Secretary of Treasury, in accordance with policy guidance provided by the Committee for the Implementation of Textile Agreements, to issue regulations governing the entry, or withdrawal from warehouse for consumption, of textile and textile products subject to section 204. The regulations were to include clarifications in, or revisions to, the country of origin rules for textiles and textile products subject to section 204 in order to avoid circumvention of multilateral and bilateral textile agreements.

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

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).

According to T.D. 85-38, the final document rule establishing 19 CFR 12.130:

The assembly of all the cut pieces of a garment usually is a substantial manufacturing process that results in an article with a different name, character, or use than the cut pieces. It should be noted that not all assembly operations of cut garment pieces will amount to a substantial transformation of those pieces. Where either less than a complete assembly of all the cut pieces of a garment is performed in one country, or the assembly is a relatively simple one, then Customs will rule on the particular factual situation as they arise, utilizing the criteria in section 12.130(d).

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: HQ 084979, dated October 23, 1989; HQ 731036, dated July 17, 1989; HQ 555730, dated February 19, 1991; HQ 556030, dated August 29, 1991; and HQ 089834, dated September 26, 1991).

Customs has long held that the mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing is not enough to substantially transform the components of an article into a new and different article of commerce (see HQ 082787, dated March 9, 1989 and HQ 082747, dated February 23, 1989).

Because the articles in question are textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854), 19 CFR 12.130 is applicable.

The item at issue is similar to Headquarters Ruling (HQ) 081642, dated April 28, 1989, addressing the country of origin of certain women's 100 percent cotton knit panties and to HQ 951424, dated April 24, 1992, involving a pair of men's briefs. In those rulings it was held that despite the fact that the garments would be sewn and assembled in one country, the country where the fabric was cut was the designated country of origin .

The sewing operation performed in Sri Lanka involves the simple assembly of several cut pattern pieces: The submitted panty consists of a three panel front and a single rear panel with a two ply crotch panel. The waist and leg openings are elasticized and capped. The sewing does not involve the complex sewing operation required when manufacturing a suit, suit jacket, or tailored shirt contemplated by section 12.130(e)(v).

The cutting in Maldives, materially changes the man-made fabric into designated garment parts. Since assembly, per se, of the garment does not result in a substantial transformation, the cutting process in Maldives is considered the time at which the last substantial transformation occurs.

HOLDING:

The country of origin of the submitted merchandise is the Maldives. It is during the cutting process, in the Maldives, that the textile product undergoes a substantial transformation and is made into a new and different article of commerce.

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). If it is 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, it is recommended that a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2).

Sincerely,

Jean F. Maguire

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