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HQ 959504




February 19, 1997

CLA-2 RR:TC:TE 959504 CAB

CATEGORY: CLASSIFICATION

Siegel, Mandell & Davidson, P.C.
One Astor Plaza
1515 Broadway
43rd Floor
New York, NY 10036-8901

RE: Country of origin of a knitted and woven scare, Section 102.21(c)(2); Section 102.21(c)(4); Eligibility of NAFTA TPL

Dear Sirs:

This is in response to your inquiry of July 18, 1996, requesting a country of origin determination for woven and knitted scarves pursuant to Section 102.21, Customs Regulations. This request is on behalf of your client, Liz Claiborne Accessories, Inc. You also question whether the subject merchandise is eligible for preferential treatment under the North American Free Trade Agreement Tariff Preference Levels (NAFTA TPLS). At this lime, Customs is not issuing determinations concerning the eligibility of goods qualifying for NAFTA TPLS, thus, this issue will be addressed in a separate riding at a later date. Samples were submitted for examination and will be returned to you under separate cover.

FACTS:

The merchandise at issue is a woven scarf and a knitted scarf. The woven scarf is square shaped with the center region comprised of a sheer silk fabric and the border region comprised of an opaque silk fabric. The knitted scarf is constructed of polyester polar-fleece fabric, is rectangular shaped, and contains stitching along the edges.

The fabric for both scarves (i.e., two types of woven fabric for the woven scarf and one type of knitted fabric for the knitted scarf) will be produced in the form of rolls in Taiwan. The sewing thread will be produced in Japan. The rolls of fabric and the sewing thread will then be shipped to Canada for complete cutting and sewing into the finished product.

ISSUE:

What is the country of origin of the subject scarves?

LAW AND ANALYSIS:

COUNTRY OF ORIGIN

Pursuant to Section 334 of the Uruguay Round Agreements Act (codified at 19 USC Section 3592), new rules of origin were effective for textile products entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. These rules were published in the Federal Register, 60 Fed. Reg. 46188 (September 5, 1995). Section 102.21, Customs Regulations (19 CFR Section 102.21), sets forth the general rules to determine country of origin. Thus, the country of origin of a textile product will be determined by a hierarchy of rules set forth in paragraphs (c)(1) through (c)(5) of Section 102.21.

Section 102.21(e)(1) sets forth the general rule for determining the country of origin of a textile or apparel product in which the good is wholly obtained or produced in a single country, territory, or insular possession. As the subject scarves are not wholly obtained or produced in a single country, territory, or insular possession, Section 102.21(e)(1) is inapplicable.

Section 102.21(c)(2) provides for instances where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section. Section 102.21 (c)(2) states:

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.

The woven scarf is classifiable under Heading 6214 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for, in pertinent part, scarves. The knitted scarf is classifiable under Heading 6117, HTSUSA, which provides for other made up knitted clothing accessories.

Section 102.21(e) states "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (e)(2) of this section:"

6213-6214 The country of origin of a good classifiable under heading 6213 through 6214 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

6101-6117 (1) If the good is not knit to shape and consists of two or more component parts, a change to an assembled good of heading 6101 through 6117 from unassembled components, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession.

(2) If the good is not knit to shape and does not consist of two or more component parts, a change to heading 6101 through 6117 from any heading outside that group, except from heading 5007, 5111 through 5113, 5208 through 5212, 5309 through 5311, 5407 through 5408, 5512 through 5516, 5806, 5809 through 5811, 5903, 5906 through 5907, and 6001 through 6002, and subheading 6307.90, and provided that the change is the result of a fabric-making process.

In this instance, the woven scarf is classifiable under Heading 6214, HTSUSA, is comprised of fabric sourced in Taiwan, and is wholly assembled in Canada. Pursuant to the applicable provision of Sections 102.21(c)(2) and 102.21(e), the country of origin of the subject woven scarf is Taiwan as this is the country where the fabric was formed by a fabric-making process.

The knitted scarf at issue is not knit to shape. You contend that there is an issue as to whether the knitted scarf is comprised of two components or not. You cite several prior Customs rulings and a court case, L'Eggs Products, Inc. v. United States, 13 CIT 40 (1989), to substantiate your claim that the subject knitted scarf is comprised of two components, namely, the fabric and the thread.

You assert that Customs has already considered a number of instances in which seemingly insignificant materials (comparable to thread) were considered bona fide components for purposes of the wholly assembled rule. You state the following:

For example, in Ruling no. HQ 958970 of April 25, 1996, the lining of an otherwise simple one component skirt was considered a component for purposes of the wholly assembled rule. Similarly, in Ruling no. HQ 959027 of April 5, 1996, a belt buckle and related hardware items were considered components even where they were attached to a fabric belting strip already recognizable as a belt by virtue of having been cut to the precise length of width of the finished belt. Additionally, in a scenario strikingly similar to the one at issue, Customs considered a backing material attached to a knitted scarf body to be a component for purposes of the wholly assembled rule. Ruling no. HQ 959244 of June 6, 1996.

You further contend that the sewing thread used in connection with the production of the knitted scarf is at least as significant as the materials considered by Customs to be components in the cited rulings. You state:

It serves a similar function as a lining, buckle or backing in that it serves to complete a recognizable yet unfinished article. Specifically, the secure overlock stitching serves as a critical fast edge preventing the unraveling of the knitted scarf body. Moreover, the stitching adds a desirable texturized feature to the border of the article Specifically, in considering the sewing of thread to a pantyhose tube (in the context of former Item 807, TSUS), the U.S. Court of International Trade specifically recognized that "the thread is a component.", L'Eggs Products, Inc. v. United States, 13 CIT 40, 49 (1989) (emphasis added).

In L'Eggs, knit tubes used as leg plank portions of pantyhose were exported from the United States to Columbia, where the tubes were sewn to create the toe-end closing. As you state, the court in L'Eggs, did conclude that the thread and fabric were two components and an assembly resulted from the joining of the two together. The L'Eggs court noted that the tube closing process prepared the pantyhose for use. Thus, the process has the utilitarian purpose of making the toe/foot area of the pantyhose durable. The court in L'Eggs also cites United States v. Baylis Brothers Company, 59 CCPA 9, 451 F.2d 643 (1971), modified, 474 F.2d 1026 (1973), where. the court held that the process of joining pre-cut and pre-stenciled fabric with thread was an assembly operation. It is important to note that in making the decision that the joining of fabric and thread was an assembly operation, the Baylis court emphasized that the imported merchandise was a new article different from its component materials, the stenciled dress front and the thread used in making the gathered stitches on the dress front. The components together became a "smocked dress front". The thread in Baylis is a component which serves as the joining agent.

When analyzing the aforementioned court cases within the context of this ruling and issues, it is apparent that this case is distinguishable from the cited court cases. The thread in both L'Eggs and Baylis, had the utilitarian purpose of being a joining agent. In L'Eggs, the thread component joined the open tube-ends and in Baylis, the thread component joined stenciled dress from fabric together to make a decorative shirred dress front. In this case, the thread does not act as a joining agent for any utilitarian purpose other than to finish an already identifiable scarf. With or without this additional stitching, the subject scarf is easily recognizable as a scarf. Thus, the additional thread does not take on any separate identity as a component piece with any function or purpose separate from being merely additional thread added to the scarf for simple finishing and Moment. The thread is not present in this case to either close or join material together as in L'Eggs and the thread is not used to create a new article as in the Baylis case. Moreover, both of these cited cases were decided within the context of item 807.00 of the Tariff Schedules of the United States (TSUS), which was replaced by Heading 9802 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Neither of which are applicable in making country of origin determinations for textiles and textile products.

As stated above, you also cite prior Customs rulings to substantiate your claim that the subject knitted scarf is comprised of two components. However, your interpretation of the cited rulings differs significantly with Customs interpretation. In HRL 959027, a buckle and additional hardware was attached to a strip of textile material which resulted in a finished belt. In that case, more than two separate components were joined together to create the belt. You state "that the fabric belting strip was already recognizable as a belt by virtue of having been cut to the precise length and width of the finished belt." Whether Customs agrees with this statement or not, the joining of the buckle to the textile fabric dearly results in an assembly of two components with a practical function. The buckle, in that instance, was a fastening agent, whereas in this instance, the thread is not used as a joining agent.

In HRL 958970, a skin body and lining were considered two components. Customs submits that in that particular instance, the two components both had a utilitarian purpose that went beyond merely being an embellishment as in this instance. In HRL 959244, the article at issue was a scarf with a felt backing. Again, there were two parts, the textile fabric and the felt material which were joined together to make the finished scarf. The knitted scarf at issue is not knit to shape and does not consists of two or more component parts, therefore the first tariff shift rule applicable to Heading 6117, HTSUSA is not applicable. The second tariff shift rule for Heading 6117, HTSUSA, is also inapplicable since the change to Heading 6117, HTSUSA, is from either Heading 6001, HTSUSA, or Heading 6002, HTSUSA, which cover all textile knitted fabrics and both of these headings are specifically excluded from the tariff shift provision. Thus, Section 102.21(e)(2) is inapplicable.

This analysis is consistent with recent HRL 959436, dated August 6, 1996, where Customs determined the country of origin of a hat comprised of felt material shaped into a conical shape and a velvet strip of material sewn to the circumference of the felt. Custom noted that the velvet strip was not a component of the finished hat and instead was an embellishment added to what amounted to a "hat".

Section 102.21 (c)(3) provides, the following, in pertinent part:

(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, 15213, 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 assembled.

Section 102.21(c)(3) is therefore inapplicable to the subject knitted scarf since it has not been wholly assembled in a single country, insular possession, or territory, nor is it a knit to shape good.

Section 102.21 (c)(4) provides the first multi-country rule. Section 102.21 (c)(4), provides the following:

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 knitted scarf; you contend that the cutting and sewing operations performed in Canada are of far greater importance than the knitting operation performed in Taiwan. You specifically state:

Most significantly, the knitting operation performed in Taiwan merely results in rolls of fabric which are susceptible to a number of different potential end uses (e.g., hats, jackets, shirts, trousers, robes, gloves, etc.). It is not until after such fabric has been shipped to Canada that its identity as a scarf begins to emerge by virtue of the cutting and sewing of the scarf body in such country. Accordingly, as the operations performed in Canada are the "most important", Canada is the country of origin of the knitted scarf pursuant to 19 CFR Section 102.21(c)(4).

Despite the persuasiveness of your argument and the fact that the importance of manufacturing operations performed in various counties are to be compared on a case-by-case basis, we note that in one particular instance Customs has reached a definitive conclusion regarding relative importance of manufacturing processes. This definitive conclusion is presented in the comments accompanying the issuance of the final rules on September 5, 1995, where Customs concluded that forming a fabric is a more important process than cutting the fabric. Thus, the knitting of the fabric in Taiwan is the most important manufacturing process. Therefore, in accordance with Section 102.21(e)(4), the country of origin of the knitted scarf is Taiwan.

HOLDING:

The country of origin of the woven scarf and knitted scarf is Taiwan.

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 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 Division

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