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HQ 959803




September 1, 1998

CLA-2 RR:CR:TE 959803 RH

CATEGORY: CLASSIFICATION COUNTRY OF ORIGIN

TARIFF NO.: 5408.34.9020

Area Director of Customs
Attn: Chief, Residual Liquidation
& Protest Branch
6 World Trade Center, Room 761
New York, NY 10048-0945

RE: Protest No. 1001-96-106405; 19 CFR 12.130; finishing operations; shrinkage; country of origin; 19 CFR 113.62; dyeing; bleaching; printing; preshrinking; substantial transformation

Dear Sir:

This is in reply to your memorandum of September 25, 1996, concerning the Application for Further Review of Protest (AFR) Number 1001-96-106405, filed by the law firm of Porter, Wright, Morris & Arthur, on behalf of Pacific Printex Corporation ("protestant"), pursuant to 19 CFR 174.24(c) and 174.25(b)(3).

We note that the protestant filed three additional protests (1001-96-104971; 1001-96-105240; 1001-6-106136) involving the same issues raised in this case, and has asked us to consider protest number 1001-96-10497 as the lead protest. However, that protest was not forwarded to our office.

FACTS:

On April 30, 1996, the protestant imported 5513 meters of 100 percent rayon fabric into the United States and designated Turkey as the country of origin. Customs issued a Request for Information on May 17, 1996, asking the protestant to submit a sample and advising the protestant that the merchandise would be conditionally released pending laboratory analysis.

After the protestant failed to submit a sample, Customs issued a Notice to Redeliver the merchandise on July 26, 1996, and notified the protestant that "[b]ased on previous laboratory analysis from same manufacturer, fabric is not substantially transformed." The protestant was also advised that the country of origin of the fabric was China, for which a visa was required.

The protestant maintains that it imported Chinese greige fabric which was bleached, dyed, printed and preshrunk by the Turkish manufacturer, Ete Mensucat. The protestant seeks cancellation of the Notice of Redelivery and a finding that the country of origin of the fabric was Turkey and that no visa was required.

Customs liquidated the entry on October 11, 1996. Classification of the merchandise under subheading 5408.34.9020 of the Harmonized Tariff Schedule of the United States (HTSUSA) is uncontested.

ISSUE:

Were the Chinese greige fabrics in question substantially transformed in Turkey pursuant to
19 CFR 12.130?

LAW AND ANALYSIS:

At the time the fabrics in question entered the United States, Section 12.130 of the Customs Regulations (19 CFR 12.130) governed the country of origin determinations for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C.
1854). Country of origin determinations where textiles and textile products are processed in more than one country is governed by the provisions in 19 CFR 12.130(b). Under that provision, 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). Section 12.130(e)(1) provides:

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.

Section 12.130(e)(2) further provides:

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:

(iv) One or more finishing operations on yarns, fabrics, or other textile articles, such as showerproofing, superwashing, bleaching, decating, fulling, shrinking, mercerizing, or similar operations; or

(v) Dyeing and/or printing of fabrics or yarns.

In this case, the protestant failed to provide Customs with a sample of the fabric. However, a Customs laboratory tested other fabrics from the same manufacturer, which are alleged to have the same finishing operations as the instant fabric. The laboratory found that those fabrics were dyed, printed and bleached in Turkey. There was no indication that the fabrics underwent any of the other finishing operations enumerated in 19 CFR

Customs has been consistent in its determinations that where dyeing and printing are not accompanied by two or more of the operations enumerated in 19 CFR 12.130(e)(1)(I), or where processing involves only one or more finishing operation with no dyeing and printing, or dyeing and printing alone, substantial transformation does not occur for country of origin purposes. See, Headquarters Ruling Letter (HQ) 734262, dated January 6, 1992, wherein Customs held that greige fabric which was treated by bleaching, dyeing, printing, and resin finishing, including special coating of the fabric, was not substantially transformed; HQ 734435, dated January 10, 1991 (greige fabric produced in Taiwan and processed in Hong Kong by desizing, scouring, bleaching, dyeing, softening, stentering and calendering, was not a substantially transformed because the dyeing operation was not in conjunction with a printing operation); HQ 089230, dated May 10, 1991 (Chinese greige fabric exported to Hong Kong where it underwent scouring, bleaching, printing, napping and preshrinking, was not substantially transformed in Hong Kong); HQ 953905, dated July 30, 1993 (fabrics which were dyed and printed and then underwent scouring, singeing, mercerizing and bleaching lacked the two additional operations enumerated in 12.130(e) and were not substantially transformed); HQ 953191, dated May 14, 1993 (a substantial transformation did not occur in Kuwait where greige fabric was desized and washed, scoured, shrunk, bleached, dyed, sized and finished and cut on four sides and hemmed); HQ 088901, dated July 5, 1991 (greige fabric shipped to Israel where it was cut and sewn into 3000 foot lengths, singed and desized, washed, dried, subjected to thermofixation (heating the fabric to fix the final elasticity), bleached, printed, placed on a stentor frame, dyed (a light shading), washed, calendered, washed, and pressed, was not substantially transformed because Customs found that the fabric was not printed and dyed).

Customs interpretation of 19 CFR 12.130 was upheld by the United States Court of International Trade in Mast Industries Inc. v. United States, 652 F. Supp. 1531 (1987); aff'd 822.F. 2d 1069 (CAFC, 1989). That case involved greige cotton fabric produced in China and sent to Hong Kong for singeing, desizing, scouring, bleaching, mercerizing, dyeing, softening, and stentering. The court stated that in determining the meaning of an agency's regulation, it would defer to that agency's interpretation unless the interpretation is plainly erroneous or inconsistent with the regulation. The court found that Customs' interpretation was reasonable and approved of Customs denying entry to the finished fabric without a visa from the Government of China.

Nevertheless, counsel argues that the fabric was substantially transformed in Turkey because the greige good and the finished product are "completely different articles." Counsel states that the greige fabric would not be suitable for the manufacturing of clothing that the finished product is ultimate intended to be transformed into. Moreover, he claims that the use, the identity and the character of the finished fabric is different from the greige fabric and the value of the finished product is higher.

A private laboratory, Albany International Research Company, tested various fabric samples from different entries and concluded that they were preshrunk. Albany International's report #1221, dated August 15, 1996, concerning this entry, reads, in part.

Laboratory Work and Results

The fabric was subsampled and tested according to American Association of Textile Chemists & Colorists, Test Method No. 135, "Dimensional Change in Automatic Home Laundering of Woven and Knit Fabrics." The test conditions used were: cold water, machine cycle delicate, and line dry. The results are shown in the following table.

Shrinkage (%)
Sample ID Warp
Fill rayon faille 0.8
0.4

Yarns were removed from the original fabric and examined with the aid of a binocular microscope. All the yarns examined exhibit a high degree of crimp which is typical of fabric that has been pre-shrunk.

Discussion and Conclusion

Based on our examination and testing of the submitted fabric, it is the opinion of the laboratory that the fabric had been pre-shrunk.

Congress granted Customs the statutory authority to verify the nature of imports using, among other methods, laboratory testing. 19 U.S.C. 1499 (1994). Additionally, It is well established that the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct. See, Exxon v. United States, 462 F. Supp 378 (1978), 81 Cust. Ct. 87, Cust. Dec. 4772. The burden of proof rests with the importer to overcome the presumption that Customs has the expertise and knowledge to use standard methods and analysis techniques to obtain accurate results. HQ 950794, dated March 25, 1992.

In determining that the fabrics had not been subjected to a shrinking process, Customs relied upon the standards set forth in the American Society for Testing and Materials (ASTM) Standard D 4038. This performance specification covers woven women's and girls' dress and blouse fabrics composed of any textile fiber or mixture of textile fibers. Section 1.1, ASTM 4038. The standard instructs that dimensional change be determined in accordance with the procedure set out in the AATCC (American Association of Chemists and Colorists) Test Method 135. The maximum allowable dimensional change recommended by the ASTM 4038 standard is 3 percent.

In this case, the 3 percent maximum allowable dimensional change used by the Customs laboratory to determine if the imported fabrics were preshrunk is a recognized industry standard. The ASTM standards are recognized by both the government and the industry. HQ 224349, dated February 18, 1994. Recognition by Customs of the ASTM standards for weighing, measuring and testing merchandise is exhibited by an array of Customs rulings, a small sampling of which include: HQ 085912, dated February 6, 1990 (Customs is of the opinion that the use of the ASTM standards will properly fulfill Congressional intent regarding the definition of a tariff term); HQ 081157, dated April 25, 1989 (it has always been Customs practice, as well as an industry practice, that any product which does not meet the ASTM D 439 specifications may not be considered automotive gasoline for either Customs or commercial purposes); HQ 086218, dated March 26, 1990 (it has consistently been the position of Customs to utilize substantiality of construction as essential to a finding that an article is designed for travel and thus could be designated as luggage - Customs Service has used the ASTM designation D1593-91 as the basis for determining substantiality); HQ 111846, dated April 28, 1992 (Customs has adopted standards established by the ASTM to determine whether the gasoline or blending components of gasoline are transformed into new and different products because such standards represent industry developed criteria for characterizing fuel oils); HQ 224340, dated May 25, 1994 (Customs uses the ASTM standards to determine fungibility for certain products); HQ 953997, dated January 24, 1994 (ASTM D3597-89 has been adopted by Customs as the proper test method which sets forth the abrasion standards for woven upholstery fabrics); HQ 954018, dated September 23, 1993 (in considering whether a product consisting of 75 percent gray Portland cement and 25 percent calcium carbonate is classifiable as Portland cements, Customs consulted several standards established by the ASTM).

Under its statutory authority to verify the nature of imports using laboratory testing, Customs has a history of relying on industry standards for its methods of weighing, measuring and testing merchandise.

There is a presumption that the test methods and analysis technique of the Customs laboratory was correct. Exxon, supra. The AATCC 135 is a test method intended for the determination of dimensional changes in woven and knit fabrics when subjected to repeated automatic laundering procedures commonly used in the home. While this may not be conclusive that the fabrics were subjected to a shrinking process, Customs believes that it is strongly indicative of whether such a process was performed on the goods. "Dimensional change" is defined in section 3.1 of the test method as "a generic term for changes in length or width of a fabric specimen subjected to specified conditions. The change is usually expressed as a percentage of the initial dimension of the specimen." Section 3.4 describes "shrinkage" as "a dimensional change resulting in a decrease in the length or width of a specimen."

The AATCC 135 test method provides that delicate fabrics shall be machine washed on delicate cycle for 8 minutes in 120 +/- 5 F. It then provides that the fabrics be tumble dried on delicate cycle or line, drip or screen dried.

Because the Customs laboratory which did the test is not equipped with a washing machine, Customs also consulted TEXTILE TESTING Physical, Chemical and Microscopical (1949) by John H. Skindle, Associate Professor of Textile Chemistry, Lowell Textile Institute. This text describes in detail the ASTM test methods for rayon woven goods. At page 117 the author states that the "Wash Wheel Testing Method" and "Launderometer Method" type of tests are suitable for laboratories doing a lot of shrinkage testing, but another method requiring no special apparatus would be desirable for laboratories making only occasional tests. An example of such a method is described at page 118. The sample fabric is immersed in a beaker containing 0.3 percent soap solution in water at 40 degrees C for at least two hours. The sample is then rinsed, squeezed as dry as possible and dry-ironed. The sample is rewet, wrung out, ironed until dry, conditioned several hours and then measured again.

The author states that:

A guaranteed shrinkproof or 100% shrinkproof fabric should have no appreciable shrinkage; a pre-shrunk fabric should have only a small amount of shrinkage (1-2%). A Sanforized label implies not over 1% shrinkage in any direction and should be so understood. In general, we may say that, even without any label or claim, a shrinkage of more than 5% in either direction is excessive, except in the case of wool.

Customs tailored its test after the AATCC 135 and Testing Textile methods. The method Customs used was as follows:

A 12" x 12" test sample from the submitted fabric was tested for shrinkage. The sample was marked 10" apart in the warp and filling direction with an indelible ink marker. The marked sample was treated at 38 ([plus minus] 1) degree centigrade or 100 ([plus minus] 2) degrees fehrenheit [sic] for 15 minutes with a 0.5% soap solution (1:30 material to liquor [sic] ratio). Then the treated sample was washed with water (38 c or 100 f) for 5 minutes followed by a warm wash (25 c or 77 f) for 5 minutes and then a cold wash also for 5 minutes. The sample was dried flat. The distances between two markings were measured and the percent shrinkage calculated.

Customs test method is comparable to both the AATCC and Testing Textile methods, and we find no evidence that it is erroneous. In fact, Customs adopted the least strenuous AATCC and Textile Testing methods (cooler water temperature, shorter wash cycle, no dry-ironing, no wringing). Moreover, Customs has ruled previously that the presumption of correctness attached to a Customs laboratory analysis was not overcome by conflicting results from independent laboratory analyses, even when the same method of testing was utilized by both Customs and the independent laboratories. See HQ 070173, dated December 27, 1982.

As the fabrics in question shrunk in excess of the 3 percent maximum allowable industry standard set forth in the ASTM, they are not considered to be preshrunk for the purposes of 19 CFR

HOLDING:

The Chinese greige fabrics in question were not substantially transformed into products of Turkey. The fabrics were dyed, printed and bleached in Turkey but lacked one of the additional operations enumerated in 19 CFR 12.130(e). The protest should be denied in full.

In accordance with section 3A(11)(b) of Customs Directive Number 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be attached to the Customs Form 19, Notice of Action, and furnished to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision (o n that date) the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Ruling Module in ACS and to the public via the Diskette Subscription Service, Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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