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HQ 960043




October 28, 1998

CLA-2 RR:CR:TE 960043 RH

CATEGORY: CLASSIFICATION COUNTRY OF ORIGIN

TARIFF NO.: 5516.14.0010

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

RE: Protest No. 1001-96-106333; 19 CFR ?12.130; finishing operations; shrinkage; country of origin; notice to redeliver; 19 CFR ?141.113(b); 19 CFR ?113.62; dyeing; bleaching; printing; shrinking; sanforizing; substantial transformation; rayon fabric

Dear Sir:

This is in reply to the Application for Further Review of Protest (AFR)1001-96-106333 filed by the law firm of Grunfeld, Desiderio, Lebowitz & Silverman, LLP, on behalf of Metro Fabrics, which you forwarded to our office for review. The protest was timely filed, and headquarter's review is warranted pursuant to 19 CFR

The protest is against a Notice to Redeliver which stated that the fabrics in question are products of China for which a visa is required. The protestant does not dispute the classification of the merchandise under subheading 5516.14.0010 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

FACTS:

On December 21, 1995, the protestant entered into the United States 32,435.81 yards (105 sacks) of 100 percent spun woven rayon challis fabrics, style numbers 4583, 4405, 4620 and 4569. The greige fabrics were sourced in China, and all of the alleged finishing operations were performed in Bursa, Turkey, by Sanayi Ve Ticaret A.S. ("Savcan").

A Request for Information on Customs Form (CF) 28 was issued on January 18, 1996, asking the protestant to submit samples of the fabrics at each stage of production as well as a list of all chemicals used during the processing, and advising the protestant that the merchandise was conditionally released.

A Customs laboratory examined the samples and reported its findings in report number 2-96-10704-001:
the sample, a plain woven fabric, is composed wholly of singly ply rayon staple yarns.

Based on our examinations performed on the sample, we are of the opinion that the sample has been bleached, dyed and printed.

There are no indications that the fabric was fulled, napped, moired, permanently stiffened, permanently embossed, decated, weighted or pre-shrunk.

A supplemental report, number 2-96-1102-001, stated:
the sample, a woven fabric, shrunk an average of 8.8% in the warp direction and 6.3% in the filling direction.

Customs determined that the greige fabrics had not been substantially transformed in Turkey and issued Notices to Redeliver on June 13, 1996. Liquidation of the entry occurred on August 23, 1996.

The protestant maintains that the fabrics were transformed in Turkey and that the Notice to Redeliver was not timely.

ISSUE:

Was the Notice to Redeliver issued in a timely manner?

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

LAW AND ANALYSIS:

The Customs Regulations governing the recall of textiles and textile products released from Customs custody are found in 19 CFR 141.113 and more generally in 113.62(d). Paragraph (b) of section 141.113 provides as follows:

For purposes of determining whether the country of origin of textiles and textile products subject to the provisions of ?12.130 of this chapter has been accurately represented to Customs, the release from Customs custody of any such textile or textile product shall be deemed conditional during the 180-day period following the date of release. If the port director finds during the conditional release period that a textile or textile product was not accurately represented to Customs, he shall promptly demand its return to Customs custody. Notwithstanding the provision of paragraph (h) of this section and ?113.62(k)(1) of this chapter, a failure to comply with a demand for return to Customs custody made under this paragraph shall result in the assessment of liquidated damages equal to the value of the merchandise involved.

Section 113.62 contains the basic importation and entry bond conditions. Under paragraph (d) of this provision:

[It] is understood that any demand for redelivery will be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period (whichever is later).

Counsel contends that section 141.113(b) is not applicable to this entry because it is intended to apply to transshipping cases where little or no processing occurred in the claimed country of origin. Counsel claims that the governing regulation is 19 CFR 141.113(d), and that the notice to redeliver was untimely because it was issued more than thirty days after Customs received the requested sample and/or after the date of entry. That provision reads:

If the importer has not promptly complied with a request for samples or additional examination packages made by the port director pursuant to ?151.11 of this chapter, the port director may demand the return of the necessary merchandise to Customs custody.

We disagree with counsel that section 141.113(b) is not applicable in this case. The background information on section 141.113(b), published in the Customs Bulletin, Vol. 28, No. 50, on December 14, 1994, makes clear that the regulation was adopted because of a significant enforcement problem regarding textiles and textile products that are imported into the United States in violation of quota restrictions or without the appropriate visa from the country of origin. The regulation was enacted to cover situations where importers declare improper country of
origin whether by incorrect processing, as in this case, or by deceit. The 180 day period was implemented to provide Customs with an opportunity to verify that country of origin claims are "accurately" represented to Customs. Under the facts of this case, the importer stated that the country of origin was Turkey, but Customs discovered that there was insufficient processing in that country to confer origin under 19 CFR 12.130. Thus, this case is a form of transhipment which falls within the purview of 19 CFR 141.113(b).

In this case, the 180-day conditional release period commenced [at the earliest] on December 21, 1995, the date the merchandise was released from Customs custody. The notice to redeliver was issued 174 days thereafter, on June 13, 1996, within the 180 day regulatory period. Accordingly, we find that Customs issued the notice to redeliver in a timely manner.

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 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

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.

Customs does not contest that the fabrics were dyed, printed and bleached inTurkey. However, a Customs laboratory found no indication that the fabric underwent any of the other finishing operations enumerated in 19 CFR ?12.130. The Turkish manufacturer, Savcan, states on the Multiple Country Declaration pertaining to this entry that 105 sacks of fabrics (patterns 4583, 4405, 4620 and 4569) underwent the following manufacturing and/or processing operations: singeing; caustification; dyeing; discharge printing; steaming; washing off; finishing with stentor; sanforizing. We note that the Multiple Country Declaration filed by Savcan does not list bleaching, although that process is listed on their invoice 138280.

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), 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 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 did not satisfy 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. Thus, we disagree with counsel that the finishing operations performed on the subject fabric, i.e., singeing, caustification, steaming, washing off, finishing with stentor are substantial processes which provide similar results as the operations listed in the regulation.

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 (Emphasis added). 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.

Protestant's primary argument is that there is no standard set forth in 19 CFR 12.130 to establish that a textile article is pre-shrunk, and that Customs use of the ASTM D 4038 to determine preshrinkage of imported fabric arbitrarily selects the particular test to be applied and imposes a standard without prior notice or authority for its use. The protestant asserts that Customs cannot arbitrarily impose requirements for shrinkage in the form of purported industry standards, which do not appear in law or regulation, and have not been the subject of any ruling, policy statement, directive or other official publication.

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 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 for most cases 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 long history of relying on industry standards for its methods of weighing, measuring and testing merchandise. Thus, we disagree with the protestant's claim that Customs arbitrarily imposed the ASTM D 4038 standard of 3 percent to measure shrinkage of the fabrics.

There is also a presumption that the test methods and analysis technique of the Customs laboratory was correct. 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. "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 at 120 +/- 5ยง 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 for 15 minutes with a 0.5% soap solution (1:30 material to liquor 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.

The Multiple Country Declaration states that the fabrics were "sanforized." SANFORIZED is a trademark owned by Cluett, Peabody and Company, Inc. We contacted a representative from that company who advised us that Cluett, Peabody and Company, Inc., recognizes two test methods to determine shrinkage of SANFORIZED fabrics. One is the Federal Test Method Standard No. 191A, which allows for shrinkage of +/- 1 percent. The other is the AATCC 135 which allows for +/- 3 percent.

Customs test method is comparable to both the AATCC 135, the Federal Test Method Standard No. 191A, and the Monfortex method, although Customs adopted less strenuous methods (cooler water temperature, shorter wash cycle, no dry-ironing, no wringing). We find no evidence that Customs test method was erroneous. Accordingly, we further find that the fabrics were not subjected to a shrinking process in accordance with 19 CFR 12.130.

Finally, we note that the protestant originally filed a single country of origin declaration required by 19 CFR 12.130(f), stating that the goods were wholly produced in a single country. If that declaration was accurate, there would have been no reason for Customs to determine the proper country of origin of the subject goods.

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 12.130(e). Furthermore, the notice to redeliver was timely issued within the conditional release period. Accordingly, the protest should be denied.

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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