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HQ 960565





October 28, 1998

CLA-2 RR:CR:TE 960565 RH

CATEGORY: CLASSIFICATION COUNTRY OF ORIGIN

TARIFF NO.: 5516.14.0010

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

RE: Protest No. 1001-96-105022; 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; substantial transformation; Customs laboratory testing methods and testing standards; rayon fabric

Dear Sir:

This is in response to your memorandum dated June 4, 1997, regarding the Application for Further Review of Protest (AFR) 1001-96-105022, filed by the law firm of Grunfeld, Desiderio, Lebowitz & Silverman, LLP, on behalf of Textile Images, Ltd. Review is warranted pursuant to 19 CFR 174.24(b).

The protest is against a Notice to Redeliver six entries of goods stating 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:

The merchandise under consideration is 100 percent spun woven rayon fabrics. The pertinent dates are:

ENTRY REQUEST FOR INFORMATION NOTICE TO
REDELIVER
1. September 29, 1995 October 16, 1995 January 12, 1996 and
March 25, 1996

2. October 31, 1995 November 14, 1995 January 12, 1996 and June 5, 1996

3. January 30, 1996 February 7, 1996 May
22, 1996

4. February 1, 1996 February 9, 1996 May
22, 1996

5. February 8, 1996 February 20, 1996 May 22, 1996

6. April 11, 1996 April 23, 1996 May 20, 1996

After entry, Customs issued Requests for Information which advised the protestant that the merchandise was being conditionally released. When Customs discovered that the fabrics underwent processing in more than one country, the protestant was required to file Multiple Country Declarations in accordance with 19 CFR ?12.130(f)(2). The protestant maintained, however, that Turkey was the country of origin of the fabrics.

A Customs laboratory determined that the fabrics were dyed, printed and bleached in Turkey. Shrinkage of the fabrics exceeded the maximum allowable percentage set forth in the American Society for Testing and Materials (ASTM) 4038 test method and specifications. Based on that information, Customs issued the Notices to Redeliver stating that textile visas were required for the fabrics as the country of origin was China.

Customs liquidated all of the entries in May and August of 1996.

Counsel claims that the Notices to Redeliver were not issued under the time prescribed by regulation, and that the country of origin of the fabrics is Turkey because the fabrics were dyed, printed, bleached and preshrunk in that country.

ISSUES:

Did Customs issue the Notices to Redeliver 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 on the date of entry which was the date the merchandise was released from Customs custody. In each entry, the first notice to redeliver was issued within four months from the date of release of the merchandise, well within the 180 day regulatory period. Accordingly, we find that Customs issued the notices to redeliver in a timely manner.

A demand for redelivery is a protestable matter pursuant to 19 U.S.C. ?1514 (a)(4), and the time in which you may file a protest against a demand for redelivery is governed by 19 CFR ?174.12(e), which states:

(e) Time of filing. Protests shall be filed, in accordance with section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514), within 90 days after either:

(2) The date of the decision, involving neither a liquidation nor reliquidation, as to which the protest is made (e.g., the date of an exaction, the date of written notice excluding merchandise from entry or delivery under any provision of the Customs laws, the date of a refusal to reliquidate under 520(c)(1) of the Tariff Act of 1930, as amended, or the date of written notice of a denial of a claim filed under section 520(d) of the Tariff Act of 1930, as amended);

In this case, the protest was not timely filed within 90 days of the Notice to Redeliver in two out of the six entries covered by the protest. On January 12, 1996, Customs issued a Notice to Redeliver for the merchandise entered on September 29, 1995 (5,963 yards of rayon challis), for failure to submit the correct visa. Another notice was issued for the same reason (failure to submit the correct visa) on March 25, 1996, covering the same merchandise.

On January 12, 1996, Customs also issued a Notice to Redeliver for the merchandise entered on October 31, 1995 (2305 M2/1738 yds. rayon challis fabric) for failure to submit the correct visa. A second notice was issued for the same reason (failure to submit the correct visa) on June 5, 1996, covering the same merchandise.

It is Customs position that the second notice in both instances had no legal effect since prior notices were issued covering the same merchandise for the same reasons. The 90 day time period in which to protest the Notices to Redeliver commenced on the date the notices were issued (January 12, 1996). Since the protest was not filed until June 21, 1996, it was not timely as to those two entries. However, the protest was timely filed with regard to the other four entries.

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 for textiles and textile products imported prior to July 1, 1996, processed in more than one country, are 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.

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, steaming, washing, condensing, and drying are substantial processes.

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, 81 Cust. Ct. 87, C.D. 4772 (1978). 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.

Counsel claims that the fabrics pertaining to the entries in question underwent shrinking. A description of the alleged shrinking operation is not provided, although counsel states that the "fulling process performed on this fabric qualifies as a shrinkage (or fulling) process under the regulations, and its effect is observable upon examination of the fabric." Counsel further states that rayon fabric cannot be pre-shrunk effectively so that it passes dimensional stability testing, and, in fact, the protestant prefers that consumers not wash garments made with its fabric.

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 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. 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. "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§ 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 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 135, the Federal Test Method Standard No. 191A, and the Monfortex standard, 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. Additionally, 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.

Additionally, we disagree with counsel that fulling constitutes a shrinking operation under 19 CFR ?12.130(e). As the fabrics in question shrunk in excess of the 3 percent maximum allowable industry standard set forth in the ASTM, and no evidence has been produced to establish that the imported fabrics were subjected to a shrinking process, they are not considered to be preshrunk for the purposes of 19 CFR 12.130(e).

HOLDING:

The Chinese 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). Moreover, Customs issued the Notices to Redeliver in a timely manner. 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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