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February 5, 1999

CLA?2-RR:NC:TA:349 D86576

CATEGORY: CLASSIFICATION

Ms. Margaret Polito
Neville, Peterson & Williams
80 Broad Street - 34TH Floor
New York, NY 10004

RE: Classification, marking and country of origin determination for surgical towels; 19 CFR 102.21(c)(2); tariff shift

Dear Ms. Polito:

This is in reply to your letter dated January 11, 1999, on behalf of Medical Action Industries, Inc., requesting a classification, marking and country of origin determination for surgical towels which will be imported into the United States.

FACTS:

The subject merchandise consists of surgical towels. You have submitted a sample of a finished surgical towel which may also be referred to as an OR towel. The blue towel is made from a 100 percent cotton huck weave fabric and it measures approximately 16.5 x 26 inches. The towel is hemmed on three sides and contains selvage on the fourth. The manufacturing operations for the surgical towels are as follows:

INDIA:
-fabric is woven.
-rolls of greige (or gray) fabric are shipped to China.

CHINA:
-fabric is bleached and otherwise finished. -fabric is dyed.
-fabric is cut into rectangles.
-fabric is hemmed, finished and packed.

ISSUE:

What are the classification, marking and country of origin of the subject merchandise?

CLASSIFICATION:

The applicable subheading for the surgical towels will be 6307.90.8910, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for other made up articles, including dress patterns: other: other: surgical towels. The rate of duty will be 7 percent ad valorem.

The surgical towels fall within textile category designation 369. The designated textile and apparel categories may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes. To obtain the most current information available, we suggest that you check, close to the time of shipment, the Status Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.

Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.

Paragraph (c)(2) states that "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 of the foreign materials 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:"

Paragraph (e) in pertinent part states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section":

HTSUS Tariff shift and/or other requirements

6307.90 The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

As the fabric comprising the surgical towel is formed in a single country, that is, India, as per the terms of the tariff shift requirement, country of origin is conferred in India.

MARKING:

When the finished towels leave China they will be packaged in cartons that will state: “Product of India: Finished in China”. The individual towels will not be marked. After importation, the surgical towels will either be shipped in their original containers to hospitals, HMOs and other ultimate customers or they may be subjected to a sterilization process and repacked for shipment to those ultimate customers. You have requested a ruling on whether the proposed “Product of India: Finished in China” marking on the outer container in lieu of marking the article itself is an acceptable country of origin marking for imported surgical towels.

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304.

The proposed marking “Product of India: Finished in China” indicates that the country of origin of the finished surgical towel is India which is consistent with the origin rules for surgical towels under Section 102.21, Customs Regulations. The proposed marking “Product of India: Finished in China” will satisfy the marking requirements of 19 U.S.C. §1304 and 19 C.F.R. Part 134 and would be an acceptable country of origin marking for the finished surgical towels.

The next question that must be resolved is who is the ultimate purchaser of the imported towels. Section 134.1(d), Customs Regulations {19 C.F.R. §134.1(d)}, defines an ultimate purchaser as “generally the last person in the U.S. who will receive the article in the form in which it was imported.” In C.S.D. 89?56 (December 21, 1988), Customs determined that the ultimate purchaser of surgical towels was the hospital and outpatient surgery centers. Similarly, in this case, the hospitals and HMOs will be the ultimate purchasers of the surgical towels.

The final question to be resolved is whether it is sufficient to only mark the outside container in which the towels are packaged or repackaged. Section 134.32(d), Customs Regulations {19 C.F.R. §134.32(d)}, excepts an article from marking if its container will reasonably indicate the origin of the article. In C.S.D. 89?56, Customs considered surgical towels which were washed, folded, and placed in individual packages after importation. Customs determined that it was not necessary to mark the individual surgical towels, but that it was appropriate to only mark the package in which the towels were packed with the country of origin of the towels. Similarly, in this case, it will be acceptable to only mark the outside container in which the towels are packaged with their country of origin, provided the ultimate purchaser (the hospitals and HMOs) receives the towels in these properly marked containers.

It is also stated that the towels are imported in bulk and may be sterilized and repacked after importation. If the towels are imported in properly marked bulk containers, 19 C.F.R. §134.26 will apply, as the certification requirements specified in that section are applicable to articles marked with their country of origin, or to those articles which are imported in properly marked containers. The purpose of 19 C.F.R. §134.26 is to ensure that the new container in which the article is repacked contains the country of origin of the article.

Section 134.26, Customs Regulations (19 C.F.R. §134.26), provides in pertinent part that:

If an imported article subject to these requirements is intended to be repacked in retail containers ... after its release from Customs custody, or if the port director having custody of the article, has reason to believe such article will be repacked after its release, the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part....

Therefore, this procedure may be used if the container in which the towels are packed is properly marked with the towel’s country of origin. If the towels are not imported in properly marked bulk containers and the towels also are not individually marked, then the procedures of 19 C.F.R. §134.34(a) shall be used. Please note that only 19 C.F.R. §134.26(a) provides that the certification statement may be submitted in blanket form to cover all importations of a particular product for a given period.

Since a sample of the container in which the wrappers will be repackaged was not submitted, we cannot comment upon the acceptability of its marking. However, please note that if the name of a locality other than the towel’s country of origin is on the container, the requirements of 19 C.F.R. §134.46 must be satisfied.

HOLDING:

The subject surgical towels are classified in subheading 6307.90.8910, HTSUSA, which provides for surgical towels.

The country of origin of the surgical towels is India. Based upon international textile trade agreements products of India are subject to the requirement of a visa.

The proposed marking “Product of India: Finished in China” will satisfy the marking requirements of 19 U.S.C. §1304 and 19 C.F.R. Part 134 and would be an acceptable country of origin marking for the finished surgical towels. Based on the facts presented, the towels may be excepted from marking pursuant to 19 U.S.C. §1304(a)(3)(D) and 19 C.F.R. §134.32(d) and only the outer container in which the towels are packed must be marked with the country of origin of the towels, as the ultimate purchaser of the surgical towels is the hospital or HMO to which the towels are sold. Furthermore, the towels may be repackaged after their release from Customs custody if the requirements of 19 C.F.R. §134.26 are satisfied, provided the towels are imported in properly marked bulk containers. The requirements of 19 C.F.R. §134.26 will be satisfied if the towels are imported in properly marked containers, and Medical Action Industries repackages the towels in properly marked containers.

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 a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). 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.

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist John Hansen at 212-637-7078.

Sincerely,

Robert B. Swierupski
Director,

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