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HQ 960038




December 21, 1999

CLA-2 RR:CR:TE 960038 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. 1001-96-107385; 19 CFR §12.130; finishing operations; country of origin; notice to redeliver; dyeing; bleaching; printing; shrinking; substantial transformation; rayon fabric

Dear Sir:

This is in response to your memorandum dated November 29, 1996, regarding the Application for Further Review of Protest (AFR) 1001-96-107385 filed by the law firm of Sandler, Travis & Rosenberg, P.A., on behalf of Shason, Inc. The protest was timely filed and headquarter’s review is warranted pursuant to 19 CFR §174.24(b).

The protest is against a Notice to Redeliver alleging that the fabrics in question are products of China for which a category 611 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 April 1, 1996, the protestant imported into the United States 2139 meters of 100 percent spun rayon challis fabrics. The greige fabrics were sourced in China and all of the finishing operations were performed in Turkey by Ete Mensucat Sanayi Ve Ticaret A.S.

A Request for Information on Customs Form (CF) 28 was issued on May 17, 1996, for a sample of the fabric. The merchandise was conditionally released pending laboratory analysis.

The Customs laboratory examined the fabric and found that it had been dyed, printed and pre-shrunk. Customs determined that the greige fabrics had not been substantially transformed in Turkey and issued a Notice to Redeliver on August 15, 1996, requiring a visa for the fabrics from China.

Liquidation of the entry occurred on October 4, 1996.

ISSUE:

Were the 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), and include, e.g., time involved, complexity, degree of skill, value added, etc. Section 12.130(e)(1) provides:

[A]n 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.

A Customs laboratory analyzed the fabric and reported its findings as follows:

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

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

The fabric shrunk an average of 1.7% in the warp and 1.7% in the filling direction.

Customs does not contest that the fabrics were dyed, printed and pre-shrunk in Turkey. However, a Customs laboratory found no indication that the fabric underwent any of the other finishing operations enumerated in 19 CFR §12.130. Specifically, the fabric did not appear to have been bleached.

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 operations with no dyeing and printing, or dyeing and printing alone, a 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, finished, 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.

At the request of our office, the fabrics in question were reexamined by the Customs laboratory on December 21, 1998, to determine whether bleaching occurred. Customs laboratory confirmed that the fabrics were not bleached nor was bleaching necessary prior to dyeing and printing. The laboratory report reads, in pertinent part:

The sample is a dyed and printed woven fabric. A careful examination shows that this fabric has a basic country folk like look. The shape and dimensions of the print are not as exact as would be expected from repeat to repeat and the depth of each color varies from area to area within the same printed pattern. The fabric has the look of a patchy, unevenly dyed, off or misprinted, second quality fabric. The overall appearance is that of a washed out fabric with colors that over run each other and similar to the effect of hand block or screen printed cottage industry fabric.

The dyeing and printing performed on this fabric are not of high quality. It is neither a light shade nor a bright fluorescent colored fabric. It has a dull appearance and the print is not sharp and does not have any portions which are white or pastel colored.

These types of results are best achieved on a desized/scoured fabric. To get this type of patchy, uneven effect with bleached fabric is more difficult and would require additional pigments/dyes and greater blending of colors to match the dull unpronounced shades.

Accordingly, in light of the Customs laboratory’s analysis we find that the Chinese fabrics were dyed, printed and pre-shrunk in Turkey but lacked one of the additional operations enumerated in 12.130(e).

HOLDING:

The greige fabrics in question from China were not substantially transformed into products of Turkey. The fabrics were dyed, printed and pre-shrunk in Turkey but lacked one of the additional operations enumerated in 12.130(e). 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 (on 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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