Country of Origin of Sweaters--Fabric Knit in Hong Kong and Sent to Singapore For Cutting and Assembly

HQ 950132 December 4, 1991 CLA-2 CO:R:C:T 950132 PR CATEGORY: Classification Ms. Gloria Arellanes Manager, Import Administration Levi Strauss & Co. 1155 Battery Street San Francisco, CA. 94120 RE: Country of Origin of Sweaters--Fabric Knit in Hong Kong and Sent to Singapore For Cutting and Assembly Dear Ms. Arellanes: This is in reply to your letter of August 9, 1991, requesting a ruling on the country of origin of certain sweaters. Our ruling on the matter follows. FACTS: The following information has been submitted: (1) Sweater panels are knit in Hong Kong. The panels are separated lengthwise into to sections by pulling a looped stitch. These panels include ribbing along the outer edges of the panels, and lines of demarcation knit between the individual fronts and backs of the sweaters. Sleeves are cut from another panel. These also have ribbing along the outer edges. (2) Panels are sent to Saipan. There the individual sweater parts are cut from the panels, linked, overlocked, finished and packed. Five samples were submitted. One is a finished solid color cotton pullover sweater with a large DOCKERS design knit into the front panel. It has a long sleeves and rib knit waistband and cuffs. A second sample is a length of fabric from which the front panels are cut. It has the rib knit waistband along one lengthwise edge, cutting lines dividing the panels, and each panel is knit with a large DOCKERS design. A third sample is a length of fabric similar to the second sample, only without the DOCKERS designs--this is presumably to be cut along cutting lines into back panels. The fourth and fifth samples are cut sleeve panels (with rib knit cuffs). ISSUE: The issue presented is whether the cutting of the fabric into garment panels and the assembly of those cut pieces in Saipan is sufficient to cause those sweaters to be products of the Commonwealth of the Northern Mariana Islands for duty, marking, and textile restraint purposes. LAW AND ANALYSIS: Section 12.130(b), Customs Regulations (19 CFR 12.130) provides, in pertinent part, as follows: (b) Country of origin. For the purpose of this section * * * a textile or textile product * * * which consists of materials produced or derived from, or processed in, more than one foreign territory or country, or insular possession of the U.S., shall be a product of that foreign territory or country, or insular possession where it last underwent a substantial transformation. A textile or textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing operations into a new and different article of commerce. * * * Section 12.130(e)(2)(iii) of that same regulation provides that an article usually will not be considered to be a product of a second country where otherwise completed knit-to-shape component parts from one country have been merely assembled in the second country. In this regard, Customs has consistently ruled that knit fabric with cutting lines or other markings establishing the identity of apparel parts will be treated as knit-to-shape components. Headquarters Ruling Letter (HRL) 088069, dated January 25, 1990, illustrates this rule and also involves merchandise which is very similar to the instant fabrics. See also HRL 089155, dated May 20, 1991. Accordingly, garments made from the sample fabrics are products of the country where those fabrics were knit. HOLDING: Merchandise represented by the submitted sweater, cut and assembled in Saipan from fabric knit with cutting lines in Hong Kong, is a product of Hong Kong for duty, marking, and textile restraint purposes. Sincerely, John Durant, Director Commercial Rulings Division