Country of origin of women's pants; fabric woven and cut in Taiwan; assembly by sewing in Country B; 19 CFR 12.130; mere assembly is not a substantial transformation

HQ 954604 October 28, 1993 CLA-2 CO:R:C:T 954604 NLP CATEGORY: Classification Mr. Barry E. Powell Grunfeld, Desiderio, Lebowitz & Silverman 245 Park Avenue New York, NY 10167-0002 RE: Country of origin of women's pants; fabric woven and cut in Taiwan; assembly by sewing in Country B; 19 CFR 12.130; mere assembly is not a substantial transformation Dear Mr. Powell: This is in response to your letter of July 8, 1993, on behalf of your client, Tuntex Incorporation, requesting a country of origin determination for three styles of women's pants. Samples of the finished pants, i.e., after assembly, as well as samples of the component parts, before assembly, were submitted to this office for examination and will be returned to you with this ruling. FACTS: The submitted samples consist of three styles of women's woven pants. Style L802 is a women's woven pant that will be constructed from four major panels (two front leg and two back leg panels) and twenty three ancillary components, including four front pocket bag pieces, belt loops and six waistband interlinings. The unlined pants will feature a front zipper fly secured at the waist by a button, two front "J" style serge-faced "bag" pockets, a back welt pocket secured by a button tab, a waistband elasticized at the sides, two stylized front belt loops and three back belt loops. The front of the pants will feature three pleats at each hip. Style C817 is a women's woven pant that will be constructed of four major panels (two front and two back leg panels) and twenty three ancillary components, including four front pocket bag pieces, belt loops and six waistband interlinings. The unlined pants will feature a front zipper fly secured at the waist by a button, two welt front pockets, a waistband elasticized at the sides, two stylized front belt loops and three back belt loops. The front of the pants will feature three pleats on each hip. The third style, L695, is a women's woven pant that will be constructed of four major panels (two front and two back leg panels) and sixteen ancillary components, including four front pocket bag pieces, belt loops and six waistband interlinings. The unlined pants will feature a front zipper fly secured at the waist by one hidden and one visible tab button closure, two front "J" style serge-faced "bag" pockets, a waistband elasticized at the sides, and one belt loop at the right side of the waistband. The front of the pants will also feature three pleats on each hip. You state that Tuntex is contemplating a multi-country processing operation whereby fabric will be woven and cut into component parts in Taiwan. The component parts and trim will be sent to a second country (Country B) for assembly by sewing and for packaging for export to the United States (U.S.). The relative costs of the components and production operations for the three styles are as follows: L802 C817 L695 Piece Goods (Taiwan) 63.10% 61.71% 65.20% Cutting (Taiwan) 6.27% 6.97% 4.80% Sewing (Country B) 5.04% 6.10% 4.06% Packing (Country B) 0.61% 0.70% 0.62% Trim (Taiwan) 9.98% 9.52% 10.32% Profit (Taiwan) 15.00% 15.00% 15.00% _____ _____ _____ 100% 100% 100% The costs and time required (in minutes) for cutting and sewing a dozen garments of each of these styles are as follows: L802 C817 L695 cost/time cost/time cost/time Cutting (Taiwan) $6.23/216 $6.00/208 $4.62/160 Sewing (Country B) $5.01/371 $5.25/355 $3.90/278 ISSUE: What is the country of origin of the three styles of women's woven pants? LAW AND ANALYSIS: Country of origin determinations for textile products are subject to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130(b) provides that a textile product that is processed in more than one country or territory shall be a product of that country or territory 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(d) of the Customs Regulations sets forth criteria for determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered. Section 12.130(d)(1) of the Customs Regulations states that a new and different article of commerce will usually result from a manufacturing or processing operation if there is a change in: (i) Commercial designation or identity. (ii) Fundamental character or (iii) Commercial use. Section 12.130(d)(2) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered: (i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S. (ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S. (iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S. (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the U.S. (v) The value added to the article or material in each foreign territory or country, or insular possession of the U.S., compared to its value when imported into the U.S. Section 12.130(e) of the Customs Regulations sets forth criteria which aid us in determining whether an article has been subjected to certain manufacturing or processing operations which serve to substantially transform an article into a new and different article of commerce. Specifically, Section 12.130(e)(1)(v) is relevant in the instant case. This Section provides that: 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: * * * * * (v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits, and shirts). We have previously held that cutting of fabric into pattern pieces constitutes a substantial transformation of the fabric, resulting in the apparel pieces becoming a product of the country where the fabric is cut. Customs has also held that the mere assembly of goods, entailing simple combining operations, trimming or joining together by sewing is not enough to substantially transform the components of an article into a new and different article of commerce. For example, in Headquarters Ruling Letter (HRL) 951437, dated July 17, 1992, Customs held that the assembly process of women's pants in Malaysia, which involved the sewing together of components that were cut from fabric in Singapore, did not involve sufficient skill or complexity to constitute a substantial transformation as defined by Section 12.130(e)(v). Therefore, the country of origin was found to be Singapore as that was where the piece goods were cut into specific parts and where the articles last underwent a substantial transformation. See also, HRL 082747, dated February 23, 1989; HRL 086665, dated March 23, 1990; HRL 951169, dated April 1, 1992; HRL 734392, dated August 4, 1992; HRL 953489 dated June 14, 1993; HRL 953698, dated July 19, 1993; HRL 953903, dated August 17, 1993. In the instant case, the cutting in Taiwan for the pants materially alters the fabric into designated component pieces. The assembly operations to be performed in Country B are mere combining and sewing operations and do not possess the requisite degree of complexity to be deemed substantial manufacturing processes for purposes of conferring country of origin status. In assembling the component pieces, no great degree of skill or advanced technology is required, nor is tailoring involved. Thus, the country of origin of these articles is Taiwan as that is where the fabric was woven and cut into specific parts and where the articles last underwent a substantial transformation. HOLDING: The country of origin for pant styles L802, C817 and L695 is Taiwan. 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 177.9(b)(1), Customs Regulations (19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it subsequently be 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, it is recommended that a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2). Sincerely, John Durant, Director Commercial Rulings Division