Country of origin of various fabric carry bags assembled by sewing in China fromfabric made and cut in Korea

HQ 955666 April 19, 1994 CLA-2 CO:R:C:T 955666 BC CATEGORY: Classification Duncan A. Nixon, Esq. Sharretts, Paley, Carter & Blauvelt, P.C. 1707 L Street, N.W. Washington, D.C. 20036 RE: Country of origin of various fabric carry bags assembled by sewing in China from fabric made and cut in Korea Dear Mr. Nixon: This responds to your letter of January 5, 1994, wherein you requested a country of origin ruling on behalf of Kopho Industrial and Kopho America Corporation. Samples were not submitted, but a brochure with colored photographs and information was provided. We have reviewed the matter and our decision follows. FACTS: Exhibit 1 of your submission identifies the merchandise at issue as bags of the following types: golf bag cover (Kp-1968OP COST); photo/video bag (KP-1726ON COST); computer bag (KP-2219ON COST); CD case (KP-1746ON COST); book bag/backpack (KP-1943ON COST); laptop computer bag (KP-2193OP COST); cassette tape case (KP-1674ON COST); and sports bag (KP-2147ON COST). According to your letter, these bags are made in China from fabrics produced and cut in Korea and other components (buckles, zippers, clips, lining, etc.) produced in Korea and the United States. The cut fabrics and components are shipped to China for assembly by sewing. You assert that the assembly process is a simple sewing procedure. You have provided the following information, demonstrating the breakdown of cost of production for the various bags in Korea and China: Article Korea Cost FreightChina CostTotal Cost Golf bag cover $7.35 $0.40 $0.80 $8.55 Photo/video bag $8.53 $0.60 $1.50 $10.63 Computer bag $1.59 $0.15 $0.30 $2.04 CD case $0.90 $0.10 $0.12 $1.12 book bag $4.07 $0.30 $0.50 $4.87 lap comp. bag $5.25 $0.20 $0.80 $6.25 Cass. tape case $1.23 $0.10 $0.11 $1.44 Sports bag $9.40 $0.50 $1.20 $11.10 The foregoing figures indicate that, in each case, the production cost in Korea far exceeds the production cost in China. ISSUE: What is the country of origin for the carry bags at issue, which are assembled by sewing in China from fabrics produced in Korea and other components produced in Korea and the United States? LAW AND ANALYSIS: Country of origin determinations for textile products are made in accordance with section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130 provides that a textile or textile product which consists of materials produced or derived from, or processed in, more than one country is considered to be a product of that foreign country 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 a substantial manufacturing process into a new and different article of commerce. Pursuant to section 12.130(d)(2), the following factors are evaluated in determining whether merchandise has been subjected to a substantial manufacturing or processing operation: the physical change in the article; the time involved in the manufacturing operation; the complexity of the operations; the level or degree of skill and/or technology required; and the value added to the article. While the bags are assembled and packed in China, the fabric is produced and cut in Korea and the other components are produced in Korea and the United States. These operations performed in Korea are more extensive than the simple sewing procedure performed in China. Customs has held that the cutting of fabric into pieces, or components, for assembly into a finished article constitutes a substantial transformation. Customs has long held that the mere assembly of goods, by 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. (See Headquarters Ruling Letters (HRL's) 082747 (February 23, 1989) and 082787 (March 9, 1989), regarding the assembly of jeans and a jogging suit.) Further, that part of the cost of the eight styles of bags at issue accruing from operations performed in Korea ranges from 78% to 86% of the total cost of the article. Based on the foregoing facts, we conclude that the operations performed in China do not result in a substantial transformation. Three recent Customs rulings are in accord. In HRL 951899, dated October 31, 1992, we issued a country of origin determination for certain tote bags and luggage. In that decision, luggage panels, zippers, grommets, piping, webbing, labels, and packaging materials were shipped to China for assembly into finished articles. We ruled that this assembly of materials did not involve sufficient skill or complexity to constitute a substantial transformation. In HRL 951481, dated July 31, 1992, we issued a country of origin determination with respect to certain knapsacks/backpacks. There, nylon fabric, thread, binding, zippers, webbing, trim, and hang tags were die-cut in Taiwan to the proper shapes for stitching. These materials were shipped to China for assembly. We concluded that the manufacture of the raw materials and the designing and cutting operations were the factors which contributed most to the creation of the finished articles. In HRL 953065, dated April 9, 1993, we held that the country of origin for textile bicycle bags assembled in China from fabric produced and cut in Taiwan was Taiwan. Citing HRL's 951899 and 951481, we concluded that the articles in question were last substantially transformed in Taiwan. The cutting of the fabric in Taiwan constituted a substantial transformation, while the simple assembly of component parts in China did not. The facts of the instant case are similar to the facts of the above cited cases, where fabric is produced and cut in Country A and these cut components, as well as other components produced in Country A, are assembled by simple sewing in Country B. HOLDING: The country of origin of the various textile carry bags at issue is Korea. The holding set forth above applies only to the specific factual situation and merchandise identified in this ruling request. This limitation 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 section 177.9(b)(1), Customs Regulations, 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, in that event, a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2). Sincerely, John Durant, Director