Modification of New York Ruling Letter (NY) 878608,Concerning the Country of Origin of Sheets

HQ 956030 November 22, 1994 CLA-2 CO:R:C:T 956030 PR CATEGORY: Classification Mr. Darryl Golden Norman Krieger, Inc. P.O. Box 92599 Los Angeles, California 90009 RE: Modification of New York Ruling Letter (NY) 878608, Concerning the Country of Origin of Sheets Dear Mr. Golden: This is in reference to New York Ruling Letter (NY) 878608, issued October 6, 1992, by the Area Director of Customs, New York Seaport, addressed to your company, concerning the country of origin of sheets. We have reviewed that ruling and determined that it is in error. Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (hereinafter section 625), notice that Customs was proposing to modify NY 878608 was published October 12, 1994, in the Customs Bulletin, Volume 28 Number 41. This modifies that ruling. FACTS: According to the information contained in NY 878608, fitted bed sheets are made in Kenya from fabric woven, bleached, dyed or printed, and finished in Pakistan. In Kenya, the fabric is stitched on two sides and each of the four corner pockets are finished by cutting, sewing, and adding elastic. The ruling does not state whether the fabric is shipped to Kenya in rolls or in cut pieces, but since the ruling does state that the fabric "is stitched on two sides" in Kenya, we assume that the fabric is exported from Pakistan in roll form and is cut to length (but not width) in Kenya. ISSUE: The issue presented is which country, Pakistan or Kenya, is the country of origin of the subject sheets. LAW AND ANALYSIS: Section 12.130, Customs Regulations (19 CFR 12.130) provides, in pertinent part, that a textile or textile product which consists of materials processed in more than one foreign country shall be a product of the country where it last underwent -2- 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. In applying the above criteria, Customs has taken the view that when fabric formed in one country is converted to fitted sheets in a second country, in order for the second country to be the country of origin of the sheets, among other things, all four sides of the sheets must be cut and hemmed in that second country (see e.g. HQ 955780, dated May 17, 1994; HQ 954872, dated December 2, 1993; HQ 954710, dated October 7, 1993). Since the fitted sheets which were the subject of NY 878608 were only cut and hemmed on two sides in Kenya, the processing in that country did not constitute a substantial transformation. We recognize that cutting fabric on all four sides may not reflect the usual method of producing bed sheets. However, manufacturing bed sheets by cutting the fabric on two or three sides does not, in our view, involve sufficient processing to satisfy the requirement of substantial manufacturing or processing operations. It has been pointed out to us that other Customs rulings exist which are in agreement with NY 878608. We were not aware of those rulings at the time the proposal to modify NY 878608 was prepared. Customs will move as expeditiously as possible to modify or revoke those rulings and any others we find which do not agree with this ruling. HOLDING: The country of origin of the fitted sheets described in NY 878608 is Pakistan. NY 878608, dated October 6, 1992, is hereby modified to reflect this holding. Publication of rulings or decisions pursuant to section 625 does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)). Sincerely, John Durant, Director Commercial Rulings Division