Country of Origin determination for knit garments; fabricknit, dyed and cut in Singapore; simple assembly in Indonesia;19 CFR 12.130(b),(d),(e); cutting constitutes substantial transformation

HQ 957257 March 1, 1995 CLA CO:R:C:T 957257 jb CATEGORY: CLASSIFICATION William Lee Gimmill Industrial (Private) Limited 03-04 Pei-Fu Building 24 New Industrial Road Singapore 1953 RE: Country of Origin determination for knit garments; fabric knit, dyed and cut in Singapore; simple assembly in Indonesia; 19 CFR 12.130(b),(d),(e); cutting constitutes substantial transformation Dear Mr. Lee: This letter is in response to your inquiry of October 25, 1994, requesting a country of origin determination for certain knit garments. Samples of the finished garments were submitted to this office for examination. FACTS: You state that the knit garments can be composed of single jersey, interlock, rib, fleece or other similar knit fabrics, and will consist of the following: 1. polo shirt composed of 65 percent polyester and 35 percent cotton, featuring a partial frontal opening with three button closure and short sleeves with ribbed knit cuffs; 2. turtle neck composed of 65 percent polyester and 35 percent cotton, featuring long sleeves with ribbed knit cuffs; 3. tank top composed of 65 percent polyester and 35 percent cotton, featuring shoulder straps measuring approximately 3-1/2 inches in width; 4. T-shirt composed of 40 percent polyester and 60 percent cotton, featuring a crew neckline and a left breast pocket; 5. pullover composed of 65 percent polyester and 35 percent cotton, featuring short sleeves and a partial frontal opening with single button closure. In all cases the fabric is knit, dyed and cut into the component parts in Singapore and sent to Indonesia or some other country for assembly by sewing. The assembled garments will then undergo finishing, inspection and packaging either in the country of assembly or in Singapore. ISSUE: What is the country of origin of the merchandise at issue? LAW AND ANALYSIS: Section 12.130 of the Customs Regulations (19 CFR 12.130) sets forth the principles of country of origin for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). Pursuant to 19 CFR 12.130(b), the standard of substantial transformation governs the country of origin determination where textiles and textile products are processed in more than one country. 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)(2). The following are considered: (i) The physical change in the material or article; (ii) The time involved in the manufacturing or processing; (iii) The complexity of the manufacturing or processing; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations; (v) The value added to the article or material; Section 12.130(e)(1) describes manufacturing or processing operations from which an article will usually be considered a product of the country in which those operations occurred: (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; (ii) Spinning fibers into yarn; (iii) Weaving, knitting or otherwise forming fabric; (iv) Cutting of fabric into parts and the assembly of those parts into the completed article; or (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 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 (See Headquarters Ruling Letter (HRL) 952531, dated November 25, 1992; HRL 953697, dated July 26, 1993; and HRL 955125, dated January 27, 1994). As was stated by Customs in Treasury Decision (T.D.) 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714), the final document rule establishing 19 CFR 12.130, in pertinent part: [T]he assembly of all cut pieces of a garment usually is a substantial manufacturing process that results in an article with a different name, character or use than the cut pieces. It should be noted that not all assembly operations of cut garment pieces will amount to a substantial transformation of those pieces. Where either less than complete assembly of all the cut pieces of a garment is performed in one country, or the assembly is a relatively simple one, then Customs will rule on the particular factual situations as they arise, utilizing the criteria in section 12.130(d). Customs has consistently held that the mere assembly of goods by linking and looping, or simple sewing, is not enough to substantially transform the components of an article into a new and different article of commerce (See HRL 082747, dated February 23, 1989; HRL 086665, dated March 23, 1990; HRL 951169, dated April 1, 1992; HRL 951437, dated July 17, 1992; and HRL 952647, dated January 27, 1993). In the case of the subject garments, the assembly operations performed in Indonesia (or other country), are minor 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. No great degree of skill or technology is required, nor is tailoring involved. Additional operations such as ironing, inspecting and packaging are considered minor finishing operations and are not sufficient to affect country of origin. As is stated in section 12.130(e)(2)(i), an article usually will not be considered to be a product of a particular country by virtue of merely having undergone: Simple combining operations, labeling, pressing, cleaning or drycleaning, or packaging operations, or any combination thereof; The cutting operations in Singapore materially alter the fabric into designated garment pieces. This constitutes a substantial transformation of the fabric and confers country of origin. HOLDING: The country of origin of the submitted garments, i.e., the polo shirt, turtle neck, tank top, T-shirt and pullover, is Singapore. It is at the cutting process in Singapore that the fabric last undergoes a substantial transformation and is transformed into new and different articles of commerce. As this constitutes a substantial transformation of that fabric, Singapore is the country of origin for the subject garments. 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 of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it be subsequently 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