Country of origin of down comforters; Section 12.130,Customs Regulations

HQ 957472 April 25, 1995 CLA-2 R:C:T 957472 CAB CATEGORY: Classification James C. England James C. England & Associates 6 Deer Drive (Route 3) Lexington, VA 24450 RE: Country of origin of down comforters; Section 12.130, Customs Regulations Dear Mr. England: This is in response to your inquiry of January 31, 1995, concerning the country of origin of down comforters. A sample was not provided to Customs for examination. FACTS: You are requesting a country of origin determination for a finished goose or duck down comforter under two distinct manufacturing scenarios. In the first scenario, the manufacturing process is as follows: Goose or duck down that has been washed and sterilized in China will be transported to Macao; Comforter shells cut and sewn in China will also be transported to Macao; The comforter shells and down will be assembled in Macao; Finally, the finished down comforter will be exported to the United States. In the second scenario, the manufacturing process is as follows: Imported cotton piece goods will be cut and sewn into comforter shells in Macao. These comforter shells will be filled with washed and sterilized goose or duck down from China in Macao. The finished down comforters will be exported to the United States. ISSUE: What is the country of origin for the subject down comforter? LAW AND ANALYSIS: Country of origin determinations for textile products are subject to Section 12.130, Customs Regulations (19 CFR 12.130). Section 12.130 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 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), Customs Regulations, sets forth criteria for determining whether a substantial transformation of a textile product has taken place. This regulation states 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), 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), Customs Regulations, states that for 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; (ii) The time involved in the manufacturing or processing operation; (iii) The complexity of the manufacturing or processing operations; (iv) The level or degree of skill and/or technology required in the manufacturing or processing operations; and (v) The value added to the article or material. Section 12.130(e)(1), Customs Regulations, describes manufacturing or processing operations from which an article will usually be considered a product of the country in which those operations occurred. Section 12.130(e)(1)(iv), Customs Regulations, states that a textile article will usually be a product of a particular country if the cutting of the fabric into parts and the assembly of those parts into the completed article has occurred in that country. However, 12.130(e)(2)(ii) states that a material will usually not be considered to be a product of a particular foreign country by virtue of merely having undergone cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use. In the first scenario, washed and sterilized goose or duck down from China will be exported to Macao. Comforter/quilt shells that have been cut and sewn in China will also be exported to Macao. In Macao, both the comforter/quilt shells and the goose or duck down will be combined to result in finished down comforters. As the comforter/quilt shell is exported to Macao already cut into parts and assembled, in accordance with Section 12.130(e)(1)(iv), it has undergone a substantial transformation in China. The issue Customs must address is whether the processing in Macao results in a substantial transformation. The value added to the comforter shell in Macao is significant and the increased value is due in most part to insertion of the down into the shell. The average cost of down is usually costlier than a comforter shell. There is also a requisite degree of skill involved in filling a comforter shell with down. In order for down to properly impart warmth throughout the entire comforter, the comforter must undergo processing in Macao which involves additional stitching or baffles to prevent the down from shifting to any single area of the article. Finally, the down and the comforter shell lose their separate identity and become a new and different article of commerce after they are combined in Macao. Therefore, in accordance with Section 12.130(d), in the first scenario, the subject article undergoes its last substantial transformation in Macao, the country where the down is inserted into the comforter shell. In the second scenario, piece goods will be imported into Macao. In Macao, the piece goods will be cut and sewn into a comforter shell. These shells will be filled in Macao with washed and sterilized goose or duck down from China. In this case, the piece good undergo a substantial transformation in Macao in accordance with Section 12.130(e)(1)(iv), as it is Macao, where the piece goods are cut and sewn into a finished comforter shell. Also, as stated above, the insertion of down into a comforter shell results in a substantial transformation in the country where the combining occurred, Macao. HOLDING: In both scenarios, the country of origin of the down comforter at issue is Macao. This ruling is issued pursuant to the provisions of Part 177 Customs Regulations (19 CFR Part 177). The holding in this ruling only applies to the specific factual situation presented and the merchandise identified in the ruling request. If the information furnished is not accurate or complete, or there is a change in the factual situation, this ruling will no longer be valid. In such an event, a new ruling request should be admitted. Sincerely, John Durant, Director Commercial Rulings Division