Country of origin of a backpack with detachable soft-sided cooler; 19 CFR 12.130; materialcut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantialtransformation; HRL 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94).

HQ 957700 March 29, 1995 CLA-2 CO:R:C:T 957700 SK CATEGORY: Classification Melvin S. Mogil California Innovations Inc. 4211 Yonge Street, suite 610 Willowdale, Ontario Canada M2P 2A9 RE: Country of origin of a backpack with detachable soft-sided cooler; 19 CFR 12.130; material cut in Taiwan; assembly of pre-cut components in China; mere assembly is not substantial transformation; HRL 951899 (10/31/92); 954225 (8/30/93); 956634 (9/29/94). Dear Mr. Mogil: This is in response to your letter of March 9, 1995, requesting a country of origin determination for an article described as the "BACKPACK PLUS." A sample of the finished article was submitted to this office. FACTS: The subject article is marketed as the "BACKPACK PLUS." It is a backpack with a detachable collapsible cooler. The backpack measures approximately 20 inches by 15 inches by 6 inches and its exterior surface is covered with a woven fabric. Adjustable straps are affixed to the rear and bottom of the backpack. The backpack features a zipper closure which extends across three sides and two outside pockets which have zipper closures. The backpack has a woven textile handle at the top of the article for easy portability and the entire bottom soft-sided cooler component is attached by means of a "Velcro" (tm) strip and plastic buckles. The materials for "BACKPACK PLUS" are sourced and cut into component parts in Taiwan and assembled in China. The specific operations are as follows: - 2 - MANUFACTURING OPERATIONS: 1) the raw materials are cut into component pieces in Taiwan; 2) the pre-cut components are assembled into the completed backpack in China. COSTS: 1) The cost of materials and assembly incurred in China represent approximately 15.5 percent of the total cost ($9.98) of the cooler (i.e., $1.05 worth of materials and 50 cents for assembly costs); 2) 84.5 percent of the total cost of the product is incurred in Taiwan (i.e., cost of raw materials, cutting operations, shipping expenses to transport the component pieces from Taiwan to China). ISSUE: What is the country of origin of the subject merchandise? LAW AND ANALYSIS: Section 12.130(b) of the Customs Regulations (19 CFR 12.130(b)) provides that textile products that are processed in more than one country or territory shall be products of that country or territory where they last underwent a substantial transformation. Your attention is directed to Section 12.130(e)(v) of the Customs Regulations which states that an article will usually have undergone a substantial transformation (change in country of origin) if it has undergone a substantial assembly of all cut pieces into a completed article. Customs has long 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. See Headquarters Ruling Letter (HRL) 082747, dated February 23, 1989, in which Customs determined that the assembly of jeans was not a substantial transformation and HRL 082787, dated March 9, 1989, which reached a similar conclusion with regard to a jogging suit. In the instant case, the assembly process in China involving the sewing together of components cut from fabric in Taiwan does not involve sufficient skill or - 3 - complexity to constitute a substantial transformation as defined by the regulations set forth supra. See HRL 951899, dated October 31, 1992, in which Customs issued a country of origin determination for soft-sided luggage manufactured in a similar manner. See also HRL 956634, issued to you on September 29, 1994. Pursuant to 19 CFR 12.130(d)(2)(v), the "value added" to an article is another factor which aids in determining country of origin. The greatest costs in producing "BACKPACK PLUS" are incurred in Taiwan as that is where most of the raw materials are sourced and where the material is cut into component parts. The country of origin of "BACKPACK PLUS" is Taiwan as that is the country where the article last undergoes a substantial transformation. It is in Taiwan that the fabric undergoes a substantial manufacturing process (cutting) which transforms the fabric into a new and different article of commerce (backpack and cooler components). Taiwan is also where the greatest value is added to the subject merchandise. HOLDING: The country of origin of "BACKPACK PLUS" 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