Country of origin determination for baseball cap; 19 CFR12.130(b),(d),(e); cutting constitutes substantialtransformation

HQ 957887 July 25, 1995 CLA R:C:T 957887 jb CATEGORY: CLASSIFICATION Dennis Chia SuperCap Industrial Co., Ltd. Tun Hwa S.Rd. Sec. 2 #216, 18 Floor Taipei, Taiwan ROC RE: Country of origin determination for baseball cap; 19 CFR 12.130(b),(d),(e); cutting constitutes substantial transformation Dear Mr. Chia: This letter is in response to your inquiry of April 6, 1995, requesting a country of origin determination for a variety of caps and hats. No samples were submitted to this office for examination. FACTS: Your letter indicates that the imported merchandise consists of various articles of headwear which in addition to a baseball cap, includes berets, driving caps, visors, ladies' hats, outdoor hats and caps, ivy caps, fishing hats, leather hats and caps, safari hats and hunting hats. As you only submitted a diagram illustrating the composition of the baseball cap's constituent pieces, this letter will address only the baseball cap. Without the aid of samples or diagrams of the remainder of the articles, we are not able to make a determination for country of origin purposes. You state that the baseball cap will be composed of cotton, polyester-cotton and wool blend of Taiwan origin. In Taiwan the piece goods will be cut into panels and then sent to Korea where the panels will be assembled by sewing, finished and packaged. 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 Headquarter Ruling Letter (HQ) 955125, dated January 27, 1994; HQ 953697, dated July 26, 1993; and HQ 952531, dated November 25, 1992). 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 simple sewing, is not enough to substantially transform the components of an article into a new and different article of commerce (See HQ 082747, dated February 23, 1989; HQ 086665, dated March 23, 1990; HQ 951169, dated April 1, 1992; HQ 951437, dated July 17, 1992; and HQ 952647, dated January 27, 1993). In the case of the subject baseball cap, the assembly operations 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. (See, HQ 954583, dated August 18, 1993; HQ 954446, dated August 11, 1993; HQ 952916, dated January 29, 1993; and HQ 952918, dated January 29, 1993). The operations performed in Taiwan, i.e., cutting the fabric, materially changes the fabric into designated pieces. This constitutes a substantial transformation of the fabric and confers country of origin. See also HQ 086568, dated May 30, 1990 and HQ 957518, dated May 2, 1995, where the country of origin of baseball caps was also determined to be the country in which cutting takes place. HOLDING: The country of origin of the submitted baseball cap is Taiwan. It is in Taiwan where the cutting takes place and where the fabric last undergoes a substantial transformation and is transformed into new and different articles of commerce. 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