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HQ 555878

June 18, 1991

CLA-2 CO:R:C:S 555878 DSN


TARIFF NO.: 9802.00.80, HTSUS

Mr. Steven L. Markowitz
Max Kahn Curtain Corporation
261 Fifth Avenue
New York, New York 10016

RE: Cutting foreign-origin fabric; substantial transformation; 19 CFR 10.12(e); 19 CFR 12.130(d); 730128; 555489; 555693; 555719; 733601; 556015; C.S.D. 90-29 (732673)

Dear Mr. Markowitz:

This is in response to your letter of February 4, 1991, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to various comforter shells to be assembled in Haiti from U.S.-and foreign-origin fabic.


You essentially present two scenarios for our consideration. In the first scenario, solid color or printed fabric of U.S.- origin will be cut to length and width in the U.S. by spreading 90 inch wide plies on a cutting table and cutting with a knife. The resulting cut fabric pieces to be used as the top of the comforter shell, will be folded, packed, and shipped to Haiti for processing to create the finished shell. The second scenario is similar to the first except that the solid color or printed fabric to be used as the top of the shell will be imported into the U.S., cut to length and width, and then shipped to Haiti for assembly operations. In both scenarios, the solid color fabric to be used as the back of the comforter shell will be of foreign origin and will be cut to length and width in Haiti prior to assembly operations.

In Haiti, the following operations will be performed to create the comforter shells:

1. move goods to cutting area, using 60-inch wide fabric back;

2. cut goods to be used for the back of the shell by spreading fabric on cutting table and cutting entire spread with knife;

3. piece together top by using overlock machine with 100% polyester thread;

4. piece together back by using overlock machine with 100% polyester thread;

5. attach top to back using single needle lockstitch with 100% polyester thread, with face sides;

6. fold the comforter shell; and

7. box 25 comforter shells per carton


Whether the comforter shells qualify for the partial duty exemption available under HTSUS subheading 9802.00.80 when returned to the U.S.


HTSUS subheading 9802.00.80 provides a partial duty exemption for:

{a}rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting.

All three requirements of HTSUS subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full value of the imported assembled article, less the cost or value of such U.S. components, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

For a component to be eligible for subheading 9802.00.80, HTSUS, treatment it must first be a "product of the United States." According to section 10.12(e), Customs Regulations (19 CFR 10.12(e)), a "product of the United States" is an article manufactured within the customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components or materials. If the article consists wholly or partially of foreign components or materials, the manufacturing process in the U.S. must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article.

According to T.D. 90-17, published in the Federal Register on March 1, 1990 (55 FR 7303), the principles of country of origin for textiles and textile products contained in section 12.130, Customs Regulations (19 CFR 12.130), are applicable to such merchandise for all purposes including duty and marking. 19 CFR 12.130 requires that the standard of substantial transformation govern the determination of the country of origin where textiles and textile products are processed in more than one country. The country of origin of textile products is deemed to be that territory, country, or insular possession where the article last underwent a substantial transformation.

19 CFR 12.130(d) establishes criteria for determining whether an article has been substantially transformed. However, the criteria set forth in 19 CFR 12.130(d) are not exhaustive; one or any combination of these criteria may be determinative and additional factors may be considered.

According to 19 CFR 12.130(d)(2), the following factors are to be considered in determining whether merchandise has been subjected to substantial manufacturing or processing operations: the physical change in the materials or article, the time involved in the manufacturing or processing operations, the complexity of the other operations, the level or degree of skill and/or technology required, and the value added to the article.

The question presented here is whether cutting foreign- origin fabric in the U.S. to length and width to create the top of the comforter shells constitutes a substantial transformation. Customs has held under certain circumstances that the cutting of fabric into specific patterns and shapes suitable for use to form the completed article constitutes a substantial transformation. See, Headquarters Ruling Letter (HRL) 731028 of July 18, 1988 (cutting of fabric into garment parts for wearing apparel constitutes a substantial transformation), HRL 555489 of May 14, 1990 (cutting of fabric into glove pattern pieces results in a substantial transformation), and HRL 555693 of April 15, 1991 (cutting of fabric to create pattern pieces for infant carrier results in a substantial transformation).

However, we have ruled that surgical towel fabric which is cut to length and width, and then hemmed is not substantially transformed into a product of the country where the operations were performed. See, HRL 555719 of November 5, 1991 (cotton fabric for surgical towels cut to length and width, sewn, trimmed, prewashed, and dried is not substantially transformed), HRL 733601 of July 26, 1990 (toweling cut, hemmed, washed, shrunk, and folded in Mexico or the Phillipines does not constitute a substantial transformation, so the country of origin of the surgical towels is China--the country where the fabric was manufactured), and C.S.D. 90-29, 24 Cust. Bull. ___ (1990) (HRL 732673 of November 6, 1989) (greige terry toweling which was bleached, cut to length and width, hemmed, desized, and dyed to create beach towels was not substantially transformed).

In this case, cutting the fabric into large pieces for the top of the comforter shells is more analogous to cutting fabric for toweling. The cutting of the top pieces for the comforter shells is not as complex as cutting specific pattern pieces for garments, gloves and infant carriers. In cutting pattern pieces for garments, care must be taken to properly lay out the pattern according to the weave of the fabric, as well as carefully following the shape of the pattern which does not merely involve cutting fabric to length and/or width (i.e, cutting fabric in straight lines). In the present case, the cutting of comforter shell pieces involves simply cutting straight lines similar to cutting toweling fabric to length and/or width. See, HRL 556015 of May 20, 1991.

Based on these factors, we conclude that cutting the foreign-origin fabric in the U.S. is not a substantial transformation, and, therefore, the top of the comforter shells cut out of foreign-origin fabric in the U.S. would be considered a foreign product, and not eligible for a duty allowance under subheading 9802.00.80, HTSUS.

However, the U.S.-origin fabric which is cut to length and width in the U.S. and merely assembled in Haiti by sewing to create the comforter shells meets the requirements of HTSUS 9802.00.80, and therefore, is entitled to allowances in duty under this tariff provision. Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, and specifically enumerates sewing as an acceptable assembly process. Therefore, the Haitian
operations that entail sewing the U.S.-origin comforter top pieces together and then sewing the top to the comforter bottom are considered acceptable assembly operations pursuant to 19 CFR 10.16(a).


On the basis of the information submitted, we are of the opinion that the foreign-origin fabric which is cut to length and width in the U.S. to create the top of the comforter shells is not substantially transformed into a product of the U.S., and therefore, is not eligible for an allowance in duty under subheading 9802.00.80, HTSUS, when returned as part of the completed shells.

The sewing operations performed in Haiti on the U.S.-origin fabric which is cut to length and width in the U.S. are acceptable assembly operations pursuant to HTSUS subheading 9802.00.80. Therefore, an allowance in duty may be made under this tariff provsion for the cost of value of these U.S. components, upon compliance with the documentary requirements of 19 CFR 10.24.


John Durant, Director
Commercial Rulings Division

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