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HQ 556030

August 29,1991

CLA-2 CO:R:C:S 556030 KCC


TARIFF NO.: 9802.00.50

Mr. Bruce D. Roberts
Miami International Forwarders
P.O. Box 523730
Miami, Florida 33126-1019

RE: Girls' 100% cotton blue denim pants with holes covered in the inside leg by patches. Alterations; new and commercially different article; cutting; ripping; sewing; 555021; 555249; 554371; 078245; 555760; substantial transformation; marking

Dear Mr. Roberts:

This is in response to your letter dated April 11, 1991, on behalf of JMS Trading Corporation, concerning the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), and country of origin marking requirements to girls' 100% cotton blue denim pants imported from Guatemala. Samples of the pants before and after the Guatemala processing operations were submitted for examination.


Girls' 100% cotton blue denim pants are manufactured in Chile and imported into the U.S. with the appropriate duty paid. Thereafter, JMS Trading Corporation (JMS) intends to ship the pants to Guatemala for processing operations. In Guatemala, the pants will be subjected to the following processes:

1) the legs' inside seams are opened by tearing out the stitches;
2) the legs are turned inside out;
3) holes are cut into the legs;
4) U.S.-origin patches are placed on the inside of the pant legs over the cut holes and sewn into place with a single line of stitches; and
4) the legs' inside seams are sewn closed.

Upon completion of the foreign operations, the girls pants with the holes covered with patches will be imported into the U.S.


I. Whether the girls' pants will be entitled to the partial duty exemption available under subheading 9802.00.50, HTSUS, when imported into the U.S.

II. What are the country of origin marking requirements applicable to the imported processed girls pants?


I. Applicability of subheading 9802.00.50, HTSUS

Subheading 9802.00.50, HTSUS, provides for the assessment of duty on the value of repairs or alterations performed on articles returned to the U.S. after having been exported for that purpose. However, the application of this tariff provision is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See, A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'd, C.D. 1752, 36 Cust.Ct. 46 (1956); and Guardian Industries Corporation v. United States, 3 CIT 9 (1982), Slip Op. 82-4 (Jan. 5, 1982). Subheading 9802.00.50, HTSUS, treatment is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. See, Dolliff & Company, Inc. v. United States, 81 Cust.Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978), aff'd, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015 (1979).

We have ruled that U.S. articles subjected to a silk screening or hand-painting operation abroad and then returned to the U.S., were not eligible for subheading 9802.00.50, HTSUS, treatment because these operations are more than an alteration. We stated that the silk screening and hand-painting operations created a different article of commerce and constituted a finishing step in the manufacture of the articles. See, Headquarters Ruling Letter (HRL) 555021 dated July 1, 1988 (silk screening of socks is not considered an alteration pursuant to this tariff provision); HRL 555249 dated June 16, 1989 (silk screening and chenilling designs on sweatshirts abroad exceeds an alteration); and HRL 554371 dated December 10, 1986 (hand- painting a design onto sweatshirts abroad exceeds an alteration). Additionally, we have previously held that embroidery of articles does not constitute a repair or alteration under subheading 9802.00.50, HTSUS. See, HRL 078245 dated June 17, 1986 (embroidery of cotton sheets does not constitute an alteration) and HRL 555760 dated November 16, 1990 (embroidery of t-shirts in Guatemala constitutes an operation that exceeds an alteration).

With regard to the facts of the instant case and based on our previous rulings, we are of the opinion that the foreign tearing, cutting and sewing operations exceed an alteration. Although the girls pants may be worn whether or not the holes are cut and patches sewn on, the Guatemalan operations, like embroidery and silk screening, are considered neither a repair nor an alteration under the provision of subheading 9802.00.50, HTSUS. The girls' pants, which have a new look and texture as a result of the Guatemalan operations, are different from the plain pants, and, as such, the foreign operations have created a different article with unique, specialized appeal. Furthermore, the Guatemalan operations constitute a finishing step in the manufacture of the patched jeans.

II. Country of Origin Marking Requirements

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), provides that "country of origin" means the foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of the marking laws and regulations.

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 foreign territory, country, or insular possession where the article last underwent a substantial transformation. A textile or 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.

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 operations, the level or degree of skill and/or technology required, and the value added to the article.

In this case, we are of the opinion that the girls' pants have not been substantially transformed in Guatemala. The use and essential character of the girls' pants remains the same. The processing operations performed in Guatemala, which involve cutting holes in the pant legs and adding colorful patches to cover the holes from the inside of the leg, merely add decorative features to the legs of the pants. From the information presented, it appears that little time, skill and technology are required to perform the foreign operations.

We have also considered your request regarding the appropriate marking of the girls' pants. It is our opinion that the original label is acceptable. It clearly indicates that the country of origin is Chile. The label "Made in Republic of Chile" is acceptable. Since the pants remain the country of origin where they were originally manufactured--Chile--they will be charged against that country's quota and visa when they re- enter the U.S. from Guatemala.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories applicable to textile merchandise, you should contact your local Customs office prior to importation of the merchandise to determine the current status of any import restraints or requirements.

The designated textile and apparel category may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest that you check, close to the time of shipment, the Status

Report on Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.


On the basis of the information and samples submitted, it is our opinion that the foreign operations may not be considered an alteration as they create a commercially different article and constitute a finishing step in the production of patched jeans. Therefore, tariff treatment of the returned goods under subheading 9802.00.50, HTSUS, is precluded.

The processing operations performed in Guatemala to the girls' pants do not result in a substantial transformation. Therefore, upon reimportation into the U.S., the pants are considered a product of the country where they were originally manufactured. The label, "Made in Republic of Chile," attached to the girls pants upon initial importation into the U.S. is an acceptable label pursuant to 19 U.S.C. 1304.


John Durant, Director
Commercial Rulings Division

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