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HQ 734645

November 2, 1992

MAR-2-05 CO:R:C:V 734645 RSD


Lewis Stein, Esq.
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, N.J. 08933-7002

RE: Country of origin marking of silk and polyester sutures used in surgery; textiles; braiding of strands; subheading 9802.00.50 of HTSUS; advanced in value and improved in condition; 19 CFR 12.130(c)

Dear Mr. Stein:

This is in reference to your letter dated May 12, 1992, regarding the country of origin marking requirements of sutures used in surgery and made of silk or polyester. You have also requested a ruling confirming that the goods would be covered by HTSUSA 9802.00.50. Accompanying your submission were samples of the sutures and their packaging.


Ethicon, Inc., a wholly-owned subsidiary of Johnson & Johnson, will import into the U.S. two types of surgical sutures -- silk and polyester. Ethicon will ship silk thread which has been braided in the U.S. from Chinese or Japanese sourced silk, as well as braided polyester suture material of U.S. origin, on reels, to Australia. All of the packaging materials for the sutures, presumably of U.S.-origin, will also be shipped to Australia from the U.S.

In Australia, the braided suture materials will be cut to length and the appropriate number of strands will be gathered and temporarily held together with a metal strip. Special vacuum equipment will then suck the strands into a curved labyrinth channel of the packaging. The package is then sealed after the insertion of the surgical sutures.

This sealed package then has a batch number embossed into it and is then fed between a sheet of Tyvek and a sheet of clear plastic. The sheets are then heat sealed and cut to form the final package. The Tyvek and the clear plastic are of U.S. origin and are shipped to Australia in rolls. Three dozen overwrapped packages are placed into a box. The box is stamped with the batch number. A bar code is put on the bottom of the box and a cellophane overwrap is put on the box to keep it clean. The box of sutures is then sterilized by cobalt radiation.


What are the country of origin marking requirements for the surgical sutures made of silk or polyester?

Are the surgical sutures eligible for the partial duty exemption available under 9802.0050, HTSUSA, when imported into the U.S.?


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 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textile and textile products subject to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854)("section 204"). According to T.D. 90-17, published in the Federal Register on March 1, 1990, (55 FR 7303), the rules of origin for textiles and textile products contained in 19 CFR 12.130 are applicable to such merchandise for all purposes, including duty and marking. Customs has determined that 19 CFR 12.130 will be applied to determine the country of origin of all imported articles which are classified in Section XI, Harmonized Tariff Schedule of the United States, or to any imported article classified outside of Section XI, HTSUSA, under a subheading which has a textile category number associated with it. Because the subject merchandise would be classified under Section XI, HTSUSA, 19 CFR 12.130 will be used in making the country of origin determination.

Pursuant to 19 CFR 12.130, the standard of substantial transformation governs 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. 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 operations. In other words, for textiles governed by 19 CFR 12.130, there is a two part test for substantial transformation: 1) a new different article of commerce and 2) a substantial manufacturing or processing operation.

Section 12.130(d)(1) 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.

The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d) and (e). Section 12.130(d)(2) lists some of the factors considered in determining whether a substantial manufacturing or processing operation has occurred. These factors include: the physical change in the material or article; the time involved in the processing; the complexity of the operation; the level or degree or skill and technology required in the operation; and the value added to the article or material in the non-U.S. based operation versus the value added to the article or material in the U.S.

The first question that must be addressed is whether the silk and polyester stands are substantially transformed in the U.S. when they are made into the sutures. The strands are braided together to make them into the sutures. The braiding of the strands of silk or polyester into thread or a suture is very analogous to the weaving of fibers into fabric or material. 19 CFR 12.130(e)(iii) indicates that an article or material will usually be the product of a particular country or territory where weaving, knitting or otherwise forming of fabric is done. Consequently, the braiding of the separate strands of silk or polyester into sutures in the U.S. creates a new product of commerce as a result of a substantial manufacturing operation which would render the sutures products of the U.S.

The next question that must be determined is whether the country of origin of the sutures is changed as a result of the processing done in Australia. In Australia, the sutures are cut to length, packaged, and sterilized by radiation. There is an exception to the general rule set forth in section 12.130(c), which provides that U.S. textile articles that are advanced in value or improved in condition, or assembled in a foreign country, are considered to be products of that foreign country. Since the sutures are U.S. products, it is necessary to determine if they will improved in condition or advanced in value. The cutting to length of the sutures makes them more commercially usable and clearly increases their value. Similarly, the sterilization by radiation improves the condition and increases the value of the sutures. Accordingly, the processing in Australia makes the sutures products of Australia. At the time they are imported back into the U.S., the packages containing the sutures should be marked to indicate that the country of origin of the sutures is Australia.

You also inquire as to whether the sutures will be eligible for the partial duty exemption available under subheading 9802.0050 HTSUSA when imported into the U.S. Articles returned to the U.S. after having been exported to be advanced in value or improved in condition by repairs or alterations may qualify for the partial duty exemption under HTSUSA subheading 9802.00.50 provided the foreign operation does not destroy the identity of the exported articles or create new or different articles through a process of manufacture. Accordingly, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended purpose prior to the foreign processing. Dolliff & Company Inc., v. United States, 455 F.Supp. 618 (1978), aff'd, 599 F.2d 1015 (1979).

Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations when returned to the U.S., provided the documentary requirements of section 10.8 Customs Regulations (19 CFR 10.8), are satisfied.

Customs has previously ruled that, under certain circumstances, cutting material to length can be considered an alteration within the meaning of subheading 9802.00.50, HTSUSA. However, in situations where rolls of material-length merchandise are exported and finished goods are returned primarily by cutting to length, this cutting constitutes a finishing step in the manufacture of the goods. The conversion from material lengths to finished products exceeds the meaning of the term "alterations" under this tariff provision. See, Headquarters Ruling Letters (HRLs) 555782 dated April 22, 1991, and 556034 dated August 26, 1991. It is our position that the cutting to length of the sutures in this case is a finishing step in the manufacture of the goods, and, therefore, exceeds the meaning of "alterations" under subheading 9802.00.50, HTSUSA.


The braiding of the silk and polyester strands into sutures in the U.S. makes the sutures products of the U.S. The cutting and sterilization of the sutures in Australia improves their condition and advances them in value. In accordance with 19 CFR 12.130(c), the sutures become products of Australia and at the time they are imported into the U.S., the packages should be marked to indicate that the sutures are products of Australia.

Based on the information submitted, it is our opinion that the operations performed in Australia exceed the scope of an "alteration," and, therefore the surgical sutures are ineligible for the partial duty exemption under subheading 9802.00.50, HTSUSA.


John Durant, Director

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