HQ 0952503 - Country of origin of sweaters from Korea, China and the Solomon Islands. - United States International Trade Commision Rulings

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HQ 952503

January 15, 1993

CLA-2 CO:R:C:T 952503 HP

CATEGORY: CLASSIFICATION

Ms. Mary Jo Muoio
Vice President
Wolf D. Barth Co., Inc.
90 West Street
New York, NY 10006

RE: Country of origin of sweaters from Korea, China and the Solomon Islands.

Dear Ms. Muoio:

This is in reply to your letter of July 24, 1992, in which you requested a country of origin determination for sweaters imported into the United States. This letter will address the quota/visa and marking implications of our findings. Please reference your client Golden Touch, IRS No. 13-2815248-00.

FACTS:

The merchandise at issue consists of a women~s hand knit sweater, 55% ramie, 45% acrylic, of single dyed yarn. When completed it will be a long sleeved pullover with either a crew neck, mock turtleneck or a V-neck. The back and sleeve samples provided are constructed of a plain, jersey stitch, while the front has hand embroidery and intarsia constructions. The front also uses yarns of different dyes and has, therefore, an eye catching effect.

One hundred percent of the yarn is obtained from Korea. From there, the yarns for the sleeves, back and rib panels are exported to the Solomon Islands. The yarn for the front panels is exported to China, where the panels are knit to shape and then exported to the Solomon Islands. In the Solomon Islands, the sleeves, back and ribs are knit to shape. The sweaters are assembled and finished, and then packed and shipped to the United States. Cost breakdowns submitted show that the Korean work accounts for 46.8%, the Chinese work for 13.8%, and the Solomon Islands work for 39.4% of the Golden Touch price.

ISSUE:

Whether the processing operations taking place in the Solomon Islands substantially transform the Korean yarn and the Chinese front panel into a sweater of the Solomon Islands?

LAW AND ANALYSIS:

Textile commodities produced in more than one foreign country are subject to the country of origin requirements delineated in section 12.130 of the Customs Regulations (19 C.F.R. 12.130). These regulations provide that:

... a textile product . . . which consists of materials produced or derived from, or processed in, more than one foreign . . . country shall be a product of that foreign . . . country where it last underwent a substantial transformation.

12.130(b). A textile product undergoes a substantial transformation when it is " . . . transformed by means of substantial manufacturing or processing operations into a new and different article of commerce."

Section 12.130 of the regulations outlines the criteria used to determine the country of origin for textiles and textile products. Specifically, this provision of the regulations is considered in determining whether a textile product has undergone substantial manufacturing or processing operations, and what constitutes a new and different article of commerce. The factors considered are not exhaustive. In fact, "one or any combination of criteria may be determinative, and additional factors may be considered." In determining whether merchandise has undergone substantial manufacturing or processing operations, we consider the (1) physical change in the material or the article; (2) time involved; (3) complexity of the operations; (4) level or degree of skill and/or technology required; and (5) value added to the article in each country.

The article at issue last undergoes a substantial transformation in the Solomon Islands. This "substantial transformation" takes the form of extensive manufacturing and processing operations that include all of the subject matter~s assembly, finishing work and knitting, except the knitting of the front panel. The article at issue has been subjected to substantial processing in the Solomon Islands inasmuch as it is here that the articles undergo a significant physical change into a completely assembled sweater, and the costs involved in knitting and assembling the back, sleeves and rib panels are significantly higher than that of the front panel alone.

HOLDING:

As a result of the foregoing, the instant merchandise, for purposes of Section 12.130, Customs Regulations, is a product of the Solomon Islands.

The holding in this ruling applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in 177.9(b)(1), Customs Regulations (19 C.F.R. 177.9(b)(1)). This section states that a ruling letter is issued on the assumption that all of 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 C.F.R. 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. In such a case, it is recommended that a new ruling request be submitted in accordance with 177.2, Customs Regulations (19 C.F.R. 177.2).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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