HQ 0953229 - Country of origin under 19 CFR 12.130 for certain rayon fabrics; bleaching; significant process. - United States International Trade Commision Rulings

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HQ 953229

December 21, 1993

CLA-2 CO:R:C:T 953229 ch

CATEGORY: CLASSIFICATION

Jane B. O'Dell
Senior Manager
KPMG Peat Marwick
3100 Two Union Square
601 Union Street
Seattle, Washington 98101-2327

RE: Country of origin under 19 CFR 12.130 for certain rayon fabrics; bleaching; significant process.

Dear Ms. O'Dell:

This letter is in response to your inquiry, dated January 4, 1993, on behalf of your client, B. Rawe BmbH, requesting a country of origin determination for certain rayon fabrics woven in Korea or Taiwan and further processed in Germany.

FACTS:

The submitted samples are woven rayon fabrics designated as Cinderella, Belinda, Cosana, Jauako, Cilla and Christina. A laboratory analysis of the sample entitled Cinderella indicates that it is composed of approximately equal parts filament and staple rayon. The fabrics are woven in Korea or Taiwan. In Germany, they are scoured, bleached, sanforized (pre-shrunk), printed and dyed. You have submitted samples of the greige fabrics prior to bleaching, as well as samples of the finished products. Pursuant to our request, you have furnished this office with printed and dyed products from greige fabrics which have merely been scoured, as well as from greige fabrics which have been both scoured and bleached.

ISSUE:

What is the country of origin for the subject merchandise?

LAW AND ANALYSIS:

Country of origin determinations for textile products are subject to Section 12.130 of the Customs Regulations (19 CFR 12.130). Section 12.130(b) provides that a textile product that is processed in more than one country or territory shall be a product of that country or territory where it last underwent substantial transformation. A 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.

Section 12.130(d) of the Customs Regulations sets forth criteria in determining whether a substantial transformation of a textile product has taken place. This regulation states that these criteria are not exhaustive; one or any combination of criteria may be determinative, and additional factors may be considered.

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.

Section 12.130(d)(2) of the Customs Regulations states that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the following will be considered:

(i) The physical change in the material or article as a result of the manufacturing or processing operations in each foreign territory or country, or insular possession of the United States.

(ii) The time involved in the manufacturing or processing operations in each foreign territory or country, or insular possession of the United States.

(iii) The complexity of the manufacturing or processing operations in each foreign territory or country, or insular possession of the United States.

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations in each foreign territory or country, or insular possession of the United States.

(v) The value added to the article or material in each foreign territory or country, or insular possession of the United States, compared to its value when imported into the United States.

Section 12.130(e)(1) clarifies the application of these standards by setting forth examples of processing operations which will usually result in a substantial transformation. Subsection 12.130(e)(1)(i) provides for:

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. (Emphasis added).

In this instance, each of the fabrics has been dyed and printed and has been subjected to the finishing operations of bleaching and shrinking. Hence, it appears that they underwent a substantial transformation in Germany. (See Headquarters Ruling Letter (HRL) 734354 and HRL 734351, dated March 2, 1992, rayon greige fabrics exported to a second country are products of that second country for marking purposes when they have been printed, dyed, bleached and pre-shrunk).

However, in HRL 078040, dated November 24, 1986, we were asked to determine the country of origin for 100 percent rayon greige goods exported from China to West Germany. In Germany, the fabrics were dyed, printed, bleached and treated to prevent shrinkage. In that decision, we stated:

It is our understanding that fabrics composed of man- made fibers are commonly white or off-white as manufactured. In this case involving greige fabric of man-made fibers that is to be dyed and printed, bleaching which is chemical process used to whiten fabrics, yarns, or fibers is superfluous. Under these circumstances, bleaching is excluded as one of the processing operations that usually will result in a substantial transformation.

This language indicates that bleaching man-made fibers such as rayon is normally not a substantial manufacturing process despite the general rule contained in Subsection 12.130(e)(1)(i).

Similarly, in HRL 084243, dated July 19, 1989, certain rayon greige fabrics were exported to Canada where they were dyed, printed, bleached and sanforized. In that ruling, we concluded that the processes undertaken in Canada were "unnecessary in the overall finishing of the fabric." For this reason, we again found that the bleaching of rayon greige fabric was not a substantial manufacturing process.

At a meeting held at Customs Headquarters on September 22, 1993, you argued that bleaching was a necessary process in the manufacture of the instant merchandise. Specifically, you contended that bleaching insures an even background for dyeing, so that the final products are uniform in color and without flaws caused by impurities contained in the underlying fabric. In order to substantiate your claims, you offered to supply this office with samples of the finished product printed and dyed on scoured and bleached greige fabrics, as well as on greige fabrics which had merely been scoured.

In light of the arguments you advanced at our initial meeting, we consulted with specialists in the area of textile chemistry. Based upon these inquiries, we have confirmed that many manufacturers do not bleach man-made fibers such as rayon unless the final product is white. However, certain high quality fabrics of man-made fibers are bleached in order to obtain a high and uniform degree of whiteness to ensure the purity of bright dye shades. Bleaching of rayon fabrics is particularly useful when the fabric is dyed with a light, soft hue or tint. Under these circumstances, the bleaching of rayon fabric would not be superfluous or unnecessary.

On November 9, 1993, a second conference was convened to inspect several samples of the instant merchandise which had been dyed and printed with various colors and designs. Each pattern was printed upon rayon fabric which had been scoured, as well as rayon fabric which had been both scoured and bleached. Representatives from the Office of Regulations and Rulings and the Office of Laboratories and Scientific Services attended this meeting on behalf of Customs.

Upon close examination of the fabric samples we noticed appreciable overall differences in color between the bleached and unbleached rayon fabrics. These differences were particularly evident in the samples which were dyed with light colors. In addition, you were able to identify slight impurities or variations in color found in the unbleached fabrics which were not present in the bleached fabrics. Finally, the submitted samples appeared to be high quality fabrics which would be marketed to a discriminating clientele. Hence, it is reasonable to conclude that the benefits conferred upon the materials through bleaching would enhance their marketability. For these reasons, we find that you have affirmatively demonstrated that bleaching the merchandise is a substantial manufacturing process in this instance.

As the subject merchandise has been dyed, printed, bleached and sanforized (pre-shrunk) in Germany, it is a product of that country pursuant to Subsection 12.130(e)(1)(i).

HOLDING:

The country of origin of the subject merchandise is Germany.

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)), which states that a ruling letter is issued on the assumption that all 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 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

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