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HQ 954993

January 12, 1994

CLA-2 CO:R:C:T 954993 NLP


Mr. Robert F. Seely
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693

RE: Country of origin marking of disposable medical wrapping made of spunbonded and meltblown polyolefin nonwoven fabric; 19 CFR 12.130; HRL 952208

Dear Mr. Seely:

This is in response to your letter of May 26, 1993, on behalf of your client, Baxter Healthcare Corp., in which you requested a country of origin marking determination for a disposable medical product called "SupraShield", that is made of Baxter CSR wrap. On August 31, 1993, a conference was held at our offices with you and Phil Robbins and Anthony Tonucci, of our staff. Subsequent to this conference, you submitted a supplemental memorandum, dated September 14, 1993. In addition, you have submitted samples of the CSR wrap, the material used to make this wrap and marketing brochures for this product.


SupraShield, made of Baxter CSR wrap, is a disposable protective wrapping used in hospitals and clinics to preserve the cleanliness and sterility of medical and surgical instruments and supplies. The product is used mainly to wrap instruments to be sterilized. When the instruments are sealed in the wrap and they are then sterilized with steam or ethylene oxide, they remain sterile until use.

The CSR wrap is made of a tri-laminate fabric sold under the trademark "SECURON". This material is composed of three heat- bonded layers of nonwoven fabric. The two outer layers are made of spunbonded polyolefin fabric and the inner layer is made of a meltblown polyolefin fabric. The spunbonded polyolefin fabric is manufactured in France and is imported on bulk roll in subheading 5603.00.9070, Harmonized Tariff Schedule of the United States (HTSUS). The meltblown fabric is manufactured in the United States (U.S.).

The meltblown layer of SECURON is formed from polyolefin pellets of U.S. origin. The pellets are extruded and meltblown into a fabric layer. Once formed, the meltblown fabric is pulled by suction into the bottom layer of the spunbonded fabric in a continuous process which mingles the fibers of the two layers. The next step is pinpoint lamination, which fuses the three layers at close and equidistant intervals without penetrating any of the three layers. Finally, the SECURON is slit to the appropriate width and wound on bulk rolls for shipment to your client. Your client cuts the material to length, folds it and bulk packages it. These operations involving the processing of the fabric are all conducted in the U.S. Your client then sells the wrap to hospitals and clinics in the bulk packages. At the time of sale and delivery the wrap is not sterile.

According to your letter of May 26, 1993, the process used to produce the meltblown fabric is "very capital intensive and for which there is a patent pending." The meltblown portion of the production line accounts for 91% of the total capital investment and the laminator portion accounts for the remaining 9%. All the production equipment is of U.S. origin.

The French spunbonded fabric comprises 80% of the total weight of the wrap, while the U.S.-made meltblown fabric contributes the remaining 20% of the fabric's weight. The total manufacturing cost of the tri-laminate wrap, not including selling expenses and profit, consists of:

French spunbonded material 56%
U.S. materials and manufacturing costs 44%

In addition, 60% of the total production time of this wrap is incurred in the U.S with the remaining 40% incurred in France.

According to your submission and the literature you provided, the key functions of the CSR wrap are to:

1) Provide strength and durability during clinical or hospital use;

2) Allow the sterilant into the package during sterilization and allow it to escape and dissipate after sterilization;

3) Maintain content sterility by providing a barrier to liquid and particulate matter;

4) Provide durability throughout handling of the package during sterilization, storage, transport and use.

The meltblown layer imparts the barrier properties to the wrap. This layer keeps out bacteria-laden air and moisture, but allows steam or gas sterilants to penetrate and then evacuate through the wrap. The spunbonded layers provide durability, strength, softness and drapeability to the wrap.

It is your position that the CSR wrap and the fabric of which it is manufactured are not products of foreign origin and, therefore, need not be marked with a foreign country of origin. While the qualities imparted by the spunbonded fabric are important, it is the meltblown layer which provides the essential character to this product. Thus, as this layer is of U.S. origin, the CSR wrap should be considered of U.S. origin.


Whether the imported spunbonded fabric is substantially transformed when it is combined, in the U.S., with U.S. origin meltblown fabric to produce the CSR wrap?


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. The Court of International Trade stated in Koro North America v. United States, 701 F.Supp. 229, 12 CIT 1120 (CIT 198), that "In ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which the term is used in the statute, giving reference to the purpose of the particular legislation involved." The purpose of the marking statute is outlined in United States v. Friedlaender & Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that: "Congress intended that the ultimate purchaser should be able to know by 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 the 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."

Section 12.130 of the Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). 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 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, HTSUS, or to any imported article classified outside of Section XI, HTSUS, under a subheading which has a textile category number associated with it. Because the subject merchandise would be classified under Section XI, HTSUS, 19 CFR 12.130 will be used in making the country of origin determination.

Pursuant to 19 CFR 12.130(b), the standard of substantial transformation governs the country of origin determination 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 and different article of commerce and 2) a substantial manufacturing or processing operation.

Section 12.130(d) of the Customs Regulations sets forth criteria for 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) of the Customs Regulations 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) 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 U.S.

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

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

(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 U.S.

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

The marking requirements hinge on whether the imported spunbonded fabric is substantially transformed by the processing performed in the U.S. Pursuant to 19 CFR 134.35, a manufacturer in the U.S. who substantially transforms an imported article is excepted from individual marking. Absent a substantial transformation, the article must be marked to advise the ultimate purchaser of the country of origin.

In Headquarters Ruling Letter 952208, dated October 8, 1992, Customs considered whether foreign sourced untwisted continuous single viscose filament yarn imported into Canada was substantially transformed when processed into two-ply viscose filament yarn. In holding that the imported yarn was not substantially transformed in Canada, Customs stated that both the foreign sourced untwisted viscose filament yarn and finished two-ply yarn qualified under the general commercial designation of "yarn" and therefore there had been no change in the fundamental character of the imported yarn after being further processed in Canada.

Similarly, in this case, we find that the domestic processing does not substantially transform the imported fabric. First, the processing in the U.S. does not change the commercial designation or identity of the product. When the French fabric enters the U.S., it is commercially referred to as nonwoven fabric. After being further processed in the U.S., the finished product is still a nonwoven fabric, although with a different modification. Both the imported fabric and the finished fabric fit under the general commercial designation of nonwoven fabric and therefore there has been no change in fundamental character.

Moreover, it is our position that both the spunbonded and meltblown fabrics equally contribute to making SupraShield a unique product. It is the combination of the barrier protection, strength, durability, softness and drapeability offered by these two fabrics that makes SupraShield specialized. The product literature illustrates this point. For example, the brochure entitled " Why do hospitals across the country want to get their hands on new Suprashield? states: "Working together, the two layers provide the ultimate in protection." The second brochure entitled "Understanding a better balance of properties" discusses the "superior balance of properties" in SECURON focusing on its softness, strength, drapeability, high barrier properties and breathability. The brochure states the following: "By combining the attributes of both spunbond and meltblown fabrics, Suprashield is able to provide a superior balance of properties necessary for a high-performance sterilization wrap."

In addition, according to your letter, the imported fabric is imported in a unique weight and polymer blend for use only in SECURON. Therefore, it is unlikely that it could be used for any other purpose than to make the finished SECURON. Moreover, the spunbonded layer of this fabric accounts for 80% of the bulk of this item and its manufacturing costs account for more than 50% of the cost of the finished fabric. Thus, the imported fabric plays an essential role in the SECURON and the processing performed on it in the U.S. does not negate its role.

Furthermore, even if the fabric was considered a new and different article under the first prong of the substantial transformation test, the second prong of the test would not be met. While the production of the U.S. component may be complex, their is no evidence to indicate that the U.S. processing of the imported fabric is particularly complex and no human skill appears to be involved in this processing. For example, the processing done to the imported fabric involves machine lamination to the U.S. fabric and then these materials are simply cut to width. The physical change in the fabric is not that significant. In addition, while 60% of the total production time for the fabric is incurred in the U.S., this is offset by the fact that more than half of the manufacturing costs are incurred outside the U.S. While you argue that the meltblown process is a complex and capital intensive operation, for example, the meltblown portion of the production line accounts for 91% and the laminator portion accounts for 9%, the production part that involves the foreign material is the lesser of these percentages.
Therefore, based on the above discussion, the imported fabric is not substantially transformed in the U.S. Accordingly, the country of origin of the subject product is "France".


Pursuant to 19 CFR 12.130, for marking purposes, the country of origin of the CSR wrap is France.

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)). This section 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).


John Durant, Director
Commercial Rulings Division

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