HQ 0955526 - Country of origin marking of imported flag prints from Japan and Taiwan; 19 CFR 12.130; printing; cutting to length or width; sewing, hemming, grommets, labeling, packaging. - United States International Trade Commision Rulings

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HQ 955526

March 10, 1994

CLA-2 CO:R:C:T 955526 ch

CATEGORY: CLASSIFICATION

Inna Gorodetsky
Administrative Manager
Emerson U.S.A.
951 Indiana Street
San Francisco, California 94107

RE: Country of origin marking of imported flag prints from Japan and Taiwan; 19 CFR 12.130; printing; cutting to length or width; sewing, hemming, grommets, labeling, packaging.

Dear Ms. Gorodetsky:

This is in response to your letters of December 1, 1993, and February 17, 1994, requesting a country of origin ruling for certain imported flag prints.

FACTS:

Pongee polyester greige fabric is woven in Japan and exported to Taiwan. In some instances the fabric is cut to length, in others it is exported in material lengths.

The material is printed or dyed (not both) in Taiwan. In addition, material imported in the piece will be cut to length. The printed material is hung, dried, cured, baked and then exported to the United States.

In the United States, the sides are trimmed. A header and grommets are sewn on one side of the print and the remaining sides are hemmed. The finished flags are then labeled, folded and packaged.

You have submitted calculations indicating that the costs of printing the fabric in Taiwan and finishing the flags in the United States are approximately equal. The costs associated with weaving the fabric in Japan were not submitted.

ISSUE:

What is the country of origin for the printed flags?

LAW AND ANALYSIS:

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 for the article.

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 a 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) sets forth manufacturing or processing operations which will usually constitute a substantial transformation. Section 12.130(e)(2) enumerates instances which will usually not constitute a substantial manufacturing or processing operation. In Treasury Decision (T.D.) 85-38, published in the Federal Register on March 5, 1985, (50 FR 8714), the final rule document which established 19 CFR 12.130, there is a discussion of how the examples and factors enumerated in the regulation are intended to operate:

Examples set forth in 19 CFR 12.130(e) are intended to give guidance to Customs officers and other interested parties. Obviously, the examples represent clear factual situations where the country of origin of the imported merchandise is easily ascertainable. The examples are illustrative of how Customs, given factual situations which fall within those examples, would rule after applying the criteria listed in 12.130(d). Any factual situation not squarely within those examples will be decided by Customs in accordance with the provisions of 12.130(b) and (d).

Section 12.130(e) reads as follows:

Manufacturing or processing operations. (1) An article or material usually will be a product of a particular foreign territory or country, or insular possession of the U.S., when it has undergone prior to importation into the U.S. in that foreign territory or country, or insular possession any of the following:

(i) 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;

(ii) Spinning fibers into yarn;

(iii) Weaving, knitting or otherwise forming fabric;

(iv) Cutting of fabric into parts and the assembly of those parts into the completed article; or

(v) Substantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut from fabric in another foreign territory or country, or insular possession, into a completed garment (e.g. the complete assembly and tailoring of all cut pieces of suit-type jackets, suits and shirts).

(2) An article or material usually will not be considered to be a product of a particular foreign territory or country, or insular possession of the U.S. by virtue of merely having undergone any of the following:

(i) Simple combining operations, labeling, pressing, cleaning or dry cleaning, or packaging operations, or any combination thereof;

(ii) Cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use;

(iii) Trimming and/or joining together by sewing, looping, linking, or other means of attaching otherwise completed knit-to-shape component parts produced in a single country, even when accompanied by other processes (e.g. washing, drying, mending, etc.) normally incident to the assembly process;

(iv) One or more finishing operations on yarns, fabrics, or other textile articles, such as showerproofing, superwashing, bleaching, decating, fulling, shrinking, mercerizing, or similar operations; or

(v) Dyeing and/or printing of fabrics or yarns.

In this instance fabric woven in Japan is exported to Taiwan, where it is printed or dyed, hung, baked, dried and cured. On occasion the fabric is also cut to length. Pursuant to Section 12.130(e)(2)(v), dyeing or printing fabric does not constitute a substantial transformation. Furthermore, cutting fabric to length is not the complex cutting into parts and assembly of those parts set forth in Section 12.130(e)(1)(iv). Rather, it entails a simple straight-line incision on two sides of the article. Hence, the cutting in this case does not constitute a substantial processing operation. Finally, the baking, drying, curing and hanging operations are analogous to the finishing operations set forth in Section 12.130(e)(2)(iv) and do not substantially transform the merchandise. As a result, the unfinished flags are not a product of Taiwan.

In the United States, the four sides of the unfinished flags are trimmed. A header with grommets is sewn on one side of the flag. The other three sides are hemmed. The finished product is labeled and packaged. The trimming, grommeting and hemming operations are simple assembly processes as set forth in Section 12.130(e)(2)(iii). Moreover, the labeling and packaging operations are mere combining operations of Section 12.130(e)(2)(i). These processes are not substantial manufacturing operations and do not result in a substantial transformation of the flags. Consequently, the flags are not products of the United States.

The foregoing conclusions are consistent with our prior decisions concerning merchandise undergoing similar processing operations. In Headquarters Ruling Letter (HRL) 953295, dated May 7, 1993, woven greige fabric from China was exported to Mauritius to be processed into finished flat sheets. In Mauritius, the fabric was printed, cut, sewn, scoured, bleached and packaged. We concluded that there was no substantial transformation in Mauritius. Therefore, the flat sheets were products of China.

In HRL 555677, dated November 5, 1990, rolls of cotton fabric were exported to Jamaica to be manufactured into surgical cloths. In Jamaica, the fabric was dyed, cut, stitched on all four edges and packaged. We found that the operations performed in Jamaica were not complex and did not constitute a substantial transformation.

HOLDING:

The country of origin of the subject merchandise is Japan. In accordance with Customs Regulation 134.46, the country of origin must be preceded by "Made in," or "Products of," or other similar words. However, the marking "Made in Japan, Finished in the United States," is acceptable. A marking of "Made in Japan, Constructed in the United States," is not acceptable as it does not accurately describe the operations performed in the United States.

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).

Sincerely,

John Durant, Director

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