HQ 957273 - Country of origin determination for ladies' lined jacket; 19 CFR 12.130(e)(1)(v); assembly constitutes substantial transformation - United States International Trade Commision Rulings

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HQ 957273

March 10, 1995

CLA CO:R:C:T 957273 jb

CATEGORY: CLASSIFICATION

Patrick D. Gill, Esq.
Rode & Qualey
295 Madison Avenue
New York, NY 10017

RE: Country of origin determination for ladies' lined jacket; 19 CFR 12.130(e)(1)(v); assembly constitutes substantial transformation

Dear Mr. Gill:

This letter is in response to your inquiry, dated October 31, 1994, on behalf of your client, Rafaella Sportswear, Inc., requesting a country of origin determination for a ladies' lined jacket. A sample of the completed garment was submitted to this office for examination.

FACTS:

You state that the fabric will be imported into Japan from Uruguay or other countries. The fabric will then be cut in Japan into the garment's constituent pieces, shipped to China for assembly by sewing into the finished garment and exported to the United States.

The jacket is constructed from 10 panels which will be cut in Japan. These consist of the front and back panels, and the top and under panels of the sleeves of the jacket. In addition there are several small textile pieces, also cut in Japan, consisting of the front facing, top collar, under collar, pocket piping, flap, pocket facing, breast pocket welt, and breast pocket facing. The individual cut fabric components will also be joined with corresponding cut pieces of lining, the latter which is similarly cut in Japan. You indicate that items of trim such as the buttons will probably be supplied from third countries such as Hong Kong.

In your opinion the assembly operation involved in the case of the instant garment is a simple one. As such, you claim that it is the cutting process which confers country of origin. Though you did not provide us with the relative cost breakdown of the various production operations, you did refer to a number of Customs rulings which you indicate support your
position that a substantial transformation occurs in the country where cutting takes place. During a subsequent meeting at our office, you stated that the value incurred in the manufacture of the components of this garment is greater than that incurred during the assembly process.

ISSUE:

What is the country of origin of the merchandise at issue?

LAW AND ANALYSIS:

Section 12.130 of the Customs Regulations (19 CFR 12.130) sets forth the principles of country of origin for textiles and textile products subject to Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854).

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 or country 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.

The factors to be applied in determining whether or not a manufacturing operation is substantial are set forth in 19 CFR 12.130(d)(2). The following are considered:

(i) The physical change in the material or article;

(ii) The time involved in the manufacturing or processing;

(iii) The complexity of the manufacturing or processing;

(iv) The level or degree of skill and/or technology required in the manufacturing or processing operations;

(v) The value added to the article or material;

Section 12.130(e)(1) describes manufacturing or processing operations from which an article will usually be considered a product of the country in which those operations occurred. Section 12.130(e)(1)(v) provides the following:

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 of all cut pieces of suit-type jackets, suits and shirts).
We have previously held that cutting of fabric into pattern pieces constitutes a substantial transformation of the fabric, resulting in the apparel pieces becoming a product of the country where the fabric is cut (See Headquarters Ruling Letter (HQ) 952531, dated November 25, 1992; HQ 953697, dated July 26, 1993; and HQ 955125, dated January 27, 1994).

Section 12.130(e)(1)(v) makes clear that there must be a substantial assembly by sewing or tailoring of a suit-type garment for substantial transformation to occur. To determine whether origin is conferred when an article is transformed from its numerous constituent parts to what is eventually recognized as the completed garment, i.e., a jacket, one must first define "substantial assembly".

Substantial assembly can be defined as that operation, whether by sewing or tailoring, when all the components of the garment are attached to form that completed jacket. Succinctly stated, substantial transformation occurs at the time of assembly of the individual component parts into what can be identified as a jacket.

The term tailored is frequently misconstrued to encompass only those garments which are constructed so as to fit the contours of the body. While this is an accurate definition, it is not all-inclusive. The Reader's Digest Complete Guide to Sewing, May 1985, p. 360, states, "(t)ailoring is just a refinement of standard sewing procedures, aimed at building permanent shape into the garment". Tailoring refers not only to the styling of a garment, but also to its workmanship. Styling refers to the cut and fit of a garment, whereas workmanship connotes the degree to which the garment has been finished (i.e., the spacing and size of stitch used, the finishing of seams so that no raw edges show, and the pressing of seams to ensure a streamlined silhouette). See, HQ 952842, dated January 7, 1993; HQ 951755, dated October 9, 1992; and, HQ 951821, dated September 28, 1992, where the country of origin of garments was discussed in terms of "tailoring".

In support of your position that the country of origin of the submitted ladies' jacket occurs in the country in which cutting takes place, you refer to several rulings: HQ 734392, dated August 4, 1992; HQ 082747, dated February 23, 1989; HQ 086665, dated March 23, 1990; HQ 951169, dated April 1, 1992; HQ 951437, dated July 17, 1992; HQ 953489, dated June 14, 1993; HQ 953698, dated July 19, 1993; and HQ 953903, dated August 17, 1993.

The rulings cited above can easily be distinguished from the subject jacket. In HQ 734392 the garment at issue was men's trousers; in HQ 082747, the garment at issue was a pair of jeans; in HQ 086665, the merchandise at issue were diapers; in HQ 951169 and 951437, the garments at issue were pants; in HQ 953489, the garments at issue were skirts; and in HQ 953698 and 953903, the garments at issue were shorts, pants and a skirt. Those rulings were based on facts specific to those garments and their respective simple assembly processes. To compare the
assembly process which leads to the style and cut of the subject jacket to the merchandise cited above (as for example the diapers or jeans), with relatively simple assembly operations, would not only be erroneous, but it would also lead to inconsistent results in country of origin determinations involving complex assembly operations like the instant jacket.

In particular, I would refer you to a closer reading of one of the rulings you cited, HQ 951169, wherein the country of origin of four styles of pants was discussed. The issue turned on whether the sub-assembly of some of the constituent garment pieces would affect the country of origin. Though information on sub-assembly operations had been furnished by the importer as to one of the styles, it was not provided for the remaining styles. Customs held that for four of the styles, even if sub-assembly operations had taken place, this would not affect the country of origin. However, as to the remaining style, Customs held that if there were no sub-assembly operations, and all of the cut pieces were assembled into the finished garment, this would amount to substantial processing. Thus the country of assembly would confer country of origin. This was stated to be due to the tailoring involved and the complex nature of the assembly process.

Accordingly value is not the only issue which must be examined. As set out in section 12.130(d)(2), the complexity of the manufacturing process and the degree of skill are also determinative factors. In the case of the subject garment, it is the opinion of this office that the assembly process is a complex one; it is the type of assembly provided for in section 12.130(e)(1)(v), as conferring country of origin. Features such as separate lapel pieces, lined flaps on the front pockets, an internal button closure and slits at the cuffs with decorative buttons, result in a tailored jacket whose detailed workmanship is further evidenced in the close spacing and size of the stitch and the clean finish of the seams.

The assembly operation performed in China is beyond a simple assembly operation and constitutes a substantial transformation of the fabric and confers country of origin.

HOLDING:

The country of origin of the submitted jacket is China. It is in China where assembly by sewing takes place and where the fabric last undergoes a substantial transformation and is transformed into a new and different article of commerce.

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 of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently 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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