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NY D81294

August 18, 1998

CLA-2-58:RR:NC:TA:351 D81294


TARIFF NO.: 5806.32.1090

Mr. Kenneth N. Wolf
Sandler, Travis & Rosenberg, P.A.
551 Fifth Avenue
New York, NY 10176

RE: The tariff classification and status under the United States-Israel Free Trade Area Implementation Act of 1985 of textile ribbons from Israel.

Dear Mr. Wolf:

In your letter dated August 12,1998, you requested a classification ruling and country of origin determination on behalf of ZIM Industrial Ribbon Co.

Fabric which is woven and dyed in Taiwan will be imported into Israel. The fabric will be imported in rolls measuring 60 inches in width. In a telephone conversation you stated that the fiber content of the fabric is 90% polyester and 10 % metallic. In Israel a number of processes are undertaken to produce a wired ribbon. First, a non-fray stiffener is applied to the fabric. This is a coating typically applied to the backside of the fabric which is then subjected to a drying process. Next the fabric, which is in 60" rolls, will be precision slit to the desired ribbon width. After being slit, the ribbons are hemmed on both sides. This hemming operation includes the inclusion of a wire within the hems by means of merrow stitching. This procedure of making the edges of the ribbon fast goes beyond a simple hemming process. Four threads, 2 nylon and 2 metallic, are used to create a decorative edge to the ribbon, contain and conceal the wire and effectively form a hem.

Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for making country of origin determinations for textile 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, the standard of substantial transformation governs the determination of the country of origin 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 different article of commerce and 2) a substantial manufacturing or processing operation.

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.

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) lists some of the factors considered in determining whether a substantial manufacturing or processing operation has occurred. These factors include: the physical change in the material or article; the time involved in the processing; the complexity of the operation; the level or degree or skill and technology required in the operation; and the value added to the article or material in the non-U.S. based operation versus the value added to the article or material upon importation into the U.S.

The fabric is transformed into ribbon, creating a new and different article of commerce. The ribbon, in its final form, differs from the bolt of fabric in commercial designation, fundamental character and commercial use. Therefore, the first prong of the substantial transformation standard is satisfied for the fabric which is made into a ribbon.

The second prong of the substantial transformation standard, which requires that the article undergo a substantial manufacturing or processing operation in the second foreign country, must also be satisfied in order for the fabric to be considered substantially transformed.

As noted above, the merrowing and addition of the wire to the fabric edge is complex, requires a high degree of precision and is costly relative to the cost of the ribbon in its finished condition. The pre-cut narrow fabric is loaded into a semi-automatic device that applies two nylon threads and two metallic threads in a merrow stitch along each side of the ribbon. During stitching, the metal wire is applied and secured to the edge. For mechanical and decorative reasons, high density of stitching is required to create a continuous and dense edging. Figures submitted for both cost and labor indicate that processing costs in Israel equal over 45 percent of the cost of the completed ribbon, while labor hours are approximately double the time needed to produce the fabric in its imported condition.

Based upon these factors, we conclude that the fabric which is made into ribbon in Israel does undergo a substantial transformation, and the country of origin of the ribbon is Israel.

The applicable subheading for the ribbon will be 5806.32.1090, Harmonized Tariff Schedule of the United States (HTS), which provides for narrow woven fabrics, other woven fabrics: of man-made fiber, ribbons, other. The rate of duty will be Free.

This ruling is being issued under the provisions of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Camille R. Ferraro at 212-466-5885.


Robert B. Swierupski

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