HQ 950841: Country of origin of baseball-style caps; modification of HRL 084624

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 950841

                         January 4, 1993




CLA-2  CO:R:C:T   950841 CC

CATEGORY:  Classification

Nancy Fuller-Jacobs, Esq.
Jennings, Engstrand & Henrikson
501 West Broadway
Suite 1400
San Diego, CA  92101-3541

RE:  Country of origin of baseball-style caps; modification of   
     HRL 084624

Dear Ms. Fuller-Jacobs:

     This letter is in response to your inquiries, on behalf of 
R & R Accessories (R&R), concerning the country of origin of
baseball-style caps.  

     In Headquarters Ruling Letter (HRL) 084624, dated August 8,
1989, we ruled on the country of origin of baseball-style caps
imported by R&R.  In HRL 084624 the entire facts presented
concerning processing of the subject hats were in the following
statement: "The material for the hat is cut in Taiwan but is
assembled in either the Philippines, Thailand, or China."  We
ruled in HRL 084624 that the country of origin was the country of
assembly. 

     In response to concerns raised by Customs relating to the
country of origin of the subject merchandise and the completeness
of the factual information furnished for HRL 084624, you
submitted additional information concerning the manufacturing and
processing operations employed by R&R to make the subject caps. 
This information shows, among other things, that the caps are
made in three countries instead of two, with final assembly
taking place in Mexico.  In our letter of May 4, 1992, we
informed you that since the manufacturing and processing
operations of R&R's merchandise are substantially different from
the information provided to us for making the country of origin
determination in HRL 084624, we would be modifying HRL 084624
based on the additional information and in accordance with 19 CFR
177.9.  The modification of HRL 084624 follows based on all the
information you have provided to us concerning the merchandise at
issue.   

FACTS:

     According to your submissions, the following processes are
performed in Taiwan:  

     1.  The raw materials for the caps are purchased in Taiwan
at a cost of $4.030 per dozen.  

     2.  The materials are then shipped via Hong Kong to China at
a cost of $.392 per dozen.  

     You state that the following processes are performed in
China:

     1.  The cap materials are cut using automatic machines.  

     2.  The sweatband material is cut in straight lines.  The
material has been sewn together by sewing long, straight strips
of material together using a regular needle machine.  There is no
turning or positioning of the material required.

     3.  The mesh back and front panel components are created by
using a regular, single needle machine.  The four pieces of mesh
back are sewn together using three straight line stitches.  This
sewing involves a straight line sewing technique where the worker
pulls the material through the machine; the worker is not
required to guide the material in any special way, and can rest
his or her arms on the machine while sewing.  

     4.  The visor is sewn together by using a double needle four
stitch machine.  This sewing combines a piece of foam, a hard
cardboard material, and a top cloth material.  There is a guide
on the Four Stitch Machine which helps the worker turn and sew
the visor.  Depending on the client's specifications, a total of
between 2 to 8 lines of stitches are placed in the visor.  

     5.  After the above-referenced process which involves labor
costs of $.335 per dozen, the components of the caps are shipped
to Mexico, via Hong Kong, at a cost of $.608 per dozen.  

     You state that the following processes are performed in
Mexico:

     1.  The materials are transported and unloaded and then the
inventory is checked.  

     2.  The crown is assembled by performing the following
operations: sewing lining #1 on the mesh back, covering the mesh
back edge with lining, sewing the front panel by a single stitch
which creates the shape of the front panel on the crown,
combining the front panel and mesh back, which are then sewn
together using a regular single needle machine, sewing linings #2
and #3 on the mesh back, and sewing 2 size bands on the crown. 

     3.  The fabric label is sewn or glued on the cap.

     4.  The visor, parts of the crown, braid, and sweatband are
combined.  The assembly of these parts requires the use of a high
head single needle sewing machine, which requires the worker to
position his hands to turn the materials while sewing.  The
machine does not have a table so that the operator can rest his
or her arms while sewing.  You believe that this step requires
the greatest degree of skill on the part of the operator. 
Holding all four pieces together, the operator of a high head
machine sews together the crown parts and sweatband.  This
process is accomplished by the operator performing the following
tasks: sewing together the crown parts and sweatband; sewing the
visor onto the cap, and at the same time, sewing the braid onto
the cap, and cutting the excess braid; and inspecting the caps.  

     5.  The adjustable band is sewn onto the crown.  

     6.  A quality control supervisor spot checks the quality of
the cap.

     7.  The button is attached to the cap.

     8.  The caps are packed and shipped.  

The total cost of all packaging materials is $.436 per dozen.
Direct labor costs in Mexico equal $.570 per dozen caps, and the
total labor costs in Mexico equal $1.145 per dozen caps.    
    
ISSUE:

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

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 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
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 into the U.S.

     The raw material for the caps at issue is Taiwanese.  In
China the cap materials are cut, the front and back panels are
produced by sewing, and the visor is sewn together.  The
materials created by this processing clearly identify the
merchandise at issue as caps; thus, a new and different article
of commerce has been created in China.  In addition, we believe
that the operations performed in China constitute substantial
manufacturing and processing operations.  Consequently a
substantial transformation has taken place in China.  In Mexico
only a partial assembly takes place, consisting mainly of
assembly of the crown and attachment of the visor, braid,
sweatband, adjustable band and button, and the packing and
shipment of the merchandise.  More importantly, when the
merchandise leaves China it is clearly identifiable as a cap, and
thus a new and different article of commerce has not been created
in Mexico.  Consequently a substantial transformation does not
take place in Mexico; the last substantial transformation for the
merchandise at issue takes place in China.
        
HOLDING:

     The country of origin for the merchandise at issue is China.

     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 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).

     Based on the additional facts presented and Section
177.9(b)(1) of the Customs Regulations, and in order to insure
uniformity in Customs country of origin determination of this
merchandise and eliminate uncertainty, we are modifying HRL
084624 to reflect the above country of origin determination
effective with the date of this letter.  

     This notice to you should be considered a modification of
HRL 084624 under 19 CFR 177.9(d)(1).  It is not to be applied
retroactively to HRL 084624 (19 CFR 177.9(d)(2)) and will not,
therefore, affect past transactions for the importation of your 
client's merchandise under that ruling.  


                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division