HQ 954451: Country of origin determination of "Back Pal"; substantial transformation; 19 CFR 12.130(b) and (e); fabric is woven, cut, printed, inspected, folded, ironed and packed in Taiwan; the component pieces are assembled by sewing into backpacks in China; T.D. 85-38; HRL 951437

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 954451

                         August 16, 1993

CLA-2 CO:R:C:T  954451  NLP

CATEGORY: Classification

Ming Chun Wu, President
Minn Poe Industry Co., LTD.
12, 205 Lane, Min Tsu St. 
Hu Ne Village, Hu Nei Hsiang
Kaohsiung Hsien, Taiwan, R.O.C.

RE:  Country of origin determination of "Back Pal"; substantial
     transformation; 19 CFR 12.130(b) and (e); fabric is woven,
     cut, printed, inspected, folded, ironed and packed in
     Taiwan; the component pieces are assembled by sewing into
     backpacks in China; T.D. 85-38; HRL 951437

Dear Mr. Wu:

     This is in response to your letter of February 4, 1993, in
which you requested a country of origin determination for "Back
Pal" backpacks.  A sample of the completed item was submitted for
our examination.

FACTS:

     The article at issue is a backpack, called "Back Pal", style
No. MP9002.  The outer shell of the backpack is made of a woven
textile fabric. According to your letter, the fabric for the
backpack is woven and cut into 12 component pieces in Taiwan.  In
addition, in Taiwan, the fabric will be printed, pressed,
inspected, folded and packed.  The fabric components will then be
sent to China for assembly by sewing into backpacks.

     The time expended per unit and the skill and/or technology
required for the above processes are as follows:

     1. 1 minute per yard for weaving the fabric.
          This operation is performed by a weaving and dyeing
          machine.
     2. 3 minutes to cut the fabric into the 12 components. 
          This operation is performed by a computer marker
          machine, a plotter machine and a cutting machine.
     3. 0.5 minutes for printing.
          This operation is performed by a printing machine.
     4. 0.8 minutes for pressing.
     5. 3 minutes for inspection, folding and ironing.
          This operation is performed by skilled workers and an
          ironing machine, respectively.


     6. 3 minutes for packing into polybags and cartons.  
          This operation is performed by a packaging machine.
     7. 15 minutes/PC for assembled into Back Pal. 
          This operation is performed by sewing machines.

8-10 skilled workers operate the machinery used in performing the
operations in steps 1-6.  1-3 skilled workers are used in
assembling the backpacks in China.

     The values added, in U.S. currency, for the above described
processes are as follows:

     1. $0.80/PC added after weaving.             (Taiwan)
     2. $0.12/PC added after cutting.               " "     
     3. $0.06/PC added after printing.              " "
     4. $0.08/PC added after pressing and packaging." "
     5. $0.45/PC added after the accessory.         " "
     6. $0.24/PC added after assembly into Back Pal (China)

ISSUE:

      What is the country of origin for the "Back Pals"?

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 or 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 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.

     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 onto the U.S.

     Section 12.130(e) of the Customs Regulations sets forth
criteria which aid us in determining whether an article has been
subjected to certain manufacturing or processing operations which
serve to substantially transform an article into a new and
different article of commerce.  Specifically, Section
12.130(e)(1)(iii)(iv) and (v) are relevant in the instant case. 
This Section provides that:

          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:

          *         *         *         *         *

     (iii) Weaving, knitting or otherwise forming fabric;        

     (iv)  Cutting of fabric into parts and the assembly of those
           parts into the completed articles; 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).

     According to T.D. 85-38 (19 Cust. Bull. 58, 70; 50 FR 8714),
the final document rule establishing 12.130:

     [T]he assembly of all the cut pieces of a garment 
     usually is a substantial manufacturing process that 
     results in an article with a different name, character, 
     or use than the cut pieces.  It should be noted that 
     not all assembly operations of cut garment pieces will
     amount to a substantial transformation of those pieces.
     Where either less than complete assembly of all the cut
     pieces of a garment is performed in one country, or the
     assembly is a relatively simple one, then Customs will rule
     on the particular factual situations as they arise,
     utilizing the criteria in section 12.130(d). 
     [emphasis added]

     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.  Customs has also held that the mere
assembly of goods, entailing simple combining operations,
trimming or joining together by sewing is not enough to
substantially transform the components of an article into a new
and different article of commerce.  For example, in Headquarters
Ruling Letter (HRL) 951437, dated July 17, 1992, Customs held
that the assembly process of women's pants in Malaysia, which
involved the sewing together of components that were cut from
fabric in Singapore, did not involve sufficient skill or
complexity to constitute a substantial transformation as defined
by Section 12.130(e)(v).  Therefore, the country of origin was
found to be Singapore as that was where the piece goods were cut
into specific parts and where the articles last underwent a
substantial transformation. 

     In the instant case, the cutting in Taiwan for the backpack
materially alters the fabric into designated component pieces.  
The assembly operations to be performed in China are mere
combining and sewing operations and do not possess the requisite
degree of complexity to be deemed substantial manufacturing
processes for purposes of conferring country of origin status. 
In assembling the component pieces, no great degree of skill or
advanced technology is required, nor is tailoring involved.  
In addition, the value added to these garments in Taiwan is
greater than that added in China.  The processing these
components undergo in Taiwan is of longer duration and the work
involved is of greater complexity requiring 8-10 laborers as
opposed to the 1-3 laborers who process these pieces in China. 
Thus, the country of origin of these articles is Taiwan as that
is where the fabric was woven and cut into specific parts and
where the articles last underwent a substantial transformation. 

HOLDING:

     The country of origin for the "Back Pal" backpack is Taiwan.

     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
                                   Commercial Rulings Division