HQ 958700: Country of Origin determination for knit scarves andheadbands; fabric knit in Taiwan; 19 CFR 12.130(b),(d),(e);knitting constitutes a substantial transformation

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 958700
                                 
                          March 25, 1996

CLA-2  RR:TC:TE  958700  jb

CATEGORY:  CLASSIFICATION

Dick Lin
Canonda Enterprise Co., Ltd.
6/F. No. 119, Chien Kuo N. Road
Sec. 2, Taipei
Taiwan, R.O.C.

RE:  Country of Origin determination for knit scarves and
headbands; fabric knit in Taiwan;  19 CFR 12.130(b),(d),(e);
knitting constitutes a substantial transformation 

Dear Mr. Lin:

     This letter is in response to your inquiry of November 20,
1995, requesting a country of origin determination for certain
knit scarves and headbands.  Samples were submitted to this
office for examination.

FACTS:

     The merchandise at issue consists of knit scarves and
headbands made out of acrylic or wool yarn.  The manufacturing
process is as follows:

     Taiwan

     knitting of goods in jacquard circular machines
     setting lines of demarcation

     Vietnam

     inspection
     separation of scarves or headbands by cutting along lines of
demarcation
     ironing (steaming)
     size fitting
     making up fringe/or knot
     attaching fringe or knot to scarf or headband
     attaching J-hook and hang tag 
     packing in polybag
     quality control
     packing

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:  

     (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 of all cut            pieces of suit-type jackets, suits
and shirts).
     
      As was stated by Customs in Treasury Decision (T.D.) 85-38
(19 Cust. Bull. 58, 70; 50 FR 8714), the final document rule
establishing 19 CFR 12.130, in pertinent part:

     [T]he assembly of all 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).
     
     Customs has consistently held that the mere assembly of
goods by linking and looping, or simple sewing, is not enough to
substantially transform the components of an article into a new
and different article of commerce (See HRL 082747, dated February
23, 1989; HRL 086665, dated March 23, 1990; HRL 951169, dated
April 1, 1992; HRL 951437, dated July 17, 1992; and HRL 952647,
dated January 27, 1993).      
     
     In the case of the subject scarves and headbands, the
knitting process identifies the merchandise and is considered a
substantial transformation as envisioned by 12.130(e)(1)(iii). 
The operations performed in Vietnam, that is, cutting along the
lines of demarcation and combining and sewing are minor
operations which do not possess the requisite degree of
complexity to be deemed substantial manufacturing processes for
purposes of conferring country of origin status.  No great degree
of skill or technology is required, nor is tailoring involved.  

     Additional operations such as ironing, inspecting and
packaging are considered minor finishing operations and are not
sufficient to affect country of origin.  As is stated in section
12.130(e)(2)(i), an article usually will not be considered to be
a product of a particular country  by virtue of merely having
undergone:

     Simple combining operations, labeling, pressing, cleaning or
drycleaning, or packaging     operations, or any combination
thereof;


     The knitting operation in Taiwan materially alters the
fabric.  This constitutes a substantial transformation of the
fabric and confers country of origin.  

HOLDING:

     The country of origin of the submitted garments, i.e., the
scarves and headbands, is Taiwan.  It is at the knitting process
in Taiwan that the fabric last undergoes a substantial
transformation and is transformed into new and different articles
of commerce.  As this constitutes a substantial transformation of
that fabric, Taiwan is the country of origin for the subject
scarves and headbands.    
     
     However, you should be aware that on December 8, 1994, the
President signed into law the Uruguay Round Agreements Act. 
Section 334 of that Act provides new rules of origin for textiles
and apparel entered or withdrawn from warehouse, for consumption,
on and after July 1, 1996.  On September 5, 1995, Customs
published Section 102.21, Customs Regulations, in the Federal
Register, implementing 334 (60 FR 46188).  Section 334 generally
provides, with certain exceptions, that the origin of textile
goods will be the country in which they are assembled.  The
subject scarves and headbands are within the products excepted
from the assembly rule.  19 CFR 102.21(c)(3)(i) states "If the
good was knit to shape, the country of origin of the good is the
single country, territory, or insular possession in which the
good was knit".  Accordingly, as per 334 of the Uruguay Round
Agreements Act, the country of origin of the subject merchandise
is also Taiwan.

     This ruling is issued pursuant to the provisions of Part
177, Customs Regulations (19 CFR Part 177).  If the specific
factual situation is not as described above, this ruling may not
be valid.  In such an event, it is recommended that a new ruling
request be submitted.




                         Sincerely,





                         John Durant, Director
                         Commercial Rulings Division