us-cbp-cross-rulings-hq-959137•HQ 959137: Classification, country of origin and markingdeterminations; embroidered upholstery fabric; Section 12.130;Section 102.21(c); Section 134.1(b), Customs Regulations.
HQ 959137: Classification, country of origin and markingdeterminations; embroidered upholstery fabric; Section 12.130;Section 102.21(c); Section 134.1(b), Customs Regulations.
us-cbp-cross-rulings-hq-959137HQ 959137: Classification, country of origin and markingdeterminations; embroidered upholstery fabric; Section 12.130;Section 102.21(c); Section 134.1(b), Customs Regulations.Guidance
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 959137
June 20, 1996
CLA-2 RR:TC:TE 959137 SK
CATEGORY: Classification
TARIFF NO.: 5810.99.9000
Spencer Hutchins
AKA International, Inc.
2601 Elliott Ave., Suite 3167
Seattle, Washington 98121
RE: Classification, country of origin and marking
determinations; embroidered upholstery fabric; Section 12.130;
Section 102.21(c); Section 134.1(b), Customs Regulations.
Dear Mr. Hutchins:
This is in response to your inquiry of November 29, 1995, on
behalf of Robbins Textile Designs, requesting a classification,
country of origin and marking determination for embroidered
upholstery fabric pursuant to Section 12.130, Section 102.21 and
Section 134.1(b), Customs Regulations. You also inquire as to
whether the subject merchandise is entitled to a duty allowance.
Samples swatches were submitted to this office for examination.
FACTS:
The subject merchandise consists of two styles of
embroidered upholstery fabric, identified as "Siam" and
"Newport." The woven base fabric of each swatch is made of 100
percent silk.
The subject fabrics are imported from India into the United
States. A knit polyester backing is applied in the United States
to facilitate the embroidery process. The fabric is exported to
China for embroidery with rayon thread. The fabric is then
returned to the United States where it will be used as
upholstery.
- 2 -
You submit that the cost of the polyester-backed silk is
$15.30 per yard with the cost breakdown set forth as $13.30 for
the silk and $2.00 for the backing. You state that the
preponderance of the weight is imparted by the silk, rather than
the polyester backing, and that the cost of embroidering fabric
in China is $15.00 per yard.
Specification sheets were provided for the subject fabrics.
The fabric style identified as "Siam" is a plain weave 100
percent silk fabric with a width per unit area of 140
centimeters. The fabric weighs 157 grams per square meter. The
warp is 44 denier and the weft 380 denier. The yarn has been
dyed. The fabric style identified as "Newport" is a plain
solid weave made of 100 percent silk. The fabric has a width per
unit area of 137 centimeters. The fabric weighs 100-150 grams
per linear yard. The yarn has been dyed.
The Office of Laboratories and Scientific Services at
Customs Headquarters analyzed the subject fabrics and submitted a
lab report to this office. The lab report states that the
"Newport" style fabric consists of 56 percent by weight woven
fabric and 44 percent by weight knit fabric. The "Siam" style
consists of 42 percent by weight woven fabric, 12 percent by
weight knit fabric, and the remainder of the total fabric weight
is comprised of a nonwoven backing material and embroidery
thread.
ISSUES:
1) What is the proper classification of the embroidered fabric?
2) Is the subject merchandise entitled to a duty allowance?
3) What is the country of origin of the subject merchandise?
4) How is the subject merchandise to be marked?
LAW AND ANALYSIS:
- CLASSIFICATION AND ASSESSABLE DUTY -
Classification of merchandise under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) is governed by
the General Rules of Interpretation (GRI's). GRI 1 provides that
classification shall be determined according to the terms of the
headings and any relative section or chapter notes.
- 3 -
Merchandise that cannot be classified in accordance with GRI 1 is
to be classified in accordance with subsequent GRI's, applied in
sequential order.
Heading 5810, HTSUSA, provides for, inter alia, embroidery
in the piece. The Explanatory Notes (EN) to heading 5810, at
page 808, define embroidery as that which is "obtained by working
with embroidery threads on a pre-existing ground of ...
woven fabric ... ." The subject merchandise consists of a pre-existing woven fabric background of 100 percent silk onto which
rayon thread has been embroidered to create an ornamental effect.
Accordingly, classification is proper within heading 5810,
HTSUSA. Specifically, the subject fabric is classifiable within
subheading 5810.99.9000, HTSUSA, which provides for, "Embroidery
in the piece, in strips or in motifs: other embroidery: of other
textile materials: other... ." The rate of duty applicable to
subheading 5810.99.9000, HTSUSA, is set forth in Additional U.S.
Note 5 which states: "The rates of duty applicable to subheading
5810.99.90 are ... 7.6 percent, but in the case of embroidery in
the piece not less than the rate which would apply to such
product if not embroidered." If the subject merchandise were not
embroidered, both the Newport and the Siam styles would be
classifiable under subheading 5007.20, HTSUSA, which has an
attendant rate of duty of 3 percent ad valorem. The subject
merchandise, therefore, is dutiable at a rate of 7.6 percent ad
valorem. There are no quota/visa restraints applicable to the
subject merchandise at this time. The imported embroidered
fabric is dutiable on its full appraised value. See U.S. Note
2(a), subchapter II, Chapter 98, HTSUSA. Based on the
information presented, no duty allowance may be made for the
polyester backing.
- COUNTRY OF ORIGIN: SECTION 12.130, CUSTOMS REGULATIONS -
Country of origin determinations for textile or apparel
products entered, or withdrawn from warehouse for consumption,
before July 1, 1996, 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 to be used 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.
- 4 -
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;
(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) of the Customs Regulations describes
manufacturing or processing operations by which an article will
usually be considered a product of the country in which the
following operations occur:
(i) Dying 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 articles; or
- 5 -
(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).
In the instant case, the formation of the woven fabric in
India constitutes a substantial transformation as per Section
12.130 (e)(1)(iii) cited above. The formation of the knit
polyester backing also constitutes a substantial transformation
for the same reason, however the country in which this
manufacturing operation takes place is not specified in your
submission to this office. The combining of the polyester
backing to the silk fabric in the United States does not
substantially transform the subject merchandise; this operation
is deemed a simple assembly process and does not require the
requisite degree of complexity to be considered a significant
manufacturing or processing operation. Similarly, the embroidery
work performed in China does not constitute a substantial
transformation inasmuch as the embroidery does not serve to
change the identity or fundamental character of the fabric: the
subject merchandise enters China as upholstery fabric and is
exported as upholstery fabric, albeit enhanced in decorative
value. See Headquarters Ruling Letter (HRL) 089068, dated July
1, 1991, in which Customs determined that embroidering a polar
bear design to the front panel of an unfinished sweater was not a
substantial transformation; HRL 088565, dated May 23, 1991, in
which Customs held that re-embroidery of lace fabric was not a
substantial transformation, and; HRL 733952, dated February 15,
1991, in which Customs determined that decorating front panels of
an unfinished tracksuit top with appliques and embroidery did not
constitute a substantial transformation. HRL 082527, dated March
9, 1989, is distinguished in that this ruling dealt with
inexpensive fabric which underwent complex eyelet embroidery
performed by Schiffli machines and virtually all of the value was
imparted by the embroidery.
As the simple assembly and embroidery operations,
respectively performed in the United States and China, do not
serve to substantially transform the subject merchandise within
the purview of Section 12.130, and the woven silk fabric
component and the knit polyester backing have been substantially
transformed prior to assembly in different countries, a different
test must be applied to determine the country of origin of the
fabric. In Customs Memo 088778, dated March 25, 1991, this
office held that in manufacturing situations which are not
covered by 19 CFR 12.130, a country of origin determination shall
be predicated on the portion of the article which imparts the
essential character to that garment. Explanatory Note VIII
- 6 -
to GRI 3(b), which sets forth the standards used in an essential
character determination, reads:
"[T]he factor which determines essential
character will
vary as between different kinds of goods. It
may,
for example, be determined by the nature of the
material or component, its bulk, quantity, weight
or value, or by the role of a constituent
material
in relation to the use of the goods."
In the instant case, it is the woven silk fabric which
imparts the essential character to the subject merchandise. This
component provides the most significant visual impact, it is
significantly heavier than the polyester backing and, at $13.30
per yard to produce the silk fabric versus $2.00 per yard to
produce the knit backing, it is substantially more valuable.
Accordingly, if the subject upholstery fabric is entered, or
withdrawn from warehouse for consumption, before July 1, 1996,
the country of origin of the fabric is India.
-COUNTRY OF ORIGIN: SECTION 102.21 -
Pursuant to the Uruguay Round Agreements Act, new rules of
origin will be effective for textile or apparel products entered,
or withdrawn from warehouse for consumption, on or after July 1,
1996. These rules were published
in the Federal Register, 60 Fed. Reg. 46188 (September 5, 1995).
Section 102.21, Customs Regulations (19 CFR Section 102.21), sets
forth the general rules which determine country of origin. The
country of origin of a textile or apparel product will be
determined by a hierarchy of rules set forth in paragraphs (c)(1)
through (c)(5) of Section 102.21.
Section 102.21(c)(1) sets forth the general rule for
determining the country of origin of a textile or apparel product
in which the good is wholly obtained or produced in a single
country, territory, or insular possession.
Section 102.21(c)(2) provides for instances where the
country of origin of a textile or apparel product cannot be
determined under Section 102.21(c)(1). Section 102.21 (c)(2)
provides:
"[W]here the country of origin of a textile or apparel
product
cannot be determined under paragraph (c)(1) of this
section,
the country of origin of the good is the single
country, territory,
- 7 -
or insular possession in which each foreign material
incorporated
in that good underwent an applicable change in tariff
classification,
and/or met any other requirement, specified for the
good in
paragraph (e) of this section."
Section 102.21(c)(3) governs instances where country of
origin of a textile or
apparel product cannot be determined pursuant to paragraphs
(c)(1) or (c)(2) and provides:
(i) "[I]f 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; or
(ii) Except for goods of heading 5609, 5807, 5811, 6213,
6214, 6301
through 6306, and 6308, and subheadings 6209.20.5040,
6307.10,
6307.90, and 9404.90, if the good was not knit to shape
and the
good was wholly assembled in a single country,
territory, or insular
possession, the country of origin of the good is the
country, territory,
or insular possession in which the good was wholly
assembled."
Section 102.21(b), paragraph (6), defines "wholly assembled"
as follows:
"[T]he term wholly assembled' when used with reference
to a good
means that all components, of which there must be at
least two, preexisted in essentially the same
condition as found in the finished good and were
combined to form the finished good in a single
country, territory, or insular possession. Minor
attachments and
minor embellishments (for example, appliques, beads,
spangles, embroidery, buttons) not appreciably
affecting the identity of the
good, and minor subassemblies (for example, collars,
cuffs, plackets, pockets), will not affect the status of
a good as wholly assembled' in
a single country, territory, or insular possession."
For the manufacturing scenario described above, Section
102.21(c)(1) does not provide the relevant country of origin
analysis because the subject embroidered upholstery fabric is not
wholly obtained or produced in a single country.
Section 102.21(c)(2) is also inapplicable inasmuch as there
is no single country where each foreign material incorporated in
the subject merchandise undergoes an applicable change in tariff
classification. The embroidered fabric is classifiable under
- 8 -
subheading 5810.99.9000, HTSUSA. Accordingly, we are directed to
paragraph (e) of this section which states, in pertinent part,
that origin is conferred in the following manner:
5810.91 - 5810.99 (1)"[F]or embroidered fabric, the
country of origin is the
country, territory, or insular possession in
which the
fabric was produced by a fabric-making
process."
As the woven silk fabric and the polyester backing fabric
comprising the subject merchandise were produced in two different
countries, Section 102.21(c)(2) is inapplicable and our
hierarchical application of Section 102.21(c) continues.
Section 102.21(c)(3)(i) does not provide the relevant
country of origin analysis in the instant case inasmuch as the
subject fabric is not a knit to shape good. Section
102.21(c)(3)(ii), however, states that except for goods of
certain enumerated headings and subheadings, of which heading
5810, HTSUSA, is not included, and for non- knit to shape goods,
the country of origin will be the country, territory, or insular
possession in which the good was wholly assembled. In this case,
the subject article is wholly assembled in the United States as
this is where the woven silk fabric is combined with the
polyester knit backing. The embroidery operations in China are
not taken into consideration in this instance, pursuant to
Section 102.21(b)(6) cited supra. Accordingly, based on Section
102.21(c)(3)(ii), the country of origin of the subject upholstery
fabric is the United States.
Be advised, however, that there is an exception for products
from the United States that are sent abroad for processing.
Section 12.130(c), Customs Regulations, provides that any product
of the United States which is returned after having been advanced
in value or improved in condition abroad, or assembled abroad,
shall be a foreign article. Section 12.130, which remains in
effect, was originally intended to be used to determine the
country of origin of textiles and textile products for quota/visa
requirements. In Treasury Decision ("T.D.") 90-17, issued
February 23, 1990, Customs announced a change in practice and
position. This change resulted in Customs using Section 12.130
for quota, duty and marking purposes when making country of
origin determinations for textile goods. Therefore, in
accordance with T.D. 90-17 and Section 12.130(c), the country of
origin of the embroidered fabric is China for quota, duty and
marking purposes, as it is in China that the U.S.-origin fabric
is advanced in value by means of embroidering.
- 9 -
- COUNTRY OF ORIGIN MARKING REQUIREMENTS-
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), requires
that, unless excepted, every article of foreign origin (or its
container) imported into the U.S. shall be marked in a
conspicuous place as legibly, indelibly and permanently as the
nature of the article (or its container) will permit in such
manner as to indicate to an ultimate purchaser in the U.S. the
English name of the country of origin of the article. The
regulations implementing the requirements and exceptions of 19
U.S.C. 1304 are set forth in Part 134, Customs Regulations (19
CFR Part 134).
"Country of origin" is defined in section 134.1(b), Customs
Regulations (19 CFR 134.1(b)as:
"...the country of manufacture, production, or growth of any
article of foreign origin entering the United States.
Further work or material added to an article in another
country must effect a substantial transformation in order to
render
such other country the country of origin' within the
meaning of this part... ."
The ultimate purchaser is defined in 19 CFR 134.1(d)) as
generally the last person in the U.S. who will receive the
article in the form in which it was imported. If the imported
article will be used in manufacture, the manufacturer may be the
ultimate purchaser if he subjects the imported article to a
process which results in a substantial transformation of the
article. In such case, the article itself is excepted from
marking pursuant to section 134.35(a), Customs Regulations (19
CFR 134.35(a)), and only the outermost container of the imported
article must be marked.
In regard to the facts of this case, we have previously
determined that, by application of the current rules of origin
for textile and apparel products found in 19 CFR 12.130, joining
the polyester backing to the imported silk fabric in the U.S.
will not result in a substantial transformation of the Indian-origin silk into a good of the U.S. Therefore, the U.S. firm
which joins the backing to the silk fabric is not the ultimate
purchaser, and the initially-imported silk (or its container)
must be marked to indicate its Indian origin. We have also
determined that the subsequent embroidery process in China will
not result in a substantial transformation of the fabric into a
product of China. Therefore, when the embroidered silk fabric is
reimported, the fabric or the container in which it reaches the
ultimate purchaser must again be marked to indicate the Indian
origin of the fabric.
- 10 -
Applying the rules of origin for textile and apparel
products set forth in 19 CFR 102.21, which will become effective
on July 1, 1996, we have determined that the process of joining
the backing to the silk in the U.S. will render the U.S. the
country of origin of the fabric. Thus, pursuant to 19 CFR
134.35, the fabric will be
excepted from country of origin marking and only the outermost
container of the initially-imported silk must be marked to
indicate the Indian origin of the fabric. With respect to the
subsequent embroidery process performed in China, we have
determined that, by applying the rules of origin provided for in
19 CFR 102.21, the silk fabric remains a good of the U.S.
However, 19 CFR 12.130(c) provides that a textile product of U.S.
origin which is advanced in value or improved in condition
abroad, or assembled abroad, may not, upon its return to the
U.S., be considered a product of the U.S.
As stated above, the embroidery process performed in China
advances the value and improves the condition of the fabric
therefore, pursuant to 19 CFR 12.130(c), the resulting
embroidered fabric is not considered a product of the United
States but a product of China. Therefore, the reimported fabric
or the
container in which it reaches the ultimate purchaser must be
marked to indicate the Chinese origin of the fabric.
HOLDING:
The subject merchandise is classifiable under subheading
5810.99.9000, HTSUSA, which provides for "Embroidery in the
piece, in strips or in motifs: other embroidery: of other textile
materials: other... ." The rate of duty is 7.6 percent ad
valorem. There is no quota/visa restraints applicable to the
subject merchandise at this time. The imported embroidered fabric
is dutiable on its full appraised value. See U.S. Note 2(a),
subchapter II, Chapter 98, HTSUSA. Based on the information
presented, no duty allowance may be made for the polyester
backing.
If the subject merchandise is entered, or withdrawn from
warehouse for consumption, before July 1, 1996, the country of
origin of the fabric is India.
If the subject merchandise is entered, or withdrawn from
warehouse for consumption, on or after July 1, 1996, pursuant to
Section 102.21 of the Customs Regulations, the country of origin
of the fabric is the United States. Inasmuch as the embroidery
process performed in China clearly advances the value and
improves the
condition of the fabric, pursuant to 19 CFR 12.130(c), the
resulting embroidered fabric may not be considered a product of
the United States, but rather will be
- 11 -
considered a product of China. Therefore, the reimported fabric
or the container in which it reaches the ultimate purchaser must
be marked to indicate the Chinese origin of the fabric.
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 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, if there is any change in the
facts submitted to Customs, it is recommended that a new ruling
request be submitted in accordance with 19 CFR 177.2.
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division
Continue your research in ChatGPT or Claude
Connect Omnilex to search the legal corpus from your AI assistant.