Country of origin of surgical towels created from Indianfabric by cutting, folding and hemming in Mexico; assembly;substantial transformation; 19 CFR 12.130

HQ 734896 May 14, 1993 MAR-2-05 CO:R:C:V 734896 AT CATEGORY: Marking Jack Alsup, Esq. Alsup & Alsup, Inc. 12 East 49th Street New York, NY 10017 RE: Country of origin of surgical towels created from Indian fabric by cutting, folding and hemming in Mexico; assembly; substantial transformation; 19 CFR 12.130 Dear Mr. Alsup: This is in response to your letter dated November 16, 1992, on behalf of Esperanza Industries, Inc. (Esperanza), requesting a ruling on the country of origin of imported surgical towels from Mexico. A sample was submitted with your letter for review. We regret the delay in responding. FACTS: You state that Esperanza intends to import 100% woven cotton fabric surgical towels from Mexico. You also state that the production of the surgical towels will involve processing operations performed in two countries, India and Mexico. According to your letter Esperanza will purchase and import 100% woven cotton fabric "Huckaback" which is manufactured in India. The fabric will be imported in rolls, 100 meters X 58 inches and will be shipped in-bond to Mexico. In Mexico the following operations will be performed to create the finished towels: 1. Fabric undergoes incoming Q.A. inspection. 2. Fabric is cut into 17" X 28" pieces using electric knives and special rolling and stretching equipment. 3. Individual pieces are sewn with 1/4" hem on at least three edges. 4. On-line inspection are required during sewing process. 5. Product goes through a delinting procedure that uses very high vacuum equipment. 6. Another Q.A. inspection. 7. Product is folded using approved aseptic technique. 8. Product is again inspected. 9. Product is placed in immediate package. 10. Product is packaged for shipment. ISSUE: What is the country of origin of the imported surgical towels processed in the manner described above? LAW AND ANALYSIS: Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Section 12.130, Customs Regulations (19 CFR 12.130), sets forth the principles for country of origin marking determinations for textiles and textile products. 19 CFR 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. 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(e)(iv) states that a textile article will usually be a product of a particular country if the cutting of the fabric into parts and the assembly of those parts into the completed article has occurred in that country. However, 19 CFR 12.130(e)(2)(ii) states that a material will usually not be considered to be a product of a particular foreign country by virtue of merely having undergone cutting to length or width and hemming or overlocking fabrics which are readily identifiable as being intended for a particular commercial use. Customs has previously held that the country of origin of surgical towels is the country where the fabric for the surgical towels is manufactured. In HQ 088078 (November 14, 1990), Customs stated that "although most of the manufacturing processes at issue occur in Mexico, the weaving of the raw materials in China is deemed to be the factor which contributes most to the creation of the final product. The fabric constructed in China is manufactured in such a way as to be readily identifiable in the industry as surgical toweling fabric; the special weave and blue dye of the raw material further marks its intended use in the manufacture of these towels". Accord HQ 950789 (March 24, 1992). See also, HQ 733601 (July 26, 1990), which held that toweling cut, hemmed, washed, shrunk and folded in Mexico of the Philippines does not constitute a substantial transformation, so the country of the surgical towels is China, the country where the fabric was manufactured. Similarly, in this case, we find that the Indian fabric which is inspected, cut to length and width, hemmed, folded and packaged in Mexico remains a product of the country where the fabric was manufactured, India. Since we have determined that the country of origin of the imported surgical towels is India, it is acceptable to mark the article with the phrase "Made in India" provided that the marking is conspicuous, legible and permanent (factors which we cannot determine due to no marked sample was submitted for our review. The phrase "Finished in Mexico" (or similar phrase), is not required to be added to the origin label. HOLDING: The country of origin of the imported surgical towels processed in the manner described above for marking and quota purposes is India where the fabric is manufactured. The marking "Made in India" is an acceptable marking for the surgical towels provided that the marking is conspicuous, legible and permanent. The phrase "Finished in Mexico" (or similar phrase) is not required to be added to the origin label. 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 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 177.2, Customs Regulations (19 CFR 177.2). Sincerely, John Durant, Director