Country of origin of certain yarn

HQ 953590 April 22, 1993 CLA-2 CO:R:C:T 953590 CMR CATEGORY: Classification Mr. Jack Schachter Cansew, Inc. 111 Chabanel O/W Montreal, Quebec Canada H2N 1C9 RE: Country of origin of certain yarn Dear Mr. Schachter: This ruling is in response to your request of November 6, 1992, and supplemental submissions, regarding the determination of the country of origin of certain yarn processed in Canada. We did not receive your supplemental submissions until recently and regret the delay in responding. FACTS: The yarn at issue is subject to processing in Thailand and Canada. The processing which is performed in Thailand is as follows: 1. Manufacturing of the fiber; 2. Spinning of the fiber into singles yarn; 3. Twisting and doubling of singles into finished yarn; and, 4. Winding the yarn onto cones or dye tubes. The yarn is then exported to Canada. In Canada, the yarn is subjected to the following processes: 1. Winding operations to achieve even package density; 2. Autoclave yarn to preshrink; 3. Bleaching, dyeing and lubricating yarn; and, 4. Final winding of yarn onto cones, etc. -2- The yarns are raw, white, and twisted "S" in the single and "Z" in the ply. From your listing of processes, it appears the singles are plied (doubled) and given a "Z" twist in Thailand. The average value of the yarn upon exportation from Thailand is $1.62 (US), FOB Thailand. You did not provide any information regarding the time factor for the processes in Thailand. The processes which occur in Canada increase the value of the yarn by $2.87 (US) per pound. It requires at a minimum 6 1/2 hours to perform all of the processing in Canada. ISSUE: Is the country of origin for the yarn at issue Thailand or Canada? LAW AND ANALYSIS: Country of origin determinations for textile articles are governed by the criteria set forth in Volume 19 of the Code of Federal Regulations, Section 12.130 (19 CFR 12.130). The regulation provides that a textile or textile article which is produced or derived, or processed in, more than one foreign territory or country, or U.S. insular possession, shall be a product of that place where it last underwent a substantial transformation. 19 CFR 12.130(b). Section 12.130(d) sets out the basic guidelines for determining the country of origin of textiles or textile articles. While not exhaustive, it enumerates various criteria utilized in determining whether a new and different article of commerce is created as a result of a manufacturing or processing operation and whether such operations are considered substantial. Section 12.130(e)(1) lists various processes which are considered sufficient to convey origin when performed in a foreign territory or country, or U.S. insular possession, prior to importation into the United States. Among the processes listed is the spinning of fibers into yarn. In your letter, you indicate that the fibers are spun into yarn in Thailand. At that point, the fibers have undergone a substantial transformation and Thailand is considered the country of origin of the yarn. In order to change the country of origin of the yarn after importation into Canada, the yarn must undergo another substantial transformation in Canada. Section 12.130(e)(2) provides for processes which will not substantially transform textiles. These processes include: -3- Simple combining operations, * * * , or packaging operations, * * * ; One or more finishing operations on yarns, fabrics, or other textile articles, such as showerproofing, superwashing, bleaching, decating, fulling, shrinking, mercerizing, or similar operations; [and] Dyeing and/or printing of fabrics or yarns. The processes which the yarn will undergo in Canada fall squarely within the above listed operations. Winding onto cones is viewed as a simple operation in preparation for the finishing operations and afterwards as a packaging operation. Shrinking, bleaching and dyeing are finishing operations which are specifically named in section 12.130(e)(2). Lubrication of the yarn is viewed as a similar operation. Although the value added to the yarn in Canada is greater than the value of the yarn as exported from Thailand, the processing operations performed in Canada are not viewed as substantial nor as transforming the yarn into a new and different article. HOLDING: The country of origin of the yarn at issue is Thailand. 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 effect 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