HQ 951481

July 31, 1992

CLA-2 CO:R:C:T 951481 CRS

CATEGORY: Classification

Mr. Alan Sutter

J.W. Hampton, Jr. & Co., Inc.

15 Park Row

New York, NY 10038

RE: Nylon knapsacks/backpacks; country of origin; 19 CFR 12.130;

not substantial transformation; HRL 088455.

Dear Mr. Sutter:

This is in reply to your letter of March 24, 1992, on behalf

of Acme Brief Case Co., Inc., regarding the country of origin for

tariff and quota purposes of five styles of knapsacks/backpacks.

Samples of the merchandise in question were provided.

FACTS:

The merchandise in question consists of knapsacks/backpacks

identified as style numbers 7411, 7711, 7430s, 7474 and 76362.

The material components of the knapsacks/backpacks, including

nylon fabric, thread, binding, zippers, webbing, trim and hang

tags, are purchased in Taiwan and are wholly of Taiwanese origin

and manufacture. The fabric is die-cut in Taiwan to the proper

shapes for stitching into knapsacks/backpacks. After cutting,

the die-cut fabric and other parts are shipped to the People\'s

Republic of China (PRC) where they are assembled into finished

articles. The completed backpacks/knapsacks are then packed into

cartons and shipped to the United States. The manufacturer in

the PRC is Guh Dih Tsuen, Rong Chyi Town, Goang Dong Province.

You state that the facts underlying this transaction are

essentially identical to those stated in Headquarters Ruling

Letter (HRL) 088455, issued to you on behalf of Acme Brief Case

Co., Inc., on March 8, 1991. The differences are that: (1) the

country of assembly in this instance is the People\'s Republic of

China rather than Indonesia; and (2) while the cost per dozen for

styles 7411, 7711 and 7430s are the same as given for the styles

at issue in HRL 088455, the cost per dozen for styles 7474 and

76362 is different.

You have provided the following cost information per dozen

with regard to the styles in question:

Styles 7411, 7711 and 7430s

PRC

Labor \$3.360

Polybag 0.264

Carton 0.144

Inland trucking 0.468

Bank charges 0.240

PRC cost \$4.476

Taiwan

Nylon with PVC backing \$7.440

PVC sheeting for pocket backing 0.228

Design and dies 0.084

Cutting 0.236

Zippers 1.680

Webbing 0.864

Foam padding for backstraps 0.444

Plastic buckles 0.450

Thread 0.216

Hangtag 0.212

Taiwan cost \$11.854

The total cost of the knapsacks/backpacks per dozen for styles

7411, 7711 and 7430s is \$16.33 of which 72.6 percent represents

costs incurred in Taiwan, and 27.4 percent, costs incurred in the

PRC.

Style 7474

PRC

Labor \$6.390

Polybag 0.264

Carton 0.192

Inland trucking 0.952

Bank charges 0.384

PRC cost \$8.182

Taiwan

Nylon with PVC backing \$13.500

PVC sheeting for pocket backing 0.360

Design and dies 0.132

Cutting 0.384

Zippers 1.141

Webbing 1.926

Foam padding for backstraps 0.577

Plastic buckles 1.082

Thread 0.216

Hangtag 0.500

Taiwan cost \$19.818

The total cost per dozen of style 7474 is \$28.00, of which 70.78

percent represents costs incurred in Taiwan, and 29.22 percent

costs incurred in the PRC.

Style 76362

PRC

Labor \$6.760

Polybag 0.264

Carton 0.200

Inland trucking 0.952

Bank charges 0.362

PRC cost \$8.538

Taiwan

Nylon with PU backing \$15.550

PVC sheeting for pocket backing 1.020

Design and dies 0.371

Cutting 0.450

Zippers 3.663

Webbing 0.840

Foam padding backstraps 0.960

Plastic buckles 0.528

Thread 0.480

Hangtag 0.600

Taiwan cost \$24.460

The total cost per dozen of style 76362 is \$33.00, of which 74.13

percent represents costs incurred in Taiwan, and 25.87 percent,

costs incurred in the PRC.

ISSUE:

The issue presented is whether the assembly of backpacks in

the People\'s Republic of China from materials of Taiwanese origin

constitutes a substantial transformation under section 12.130 of

the Customs Regulations.

LAW AND ANALYSIS:

The country of origin regulations for textiles and textile

products are contained in section 12.130, Customs Regulations

(19 CFR 12.130. Section 12.130 provides that a textile or

textile product consisting of materials produced or derived from,

or processed in, more than one foreign country, is considered to

be a product of that foreign country where it last underwent a

substantial transformation. Subsection 12.130(d) enumerates the

criteria to be considered in determining country of origin. The

criteria include the physical change in the material or article,

the time involved in the manufacturing or processing operations,

the level or degree of skill and/or technology required, and the

value added to the article. These criteria are not exhaustive;

one or any combination of these criteria, as well as additional

factors, may be considered.

Although the knapsacks/backpacks are assembled and packed in

the PRC, the nylon fabric and other components are wholly of

Taiwanese origin and manufacture. In addition, the design and

cutting operations are performed in Taiwan. The raw material

manufacture, and the design and cutting operations are deemed to

be the factors which contribute most to the creation of the final

product. Furthermore, we note that approximately three-quarters

of the total value of the merchandise stems from operations

performed in Taiwan.

Based on the information provided, Customs is of the opinion

that the work performed in the PRC represents little more than

simple fabrication and therefore does not constitute a

substantial manufacturing or processing operation under 19 CFR

12.130. Accordingly, Taiwan is the country of origin of the

knapsacks/backpacks at issue.

HOLDING:

The country of origin of the knapsacks/backpacks in question

is Taiwan.

The holding in this ruling letter is binding only as it

applies to the particular transaction or issue described in your

request (19 CFR 177.9(a)). Each ruling is issued on the

assumption that all of the information provided is accurate and

complete in every material respect (19 CFR 177.9(b)(1)). In the

event that the information provided should differ from the

circumstances of the actual transaction, or does not comply with

19 CFR 177.9, this ruling will be subject to modification or

revocation and may no longer be relied upon. In particular, the

country of origin determination may be affected. In such a case,

we recommend that a new request for a binding ruling be submitted

in accordance with 19 CFR 177.2.

Sincerely,

John Durant, Director

Commercial Rulings Division