HQ 954993: Country of origin marking of disposable medical wrapping made of spunbonded and meltblown polyolefin nonwoven fabric; 19 CFR 12.130; HRL 952208

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 954993

                        January 12, 1994

CLA-2 CO:R:C:T 954993 NLP

CATEGORY: Marking

Mr. Robert F. Seely
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693

RE:  Country of origin marking of disposable medical wrapping    
     made of spunbonded and meltblown polyolefin nonwoven fabric;
     19 CFR 12.130; HRL 952208 

Dear Mr. Seely:

     This is in response to your letter of May 26, 1993, on behalf
of your client, Baxter Healthcare Corp., in which you requested a
country of origin marking determination for a disposable medical
product called "SupraShield", that is made of Baxter CSR wrap.  On
August 31, 1993, a conference was held at our offices with you and
Phil Robbins and Anthony Tonucci, of our staff.  Subsequent to this
conference, you submitted a supplemental memorandum, dated
September 14, 1993.  In addition, you have submitted samples of the
CSR wrap, the material used to make this wrap and marketing
brochures for this product.

FACTS:

     SupraShield, made of Baxter CSR wrap, is a disposable
protective wrapping used in hospitals and clinics to preserve the
cleanliness and sterility of medical and surgical instruments and
supplies.  The product is used mainly to wrap instruments to be
sterilized.  When the instruments are sealed in the wrap and they
are then sterilized with steam or ethylene oxide, they remain
sterile until use.

     The CSR wrap is made of a tri-laminate fabric sold under the
trademark "SECURON".  This material is composed of three heat-
bonded layers of nonwoven fabric.  The two outer layers are made
of spunbonded polyolefin fabric and the inner layer is made of a
meltblown polyolefin fabric.  The spunbonded polyolefin fabric is
manufactured in France and is imported on bulk roll in subheading
5603.00.9070, Harmonized Tariff Schedule of the United States
(HTSUS).  The meltblown fabric is manufactured in the United States
(U.S.).




   The meltblown layer of SECURON is formed from polyolefin pellets
of U.S. origin.  The pellets are extruded and meltblown into a
fabric layer.  Once formed, the meltblown fabric is pulled by
suction into the bottom layer of the spunbonded fabric in a
continuous process which mingles the fibers of the two layers. 
The next step is pinpoint lamination, which fuses the three layers
at close and equidistant intervals without penetrating any of the
three layers.  Finally, the SECURON is slit to the appropriate
width and wound on bulk rolls for shipment to your client.   Your
client cuts the material to length, folds it and bulk packages it. 
These operations involving the processing of the fabric are all
conducted in the U.S.  Your client then sells the wrap to hospitals
and clinics in the bulk packages.  At the time of sale and delivery
the wrap is not sterile.                                 
     
     According to your letter of May 26, 1993, the process used to
produce the meltblown fabric is "very capital intensive and for
which there is a patent pending."  The meltblown portion of the
production line accounts for 91% of the total capital investment
and the laminator portion accounts for the remaining 9%.  All the
production equipment is of U.S. origin.

     The French spunbonded fabric comprises 80% of the total weight
of the wrap, while the U.S.-made meltblown fabric contributes the
remaining 20% of the fabric's weight.  The total manufacturing cost
of the tri-laminate wrap, not including selling expenses and
profit, consists of:

     French spunbonded material                   56%
     U.S. materials and manufacturing costs       44%            
                                                                 

In addition, 60% of the total production time of this wrap is
incurred in the U.S with the remaining 40% incurred in France.

     According to your submission and the literature you provided,
the key functions of the CSR wrap are to:

     1) Provide strength and durability during clinical or  
hospital use;

     2) Allow the sterilant into the package during     
     sterilization and allow it to escape and dissipate after
     sterilization;

     3) Maintain content sterility by providing a barrier to     
liquid and particulate matter;

     4) Provide durability throughout handling of the package
     during sterilization, storage, transport and use.           
                                                                 


     The meltblown layer imparts the barrier properties to the
wrap.  This layer keeps out bacteria-laden air and moisture, but
allows steam or gas sterilants to penetrate and then evacuate
through the wrap.  The spunbonded layers provide durability,
strength, softness and drapeability to the wrap.

     It is your position that the CSR wrap and the fabric of which
it is manufactured are not products of foreign origin and,
therefore, need not be marked with a foreign country of origin. 
While the qualities imparted by the spunbonded fabric are
important, it is the meltblown layer which provides the essential
character to this product.  Thus, as this layer is of U.S. origin,
the CSR wrap should be considered of U.S. origin.
                                                                 
ISSUE:

     Whether the imported spunbonded fabric is substantially
transformed when it is combined, in the U.S., with U.S. origin
meltblown fabric to produce the CSR wrap?

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.  The Court of International Trade
stated in Koro North America v. United States, 701 F.Supp. 229, 12
CIT 1120 (CIT 198), that "In ascertaining what constitutes the
country of origin under the marking statute, a court must look at
the sense in which the term is used in the statute, giving
reference to the purpose of the particular legislation involved." 
The purpose of the marking statute is outlined in United States v.
Friedlaender & Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where
the court stated that: "Congress intended that the ultimate
purchaser should be able to know by inspection of the marking on
the imported goods the country of which the goods is the product. 
The evident purpose is to mark the goods so that at the time of the
purchase the ultimate purchaser may, by knowing where the goods
were produced, be able to buy or refuse to buy them, if such
marking should influence his will."
     
     Section 12.130 of the Customs Regulations (19 CFR 12.130),
sets forth the principles for making country of origin
determinations for textiles and textile products subject to Section
204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854). 
According to T.D. 90-17, published in the Federal Register on March
1, 1990, (55 FR 7303), the principles of country of origin for
textiles and textile products contained in 19 CFR 12.130 are
applicable to such merchandise for all purposes, including duty and
marking.  Customs has determined that 19 CFR 12.130 will be applied
to determine the country of origin of all imported articles which
are classified in Section XI, HTSUS, or to any imported article
classified outside of Section XI, HTSUS, under a subheading which
has a textile category number associated with it.  Because the
subject merchandise would be classified under Section XI, HTSUS,
19 CFR 12.130 will be used in making the country of origin
determination.

     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, country, or insular possession 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 operations.  In
other words, for textiles governed by 19 CFR 12.130 there is a two
part test for substantial transformation : 1) a new and different
article of commerce and 2) a substantial manufacturing or
processing operation. 

     Section 12.130(d) of the Customs Regulations sets forth
criteria for 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.

     Section 12.130(d)(1) of the Customs Regulations 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.
     
     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(d)(2) 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 as
          a result of the manufacturing or processing operations
          in each foreign territory or country, or insular
          possession of the U.S. 

          (ii)  The time involved in the manufacturing or
          processing operations in each foreign territory or
          country, or insular possession of the U.S. 

          (iii) The complexity of the manufacturing or processing
          operations in each foreign territory or country, or
          insular possession of the U.S.

          (iv)  The level or degree of skill and/or technology
          required in the manufacturing or processing operations
          in each foreign territory or country, or insular
          possession of the U.S.

          (v)   The value added to the article or material in    
          each foreign territory or country, or insular 
          possession of the U.S., compared to its value when
          imported onto the U.S.

     The marking requirements hinge on whether the imported
spunbonded fabric is substantially transformed by the processing
performed in the U.S.  Pursuant to 19 CFR 134.35, a manufacturer
in the U.S. who substantially transforms an imported article is
excepted from individual marking.  Absent a substantial
transformation, the article must be marked to advise the ultimate
purchaser of the country of origin.  

     In Headquarters Ruling Letter 952208, dated October 8, 1992,
Customs considered whether foreign sourced untwisted continuous
single viscose filament yarn imported into Canada was substantially
transformed when processed into two-ply viscose filament yarn.  In
holding that the imported yarn was not substantially transformed
in Canada, Customs stated that both the foreign sourced untwisted
viscose filament yarn and finished two-ply yarn qualified under the
general commercial designation of "yarn" and therefore there had
been no change in the fundamental character of the imported yarn
after being further processed in Canada.

     Similarly, in this case, we find that the domestic processing
does not substantially transform the imported fabric.  First, the
processing in the U.S. does not change the commercial designation
or identity of the product.  When the French fabric enters the
U.S., it is commercially referred to as nonwoven fabric.  After
being further processed in the U.S., the finished product is still
a nonwoven fabric, although with a different modification.  Both
the imported fabric and the finished fabric fit under the general
commercial designation of nonwoven fabric and therefore there has
been no change in fundamental character.

     Moreover, it is our position that both the spunbonded and
meltblown fabrics equally contribute to making SupraShield a unique
product.  It is the combination of the barrier protection,
strength, durability, softness and drapeability offered by these
two fabrics that makes SupraShield specialized.  The product
literature illustrates this point.  For example, the brochure
entitled " Why do hospitals across the country want to get their
hands on new Suprashield? states: "Working together, the two layers
provide the ultimate in protection."  The second brochure entitled
"Understanding a better balance of properties" discusses the
"superior balance of properties" in SECURON focusing on its
softness, strength, drapeability, high barrier properties and
breathability.  The brochure states the following: "By combining
the attributes of both spunbond and meltblown fabrics, Suprashield
is able to provide a superior balance of properties necessary for
a high-performance sterilization wrap." 

     In addition, according to your letter, the imported fabric is
imported in a unique weight and polymer blend for use only in
SECURON.  Therefore, it is unlikely that it could be used for any
other purpose than to make the finished SECURON.   Moreover, the
spunbonded layer of this fabric accounts for 80% of the bulk of
this item and its manufacturing costs account for more than 50% of
the cost of the finished fabric.  Thus, the imported fabric  plays
an essential role in the SECURON and the processing performed on
it in the U.S. does not negate its role.

     Furthermore, even if the fabric was considered a new and
different article under the first prong of the substantial
transformation test, the second prong of the test would not be met. 
While the production of the U.S. component may be complex, their
is no evidence to indicate that the U.S. processing of the imported
fabric is particularly complex and no human skill appears to be
involved in this processing.  For example, the processing done to
the imported fabric involves machine lamination to the U.S. fabric
and then these materials are simply cut to width.  The physical
change in the fabric is not that significant.  In addition, while
60% of the total production time for the fabric is incurred in the
U.S., this is offset by the fact that more than half of the
manufacturing costs are incurred outside the U.S.  While you argue
that the meltblown process is a complex and capital intensive
operation, for example, the meltblown portion of the production
line accounts for 91% and the laminator portion accounts for 9%,
the production part that involves the foreign material is the
lesser of these percentages. 
     Therefore, based on the above discussion, the imported fabric
is not substantially transformed in the U.S.  Accordingly, the
country of origin of the subject product is "France". 

HOLDING:

     Pursuant to 19 CFR 12.130, for marking purposes, the country
of origin of the CSR wrap is France.

     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 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 section 177.2,
Customs Regulations (19 CFR 177.2).


                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division