CLA-2 CO:R:C:V 554962 GRV
TARIFF NO: 9802.00.80, HTSUS (formerly 807.00, TSUS)
District Director of Customs
Laredo, Texas 78044-3130
RE: Internal Advice 50/87 - Applicability of HTSUS subheading
9802.00.80 to range heating elements from Mexico
Dear Sir:
This is in reference to your memorandum of July 30, 1987,
forwarding a request for internal advice, initiated by counsel
for Emerson Electric Company, Edwin L. Wiegand Division, concern-
ing the applicability of item 807.00, Tariff Schedules of the
United States (TSUS) (now subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS)) to certain range
heating elements imported from Mexico. We apologize for the
delay in responding.
FACTS:
As stated in a letter dated May 7, 1987, from counsel for
Emerson Electric Company, the range heating element components
exported are of U.S. origin and consist of the following:
(1) pre-cut metal tubing;
(2) a heating element wire, cut from a continuous length;
(3) magnesium oxide powder;
(4) epoxy;
(5) a pair of metal strips; and
(6) an electrode fitting.
The foreign assembly process is described as follows:
(1) A pre-cut metal tube is loaded onto a filling machine
and a heating element wire, cut from a continuous length, is
inserted into the tube.
(2) Magnesium oxide powder is poured into the hoppers of a
machine, which subsequently fills the tube and shakes the
magnesium oxide around the wire.
(3) The assembled components are removed from the filling
machine, placed on a rolling machine and compressed; forcing
all of the air out of the magnesium oxide.
(4) The assembled items are then heated so that they can be
formed into a spiral configuration. At the same time, the
tubing is flattened on the side which will be the top of the
heating element.
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(5) Once in its desired shape, epoxy is applied to the ends
of the tube to ensure that the magnesium powder does not
fall out.
(6) A pair of metal strips are welded together to form a "y"
shaped bracket which is then force fitted to the above
described assembled items and crimped into place so that the
"y" shaped frame and the element are permanently held
together.
(7) Small electrodes are then welded to the tip ends of the
wires coming out of the ends of the bent tubing.
It is the opinion of your office that materials such as
powders, paints, etc., are not components for purposes of TSUS
item 807.00 and that the partial duty exemption available under
that tariff provision should be denied for the magnesium oxide
powder and the epoxy. Further, you state that the shaping and
compression of the straight piece of tubing into a spiral
configuration is not an operation which is incidental to the
assembly process.
ISSUE:
Whether the U.S. materials exported to Mexico for processing
into range heating elements are eligible for the duty exemption
provided for in HTSUS subheading 9802.00.80.
LAW & ANALYSIS:
Effective January 1, 1989, the HTSUS superseded and re-
placed the TSUS. TSUS item 807.00 was carried over into the
HTSUS without change as subheading 9802.00.80. This tariff
provision provides a partial duty exemption for articles:
...assembled abroad in whole or in part of fabricated com-
ponents, the product of the United States, which (a) were
exported in condition ready for assembly without further
fabrication, (b) have not lost their physical identity in
such articles by change in form, shape, or otherwise, and
(c) have not been advanced in value or improved in condi-
tion abroad except by being assembled and except by opera-
tions incidental to the assembly process such as cleaning,
lubricating and painting.
All three requirements of HTSUS subheading 9802.00.80 must be
satisfied before a component may receive a duty allowance. An
article entered under HTSUS subheading 9802.00.80 is subject to a
duty upon the full value of the imported article, less the cost
or value of the U.S. components assembled therein, provided there
has been compliance with the documentary requirements of section
10.24, Customs Regulations (19 CFR 10.24).
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Section 10.12(d), Customs Regulations (19 CFR 10.12(d)),
defines a fabricated component as a manufactured article ready
for assembly in the condition as exported except for operations
incidental to the assembly. Section 10.14(a), Customs Regula-
tions (19 CFR 10.14(a)), provides, in part, that:
[t]he components must be in condition ready for assembly
without further fabrication at the time of their exportation
from the United States to qualify for the exemption. Compo-
nents will not lose their entitlement to the exemption by
being subjected to operations incidental to the assembly
either before, during, or after their assembly with other
components.
Operations incidental to the assembly process are not con-
sidered further fabrication operations, as they are of a minor
nature and cannot always be provided for in advance of the assem-
bly operation. Examples of operations considered incidental to
the assembly process are delineated at section 10.16(b), Customs
Regulations (19 CFR 10.16(b)). The fifth example provides for
adjustments in the shape or form of a component to the extent
required by the assembly being performed abroad. However, sec-
tion 10.16(c), Customs Regulations (19 CFR 10.16(c)), provides,
in part, that:
[a]ny significant process, operation, or treatment other
than assembly whose primary purpose is the fabrication,
completion, physical or chemical improvement of a component,
or which is not related to the assembly process,...shall not
be regarded as incidental to the assembly and shall preclude
the application of the exemption to such article.
In General Instrument Corporation v. United States, 61 CCPA
86, C.A.D. 1128, 499 F.2d 1318 (1974), magnet and lead wire were
processed into coils and harnesses (subassemblies) that were
assembled into imported television deflection yokes. The wire
was exported on spools. Abroad, the wire was despooled & formed
into the primary shapes of a coil by winding around cores, after
which it was taped, to prevent unraveling, cement dipped, dried,
and precision shaped to fit the contours of a plastic liner on
which it was subsequently mounted. Lead wires were drawn from
supply spools, cut to length, and the ends mechanically stripped
of insulating material. The leads were then brought together
with a plug assembly, the wires woven into a cable harness, and
the cable harness secured with tape. The court held that the
despooling, winding, taping, etc., operations to be assembly
steps rather than a "further fabrication" within the meaning of
item 807.00, as the wire was capable of immediately entering into
the assembly process as exported, and allowed the duty exemption.
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However, in Samsonite Corporation v. United States, Slip Op.
88-166, __ CIT ___, 702 F.Supp. 908 (CIT 1988), strips of steel
for use in luggage were denied TSUS item 807.00 treatment, as
prior to assembly, the straight strips were bent by machine into
a form analogous to a squared-sided letter C. The court found
that the bending process did more than "adjust" the article, as
contemplated by 19 CFR 10.14(a)(5), and, in effect, created the
component to be assembled, the essence of which was its configu-
ration. Further, the court found that the straight strips of
steel could not have been placed immediately into the luggage
bags without the bending operation. The court concluded that
neither the statute nor the regulations covered a process which
was as necessary to the fabrication of the component as it was to
subsequent assembly thereof and denied the partial duty exemption
available under TSUS item 807.00.
As in the Samsonite case, the metal tubes in this case are
straight when exported and are not capable of immediately enter-
ing into the assembly process as exported, but require the bend-
ing operation before assembly can begin. This bending of the
metal tube (and the heating element wire therein) into a spiral
configuration does more than "adjust" the component to be assem-
bled; it effectively creates the component, the essence of which
is its spiral configuration. That the essence of the component
is its spiral shape is obvious from the fact that it is meant to
be force fitted onto the "y" shaped bracket and it can only be so
assembled after completion of the bending operation. Therefore,
we hold that the shaping of the metal tubes (and the heating
element wire therein) constitutes a further fabrication of the
exported component, and is not an incidental assembly operation,
as it is a significant operation that is necessary for the
completion of the component.
This conclusion is consistent with previous Headquarters
rulings involving similar shaping or coiling operations (see, for
example, rulings dated August 23, 1985 (553796), and June 25,
1987 (554577)). Accordingly, neither the metal tube nor the
heating element wire are entitled to the duty exemption provided
for in HTSUS subheading 9802.00.80.
Assembly operations are discussed at section 10.16(a),
Customs Regulations (19 CFR 10.16(a)), which provides that:
[t]he assembly operations performed abroad may consist of
any method used to join or fit together solid components,
such as welding, soldering, riveting, force fitting, gluing,
laminating, sewing, or the use of fasteners, and may be
preceded, accompanied, or followed by operations incidental
to the assembly.... The mixing or combining of liquids,
gases, chemicals, food ingredients, and amorphous solids
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with each other or with solid components is not regarded as
an assembly.
Thus, the benefits of HTSUS subheading 9802.00.80 apply only to
U.S. components of a type designed to be fitted together with
other components and does not apply to chemical products, food
ingredients, liquids, gases, powders, etc. H.R. Rep. No. 342,
89th Cong., 1st Sess. 49 (1965).
In this case, the heating element wire is coated with
magnesium oxide powder. As stated above, powders are not
considered fabricated components for purposes of HTSUS subheading
9802.00.80. Similarly, epoxy resin is a thermosetting chemical
product, and as such also falls outside the scope of fabricated
components eligible for this tariff treatment. Accordingly, both
the magnesium oxide powder and the epoxy are ineligible for the
duty exemption under HTSUS subheading 9802.00.80.
Regarding the two metals strips and the electrode fitting,
these U.S. components are exported to Mexico in condition ready
for assembly without further fabrication. Moreover, the welding
of the metal strips together to form a "y" shaped bracket, the
welding of the electrodes to the tips of the wires, and the force
fitting of the "y" bracket to the spiral-shaped metal tube con-
stitute acceptable assembly operations under 19 CFR 10.16(a).
Therefore, the pair of metal strips and the electrode are
entitled to the duty exemption under HTSUS subheading 9802.00.80.
HOLDING:
On the basis of the information and sample submitted, we
conclude for the reasons stated above that no deduction from the
full value of the imported range heating elements may be made
under HTSUS subheading 9802.00.80 for the cost or value of the
pre-cut metal tubing, the heating element wire, the magnesium
oxide powder or the epoxy. However, allowances may be made under
this tariff provision for the cost or value of the metal stripes
and the electrode fitting, assuming compliance with the
documentary requirements of 19 CFR 10.24.
Sincerely,
John Durant, Director
Commercial Rulings Division