CLA-2-CO:R:C 555119 RA
TARIFF NOS.: 9802.00.50, HTSUS; 9802.00.80, HTSUS
Mr. Howard Shube
Special Projects Manager
Shube's Manufacturing, Inc.
2010 Ridgecrest Drive, S.E.
Albuqueque, New Mexico 87108
RE: Classification of silver jewelry from Mexico under
subheading 9802.00.50, HTSUS, or 9802.00.80, HTSUS
Dear Mr. Shube:
This is in response to your letter of August 25, 1988,
requesting a ruling on the eligibilty for reduced duty treatment
of certain silver articles of jewelry cast in the U.S. and
exported to Mexico for processing and return to this country.
FACTS:
You propose to export to Mexico certain silver rings,
earrings, charms, and similar items, which were cast in the U.S.,
for certain processing operations, which may include clipping,
grinding, tumbling, soldering, and straightening. The pieces are
then inspected, tagged, and returned to the U.S. for finishing.
The clipping consists of closely removing any unwanted material
left by the U.S. clipping operation. Any rough spots are then
removed by means of a grinding wheel and then the silver articles
are tumbled in a steel drum using an abrasive or steel shot media
to remove scratches or oxides. In the case of the rings, it may
be necessary for them to be placed on a spindle and tapped until
straightened and restored to true round. Certain items, such as
earrings, pins, or dangles, are subjected to assembly operations
to attach wires, posts, or pins by soldering or crimping. Burn
marks or oxidation caused by soldering are removed by tumbling.
The remaining processing steps are done on return to the U.S. and
may include cutting facets, enameling, plating, and inspection.
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ISSUE:
Whether the returned silver jewelry will be eligible for the
partial duty exemption provided for in subheading 9802.00.50 or
9802.00.80, Harmonized Tariff Schedule of the U.S. (HTSUS).
LAW AND ANALYSIS:
Subheading 9802.00.50, HTSUS, provides for the assessment of
duty on the value of repairs or alterations performed abroad on
articles exported for that purpose. However, this partial duty
exemption is applicable only when the exported article is in a
finished condition. Dolliff & Company Inc. v. U.S., 16 CCPA 77,
C.A.D. 1225 (1979). Alterations do not apply to intermediate
operations which are performed in the manufacture of completed
articles. If the foreign processing is a step in the work needed
to finish the articles for its intended use, the statutory
provision for alterations will not apply. Guardian Industries
Corporation v. U.S., 3 CIT 9 (1982) and U.S. v. J.D. Richardson
Co., 36 CCPA 15, C.A.D. 390 (1948).
The clipping, grinding, tumbling, and straightening
operations to be performed in Mexico all constitute processing
which is a step in the manufacture of the jewelry items essential
to their intended use after return to the U.S. Accordingly, this
processing amounts to more than an alteration, thereby precluding
classification of the returned jewelry under subheading
9802.00.50, HTSUS.
Subheading 9802.00.80, HTSUS, applies to articles assembled
abroad in whole or in part of fabricated components of U.S.
origin with no operations performed thereon except the attachment
of the components to form the imported merchandise and operations
incidental thereto. Duty is assessed on the total appraised
value of the imported article less the cost or value of the
fabricated components of U.S. origin.
Operations such as combining parts of earrings or broach
pins by attaching and soldering or crimping posts, wires, or pins
are considered qualified assemblies under this provision. See
section 10.16(a), Customs Regulations (19 CFR 10.16(a)).
However, in order to be eligible for this tariff treatment, the
parts would have to be completely fabricated components when
exported from the U.S. and ready for assembly with only
incidental operations performed abroad. Section 10.16(c)(5),
Customs Regulations (19 CFR 10.16(c)(5)), provides, in part, that
polishing, burnishing and similar processes are not considered
incidental to the assembly operation. Therefore, if it is
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necessary to grind or tumble the various components before they
are joined, subheading 9802.00.80, HTSUS, would not be applicable
as these operations are more than incidental to assembly. For
your information, we have enclosed a copy of the Customs
Regulations relating to subheading 9802.00.80, HTSUS.
HOLDING:
Silver items of jewelry which are cast in the U.S. and
exported to Mexico where they are subjected to operations, such
as clipping, grinding, tumbling, or assembly, are processed
beyond the meaning of the term "alterations," and, therefore,
subheading 9802.00.50, HTSUS, would not be applicable to these
items. Moreover, jewelry items assembled abroad by soldering or
crimping wires or posts onto parts of earrings or broach pins
would not be eligible for the partial duty allowance under
subheading 9802.00.80, HTSUS, if the components are subjected to
grinding or tumbling operations abroad prior to the assembly
process.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure