CLA-2-CO:R:C 555486 RA
Steven H. Becker, Esq.
Coudert Brothers
200 Park Avenue
New York, New York 10166
RE: Applicability of subheading 9802.00.80, HTSUS, to mylar
slot insulators folded prior to assembly
Dear Mr. Becker:
This is in response to your letter of September 19, 1989,
inquiring whether the folding of edges of mylar slot insulators
assembled into stator cores can be considered as an operation
incidental to assembly under subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS).
FACTS:
The stator core of small electric motors assembled in Mexico
utilizes mylar slot insulators in order to insulate the copper
magnet wire wound in the core. The insulators are cut from rolls
of mylar 2720 feet in length which are made in the United States.
The required length of insulation is folded over along the
lengthwise edges of the roll forming a 180` angle which "springs
back" to rest at about a 140` angle, cut to length, and then
assembled into the slot of the core by bending at a soft angle
along a center line perpendicular to the lengthwise folded edges.
The purpose of the folding is to insure that the mylar stays in
place in the stator core when the wire windings are added. The
folding, cutting, and assembly is done automatically by machine
at a relative small cost and in a short time.
ISSUE:
Can an allowance in duty be made under subheading
9802.00.80, HTSUS, for the mylar parts of U.S. origin which are
assembled and processed as described above?
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, provides for articles
assembled abroad in whole or in part of fabricated components of
U.S. origin with no operations performed thereon except the
joining of the components and operations incidental thereto. The
components must be exported in condition ready for assembly,
cannot lose their physical identity, and cannot be advanced in
value or improved in condition except by the assembly or
operations incidental thereto. Duty is assessed on the appraised
value of the imported merchandise less the cost or value of the
U.S.-made components at the time they were exported.
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)),
states that the assembly operations may consist of any method
used to join or fit together solid components and may be
preceded, accompanied, or followed by operations incidental to
the assembly. However, section 10.16(c), Customs Regulations (19
CFR 10.16(c)), provides that any significant process, operation,
or treatment other than assembly whose primary purpose is the
fabrication, completion, or physical improvement of a component
shall not be regarded as incidental to the assembly and shall
preclude the application of the exemption to such article.
You state that it would be impractical and uncommercial to
bend the edges of the mylar prior to its shipment to Mexico as it
would lose its spring back quality. You point out that in a
ruling letter dated February 25, 1981 (055899), we determined
that the folding of mylar in a similar situation was not
incidental to assembly, but that in a ruling letter dated
November 5, 1986 (554289), we held that a notched metal strip
which was bent at the notched points to form a picture frame was
subjected to an operation which was incidental to the assembly of
the frame.
A more recent judicial interpretation of the bending process
which may be considered incidental to assembly appears in
Samsonite Corporation v. U.S., Slip. Op. 88-166, 702 F. Supp.
908 CIT (1988). The court held that a bending cannot be
considered incidental to assembly where it does more than adjust
the article and results in the creation of the component to be
assembled. The court concluded that the statute and regulations
do not cover a process which is as necessary to the fabrication
of the component as it is to the assembly thereof. It did not
believe that the magnitude of a process in terms of time and cost
was controlling but that the important factor was whether the
procedure was "so related" to the assembly that it was "logically
performed" with it and necessarily linked to the process of
assembly. On this basis, the bending of steel frames for
suitcases was not considered incidental to assembly because their
fabrication by bending was separate from the assembly process and
could have been done in the U.S. prior to exportation.
In contrast to the bending operation in the Samsonite case,
the folding of the mylar edges in your case is so related to
assembly that it would not be feasible to perform it except
during assembly. The folding enabled the edges to be inserted
and snugly fitted into the grooves of the stator core so they
could not slip out. Also, if folded at another time the edges
would not "spring back" as required for proper assembly.
Accordingly, the folding of the mylar components was less a part
of their fabrication than of the assembly of the merchandise to
form the stator cores and, therefore, may be considered
incidental to the assembly process.
Headquarters Ruling Letter 055899 is modified accordingly.
HOLDING:
The folding of mylar slot insulators assembled into stator
cores for electric motors may be considered to be incidental to
assembly under subheading 9802.00.80, HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division