CLA-2 CO:R:CV:V 555506 BJO
TARIFF NO. 9802.00.80, HTSUS
Charles T. Beeching, Jr., Esq.
Bond, Schoeneck & King
One Lincoln Center
Syracuse, New York 13202-1355
RE: Eligibility of Chinaware imported from Canada for Reduced-
Duty Treatment under Subheading 9802.00.80, HTSUS
Dear Mr. Beeching:
This is in response to your letter of September 15, 1989, on
behalf of Syracuse China Corporation, in which you request a
ruling that U.S.-produced china tableware to which a decal and
glaze are applied in Canada are eligible for reduced-duty
treatment under subheading 9802.00.80, Harmonized Tariff Schedule
of the U.S. (HTSUS), when returned.
FACTS:
You state that producing the china involves five steps: (1)
mixing of ceramic ingredients, including clay, flint, and
alumina, (2) forming the material into tableware shapes, (3)
firing the shapes under high temperatures in a kiln to form a
"bisque," (4) application of a U.S.-produced decal decoration to
the bisques by moistening the back of the decal and pressing it
to the bisque, and (5) the application of a glaze to the bisque
and firing the glazed bisque in a kiln. You state that the
purpose of the glaze is to protect the body and the decal.
The first three steps (the formation of the bisques) will be
performed in the U.S.; the last two will be performed in Canada.
You state that the cost of applying and firing the glaze will
represent not more than 3% of the manufacturing cost of the
finished product.
ISSUE:
Whether glazing and firing chinaware, after application of a
decal, is an operation that is incidental to assembly for
purposes of subheading 9802.00.80, HTSUS.
LAW AND ANALYSIS:
Articles assembled abroad in whole or in part of fabricated
components the product of the U.S. qualify for the partial duty
exemption of subheading 9802.00.80, HTSUS, if three conditions
are met: (1) the U.S. products are exported in condition ready
for assembly without further fabrication; (2) the U.S. products
have not lost their physical identity in the assembled articles
by change in form, shape, or otherwise; and (3) the U.S. products
have not been advanced in value or improved in condition abroad
except by being assembled and except by operations incidental to
the assembly process, such as cleaning, lubricating, and
painting. Such articles are subject to a duty upon their full
value, less the cost, or, if no charge is made, the value of the
U.S. products.
In United States v. Mast Industries, Inc., 69 CCPA 47, 668
F.2d 501 (1981), the court, after review of the pertinent
legislative history, determined that operations may be considered
incidental to the assembly process if they are of a minor nature,
and that Congress intended "a balancing of all relevant factors
to ascertain whether an operation of a 'minor nature' is
incidental to the assembly process." Mast at 53-54. In Mast,
the court considered the following factors in its determination:
(1) whether the cost of the operation relative to the cost of the
affected component, and the time required by the operation
relative to the time required for assembly of the whole article,
were such that the operation may be considered minor, (2) whether
the operations in question were necessary to the assembly
process, and (3) whether the operations were so related to the
assembly that they were logically performed during the assembly.
Mast at 54.
Applying the Mast criteria here, we do not find that the
glazing operation is of a minor nature, or incidental to
assembly. In Mast, the court found that buttonholing and pocket
slitting were operations incidental to the sewing of garment
pieces into women's pants. The sewing of the garment pieces to
form the two styles of women's pants took approximately 35
minutes and 36 minutes, while the buttonholing took 8 to 10
seconds for one style and 7 to 8 seconds for the other, and the
pocket slitting took 15 to 20 seconds for one style and 30
seconds for the other. Mast at 49. The direct labor cost of
assembly for the two styles was 1.36/1.40 colones, while the cost
of buttonholing and pocket-slitting for each style was .0075
colones and .025 colones, respectively. Mast at 49-50. The
assembly you describe involves only the moistening of a decal and
pressing it to the U.S. produced bisque, while the operation you
claim incidental to that assembly is the glazing of the bisque
and firing in an oven. Although no data has been submitted, it
does not appear based on your description of the process that the
time required to glaze and fire the bisques compared to the time
required to apply the decal is as insignificant as the time
required for buttonholing and pocket slitting relative to the
time of assembly in Mast. Nor does it appear that the cost of
the glazing relative to the cost of applying the decal approaches
the insignificance of the cost of buttonholing and pocket
slitting relative to the cost of assembly in Mast. While the
glazing operation may represent no more than 3 percent of the
total manufacturing cost of the finished product, as you claim,
you have not submitted data showing that the glazing cost is
minor relative to the foreign assembly cost (the application of
the decal), which is the meaningful comparison under Mast. For
these reasons, we do not find that the glazing operation is "of a
minor nature" for purposes of subheading 9802.00.80, HTSUS.
Nor do we find that the glazing process is incidental to the
foreign assembly. It does not appear that glazing is necessary
to the assembly, for, unlike the buttonholing and pocketslitting
operations performed in Mast, glazing is not a prerequisite to
other assembly steps. See Mast at 54. Finally, you do not claim
that glazing is so related to the assembly that it is logically
performed during the assembly. Glazing appears to involve
different processes and equipment than moistening and applying
the decal, again in contrast to the operations performed in Mast.
See Mast at 54 ("Buttonholing and pocket slitting were closely
related to the assembly process. Both involved taking needle and
thread to fabric, as in the assembly process. Both were done
with special sewing machines.").
CONCLUSION:
Glazing and firing U.S.-produced chinaware, after
application of a decal abroad, are not operations incidental to
assembly for purposes of subheading 9802.00.80, HTSUS.
Therefore, the chinaware will not be eligible for reduced duty
treatment under that subheading when returned to the U.S.
Sincerely,
John Durant, Director
Commercial Ruling Division