CLA-2 CO:R:C:V 555553 KAC
Mr. Thomas A. Baker
The Antenna Specialists Co.
30500 Bruce Industrial Parkway
Solon, Ohio 44139
RE: Applicability of duty exemption under HTSUS subheadings
9802.00.80 and 9801.00.10 to various models of antennas and
a support structure for cellular telephone antennas
Dear Mr. Baker:
This is in response to your letter of October 10, 1989, to
the District Director, Laredo, Texas, and your letters of
November 2, 3, 15, and 17, 1989, to the Commissioner of Customs,
requesting rulings on the applicability of subheading 9802.00.80,
Harmonized Tariff Schedule of the United States (HTSUS), to
various models of antennas and a support structure for cellular
telephone antennas to be imported from Mexico. Your letters were
referred to our office for a response.
FACTS:
The Antenna Specialists Company will be shipping U.S.
components to Mexico for assembly into various models of antennas
and an electro-mechanical support structure for use with a
variety of cellular telephone antennas. Except where
specifically noted, all machining (threading, forming, and
drilling) is performed in the U.S. Foreign operations common to
each assembly include the following:
1. force fitting, pushing, inserting, pressing, snapping
components together;
2. cutting cable or wire to length;
3. sliding a component over another component;
4. soldering two components together;
5. screwing or threading components together;
6. winding cable or wire around certain components; and
7. wrapping tape around cable or bundles of loose wire.
Model-specific operations include the following:
1. gluing an O-ring and nut into place;
2. applying loctite to threads, as a gluing agent;
3. bending wire and removing excess wire;
4. applying epoxy, as a gluing agent;
5. wiping off excess epoxy;
6. heat shrinking sleeving over a component;
7. gluing label to component;
8. pressing down on an area of a tube to secure it to
another component.
In addition to the above operations, two forms of packaging
operations will be performed in Mexico. The first operation,
described as the "Kit Bag Ass'y" and the "Coil and Bag Ass'y,"
entails placing various U.S. items, such as bolts, screws, nuts,
installation instructions, users report card, operating
instructions, and product warning label, into a plastic bag,
which is then packaged together with the antennas and support
structures. The second packaging operation entails packaging the
assembled products for retail sale. The completed antennas and
support structures are then imported into the U.S.
ISSUE:
Whether the various models of antennas and the support
structure for cellular telephone antennas will qualify for
treatment under HTSUS subheadings 9802.00.80 and 9801.00.10 when
returned to the U.S.
LAW AND ANALYSIS:
HTSUS subheading 9802.00.80 provides a partial duty
exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, 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 condition abroad except by being assembled and
except by operations incidental to the assembly process such
as cleaning, lubrication, 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 this tariff provision is subject to duty
upon the full value of the imported assembled article, less the
cost or value of such U.S. components, upon compliance with the
documentary requirements of section 10.24, Customs Regulations
(19 CFR 10.24).
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)),
provides that the assembly operation 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.
Operations incidental to the assembly process are not
considered further fabrication operations, as they are of a minor
nature and cannot always be provided for in advance of the
assembly operations. However, any significant process, operation
or treatment whose primary purpose is the fabrication,
completion, physical or chemical improvement of a component
precludes the application of the exemption under HTSUS
subheading 9802.00.80 to that component. See, section 10.16(c),
Customs Regulations (19 CFR 10.16(c)).
Those operations to be performed in Mexico which result in
securely joining components together by force fitting, inserting,
pressing, snapping, soldering, screwing, threading, gluing
(including the application of loctite and epoxy as a gluing
agent), wrapping tape around cable or bundles of loose wire, and
sliding a component over another component are considered
acceptable assembly operations pursuant to 19 CFR 10.16(a).
Securely winding cable or wire around other components is
considered an acceptable assembly operation within the meaning
of this tariff provision. See, General Instrument Corporation v.
United States, 61 CCPA 86, C.A.D. 1128, 499 F.2d 1318 (1974),
rev'g, 70 Cust.Ct. 151, C.D. 4421, 359 F.Supp. 1390 (1973) and 19
CFR 10.16(a). Cleaning components, including wiping off excess
epoxy, is considered an operation incidental to the assembly
process pursuant to 19 CFR 10.16(b)(1). Trimming of excess wire
is considered an acceptable operation incidental to the assembly
process pursuant to 19 CFR 10.16(b)(4), which states that
trimming, filing or cutting off of small amounts of excess
material is incidental to assembly. Bending of the retainer legs
after its assembly into the "Conductor Wire and Board Ass'y" and
depressing a tube to secure it to the component fitted therein
are considered operations incidental to assembly pursuant to 19
CFR 10.16(b)(5), which allows adjustments in the shape or form of
a component to the extent required by the assembly being
performed. Cutting wire or cable to length is also considered an
operation incidental to the assembly process pursuant to 19 CFR
10.16(b)(6). Moreover, heating the heat reactive tubing to
shrink the material around a component or a group of components
is considered an acceptable assembly operation or operation
incidental thereto in view of General Instrument Corporation v.
United States, 70 Cust.Ct. 64, C.D. 4408 (1973) (precut lengths
of tubular sleeving called "shrink sleeving," assembled abroad
with other components to form selenium rectifiers, are entitled
to allowances in duty under the precursor provision of HTSUS
subheading 9802.00.80). See also, Headquarters Ruling Letters
555503 dated March 15, 1990, and 052760 dated March 3, 1978.
HTSUS subheading 9801.00.10 provides for the free entry of
U.S. products that are exported and returned without having been
advanced in value or improved in condition by any means while
abroad, provided the documentary requirements of section 10.1,
Customs Regulations (19 CFR 10.1), are met. In United States v.
John V. Carr & Sons, Inc., 69 Cust.Ct. 78, C.D. 4377, 347 F.Supp.
1390 (1972), 61 CCPA 52, C.A.D. 1118, 496 F.2d 1225 (1974), the
court stated that absent some alteration or change in the item
itself, the mere repackaging of the item even for the purpose of
resale to the ultimate consumer, is not sufficient to preclude
the merchandise from being classified under item 800.00, Tariff
Schedules of the United States (TSUS) (the precursor to
subheading 9801.00.10, HTSUS).
Therefore, those U.S. items, such as the nuts, bolts,
screws, and installation instructions, which are exported to
Mexico and merely packaged in plastic bags are not considered to
have been advanced in value or improved in condition for purposes
of HTSUS subheading 9801.00.10. As a result, these items will be
exempt from duty under this tariff provision when they are
returned to the U.S. packaged with the completed antennas or
support structure, provided the documentation requirements of 19
CFR 10.1 are satisfied. The packaging materials themselves
(e.g., cartons, plastic bags, foam inserts) will also receive
duty-free treatment under HTSUS subheading 9801.00.10, if of
U.S. origin.
The various antenna assemblies and the support structure for
the cellular telephone antennas (Model numbers: M-902, MS 264,
ASP-7A, HM-7A, AV-5, MON-3, ASP-268, ASPA268, ASPB268, ASPC268,
ASP177, and MR510) are classifiable under the provision for other
antennas and antenna reflectors, subheading 8529.10.60, HTSUS,
dutiable at 6 percent ad valorem. Articles classifiable under
this provision are entitled to duty-free treatment under the
Generalized System of Preferences, provided the 35 percent value-
content requirement and the other requirements set forth in
sections 10.171 through 10.178, Customs Regulations (19 CFR
10.171-10.178) (copy enclosed), are satisfied.
HOLDING:
On the basis of the information submitted it is our opinion
that the U.S. components to be exported to Mexico for assembly
into various models of antennas and the support structure for
cellular telephone antennas will be entitled to duty allowances
under HTSUS subheading 9802.00.80 when returned to the U.S.,
provided the documentation requirements of 19 CFR 10.24 are met.
Those U.S. items that are exported to Mexico and merely packaged
with the antennas and support structure for cellular telephone
antennas will receive duty-free treatment under HTSUS subheading
9801.00.10 upon their return to the U.S., assuming compliance
with the documentation requirements of 19 CFR 10.1. The antennas
and the support structure for the cellular telephone antennas
are classifiable under the provision for other antennas and
antenna reflectors, HTSUS subheading 8529.10.60, dutiable at 6
percent ad valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure
cc: Ass't Area Dir, NIS
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