CLA-2 CO:R:C:V 555595 LS
Mr. John Mayo McKeown
1809 Farragut Street
Laredo, Texas 78040-0871
RE: Applicability of partial duty exemption under subheading
9802.00.80, HTSUS, to leather-wrapped eyeglass temples
and nylon sunglass frames
Dear Mr. McKeown:
This is in response to your letters dated November 30,
1989, and February 5, 1990, to Customs in Laredo, Texas, on
behalf of Phoenix Assembly Corp., requesting a ruling on the
applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to two separate
products -- leather-wrapped eyeglass temples and nylon sunglass
frames. Samples were submitted for examination. Your letters
were referred to this office for preparation of a response.
FACTS:
With respect to the leather-wrapped temples, Phoenix
Assembly Corp. is planning to export to Mexico right and left
temples, stitched leather, and acetone. The temples are made of
metal, with the lower half encapsulated in a plastic material.
The temples and acetone are of U.S. origin and the leather is of
Canadian origin. A Mexican company will perform the following
operations. The leather, which is already folded and stitched on
one end when exported to Mexico on rolls, is cut to length and
width. Glue is placed on the reverse side of the leather and
activated with acetone. The leather is glued onto the plastic
portion of the temple and any excess is removed by cutting. The
lower part of the leather-covered portion of the temple is then
bent so that the temple will fit behind the eyeglass wearer's
ear. The temples will then be returned to the U.S., where they
will be assembled with eyeglass frame fronts which have also been
covered with leather in Mexico.
You have specifically asked us to address the issue of what
effect the bending operation has on the temples' eligibility for
a partial duty exemption under subheading 9802.00.80, HTSUS. You
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also request a determination as to the country of origin of the
eyeglass frames for marking purposes, assuming that the temples
and frame fronts are leather-wrapped in Mexico and then assembled
in the U.S. This will be the subject of a separate response.
With respect to the sunglass frames, Phoenix Assembly Corp.
plans to export the nylon temples, nylon frame fronts, and metal
hinge pins, all of U.S. origin, to Mexico. Prior to the assembly
of the frame fronts and temples, the left and right temples will
undergo the following operations. First, mold closure marks are
removed by tracing the periphery of the temple with a hand
grinder equipped with an abrasive wheel. Next, the areas where
the marks were removed are polished by tracing the periphery of
the temple with a hand grinder equipped with a felt wheel and
polish rouge. Lastly, the registered trademark "Ray-Ban" is
printed on the end of the left temple which will be attached to
the frame front. This printing is achieved using a "TAMPO"
transfer printing press. The temple is then placed in a
temporary staging area to allow the ink to dry. The same
procedure is followed on the right temple where the registered
trademark "Cats" is printed.
The assembly operations will consist of the following
steps. The metal hinge pin is inserted into the first half of
the left temple by (1) placing the pin into the hole in the upper
jaw of special hinge pin pliers; (2) placing the temple hinge
over the lower jaw of the pliers ; and (3) squeezing the pliers
shut. Next, the left temple is placed onto the hinge located on
the left side of the frame front, and the final stage of the pin
insertion is achieved using modified pliers. This same process
is repeated for the right temple. The temples are then folded to
check for the proper fit. The completed sunglass frame is
visually inspected for defects, and then placed in a shipping
container. The frames will then be shipped to Texas for
insertion of the lenses.
You have also requested that we address the country of
origin marking requirements for the sunglass frames. You inquire
whether the frames, prior to insertion of the lenses in the U.S.,
will be entitled to a waiver of the marking requirements.
ISSUE:
(1) Whether the bent leather-wrapped temples will qualify
for the partial duty exemption under subheading 9802.00.80,
HTSUS, when returned to the U.S.
(2) Whether the nylon sunglass frames will qualify for the
partial duty exemption under subheading 9802.00.80, HTSUS, when
returned to the U.S.
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LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, 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, lubricating and painting.
All three requirements of subheading 9802.00.80, HTSUS, must be
satisfied before a component may receive a duty allowance. An
article entered under subheading 9802.00.80, HTSUS, is subject to
duty upon the full value of the imported assembled article less
the cost or value of the U.S. components, upon compliance with
the documentary requirements of section 10.24, Customs
Regulations (19 CFR 10.24).
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 operation. Examples of operations considered incidental
to the assembly process are delineated at section 10.16(b),
Customs Regulations (19 CFR 10.16(b)). However, any significant
process, operation, or treatment whose primary purpose is the
fabrication, completion, or physical or chemical improvement of a
component, or which is not related to the assembly process,
precludes the application of the exemption under subheading
9802.00.80, HTSUS. See 19 CFR 10.16(c).
I. Leather-wrapped temples
The temples constitute "fabricated components, the product
of the U.S.," as they are exported in a condition ready for
assembly, within the meaning of clause (a) of subheading
9802.00.80, HTSUS. Assuming that the acetone is in a liquid form
as exported, it does not qualify as a "fabricated component, the
product of the U.S." The legislative history of subheading
9802.00.80, HTSUS, makes it clear that the exemption applies to
U.S.-made fabricated components which are of types 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).
Therefore, the acetone is not eligible for the partial duty
exemption under the statute.
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The application of the leather onto the plastic covering of
the temple is an acceptable assembly operation in accordance with
19 CFR 10.16(a). See Headquarters Ruling Letter 554908 dated
December 22, 1988 (process of applying various adhesives to very
thin pieces of foreign leather, gluing the leather to eyeglass
frames, and skiving off excess leather constitutes an acceptable
assembly operation for purposes of subheading 9802.00.80, HTSUS).
We next consider the specific issue raised, i.e., whether
the curling or bending of the temple constitutes a "fabrication,"
as that term is used in 19 CFR 10.16(c), or an operation
incidental to the assembly process. In Samsonite Corporation v.
United States, 12 CIT ___, 702 F. Supp. 908 (1988), appeal
docketed, No. 89-1346 (Fed. Cir. March 17, 1989), the court
considered the issue of whether the bending of steel strip to
form a luggage frame prior to the assembly of a luggage bag
constituted a fabrication or an operation incidental to the
assembly. The steel strips were bent by machine into a form
analogous to a square-sided letter C and subjected to other
operations prior to being assembled into the luggage bags. The
court found that the bending process did more than "adjust" (19
CFR 10.16(b)(5)) the article, but rather created the component to
be assembled, the essence of which was its configuration. The
bending, which transformed the strip into a luggage frame, was
found to be a "further fabrication."
Similarly, in the instant case we find that the bending of
the temple after the assembly (i.e., application of leather onto
temple) constitutes a "fabrication" or "completion" of the temple
within the meaning of 19 CFR 10.16(c). The bending does not
qualify as an operation incidental to the assembly process under
19 CFR 10.16(b)(5) since it does not constitute an adjustment "in
the shape or form of a component to the extent required by the
assembly being performed." See Samsonite. The bending here is
more than an adjustment in shape or form and it is not required
by the assembly. Instead, the primary purpose of the bending is
the fabrication or completion of the temple. See 19 CFR
10.16(c). Further, the bending of the temple is "not related to
the assembly process" (19 CFR 10.16(c)) by which the leather is
wrapped around and glued to the plastic portion of the temple.
See Surgikos, Inc. v. United States, Slip. Op. 88-35, 12 CIT ___
(1988) (in applying the criteria for operations incidental to the
assembly process, the court found that fenestration and finish
folding of surgical sheets were not related directly to the
gluing process by which the sheets were assembled).
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Since the U.S.-origin temples will be advanced in value or
improved in condition by a bending process which is not an
assembly operation or an operation incidental thereto, they will
not be eligible for the partial duty exemption under subheading
9802.00.80, HTSUS.
II. Nylon sunglass frames
We must first determine whether the sunglass frame fronts,
temples, and metal hinge pins are exported in a condition ready
for assembly without further fabrication (clause (a) of
subheading 9802.00.80, HTSUS). The metal hinge pins satisfy
clause (a) because they enter immediately into the assembly
process in their exported condition. Since the frame fronts and
temples undergo several processes in Mexico prior to their
joinder, it is necessary to ascertain whether these processes
constitute operations incidental to the assembly process or
further fabrication.
The first pre-assembly process involves the removal of mold
closure marks by using a hand grinder with an abrasive wheel.
This procedure qualifies as an operation incidental to the
assembly process because it is a trimming or filing operation
designed to remove small amounts of excess plastic after the
molding of the frame fronts and temples. See 19 CFR 10.16(b)(4).
The next step of polishing the areas on the temple or frame
front where the mold closure marks were removed constitutes an
operation incidental to the assembly process. In part, 19 CFR
10.16(c)(5) provides that polishing which imparts significant new
characteristics or qualities to an article is an operation not
incidental to the assembly process. The polishing here does not
impart a significant new characteristic to the temple or frame
front, but is, instead, analogous to a cleaning operation which
is enumerated in 19 CFR 10.16(b)(1) as an acceptable operation
incidental to the assembly process.
The operation of printing the logos, "Ray-Ban" and "Cats"
on the left and right temples, respectively, using a transfer
printing press also constitutes an operation incidental to the
assembly process. In C.S.D. 79-314, 13 Cust. Bull. 1468 (1979),
Customs determined that printing which serves the purpose of
"origin markings, trademark, polarity, color coding, part number
identification, or instruction for use," is not substantial in
nature and "reasonably appear[s] to be commercially and
functionally related to the overall assembly process and the
assembled article itself." Since both "Ray-Ban" and "Cats" are
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registered trademarks, the printing of these names does not
preclude application of the partial duty exemption under
subheading 9802.00.80, HTSUS.
Having found that the three pre-assembly processes
constitute operations incidental to the assembly process, we
conclude that the frame fronts and temples satisfy clause (a) of
subheading 9802.00.80, HTSUS.
For purposes of subheading 9802.00.80, HTSUS, the term
"assembly" means the fitting or joining together of fabricated
solid components. 19 CFR 10.16(a); C.J. Tower & Sons of Buffalo,
Inc. v. United States, 62 Cust. Ct. 643, C.D. 3840, 304 F. Supp.
1187 (1969). Joinder by the use of fasteners is one of the
acceptable means of assembly listed in 19 CFR 10.16(a). The
assembly operation in this case involves a three step process:
(1) inserting the hinge pin, a type of fastener, into the first
half of the temple using special hinge pin pliers; (2) placing
the temple onto the hinge of the frame front; and (3) finishing
the pin insertion utilizing modified pliers.
Finally, the closure or folding of the temples to check for
proper fit and the visual inspection of the completed frame are
operations incidental to the assembly process. See 19 CFR
10.16(b)(7).
We find that the U.S. fabricated components, consisting of
the nylon sunglass frame fronts, the nylon temples, and the metal
hinge pins, are in a condition ready for assembly without further
fabrication, do not lose their physical identities in the
assembly operations, and are not otherwise advanced in value or
improved in condition except by assembly operations and
operations incidental thereto. Therefore, the nylon sunglass
frames are eligible for the duty allowance under subheading
9802.00.80, HTSUS.
HOLDING:
The leather-wrapped temples will not be eligible for the
partial duty exemption under subheading 9802.00.80, HTSUS, when
returned to the U.S. No allowance may be made for the cost or
value of the leather component which is of Canadian origin. The
U.S.-origin metal temples with the plastic encapsulation are not
eligible for the exemption since they will be advanced in value
or improved in condition by a bending process which is not an
assembly operation or an operation incidental thereto. The
acetone is also not eligible because it is not a fabricated
component of a type designed to be fitted together with other
components.
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The processes performed in Mexico on the components of the
nylon sunglass frames are considered acceptable assembly
operations or operations incidental thereto. Since all the
components of the frames are of U.S. origin, allowances in duty
may be made under subheading 9802.00.80, HTSUS, for the cost or
value of these components when the frames are returned to the
U.S., upon compliance with the documentary requirements of 19 CFR
10.24.
Sincerely,
Acting Director
Commercial Rulings Division