CLA-2 CO:R:C:S 555642 LS
Leslie A. Glick, Esq.
Porter, Wright, Morris & Arthur
1233 20th Street, N.W.
Washington, D.C. 20036-2395
RE: Applicability of subheading 9802.00.80, HTSUS, to decorated
mirror components of framed mirrors; decorating by applying
Deca Glass Tech paint to silk screen design placed over
glass mirror; further fabrication; 19 CFR 10.16(c)
Dear Mr. Glick:
This is in response to your letter dated April 18, 1990,
requesting a ruling, on behalf of Tyrone Art, Inc., as to whether
a certain process of decorating the mirror components of framed
mirrors by applying a lacquer substance constitutes an operation
incidental to the assembly of the framed mirrors, within the
meaning of subheading 9802.00.80, Harmonized Tariff Schedule of
the United States (HTSUS).
FACTS:
The following facts are based upon your letter and a
telephone conference between yourself, your client, and a member
of my staff.
Tyrone Art, Inc. plans to ship U.S. origin mirrors, frames,
a clear liquid lacquer, known as "Deca Glass Tech paint", and
other materials to Mexico, where the following operations will
take place.
1. A silk screen border design or stencil is laid over the
top of the U.S. mirror.
2. The Deca Glass Tech paint is poured by hand over the
silk screen and applied with a hand squeegee. This lacquer
material is allowed to air dry for approximately five minutes.
A design is formed on the surface of the glass when the lacquer
material fills in the hollow areas of the stencil. The excess
lacquer is rinsed away with water, and the stencil is removed
from the glass. The dried Deca Glass Tech paint has a frosted
white appearance on the mirror, and serves a decorative purpose.
Although you described this process as "etching" in your letter,
you explained during the conference call that it is not
technically etching. Instead, you claim that it is similar to an
adhesion process, and that the lacquer substance becomes a flat
solid after it dries, in a manner similar to paint. For purposes
of this ruling, we will refer to the steps described in this
paragraph as a decorating process.
3. A U.S. metal hanger is hand-inserted into a die cut on a
U.S. pre-cut corrugated back.
4. The decorated mirror is placed over the top of the U.S.
corrugated back.
5. The mirror and corrugated back are fit within a U.S.
frame made of aluminum, wood, or plastic. You state that most of
the frames will be made of the plastic material.
6. U.S. tape is applied by hand along the perimeter of the
back of the framed mirror to firmly secure the corrugated back
and mirror to the frame.
7. The completed mirror(s) is placed in corrugated
packaging which is stapled closed.
8. Six individually packed framed mirrors are packed in a
U.S. shipping carton, sealed with tape, and imported into the
U.S.
You have submitted two samples, both of which have frames
made of a plastic material. One consists of a single mirror with
a border design along the edges. The other sample consists of
one large undecorated mirror and two smaller decorated mirrors
placed together in one corrugated cardboard packaging. The
design on the smaller mirrors consists of a vase with flowers.
You state that the decorating process is not done in the U.S.
prior to shipping the glass to Mexico for assembly because
shipment of the individual pieces of glass would cause them to
scratch against each other, thus damaging the designs created
with the Deca Glass Tech paint. The decorated mirrors are
protected once they are put into the frames.
You contend that the process of decorating the mirrors by
applying the Deca Glass Tech paint constitutes an operation
incidental to the assembly of the framed mirrors. Therefore, you
assert that a duty allowance should be permitted under
subheading 9802.00.80, HTSUS, for the decorated mirror components
when they are imported into the U.S. as part of the completed
framed mirrors. You claim that the operation involved in
decorating the mirrors is of a minor nature which should not be
considered a further fabrication, within the meaning of
subheading 9802.00.80, HTSUS. To support this claim, you have
submitted cost and time figures which indicate that the
decorating process comprises between 3% and 4% of the time
involved to assemble the completed framed mirror, and
approximately 1% of the framed mirror's entire cost.
Since you have already received a ruling on certain picture
frames produced by Tyrone Art, Inc. using similar assembly
operations in Mexico, you have limited this ruling request to
the issue of whether decorating the mirrors constitutes an
operation incidental to assembly. That prior ruling,
Headquarters Ruling Letter (HRL) 555214 dated December 26, 1989,
involved three types of picture frames containing picture
prints. We held that those frames made from cut-to-length wood
and aluminum moldings would qualify for a duty allowance under
subheading 9802.00.80, HTSUS, because the cutting operation
abroad was considered incidental to the assembly process.
However, we found that the frames made of a plastic border
material, which were exported in a straight, pre-notched
condition and hand-wrapped around the 3-part picture print
sandwich, were not eligible for a duty allowance under this
tariff provision. This holding was based upon our finding that
the hand-wrapping, i.e., bending, of the U.S. plastic border
material constituted a further fabrication of this component. In
HRL 555612 dated September 13, 1990 (a partial reconsideration of
HRL 555214), we affirmed our ruling with respect to the frames
made of the plastic border material.
ISSUE:
Whether the process of decorating the mirror components of
the framed mirrors by applying the "Deca Glass Tech paint"
constitutes an operation incidental to the assembly process of
inserting and securing the mirrors in the frames.
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).
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 operation. See 19 CFR 10.16(a). Examples of operations
considered incidental to the assembly process are delineated at
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, is not regarded as
incidental to the assembly and precludes the application of the
exemption under subheading 9802.00.80, HTSUS. See 19 CFR
10.16(c).
We first consider whether the process of decorating the
mirrors by applying the Deca Glass Tech paint constitutes an
assembly operation, within the meaning of subheading 9802.00.80,
HTSUS. The legislative history of this tariff provision makes it
clear that the partial duty 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). Because the only
components involved in the decorating process are the mirror and
the Deca Glass Tech paint, and this "paint" constitutes a liquid,
there is no joinder of two or more solid components. See 19 CFR
10.16(a). Consequently, the decorating process itself does not
constitute an assembly operation.
However, we do find that, based upon 19 CFR 10.16(a), the
combined processes of fitting the decorated mirror and corrugated
back into the slits of the plastic frame, and applying tape to
firmly secure the mirror and back in the frame, constitute an
acceptable assembly operation. Assuming that this plastic frame
is made from the same material as the plastic frame in HRL
555214 and HRL 555612 (i.e., straight, pre-notched extruded
plastic border material of U.S. origin), and is subjected to the
same processes in Mexico, we find that the plastic border
material which is hand-wrapped or bent to create the frame for
the mirror is not eligible for a duty allowance under subheading
9802.00.80, HTSUS, because the bending process constitutes a
further fabrication of this U.S. component. Provided that the
processes involved in joining the frames made of aluminum and
wood with the mirror and backing encompass the same procedures
employed in HRL 555214 (with respect to the assembly of the
aluminum and wood picture frames with the picture print
sandwiches), we find that these wood and aluminum frames will be
eligible for a duty allowance under subheading 9802.00.80, HTSUS,
when the completed article is imported into the U.S.
We next address your contention that the process of
decorating the mirrors with the Deca Glass Tech paint is merely
an operation incidental to the above-described assembly process,
rather than a further fabrication of the mirror components. We
find that the decorating process is not an operation incidental
to the assembly of the mirror, back, and frame components,
because it is significant in nature and its primary purpose is to
physically improve or enhance the appearance of the mirror
component. See 19 CFR 10.16(c). Among the examples of
operations enumerated in 19 CFR 10.16(c) which are considered
not to be incidental to the assembly process is "[p]ainting
primarily intended to enhance the appearance of an article or to
impart distinctive features or characteristics." 19 CFR
10.16(c)(3). Although the decorating process here is not
technically the same as painting, it is sufficiently analogous to
fit within this enumerated example. Furthermore, the decorating
operation is not related to the assembly process of securely
fitting the mirror and corrugated back in the frame. See 19 CFR
10.16(c). Thus, we find that the application of the Deca Glass
Tech paint constitutes a further fabrication of the mirror
component, so as to preclude this component's eligibility for a
duty allowance under subheading 9802.00.80, HTSUS.
In United States v. Mast Industries, Inc., 515 F. Supp. 43,
1 CIT 188, aff'd, 668 F.2d 501, 69 CCPA 47 (1981), the court
considered the legislative history of the phrase "incidental to
the assembly process," and found that Congress intended a
balancing of all relevant factors to ascertain whether an
operation of a "minor nature" was incidental to the assembly
process. The court stated that relevant factors included:
(1) whether the relative cost of the operation and
time required by the operation were such that the
operation may be considered minor;
(2) whether the operation is necessary to the assembly
process;
(3) whether the operation is so related to the assembly
that it is logically performed during assembly; and,
(4) whether economic or other practical considerations
dictate that the operation be performed concurrently
with assembly.
Although we recognize that both the time and cost involved
in the decorating operation are minor compared to the time
required by the entire assembly operation and the cost of the
completed framed mirror, we find that the other three criteria
set forth in Mast are not satisfied. Decorating the mirror is
neither a necessary prerequisite to the subsequent assembly
process nor related to that assembly. Further, there is no
indication that economic or other practical considerations
mandate that the decorating be performed concurrently with the
assembly. Weighing these factors further confirms our conclusion
that the decorating operation is not an incidental operation,
within the meaning of subheading 9802.00.80, HTSUS, but rather
constitutes a further fabrication of the mirror component.
HOLDING:
On the basis of the information presented, we find that the
process of decorating the mirror components of the framed mirrors
by applying the "Deca Glass Tech paint" is not an operation
incidental to the assembly of the mirrors and corrugated backs
with the frames, but rather is a further fabrication of the
mirror components. Therefore, a duty allowance will not be
permitted under subheading 9802.00.80, HTSUS, for the cost or
value of the decorated mirror components when the framed mirrors
are imported into the U.S. However, the one undecorated mirror
component which is part of a 3-piece mirror set will be entitled
to a duty allowance.
Sincerely,
John Durant, Director
Commercial Rulings Division