CLA-2 CO:R:C:S 556124 DSN
Mr. Russell L. Jones
P.O. Box 488
San Luis, Arizona 85349
RE: Applicability of partial duty exemption to spring brakes
assembled in Mexico; assembly; 19 CFR 10.16; 555553;
555565; 555765
Dear Mr. Jones:
This is in response to your letter dated June 26, 1991, on
behalf of TSE Brakes, Inc., requesting a ruling concerning the
applicability of subheading 9802.00.80, Harmonized Tariff Schedule
of the United States (HTSUS), to spring brakes imported from
Mexico.
FACTS:
According to your submissions, TSE Brakes, Inc., intends to
assemble spring brakes in Mexico from U.S-origin and foreign
components. The spring brakes are designed to be mounted on the
outside of large trucks and buses.
You state that approximately 60 percent of the components
are of U.S. origin and about 40 percent are foreign. The
U.S.-origin components consist of:
1. spring housing;
2. push rod;
3. return spring;
4. dust cap;
5. main spring;
6. clamp;
7. o'ring;
8. warning tag;
9. push rod plate;
10. diaphragm
2
The first phase of the assembly operation consists of the sub-
assembly of an adapter base. According to Scott McElroy,
operations manager of TSE Brakes, Inc., who spoke by telephone
with a member of my staff, the housing and aluminum plates are
powder coated in Mexico prior to assembly, while the spring
located below the housing is powder coated in the U.S.
The powder coating process consists of a combination of
pigment and epoxy. The parts are sprayed with the coating and
then heated in an oven. The heating process causes the powder to
melt and flow evenly across the metal parts and bond with the
exposed parts of the premium spring brake. This process is
performed to protect the brakes from salt and other highway
cleaning solvents used for snow and ice removal. Only those
spring brakes which are to be used in cold weather climates will
undergo this process.
The next phase of the assembly process consists of
positioning the spring housing into a single assembly press. The
main spring is then placed into the spring housing. The press
plate is placed onto the main spring in order to completely
compress the main spring into the spring housing. A diaphragm is
placed in the spring housing on top of the press plate. The
pre-assembled adapter base is then placed onto the diaphragm.
Clamps are positioned around the spring housing, and nuts and
bolts are used to tighten them to approximately 25 pounds of
torque. Warning tags are then slipped over the clamp bolts. A dust
assembly cap is snapped onto the spring housing which completes the
assembly of a single spring brake.
Although not stated in your ruling request, Mr. McElroy
asked a member of my staff by telephone for a ruling concerning
the applicability of subheading 9802.00.80, HTSUS, to spring
brakes not subjected to the powder coating operation.
ISSUE:
Whether the spring brakes will qualify for the partial duty
exemption available under subheading 9802.00.80, HTSUS, when
returned to the U.S.
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,
3
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 this tariff provision is subject to duty
upon the full cost or value of the imported assembled article,
less the cost or value of the U.S. components assembled therein,
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 whether
performed before, during, or after assembly, do not constitute
further fabrication, and shall not preclude the application of
the exemption. An example of an operation which is considered
incidental to the assembly process is the application of
preservative paint or coating, including preservative metallic
coating, lubricants, or protective encapsulation. See, section
10.16(b)(3), Customs Regulations (19 CFR 10.16(b)(3)).
As to the assembly of spring brakes in this case, it is our
opinion that the operations performed i mexico, whereby the U.S.
components are securely joined together by force fitting and the
use of nuts and bolts, are acceptable assembly operations. See,
19 CFR 10.16(a) and Headquarters Ruling Letters 555553 of April
11, 1990, 555564 of May 1, 1990 and 555765 of November 8, 1990.
During the instant assembly operations, the powder coating
is applied as a preservative designed to protect the brakes from
corrosion associated with salt and other road cleaning materials
used to remove snow and ice. Sales brochures submitted with this
request show that the spring brakes are advertised as containing
corrosion protection. In addition, those spring brakes which are
sold to areas where no snow and ice are expected are not powder
coated. Thus, since the above cited regulation specifically
enumerates preservative coating as an example of an operation
incidental to assembly, we find that the powder coating of the
housing and aluminum plates in Mexico is an acceptable
incidental operation.
4
HOLDING:
On the basis of the information presented, it is our
opinion that the powder coating of the housing and aluminum
plates is an operation incidental to acceptable assembly
operations for the spring brakes, and will not preclude
subheading 9802.00.80, HTSUS, treatment for these U.S.-origin
components. Therefore, the U.S. components exported to Mexico
for assembly into spring brakes will be entitled to duty
allowances under subheading 9802.00.80, HTSUS, when returned to
the U.S., provided the documentation requirements of 19 CFR 10.24
are met.
Sincerely,
John Durant, Director
Commercial Rulings Division