CLA-2 CO:R:C:S 556197 DSN
Mr. Alex Romero, Jr.
Manager, A.F. Romero & Co., Inc.
477 Railroad Blvd.- P.O. Box 989
Calexico, CA 92231-0989
RE: Coating steel pipes with gunite; 19 CFR 10.14; 10.16;
556124
Dear Mr. Romero:
This is in response to your letter of August 19, 1991 on
behalf of International Fabricators & Engineers, Inc., (IFE)
requesting a ruling concerning the applicability of subheading
9802.00.80, Harmonized Tariff Schedule of the United States
(HTSUS), to steel water pipes coated with gunite from Mexico.
FACTS:
According to your submissions, IFE will ship U.S.-origin
steel pipes to Mexico where they will be cut to length and
assembled by welding into custom made pipes for water systems
networks both public and private. Wire mesh is then wrapped
around the pipe sections.
"Gunite" is sprayed onto the pipe sections over the wire
mesh in order to protect the pipes against corrosion. "Gunite"
is a trademark for a concrete mixture sprayed under pressure over
steel reinforcements. IFE manufactures piping according to
standards set by the American Water Works Association which
specifically sets standards for gunite coating.
ISSUE:
Whether the steel water pipes 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,
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 10.14(a), Customs Regulations (19 CFR 10.14(a)),
states in part that:
[t]he components must be in condition ready for assembly
without further fabrication at the time of their exportation
from the United States to qualify for the exemption.
Components will not lose their entitlement to the exemption
by being subjected to operations incidental to the assembly
either before, during, or after their assembly with other
components.
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 919 CFR 10.16(b)(3)).
In the instant case, cutting the steel pipes to length is
considered an operation incidental to the assembly process
pursuant to 19 CFR 10.16(b)(6). Securely joining the U.S.
components together by welding is an acceptable assembly
operation pursuant to 19 CFR 10.16(a).
During the instant assembly operations, the gunite coating
is applied as a preservative designed to protect the steel water
pipes from corrosion associated with water. Since the above-
cited regulation specifically enumerates preservative coating as
an example of an operation incidental to assembly, we find that
the gunite coating of the steel water pipes in Mexico is an
acceptable incidental operation. See Headquarters Ruling Letter
(HRL) 556124 of October 31, 1991, in which we held that powder
coating spring brakes to protect against corrosion associated
with snow and ice removal was considered an operation incidental
to assembly.
HOLDING:
On the basis of the information provided, it is our opinion
that the operations performed abroad to create the steel water
pipes are considered proper assembly operations or operations
incidental thereto. Therefore, the steel water pipes may enter
under subheading 9802.00.80, HTSUS, with allowances in duty for
the cost or value of the U.S. components incorporated therein,
upon compliance with the documentary requirements of 19 CFR
10.24.
Sincerely,
John Durant, Director
Commercial Rulings Division