CLA-2 CO:R:C:S 556271 DSN
Mr. Bernard R. Nottling
Account Manager
Rudolph Miles & Sons
4950 Gateway East
P.O. Box 144
El Paso, Texas 79941
RE: Applicability of partial duty exemption to gas furnace
ignition devices; 19 CFR 10.14; 19 CFR 10.16; 556197;
556124
Dear Mr. Nottling:
This is in response to your letter of September 11, 1991, on
behalf of Control Products Division, Johnson Controls, requesting
a ruling on the applicability of subheading 9802.00.80,
Harmonized Tariff Schedule of the United States (HTSUS), to gas
furnace ignition devices to be assembled in Mexico from U.S. and
foreign-origin components.
FACTS:
According to your submission, cases and covers of U.S.-
origin are sent to Mexico to be plated with zinc dichromate. In
Mexico, the cases and covers are hung on racks and run through
the plating process, which first involves cleaning to remove oil
and soil and acid dipping to remove any corrosion. The cases and
covers are then zinc plated, rinsed, dichromate dipped, rinsed,
and dried before being assembled with other components to create
gas furnace ignition devices. You state that the sole purpose of
the plating operation is to provide a highly corrosion-resistant
metallic coating to the cases and covers.
The time involved in plating a case and cover is 1.08
minutes, while the total time to assemble an ignition device is
41.46 minutes. Thus the plating time represents 2.6% of the
total assembly time.
The cost of the plating operation for the case and cover is
$0.48. The above figure represents approximately 4% of the total
cost of the ignition device.
ISSUE:
Whether the plating operation constitutes an operation
incidental to assembly so as to qualify the cases and covers for
the duty exemption available under subheading 9802.00.80, HTSUS,
when returned to the U.S., incorporated into gas furnace
ignition devices.
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 (19 CFR 10.16(b)(3)). However,
19 CFR 10.16(c)(5) includes as an example of an operation not
incidental to assembly "plating (other then plating incidental
to assembly)."
In the instant case, the plating operation is performed to
provide a highly corrosion resistant metallic coating to the
cases and covers. We have held that protective coating applied
to articles to prevent corrosion are considered operations
incidental to assembly. See, Headquarters Ruling Letters (HRL's)
556197 of December 4, 1991, in which we held that gunite coating
of steel water pipes to prevent corrosion associated with water
was considered an operation incidental to assembly. See also,
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.
In United States v. Mast Industries, Inc., 515 F. Supp.43, 1
CIT 188, aff'd, 69 CCPA 47, 668 F.2d 501 (1988), the court, in
examining the legislative history of the meaning of "incidental
to the assembly process," stated that:
[t]he apparent legislative intent was to not preclude
operations that provide an "independent utility" or that
are not essential to the assembly process; rather, Congress
intended a balancing of all relevant factors to ascertain
whether an operation of a "minor nature" is incidental to
the assembly process.
The court then indicated that relevant factors included:
(1) whether the relative cost and time of the operation
are 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 operations be performed concurrently
with assembly.
Based on the information provided in your submission
regarding the cost and time of the plating operation, we conclude
tha the operation is minor in comparison to the total assembly of
the ignition device. Although the plating operation is not
necessary to the subsequent assembly process, we are satisfied
that the operation is logically performed concurrently with
assembly in view of economic and other practical considerations.
Thus, applying the Mast criteria and our previous rulings to this
case, it is our opinion that the plating operation is incidental
to the assembly process.
HOLDING:
On the basis of the information provided, it is our opinion
that the plating operation is considered an operation incidental
to assembly. Therefore, allowances in duty may be made under
this tariff provision for the cost or value of the U.S. cases and
covers upon compliance with the documentary requirements of 19
CFR 10.24
Sincerely,
John Durant, Director
Commercial Rulings Division