CLA-2 CO:R:C:S 556714 RAH
District Director
U.S. Customs Service
5850 San Felipe Street
Suite 500
Houston, Texas 77057-3012
RE: I/A 25/92; Applicability of duty exemption under HTSUS
subheading 9802.00.80 to U.S.-origin yarn exported to
Sweden for twisting and spinning
Dear Ms. McCauley:
This is in response to your memorandum of April 15, 1992,
forwarding a request for internal advice submitted by the law
firm of Givens and Kelly on behalf of Multiflex International,
Inc, concerning the applicability of subheading 9802.00.80,
Harmonized Tariff Schedule of the United States (HTSUS), to
twisting and spinning of U.S.-origin yarn in Sweden.
FACTS:
Untwisted Kevlar multifilament yarn which is wound on
cylindrical spools of 20 lbs. yarn per spool is exported to
Aktiebolaget Svenskt Konstsilke (S.K.S.) in Sweden by Du Pont via
its European Du Pont subsidiary. Kevlar is an aromatic polyamide
fiber of extreme tenacity (high tensile strength), of greater
resistance to elongation than steel, and capable of high energy
absorption. It is ultimately used by Multiflex in protective
bundle applications for offshore drilling rig control cables with
hydraulic, electro-hydraulic, or pneumatic cores. Its light
weight and great strength make it ideal for protecting these
heavy weight, rough duty cables from both the elements, internal
pressures, and the stresses of offshore use.
S.K.S. twists the yarn (60 twists per meter) on Kevlar ring
twisting frames preparatory to winding onto bobbins. The twisted
Kevlar yarn is wound onto bobbins in parallel (from 3 to 7
parallel ends) by use of an eight-inch traverse spooling machine.
This "parallel end" winding involves no weaving or braiding. The
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Kelvar yarn is braided by Multiflex upon the yarn's return to
the United States to form the protective bundle cores for control
bundles for offshore drilling and production platforms.
After winding, S.K.S. dips each end of the bobbins into a
1/4th inch deep adhesive neoprene solution to keep the Kevlar
yarn from slipping off of the sides of the bobbins in transport.
The inquirer states that the solution does not affect the small
amount of Kelvar it contacts in any way; it merely allows
efficient handling of the Kevlar yarn on the bobbins, which
themselves are ultimately mounted on Multiflex's braiding machine
in the United States.
The inquirer argues that the 20-lbs. Kevlar spools are
exported in a condition ready for assembly without further
fabrication. S.K.S. adds no coatings or other chemical
treatments to enhance any of the properties of the Du POnt
Kelvar. S.K.S. merely assembles the Du Pont Kelvar strands into
a manageable yarn ready for the Multiflex braiding process upon
its return to the United states. They further argue that the Du
Pont Kevlar has not lost its physical identity, and that the
operation does not advance the value or improve the condition of
the Kevlar except by virtue of assembling the Kevlar strands into
manageable yarn for ready mounting on Multiflex's braiding
machine in the United States. The assembly operation abroad
comprises only about 11 percent of the total value of the product
when shipped to Multiflex.
In support of its claims, the inquirer cites Headquarters
Ruling Letters (HRL) 555128 dated January 9, 1989; HRL 555221
dated October 24, 1989; HRL 554521 dated May 29, 1987; HRL 553593
dated May 16, 1985 and New York Ruling Letter 832037 dated
September 29, 1988.
ISSUE:
Whether the twisted and wound U.S.-origin yarn will be
eligible for the partial duty exemption provided for under
subheading 9802.00.80, HTSUS, when returned to the U.S. from
Sweden.
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
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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.
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 operations. However, any significant process, operation
or treatment whose primary purpose is the fabrication,
completion, physical or chemical improvement of a component
precludes the application of the exemption under subheading
9802.00.80, HTSUS, to that component. See, 19 CFR 10.16(c).
Customs has long held that mere twisting of yarn into twine
or rope is a combining or joining of components in an acceptable
assembly operation. HRL 555128, supra, citing HRL 553593 dated
May 16, 1985 and HRL 554531 dated May 29, 1987. In HRL 555128,
3-ply nylon rope yarn is twisted into strands of 10 yarn fibers
each and then three of those strands twisted together to form
3-strand twisted rope. Moreover, foreign despooling and winding
operations have been considered by the courts within the context
of TSUS item 807.00 [the predecessor to subheading 9802.00.80,
HTSUS] and been found to constitute assembly steps rather than a
"further fabrication." See, General Instrument Corporation v.
United States, 61 CCPA 86, C.A.D. 1128, 499 F.2d 1318, 1320
(1974), rev'g, 70 Cust. Ct. 151, C.D.4421, 359 F. Supp. 1390
(1973), and General Instrument Corporation v. United States, 72
Cust. Ct. 86, 91, C.D. 4507 (1974), appeal dismissed, 62 CCPA 109
(1974) (both involving wire exported on spools and despooled onto
winding machines).
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In the instant case, we find that twisting yarn on the
Kelvar ring twisting frames and winding onto bobbins in Sweden
constitutes an acceptable assembly, in accordance with the above
cited cases and rulings. Moreover, dipping the ends of the
bobbins into an adhesive neoprene solution to keep the yarn from
slipping off of the sides of the bobbins in transport is an
insignificant operation which does not affect the use or
character of the yarn.
HOLDING:
U.S.-origin yarn exported to Sweden where it is twisted and
wound onto bobbins will be entitled to a duty allowance under
subheading 9802.00.80, HTSUS, when returned to the U.S. as those
operations constitute acceptable assembly operations.
Sincerely,
John Durant, Director
Commercial Rulings Division