CLA-2 CO:R:C:S 556808 RAH
Mr. Joseph A. Black
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, FL 33126-2022
RE: Products of the United States; subheading 9802.00.80, HTSUS;
Assembly; Zipper; 19 CFR 10.12(e)
Dear Mr. Black:
This is in response to your letter of June 23, 1992,
requesting a ruling on behalf of RAM, Fasteners of America of El
Paso, Texas, regarding whether zippers will qualify as a product
of the United States for purposes of subheading 9802.00.80,
Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
You state that the zippers are made from the following
components, which are imported from Mexico into the United
States:
1. Zipper chain (imported in 200 yard rolls);
2. A brass slider;
3. A brass bottom stop (imported in coils weighing
approximately seven pounds from which approximately
21,000 stops can be produced);
4. Brass top stops (imported in seven pound coils).
In the United States, the zipper chain is cut to length and
then gapped by removing teeth from both the bottom and the top.
The slider is mounted on the chain and brass stops are attached
to the top and bottom of the chain to prevent the slider from
being removed from the completed zipper. The latter operation
consists of cutting the stops to the appropriate length and
crimping them on the zipper chain where the teeth have been
removed.
You state that two machine operators are required if an
automatic machine is used in making the zippers, while the less
sophisticated machine requires three operators.
Additionally, you submit the following cost breakdown for
assembling a seven inch zipper:
Zipper Chain .05625
Zipper Slider .0225
Stop Wire .0008
Capital .0025
Labor .0125
Overhead .015
The total cost of production of the zipper is $0.10955 which
includes $0.03 U.S. value-added. The U.S. value-added represents
27.4 percent of the total cost.
You contend that the zippers in question should be
considered products of the United States because the foreign
components are substantially transformed into a new and different
article of commerce with a new name, character and use, as a
result of the processing in the United States.
We infer from your submission that the completed zippers
will be exported to a foreign country for assembly into other
articles, which will then be returned to the U.S. and entered
under subheading 9802.00.80, HTSUS.
ISSUE:
Whether foreign-made zipper components made into completed
zippers in the United States are substantially transformed into
"products of the United States" for purposes of subheading
9802.00.80, HTSUS.
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).
For purposes of subheading 9802.00.80, HTSUS, a "product of
the United States" is an article manufactured within the Customs
territory of the U.S. and may consist wholly of U.S. components
or materials, of U.S. and foreign components or materials, or
wholly of foreign components or materials. If the article
consists wholly or partially of foreign components or materials,
the manufacturing process must be such that the foreign
components or materials have been substantially transformed into
a new and different article, or have been merged into a new and
different article. Section 10.12(e), Customs Regulations
(19 CFR 10.12(e)).
A substantial transformation occurs "when an article emerges
from a manufacturing process with a new name, character, or use
which differs from that of the original material subjected to the
process." The Torrington Company v. United States, 764 F.2d
1563, 1568 (Fed. Cir. 1985).
In the instant case, we find that the assembly of the zipper
components into a finished zipper is a relatively minor operation
or combining process which leaves the identity of the components
intact. Moreover, the essential character of the zipper (i.e.,
chain and slider) is not substantially changed, nor does it lose
its separate identity as a result of the assembly operation in
the U.S. Furthermore, we find that the foreign components are
already dedicated to use as a zipper prior to their being
assembled together. Accordingly, the zipper will not be
considered a "product of the United States" and therefore will
not be entitled to a duty allowance under subheading 9802.00.80,
HTSUS, when returned to the U.S. as part of an article assembled
abroad.
HOLDING:
Foreign-made zipper components assembled into completed
zippers in the U.S. are not considered "products of the United
States" for purposes of subheading 9802.00.80, HTSUS, as the
components are not substantially transformed into a new and
different article of commerce as a result of that processing.
Sincerely,
John Durant, Director
Commercial Rulings Division