CLA-2 CO:R:C:S 557804 MLR
Mr. William J. LeClair
Trans-Border Customs Services, Inc.
One Trans-Border Drive
P.O. Box 800
Champlain, NY 12919
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.80 to plasterboard; vinyl covered; cut-
to-length and width; gluing
Dear Mr. LeClair:
This is in response to your letter of February 7, 1994,
requesting a ruling on behalf of Okaply Industries Ltd.,
regarding the applicability of subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS), to plasterboard
that is covered with vinyl in Canada.
FACTS:
U.S.-origin plasterboard (sometimes called sheetrock or
gypsumboard), measuring 4 feet by 8 feet, will be exported to
Canada with U.S.-origin vinyl cover in roll form. In Canada, the
vinyl cover will be glued to one side of the plasterboard. No
cutting or other processing will be done to the plasterboard.
However, in a telephone conversation with a member of my staff,
you indicated that the vinyl cover on the rolls is 51 inches wide
and will be cut to length and width in Canada.
ISSUE:
Whether the vinyl-covered plasterboard 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,
lamination, sewing, or the use of fasteners.
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. See 19 CFR 10.16(a). 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).
In this case, gluing the U.S.-origin vinyl cover to the
U.S.-origin plasterboard is specifically considered an acceptable
assembly operation pursuant to 19 CFR 10.16(a). The plasterboard
will not be cut in Canada; therefore, it will be eligible for the
duty allowance under subheading 9802.00.80, HTSUS. However, the
vinyl cover on the rolls will be cut-to-length and width in
Canada. In Headquarters Ruling Letter (HRL) 555798 dated March
25, 1991, we held that U.S.-origin fabric cut both to length and
width in Haiti did not qualify for the partial duty exemption
available under subheading 9802.00.80, HTSUS, because these
operations constituted a further fabrication of the fabric,
contrary to clause (a) of the statute. We stated that the
cutting operations were analogous to cutting fabric to a specific
pattern or shape, which is an impermissible operation under this
tariff provision. See 19 CFR 10.16(c)(2). We, therefore, find
that the vinyl cover will not qualify for the partial duty
exemption available under subheading 9802.00.80, HTSUS.
HOLDING:
On the basis of the information submitted, it is our opinion
that gluing the U.S.-origin vinyl cover to the U.S.-origin
plasterboard is considered a proper assembly operation. However,
cutting the vinyl cover to length and width in Canada is not
considered an operation incidental to the assembly process.
Therefore, the vinyl-covered plasterboard may be entered under
subheading 9802.00.80, HTSUS, with allowances in duty only for
the cost or value of the U.S.-origin plasterboard, but not the
vinyl cover, provided the documentary requirements of 19 CFR
10.24 are satisfied.
Sincerely,
John Durant, Director
Commercial Rulings Division