CLA-2 R:C:S 559071 DEC
District Director of Customs
P.O. Box 789
Great Falls, Montana 54903
RE: Request for Internal Advice; Wafers incorporating integrated
circuits;
United States v. Texas Instruments Inc., C.A.D. 1178, 545 F.
2d 739;
HRL 555638
Dear Sir/Madam:
This is in response to your request for Internal Advice, by
letter dated February 28, 1995, regarding the eligibility of
silicon wafers used in the production of integrated circuits for
a partial duty exemption pursuant to subheading 9802.00.80,
Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
In the United States, a high grade silicon is produced from
pure crystal silicon in a supersaturated silicon solution
contained in a cylinder four inches in diameter. After the
silicon crystallizes throughout the length of the cylinder, the
solid cylindrical mass is removed and is sawed into thin slices.
These slices are called wafers. Each wafer is subjected to
various treatments resulting in integrated circuits (also known
as die) embedded into the surface of the wafer. On the surface
of the wafer, the integrated circuits appear in regular rows and
columns. Depending on the size of the particular circuit, the
number of circuits per wafer may range from very few to several
hundred. The circuits are generated through various processes.
One process results from placing a photomask over the
surface of the wafer and passing a strong light through the mask.
The mask is patterned in clear and opaque material to let the
light through in a pattern dictated by the end use of the
integrated circuit. The light affects the surface of the wafer
so that, by the application of the etching chemical, some wafer
surface is removed. Various finishing processes are
applied to finish the integrated circuit. After the circuit is
finished, testing is conducted. Bad integrated circuits are
marked with a colored paint. Lines are drawn on the wafers as a
pattern used for later scribing of the wafer overseas. These
lines are drawn in regular vertical and horizontal rows and
columns so that the integrated circuits are framed. The wafers
are then exported overseas from the United States for processing.
At the foreign processing facility, a sticky paper is
applied to the bottom of the wafer. The wafers are then scribed
along the pre-drawn lines using a small circular diamond saw.
This scribing process with circular saw passes through the wafer
completely. A machine called a die bonder is passed over the
broken wafer and sucks up all the material on the sticky paper
except the good die. The good die are then removed and inserted
into the lead frames where they are glued to a small pad on the
bottom of the frame. Lead frames are small metal containers
which have electrical leads protruding from their bottom. After
the die are placed in their frames, gold wire is placed near the
upper extremity of the die and an ultrasound device operates to
generate heat which causes the wire to be soldered to the die.
The gold wire extends to the bottom of the lead frame where the
soldering process is repeated. This process is repeated around
the sides of the die until all soldering is accomplished. Each
point of soldering on the lead frame electrically connects the
die to the external leads.
Molten plastic is poured over the die and lead frame which
when solidified forms a protective surface and an electrically
insulating barrier. The encapsulated die is then returned to the
United States. This finished product is placed on a printed
circuit board during a manufacturing process and is electrically
connected via the leads extending from the lead frame.
ISSUE:
Are the wafers described above eligible for the partial duty
exemption pursuant to subheading 9802.00.80, HTSUS, when returned
to the United States?
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 United States components assembled abroad,
provided the section 10.24, Customs Regulations (19 CFR 10.24),
documentary requirements are satisfied.
Section 10.14(a), Customs Regulations (19 CFR 10.14(a)),
states, in part, that
The 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 10.14 contains an example that states where integrated
circuit wafers containing individual integrated circuits have
been scribed or scored in the United States, these articles are
regarded as fabricated components. The example goes on to
provide that separating the wafer into individual frames by
cutting or the segmentation of the wafer into individual die by
flexing or breaking along the scored lines is regarded as an
operation incidental to the assembly process. Section 10.16(c),
Customs Regulations (19 CFR 10.16(c)), states that 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.
The facts presented in United States v. Texas Instruments
Inc., C.A.D. 1178, 545 F. 2d 739 (1976) are very similar to those
you have presented in your Internal Advice request. The Texas
Instrument case involved the production of transistors from
silicon in a manner very similar to the method described above.
The foreign assembly process involved the scoring of the silicon
slice along the marks established in the United States. Each
chip was then bonded to three stiff lead wires. This completed
assembly was then molded in a plastic compound using a mold
press. The appellate court held that the scribing operation and
the separation of the transistor chips into separate individual
transistor areas did not amount to a further fabrication. In
addition, the court concluded that the scribing and breaking
operations at issue were incidental to the assembly process
within the meaning of clause (c) of the statute. See also
Headquarters Ruling Letter (HRL) 555638, dated June 11, 1990.
Consistent with the holding in Texas Instruments and the example
in 19 CFR 10.16(a), we find that the scribing of the wafers in
this case along pre-drawn lines is an operation incidental to the
foreign assembly process.
HOLDING:
Consistent with the position articulated in United States v.
Texas Instruments Inc., C.A.D. 1178, 545 F. 2d 739 (1976), an
allowance in duty may be made under subheading 9802.00.80, HTSUS,
with respect to the cost or value of the U.S. components (i.e.
the wafer) since the processing performed abroad with respect to
the exported wafer are qualifying assembly operations and
operations incidental thereto.
This decision should be mailed by your office to the
affected importer no later than 60 days from the date of this
letter. On that date, the Office of Regulations and Rulings will
take steps to make the decision available to Customs personnel
via the Customs Rulings Module in ACS and the public via the
Diskette Subscription Service, LEXIS, Freedom of Information Act
and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division