CLA-2 CO:R:C:F 953650 GGD
Mr. Min-Gee Hsia
San Francisco Candle Company
26239 Research Road
Hayward, California 94545
RE: Wax Columns and Decorated Wax Candle
Dear Mr. Hsia:
This letter is in response to your inquiry of February 1,
1993, on behalf of San Francisco Candle Co., concerning the
classification under the Harmonized Tariff Schedule of the United
States (HTSUSA), of separate articles identified as petroleum wax
columns and wax candles to be imported from China. A sample of a
decorated candle was submitted with your inquiry.
FACTS:
The first article consists of colored wax columns that are
manufactured in China from wax slabs of U.S. origin. The columns
are made by combining different colored layers of wax, then
extruding the wax into columns measuring from one to eight feet
in length. The inquirer has not specified the chemical content
of the waxes, nor whether the products will consist of animal,
vegetable, or mineral waxes, or combinations thereof. The candle
making process following importation of the wax columns into the
U.S. will involve heating and cutting the columns to desired
lengths, pouring wax into and removing wax from molds, dipping,
polishing, adding wicks, labeling, and packaging.
The second article, identified as sample no. 32242, consists
of a sphere-shaped candle measuring approximately three inches in
height. The interior or base portion, which comprises the bulk
of the candle, consists of a plain colored wax sphere of U.S.
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origin that is exported to China. In China, a decorative wax
veneer, measuring approximately 1/8 inch in thickness, is applied
to the base candle. The veneer's intricate designs are crafted
by rolling sheets of colored wax into rods. The rods are then
bundled and stretched to reduce their diameters. More rods are
added, bundled, and stretched. The resulting conglomerate rod is
then sliced into cross sections or veneer disks. The disks are
applied to the surface of the base candle and cooled. The
finished candle is then imported into the U.S.
ISSUES:
1) Whether the articles are classified in heading 3404,
HTSUSA, as artificial waxes and prepared waxes; or in heading
3406, HTSUSA, as candles, tapers and the like.
2) Whether the U.S.-origin wax and candles are entitled to
duty exemptions under subheadings 9801.00.10 and/or 9802.00.80,
HTSUSA.
LAW AND ANALYSIS:
Classification under the HTSUSA is made in accordance with
the General Rules of Interpretation (GRIs). The systematic
detail of the harmonized system is such that virtually all goods
are classified by application of GRI 1, that is, according to the
terms of the headings of the tariff schedule and any relative
Section or Chapter Notes. In the event that the goods cannot be
classified solely on the basis of GRI 1, and if the headings and
legal notes do not otherwise require, the remaining GRIs may then
be applied. The Explanatory Notes (ENs) to the Harmonized
Commodity Description and Coding System, which represent the
official interpretation of the tariff at the international level,
facilitate classification under the HTSUSA by offering guidance
in understanding the scope of the headings and GRIs.
Among other items, Chapter 34, HTSUSA, covers artificial
waxes, prepared waxes, candles, and similar articles. The EN to
Chapter 34 indicates that the chapter covers products mainly
obtained by the industrial treatment of fats, oils or waxes.
Heading 3404, HTSUSA, provides for artificial and prepared waxes.
Note 5 to Chapter 34 states in pertinent part that the expression
"artificial and prepared waxes" applies to products obtained by
mixing different waxes. The ENs to heading 3404 indicate that
the mixes may be of animal, vegetable, and mineral waxes, except
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that mixtures consisting only of mineral waxes are excluded from
the heading. The ENs relate that the heading also covers the
above waxes if they are colored.
Heading 3406, HTSUSA, provides for candles, tapers and the
like. The ENs to heading 3406 indicate that the heading covers
these goods whether or not they are colored, perfumed, or
decorated, and that such items (including ball or coiled tapers)
are usually made of tallow, stearin, paraffin wax or other waxes.
Although the term "candle" is not defined in the tariff, the
American College Dictionary, 1970, states that a candle is a
long, usually slender, piece of tallow, wax, etc., with an
embedded wick, burned to give light.
The colored wax columns have no wicks, nor are they burned
to give light. In order to transform the wax columns into
candles, extensive processing is required. At the time of
importation, these goods will consist essentially of artificial
and/or prepared waxes, and are classified as such in subheading
3404.00.0000.
Although neither long nor slender, the sphere-shaped wax
candle, which is both colored and decorated, has an embedded wick
and may be burned to provide light. The candle's appearance and
value are significantly advanced in China by the process adding
the outer wax veneer. The article is classified in subheading
3406.00.0000, HTSUSA.
Subheading 9801.00.10, HTSUSA, provides for the duty-free
entry of products of the U.S. that are returned after having been
exported, without having been advanced in value or improved in
condition by any process of manufacture or other means while
abroad, provided there has been compliance with the documentary
requirements of section 10.1, Customs Regulations (19 CFR 10.1).
In this case, various layers of U.S.-origin wax slabs are
combined and extruded in China for the purpose of forming shapes
that are more workable for the bulk of the manufacturing
processes yet to occur in the U.S. The combining and extruding
of waxes are manufacturing processes which advance in value and
improve in condition the U.S.-origin wax slabs. Therefore, when
imported, the wax columns will not be entitled to duty-free
treatment under subheading 9801.00.10, HTSUSA. The U.S.-origin,
plain wax (interior) candle exported to China is also returned to
the U.S. in an improved condition and advanced in value through
manufacturing processes abroad. The candle is not entitled to
duty-free treatment under subheading 9801.00.10, HTSUSA.
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With respect to whether the articles are entitled to a duty
exemption under subheading 9802.00.80, HTSUSA, we note that the
provision allows a partial duty exemption for:
articles 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.
An article entered under subheading 9802.00.80, HTSUSA, is
subject to duty upon the full value of the imported assembled
article, less the cost or value of such U.S. components, upon
compliance with the documentation requirements of section 10.24,
Customs Regulations (19 CFR 10.24).
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 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 HTSUSA
subheading 9802.00.80 to that component. See, 19 CFR 10.16(c).
We previously determined that the U.S.-origin wax slabs
undergo significant manufacturing processes in China which
constitute a further fabrication and result in a change in the
U.S. product's shape. Therefore, the wax columns are not
entitled to duty-free treatment under subheading 9802.00.80,
HTSUSA.
On the other hand, the base candle is exported to China in a
condition ready for the foreign assembly process, and its
physical identity is not lost by any change in form, shape, or
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otherwise. It is our determination that the method by which the
foreign-origin, decorative veneer component is joined to the
U.S.-origin candle, constitutes an acceptable process of assembly
for purposes of duty-free treatment under subheading 9802.00.80,
HTSUSA.
HOLDING:
The colored wax columns are classified under subheading
3404.00.0000, HTSUSA, the provision for "Artificial waxes and
prepared waxes." The general column one duty rate applicable to
this merchandise is dependent upon the chemical makeup of the
waxes.
The decorated wax candle is classified under subheading
3406.00.00, HTSUSA, the provision for "Candles, tapers and the
like." The general column one duty rate applicable to this
merchandise is 5.8 percent.
Neither the U.S.-origin waxes nor the decorated wax candle
are entitled to duty exemptions under subheading 9801.00.10,
HTSUSA. The U.S.-origin waxes are not entitled to a duty
exemption under subheading 9802.00.80, HTSUSA. The decorated wax
candle is entitled to a duty allowance under subheading
9802.00.80, HTSUSA, assuming compliance with the documentation
requirements set forth in 19 CFR 10.24.
Sincerely,
John Durant, Director
Commercial Rulings Division