CLA-2 CO:R:C:G 083455 AJS
TARIFF NO: 8482.20.0010; 9802.00.80
Richard G. Seley
Rudolph Miles & Sons, Inc.
4950 Gateway East
P.O. Box 144
El Paso, Texas 79942
RE: Steel tapered roller bearings assembled in Mexico
Dear Mr. Seley:
Your request of December 7, 1988, for a ruling on the
tariff classification of steel tapered roller bearings has
been referred to this office for a reply.
FACTS:
The merchandise consists of steel tapered roller bearings
which will be assembled in Mexico. The bearings are composed of
a completely finished cone (inner ring) manufactured in Romania,
completely finished rollers from the United States, retainers
(or cages) for the rollers which are to be manufactured in either
the United States or Mexico, and a completely finished cup
(outer ring) from Romania. These components will be assembled by
means of force fitting and the completed article will then be
imported into the U.S.
ISSUE:
What is the classification of steel tapered roller
bearings in which two of the components are manufactured in
Romania, another component is of U.S. origin, the last component
may be from the U.S. or Mexico, where the assembly will take
place in Mexico. In addition, what is the proper marking of
this type of bearing under these circumstances.
LAW AND ANALYSIS:
Classification of products under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) is governed by
-2-
the General Rules of Interpretation (GRI's). GRI 1 provides that
classification is determined first in accordance with the terms
of the headings and any relative section or chapter notes.
Subheading 8482.20.0010, HTSUSA, provides for "[t]apered
roller bearings, including cone and tapered roller assemblies.
[c]up and cone assemblies entered as a set." The bearings in
question fit this description and are classifiable under this
subheading.
However, since these bearings are to be assembled in Mexico
and consist of components from both Romania and the U.S., the
question then arises regarding which country these bearings
originated from in order to determine which column duty rate is
applicable. If these bearings are products of Mexico, they would
be subject to the General Column 1 rate of 6.5 percent ad
valorem. But if they are products of Romania, then they would be
subject to the Column 2 rate of 67 percent ad valorem.
In general, the country of origin of an article, for U.S.
tariff purposes, is the country in which the last substantial
transformation of the article takes place. In this case, the
bearing components from Romania would remain products of that
country unless the assembly in Mexico results in an article
having a name, character, or use different from the original
components. Anheuser-Busch Brewing Association v. United States,
207 U.S. 556 (1908), at page 563. In order to make this
determination, it is necessary to address the substantiality of
the processing performed in Mexico. Uniroyal, Inc. v. United
States, 3 C.I.T. 220 (1982); Belcrest Linens v. United States,
Appeal No. 84-734 (1984); and Data General Corporation v. United
States, 4 C.I.T. 182.
The term "substantial transformation" is a term applied to
describe the nature of the change that must occur as a result of
processing in order to change the country of origin of an article
for various tariff purposes. For example, this term is used in
the Customs Regulations concerning marking (Section 134.35), the
eligibility of goods under item 807.00 (9802.00.80 HTSUSA)
(Section 10.14), and preferential tariff provisions such as the
Generalized System of Preferences and the Caribbean Basin
Initiative (Section 10.177 and 10.196).
This case essentially involves the assembly of four com-
ponents into a tapered roller bearing assembly. In the bearing
industry, the three most crucial components of the bearing are
the cup, cone, and rollers. In this case, the cup and cone are
manufactured in Romania and arrive in Mexico as completely fin-
ished components. The rollers are manufactured in the U.S. and
arrive in Mexico as completely finished components. The fourth
-3-
component is the cage which is to be manufactured in either the
U.S. or Mexico. The cage is a secondary component and not
subject to the tight manufacturing specifications required of the
other components.
The assembly of one cone, cage, rollers, and cup would not
entail the type of processing required to meet the substantial
transformation test. No new merchandise is created which
possesses a different name, character or use than that of the
original components. The only processing that takes place is
the simple assembly of four finished components to create a tap-
ered roller bearing. Each of these components is specifically
designed for this assembly and only intended to be one component
in the finished bearing. In sum, this process seem to be no more
than a simple assembly which does not accomplish the type of
substantial transformation required to allow the merchandise to
be considered a product of Mexico. Since the assembled product
cannot be considered of Mexican origin, the country of origin
would remain that of the place where the components were last
substantially transformed. In this case the country of origin
would be Romania.
Subheading 9802.00.80, HTSUSA, 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.
An article entered under this tariff provision is subject to a
duty upon the full value of the imported assembled article, less
the cost or value of the U.S. components assembled therein,
provided there has been compliance with the documentation
requirements of section 10.24, Customs Regulations (19 CFR
10.24).
Assembly operations for purpose of HTSUSA subheading
9802.00.80 are interpreted at section 10.16(a), Customs
Regulations (19 CFR 10.16(a)), which specifically enumerates
force fitting as an acceptable means of assembly.
In the instant case, the imported articles will be eligible
for the partial duty exemption available under HTSUSA subheading
9802.00.80. The rollers are finished products of the U.S. which
are exported for acceptable assembly operations with other
-4-
components. The U.S. components do not lose their physical
identity in the assembly operation and an examination of the
sample submitted shows that the U.S. components are not otherwise
advanced in value or improved in condition except by the assembly
operation. Accordingly, an allowance in duty may be made under
this tariff provision for the cost or value of the rollers and,
if manufactured in the U.S., the cages, upon compliance with the
documentary requirements of 19 CFR 10.24.
Your letter also requests a country of origin marking
determination. Inasmuch as the roller bearings assemblies would
be eligible for treatment under subheading 9802.00.80, HTSUSA,
section 10.22 of the Customs regulations applies to their
marking. For the purposes of country of origin marking, the
country of assembly (i.e. Mexico) is the country of origin and
the following markings would be acceptable:
(1) Assembled in Mexico
(2) Assembled in Mexico from Romanian
and U.S. components.
Because of the inclusion of the U.S. address on the box,
the requirements of section 134.46 of the Customs regulations
apply. This section requires the marking to appear in close
proximity to the address and in comparable size letters.
The marking of the box alone is sufficient if (1) the
district director is satisfied that the article will reach the
ultimate purchaser in the marked box, and (2) the article
contains no misleading markings. Otherwise, the article itself
must also be marked.
HOLDING:
The steel tapered roller bearings are classifiable in sub-
heading 8482.20.0010, HTSUSA. They are considered to be
products of Romania and are dutiable at the Column 2 rate of 67
percent ad valorem. However, allowances in duty may be made
under subheading 9802.00.80, for the cost or value of the U.S.
components assembled into bearings upon compliance with 19 CFR
10.24.
For country of origin marking requirements, Mexico is the
country of origin. "Assembled in Mexico" or "Assembled in Mexico
from Romanian and U.S. components" is an acceptable marking.
Sincerely,
John Durant, Director
Commercial Rulings Division