CLA-2 CO:R:C:S 556069 DSN
Mr. Thomas H. Givens
Manager of Distribution
Pirelli Cable Corporation
P. 0. Box 1097
Greenwood, South Carolina 29648
RE: Applicability of partial duty exemption to insulated
electrical wire from Canada; C.J. Tower; 553244;
555564; 731806
Dear Mr. Givens:
This is in response to your letter of May 29, 1991,
requesting a ruling on the applicability of subheading
9802.00.80, Harmonized Tariff Schedule of the United States
(HTSUS), to certain insulated electrical wire to be assembled in
Ontario, Canada, before returning to the U.S. Samples were
submitted with your request.
FACTS:
According to your submission, copper wire strand and
compounds in pellet form of U.S. origin are exported to Canada
where the pellets are heated and extruded (volcanized) to form
insulation for the copper wire conductor. The resulting
insulated electrical wire is then wound on spools which are
placed in boxes for shipment to the U.S. The spools and boxes
may be of U.S. or Canadian origin.
ISSUE:
Whether the insulated electrical wire 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:
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[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,
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 subheading
9802.00.80, HTSUS, to that component. See 19 cfr 10.16(c).
The process of encasing the copper wire by heating the
compounds in pellet form and extruding the molten rubber around
the wire is considered an acceptable assembly operation under
subheading 9802.00.80, HTSUS. See C.J. Tower & Sons of Buffalo,
Inc. v. United States, 62 Cust. Ct. 643, C.D. 3840, 304 F. Supp.
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1187 (1969) (extrusion process whereby foreign polyethylene is
made from pellets in liquid form of high viscosity and is formed
with sheets of U.S. polyester is acceptable assembly since
polyethylene becomes a solid upon completion of the assembly
process). See also Headquarters Ruling Letter (HRL) 553244 of
October 3, 1984 (encasing fiber optics by extrusion of
polyethylene material constitutes an acceptable assembly).
Therefore, allowances in duty may be made under subheading
9802.00.80, HTSUS, for the cost or value of the copper wire of
U.S. origin. However, no allowance in duty may be made under
this tariff provision for the cost or value of the compounds in
pellet form as they are not exported from the U.S. in condition
ready for assembly without further fabrication as required by
clause (a) of the statute. The heating extrusion/volcanization
process performed abroad clearly demonstrates that the pellets
require further fabrication before they can be joined to the
copper wire. Moreover, the heating and extrusion process causes
the pellets to lose their physical identity by change in form and
shape, contrary to clause (b) of the statute. See HRL 555564 of
May 1, 1990 (no allowance in duty may be made under subheading
9802.00.80, HTSUS, for the polyvinyl chloride into which the
antenna structure of a tuck pack assembly was dipped. )
With respect to the packaging materials (i.e., the spools
and boxes), if they are of U.S. origin, they will be entitled to
duty-free treatment under subheading 9801.00.10, HTSUS.
Subheading 9801.00.10, HTSUS, provides for the free entry of
products of the U.S. that have been exported and returned without
having been advanced in value or improved in condition by any
process of manufacture of other means while abroad, provided the
documentary requirements of section 10.1, Customs Regulations (19
CFR 10.1), are met. We held in HRL 731806 of November 18, 1988,
that containers of U.S. origin are entitled to duty-free
treatment under subheading 9801.00.10, HTSUS, when returned with
their contents. However, if the spools and boxes are of Canadian
origin, their cost or value would be included as part of the
dutiable value of the insulated electrical wire.
HOLDING:
On the basis of the information and samples submitted, we
conclude that the assembled insulated electrical wire from Canada
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is eligible for partial duty exemption under subheading
9802.00.80, HTSUS, with allowances in duty only for cost or value
of the copper wire strand, provided the documentation
requirements of 19 CFR 10.24 are met.
Sincerely,
John Durant, Director
Commercial Rulings Division