CLA-2 CO:R:C:S 556265 DSN
Mr. Philip Freeman
Cain Customs Brokers, Inc.
421 Texano
P.O. Box 150
Hidalgo, Texas 78557
RE: Reconsideration of HRL 555539 of June 7, 1990;
tinning;
Dear Mr. Freeman:
This is in response to your letter of September 13, 1991, on
behalf of Deltron, Inc., requesting reconsideration of
Headquarters Ruling Letter (HRL) 555539 of June 7, 1990,
concerning the applicability of subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS), to toroids to be
imported from Mexico. You specifically seek reconsideration of
our holding that tinning the ends of U.S.-origin magnet wire in
Mexico precludes an allowance in duty for the cost or value of
wire.
FACTS:
According to your submissions, the tinning operation, which
is performed after magnet wire is assembled to a ferrite core by
winding, consists of dipping the ends of the wire in flux and
then into melted solder. This operation is performed to allow
assembly of the completed toroid into a printed circuit in the
U.S. without further preparation of the leads for electrical
connection.
You state that the time and cost of the tinning operation
when compared to the total time and cost of the entire assembly
operation ranges from 3.3% to 7.3%. No comparative time and cost
information was available when this issue was considered in HRL
555539.
ISSUE:
Whether the tinning operation constitutes an operation
incidental to assembly for purposes of subheading 9802.00.80,
HTSUS.
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, lubrication, 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 value of the imported assembled article, less the
cost or value of such U.S. components, upon compliance with the
documentary 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 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).
Based on the information provided in your submission
regarding the cost and time of the tinning operation, we conclude
that the operation is minor in comparison to the total assembly
of the toroids. The range of 3.3% to 7.3% for the tinning
operation reflects the minor nature of this process when compared
to the assembly of the toroids.
HOLDING:
On the basis of the information provided, it is our opinion
that the tinning operation is considered an operation incidental
to assembly. Therefore, allowances in duty may be made under
this tariff provision for the cost or value of the U.S. magnet
wire.
HRL 555539 is hereby modified in accordance with this
ruling.
Sincerely,
John Durant, Director
Commercial Rulings Division