CLA-2 RR:CR:SM 561275 MLR
Frederick L. Ikenson, Esq.
Larry Hampel, Esq.
1621 New Hampshire Avenue, N.W.
Washington, D.C. 20009
RE: Applicability of duty exemption under HTSUS subheading 9802.00.50 to automotive starter motor armatures; lamination disk; commutator; conductors; shaft; essential identity; Article 509; NAFTA
Dear Mr. Ikenson and Mr. Hampel:
This is in reference to your letter of January 22, 1999, requesting a ruling on behalf of IPM Service Corporation (“IPM”), concerning the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), to automotive starter motor armatures repaired in Mexico. Descriptive literature was submitted with your request.
FACTS:
It is stated that IPM is a producer and importer of various automotive parts and components, including a variety of starter motor armatures and parts therefor. It is stated that a starter motor armature consists of (1) a lamination assembly which is typically made up of 40 to 60 individual lamination disks depending on the armature type or the starter motor into which the armature must fit, and which accounts for approximately 44 percent of the material costs of a new armature; (2) at least two insulating end fibers, each in the size and shape of an individual lamination disk; (3) a commutator whose number of conducting bars is determined by the number of slots in the lamination assembly, (4) conductors (or “hair pins”), the exact number, size, and shape of which is dictated by the lamination assembly; and (5) a shaft, to which the lamination assembly and commutator is mounted (the shaft diameter is determined by the lamination assembly since the shaft must hold the lamination assembly securely at the specified torque of the starter motor).
It is stated that when a starter motor fails due to a worn or damaged armature, IPM’s customer returns the armature “core” to IPM for credit. Partial or no credit may be given if the lamination assembly is damaged, since a core with a damaged lamination assembly cannot be refurbished. The core is then sent to Mexico for refurbishing.
In Mexico, four scenarios are contemplated. The cores are separated by the type of lamination assembly the armature has, based on the number, size, and shape of lamination disks. The cores are checked for winding shorts and shorts to ground between copper and steel elements. Cores with such continuity failures are subjected to the most extensive of the four scenarios, referred to as “Full Rewind.” This involves replacing the hair pins, commutator, and if necessary, the shaft. Where a refurbished, rather an a new commutator and/or shaft is used, these components will not be returned to the same armature but will be reconditioned by cutting, sanding, or straightening, and stocked until needed. After the commutator is removed, the core is placed on a “burnout” cart where the core enters an oven to remove all coatings and insulation, and to burn off the end fibers but leave the steel lamination assembly and the copper of the hair pins intact. After cooling, the copper content is recovered and sold as scrap, and the lamination assembly is wire brushed, checked for slot alignment, and realigned as necessary. The shaft is examined, and if bad, the shaft is removed and a new or reconditioned shaft is pressed into the lamination assembly. A new end fiber is then placed on each end of the lamination assembly, and new hair pins are installed into the slots of the lamination assembly. The subassembly is mounted in a twister, and the hair pins are twisted to the proper position to align with their contact surfaces on the commutator, and the windings (twisted hair pins) are electrically tested. The commutator is then placed on the shaft, pressed down to the start of the shaft knurling, aligned with the hair pin ends, and pressed to its final position on the shaft.
The second scenario is referred to as “Commutator and Shaft Replacement” where the armature winding (the configuration of hair pins or conductors) is serviceable. In this scenario, it is stated that since the hair pins remain intact within the slots of the lamination assembly, but since the new or reconditioned commutator must connect to the hair pins, the defective commutator is removed by heating it to melt the solder and pulling it from the shaft while the solder is hot. The bad commutator is then scrapped. A new or reconditioned shaft and commutator are then installed.
In the third scenario, referred to as “Commutator Replacement,” only the commutator is defective, and the shaft does not need to be replaced. The commutator is heated to melt the solder and is pulled from the shaft and scrapped. A new or refurbished commutator is then installed as described under “Full Rewind.”
In the fourth scenario, referred to as “Shaft Replacement” only the shaft must be replaced. The armature is placed in a fixture and the damaged shaft is pressed out from the commutator end and a new shaft is pressed in, and the windings are tested.
ISSUE:
Whether it is sufficient to merely keep the lamination assembly intact during the refurbishing of the starter motor armatures in Mexico for purposes of determining their eligibility for duty-free treatment under subheading 9802.00.50, HTSUS.
LAW AND ANALYSIS:
Articles exported from and returned to the U.S., after having been advanced in value or improved in condition by repairs or alterations in Mexico, may qualify for a duty exemption under HTSUS subheading 9802.00.50, provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff'g C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Articles are entitled to this duty exemption provided the documentary requirements of section 181.64(c), Customs Regulations (19 CFR 181.64), are satisfied.
“Repairs or alterations” are defined in 19 CFR 181.64 as the restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the U.S.
Repairs are operations aimed at restoring articles to their original condition, but cannot be so extensive as to destroy the identity of the exported article or to create a new and different article. Press Wireless, Inc. v. United States, 6 Cust. Ct. 102, C.D. 438 (1941). In Press Wireless, radio tubes were sent abroad for repairs which involved the use of heavier filament than that used in the original manufacture of the tubes. Also, the markings on the articles were erased, and new numbers were substituted to facilitate matching the tubes for use in transmitters. The court held that the use of improved materials in the restoration was immaterial, as long as the article was not considered a new and different article of commerce or its identity was destroyed.
In this case, it is claimed that the lamination assembly imparts the essential identity to the starter motor armatures since it limits, by size and design, each of the other subordinate components that are used in the repair of the armatures. It is also claimed that the lamination assembly is also the most costly component of an armature, and the serviceability of the lamination assembly alone dictates whether a customer will receive core credit for the damaged armatures and whether the armature may be repaired. As support that the lamination assembly imparts the essential character to the starter motor armature, Society of Automotive Engineers, Inc., Starter Armature Remanufacturing Procedures, Publication SAE J2240 (Feb. 1995), procedures 5.4 and 5.4.1 are cited which indicate that where the armature exhibits a damaged or defective lamination assembly, no repair is prescribed and the recommended procedure is to salvage the usable parts.
In HRL 561017 dated August 19, 1998, Customs applied three factors in determining that an engine block represented the essential identity of used motor vehicle engines for purposes of subheading 9802.00.50, HTSUS; namely (1) the value, (2) the role in providing the structural support to the engine components, and (3) the fact that it determined the two main features of an automotive engine, the size and number of cylinders. We do find these factors relevant in this case in determining that the lamination assembly imparts the essential identity to the starter motor armatures.
In this case, it is stated that the lamination assembly represents 44 percent of the material costs of an armature. With regard to the lamination assembly’s role, we note that a starter motor consists of a field housing which contains electromagnets. Located between these magnets is the armature which is constructed of thin, circular disks of steel, laminated together and wound lengthwise with heavy-gauge insulated copper wire. Halderman, Diagnosis and Troubleshooting of Automotive Electrical, Electronic, and Computer Systems (2nd Ed. 1997). The laminated core supports the copper loops of wire around the armature and helps concentrate the magnetic field produced by the coils. Id. When a mechanic tests an armature, a loop that is broken where it connects to the commutator segments may be resoldered. The commutator may also be machined on a lathe to create a smooth and round surface. However, when an armature is shorted, the armature must be replaced or rewound by a specialist. Id. We also agree that, as stated by counsel, the lamination assembly’s size and shape dictates the design of the commutator, shaft and conductors. Furthermore, based upon the Starter Armature Remanufacturing Procedures, submitted for our review, if the lamination assembly is defective, the usable parts are salvaged. Therefore, since the lamination assembly plays a principal part in the function of the armature, we agree that it imparts the essential identity of the armature, and provided it is retained during the repairs performed to the armature and the documentary requirements of 19 CFR 181.64 are satisfied, the returned armatures are entitled to duty-free treatment under subheading 9802.00.50, HTSUS.
HOLDING:
On the basis of the information provided, we find that the lamination assembly imparts the essential identity of the armature, and provided it is retained during the repairs performed to the armature in Mexico and the documentary requirements of 19 CFR 181.64 are satisfied, the returned armatures are entitled to duty-free treatment under subheading 9802.00.50, HTSUS.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division