OT:RR:CTF:VS H302202 JK
Cecelia Rothrock, LCB, CCS
Customs Regulatory Manager
Crane Worldwide Logistics LLC
1500 Rankin Road
Houston, TX 77073
Re: Subheading 9802.00.80, HTSUS; electric vehicle; motors and motor controllers
Dear Ms. Rothrock:
This is in response to your letter dated November 7, 2018, on behalf your client Electra Meccanica Vehicles Corp. (Electra), requesting a ruling on the eligibility of its “SOLO” electric vehicle for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
Electra proposes to import a three-wheeled electric vehicle named “SOLO” from China. Electric motors manufactured in California and motor controllers manufactured in Puerto Rico will be exported to China for assembly into the finished “SOLO” vehicles.
The electric motor is installed into the “SOLO” vehicle in a process described as follows: first, the motor is bolted to the swing arm of the vehicle. The motor rests in a middle cross member and the motor and cross member are joined together between part of the swing arm and a metal plate, for support and protection of the motor. The end plate is also bolted to the motor. A small drive sprocket with a key and fastener are installed to the end plate. The rest of the swing arm is assembled together and the entire swing arm with the connected motor is installed onto the rear subframe/chassis of the “SOLO” vehicle.
The motor controller is installed into the “SOLO” vehicle underneath the rear subframe of the vehicle with four mounting bolts. A cooling plate is placed under the motor controller using fastening bolts.
Along with your request, you provided illustrations showing the installation processes and locations of the electric motor and motor controller after being installed into the “SOLO” vehicles.
ISSUE:
Whether the “SOLO” vehicle is eligible for a partial duty exemption under subheading 9802.00.80, HTSUS.
LAW AND ANALYSIS:
Subheading 9802.00.80, HTSUS, provides 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[.]
All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before an article may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full appraised value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentation requirements of 19 C.F.R. § 10.24.
Section 10.14(a), Customs Regulations (19 C.F.R. § 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 [U.S.] to qualify for the exemption. Components will not lose their entitlement to the exemption by being subject to operations incidental to the assembly either before, during, or after their assembly with other components.
Section 10.16(a), Customs Regulations (19 C.F.R. § 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. See 19 C.F.R. § 10.16(a). 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 C.F.R. § 10.16(c).
In Headquarters Ruling Letter (HQ) 561873 dated November 7, 2000, gas turbine engines were assembled using various components, some of which included U.S.-origin parts, via operations that included welding, force fitting, soldering and the use of fasteners. CBP found that the assembly operations conformed to the requirements of 19 C.F.R. § 10.16(a) and that the imported turbine engines were eligible for partial duty exemption under subheading 9802.00.80, HTSUS.
In New York Ruling Letter (NY) N004258 dated December 26, 2006, a small electric vehicle was assembled with four U.S. produced items—a 48 volt battery charger, eight volt batteries, a controller and a windshield. CBP found that the assembly met all three requirements of subheading 9802.00.80, HTSUS.
In this case, you describe processing in China which involve only assembly operations. The U.S.-manufactured electric motor and the motor controller are ready for assembly without further fabrication at the time of their exportation from the United States. We find that the installation of the electric motor and the motor controller into the “SOLO” vehicle, which involves the joining or fitting together of solid components using bolts or fasteners, constitute acceptable means of assembly pursuant to 19 C.F.R. § 10.16(a).
Accordingly, we find the “SOLO” vehicle at issue will be eligible for a partial duty exemption under subheading 9802.00.80, HTSUS, provided the documentary requirements of 19 C.F.R. § 10.24 are satisfied.
HOLDING:
On the basis of the information submitted, the electric vehicle at issue is eligible for a partial duty exemption under subheading 9802.00.80, HTSUS.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch