CLA-2-85:OT:RR:NC:N1:112
Ram J. Arvikar
Director Global Quality
Vectron International
267 Lowell Road
Hudson, NH 03051
RE: The tariff classification of and country of origin of Crystal Oscillators from the U.S.
Dear Mr. Arvikar:
In your letter dated June 29, 2015, you requested a tariff classification ruling and country of origin of Crystal Oscillators that are manufactured in the U.S., exported to Germany for “programming”, and subsequently returned to the U.S. A sample was not provided with your letter for review.
Crystal oscillators are devices used to provide timing functions in electrical circuits. Your request describes the assembly of the oscillators as occurring in the U.S from foreign and domestic components, and you have provided a complete bill of material that lists integrated circuits, capacitors, resistors, substrates, encapsulating components, and adhesives. The assembly process consists of soldering the components onto a printed circuit and encapsulating the assembly in epoxy and ceramic insulating caps.
After the devices are assembled and tested, they are sent to Germany to undergo a process that calibrates the timing to a precise frequency with temperature compensations. This process includes the application of heat to the device and electronically adjusting the oscillator output. You state that the devices are operational prior to being exported and that the process performed in Germany is to calibrate the oscillators to a specific frequency which allows the device to be used for its intended purpose.
You suggest that the Crystal Oscillators assembled in the U.S. are classified in 8542.31.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “electronic integrated circuits: processors and controllers, whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits”. This office disagrees as the devices do not meet the assembly process pursuant to the terms of Chapter 85, Note 8, HTSUS.
The applicable subheading for the Crystal Oscillators will be 8543.70.9650, HTSUS, which provides for “Electrical machines and apparatus…: Other machines and apparatus: Other: Other: Other: Other.” Based on the information provided, the country of origin of the Crystal Oscillators is the United States.
With regard to the Crystal Oscillators being exported to Germany for further processing and returned to the U.S., you suggest that upon importation, the oscillators should be imported under 9802.00.5060, HTSUS.
Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by means of a repair or alteration. Duty is assessed only on the cost or value of the repair or alteration abroad, provided that the documentary requirements of 19 CFR §10.8 are met. Classification under subheading 9802.00.50, HTSUS, is precluded where: (1) the exported articles are not complete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles; or (2) the operations performed abroad destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture.
We conclude that the tuning of the oscillator circuit by applying heat and electronically calibrating the frequency of the device’s output improves the articles while not altering the identity of the final product. Thus, we agree that the Crystal Oscillators, manufactured as described above, meet the terms of subheading 9802.00.5060, HTSUS, and upon importation remain of U.S. origin.
The applicable subheading for the Crystal Oscillators upon importation from Germany will be 9802.00.5060, HTSUS, which provides for “articles returned to the U.S. after having been exported to be advanced in value or improved in condition by any process of manufacture or other means: articles exported for repairs or alterations, other”. Articles entitled to this partial duty exemption are dutiable only upon the value of the foreign repairs or alterations, upon compliance with all applicable regulations.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Karl Moosbrugger at [email protected].
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division