Applicability of partial duty exemption in subheading 9802.00.80, HTSUS, to a plastic TV cabinet assembled and partly painted abroad

HQ 555858 MAY 13, 1991 CLA-2 CO:R:C:S 555858 RA CATEGORY: Classification TARIFF NO.: 9802.00.80 Mr. Michisuke Araki Vice President Kyomex, S.A. de C.V. Apartado Postal #349 Admon. Plaza Patria 22441 Tijuana, B.C., Mexico RE: Applicability of partial duty exemption in subheading 9802.00.80, HTSUS, to a plastic TV cabinet assembled and partly painted abroad Dear Mr. Araki: This is in response to your letter of January 4, 1991, regarding the eligibility for a duty allowance under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), of a U.S.-made television cabinet assembled in Mexico by Kyomex and returned to the U.S. as part of a completed television set. FACTS: Molded plastic television cabinets, manufactured in the U.S., are exported to Mexico along with U.S.-origin plastic foil, paint and bonding hooks. In Mexico, two plastic bonding hooks are attached to the inside of each cabinet to hold the front of the cabinet to the rear cover. The front section of the cabinet is then painted "for cosmetic reasons only," and a pre- cut decorative thin sheet of plastic foil is laminated to the top and the left and right sides of the cabinet. The finished cabi- nets are then shipped to another facility in Mexico where they are used to make completed television sets. You ask whether the decorative painting renders the cabinets dutiable when they are returned to the U.S. as part of the completed television sets. ISSUE: Can an allowance in duty be made under subheading 9802.00.80, HTSUS, for parts of U.S. origin which are assembled abroad into cabinets in the above-described manner? - 2 - LAW AND ANALYSIS: Subheading 98202.00.80, HTSUS, provides a partial duty exemption for articles assembled abroad in whole or in part of U.S. fabricated components, provided the components: (a) are exported in condition ready for assembly without further fabrication; (b) do not lose their physical identity by change in form, shape, or otherwise, and; (c) are not 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 subheading 9802.00.80, HTSUS, 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)), states that the assembly operations may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, or the use of fasteners. These operation may be preceded, accompanied, or followed by operations incidental to the assembly. 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). Examples of operations considered incidental to assembly are set forth in 19 CFR 10.16(b), which include the "[a]pplication of preservative paint or coating...." However, 19 CFR 10.16(c) provides that "[painting primarily intended to enhance the appearance of an article..." is not considered incidental to the assembly process. In Headquarters Ruling Letter (HRL) 553778 dated September 20, 1985, it was determined that the painting of color television cabinets could not be considered as an operation incidental to assembly. Similarly, in HRL 553640 dated August 9, 1985, automobile truck parts which were painted abroad for ornamental purposes were held dutiable on total quantity and value when returned to the U.S. In regard to the facts of this case, as the front section of the plastic television cabinet is painted for decorative purposes only, no allowance in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S.-made cabinet. However, attaching the two plastic bonding hooks to the inside of the cabinet and laminating the plastic foil to the top - 3 - and sides of the cabinet are considered acceptable assembly operations under 19 CFR 10.16(a). Therefore, allowances in duty may be made for the cost or value of the U.S.-origin bonding hooks and pre-cut plastic foil, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24). We have enclosed for your information a publication which explains the conditions and requirements for entry under subheading 9802.00.80, HTSUS. HOLDING: The decorative painting of the U.S.-made molded plastic cabinet in Mexico precludes the application of the duty exemption under subheading 9802.00.80, HTSUS, to that component. However, upon importation of the completed television sets, allowances in duty may be made under this tariff provision for the cost or value of the U.S.-origin bonding hooks and plastic foil which are merely assembled to the cabinet abroad, provided the documentation requirements of 19 CFR 10.24 are satisfied. Sincerely, John Durant, Director Commercial Rulings Division Enclosure