Eligibility of U.S.-origin connectors for a duty allowance when attached to Japanese wire and incorporated in an electrical harness. Timex

HQ 555869 April 2, 1991 CLA-2 CO:R:C:S 555869 KCC CATEGORY: Classification TARIFF NO.: 9802.00.80 Mrs. Orquidea Catalanotto Sumitrans Corporation 1981 Marcus Avenue Suite E-102 Lake Success, New York 11042 RE: Eligibility of U.S.-origin connectors for a duty allowance when attached to Japanese wire and incorporated in an electrical harness. Timex Dear Mrs. Catalanotto: This is in response to your letter dated January 30, 1991, requesting a ruling concerning the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to electrical harnesses from Mexico containing U.S.- origin connectors. Samples of the connectors and electrical harness were previously submitted for examination. FACTS: Sumitrans manufactures wire for electrical harnesses used in automobiles and motorcycles. Sumitrans intends to import Japanese origin wire into the U.S. In the U.S., the wire will be cut to varying lengths and U.S.-origin electrical connectors will be crimped onto the ends of the wire. The wire and connectors, now called "wire for an unassembled harness", will be shipped to Mexico and attached to additional components to form an electrical harness. Upon completion of the foreign operations, the electrical harness will be returned to the U.S. Sumitrans previously received Headquarters Ruling Letter (HRL) 555774 dated December 10, 1990, which held that cutting Japanese origin wire to length and crimping U.S.-origin connectors onto the wire ends does not result in a substantial transformation of the Japanese origin wire into a product of the U.S. You now inquire whether the cost or value of the U.S.- origin connectors will be eligible for the partial duty exemption available under subheading 9802.00.80, HTSUS, when returned to the U.S. incorporated in the electrical harness. ISSUE: Whether the U.S.-origin connectors will be eligible for a duty allowance under subheading 9802.00.80, HTSUS, when returned to the U.S. as part of electrical harnesses. 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, 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 this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24). U.S. components are entitled to the duty exemption available under subheading 9802.00.80, HTSUS, even though they had been originally combined with foreign components in the U.S. and then exported for foreign assembly operations. Timex Corporation v. United States, 12 CIT , 691 F. Supp. 1445 (CIT 1988). In Timex, watch bezels of U.S.-origin were combined with foreign crystals in the U.S. to create bezel crystal assemblies. The bezel crystal assemblies were exported to Mexico for assembly into watches and then returned to the U.S. The court held that as the bezels were of U.S.-origin and did not occasion a drawback, they were entitled to the duty exemption available under item 807.00, Tariff Schedules of the United States (HTSUS) (the precursor provision to subheading 9802.00.80, HTSUS). Assuming that the foreign assembly operations satisfy all the requirements of subheading 9802.00.80, HTSUS, it is our opinion that the U.S. connectors will be entitled to a duty allowance under this tariff provision. Like the bezels in Timex, the U.S. connectors are subjected to similar domestic and foreign operations. First, the U.S. connectors are combined with Japanese wire in the U.S. to form "wire for the unassembled harness." The "wire for the unassembled harness" is then shipped to Mexico for assembly with other components to create an electrical harness, which is thereafter returned to the U.S. HOLDING: If all the requirements of subheading 9802.00.80, HTSUS, are met during the assembly of the electrical harness in Mexico, an allowance in duty may be made for the cost or value of the U.S. connectors incorporated therein. Sincerely, John Durant, Director Commercial Rulings Division