Applicability of duty exemption under subheading 9802.00.80, HTSUS, to certain U.S.-manufactured components exported to Mexico for assembly into switches

HQ 556539 April 15, 1992 CLA-2 CO:R:C:S 556539 RAH CATEGORY: Classification TARIFF NO.: 9802.00.80 Mr. Philip Freeman Cain Customs Brokers 421 Texano P.O. Box 150 Hidalgo, TX 78557 RE: Applicability of duty exemption under subheading 9802.00.80, HTSUS, to certain U.S.-manufactured components exported to Mexico for assembly into switches Dear Mr. Freeman: This is in response to your letter dated February 21, 1992, requesting a ruling under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), for certain U.S.-manufactured components which are exported to Mexico for assembly into switches. As requested, we are returning the samples which were forwarded for our review. FACTS: You state that your client intends to import from Mexico Class 45 Switches which are used in the operation of air conditioning, heating, welding, data processing, and refrigeration equipment. The following U.S.-manufactured components are exported to Mexico to be assembled into the switches: PART NUMBER PART NAME D35082-001 Cover D26183-001 Crossarm D73307-001 Arc Box D26206-001 Magnet D55079-001 Frame D26386-001 Screw D26189-001 Terminal D26192-001 Clip D26187-001 Spring - 2 - S00263-007 Screw D26208-001 Kick Out Spring S00263-006 Screw D25254-001 Double Quick Connect D26234-001 Terminal S00211-006 Screw D26190-001 Movable Contact S00133-004 Rivet D55080-002 Coil D27504-001 Armature D25983-424 Nameplate D26207-009 Nameplate D25983-391 Nameplate In Mexico, the assembly is completed in five operations which are described as follows: Crossarm Assembly Clip is placed in armature holes. Armature is put into crossarm. Contact Board Rivet Assembly Place stationary terminals on riveting fixture upside down. Place arc box upside down on fixture. Position these parts under riveter in fixture, rivet 2 rivets, reposition and rivet 2 other rivets. Power Screw Assembly Place riveted contact boards on screw-driving fixture. On some models, place quick connects on fixture. Place screws in boards and drive with power driver. Contact Board Assembly Place crossarm assembly in contact board. Place movable contacts in crossarm assembly. Position 2 springs and insert between crossarm and movable contact using insertion tool. Apply labels to board. Final Build Place magnet in frame. Place coils in magnet slots. Place kickout springs on coil nibs. Snap board assembly onto coil. Place board assembly onto frame. Turn assembly upside down, position 2 screws and drive into frame. Tap bottom of frame on table to be sure of tight fit, inspect. ISSUE: Whether the Class 45 Switches will be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, upon importation into the United States. - 3 - LAW AND ANALYSIS: All articles imported into the U.S. are subject to duty unless specifically exempted therefrom under the HTSUS. 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). Section 10.14(a), Customs Regulations (19 CFR 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 United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components. Section 10.16(a), Customs Regulations (19 CFR 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, lamination, 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. 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). - 4 - In Headquarters Ruling Letter (HRL) 555533 dated June 4, 1990, we held that U.S.-manufactured parts assembled abroad into starter solenoid switches which provide electrical energy to starters on automobile engines qualify for a partial duty allowance under subheading 9802.00.80, HTSUS. That assembly operation included, inter alia, force fitting, punching, screwing, riveting, pressing and snapping components together, enclosing components within other components, stacking components together and testing the switch for electrical charge. Moreover, we have also held that U.S. components assembled abroad into electronic relay switches by riveting, winding, taping, soldering in position, staking and welding qualify for the duty exemption under subheading 9802.00.80, HTSUS. HRL 067356 dated August 13, 1981. The assembly in the instant case includes fitting parts together, riveting, screwing, snapping parts together, and applying a label. We find that these operations clearly fall within the purview of an acceptable assembly as outlined in the Customs Regulations (19 CFR 10.16(a)), and prior rulings (555533, supra, and 067356, supra). We further find that all three requirements of subheading 9802.00.80, HTSUS, have been satisfied and that the Class 45 Switches are entitled to a partial duty exemption under that subheading, upon importation into the United States. HOLDING: The Class 45 Switches will be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, upon importation into the United States. The U.S.-manufactured components are exported to Mexico in condition ready for assembly without further fabrication, do not lose their physical identity in such articles by change in form, shape, or otherwise, and are not advanced in value or improved in condition abroad except by being assembled. Therefore, allowance in duty may be made under this tariff provision for the cost or value of the U.S.-made components, upon compliance with the documentation requirements of 19 CFR 10.24. Sincerely, John Durant, Director Commercial Rulings Division