Applicability of partial duty exemption to certain disposable medical articles

HQ 557328 September 3,1993 CLA-2 CO:R:C:S 557328 RAH CATEGORY: Classification TARIFF NO.: 9802.00.80 Mr. Robert F. Seely Katten Muchin & Zavis 525 West Monroe Street, Suite 1600 Chicago, Illinois 60661-3693 RE: Applicability of partial duty exemption to certain disposable medical articles Dear Mr. Seely: This is in response to your letter of May 7, 1993, on behalf of Baxter Healthcare Corporation ("Baxter"), requesting a ruling on the applicability of certain merchandise for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The products in question are disposable articles used in hospitals, clinics and laboratories. The products are assembled in Mexico entirely from U.S.-origin fabricated components, including U.S.-origin fabric or paper that is cut to shape and length in the U.S. Thread and glue (for the drape and reinforced gown only) are the only components of Mexican origin. The assembly operations are described as follow: Surgical Drape a. apply two glue lines to cord holding tabs b. apply a glue line to flap, adhere reinforcement c. fold leggings d. center perineal fenestration in fabric reinforcement and glue in place e. glue the armboard covers in place f. glue anesthesia screen to the main body of the drape g. apply a glue line around fenestration, align and place over abdominal fenestration of base sheet h. fold the lower extension, leggings, anesthesia screen, and toe extensions i. place fenestration paper shield over large fenestration j. stamp drape to indicate unfold instructions k. fold the lower section of the drape over the abdominal fenestration l. fold the top portion of the drape over the stack of folds formed by the leggings l. fold the top portion of the drape over the stack of folds formed by the leggings m. stamp product identification to indicate type of drape (e.g., "abdominal lithotomy drape") Pillowcase a. glue edges, fold over and adhere b. fold and pack Reinforced gown a. stamp size on back of body panel at neck b. glue sleeve to reinforcement at edges c. sew reinforced sleeve into cuff part d. glue trapezoidal chest reinforcement to body panel e. glue belts and binding to body panel at waist f. sew sleeves to body panel g. sew neck binding and hook to neck portion of body panel h. fold belt i. fold gown and pack Exam gown a. stamp size on body panel at neck b. sew sleeve to body panel c. sew neck binding to body panel d. fold and pack ISSUE: Whether the disposable medical articles in question qualify for the partial duty exemption available under subheading 9802.00.80, HTSUS, when returned to the U.S. 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). 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). Under the facts presented, we find that all three requirements of subheading 9802.00.80, HTSUS, will be satisfied. The foreign operations that entail sewing and gluing together pre-cut pattern pieces clearly fall within the purview of 19 CFR 10.16(a). Moreover, stamping and folding the components are operations incidental to the assembly of the articles. According, the articles will be entitle to a partial duty exemption under subheading 9802.00.80, HTSUS, upon importation into the U.S. The country of origin language you propose "Assembled in Mexico of U.S. Components" will be acceptable provided all the components except the thread and glue are of U.S. origin. See Headquarters Ruling Letter 556274 dated January 17, 1992, in which we held that mens' and boys' soccer shorts assembled from U.S. components and foreign-origin thread were properly marked "Assembled in of U.S. components." HOLDING: On the basis of the information provided, it is our opinion that the operations performed in Mexico to create disposable medical articles are considered proper assembly operations or operations incidental thereto. Therefore, those articles will be entitled to a partial duty allowance under subheading 9802.00.80, HTSUS, upon compliance with the documentary requirements of 19 CFR 10.24. Sincerely, John Durant, Director