Request for Internal Advice concerning the applicability of subheading 9802.00.80, HTSUS, to certain automotive cables from Mexico

HQ W557787 18 FEB 1994 CLA-2 C: R:C:S W557787 WAS CATEGORY: Classification TARIFF NO.: 9802.00.80 District Director U.S. Customs Service P.O. Box 3130 Laredo, TX 78044-3130 RE: Request for Internal Advice concerning the applicability of subheading 9802.00.80, HTSUS, to certain automotive cables from Mexico Dear Sir This is in response to your memorandum dated January 26, 1994, forwarding a request for internal advice, initiated by Handy & Harman of Mexico, concerning the applicability of the partial duty exemption available under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to hood release cables, temperature control cables, tire carrier cables, and vent control cables from Mexico. FACTS: The four products described in this internal advice request include hood release cables, temperature control cables, tire carrier cables, and vent control cables. The importer states that all of the raw materials used in the production of these four different cables are of U.S. origin, and there are no Mexican- origin raw materials used to produce these articles. 1. Hood release cables The importer states that the steps in the production of the hood release cables are as follows: The casing and other raw materials are received and shipped to Mexico. The first end (ferrule) is molded onto the casing with an injection molding machine. Plastic pellets are heated so that the ferrule can be molded onto the casing. Grommets are inserted onto the casing by hand. The handle housing is injection molded by melting plastic pellets onto the casing. A steel strand is received in reels and cut to length. 6. The steel strand is then inserted into the casing mechanically. An eyelet is swaged (crimped) to one end of the strand using a mechanical press. The handle is snapped into the housing end of the casing; the eyelet swaged strand is then snapped onto the handle and a steel washer is then inserted onto the post over the eyelet to prevent the handle from becoming disengaged. The opposite end of the strand is swaged (crimped) with a small bead using a mechanical press. The cable is pull-tested and packed for shipment to the U.S. 2. Temperature control cable The steps in the production of the temperature control described by the importer as follows: The casing and other raw materials are shipped to Mexico. The casing is simply cut to length in Mexico. The first end fitting is injection molded onto the casing by means of melting plastic pellets. The grommet is installed by hand. The second end fitting is injection molded onto the end of the cabling by means of heating plastic pellets. The steel strand is received in reels and is cut to length in Mexico. The first end of the steel strand is then die cast with a zinc eyelet. The steel strand is then mechanically inserted into the casing. The second end of the steel strand is then swaged with a small bead. A metal clip is then attached to the steel strand mechanically. The cable is tested and packed for shipment to the U.S. 3. Tire carrier cable The importer describes the steps in the production of the tire carrier cables as follows: A steel strand is received on a reel in Mexico. The steel strand is cut to length. The strand is inserted into a machine that birdcages (roughs u) the end of the strand to facilitate the application of the molten zinc to the strand. The cut and birdcaged strand is then inserted into a die cast machine which die casts the end fitting onto the steel strand by means of applying molten zinc. The cable is packed and shipped to the U.S. control cable. 4. Vent control cable The steps in the production of the vent control cables are by the importer as follows: The raw materials are shipped from the U.S. to the Mexican plant. A plastic end fitting is molded onto the casing by means of an injection molding machine. Steel wire is received on a reel and is cut to length in Mexico b means of a mechanical wire cutting machine. The first end of the wire strand is formed into a "pigtail” shape by means of a drill press. The pigtailed wire is inserted by hand into the casing. The second end of the wire is then formed into an "s" shape by means of a press. The cable is then packed for shipment to the U.S. ISSUE: Whether the hood release cables, temperature control cables, tire carrier cables, and vent control cables qualify for a partial d ty exemption 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 o1herwise, 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 full cost or value of the imported assembled article, cost or value of the U.S. components assembled therein, compliance with the documentary requirements of section toms Regulations (19 CFR 10.24). Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states in art that: [t]he components must be in condition ready for assembly without further fabrication at the time of their exportation for 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, laminating, sewing, or the use of fasteners. Operations incidental to the assembly process are not consider d further fabrication operations, as they are of a minor nature a d 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, preclude the application of the exemption under subheading 9802.00. O, HTSUS, to that component. See 19 CFR 10.14(a). In C.J. Tower & Sons of Buffalo Inc. v. United States, 62 Cust. Ct. 643, C.D. 3840, 304 F. Supp. 1187 (1969), plastic film composed of two plastic sheets -- one Canadian polyethylene, the other U.S. polyester mylar -- was produced in Canada by an extrusion process in which the foreign polyethylene, in molten form was joined with the U.S. mylar sheets through the use of an adhesive r adhesive promoter. After the resultant product cooled into a solid, the plastic film was trimmed a quarter of an inch. Th court found that the processing was nothing more or less than a combination of manufacturing (the foreign material) and assembling operations, that there was no intermixing of the sheets in the involved process, that the adhesive or adhesion promoter did not produce a change in the mylar's physical identity, form or shape, and that the process was a controlled operation which anticipated the transformation of the foreign liquid in o a solid before completion of the process, and provided n advance for the adhesion of two solids together in the final product. The court concluded that the foreign operation involved the assembly of two solids and that the U.S. mylar component was entitled to the duty exemption under TSUS item 807. o (the precursor to subheading 9802.00.80, HTSUS). The facts in the present case are substantially similar to the facts before the court in C.J. Tower. Relying upon C.J. Tower, Customs held in HRL 556069 dated August 13, 1991, that copper wire strand and compounds in pellet form of U.S. origin, which were exported to Canada where the re heated and extruded to form insulation for the conductor, were eligible for a partial duty exemption under subheading 9802.00.80, HTSUS. In HRL 556069, we held that while the copper wire was eligible, the pellets required further fabrication, thereby failing to meet clause (a) of the statute. We also stated that the heating extrusion process performed HRL 556069 clearly demonstrated that the pellets required further fabrication before they could be joined to the copper wire. Moreo Moreover, the heating and extrusion process caused the pellets to lose their physical identity by change in form and contrary to clause (b) of the statute. See also HRL 953385 dated April 30, 1993 (the process of encasing copper wire g compounds in pellet form and extruding polyvinyl chloride and polythermal elastomer around the wire is considered able assembly operation under subheading 9802.00.80,HTSUS); and HRL 556920 dated January 7, 1993 (the process of blue, red and brown wires into a fixture, and molding compound into a plastic strain relief grommet constitutes an acceptable assembly of an electrical harness for subheading 9802.00.80, HTSUS). In Sigma Instruments Inc. v. United States, 5 CIT 90, 565 F. Supp. 1036 (1983), aff'd, 724 F.2d 930 (Fed. Cir. 1984), U.S. terminal p ins were incorporated into header assemblies by a molding operation in Mexico. A molding compound, exported to Mexico in rope form, was heated and transformed into a viscous state before being joined to the terminal pins. At the completion of the transfer molding operation, the molding compound had substantially assumed a definitive solidification, size, and shape. Through this process the terminal pins became permanently fixed in their designed configuration and spacing so that they could perform their intended function as electrical relays. The court, relying on C.J. Tower, found that the molding operation constituted a permissible assembly within the purview of item 807.00, TSUS, and that Customs should ed an allowance in duty for the terminal pins. The appellate court further stated in Sigma that: [a]lhough an 'assembly' does involve the joining or coming together of solids, nothing in the statute requires that whether a component is a solid be determined as of the instant of initial contact. In Carter Footwear Inc. v. United States, 11 CIT 554, 669 9 (1987), F. Supp. 439 (1987), a thermoplastic box toe reinforcement was the textile vamp of a shoe upper in the Dominican The box toe was formed by first heating plastic material until it reached a molten state, placing the vamp in a vice and depositing a crescent shaped layer of plastic area of the vamp. The court stated, relying on Sigma and Tower, that the foreign component, the thermoplastic box toe, transitory molten state upon initial contact with the vamp subject to a controlled operation which anticipates the solidification or hardening of the plastic before completion of the process. As the thermoplastic solidified in a matter of seconds and displayed salient features of a solid, i.e., elasticity, high viscosity, tensile strength, crystallinity and differential adhesion, the court was persuaded that upon completion of the process there was a permanent union of two solids. Further evidence indicated that due to the higher viscosity and elasticity of the thermoplastic, it did not penetrate or intermix with individual fibers of yarn, but because of the weight of the thermoplastics it sagged into the fabric and adhered to a portion of the surface. The court distinguished the thermoplastic from a liquid which would penetrate the interstices between the fiber, thoroughly wetting the entire fabric and creating a wicking effect. Therefore, the court held that the molten plastic toe reinforcement joined to the shoe vamp qualified as a “solid,” joinder of which did not prevent the vamp from qualifying for the partial duty exemption under item 807.00, TSUS. We of the opinion that the process involved in the instant case, which consists of heating plastic pellet material and molding the cable components (i.e., end fittings, handle housing) onto the U.S. casing is an acceptable assembly operation consistent with the above-described cases. Moreover, as in Sigma and HRL 56920, while initially one of the components (pellets) was in a transitory molten state, the molding process is a controlled operation that anticipates the rapid solidification or hardening of the plastic before the completion of the joinder process and the permanent union of the two solids. Similarly, we are oft e opinion that in the production of the temperature control able and tire carrier cable, die casting one end of a steel strand and with a zinc fitting is similar to molding an end fitting and handle housing onto a casing, described above. In this operation, as in the plastic molding operation, zinc bars are melt d down and injected into a mold which hardens and results in attaching the end fitting onto the wire strand. Therefore, we find that the zinc die casting operation is an assembly operation. Therefore, as the molding and die casting operations performed in Mexico are acceptable assembly operations under subheading 9802.00.80, HTSUS, an allowance in duty may be made for the cost or value of the U.S. casing and steel strands subjected to the plastic molding and die casting operations. No allowance in duty may be made under subheading 9802.00.80, HTSUS, ho ever, for the cost or value of the plastic end fittings and handles, and zinc end fittings, as the plastic pellets or zinc bars from which they are made are not exported from the U.S. in condition ready for assembly without further fabrication, as required by clause (a) of the statute. Those additional operations to be performed in Mexico which result in securely joining components together by means of force  fitting, inserting, snapping, and pressing are considered acceptable assembly operations within the meaning of 19 CFR 10.16(a). In addition, crimping an eyelet onto one end of a wire strand is considered an acceptable assembly operation. See HRL 555205 dated August 25, 1989 (crimping terminals to spark plug wires constitutes an acceptable assembly within the meaning of 19 CFR 10.16(a)). Cutting wire to length is considered an operation incidental to the assembly process. See CFR 10.16(b)(6), which states that cutting to length of wire is an example of an operation which is incidental to the assembly process. Finally, testing is considered an operation incidental to the assembly process. See 19 CFR 10.16(b)(7), which states that final calibration and testing are operations incidental to the assembly process. The question remains whether, in regard to the vent control cable assembly, the process of bending and/or forming the U.S. origin steel wire in Mexico into a “pigtail” and “S” shape constitutes an acceptable assembly operation or an operation incidental to assembly. Ina a case involving a shaping and/or forming operation performed abroad under subheading 9802.00.80, HTSUS, Samsonite Corporation v. United States, 702 F. Supp. 908 (1988), aff’d, 889 F. 2d 1074 (1989). The court held that the bending of straight strips of U.S. steel into the shape of a square-sided “C” for use in luggage is not considered incidental to assembly where it does more than adjust the article and results in the creation of the component to be assembled. The court concluded that the statute and regulations do not cover a process which is as necessary to the fabrication of the component as it is to the assembly thereof. Further, the court found that the straight strips of steel could not have been placed immediately into the luggage bags without the bending operation. On this basis, the bending of steel frames for suitcases was not considered incidental to assembly because their fabrication by bending was separate from the assembly process and could have been performed in the U.S. prior to exportation. As in Samsonite, the wire strand in the vent control cable is straight when exported and is not capable of immediately entering into the assembly process but must be bent or formed before the assembly pro9cess can begin. The process of bending one end of the wire into a pigtail configuration and the other into an “S” shape does more than merely “adjust” the component to be assembled; it effectively creates the component, the essence of shaping of the wire strand constitutes a further fabrication of the exported component and is a significant operation which is necessary of the completion of the final article. Thus, no allowance may be made for the cost or value of the wire strand, when returned to the U.S. incorporated into the vent control cable. HOLDING: Based on the information presented, it is our opinion that the foreign operations performed on the U.S.-origin components which include molding, cutting, force-fitting, snapping, crimping, and pressing components together, are considered proper assembly operations and operations incidental to the assembly process, however, the operations which entail forming and/or bending the steel wire into “pigtail” and “S” shapes in the production of the vent control cables are not considered proper assembly operations or operations incidental to the assembly process. Therefore, the imported hood release cables temperature control cables, tire carrier cables and vent control cables may be entered under subheading 9802.00.80, HTSUS, with all allowances in duty for the cost or value of the U.S. components, except for the steel wire which has been bent or formed in the vent control cables, incorporated therein, upon compliance with the documentary requirements of 19 CFR 10.24. In addition, no allowance in duty may be made for the cost or value of the plastic pellets and the zinc bar used to make the end fittings and handle for the four types of cables, as they are not exported from the U.S. in condition ready for assembly without further fabrication as required by subheading 9802.00.80, HTSUS. This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Modul in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act, and other public access channels. Sincerely, John Durant, Director Commercial Rulings Division