United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1990 HQ Rulings > HQ 0555519 - HQ 0730935 > HQ 0555544

Previous Ruling Next Ruling


HQ 555544


May 1, 1990

CLA-2 CO:R:C:V 555544 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Joseph S. Kaplan, Esq.
Ross & Hardies
529 Fifth Avenue
New York, New York 10017-4608

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to fiber optic cable

Dear Mr. Kaplan:

This is in response to your letter of December 1, 1989, on behalf of Canada Wire and Cable, Ltd., requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to fiber optic cable to be imported from Canada. Photographs and samples were submitted.

FACTS:

Canada Wire will export U.S.-origin acrylate coated optical fiber and coated corrugated steel tape to Canada for assembly operations with certain Canadian-origin components and a few materials sourced from third countries. The Canadian assembly operations consist of:

(1) cutting the acrylate coated optical fiber to length; (2) inspecting the individual optical fibers to ensure compliance with optical transmission standards; (3) covering the individual optical fibers with a silicon and nylon sheath;
(4) encasing the stainless steel strength rod with a polyethylene jacket for use as the core of the cable; (5) twisting twelve of the individual optical fibers and two polyvinyl chloride coated copper wires around the central strength rod in a "stranding" operation; (6) wrapping a plastic binder tape and propylene yarn around the optical fibers and core stranding for cushioning;
(7) wrapping marking tape with the manufacturer's name around the optic fiber and core stranding; (8) wrapping mylar tape around the optic fiber and core stranding;
(9) wrapping rip cord strings around the optic fiber and core stranding;

(10) encasing the optic fiber and core stranding with a thermoplastic jacket;
(11) wrapping rip cord strings around the optic fiber and core stranding;
(12) wrapping water blocking tape around the optic fiber and core stranding;
(13) wrapping corrugated steel tape around the optic fiber and core stranding;
(14) encasing the optic fiber and core stranding with an outside thermoplastic jacket; and (15) testing to ensure that the optical transmission quality of the original fiber has been maintained.

Upon completion of the assembly operations, the fiber optic cable will be imported into the U.S.

ISSUE:

Whether the U.S. components in the fiber optic cable will qualify for the duty exemption under HTSUS subheading 9802.00.80 when imported into the U.S.

LAW AND ANALYSIS:

HTSUS subheading 9802.00.80 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, lubrication, and painting....

All three requirements of HTSUS subheading 9802.00.80 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 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)), 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 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 HTSUS subheading 9802.00.80 to that component. See, section 10.16(c), Customs Regulations (19 CFR 16(c)).

The operations of wrapping plastic binder tape, propylene yarn, marking tape, mylar tape, rip cord strings, water blocking tape, corrugated steel tape, and twisting the individual optical fibers and copper wires around the steel rod are considered acceptable assembly operations pursuant to 19 CFR 10.16(a). See also, Headquarters Ruling Letter 085310 dated October 12, 1989, which found that twisting wire together and then wrapping jute filler, binder tape and jute bedding around the wire constitutes an acceptable assembly operation. Sheathing and encasing the optical fibers, and the fiber optic cable are considered acceptable operations incidental to the assembly process pursuant to 19 CFR 10.16(b)(3), which allows the application of a preservative coating, including protective encapsulation, in the assembly process as an incidental operation. The thermoplastic and silicon and nylon casings are applied to the optical fibers and cable solely for protective purposes and, therefore, will not preclude an allowance in duty for the cost or value of the U.S. components under this tariff provision. Cutting the optical fiber to length is considered an acceptable operation incidental to assembly pursuant to 19 CFR 10.16(b)(6), which states that cutting to length wire, thread, tape, foil, or similar products exported in continuous lengths is an acceptable incidental operation. Inspecting and testing the optical fibers and the completed fiber optic cable are considered acceptable incidental operations pursuant to 19 CFR 10.16(b)(7), which states that final calibration and testing are considered operations incidental to assembly.

With respect to the duty rate applicable to the imported optical cable, we agree with you that the cable is properly classifiable in subheading 8544.70.00, HTSUS, which provides for optical fiber cables, dutiable at the rate of 8.4% ad valorem, or 6.7% ad valorem for "goods originating in the territory of Canada" under the U.S.-Canada Free Trade Agreement Implementation Act of 1988 (FTA). General Note 3(c)(vii)(B), HTSUS, provides that where goods are not wholly obtained or produced in the territory of Canada and/or the U.S., as in this case, they, nevertheless, will be considered "goods originating in the territory of Canada" if they have been transformed in Canada so as to result "in a change in tariff classification in Canada as described in the rules of subdivision (c)(vii)(R) of this note." General Note 3(c)(vii)(R)(16)(hh), HTSUS, provides that a change in classification to heading 8544 from any other heading will qualify the goods for FTA treatment, provided the value of materials originating in Canada and/or the U.S. plus the direct cost of processing performed in Canada or the U.S. constitute not less than 50% of the value of the goods when exported to the U.S.

We are satisfied that the materials not of U.S. or Canadian origin (i.e., Megalon and nylon resin) would change tariff headings as a result of the assembly operation in Canada. Moreover, if, as you state, the remaining components and materials are "materials originating" in Canada or the U.S., then the cost information you have provided indicates that the above- described 50% value-content requirement would be satisfied in regard to the fiber optic cable to be imported from Canada. Under these circumstances, the cable would qualify as "goods originating in the territory of Canada" for purposes of the FTA, and, assuming compliance with the documentation and other requirements set forth in sections 10.301 through 10.309, Customs Regulations (19 CFR 10.301-1.309), would be dutiable at the rate of 6.7% ad valorem.

HOLDING:

On the basis of the information and samples submitted, we conclude that the U.S. components--optical fibers and corrugated steel tape--do not lose their physical identity in the assembly operation, and are not advanced in value or improved in condition except by assembly operations and operations incidental thereto. Therefore, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S. optical fibers and corrugated steel tape upon importation of the fiber optic cable, provided the documentary requirements of 19 CFR 10.24 are satisfied. The cable is classifiable in subheading 8544.70.00, HTSUS, and, based on the information provided, would be dutiable at the rate of 6.7% ad valorem as "goods originating in the territory of Canada" under the FTA, provided the requirements of 19 CFR 10.301 through 10.309 are met.

Sincerely,

Jerry Laderberg
Acting Director

Previous Ruling Next Ruling

See also: