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HQ 555569


August 1, 1990

CLA-2 CO:R:C:V 555569 KAC

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Phil Freeman
Cain Customs Brokers, Inc.
421 Texano
P.O. Box 150
Hidalgo, Texas 78557

RE: Applicability of duty exemption in HTSUS subheading 9802.00.80 to centralizers created by welding, force fitting, heat treatment, sandblasting, and painting. Assembly;incidental operations;19 CFR 10.16(a);19 CFR 10.16(b)(1);19 CFR 10.16(b)(3);053159;043591

Dear Mr. Freeman:

This is in response to your letter of January 6, 1990, and fax dated July 10, 1990, on behalf of 3D Border Industries, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to centralizers imported from Mexico.

FACTS:

3D Border Industries plans on shipping U.S.-origin components to Mexico for assembly into centralizers. The centralizer is a part used in the oil well industry, and is designed to center the pouring of cement around a steel casing in order for the casing to be uniformly cemented on all sides and held in place in the wellbore. The assembly process consists of:

(1) tack welding preformed metal strapping and collars; (2) placing two halves of the centralizer together and inserting hinge pins in the hinges;
(3) welding the points which were tack welded; (4) heat-treating the centralizer with propane burners for one to three minutes to relieve weld stress; (5) sandblasting;
(6) dipping the centralizer into waterbase paint for rust protection;
(7) packaging for transportation.

Upon completion of the above operations, the centralizers will be imported into the U.S.

ISSUE:

Whether the centralizers will qualify for the duty exemption available under HTSUS subheading 9802.00.80 when returned to 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, 19 CFR 16(c).

Tack welding, welding and inserting hinge pins in hinges are acceptable assembly operations pursuant to 19 CFR 10.16(a). We have previously held that sandblasting merely for the purpose of removing rust and dirt from metal is not further processing, but rather a cleaning operation for purposes of item 806.30, Tariff Schedules of the United States (TSUS) (the precursor provision to subheading 9802.00.60, HTSUS). See, Headquarters Ruling Letter (HRL) 053159 dated September 13, 1977. In the instant case, as the sandblasting will be performed to clean the surface of the metal before the painting operation is performed, it is considered an incidental operation pursuant to 19 CFR 10.16(b)(1), which states that cleaning is an incidental operation. The sole purpose of dipping the centralizer into paint is to protect the centralizer from rust for a period of two years. Therefore, the painting operation is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(3), which states that the application of preservative paint or coating is an incidental operation.

A "heat treatment" operation can be used for several reasons. In HRL 043591 dated January 28, 1976, we found that heat treatment performed to standardize metal's stiffness from lot to lot to permit precise forming in subsequent operations was a process of manufacture and beyond the scope of an incidental operation in item 807.00, TSUS (the precursor provision to subheading 9802.00.80, HTSUS). However, if heat treatment is used to regain the initial stress-free metallurgical structure, to clean the surface of the components from contamination, or to restore those qualities which may have deteriorated during handling and processing, heat treatment is regarded as an operation incidental to the assembly process within item 807.00, TSUS. Therefore, heat treatment is a permissible incidental operation where it restores those qualities in the metal which may have deteriorated during the handling and processing operations during the assembly.

In the present case, the heat treatment operation is performed to relieve stress in the metal after the welding operation. This type of heat treatment is an incidental operation, as its purpose is to restore the metal to its stress- free condition before the welding operation.

HOLDING:

From the information presented, it is our opinion that the operations performed abroad to create the centralizers are considered proper assembly operations or operations incidental to the assembly process. Therefore, the imported centralizers may be entered under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. components incorporated therein, upon compliance with the documentary requirements of 19 CFR 10.24.

Sincerely,

John Durant, Director
Commercial Rulings Division

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