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HQ 555426


August 6, 1990

CLA-2 CO:R:C:V 555426 GRV

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

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

RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to lead cables created by cutting-to-length continuous length components, stripping cable ends, twisting cable strands together, crimping clamps onto ends for force fitting into plastic blocks which are then either enclosed with insulating sleeves or sewn together with cord.Assembly; incidental operations;555205;085310;19 CFR 10.14(a);19 CFR 10.16(a);Marking;19 CFR 10.22

Dear Mr. Cain:

This is in response to your letters of June 14, 1989, and July 11, 1990, on behalf of General Electric Co., requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to lead cables to be imported from Mexico. Photographs and samples of the components were submitted for examination. You also inquire as to whether the returned cables will be excepted from the country of origin marking requirements under section 134.32(f) or (g), Customs Regulations (19 CFR 134.32(f) or (g)).

FACTS:

Rolls of insulated lead cable, strips of clamps/terminals, individual plastic blocks, and spooled cord and insulating sleeving, all of U.S. origin, will be exported to Mexico for assembly into various models of lead cable assemblies used to connect the windings of air conditioning or refrigeration compressor motors to an electrical power source. In Mexico, the continuous length components will either be cut-to-length, in the case of the insulated cable, cord and sleeving, or separated, in the case of the terminal strips, before assembly operations commence. Also, the ends of the lead cable will be stripped of their insulation.
The assembly operations consist of five steps:

(1) at station no. 1, a cable stripping and terminating machine crimps a terminal onto one end of the stripped lead cable. (For some models, both ends will have terminals crimped onto them);
(2) at station no. 2, a cable twisting machine twists the loose strands of the other end of the cable together; (3) at station no. 3, the terminated end(s) of the cable is securely snapped into a plastic block;
(4) at station no. 4, an amp terminating machine crimps another terminal onto the non-blocked end of the cable and the operator places an insulating sleeve over the leads on some models; and,
(5) at station no. 5, a lacing machine sews the cable together with cord in a knotting operation, and a flameless torch is used to burn off excess cord.

The various lead cable assemblies will be bulk packaged in boxes, which then will be shrink wrapped for return to the U.S. Upon importation, your client will attach the lead cables to electric motors and sell the motors to manufacturers of air conditioning or refrigeration equipment.

Regarding country of origin marking requirements, you state that the cable assemblies will not be sold at retail or as replacement parts. Rather, your client will attach them to electric motors, either in Mexico or in the U.S., before retail sale to domestic manufacturers of air conditioning or refrigeration equipment.

ISSUES:

I. Whether the returned lead cable assemblies are entitled to the partial duty exemption under HTSUS subheading 9802.00.80.

II. Whether the merchandise will be subject to country of origin marking requirements.

LAW AND ANALYSIS:

I. ASSEMBLY ABROAD

HTSUS subheading 9802.00.80 provides a partial duty exemp- tion for:

[a]rticles assembled abroad in whole or in part of fab- ricated 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 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 the U.S. components assembled therein, provided there has been compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Assembly operations for purposes of HTSUS subheading 9802.00.80 are interpreted at section 10.16(a), Customs Regulations (19 CFR 10.16(a)), which specifically enumerates force fitting and sewing operations as acceptable means of assembly. We have also held that crimping and twisting operations constitute acceptable assembly operations within the meaning of 19 CFR 10.16(a). Headquarters Ruling Letters 555205 (August 25, 1989) (crimping terminals) and 085310 (October 12, 1989) (twisting cable). Further, this section provides that assembly operations may be preceded, accompanied, or followed by operations incidental to the assembly.

Operations incidental to the assembly process are not considered further fabrication, as they are of a minor nature and cannot always be provided for in advance of the assembly operation. Examples of operations considered incidental to the assembly process are delineated at 19 CFR 10.16(b), which specifically enumerates cutting to length of finished components exported in continuous lengths.

In the instant case, the description of the foreign opera- tions and an examination of the samples submitted show that the lead cable assemblies to be imported will be eligible for the partial duty exemption available under HTSUS subheading 9802.00.80. The components are fully fabricated products of the U.S., which are exported in continuous lengths or in bulk. Once abroad, the continuous length components are either cut-to-length or severed, and the ends of the cable are stripped of insulation --acceptable incidental operations under 19 CFR 10.16(b)(6), as the ends cannot be stripped until the wire is cut to length. See, General Instrument Corporation v. United States, C.A.D. 1128, 61 CCPA 86, 499 F.2d 1318 (1974), rev'g, C.D. 4421, 70 Cust.Ct. 151, 359 F.Supp. 1390 (1973). The crimping of the terminals onto the end(s) of the stripped cable, the twisting of the cable strands, the snapping of the terminals into the plastic block, and the sewing of the cables together with cord are all acceptable assembly operations. The use of the flameless torch to remove excess cord is a minor operation and is deemed to constitute an incidental operation in this case. As the U.S. components do not lose their physical identities in the assembly operation, and are not otherwise advanced in value or improved in condition except by assembly operations and operations incidental thereto, the returned lead cable assemblies will be eligible for the partial duty exemption under HTSUS subheading 9802.00.80.

II. COUNTRY OF ORIGIN MARKING REQUIREMENTS

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The exceptions from the marking requirements are set forth in 19 U.S.C. 1304(a)(3) and 19 CFR 134.32. You request an exception from marking pursuant to 19 U.S.C. 1304(a)(3)(F) and 19 CFR 134.32(f) which except articles from marking if they are imported for use by the importer and not intended for sale in their imported or any other form. In support of your claim you indicate that the cable assemblies will not be sold at retail or as replacement parts but that your client will attach them to electric motors before retail sale to domestic manufacturers of air condition or refrigeration equipment. The above exception applies only to imported articles actually used by the importer in carrying on the business (e.g., supplies, machinery). See HRL 732082 (March 14, 1989) (samples to be used by the importer by showing them to prospective customers to solicit orders are excepted from marking under 19 CFR 134.32(f)). See also, HRL 709199 (June 28, 1978) (articles imported for showroom display or for testing purposes are for the use of the importer and are excepted from marking under 19 CFR 134.32(f)). This exception does not apply to articles to be further processed by the importer and then sold, such as the imported lead cable assemblies here.

Articles to be used in the U.S. in manufacture may, however, be excepted from marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), articles for which the marking of the containers will reasonably indicate the origin of the articles. In order to qualify for this exception, the U.S. manufacturing operations must substantially transform the imported article into a new article having a name, character or use differing from that of the imported article. In such case, the U.S. manufacturer is considered the ultimate purchaser and the marking of the container (in lieu of the article itself) will reasonably indicate the country of origin to the ultimate purchaser. See, 19 CFR 134.35. In this case, insufficient information has been presented to determine whether or not the imported lead cable assemblies will be substantially transformed as a result of their attachment to electric motors. No cost figures or information describing the manufacturing process performed was presented.

You also request an exception from marking under 19 U.S.C. 1304(a)(3)(G) and 19 CFR 134.32(g), which except from marking articles to be processed in the U.S. by the importer or for his account otherwise than for the purpose of concealing the origin of such articles and in such manner that any mark contemplated by this part would necessarily be obliterated, destroyed, or permanently concealed. No evidence has been presented in support of this claim.

Based on the information presented, we cannot grant an exception from marking the imported lead cable assemblies. Therefore, they must be marked to indicate their country of origin in accordance with the requirements of 19 U.S.C. 1304. Pursuant to 19 CFR 10.22, assembled articles entitled to a duty exemption under HTSUS subheading 9802.00.80, are considered products of the country of assembly for purposes of 19 U.S.C. 1304. This provision further states that if an imported assembled article is made entirely of American-made materials, the U.S. origin of the material may be disclosed by using a legend such as "Assembled in from material of U.S. origin," or a similar phrase. Based on our determination that the imported lead cable assemblies are entitled to a duty exemption under HTSUS subheading 9802.00.80, they are considered products of Mexico, the country of assembly. Since all the components are of U.S. origin, the subject cables may be marked "Assembled in Mexico from material of U.S. origin," or a similar phrase.

HOLDING:

On the basis of the described foreign operation and after viewing the photographs submitted, the spark plug wire assemblies will be eligible for the partial duty exemption under HTSUS subheading 9802.00.80 when returned to the U.S., upon compliance with the documentary requirements of 19 CFR 10.24.

The returned merchandise are considered products of the country of assembly for purposes of country of origin marking requirements, and must be marked accordingly.

Sincerely,


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