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HQ 555495


September 13, 1990

CLA-2 CO:R:C:V 555495 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 automobile distributor contact arm subassemblies (created by reaming, milling, drilling and counterboring holes, "spinning" and reforming components) and electrical contact assemblies (created by eyeletting, "flaring" and screwing components together).incidental operations;19 CFR 10.16(c)

Dear Mr. Cain:

This is in response to your letters of September 28, 1989, and August 23, 1990, on behalf of Wells Mfg. Co., requesting rulings on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to various models of automobile distributor contact arm subassemblies and electrical contact assemblies to be imported from Mexico. Photographs of the assembly process and samples of the two articles were submitted for examination.

FACTS:

Eighteen components, all products of the U.S., will be sent to Mexico for assembly into various models of contact arm subassemblies and distributor contact set assemblies for automobiles. Six components will be assembled into contact arm subassemblies: bushings, blocks (a.k.a. breaker arms), contacts, springs, conductors, and washers. Twelve components will be assembled into distributor contact set assemblies: contacts, pivot arms, insulators, springs, breaker and contact bars, eyelets and screw and nut terminals.

The contact arm subassemblies entail six steps: (1) reaming a block to remove excess material and pressing a bushing into the block; (2) milling the contact-side of the block to remove excess material; (3) milling the rubbing-side of the block; (4) drilling and counterboring contact holes in the block; (5) pressing together the remaining four components by a process you denominate "spinning," which you state is similar to riveting in that the parts are fastened together securely by widening the shaft of the contact rivet and pressing it to the washer, and (6) bending the spring to form to set its tension.

The distributor contact set assemblies entail seven steps: (1) spot welding a contact to a contact arm end; (2) pressing eyelets into arm pivots and a spring to hold these components together; (3) riveting a contact bar to a bar breaker; (4) pressing (flaring) a post pivot through a bar, leaving the end of the post pivot slightly flared ; (5) pressing an insulator into an arm, then screwing the terminal through the insulator; (6) pressing the arm onto a bar and attaching a spring to a screw terminal with a net, and; (7) aligning the contact assembly on a Sheffield gauge.

Following these various assembly operations, the articles will be returned to the U.S.

ISSUE:

Whether the returned articles are entitled to the partial duty exemption under HTSUS subheading 9802.00.80.

LAW AND ANALYSIS:

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 may consist of any method used to join or fit together solid components, and section 10.16(a), Customs Regulations (19 CFR 10.16(a)), specifically enumerates welding, riveting, force fitting and the use of fasteners as acceptable means of assembly. We have held that crimping constitutes an acceptable assembly operation within the meaning of 19 CFR 10.16(a). Headquarters Ruling Letter 555205 (August 25, 1989) (crimping terminals). Further, 19 CFR 10.16(a) 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 trimming off small amounts of excess materials, adjustments in the shape of a component to the extent required by the assembly and testing of assembled articles. However, 19 CFR 10.16(c), provides, in part, that:

[a]ny significant process, operation, or treatment other then assembly whose primary purpose is the fabrication, completion, physical or chemical improvement of a component, or which is not related to the assembly process, ..., shall not be regarded as incidental to the assembly and shall preclude the application of the exemption to such article.

This regulation specifically enumerates machining and burnishing as operations not incidental to the assembly process. 19 CFR

In the instant case, we are satisfied, based on the description of the foreign operations and after examining the samples submitted, that all of the components are eligible for the duty exemption, except the block component in the contact arm subassemblies, as it is subjected to operations not incidental to the assembly process. This determination regarding the block component is based on the fact that no less than four grinding/drilling operations must be performed on the block components during and after it is joined to the bushing and no explanation as to how these steps (except the drilling operation) are related to the assembly is offered or evident. Regarding the other seventeen components, all of the operations performed on them are either directly provided for under 19 CFR 10.16(a), e.g., welding, or sufficiently analogous to acceptable assembly operations to meet the requirements of the statute. HOLDING:

On the basis of the described foreign operations and after examining the samples submitted, seventeen of the eighteen components used in the assembly of contact arm subassemblies and distributor contact set 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 block component of the contact arm subassemblies will not be eligible for the exemption, as it is subjected to multiple operations not deemed to be incidental to the assembly process.

Sincerely,


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