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HQ 555638


June 11, 1990

CLA-2 CO:R:C 555638 RA

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Luis Chavez
Kemp, Smith, Duncan & Hammond
P.O. Drawer 2800
El Paso, Texas 79999-2800

RE: Applicability of subheading 9802.00.80, HTSUS, to thyristor chips sawed from silicon slices.Incident- al operations;U.S. v. Texas Instruments.

Dear Mr. Chavez:

This is in response to your letter of April 11, 1990, regarding the tariff treatment of thyristor chips separated from silicon slices in Mexico before being assembled into operative thyristors. You inquire as to the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

You state that TECCOR Electronics Inc. of Irving, Texas, is assembling thyristors in Mexico and plans to utilize chips arranged in rows and columns on silicon slices with so-called "streets" separating them from one another. The silicon slices containing hundreds of chips delineated by streets will be sawed along the streets. When the individual chips are separated, they are ready for assembly into operative thyristors without any further fabrication.

ISSUE:

Whether the separation of the individual chips by sawing them apart along the streets indicated on the silicon slices is considered an operation incidental to their assembly into thyristors, thereby rendering them eligible for an allowance in duty under subheading 9802.00.80, HTSUS.

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 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 subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article classified 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, provided the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24), are met.

You contend that the value of the chips used in assembling the imported thyristors should be deducted when computing the duty to be assessed as the chips are complete when they are exported from U.S. and need only be separated before assembly into the imported product. You stated that the chips are specifically arranged on the silicon slice to produce "streets" along which the sawing will be done to separate the individual areas.

In The U.S. v. Texas Instruments Inc., C.A.D. 1178, 545 F. 2d 739 (1976), the appellate court held that scoring and breaking a silicon slice along provided so-called "streets" to separate individual transistor areas did not amount to further fabrication of the areas and, therefore, could be considered incidental to the assembly process.

In your case, the individual areas are separated by sawing instead of scoring and breaking which were utilized in the court case. However, the result achieved is similar and the desired chips are merely separated from each other without any change in their characteristics. Accordingly, the separation process is not considered to be a further fabrication or advancement in value of the chips which are subsequently assembled into the imported thyristors. Thus,
the separation process may be treated as an operation incidental to assembly within the scope of the provision in subheading 9802.00.80, HTSUS.

HOLDING:

The separation of individual thyristor chips by sawing a silicon slice is not considered to be a further fabrication and is incidental to the assembly of the imported thyristors. The U.S.-made chips are eligible for the allowance in duty provided for in subheading 9802.00.80, HTSUS, provided the documentary requirements of 19 CFR 10.24 are satisfied.

Sincerely,

John Durant, Director

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