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HQ 556161


December 2, 1991

CLA-2 CO:R:C:S 556161 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

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

RE: Magnetic coils from Mexico; assembly; 19 CFR 10.14; 10.16; General Instruments

Dear Mr. Freeman:

This is in response to your letter of July 25, 1991, on behalf of Furnas Electric Company, requesting a ruling concerning the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to magnetic coils imported from Mexico. A sample was submitted with your request.

FACTS:

According to your submissions, Furnas Electric intends to assemble magnetic coils in Mexico from U.S.-origin components. Magnetic coils are designed to be used in a variety of electrical applications.

The first step of the assembly process consists of inserting two terminals into a plastic bobbin, either by hand or with a terminal inserter tool. Copper magnet wire is then wound around the bobbin on a winding machine. Insulation tape is then placed on the coil to improve electrical properties. The bobbin is removed off the winding machine and wrapped with tape again.

The magnet wire is soldered to the terminals in two places. In some models, the terminals are bent in a bending fixture so that they will fit different switches. The bobbin is wrapped with tape again while the coil is stamped with a date code and color coded by marker. The coils are tested for surge, resistance, shorted turns, and dielectric capacity before being packed for shipment to the U.S.

ISSUE:

Whether the magnetic coils will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUS, when returned to the U.S.

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 indentity 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 entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.14(a), Customs Regulations (19 CFR 10.14(a)) states in part that:

[t]he components must be in a condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components.

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 subheading 9802.00.80, HTSUS, to that component. See, 19 CFR 10.16(c).

In the present case, we have held that winding wire around a spool is considered an acceptable assembly operation within the meaning of this tariff provision. See, Headquarters Ruling Letter (HRL) 555533 of June 4, 1990, and General Instrument Corporation v. United States, 61 CCPA 86, C.A.D. 1128, 499 F.2d 1318 (1974), rev'g, 70 Cust. Ct. 151, C.D. 4421, 359 F. Supp. 1390 1973). Therefore, winding the copper magnet wire around a bobbin is an acceptable assembly operation. Soldering the magnet wire to the terminals and wrapping the bobbin with insulation tape are also considered acceptable assembly operations pursuant to 19 CFR 10.16(a). The testing operation performed on the coils is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(7). The slight bending of the terminals for certain models appears to be a minor operation in comparison to the total assembly process, and therefore, we believe it is an acceptable incidental operation pursuant to 19 CFR 10.16(b)(5).

HOLDING:

On the basis of the information provided, it is our opinion that the operations performed abroad to create the magnetic coils are considered proper assembly operations or operations incidental thereto. Therefore, the magnetic coils may enter under subheading 9802.00.80, HTSUS, with allowance 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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