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HQ 556197


December 4, 1991

CLA-2 CO:R:C:S 556197 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Alex Romero, Jr.
Manager, A.F. Romero & Co., Inc.
477 Railroad Blvd.- P.O. Box 989
Calexico, CA 92231-0989

RE: Coating steel pipes with gunite; 19 CFR 10.14; 10.16; 556124

Dear Mr. Romero:

This is in response to your letter of August 19, 1991 on behalf of International Fabricators & Engineers, Inc., (IFE) requesting a ruling concerning the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to steel water pipes coated with gunite from Mexico.

FACTS:

According to your submissions, IFE will ship U.S.-origin steel pipes to Mexico where they will be cut to length and assembled by welding into custom made pipes for water systems networks both public and private. Wire mesh is then wrapped around the pipe sections.

"Gunite" is sprayed onto the pipe sections over the wire mesh in order to protect the pipes against corrosion. "Gunite" is a trademark for a concrete mixture sprayed under pressure over steel reinforcements. IFE manufactures piping according to standards set by the American Water Works Association which specifically sets standards for gunite coating.

ISSUE:

Whether the steel water pipes 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 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 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 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 whether performed before, during, or after assembly, do not constitute further fabrication, and shall not preclude the application of the exemption. An example of an operation which is considered incidental to the assembly process is the application of preservative paint or coating, including preservative metallic coating, lubricants, or protective encapsulation. See, section 10.16(b)(3), Customs Regulations 919 CFR 10.16(b)(3)).

In the instant case, cutting the steel pipes to length is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(6). Securely joining the U.S. components together by welding is an acceptable assembly operation pursuant to 19 CFR 10.16(a).

During the instant assembly operations, the gunite coating is applied as a preservative designed to protect the steel water pipes from corrosion associated with water. Since the above- cited regulation specifically enumerates preservative coating as an example of an operation incidental to assembly, we find that the gunite coating of the steel water pipes in Mexico is an acceptable incidental operation. See Headquarters Ruling Letter (HRL) 556124 of October 31, 1991, in which we held that powder coating spring brakes to protect against corrosion associated with snow and ice removal was considered an operation incidental to assembly.

HOLDING:

On the basis of the information provided, it is our opinion that the operations performed abroad to create the steel water pipes are considered proper assembly operations or operations incidental thereto. Therefore, the steel water pipes may enter 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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