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HQ 556271


January 15, 1992

CLA-2 CO:R:C:S 556271 DSN

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Bernard R. Nottling
Account Manager
Rudolph Miles & Sons
4950 Gateway East
P.O. Box 144
El Paso, Texas 79941

RE: Applicability of partial duty exemption to gas furnace ignition devices; 19 CFR 10.14; 19 CFR 10.16; 556197; 556124

Dear Mr. Nottling:

This is in response to your letter of September 11, 1991, on behalf of Control Products Division, Johnson Controls, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to gas furnace ignition devices to be assembled in Mexico from U.S. and foreign-origin components.

FACTS:

According to your submission, cases and covers of U.S.- origin are sent to Mexico to be plated with zinc dichromate. In Mexico, the cases and covers are hung on racks and run through the plating process, which first involves cleaning to remove oil and soil and acid dipping to remove any corrosion. The cases and covers are then zinc plated, rinsed, dichromate dipped, rinsed, and dried before being assembled with other components to create gas furnace ignition devices. You state that the sole purpose of the plating operation is to provide a highly corrosion-resistant metallic coating to the cases and covers.

The time involved in plating a case and cover is 1.08 minutes, while the total time to assemble an ignition device is 41.46 minutes. Thus the plating time represents 2.6% of the total assembly time.

The cost of the plating operation for the case and cover is $0.48. The above figure represents approximately 4% of the total cost of the ignition device.

ISSUE:

Whether the plating operation constitutes an operation incidental to assembly so as to qualify the cases and covers for the duty exemption available under subheading 9802.00.80, HTSUS, when returned to the U.S., incorporated into gas furnace ignition devices.

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 (19 CFR 10.16(b)(3)). However, 19 CFR 10.16(c)(5) includes as an example of an operation not incidental to assembly "plating (other then plating incidental to assembly)."

In the instant case, the plating operation is performed to provide a highly corrosion resistant metallic coating to the cases and covers. We have held that protective coating applied to articles to prevent corrosion are considered operations incidental to assembly. See, Headquarters Ruling Letters (HRL's) 556197 of December 4, 1991, in which we held that gunite coating of steel water pipes to prevent corrosion associated with water was considered an operation incidental to assembly. See also, 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.

In United States v. Mast Industries, Inc., 515 F. Supp.43, 1 CIT 188, aff'd, 69 CCPA 47, 668 F.2d 501 (1988), the court, in examining the legislative history of the meaning of "incidental to the assembly process," stated that:

[t]he apparent legislative intent was to not preclude operations that provide an "independent utility" or that are not essential to the assembly process; rather, Congress intended a balancing of all relevant factors to ascertain whether an operation of a "minor nature" is incidental to the assembly process.

The court then indicated that relevant factors included:

(1) whether the relative cost and time of the operation are such that the operation may be considered minor; (2) whether the operation is necessary to the assembly process;
(3) whether the operation is so related to the assembly that it is logically performed during assembly; and (4) whether economic or other practical considerations dictate that the operations be performed concurrently with assembly.

Based on the information provided in your submission regarding the cost and time of the plating operation, we conclude tha the operation is minor in comparison to the total assembly of the ignition device. Although the plating operation is not necessary to the subsequent assembly process, we are satisfied that the operation is logically performed concurrently with assembly in view of economic and other practical considerations. Thus, applying the Mast criteria and our previous rulings to this case, it is our opinion that the plating operation is incidental to the assembly process.

HOLDING:

On the basis of the information provided, it is our opinion that the plating operation is considered an operation incidental to assembly. Therefore, allowances in duty may be made under this tariff provision for the cost or value of the U.S. cases and covers upon compliance with the documentary requirements of 19 CFR 10.24

Sincerely,

John Durant, Director
Commercial Rulings Division

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