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HQ 556497


April 15, 1992

CLA-2 CO:R:C:S 556497 WAW

CATEGORY: CLASSIFICATION

TARIFF No.: 9802.00.80

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

RE: Applicability of partial duty exemption under HTSUSA subheading 9802.00.80 to imported pressure switches; assembly; incidental operations; 556293

Dear Mr. Freeman:

This is in response to your letter of January 21, 1992, on behalf of Furnas Electric Company, requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), to pressure switches to be imported from Mexico. A sample of the merchandise was submitted for our review.

FACTS:

Furnas Electric Company intends to import a NEMA 1 type Pressure Switch, Model No. 69WA. The pressure switch is used in the operation of water well pumps and other pumping systems. You claim that all of the parts which make up the pressure switch are manufactured in the U.S. The assembly process involves the subassembly of the carrier and flipper and the final assembly of the 69WA pressure switch assembly.

The carrier subassembly is produced as follows: (1) the spring is placed by hand on top of the contact assembly; (2) the spring and contact assembly are inserted by hand into an opening in the rear of the carrier body; (3) the spring and contact assembly are then inserted into an opening in front of the carrier body. The flipper subassembly, part no. D29075-007, is produced by sliding the helper spring onto the flipper body.

The 69WA pressure switch assembly is produced as follows: Station #1 - (1) the carrier and four stationary contacts are inserted into the board; (2) the board is placed in the bender fixture; (3) at the push of a button, the bender automatically closes and opens, bending the terminals at a 90 degree angle; (4) the board is removed from the bender and placed in the automatic screwdriver fixture; (5) at the push of a foot pedal, the fixture automatically drives four screws into the stationary contacts; (6) the board is removed from the fixture.

Station #2 - (1) two screws are inserted into the board assembly from Station #1; (2) the board is placed upside down on fixture T5603; (3) the screw and pad and mainspring are inserted into the board; (4) the snap spring is hooked into the flipper subassembly; (5) the other end of the snap spring is hooked to the lever; (6) the flipper is folded under the lever and inserted into the board; (7) the clamp on fixture T5603 is closed; (8) the frame is placed on top of the board; (9) the diaphragm is placed on top of the frame; (10) the enclosure is placed on top of the diaphragm; (11) an operator pushes down on the enclosure with the left hand, while pressing the foot pedal on the fixture, which causes the fixture to automatically screw the two screws into the enclosure; (12) the clamp on the fixture is released and the assembly is removed and placed in fixture T5603-B; (13) two more screws are inserted into the assembly and screwed down with an Areo overhead driver; and (14) the switch assembly is removed from fixture T5603-B.

Station #3 - (1) the switch assembly is placed in the calibration tester; (2) the clamp is closed; (3) air pressure is turned on; (4) proper pressure is set with screwdriver; and (5) the switch assembly is removed from the tester.

Station #4 - (1) switch assembly is placed into dielectric tester; (2) tester automatically tests switch; and (3) switch is removed from tester.

Station #5 - (1) label is placed inside cover; (2) grommet is placed inside of cover; (3) cover is placed over switch assembly; and (4) cover screw is inserted into cover and driven down with air screwdriver.

Upon completion of the above operations, the pressure switches will be imported into the U.S.

ISSUE:

Whether the pressure switches will qualify for the partial duty exemption available under HTSUS subheading 9802.00.80 when returned to the U.S.

LAW AND ANALYSIS:

HTSUS subheading 9802.00.80 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, lubrication, 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 such U.S. components, 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 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, operations or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under HTSUS subheading 9802.00.80 to that component. See 19 CFR 10.16(c).

In HRL 556293 dated January 28, 1992, which involved a different model pressure switch imported by Furnas Electric Co., we held that the assembly of the pressure switch in Mexico from U.S. and foreign-origin components constitutes proper assembly operations or operations incidental to assembly pursuant to subheading 9802.00.80, HTSUSA. In HRL 556293, the pressure switches were assembled from six subassemblies: common terminal subassembly, plunger, flipper and spring subassembly; stationary contact subassembly; pad and screw subassembly; movable contact subassembly; block subassembly. The operations performed in Mexico to create the six subassemblies and the subsequent assembly of the final article involved securely joining components together by snapping, screwing, and force fitting.

We are persuaded by the documentation and sample provided that, with the exception of the stationary contacts, all of the U.S. components exported for assembly into the pressure switches meet the three requirements of HTSUS subheading 9802.00.80 and, therefore, are entitled to duty allowances under this tariff provision. The operations which result in securely joining components together by force fitting, punching, screwing, riveting, pressing, attachment by knot/grommet and snapping are analogous to those operations in HRL 556293, and are considered acceptable assembly operations pursuant to 19 CFR 10.16(a). Completely and securely enclosing certain components within other components is also considered an acceptable assembly operation. See HRL 554920 dated January 3, 1989 (completely enclosing a metal weight in the bottom hem of vertical blinds is an acceptable assembly process).

The testing operation is also considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(7), which states that final calibration and testing of the assembled articles are considered operations incidental to the assembly process. Finally, inserting a label inside the cover of the pressure switch will not preclude tariff treatment under HTSUS subheading 9802.00.80. See C.S.D. 79-314 (1979), which found that "foreign stamping, markings, coding, or printing, when serving the purpose of origin markings, trademark, . . . or instruction for use, would not preclude tariff treatment under item 807.00," Tariff Schedules of the United States (TSUS) (the precursor to HTSUS subheading 9802.00.80).

However, we believe that the bending of the stationary contacts (terminals) at a 90 degree angle, by means of a bender fixture is not an operation incidental to the assembly process. Although 19 CFR 10.16(b)(5), permits "[a]djustments in the shape or form of a component to the extent required by the assembly. . . " as an operation incidental to the assembly process, 19 CFR 10.16(c) provides that:

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

In Samsonite Corporation v. U.S., 12 CIT 1146, 702. F. Supp. 908 (1988), aff'd, 8 Fed. Cir. ___, 889 F.2d 1074 (1989), straight strips of U.S. steel were bent into the shape of a square-sided letter "C" for use in luggage. The court found that the bending process did more than "adjust" the article, as contemplated by 19 CFR 10.14(a)(5), and, in effect, created the component to be assembled, the essence of which was its configuration. Further, the court found that the straight strips of steel could not have been placed immediately into the luggage bags without the bending operation. The court concluded that neither the statute nor the regulations covered a process which was as necessary to the fabrication of the component as it was to subsequent assembly thereof and denied the partial duty exemption available under TSUS item 807.00.

Consistent with Samsonite, we find that in the instant case, the process of bending the stationary contacts (terminals) at a 90 degree angle does more than simply "adjust" the component to be assembled; it effectively creates the component, the essence of which is the shape of the letter "C". The stationary contacts are exported into Mexico in the shape of the letter "L" and are not capable of immediately entering into the assembly process as exported, but require the bending operation before assembly can begin. Therefore, we hold that the shaping of the stationary contacts constitutes a further fabrication of the exported component, and is not an operation incidental to assembly, as it is a significant operation that is necessary for the completion of the component. Accordingly, the stationary contacts are not entitled to the allowance in duty provided for in HTSUS subheading 9802.00.80. See also HRL's 554962 dated May 15, 1989; 555290 dated April 17, 1990; 555486 dated November 2, 1989.

HOLDING:

Based on the information presented, it is our opinion that the operations performed abroad on all of the U.S. components, with the exception of the stationary contacts, which are exported for assembly into the pressure switches are considered proper assembly operations or operations incidental to the assembly process. Therefore, an allowance in duty may be made for the cost or value of the U.S. components (excluding the stationary contacts) which are incorporated into the pressure switch, upon compliance with the documentary requirements of 19 CFR 10.24. However, no such allowance may be granted under HTSUS subheading 9802.00.80 for the cost or value of the stationary contacts (terminals) as they are not exported in condition ready for assembly without further fabrication.

Sincerely,

John Durant, Director
Commercial Rulings Division

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