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HQ 556675

June 11, 1992

CLA-2 CO:R:C:S 556675 SER

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Leonard A. Clark
205 Market, St.
Laredo, TX 78040

RE: Applicability of partial duty exemption under subheading 9802.00.80, HTSUSA, to plastic hangers wrapped with string; General Instruments Corp. v. U.S.; HRL 555221, 555533; 19 C.F.R. 10.24; winding

Dear Mr. Clark:

This is in reference to your letter of March 25, 1992, received by this office on April 21, 1992, requesting a ruling concerning U.S. plastic hangers and string sent to Mexico for the string to be wrapped around the hanger.

FACTS:

The sample submitted consists of a six foot length of cotton string attached at one end to a metal clip, and plastic "hangers". The plastic "hangers", the cotton string and the metal clip are all stated to be of U.S. origin. The plastic "hangers" and string with metal clip attached, are then shipped to Mexico where the string with metal clip is wrapped around the plastic "hanger". The completed article is stated to be used to attach price tags in grocery stores, and hung by a hook from the ceiling to display prices and names of different articles.

ISSUE:

Whether the plastic "hangers" with string will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUSA, when imported into the U.S.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUSA, provides a partial duty exemption for: n

[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 subheading 9802.00.80, HTSUSA, 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).

Foreign winding operations have been considered by the courts and Customs to be within the context of this tariff provision and have been found to constitute assembly steps rather than a "further fabrication" within the meaning of that tariff provision. See, General Instrument Corporation v. U.S., 61 CCPA 86, C.A.D. 1128, 499 F.2d 1318, 1320, (1974), rev'g 359 F.Supp. 1390 (1973), and Headquarters Ruling Letters (HRLs) 555221 dated October 24, 1989 and 555533 dated June 4, 1990. In General Instruments Corp. v. U.S., wire, which was used to make horizontal coils which are used in television sets, was despooled from the supply spool and then wound around a ferrite core for a prescribed number of turns. In HRL 555533, Customs held that the assembly of starter solenoid switches, whereby wire was wound around a spool, was considered an acceptable assembly operation within the meaning of this tariff provision.

Consistent with these rulings, in this case, the operation in Mexico of winding the cotton string with metal clip around the plastic "hangers" constitutes an acceptable assembly operation within subheading 9802.00.80, HTSUSA.

HOLDING:

On the basis of the information presented, the winding of the cotton string around the plastic "hangers" constitutes an acceptable assembly operation under subheading 9802.00.80, HTSUSA. Therefore, an allowance in duty may be made under subheading 9802.00.80, HTSUSA, for the cost or value of the U.S.- origin components, provided that the proper documentationn
requirements of 19 CFR 10.24 are satisfied. The tariff classification of the articles at issue is subheading 5609.00.10, HTSUSA, with a duty rate of 5.8% ad valorem.

Sincerely,

John Durant, Director
Commercial Rulings Division

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