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HQ 556836


December 8, 1992

CLA-2 CO:R:C:S 556836 RAH

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Ms. Sandra L. Haupt
CJ Tower, Inc.
128 Dearborn Street
Buffalo, New York 14207-3198

RE: Applicability of subheading 9802.00.80, HTSUS, to U.S.-manufactured cells exported to Canada where they are charged and assembled into batteries

Dear Ms. Laupt:

This is in response to your letter of July 13, 1992, on behalf of GNB Batteries (Canada) Inc., and a "FAX" from Mr. Larry Clark dated October 29, 1992, requesting a ruling regarding certain lift truck batteries.

FACTS:

GNB Batteries, Inc. intends to import U.S.-manufactured cells into Canada on a temporary importation basis. In Canada, the cells are charged and assembled into lift truck batteries. The articles are then exported back to the United States.

The primary use of the article in the United States is to power electric fork lift trucks mainly for traction and lifting power.

The article is described as an Industrial Lead Acid Battery. It has been previously entered under subheading 8507.20.0000, Harmonized Tariff Schedule of the United States (HTSUS), dutiable under the Canadian Free Trade Agreement, at the rate of 3.1 percent.

In his "FAX", Mr. Clark describes the assembly operation. The six cells are securely inserted into a steel tray. Each cell is connected to another by an intercell connector. A cable is drawn from the negative cell combination and a second cable from the positive cell combination. The two separate cables are then joined at the ends to a charging plug. Plastic shrouds are attached to the top of the intercell and terminal connectors to prevent shorting. The battery is then placed on a shipping skid. All the parts are of U.S. origin except tubing, intercell and terminal connectors and shipping skid and decal.

Charging the cells, which is done before the assembly operation, entails adding water and acid to the cells. They are then hooked up to charging panels and charged from 88 to 96 hours. The cells are fully charged at this point and ready to be put into the steel trays.

Mr. Clark states that the Canadian labor accounts for approximately 5 percent of the total battery value.

ISSUE:

Whether the assembly of the U.S.-manufactured cells into an industrial lead acid battery qualifies for the partial duty exemption available under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), when returned to the United States.

LAW AND ANALYSIS:

All articles imported into the U.S. are subject to duty unless specifically exempted therefrom under the HTSUS.

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 appraised 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, lamination, sewing, or the use of fasteners.

The operations performed in the instant case (fastening and force fitting parts together) constitute acceptable assembly operations as delineated in 19 CFR 10.16(a). Moreover, we find that charging the U.S.-origin cells is a relatively minor operation requiring nominal labor which entails adding water and acid to the cells and hooking them up to charging panels. We understand in this regard that the cost of the charging operation represents less than .5 percent of the cost of the cells. Therefore, we conclude that assembly of the U.S.-manufactured cells into an industrial lead acid battery is an acceptable assembly operation under subheading 9802.00.80, HTSUS, and that charging the cell before such assembly is incidental thereto.

HOLDING:

On the basis of the information presented, it is our opinion that the operations performed abroad to create the battery are considered proper assembly operations or operations incidental thereto. Therefore, the batteries may enter under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S.-origin components incorporated therein, upon compliance with the documentary requirements of 19 CFR 10.24. No allowance may be granted for the cost or value of the foreign- origin components, the water or the acid.

Sincerely,

John Durant, Director
Commercial Operations Division

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