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HQ 555333


March 15, 1990

CLA-2 CO:R:C 555333 RA

CATEGORY: CLASSIFICATION

TARIFF NO: 9801.00.10; 9802.00.80

Mr. John W. Cain
Cain Customs Brokers, Inc.
P.O. Box 150
Hildalgo, Texas 78557

RE: Applicability of subheadings 9801.00.10 and 9802.00.80, HTSUS, and country of origin marking requirements, to refrigerator parts imported from Mexico

Dear Mr. Cain:

This is in response to your letter of March 10, 1989, on behalf of the Whirlpool Corporation, requesting a ruling on the applicability of subheadings 9801.00.10 and 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to certain handles and other parts for refrigerators to be imported from Mexico. You also ask whether the parts are excepted from country of origin marking requirements.

FACTS:

Handle kit packages for U.S.-made refrigerators are made up to be placed inside the units for later attachment by the dealers in the U.S. It is assumed for purposes of this ruling that all parts are of U.S. origin. Part assembly No. 1121708 is created by packaging three spacers, one end cap, and nine screws into a plastic bag which is heat sealed. Part No. 1123310 consists of a freezer compartment door handle on which end caps have been attached by pressing or screwing. Part No. 1122970 is formed by pressing or screwing end caps onto a refrigerator compartment door handle. A finished handle kit is made up of the above- mentioned three parts, a handle extension, and an instruction sheet all wrapped in a sheet of polyethylene film which is either taped shut or heat sealed.

ISSUES:

1. Will the returned handle kit packages be entitled to an exemption from duty under either subheading 9801.00.10 or 9802.00.80, HTSUS?

2. What are the country of origin marking requirements applicable to the imported handle kit packages?

LAW AND ANALYSIS:

1. Applicability of subheadings 9801.00.10 and 9802.00.80, HTSUS

Subheading 9801.00.10, HTSUS, provides for the free entry of U.S.-made products exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. The courts have held that the packaging abroad of U.S.-made products will not preclude classification under this tariff provision when there is no change in the value or condition of the articles themselves apart from their containers. See United States v. John V. Carr & Son, Inc., 69 Cust. Ct. 78, C.D. 4377 (1972), aff'd 61 CCPA 52, C.A.D. 1118 (1974). In our ruling letter to you of June 16, 1989 (HQ 555329), we held that air conditioner parts made in the U.S. and exported to Mexico for packaging in plastic bags, which are weighed, sealed, and labeled, are not considered to have been advanced in value or improved in condition for purposes of subheading 9801.00.10, HTSUS. This holding would apply to the U.S.-made refrigerator handle parts which are merely placed in plastic bags or sheets in Mexico and returned.

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for articles assembled abroad in whole or in part of fabricated components of U.S. origin with no operations performed thereon except the joining of the components and operations incidental thereto. The U.S. components must be exported in condition ready for assembly without further fabrication, and cannot lose their physical identity in the assembled article by change in form, shape or otherwise. Duty is assessed on the full appraised value of the imported merchandise, less the cost or value of the U.S.-made components, upon compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that valid foreign assembly operations may consist of any method used to join or fit together solid components, such as welding, riveting, force fitting, gluing or the use of fasteners. Therefore, the freezer compartment door handle and refrigerator compartment door handle which have end caps attached by pressing (analogous to force fitting) or screwing would be entitled to tariff treatment under subheading 9802.00.80, HTSUS. The attachment of the end caps to the handles in this manner constitutes an acceptable assembly operation pursuant to 19 CFR 10.16(a).

2. Applicability of country of origin marking requirements

Section 304 of the Tariff Act of 1930, as amended, generally requires, subject to specified exceptions, that every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or container) will permit, in such manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

Part 134, Customs Regulations (19 CFR Part 134), implements the requirements and exceptions of the statute. Pursuant to section 134.1, Customs Regulations, the ultimate purchaser is generally the last person in the U.S. to receive the article in the form in which it was imported. We understand that, after importation, the handle kit packages will be placed inside the freezer or refrigerator compartment and shipped in this manner to a dealer. The dealer will attach the handles to the refrigerator/freezer before sale to the consumer. Under these circumstances, we consider the dealer to be the last person in the U.S. to receive the handle kit in the form in which it was imported and, thus, is the ultimate purchaser.

The freezer compartment door handles and refrigerator compartment door handles which have end caps attached and are entitled to tariff treatment under subheading 9802.00.80, HTSUS, are considered products of Mexico for purposes of 19 U.S.C. 1304. See 19 CFR 10.22. Pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), an imported article is excepted from marking if the marking of its container will reasonably indicate the country of origin. Since the dealers will receive the freezer compartment door handles and refrigerator compartment door handles in a polyethylene film which is taped shut or shrink-wrapped, the country of origin marking may appear on the packaging instead of on the handles themselves. The packages should be marked "Handles Assembled in Mexico" or "Handles Assembled in Mexico of U.S. Components." No country of origin marking is required on the U.S.-made refrigerator handle parts (or their packaging) which are merely packaged in plastic bags or sheets in Mexico and returned. They are excepted from marking under 19 CFR 134.32(m), as U.S. goods exported and returned.

None of the marking exceptions you specify in your submission, 19 CFR 134.32(f), (g), and (h), is applicable in the circumstances of this case. Under 19 CFR 134.32(f), articles imported for use by the importer and not intended for sale in their imported or any other form are excepted from marking. This exception does not apply because the articles are for use by the dealer, and not the importer. Under 19 CFR 134.32(g), articles to be processed in the U.S. by the importer or for his account
otherwise than for the purpose of concealing the origin of such articles and in such manner that any mark contemplated by this part would necessarily be obliterated, destroyed, or permanently concealed are excepted from marking. This provision is not applicable since the only processing that is done is by the dealer, not the importer. Moreover, such processing would not necessarily obliterate marking on the handles. Finally, the 19 CFR 134.32(h) exception does not apply since it requires that the ultimate purchaser must necessarily know the country of origin of the article by reason of the circumstances of their importation or by reason of the character of the articles even though they are not marked to indicate their origin. There is no indication that the ultimate purchasers here, i.e., the dealers, necessarily know the country of origin of the handles.

HOLDING:

Refrigerator parts of U.S. origin exported to Mexico merely for packaging in plastic containers are not considered to be advanced in value or improved in condition, and would be entitled to free entry under subheading 9801.00.10, HTSUS, upon compliance with the documentation requirements of section 10.1, Customs Regulations (19 CFR 10.1). Such parts also are excepted from country of origin marking requirements. Door handles to which end caps are attached may receive an allowance in duty for the cost or value of the U.S. fabricated components under subheading 9802.00.80, HTSUS, provided the documentation requirements of 19 CFR 10.24 are met. The door handles are considered products of Mexico for country of origin marking purposes and, therefore, they (or the polyethylene film in which they are packaged) must be marked accordingly.

Sincerely,

John Durant
Director, Commercial

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