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HQ 556746


January 5, 1993

CLA-2 CO:R:C:V 556746 BLS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

District Director of Customs
Box 3130
Laredo, Texas 78044

RE: Subheading 9802.00.80, HTSUS; "Static Conductive Brush Assembly"; substantial transformation; 19 CFR 10.12(e); 19 CFR 10.14(b); Uniroyal; Belcrest

Dear Sir:

This is in reference to the letter dated April 30, 1992, from John M. McKeon, Customhouse Broker, on behalf of Hunt Data Products, Inc., and subsequent conversations with members of my staff, for a ruling concerning the applicability of subheading 9802.00.80, Harmonized Tariff System of the United States ("HTSUS"), to a "Static Conductive Brush Assembly" imported from Mexico. The classification of the article was also,requested, and will be the subject of a separate letter. A sample of the product at various stages of processing has been submitted. We understand that the articles are currently being imported through your port.

FACTS:

Static conductive plastic pellets of U.S. origin are exported to Mexico where the material is injection molded to form a brush handle. Ten equidistant holes are formed during this process awaiting the insertion of bristles. The formed article also includes a metal screw embedded on a side of the handle during the molding process. The handle is then returned to the U.S. where horsehair bristles of Argentinian origin are sterilized and mixed with .010 dia. conductive nylon bristles of U.S. origin. The mix of bristles for each of the ten tufts is composed of 80 percent horsehair and 20 percent nylon. Each tuft is removed by automatic equipment from a stock box containing a mix of the bristles. The tuft is then stapled and driven into the bottom of the pre-molded holes in the brush handle. After the ten holes are filled, the brush is trimmed by machine to a length of 2 inches.

The brush is then exported to Mexico, where it is assembled to a cord set, which connects the conductive brush to the grounding source. The cord set is composed of components of both U.S. and foreign origin, and is also assembled in Mexico, as follows: The cord, ring terminal, clip and insulator are assembled mechanically, and the tubing is then shrunk around the ring terminal, using hot air. The resultant cord set is then assembled to the brush with a plastic acorn nut using the metal screw affixed to the side of the brush handle. A label and loop and hook fastener are then applied to the brush. The final assembly is packaged into a display card and clamshell package to produce the final product. The label, fastener, display card and clamshell are of U.S. origin. The clamshell is then heat sealed before export to the U.S.

ISSUE:

Whether the "static conductive brush assembly" qualifies for the partial duty exemption under subheading 9802.00.80, HTSUS.

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 U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.12(e), Customs Regulations, provides generally that an article wholly or partially of foreign components or materials, may be a "product of the United States" if such foreign components or materials are "substantially transformed " by a process of manufacture into a new or different article, or are merged into a new or different article. Section 10.14(b) provides that "substantial transformation" occurs when, as a result of manufacturing processes, a new and different article
emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subject to the manufacturing process. If the manufacturing or combining process is merely a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See, Uniroyal Inc., v. United States, 542 F. Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). and Belcrest Linens v. United States, 573 F. Supp. 1149 (CIT 1983), 741 F.2d 1368 (1984).

In Uniroyal, footwear uppers were manufactured in Indonesia and then imported into the United States where outsoles were attached. The court found the imported uppers were the very essence of the imported shoe, and that the minor operation of attaching only the outsoles did not result in a substantial transformation. In reaching its decision, the court contrasted the major manufacturing operations performed abroad with the relatively minor processes performed in the United States. A major factor in the court's decision was the substantial cost of the operations performed abroad as compared to the cost of processing in the United States.

Similarly, in the instant case, the brush handle does not lose its identity during the "bristling" process. The insertion of the bristles merely completes the manufacture of the brush, which is composed of the brush handle, and the bristles. The brush handle retains its identity through the completion of the U.S. processing operations. Further, the cost of the molding operation in Mexico is approximately twice the cost of the bristling operation in the United States. Accordingly, the brush handle is not substantially transformed into a product of the United States within the meaning of section 10.14(b) of the Regulations. Therefore, as the brush handle is not considered a U.S. fabricated component, no allowance in duty may be made for its cost or value under subheading 9802.00.80, HTSUS, when returned as part of the static conductive brush assembly.

However, allowances in duty may be made under this tariff provision in the cost or value of the U.S. components comprising the cord set. The packaging materials of U.S. origin are entitled to duty-free treatment as American goods returned under subheading 9801.00.10, HTSUS, upon compliance with the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1).

HOLDING:

The brush handle sent abroad for assembly with the cord set is not eligible for an allowance in duty under subheading 9802.00.80, HTSUS, upon return from the United States. However, the U.S. components which are used in the assembly of the cord set are eligible for the exemption, since these items comply with the requirements of subheading 9802.00.80, provided the documentary rerquirements of section 19 CFR 10.24, are satisfied.

Sincerely,

John Durant, Director

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