United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1995 HQ Rulings > HQ 558677 - HQ 558835 > HQ 558677

Previous Ruling Next Ruling
HQ 558677




December 8, 1994

CLA-2-CO:R:C:S 558677 DEC

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.80

Mr. C. B. Lay
C.B. Lay Customs Brokers, Incorporated
P.O. Drawer JJ
Douglas, Arizona 85608

RE: Automotive cargo restraint nets; HTSUS 9802.00.80; 19 CFR 10.16

Dear Mr. Lay:

Your letter dated July 11, 1994, to the Customs Service office at Nogales, Arizona has been referred to this office with respect to your inquiry on behalf of Mexican Industries of Michigan (importer) concerning the eligibility of certain automotive cargo restraint nets assembled in Mexico for the partial duty exemption under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 9802.00.80. Headquarters Ruling Letter (HRL) 956764, dated August 9, 1994, which was issued to you addressed the classification and North American Free Trade Agreement (NAFTA) eligibility questions.

FACTS:

The importer plans to assemble automotive cargo restraint nets in Mexico. The cargo restraint nets will be sold to the Chrysler Automotive Corporation in the United States. The nets will be placed in the cargo areas of passenger vehicles (trunk) and behind the bench seat of light pick up trucks in order to keep cargo in place. The component parts of the cargo restraint nets are as follows:

1. nylon netting 5. instruction sheet
2. nylon webbing 6. poly packaging
3. bungee cord 7. nylon sewing thread
4. fastening straps 8. auto nuts

The nylon netting, manufactured by Firestone Textiles in Canada, is pre-cut to dimension in the United States. The nylon webbing, manufactured by Wellington
Synthetic Fibres in South Carolina, and the bungee cord, manufactured by Superior Bungee Corporation in Alabama, are shipped to Mexico with the pre-cut nylon netting. The nylon webbing and bungee cord are cut to length in Mexico. The bungee cord is curled around the perimeter of the net and gathered at each corner to form fastening loops. The nylon webbing fabric is sewn on the two ends of the net. The fastening straps are sewn on the finished net and the article is individually packaged with its fasteners. An instruction sheet is enclosed showing outward on the clear poly packaging. The individually packaged nets are then bulk-packed in shipping cartons for return to the United States. You state that the instruction sheet, poly packaging, nylon sewing thread, and auto nuts are all products of the United States.

ISSUE:

Whether the processing described above with respect to the production of automotive cargo restraint nets constitutes acceptable assembly operations or operations incidental thereto, thereby qualifying the nets for a partial duty exemption pursuant to subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

Subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) provides for 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 imported assembled article, less the cost or value of the United States components assembled abroad provided the section 10.24, Customs Regulations (19 CFR 10.24), documentary requirements are satisfied.

Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states, in part, that

The 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.

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

In this case, the operations that are under consideration for the subheading 9802.00.80, HTSUS, partial duty exemption include the cutting to length of the nylon webbing and bungee cord, the curling of the bungee cord around the perimeter of the net, the sewing of the nylon webbing fabric to the two ends of the net, the sewing of the fastening straps on the finished net, and the packaging for the return shipment to the United States.

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that assembly operations for purposes of subheading 9802.00.80 encompass any method used to join together solid components such as sewing, welding, soldering, riveting, or the use of fasteners and may be accompanied by operations that are incidental to the assembly as provided in section 10.16(b).

Section 10.16(b), Customs Regulations (19 CFR 10.16(b)), provides a list of various operations that are deemed to be incidental to the assembly process regardless of whether the process is performed before, during, or after assembly. These operations do not preclude the application of the subheading 9802.00.80, HTSUS, partial duty exemption. Included in this list is the cutting to length of wire, thread, tape, foil, and other similar products that are exported in continuous length. In this case, we find that the cutting to length of the nylon webbing fabric and bungee cord in Mexico are operations that are incidental to the assembly process and do not preclude the application of subheading 9802.00.80, HTSUS.

Section 10.16(a) states that assembly operations include any method used to join or fit together solid components. While the operation performed to curl the bungee cord around the perimeter of the nylon netting is not expressly set forth in this section, Customs finds that this curling procedure which loops the bungee cord around the perimeter of the netting to provide the finished cargo restraint net additional strength to be an acceptable assembly operation as it results in joining the bungee cord to the netting.

Section 10.16(a) specifically provides that sewing solid components together is an acceptable assembly operation. The sewing of the nylon webbing fabric on the two ends of the cargo restraint net, and the sewing on the fastening straps are operations that are incidental to the assembly process as well. The sewing of fabric to itself is considered to be an acceptable assembly operation involving two separate components -- the fabric and thread. See L'Eggs Products, Inc., v. United States, 13 CIT 40, 704 F.Supp. 1127 (1989). Moreover, sewing the various components together clearly is an acceptable means of assembly. See 19 CFR 10.16(a). Therefore, the sewing on of the nylon webbing fabric joining the two ends of the netting and the bungee cord as well as the sewing on of the fastening strap(s) are acceptable assembly operations eligible for subheading 9802.00.80, HTSUS, treatment.

Regarding the dutiability of U.S.-origin packaging materials and auto nuts, subheading 9801.00.10, HTSUS, provides for the duty-free entry of products of the United States that are returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, upon compliance with the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1). In this regard, we have previously stated that merely filling containers with their contents does not advance the value or improve the condition of the containers. C.S.D. 89-26 (1989). Accordingly, the U.S.-origin packaging will be entitled to duty-free entry under this tariff provision, assuming it is not otherwise advanced in value or improved in condition abroad.

HOLDING:

Since the United States components are exported in condition ready for assembly without further fabrication, do not lose their physical identities in the assembly operation, and are not advanced in value or improved in condition except by assembly or operations incidental thereto, they will qualify for allowances in duty under HTSUS subheading 9802.00.80, provided the documentary requirements of 19 CFR 10.24 are met. The U.S.-origin packaging materials and auto nuts will be allowed duty-free entry under subheading 9801.00.10, HTSUS, upon compliance with the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1).

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant
Director, Commercial Rulings Division

Previous Ruling Next Ruling

See also: