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HQ 560378





June 11, 1997

CLA-2 RR:TC:SM 560378 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Ms. Marjorie Katz
Optimark
14 Heath Wood Lane
Chestnut Hill, MA 02167-2685

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to fiber optic couplers; WDMs; fiber optic modules; fusing; epoxy; cutting

Dear Ms. Katz:

This is in reference to your letter of March 6, 1997, to U.S. Customs in New York, requesting a ruling on behalf of Sifam, Ltd. and Selco Products, regarding the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to fiber optic couplers, Wavelength Division Multiplexers, and fiber optic modules. A sample and data sheets were submitted with your request.

FACTS:

Data sheets for singlemode fused couplers, singlemode wavelength division multiplexers (WDMs), and polarization insensitive fiber optic isolators are submitted. It is stated that fiber optic couplers and WDMs are small components, measuring approximately 50 x 3 millimeters (mm). They are used to split or combine light in various optic systems. The manufacturing process of the fiber optic couplers and WDMs is stated to be as follows:

Sifam, located in England, purchases large spools of fiber stated to be of U.S. origin in lengths of 2.2 kilometers from Corning and Spectran, Corp., both located in the U.S. In England, the fiber is cut into lengths of about 4 meters. Two lengths of fiber are then placed next to each other on metal substrate and the ends of the fibers are secured in monitoring equipment. The fibers are then fused together in the middle by a high temperature torch, which takes about 1-2 minutes. The fused area which is about 3 mm long is then "epoxied" onto a glass substrate. The substrate is then placed into a stainless steel tube, measuring 55 x 3 mm, with two 1 meter fiber pigtails on the ends of the tube.

The second item is stated to be a fiber optic module made by splicing several different components together. It is stated that Sifam purchases fiber optic isolators made in the U.S. by Kaifa Technology, located in the U.S. These are fiber optic components that are made from crystals and are pigtailed with optical fiber. They measure 50 x 8 mm and are used to suppress optical feedback in laser-based, fiber-optic systems. In England, it is stated that the fiber pigtails of the isolator are spliced to the fiber pigtails of the couplers or WDMs which Sifam previously has manufactured. The isolator and coupler (or WDM) are then adhered to a plastic fiber organizer tray with the use of epoxy, measuring 150 x 100 x 10 mm, and then covered with the top of the plastic tray which is screwed into place. The module is then shipped to the U.S. It is stated that the isolators are manufactured in the U.S. and no processing to the isolator occurs abroad, that and only one of the fiber pigtails is spliced to the fiber pigtail of another component, which takes about 5 minutes.

In a letter you received from Customs in New York, the application of subheading 9802.00.80, HTSUS, was considered, but not confirmed based upon the information presented in a letter dated January 10, 1997.

ISSUE:

Whether the fiber optic coupler, WDM, and fiber optic modules exported from England will qualify for the partial duty exemption under HTSUS subheading 9802.00.80, when imported into the U.S.

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 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.

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. See 19 CFR 10.16(a). 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 Headquarters Ruling Letter (HRL) 555554 dated May 21, 1990, Customs considered braided cord and strips of cellulose acetate, both products of the U.S., which were exported to Mexico where they were simultaneously cut to length and joined by means of heat fusing. Regarding this tipping operation, it was held that the heat fusing operation was sufficiently analogous to other heat sealing operations, such as heat sealing plastic materials together to make plastic shoe covers, to constitute an acceptable method of assembly.

In HRL 555544 dated May 1, 1990, Customs considered U.S. origin optical fiber and coated corrugated steel tape exported abroad, where some of the operations included cutting the optical fiber to length, covering the optical fibers with a silicon and nylon sheath, twisting the optical fibers and wires around a central strength rod in a stranding operation, wrapping the optic fibers with various tape, and encasing the optic fiber and core stranding with a thermoplastic jacket. Customs determined that sheathing and encasing optical fibers and fiber optic cable with thermoplastic and silicon and nylon casings were acceptable operations incidental to the assembly process pursuant to 19 CFR 10.16(b)(3) which allows the application of a preservative coating, including protective encapsulation. It was also determined that cutting the optical fiber to length was considered an acceptable operation incidental to assembly pursuant to 19 CFR 101.16(b)(6), which states that cutting to length wire, thread, tape, foil, or similar products exported in continuous lengths is an acceptable incidental operation. Accordingly, HRL 555544 held that optical fibers and corrugated steel tape did not lose their physical identify in the assembly operation, and were not advanced in value or improved in condition except by assembly operations and operations incidental thereto.

With regard to the couplers and WDMs in this case, the fibers undergo a fusing process. In a singlemode cylindrical fiber, optical power is carried in a very thin core whose index of refraction is slightly higher than that of the surrounding cladding material. McGraw-Hill Encyclopedia of Science & Technology, Volume 5, p. 339-340 (1987). Fusion, etching, and mechanical polishing techniques may be used to bring two fiber cores close enough to each other to make possible the transfer of power from one core to the other through the interaction of corresponding evanescent fields. Id. Medium-to-strong couplers serve as amplitude combiners and splitters in various resonators and sensors. Id. Accordingly, while the fusing of the fibers makes it easier to transmit light from one optical fiber to the other, we find that the fibers exported from the U.S. are in a condition ready for assembly as the fusing only brings them closer together. Furthermore, we find that surrounding the fused area in a glass substrate which is then placed into a stainless steel tube is similar to encapsulating optical fibers which was determined to be protective in nature in HRL 555544. Additionally, as in HRL 555544, cutting the optical fiber to length is incidental to the assembly process pursuant to 19 CFR 10.16(b)(6). Therefore, the coupler and WDMs will be eligible for subheading 9802.00.80, HTSUS, treatment, with allowances in duty for the optical fiber, stated to be of U.S. origin.

In regard to the modules, it is stated that no processing is performed on the isolators, stated to be of U.S. origin. We find that splicing the fiber pigtails of the isolator to the fiber pigtails of couplers or WDMs constitutes an acceptable assembly operation. Additionally, adhering the isolator in the plastic fiber organizer tray with the use of epoxy also constitutes an acceptable operation. Therefore, the module will be eligible for subheading 9802.00.80, HTSUS, treatment, with allowances in duty for the isolators, stated to be of U.S. origin.

HOLDING:

On the basis of the information and samples submitted, we find that the optical fiber, stated to be of U.S. origin, in the couplers and WDMs do not lose their physical identity in the assembly operation, and are not advanced in value or improved in condition except by assembly operations and operations incidental thereto. Therefore, allowances in duty may be made under subheading 9802.00.80, HTSUS, for the cost or value of the U.S. fabricated components incorporated into the couplers and WDMs, provided the documentary requirements of 19 CFR 10.24 are satisfied. Additionally, we find that the modules will be eligible for subheading 9802.00.80, HTSUS, treatment, with allowances in duty for the isolators, stated to be of U.S. origin, provided the documentary requirements of 19 CFR 10.24 are satisfied.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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

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