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HQ 562064




June 18, 2001

CLA-02 RR:CR:sm 562064 tjm

CATEGORY: SPECIAL CLASSIFICATION

Mr. John Lindsay
New Metals & Chemicals Ltd.
Newmet House
Rue De St. Lawrence
Waltham Abey
Essex.EN9 1PF
United Kingdom

RE: Special Classification; assembly abroad of U.S. components; self-adhesive foam tape; 9802.00.80 HTSUS.

Dear Mr. Lindsay:

This is in reply to your letter, dated March 9, 2001, requesting a ruling on the applicable rate of duty for an article assembled in the United Kingdom with U.S. origin material. Our decision follows.

FACTS:

The product at issue is a flat adhesive-backed silicone foam tape used by aircraft manufacturers and maintenance firms. You stated that the silicone foam, adhesive, and backing paper originate in the United States. You import the silicone foam in rolls (3 feet in width) and you import the adhesive lined backing paper in similar width. Your company applies the adhesive to the silicone foam in the United Kingdom to produce an adhesive-backed silicone foam. The foam is then cut into tapes of varying widths from 9 mm to 350 mm. Two samples of the adhesive backed silicone foam tape were submitted. One sample measures 3” X 3” without adhesive lining and the other measures 1” X 8 1/5” lined with the adhesive and backing paper.

On April 30, 2001, you stated by telephone, that the adhesive lined backing paper is applied to the foam primarily by pressure and some low heat. Furthermore, you clarified that the foam is cut to length from the roll. Subsequently, the cut foam is sliced again in varying widths (9 mm to 350 mm). The samples you submitted also are not samples of actual products in terms of exact dimension.

ISSUE:

What is the dutiable status of the above-described self-adhesive foam tape when imported into the United States?

LAW AND ANALYSIS:

All articles imported into the U.S. are subject to duty unless specifically exempted therefrom under the Harmonized Tariff Schedule of the United States (“HTSUS”). For instance, 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, lubrication, 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 a rate of duty that is applied to the full value of the imported article, less the cost or value of such products of the United States, upon compliance with documentary requirements of section 10.24, Customs Regulations (19 CFR § 10.24).

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. In the instant case, the application of the adhesive to the foam is an acceptable assembly process abroad under 19 C.F.R. § 10.16(a). See also Headquarters Ruling Letter (“HRL”) 951319, dated May 13, 1992, where Customs ruled that gluing fabric tape to paper strips was an acceptable assembly process.

Section 10.14(a), Customs Regulations (19 C.F.R. § 10.14(a)), states in pertinent 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.

To qualify for exemption under 9802.00.80, HTSUS, the exported U.S.-origin components must be considered “fabricated” components. Section 10.14(a), Customs Regulations, (19 CFR § 10.14(a)), states that “[m]aterials undefined in final dimensions and shapes, which are cut into specific shapes or patterns abroad are not considered fabricated components.” 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. For examples of processes that do not qualify as “incidental to the assembly process,” see 19 C.F.R. § 10.16(c).

In contrast, any operations abroad incidental to the assembly process are not considered further fabrication and are therefore acceptable to meet the requirements of subheading 9802.00.80, HTSUS. Such incidental processes include cleaning, preservative coating, trimming, and filing. Specifically, 19 C.F.R. § 10.16(b)(6) includes “cutting to length of wire, thread, tape, foil, and similar products exported in continuous length; separation by cutting of finished components. . .” as operations not incidental to the assembly process.

The Customs Regulations distinguish between cutting exported material to size and shape, thus creating the basic article (19 C.F.R. 10.16(c)), from cutting material exported in continuous length to shorter lengths (e.g. 19 C.F.R. § 10.16(b)(6)). In HRL 554924, dated November 16, 1989, Customs ruled that where U.S. origin fabric was cut in West Germany into specific size and shape, the cutting process of the U.S. origin fabric did not qualify as an operation incidental to the assembly process. Additionally, in HRL 555241, dated July 3, 1989, Customs ruled that cutting U.S. origin rolls of labels into specific length and width in Mexico constituted a finishing step in the manufacture of the completed imported product and therefore was not an operation incidental to the assembly process.

On the other hand, in HRL 951319, dated May 13, 1992, Customs ruled that where U.S. origin fabric tape and paper strips were cut to length before being glued together, this cutting process qualified as “incidental to the assembly process” and therefore met the requirements of subheading 9802.00.80, HTSUS. See also HRL 557709, dated May 24, 1994, where Customs ruled that cutting U.S. origin vinyl material to length was an acceptable operation incidental to the assembly process.

In the instant case, upon importation into the United Kingdom, your company applies the adhesive on one side of the silicone foam with the backing paper covering the adhesive-laid side. You then cut the foam from the roll to length and subsequently cut again to various widths for the final product (9 mm to 350 mm). Noting the above described distinction that the U.S. Customs Service applies between cutting exported material to size and shape, thus creating the basic article (19 CFR 10.16(c)) and merely cutting exported material to shorter lengths (19 CFR § 10.16(b)(6)), the process in the instant case is the former. Similar to our previous rulings in HRL 554924, dated November 16, 1989, and HRL 555241, dated July 3, 1989, the cutting process in the instant case is not incidental to the assembly process, but rather constitutes a further fabrication of the exported U.S. materials.

Because the product at issue undergoes an operation that is not incidental to the assembly process and is therefore improved abroad, U.S. Note (2) of Subchapter II, Chapter 98, HTSUS, applies:

Except as provided in paragraph (b), any product of the United States which is returned after having been advanced in value or improved in condition abroad by any process of manufacturer or other means, or any imported article which has been assembled abroad in whole or in part of products of the United States, shall be treated for the purposes of this Act as a foreign article, and, if subject to a duty which is wholly or partly ad valorem, shall be dutiable, except as otherwise prescribed in this part, on its full value determined in accordance with section 402 of the Tariff Act of 1930, as amended. If such product or such article is dutiable at a rate dependent upon its value, the value for the purposes of determining the rate shall be its full value under the said section 402.

Confirmed by the National Commodity Specialist Division, the products at issue in the instant case are classifiable under 3919.10.2055, HTSUS, (for tapes up to 20 cm in width) or 3919.90.5060, HTSUS, (for tapes exceeding 20 cm in width). Therefore, the current applicable rate of duty for both subheadings is 5.8% ad valorem.

HOLDING:

Under 9802.00.80, HTSUS, goods assembled abroad from U.S. fabricated components may be eligible for a duty exemption. Under this provision, certain operations incidental to the assembly process are permitted in the manufacturing process abroad. Cutting exported material to specific shapes or patterns abroad is considered not incidental to the assembly process while cutting exported material to length is a permitted operation incidental to the assembly process. In the instant case, because the foam rolls are cut to length and subsequently again in width to specific sizes, the operation in the U.K. is not considered incidental to the assembly process. The U.S. components undergo further fabrication and therefore are precluded from the provisions of 9802.00.80, HTSUS.

The applicable rate of duty under 3919.10.2055, HTSUS, or 3919.90.5060, HTSUS, is 5.8% ad valorem.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents are 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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