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HQ 562469




October 16, 2002

CLA-2 RR:CR:SM 562469 KSG

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Mr. Jason M. Waite, Esq.
Alston & Bird LLP
601 Pennsylvania Avenue, N.W.
North Building, 10th Floor
Washington, DC 20004-2601

RE: Non-sterile suture attached to a suture needle; subheading 9801.00.10; U.S.-origin packing materials

Dear Mr. Waite:

This is in reference to your letters of November 8, 2001, April 18, 2002, and July 31, 2002, on behalf of Surgical Specialties, requesting a binding ruling concerning the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), and country of origin of non-sterile suture attached to a suture needle and packaged in a cardboard wrapper. You also inquired regarding the eligibility of suture and needle for a partial duty exemption under subheading 9802.00.80, HTSUS, and the eligibility of the cardboard wrapper for duty-free treatment under subheading 9801.00.10, HTSUS. The classification and country of origin issues are the subject of a separate response. See Customs Bulletin and Decisions, Vol. 36, No. 40 at page 86, dated October 2, 2002, Proposed Modification and Revocation of Ruling Letters and Treatment Relating to Tariff Classification of Sterile and Non-Sterile Suture Attached to a Needle. At the request of counsel, a telephone conference was held on this matter at Headquarters.

FACTS:

The article involved in this case consists of the following components and packaging materials which will be exported from the United States to three foreign locations for assembly operations, one in Mexico, China, and the Dominican Republic: surgical needles (channeled); surgical needles (drilled end); black braided silk suture; black mono nylon suture; catgut suture (plain and chromatic); polypropylene suture; wrapping cards composed of various packaging materials. The silk yarn is extruded in China; the nylon yarn is extruded in the United Kingdom; the catgut is produced in Brazil; and the polypropylene yarn is extruded in the United States. The needles and paperboard folding cards are of U.S. origin.

The foreign assembly operation involved is as follows: the die pair is inserted into the attaching machine corresponding to the deburred needles; the suture is supplied already cut to length and, for braided silk, tipped to prevent the braid from unraveling; the needle is inserted into the needle holder so that the channel section protrudes outside along its axis; the needle channel is placed into the groove of the stationary die (the full channel length of the needle must be inside the groove but not the pressed section); the suture end is inserted into the channel; and lastly, the dies press upon the channel, thereby closing the channel flanges around the thread. This last step is repeated several times by rotating the needle between the dies for each closure to get a round, cylindrical shape. The thread and needle components are then attached. The completed item is enclosed in a wrapping card.

ISSUE:

Whether the non-sterile suture needle is eligible for a duty exemption under subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

Articles assembled abroad in whole or in part of fabricated components, the product of the U.S., 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 articles, less the cost or value of the U.S. component assembled therein, upon compliance with the documentary requirements of 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 U.S. to qualify for the exemption. Components will not lose their entitlement to the exemption by being subject 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 operations performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners. The mixing or combining of liquids, gases, food ingredients, and amorphous solids with each other or with solid components is not regarded as an assembly.

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 HTSUS subheading 9802.00.80 to that component. See 19 CFR 10.16(c).

In this case, the U.S. origin needle and the polypropylene suture material are the components that would be eligible for a duty allowance. Based on the facts presented, both the needle and the polypropylene yarn are exported ready for assembly without further fabrication. The assembly of the sutures to the needles joins together two components and is an acceptable assembly operation performed abroad. Enclosing the non-sterile suture into a paperboard folding card is a packaging operation and pursuant to 19 CFR 10.16(f), would not disqualify the components for eligibility for the duty allowance.

Lastly, counsel argues that the U.S.- origin paperboard folding cards are eligible for duty-free treatment under subheading 9801.00.10, HTSUS.

Subheading 9801.00.10, HTSUS, provides that products of the United States when 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 can be entered duty free provided the documentary requirements of 19 CFR 10.1 are satisfied.

The court held in Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), that tomatoes of American origin were entitled to duty free entry under item 800.00, Tariff Schedules of the United States (TSUS) (the predecessor to subheading 9801.00.10, HTSUS). The tomatoes were shipped to Canada where they were unloaded, unpacked, sorted, graded by color and size, and repacked. The court stated that the test to be applied in item 800.00 cases is whether the merchandise of American origin has itself (apart from its container) been the object of advancement in value or improvement in condition while abroad.

Customs held in Headquarters Ruling Letter ("HRL") 560635, dated December 15, 1997, that "the act of being filed with their contents is not considered to be an advancement in the condition of the container or packing materials." Based on the facts presented, the paperboard folding cards are not advanced in value or improved in condition abroad. Also see NY C82742, dated January 12, 1998. Accordingly, based on the facts presented, the U.S.-origin paperboard folding cards are eligible for duty-free treatment under subheading 9801.00.10, HTSUS.

HOLDING:

Based on the information provided, the non-sterile U.S.-origin needles and U.S. origin polypropylene yarn described above are eligible for a duty allowance under subheading 9802.00.80, HTSUS, for the cost or value of these components, upon compliance with the documentation requirements of 19 CFR 10.24.

The U.S.-origin paperboard folding cards are eligible for duty-free treatment under subheading 9801.00.10, HTSUS upon compliance with the documentation requirements set forth in 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,

Myles B. Harmon, Acting Director
Commercial Rulings Division


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