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HQ 563527




September 29, 2006

CLA-2 RR:CTF:VS 563527 KSG

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80

Robert L. Eisen, Esq.
Christopher E. Pey, Esq.
Baker & McKenzie LLP
1114 Avenue of the Americas
New York, NY 10036

RE: Eligibility of imported computer memory chips for a partial duty exemption under subheading 9802.00.80, HTSUS

Dear Mr. Eisen and Mr. Pey:

This is in reference to your letter dated May 5, 2006, on behalf of Micron Technology, Inc., requesting a binding ruling concerning the eligibility of imported computer memory chips for a partial duty exemption under subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States (HTSUS). Your amended request for confidentiality, dated June 30, 2006, has been granted.

FACTS:

Micron proposes to ship U.S.-origin wafers to foreign Country A where the processing may include back grinding, which thins the wafers by removing silicon from the backs of the wafers. Prior to grinding, tape is placed on the tops of the wafers to protect the active circuitry. The wafers are then placed on back grind machines and thinned to the thickness specified in the package design requirements.

The foreign processing includes the following operations: after back grinding, the protective tape is removed and sticky tape is applied to the back; the wafer is then scribed along pre-drawn lines using a small circular diamond saw. The circular saw completely passes through the wafer but not through the tape. A die bonder machine is passed over the scribed wafer to remove all material from the sticky tape except from the known “bad” die. The “good” die are attached to either lead frames, which are small metal frames from which electrical leads protrude, or to substrates. After being placed on the lead frames or substrates, gold wire is soldered to the die using an ultrasound device. The gold wire is then soldered to the lead frame or substrate, electrically connecting the die to an external lead. This process is repeated with an adhesive placed between the die until the correct number of die are mounted on the lead frame or substrate. In other words, this process is repeated twice for a two-die stack, four times for a four-die stack, etc.

Next, molten plastic is poured over the die and lead frame or substrate which, when solidified, forms a protective and electrically insulating barrier. An additional step that is performed on some products is the attachment of solder balls to the bottoms of the substrates. Regardless of whether the product is on a lead frame or substrate, a trim and form machine is used to remove the packaged die and bend the leads into the correct shape. The products are then shipped to the U.S. where they are tested prior to sale.

ISSUE:

Whether the imported computer memory chips are eligible for a partial duty exemption under subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

Based on the facts presented, CBP has determined that the imported chips would be classified in subheading 8543.89.9300 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:Otherapparatus: Other: Other:Other:Multichip integrated circuits described in additional U.S. note 14 to chapter 85.” Additional U.S. note 14, Chapter 85, HTSUS, states that: “For the purposes of subheading 8543.89.93, the term “multichip integrated circuits” refers to multichip integrated circuits consisting of two or more interconnected monolithic integrated circuits combined to all intents and purposes indivisibly, whether or not on one or more insulating substrates, with or without leadframes, but with no other active or passive circuit elements.” The rate of duty is free.

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). Pursuant to 19 CFR 10.16(b), the following are examples of operations which are incidental to the assembly process:

(4) Trimming, filing, or cutting off of small amounts of excess materials; (5) Adjustments in the shape or form of a component to the extent required by the assembly being performed abroad

We find that the attachment of the die to the lead frame or substrate is an acceptable assembly operation under 19 CFR 10.16(a). The issue presented is whether the other operations performed abroad, including the back grinding, are operations incidental to the assembly process. Based on the facts presented, it is unclear if back grinding is used in a limited fashion to even out the surface of the IC or if back grinding is used on a regular basis to thin the wafer to the proper thickness so that it is suitable for a particular application before assembly. If the back grinding is used in a limited fashion to even out the surface of the IC, then it would be considered incidental to the assembly process and the imported chips would be eligible for a duty allowance under subheading 9802.00.80, HTSUS, for the cost or value of the U.S.-origin components, assuming compliance with the documentary requirements of 19 CFR 10.24.

HOLDING:

Based on the information provided, if the back grinding is used in a limited fashion to even out the surface of the IC, the imported computer memory chips described above would be eligible for a duty allowance under subheading 9802.00.80, HTSUS, for the cost or value of the U.S.-origin components, assuming compliance with the documentation requirements of 19 CFR 10.24.

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,

Monika R. Brenner
Chief, Valuation & Special Programs Branch

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