CLA-2 CO:R:C:V 555503 KAC
Mr. Thomas A. Baker
The Antenna Specialists Company
30500 Bruce Industrial Parkway
Solon, Ohio 44139-3996
RE: Applicability of the duty exemption under subheading
9802.00.80, HTSUS, to dual section, ferrite isolators
imported from Mexico
Dear Mr. Baker:
This is in response to your letter of September 20, 1989,
to the District Director, Laredo, Texas, requesting a ruling on
the applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to dual section, ferrite
isolators imported from Mexico. Your letter was referred to our
office for the preparation of a response. A sample of the
product was submitted for our consideration.
FACTS:
The Antenna Specialists Company will be shipping U.S.
components to Mexico for assembly into a dual section, ferrite
isolator ("isolator"). The isolator is used between an antenna
and transmitter/receiver in a fixed location to filter out
unwanted receptions. The isolator assembly process is described
as three separate operations: the isolator coax subassembly, the
board and conductor subassembly, and the isolator final
assembly. Except where specifically noted all machining
(threading, forming, and drilling) is performed in the U.S.
ISOLATOR COAX:
The following U.S. components are used in the isolator coax
subassembly: R-142 B/U coax cable, crimp type "N" male coax
connector, crimp flange, tube mount, and heat reactive tube. The
foreign subassembly operations are as follows:
1. 10 1/2 inch R-142 B/U coax cables are cut to length;
2. type "N" male coax connector is force-fitted to one end
of the coax cable;
3. the flange and mount are soldered and then force fitted
to the remaining end of the coax cable; and
4. heat reactive tubing is cut to length, slipped over both
ends of the coax cable and then heat is applied to
shrink the tube around the coax cable in order to strain
relieve cable at points of entry to "N" connector and
flange/mount.
BOARD AND CONDUCTOR:
The following U.S. components are used in the board and
conductor subassembly: printed circuit board, insulating tube,
7/8 inch #18 bare copper wire, and garnet support. The foreign
subassembly operations are as follows:
1. both circulators are soldered into position;
2. insulated tube is slipped over cut-to-length bare copper
wire; and
3. both ends of bare copper wire are bent into a specific
angle to fit appropriate holes in a printed circuit
board and soldered into position.
ISOLATOR:
This final assembly process joins the isolator coax sub-
assembly, the board and conductor subassembly, and certain
additional components together to complete the finished product,
the isolator. The following U.S. components are used in the
isolator assembly: resistors, load resistors, garnet wafers,
ceramic magnets, port block, magnet plates, side cover, end
cover, heat-sink spacer, back panel, mounting panel, front panel,
heat-sink, AG-58 A/U connector ("N" female), AG-1094/U connector
("BNC" female), solder terminal, split lockwasher, plastic cap,
.002 and .004 inch paper spacer (optional during electrical
alignment), "invar" pole plate, base, plate covers, adhesive,
adhesive accelerator, various size screws (fasteners), isolator
coax subassembly, and board and conductor subassembly. The
isolator assembly operations are as follows:
1. using the base as a building block, load resistor
is force fitted into position and the lower garnet
wafers are placed in position into their provided holes;
2. board and conductor subassembly is placed in position
into provided holes;
3. upper garnet wafers are placed in position;
4. resistors are placed in position and soldered;
5. remaining load resistor is placed in position and
soldered and/or screwed to the assembly;
6. appropriate fasteners are used to hold in place the
components described in step numbers 1 through 4;
7. input, output and sampling connectors center conductors
soldered to printed circuit board;
8. main heat-sink placed in position;
9. port block, "BNC" connector and UG-88 A/U connector are
fastened to heat-sink with appropriate fasteners;
10. isolator coax subassembly placed in position and
fastened to heat-sink;
11. side cover, end cover, and front panel positioned and
fastened;
12. upper magnets and lower magnets placed in position;
13. "pole-plates" (one invar and one cold-rolled steel) are
placed in position over magnets and secured with
adhesive and adhesive accelerator;
14. the seven tuning adjustment screws are inserted into
the base and invar pole plate;
15. mounting panel is placed into position over lower
isolator base; and
16. all appropriate fasteners are inserted into their
respective positions and tightened.
The completed isolator must then undergo "electrical
alignment" which is a final tuning operation. This operation
will be performed either in the U.S. or in Mexico. After the
final isolator assembly operations, or after the final tuning
operation performed in Mexico, the isolator will be returned to
the U.S.
ISSUE:
Whether the foreign operations constitute an "assembly",
thereby entitling the dual section, ferrite isolator to the
partial duty exemption available under HTSUS subheading
9802.00.80 when returned to the U.S.
LAW AND ANALYSIS:
HTSUS subheading 9802.00.80 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 HTSUS subheading 9802.00.80 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 value of the imported assembled article, less the
cost or value of such U.S. components, upon compliance with the
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,
laminating, 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. 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, section 10.16(c), Customs
Regulations (19 CFR 10.16(c)).
We are persuaded by the documentation and sample provided
that all of the U.S. components exported for assembly into the
isolators meet the three requirements of HTSUS subheading
9802.00.80 and, therefore, are entitled to duty allowances under
this tariff provision. The force fitting, soldering, screwing,
use of adhesive, and slipping a tube over wire are considered
acceptable assembly operations pursuant to 19 CFR 10.16(a).
Moreover, heating the heat reactive tubing to shrink the tube
around the coax cable is considered an acceptable assembly
operation or operation incidental thereto in view of General
Instrument Corporation v. United States, 70 Cust.Ct. 64, C.D.
4408 (1973) (precut lengths of tubular sleeving called "shrink
sleeving," assembled abroad with other components to form
selenium rectifiers, are entitled to allowances in duty under the
precursor provision of HTSUS subheading 9802.00.80). See also,
Headquarters Ruling Letter 052076 dated March 3, 1978.
Cutting the cable, wire and tubing to length is considered
an operation incidental to the assembly process pursuant to 19
CFR 10.16(b)(6)). The bending of copper wire immediately before
it is soldered to the printed circuit board--the last step in the
board and conductor subassembly process-- is considered an
operation incidental to assembly pursuant to 19 CFR 10.16(b)(5),
which allows adjustments in the shape or form of a component to
the extent required by the assembly being performed. Finally,
the "electrical alignment" process, if performed in Mexico, is
considered an operation incidental to the assembly process
pursuant to 19 CFR 10.16(b)(7), which states that final
calibrations and testing are operations incidental to the
assembly process.
The isolators are classifiable as other radio reception
parts in HTSUS subheading 8529.90.50, and dutiable at the rate
of 5.9% ad valorem. Articles classifiable under this provision
are entitled to duty-free treatment under the Generalized System
of Preferences, provided the 35% value-content requirement and
the other requirements set forth in sections 10.171 through
10.178, Customs Regulations (19 CFR 10.171-10.178), are
satisfied.
HOLDING:
On the basis of the information and sample provided, it is
our opinion that the foreign operations performed on the U.S.
components are proper assembly operations or operations
incidental to assembly pursuant to HTSUS subheading 9802.00.80.
Therefore, an allowance in duty may be made under this tariff
provision for the cost or value of all U.S. components upon
compliance with the documentary requirements of 19 CFR 10.24.
The isolators are classifiable in HTSUS subheading 8529.90.50.
Sincerely,
John Durant, Director
Commercial Rulings Division
cc: Ass't Area Dir, NIS
845733