CLA-2 CO:R:C:S 556013 WAW
Edward B. Ackerman, Esq.
Siegel, Mandell & Davidson, P.C.
655 Fifteenth Street, N.W.
Suite 300
Washington, D.C. 20005
RE: Eligibility for duty-free treatment under U.S. Note 2(b),
subchapter II, Chapter 98, HTSUSA, of enema tip assemblies
manufactured in Haiti
Dear Mr. Ackerman:
This is in reference to your letter of April 23, 1991, on
behalf of your client, E-Z-EM Company, Inc., in which you request
a ruling on the applicability of duty-free treatment for enema
tip assemblies to be imported from Haiti, pursuant to section 222
of the Customs and Trade Act of 1990 (Public Law 101-382), which
amended U.S. Note 2, subchapter II, Chapter 98, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA).
FACTS:
Your client produces enema tip assemblies in Haiti for use
in medical diagnostic imaging procedures. The various
components which comprise the finished product include the
following: clear intravenous tubing, an elastomer retention
cuff, the enema tip [which contains either one or two airways
(cuff inflation and patient-air), and a larger middle canal], a
plastic one-way valve, an adaptor, blue tubing, packaging and
labels.
The operations performed in Haiti to produce the completed
enema tip assembles are as follows:
(1) The enema tip's drainage holes and cuff inflation
passage are opened;
(2) the clear intravenous tubing is bonded to the enema
tip's inflation airway;
(3) the elastomer retention cuff is positioned over the
enema tip;
(4) the two ends of the retention cuff, after proper
alignment and positioning are permanently secured to
the tip in one of two ways:
(a) bonding with adhesive
(b) fastening with multifilament thread which
is secured with a drop of adhesive
(5) the cuffed tips are subject to quality control
inspections for leakage and other defects;
(6) the one-way valve is inserted into the patient-air
airway of the enema tip;
(7) the adaptor is bonded to the patient-air blue
tubing;
(8) the blue tubing with adaptor is bonded to the
patient-air airway of the enema tip;
(9) when required, a connector is bonded to the larger
middle canal of the enema tip;
(10) the complete tip assembly is subject to quality
control testing for clogging;
(11) labels are applied to the blue and clear tubing
and the product is packaged for shipment to the U.S.
You ask whether the enema tip assemblies produced in Haiti
as described above are entitled to duty-free treatment under U.S.
Note 2(b), subchapter II, Chapter 98, HTSUSA ("Note 2(b)"), when
100% of the components and ingredients used to make the article
are of U.S. origin. You further ask whether the assemblies would
be eligible for such treatment where all of the components and
ingredients are of U.S.-origin, except for the adhesive used to
secure the string ends and cuff (step 4), which will be of
German origin.
ISSUE:
Whether the enema tip assemblies produced in Haiti as
described above are eligible for duty-free treatment under Note
2(b).
LAW AND ANALYSIS:
Section 222 of the Customs and Trade Act of 1990 (Public Law
101-382) amended U.S. Note 2, subchapter II, Chapter 98, HTSUSA,
to provide for the duty-free treatment of articles (other than
textile and apparel articles, and petroleum and petroleum
products) which are assembled or processed in a Caribbean Basin
Economic Recovery Act (CBERA) beneficiary country (BC) wholly of
fabricated components or ingredients (except water) of U.S.
origin. This amendment was effective with respect to goods
entered on or after October 1, 1990.
Note 2(b) provides as follows:
(b) No article (except a textile article, apparel
article, or petroleum, or any product derived
from petroleum, provided for in heading 2709
or 2710) may be treated as a foreign article,
or as subject to duty, if--
(i) the article is--
(A) assembled or processed in whole
of fabricated components that are a
product of the United States, or
(B) processed in whole of
ingredients (other than water) that
are a product of the United States,
in a beneficiary country; and
(ii) neither the fabricated components,
materials or ingredients, after exportation
from the United States, nor the article
itself, before importation into the United
States, enters the commerce of any foreign
country other than a beneficiary country.
As stated in this paragraph, the term "beneficiary
country" means a country listed in General Note
3(c)(v)(A).
Although Note 2(b)(i)(A) and (B) are separated by the word
"or", it is our opinion that Congress did not intend to preclude
free treatment under this provision to an article which is
created in a BC both by assembling and processing U.S.
fabricated components and by processing U.S. ingredients.
Pursuant to General Note 3(c)(V)(A), HTSUSA, Haiti has been
designated as a BC for CBERA purposes. In regard to the first
assembly process you describe, 100% U.S.-origin components and
ingredients are used during the foreign production operation,
which involves the bonding of fabricated U.S. component parts,
quality control inspections and the assembly of the finished
article. Therefore, the enema tip assemblies made entirely from
U.S. component materials will be entitled to duty-free treatment
under Note 2(b), assuming the applicable documentation
requirements are satisfied.
We further find that the assemblies made with all U.S.
materials except adhesive of German origin, which is used to
secure the string ends and cuff of the enema tip assemblies, are
eligible for duty-free treatment under Note 2(b). Based on the
information you submitted, the cost of the adhesive represents
approximately one percent of the total cost of the completed
article. General Note 7(e)(i), HTSUSA, states that, for purposes
of the tariff schedule, the term "'wholly of' means that the
goods are, except for negligible or insignificant quantities of
some other material or materials, composed completely of the
named material." It is our determination that although the enema
tip assemblies are not made of 100% U.S. components and
ingredients, the adhesive constitutes merely an insignificant
portion of the entire article and, therefore, the presence of the
foreign adhesive would not preclude application of duty-free
treatment under Note 2(b).
Enclosed is a copy of Headquarters telex 9264071 dated
September 28, 1990, to Customs field offices, setting forth
procedures for the entry of articles under Note 2(b).
HOLDING:
The enema tip assemblies manufactured in Haiti as described
above may enter the U.S. duty-free pursuant to Note 2(b)
provided the documentation requirements set forth in the attached
telex dated September 28, 1990, are satisfied. This decision is
limited to the specific facts of this case.
Sincerely,
John Durant, Director
Commercial Rulings Division
Enclosure