CLA-2 CO:R:C:S 556367 LS
Mr. Phil Freeman
Cain Customs Brokers
421 Texano
P.O. Box 150
Hidalgo, Texas 78557
RE: Applicability of subheadings 9801.00.10 and 9802.00.80,
HTSUS, to cellular telephone antenna, packaged in kit form,
and formed by press fitting, crimping, soldering, screwing,
taping, cutting, staking, and testing. Assembly; incidental
operations; packaging; Superscope; 555205; 555553
Dear Mr. Freeman:
This is in response to your letter dated October 28, 1991,
amended by your letter of January 9, 1992, requesting a ruling,
on behalf of Alliance Telecommunications Co., d/b/a "db Mobile",
regarding the applicability of subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS), to a cellular
telephone antenna, which is packaged in kit form and referred to
as Model ASA437. A sample of the antenna was submitted.
FACTS:
The following facts are based upon your letters dated
October 28, 1991, December 30, 1991, and January 9, 1992, a fax
transmission dated April 3, 1992, and several telephone
conversations between yourself and a member of my staff.
The merchandise at issue is an antenna designed to be
mounted on glass, such as a car window, for use with a mobile
cellular telephone. It is packaged in kit form with instructions
for final installation by the consumer. The kit includes the
following items: a coaxial cable subassembly attached to a
coupler base subassembly; a whip antenna subassembly; an
articulating base; an articulating base cover; an allen wrench; a
connector kit; an instruction sheet; and an alcohol swap. The
three subassemblies and the articulating base with tape attached
are assembled in Mexico from various components. The remaining
items are exported to Mexico from the U.S. solely to be packaged
with the subassemblies and the articulating base. All of the
components, except for the the coaxial cable which comprises part
of the coaxial cable subassembly, are of U.S. origin and exported
to Mexico.
The antenna is assembled by means of the following
operations.
Coaxial Cable Subassembly
(1) Coaxial cable is cut from a reel to a length of 15 feet.
(2) Coaxial cable is inserted into a machine which strips
the plastic jacket from both ends.
(3) The cable is wound into a coil by means of a hanking
machine. The coil is then secured with a rubber band or
twist-tie.
(4) The coaxial cable is inserted through the coupler base
cover, and the cover is slid up the cable.
(5) A metal eyelet is slipped onto the exposed end of the
cable which extends through the coupler base cover. The
metal shield braid on the coaxial cable is folded back to
allow the subsequent stripping of the plastic insulator from
the copper conductor. The stripping is necessary so that
the copper conductor of the cable can be soldered to the
conductor loop in the coupler base subassembly. The eyelet
is pushed forward under the folded back portion of the metal
braid. A strain relief tube is slipped over the metal
braid, placing the metal braid between the eyelet and the
tube. The eyelet and strain relief tube are attached to the
cable by crimping the tube.
Coupler Base Subassembly
(1) A plate bracket is placed in a holding fixture. A
pemnut is inserted into the bracket hole and pressed into
the bracket with a hand press.
(2) The plate bracket is placed onto the coupler base by
aligning two slots in the bracket with the plastic posts on
the coupler base. The bracket is securely fastened to the
coupler base by using an arbor-type press to flatten the
posts on the base.
(3) The coupler base is placed onto a holding fixture.
(4) The coaxial cable subassembly is inserted into the
bracket opening and soldered to the coupler base at the
points where the eyelet meets the bracket.
(5) A bronze conductor loop is inserted into a loop on the
plate bracket of the coupler base and soldered into place.
The other end of the conductor loop is soldered to the
protruding end of the coaxial cable conductor (i.e., the end
of the cable which was stripped of a small amount of plastic
insulator in step 5 of the coaxial cable subassembly).
(6) The coupler base cover is slid down the cable and placed
on top of the coupler base. The cover is securely attached
to the base by an operation known as "staking," whereby a
pneumatic machine fixture punches a small dent or dimple on
each side of the base and presses the cover onto the base.
The dents serve the purpose of holding the cover in place.
(7) A transfer plate is screwed into the bottom of the
coupler base subassembly.
(8) The coupler base subassembly is tested for electrical
properties.
Articulating Base
(1) A piece of adhesive double-stick tape is taped to the
bottom of the articulating base.
Whip Antenna Subassembly
(1) While the antenna rod is in a holding fixture, the
antenna whip tip is attached to the rod by a press fitting
operation using a hand press.
(2) While the antenna whip ferrule is in a holding fixture,
the antenna rod and ferrule are joined by a press fitting
operation using a hand press. The article assembled as a
result of steps 1 and 2 will be referred to as the antenna
rod-ferrule subassembly.
(3) The antenna rod-ferrule subassembly is returned to the
U.S. where it is subjected to an operation similar to
painting, whereby a black powder coating is applied. The
powder coating serves to protect the subassembly from rust
and corrosion. The subassembly is then returned to Mexico.
(4) In Mexico, the articulating arm is screwed into the
antenna rod-ferrule subassembly, resulting in the whip
antenna subassembly.
Packaging
(1) The subassemblies, as well as the articulating base, are
packaged in a polyethelene bag with an allen wrench, plastic
articulating base cover, a connector kit, an instruction
sheet, and an alcohol swap.
You have requested a ruling on the eligibility under
subheading 9802.00.80, HTSUS, of the packaged antenna kit, as
well as the antenna rod-ferrule subassembly temporarily imported
into the U.S. for painting.
ISSUE:
(1) Whether the cellular telephone antenna, packaged in kit
form, will qualify for the partial duty exemption under
subheading 9802.00.80, HTSUS, when imported into the U.S.
(2) Whether the antenna rod-ferrule subassembly will
qualify for the partial duty exemption under subheading
9802.00.80, HTSUS, when imported into the U.S. for painting.
LAW AND ANALYSIS:
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,
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 subheading 9802.00.80, HTSUS, is subject to
duty upon the full value of the imported assembled article less
the cost or value of the U.S. components, upon compliance with
the documentary requirements of section 10.24, Customs
Regulations (19 CFR 10.24).
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 operation. See section 10.16(a), Customs Regulations
(19 CFR 10.16(a)). Examples of operations considered incidental
to the assembly process are delineated at 19 CFR 10.16(b).
However, any significant process, operation, or treatment whose
primary purpose is the fabrication, completion, or physical or
chemical improvement of a component precludes the application of
the exemption under subheading 9802.00.80, HTSUS. See 19 CFR
10.16(c).
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)),
provides in part:
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, and may be preceded, accompanied, or
followed by operations incidental to the assembly as
illustrated in paragraph (b) of this section.
The operations described above under each subassembly which
result in securely joining components together by force fitting
or press fitting, inserting, crimping, soldering, screwing,
taping, wrapping a band or twist-tie around the coiled cable, and
sliding a component over another component are considered
acceptable assembly operations pursuant to 19 CFR 10.16(a).
See Headquarters Ruling Letter (HRL) 555553 dated April 11, 1990
(assembly of antenna involving similar operations); HRL 555205
dated August 25, 1989 (crimping terminals to spark plug wires
constitutes an acceptable assembly within the meaning of 19 CFR
10.16(a)).
Cutting the coaxial cable to length is considered an
operation incidental to the assembly process pursuant to section
10.16(b)(6), Customs Regulations (19 CFR 10.16(b)(6)). Stripping
the plastic jacket from both ends of the cable, and stripping the
plastic insulator from the copper conductor part of the cable are
both considered acceptable incidental operations pursuant to 19
CFR 10.16(b)(4). The latter regulation states that trimming,
filing, or cutting off of small amounts of excess materials is an
example of an operation which is incidental to the assembly
process. The operation of folding back the metal shield braid on
the coaxial cable is incidental to the subsequent assembly
process of crimping, pursuant to 19 CFR 10.16(b)(5), which allows
for adjustments in the shape or form of a component to the extent
required by the assembly performed abroad. The aspect of the
staking operation which involves punching a small dent or dimple
on each side of the coupler base is necessary for the subsequent
press fitting of the coupler base cover onto the coupler base.
Thus, the punching operation is incidental to an assembly
process, pursuant to 19 CFR 10.16(b)(5). Finally, testing the
coupler base subassembly for electrical properties is considered
incidental to the assembly process, pursuant to 19 CFR
10.16(b)(7), which specifically provides for testing of assembled
articles.
When the antenna rod-ferrule subassembly is imported into
the U.S. for purposes of painting, it will be eligible for a
partial duty exemption under subheading 9802.00.80, HTSUS, upon
compliance with the documentary requirements of 19 CFR 10.24,
since the processes performed in Mexico on the component parts
are acceptable assembly operations. A duty allowance will be
permitted for the cost or value of all of the components which
are of U.S. origin.
The cellular telephone antenna, which is packaged in kit
form, will be entitled to the partial duty exemption under
subheading 9802.00.80, HTSUS, when imported into the U.S., upon
compliance with the documentary requirements of 19 CFR 10.24. A
duty allowance will be permitted under subheading 9802.00.80,
HTSUS, for the cost or value of only those components which are
of U.S. origin. Thus, no allowance may be made for the cost or
value of the coaxial cable, which comprises part of the coaxial
cable subassembly, since it is of foreign origin. In addition,
no allowance will be permitted for the cost or value of the
assembled antenna rod, antennna whip tip, and antennna whip
ferrule because, having been advanced in value or improved in
condition abroad, the antenna rod-ferrule subassembly is treated
as a foreign article pursuant to U.S. Note 2(a), Chapter 98,
Subchapter, II, HTSUS. See C.S.D. 90-71(4), 24 Cust. Bull. 2
(1990) (where a capacitor received a partial duty exemption under
subheading 9802.00.80, HTSUS, for the cost or value of the U.S.
components assembled therein, it was not entitled to the
exemption again when it was subsequently reimported). The
application of the powder coating to this subassembly in the U.S.
does not result in a substantial transformation so as to affect
its country of origin. See 19 CFR 10.14(b) ("[s]ubstantial
transformation occurs when, as a result of manufacturing
processes, a new and different article emerges, having a
distinctive name, character, or use, which is different from that
originally possessed by the article or material before being
subject to the manufacturing process"). Thus, when the antenna
rod-ferrule subassembly is exported to Mexico after the powder
coating operation, it is not considered a fabricated component of
U.S. origin, as required by subheading 9802.00.80, HTSUS. See 19
CFR 10.14(a). A duty allowance will be permitted for the cost or
value of the U.S. manufactured articulating arm, which is not
temporarily imported into the U.S. with the antenna rod-ferrule
subassembly for purposes of painting.
We next consider the dutiable status of the remaining U.S.
origin articles (i.e., the allen wrench, plastic articulating
base cover, connector kit, instruction sheet, and alcohol swap),
which are exported to Mexico solely for packaging with the other
components of the antenna kit. Subheading 9801.00.10, HTSUS,
provides for the free entry of products of the U.S. that are
exported and returned without having been advanced in value or
improved in condition by any process of manufacture or other
means while abroad, provided the documentary requirements of
section 10.1, Customs Regulations (19 CFR 10.1) are met. In
Superscope, Inc. v. United States, 13 CIT 997, 727 F. Supp. 629
(1989), the Court of International Trade held that certain glass
panels of U.S. origin that were exported, repacked abroad with
certain foreign components, and returned to the U.S. as part of
unassembled audio cabinets, were entitled to duty-free entry
under item 800.00, Tariff Schedules of the United States (TSUS)
(the predecessor of subheading 9801.00.10, HTSUS), since the U.S.
panel portion of the imported article was "not 'advanced in value
or improved in condition . . . while abroad,' but [was] merely
repacked." Id. at 631. Although Superscope concerned the TSUS,
not the HTSUS, the decision is believed to be equally applicable
to similar situations arising under the HTSUS, since item 800.00,
TSUS, and relevant Schedule 8, TSUS, headnotes were carried over
virtually unchanged into the HTSUS. We believe that the decision
in Superscope is controlling in regard to the facts of the
instant case. The mere repackaging of the U.S. manufactured
items with the foreign assembled articles neither advances them
in value nor improves them in condition. Therefore, a
classification allowance in duty may be made under subheading
9801.00.10, HTSUS, for the cost or value of the allen wrench,
articulating base cover, connector kit, instruction sheet, and
alcohol swap, provided the documentation requirements of 19 CFR
10.1 are met.
HOLDING:
When the antenna rod-ferrule subassembly, which is assembled
in Mexico, is imported into the U.S. for purposes of painting, it
will be eligible for a partial duty exemption under subheading
9802.00.80, HTSUS, upon compliance with the documentary
requirements of 19 CFR 10.24. The cellular telephone antenna,
which is packaged in kit form, will be entitled to the partial
duty exemption under subheading 9802.00.80, HTSUS, with duty
allowances permitted for the cost or value of only those
components which are of U.S. origin. No allowance will be
permitted for the cost or value of the components of the antenna
rod-ferrule subassembly, since the subassembly is treated as a
foreign article pursuant to U.S. Note 2(a), Chapter 98,
Subchapter II, HTSUS. A classification allowance in duty may be
made under subheading 9801.00.10, HTSUS, for the cost or value of
the allen wrench, plastic articulating base cover, connector kit,
instruction sheet, and alcohol swap, since they are merely
packaged with the other components of the kit.
Sincerely,
John Durant, Director
Commercial Rulings Division