CLA-2 CO:R:C:S 557513 MLR
Ms. Erin Yeary
Daniel B. Hastings Inc.
P.O. Box 673
Laredo, Texas 78042
RE: Applicability of duty allowance under HTSUS subheading
9802.00.80 to stainless steel and galvanized stranded wire
and wire rope; twisting
Dear Ms. Yeary:
This is in reference to a letter signed by Mr. Salvador
Beattie dated April 28, 1993, requesting a ruling on behalf of
ACS Industries, regarding the applicability of subheading
9802.00.80, Harmonized Tariff Schedule of the United States
(HTSUS), to stainless steel and galvanized stranded wire and wire
rope. Samples were submitted with the request.
FACTS:
ACS Industries ("ACS") plans to ship U.S.-origin stainless
steel and galvanized wire to ACS Internacional, S.A. de C.V.
where the wire will be put in a twisting machine which will make
stranded wire containing 7 to 65 strands of individual wire. All
of the stranded wire will have a twist exceeding one revolution
for a length equal to the strand diameter multiplied by 8.5. The
excess wire is then trimmed off. Some of the stranded wire will
be retwisted to form a wire rope, and the excess will be trimmed
off. Both the stranded wire and wire rope will be packaged and
imported into the U.S.
From an examination of the samples, it appears that the wire
is "preformed" before being twisted; however, no indication in
the ruling request was made whether the wire is "preformed" in an
intermediate operation that passes the wire over preforming
roller heads in a machine process which shapes the wire into its
final form before passing into a finished strand. Based upon
additional information that you provided, there are four
different basic constructions of stainless steel and galvanized
stranded wire rope that will be made: 1 x 7, 1 x 19, 7 x 7, and
7 x 19, each of which serve different purposes. You now indicate
that the 1 x 7 and 1 x 19 constructions do not pass through a
preformer; however, the 7 x 7 and 7 x 19 constructions do pass
through preforming rolling heads which shape the wire so that the
wire is formed properly into the finished rope.
ISSUE:
Whether the stranded wire and wire rope will qualify for the
duty allowance under subheading 9802.00.80, HTSUS, when imported
into the U.S.
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 this tariff provision is subject to duty
upon the full cost or value of the imported assembled article,
less the cost or value of the U.S. components assembled therein,
upon compliance with the documentary requirements of section
10.24, Customs Regulations (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 United States to qualify for
the exemption. Components will not lose their
entitlement to the exemption by being subjected 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 operation performed abroad may consist
of any method used to join or fit together solid components, such
as welding, soldering, riveting, force fitting, gluing,
lamination, 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. See 19 CFR 10.16(a). 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
subheading 9802.00.80, HTSUS, to that component. See 19 CFR
10.16(c).
In Headquarters Rulings Letter (HRL) 556160 dated December
2, 1991, we considered magnet wire wound onto a bobbin by a wire-
winding machine, then run off the bobbin and twisted to the
length necessary to make inductance coils. After the wire was
twisted, it was then wound back onto the bobbin, cut to length
and secured with tape. It was held that based in part on General
Instrument Corporation v. United states, 359 F. Supp. 1390 (Cust.
Ct. 1973), rev'd, 499 F.2d 1318 (CCPA 1974), that the winding of
the magnet wire around the bobbin was considered an acceptable
assembly operation. Twisting the wires together and securing the
wire to the bobbin with tape were also considered acceptable
assembly operations.
Some of the operations performed in General Instruments
included despooling wire and forming it with the use of a winding
machine into the primary shape of a horizontal coil; removing the
coil from the winding machine; taping it to prevent unraveling;
and cement dipping, drying, and shaping the coil to fit the
contours of a plastic liner. The U.S. Court of Customs and
Patent Appeals determined that the wire was not further
fabricated in Taiwan, but was rather subjected to assembly steps
within the meaning of item 807.00, Tariff Schedules of the United
States (TSUS) (now subheading 9802.00.80, HTSUS). Citing, the
legislative history of item 807.00, TSUS, it was stated "that
Congress did not intend to exclude articles from item 807.00
merely because the American components had undergone some change
of form or shape. The test specified in item 807.00 is whether
the components have been changed in form, shape, or otherwise to
such an extent that they have lost their physical identity in the
assembled article."
On the other hand, we have held in HRL 553796 dated August
23, 1985, that "preforming" wire by passing it over roller heads
to shape it into its final form before passing it into a finished
strand to produce preformed rope, amounted to a fabrication that
nullified item 807.00, TSUS, treatment. In contrast to General
Instruments, it was stated that where wire is exported and coiled
into specific shapes without regard to inner cores or other
components comprising an assembly, it will be considered to be a
further fabrication. However, it was also held that merely
pulling the wires together to form strands or stranding them into
rope were acceptable assembly operations. We have also held in
HRL 555732 dated December 20, 1990, that U.S.-origin stainless
steel strip which was unrolled through a wheel housing that put a
slight bend (crown) in the strip, was not exported from the U.S.
in condition ready for assembly without further fabrication
because the bending was considered a manufacturing process which
completed the materials to be assembled, thereby not entitling
the strip to the duty allowance under subheading 9802.00.80,
HTSUS.
Therefore, in this case, based on HRL 553796 and HRL 555732
which were decided after the General Instruments case, a duty
allowance may be made for the cost of value of the U.S.-origin
wire used to make the 1 x 7 and 1 x 19 constructions upon their
return to the U.S. because they are not preformed. However, no
such duty allowance may be made for the 7 x 7 and 7 x 19
constructions because they are preformed abroad into their final
form to aid in the twisting of the wire, which is considered to
be a further fabrication of the wire independent of the assembly.
Therefore, the 7 x 7 and 7 x 19 constructions are not entitled to
subheading 9802.00.80, HTSUS, treatment.
HOLDING:
On the basis of the information and samples submitted, we
conclude that an allowance in duty may be made under subheading
9802.00.80, HTSUS, for the cost or value of the U.S.-origin wire
used to make the 1 x 7 and 1 x 19 constructions upon their return
to the U.S., provided the documentary requirements of 19 CFR
10.24 are satisfied; however, no such duty allowance may be made
for the 7 x 7 and 7 x 19 constructions because they are preformed
abroad.
Sincerely,
John Durant, Director