CLA-2 CO:R:C:M 953385 RFA
Mr. Rick Dahl
American Trading Corporation
9825 Albers Avenue
Dundas, MN 55019
RE: Applicability of partial duty exemption under HTSUS
subheading 9802.00.80 to electric welding cables;
C.J. Tower; HQ 556069; Section XVI, Note 2(a)
Dear Mr. Dahl:
In your letters of January 5, 1993, and January 29, 1993, to
the Regional Commissioner of Customs in New York, you inquired as
to the tariff classification of electric welding cables under the
Harmonized Tariff Schedule of the United States (HTSUS). Your
letters and sample were referred to this office for a direct
response.
FACTS:
The subject merchandise, an electric welding cable, is
comprised of an inner core of copper, an inner covering material
of Poly-Vinyl Chloride (PVC), and an outer covering material of
Poly-Thermal Elastomer (PTE). The cables will be imported in 500
foot lengths from Australia, and are to be connected between the
welding arc electrode and the welding equipment. According to
the information provided, the cables are said to be specifically
created and manufactured to the importer's exact specifications,
and are said to be used in the building of welding equipment, or
as replacement parts for existing electric welding equipment.
The cables are designed to be conductors of high voltage, and
still be very flexible and perform under extreme conditions.
You also state that the importer will be supplying copper
stranding manufactured in their United States (U.S.) facility
from U.S. copper, as well as the covering materials of U.S.
origin in pellet form. In Australia, the copper strands are
bunched to create the different gauges of cable, and afterwards
the covering materials are extruded onto the copper cable, and
then cut into lengths of 500 feet.
ISSUE:
1) Are the cables classifiable under the HTSUS as parts for
welding equipment or as copper electric conductors?
2) Do the cables qualify for the duty exemption under
subheading 9802.00.80, HTSUS, when imported into the United
States?
LAW AND ANALYSIS:
1) Classification of the Cables:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification shall be
determined according to the terms of the headings and any
relative section or chapter notes.
The cables are imported into the United States in 500 feet
lengths. In the information provided, it is stated that the
cables are designed to be used exclusively as a replacement part
for existing electric welding machines, or in the production of
new electric welding equipment. You suggest classification of
the merchandise as parts for welding equipment under subheading
8515.90.20, HTSUS. Section XVI, Note 2(a) governs parts of
machines for chapter 85, HTSUS. Section XVI, Note 2(a) in part
states that "[p]arts which are goods included in any of the
headings of chapter 84 and 85. . . are in all cases to be
classified in their respective headings. . ." Because the cables
are specifically described under heading 8544, HTSUS, under
Section XVI, Note 2(a), they cannot be classifiable as parts of
welding machines under heading 8515, HTSUS.
Because the voltage rating of the cables is 600 volts, we
find that the cables are classifiable as insulated cables under
subheading 8544.59.20, HTSUS, which provides for: "[i]nsulated
. . . wire, cable . . . [o]ther electric conductors, for a
voltage exceeding 80 V but not exceeding 1,000 V: [o]ther: [o]f
copper".
2) Qualification for Duty Exemption:
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).
The process of encasing the copper wire by heating the
compounds in pellet form and extruding the PVC and the PTE around
the wire is considered an acceptable assembly operation under
subheading 9802.00.80, HTSUS. See C.J. Tower & Sons of Buffalo,
Inc. v. United States, 62 Cust. Ct. 643, C.D. 3840, 304 F. Supp.
1187 (1969)(an extrusion process whereby foreign polyethylene was
made from pellets in liquid form of high viscosity and was joined
with sheets of U.S. polyester was held to be an acceptable
assembly since the polyethylene became a solid upon completion of
the assembly process.)
Relying upon C.J. Tower, we held in HQ 556069 (August 13,
1991) that copper wire strand and compounds in pellet form of
U.S. origin, which were exported to Canada where the pellets are
heated and extruded to form insulation for the copper wire
conductor, were eligible for partial duty exemption under
subheading 9802.00.80, HTSUS. In HQ 556069, we held that while
the copper wire was eligible, the pellets required further
fabrication, thereby failing to meet clause (a) of the statute.
The heating extrusion process performed abroad clearly
demonstrates that the pellets require further fabrication before
they can be joined to the copper wire. Moreover, the heating and
extrusion process causes the pellets to lose their physical
identity by change in form and shape, contrary to clause (b) of
the statute.
Based upon HQ 556069, we find that allowances in duty may be
made under subheading 9802.00.80, HTSUS, for the cost or value of
the copper wire of U.S. origin. However, no allowance in duty
may be made under this tariff provision for the cost or value of
the compounds in pellet form as they are not exported from the
U.S. in condition ready for assembly without further fabrication
as required by clause (a) of the statute. The heating of the
pellets in Australia causes the pellets to lose their physical
identity by change in form and shape, contrary to clause (b) of
the statute.
HOLDING:
The subject merchandise is classifiable under subheading
8544.59.20, HTSUS, which provides for: "[i]nsulated . . .wire,
cable. . .[o]ther electric conductors, for a voltage exceeding 80
V but not exceeding 1,000 V: [o]ther: [o]f copper". The general,
column one rate of duty is 5.3 percent ad valorem.
On the basis of the information and sample submitted, we
conclude that the electric cable, except for the PVC and PTE
coverings, do not lose their physical identity in the assembly
operation, and are not advanced in value or improved in condition
except by assembly operations and operations incidental thereto.
Therefore, the cable is eligible for partial duty exemption under
subheading 9802.00.80, HTSUS, for the cost or value of the copper
wire strand, provided the documentary requirements of 19 CFR
10.24 are satisfied.
Sincerely,
John Durant, Director