CLA-2 CO:R:C:S 556836 RAH
Ms. Sandra L. Haupt
CJ Tower, Inc.
128 Dearborn Street
Buffalo, New York 14207-3198
RE: Applicability of subheading 9802.00.80, HTSUS, to
U.S.-manufactured cells exported to Canada where they
are charged and assembled into batteries
Dear Ms. Laupt:
This is in response to your letter of July 13, 1992, on
behalf of GNB Batteries (Canada) Inc., and a "FAX" from Mr. Larry
Clark dated October 29, 1992, requesting a ruling regarding
certain lift truck batteries.
FACTS:
GNB Batteries, Inc. intends to import U.S.-manufactured
cells into Canada on a temporary importation basis. In Canada,
the cells are charged and assembled into lift truck batteries.
The articles are then exported back to the United States.
The primary use of the article in the United States is to
power electric fork lift trucks mainly for traction and lifting
power.
The article is described as an Industrial Lead Acid Battery.
It has been previously entered under subheading 8507.20.0000,
Harmonized Tariff Schedule of the United States (HTSUS), dutiable
under the Canadian Free Trade Agreement, at the rate of 3.1
percent.
In his "FAX", Mr. Clark describes the assembly operation.
The six cells are securely inserted into a steel tray. Each cell
is connected to another by an intercell connector. A cable is
drawn from the negative cell combination and a second cable from
the positive cell combination. The two separate cables are then
joined at the ends to a charging plug. Plastic shrouds are
attached to the top of the intercell and terminal connectors to
prevent shorting. The battery is then placed on a shipping skid.
All the parts are of U.S. origin except tubing, intercell and
terminal connectors and shipping skid and decal.
Charging the cells, which is done before the assembly
operation, entails adding water and acid to the cells. They are
then hooked up to charging panels and charged from 88 to 96
hours. The cells are fully charged at this point and ready to be
put into the steel trays.
Mr. Clark states that the Canadian labor accounts for
approximately 5 percent of the total battery value.
ISSUE:
Whether the assembly of the U.S.-manufactured cells into an
industrial lead acid battery qualifies for the partial duty
exemption available under subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS), when returned to
the United States.
LAW AND ANALYSIS:
All articles imported into the U.S. are subject to duty
unless specifically exempted therefrom under the HTSUS.
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 appraised 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.
The operations performed in the instant case (fastening and
force fitting parts together) constitute acceptable assembly
operations as delineated in 19 CFR 10.16(a). Moreover, we find
that charging the U.S.-origin cells is a relatively minor
operation requiring nominal labor which entails adding water and
acid to the cells and hooking them up to charging panels. We
understand in this regard that the cost of the charging operation
represents less than .5 percent of the cost of the cells.
Therefore, we conclude that assembly of the U.S.-manufactured
cells into an industrial lead acid battery is an acceptable
assembly operation under subheading 9802.00.80, HTSUS, and that
charging the cell before such assembly is incidental thereto.
HOLDING:
On the basis of the information presented, it is our opinion
that the operations performed abroad to create the battery are
considered proper assembly operations or operations incidental
thereto. Therefore, the batteries may enter under subheading
9802.00.80, HTSUS, with allowances in duty for the cost or value
of the U.S.-origin components incorporated therein, upon
compliance with the documentary requirements of 19 CFR 10.24. No
allowance may be granted for the cost or value of the foreign-
origin components, the water or the acid.
Sincerely,
John Durant, Director
Commercial Operations Division