HQ 555495: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to automobile distributor contact arm subassemblies (created by reaming, milling, drilling and counterboring holes, "spinning" and reforming components) and electrical contact assemblies (created by eyeletting, "flaring" and screwing components together).incidental operations;19 CFR 10.16(c)

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 555495

                       September 13, 1990

CLA-2 CO:R:C:V 555495 GRV

CATEGORY:  CLASSIFICATION

TARIFF NO.:  9802.00.80

Mr. John W. Cain
Cain Customs Brokers, Inc.
421 Texano
P.O. Box 150
Hidalgo, Texas  78557

RE:  Applicability of partial duty exemption under HTSUS subhead-
     ing 9802.00.80 to automobile distributor contact arm
     subassemblies (created by reaming, milling, drilling and
     counterboring holes, "spinning" and reforming components)
     and electrical contact assemblies (created by eyeletting,
     "flaring" and screwing components together).incidental
     operations;19 CFR 10.16(c)

Dear Mr. Cain:

     This is in response to your letters of September 28, 1989,
and August 23, 1990, on behalf of Wells Mfg. Co., requesting
rulings on the applicability of subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS), to various models
of automobile distributor contact arm subassemblies and
electrical contact assemblies to be imported from Mexico.
Photographs of the assembly process and samples of the two
articles were submitted for examination.

FACTS:

     Eighteen components, all products of the U.S., will be sent
to Mexico for assembly into various models of contact arm
subassemblies and distributor contact set assemblies for
automobiles.  Six components will be assembled into contact arm
subassemblies:  bushings, blocks (a.k.a. breaker arms), contacts,
springs, conductors, and washers.  Twelve components will be
assembled into distributor contact set assemblies:  contacts,
pivot arms, insulators, springs, breaker and contact bars,
eyelets and screw and nut terminals.

     The contact arm subassemblies entail six steps:
(1) reaming a block to remove excess material and pressing a
bushing into the block; (2) milling the contact-side of the block
to remove excess material; (3) milling the rubbing-side of the
block; (4) drilling and counterboring contact holes in the block;
(5) pressing together the remaining four components by a process
you denominate "spinning," which you state is similar to riveting
in that the parts are fastened together securely by widening the
shaft of the contact rivet and pressing it to the washer, and (6)
bending the spring to form to set its tension.

     The distributor contact set assemblies entail seven steps:
(1) spot welding a contact to a contact arm end; (2) pressing
eyelets into arm pivots and a spring to hold these components
together; (3) riveting a contact bar to a bar breaker;
(4) pressing (flaring) a post pivot through a bar, leaving the
end of the post pivot slightly flared ; (5) pressing an insulator
into an arm, then screwing the terminal through the insulator;
(6) pressing the arm onto a bar and attaching a spring to a screw
terminal with a net, and; (7) aligning the contact assembly on a
Sheffield gauge.

     Following these various assembly operations, the articles
will be returned to the U.S.

ISSUE:

     Whether the returned articles are entitled to the partial
duty exemption under HTSUS subheading 9802.00.80.

LAW AND ANALYSIS:

     HTSUS subheading 9802.00.80 provides a partial duty exemp-
tion for:

     [a]rticles assembled abroad in whole or in part of fab-
     ricated 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 HTSUS subheading 9802.00.80 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 value of the imported assembled article, less the
cost or value of the U.S. components assembled therein, provided
there has been compliance with the documentation requirements of
section 10.24, Customs Regulations (19 CFR 10.24).
     Assembly operations for purposes of HTSUS subheading
9802.00.80 may consist of any method used to join or fit together
solid components, and section 10.16(a), Customs Regulations (19
CFR 10.16(a)), specifically enumerates welding, riveting, force
fitting and the use of fasteners as acceptable means of assembly.
We have held that crimping constitutes an acceptable assembly
operation within the meaning of 19 CFR 10.16(a).  Headquarters
Ruling Letter 555205 (August 25, 1989) (crimping terminals).
Further, 19 CFR 10.16(a) provides that assembly operations may be
preceded, accompanied, or followed by operations incidental to
the assembly.

     Operations incidental to the assembly process are not
considered further fabrication, as they are of a minor nature and
cannot always be provided for in advance of the assembly
operation.  Examples of operations considered incidental to the
assembly process are delineated at 19 CFR 10.16(b), which
specifically enumerates trimming off small amounts of excess
materials, adjustments in the shape of a component to the extent
required by the assembly and testing of assembled articles.
However, 19 CFR 10.16(c), provides, in part, that:

     [a]ny significant process, operation, or treatment other
     then assembly whose primary purpose is the fabrication,
     completion, physical or chemical improvement of a component,
     or which is not related to the assembly process, ..., shall
     not be regarded as incidental to the assembly and shall
     preclude the application of the exemption to such article.

This regulation specifically enumerates machining and burnishing
as operations not incidental to the assembly process.  19 CFR
10.16(c)(5).

     In the instant case, we are satisfied, based on the
description of the foreign operations and after examining the
samples submitted, that all of the components are eligible for
the duty exemption, except the block component in the contact
arm subassemblies, as it is subjected to operations not
incidental to the assembly process.  This determination regarding
the block component is based on the fact that no less than four
grinding/drilling operations must be performed on the block
components during and after it is joined to the bushing and no
explanation as to how these steps (except the drilling operation)
are related to the assembly is offered or evident.  Regarding the
other seventeen components, all of the operations performed on
them are either directly provided for under 19 CFR 10.16(a),
e.g., welding, or sufficiently analogous to acceptable assembly
operations to meet the requirements of the statute.
HOLDING:

     On the basis of the described foreign operations and after
examining the samples submitted, seventeen of the eighteen
components used in the assembly of contact arm subassemblies and
distributor contact set assemblies will be eligible for the
partial duty exemption under HTSUS subheading 9802.00.80 when
returned to the U.S., upon compliance with the documentary
requirements of 19 CFR 10.24.  The block component of the contact
arm subassemblies will not be eligible for the exemption, as it
is subjected to multiple operations not deemed to be incidental
to the assembly process.

                              Sincerely,





                              John Durant, Director
                              Commercial Rulings Division