us-cbp-cross-rulings-hq-555601•HQ 555601: Internal Advice Request No. 7/90; applicability of subheading 9802.00.80, HTSUS, to an expandable 21-pocket letter file folder formed by cutting, scoring, taping, gluing, crimping, hole-punching, folding paper into bellows, and folding bellows into U-shape. Assembly; fabrication; incidental operations; Samsonite; Mast; 554962; 555394.
HQ 555601: Internal Advice Request No. 7/90; applicability of subheading 9802.00.80, HTSUS, to an expandable 21-pocket letter file folder formed by cutting, scoring, taping, gluing, crimping, hole-punching, folding paper into bellows, and folding bellows into U-shape. Assembly; fabrication; incidental operations; Samsonite; Mast; 554962; 555394.
us-cbp-cross-rulings-hq-555601HQ 555601: Internal Advice Request No. 7/90; applicability of subheading 9802.00.80, HTSUS, to an expandable 21-pocket letter file folder formed by cutting, scoring, taping, gluing, crimping, hole-punching, folding paper into bellows, and folding bellows into U-shape. Assembly; fabrication; incidental operations; Samsonite; Mast; 554962; 555394.Guidance
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 555601
October 29, 1990
CLA-2 CO:R:C:V 555601 LS
CATEGORY: Classification
TARIFF NO.: 9802.00.80
District Director of Customs
Lincoln Juarez Bridge, Bldg. #2
P.O. Box 3130
Laredo, Texas 78044-3130
RE: Internal Advice Request No. 7/90; applicability of
subheading 9802.00.80, HTSUS, to an expandable 21-pocket
letter file folder formed by cutting, scoring, taping,
gluing, crimping, hole-punching, folding paper into
bellows, and folding bellows into U-shape. Assembly;
fabrication; incidental operations; Samsonite; Mast;
554962; 555394.
Dear Sir:
This is in response to your memorandum of January 17, 1990,
forwarding a request for internal advice dated October 27, 1989,
initiated by John Mayo McKeown, on behalf of Mead School and
Office Products. The request relates to the applicability of
subheading 9802.00.80, Harmonized Tariff Schedule of the United
States (HTSUS), to an expandable 21-pocket letter file folder.
Samples of the completed folder and the components were submitted
for examination.
FACTS:
The following facts are based upon the submission of John
McKeown, which includes photographs of the manufacturing steps
performed in Mexico, and a telephone conversation between the
manager of the assembly plant and a member of my staff.
Mead School and Office Products plans to export components
of U.S. origin to a related company in Mexico which will perform
certain operations resulting in an "expandable 21-pocket letter
file," which measures 10 inches by 12 inches. The U.S.
components used in each file consist of: a roll of paper which
is 6 feet in diameter and 33 inches long; a roll of tape; 20
precut, preprinted, and prescored paper inserts; a precut
chipboard; one reinforced precut and preprinted manila sheet
which consists of white coated paper; a brown facing sheet (also
known as a "front cover") and a back sheet (also known as a "back
cover with flap") which have rounded edges and are precut,
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prescored, and preprinted; a tin eyelet ring; and a preassembled
elastic cord. The operations performed in Mexico consist of the
following steps:
1. The paper on the roll is cut to length.
2. The paper is scored on a separate machine. Scoring is
a process whereby the paper is creased vertically along
two lines, which facilitates the folding of the paper
into a U-shape, as described in step 5 below. The scoring
actually breaks the fibers of the paper.
3. The tape is applied to the ends of the paper and
squeezed with a roller. The tape serves to reinforce the
bellows described below.
4. A machine is used to fold the paper into bellows, which
are similar to pleats.
5. The paper is folded into a "U" shape and crimped.
6. After the inserts are collated, they are folded on the
sides along the scores. With glue applied to the folded
portions, the inserts are attached to the U-shaped bellows
to form the pockets of the expandable file folder.
7. The chipboard is glued to the front of the U-shaped
bellows to create the first pocket.
8. The reinforced manila sheet is glued to the back of the
U-shaped bellows to create the last pocket.
9. The brown front cover is glued to the chipboard located
on the front of the U-shaped bellows.
10. The back cover with flap is glued to the back of the
reinforced manila sheet.
11. A 1/4 inch diameter hole is punched by machine into
the back cover with flap.
12. A tin metal eyelet ring is fit into the hole and
secured by crimping.
13. An elastic cord is inserted through the eyelet and
wrapped around the file folder.
14. Folders go through a shrinkable wrapping machine and
are then packaged in shipping containers.
The broker for the importer focuses on the question of
whether the scoring process, described in step 2, constitutes an
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operation incidental to the assembly process. In the request for
internal advice you state your position that the processing of
the paper from a continuous roll into the bellows portion of the
expandable file folder by cutting, scoring, taping, folding, and
crimping constitutes a fabrication of a component. Thus, you
contend that the bellows component, which is formed from the
paper and the tape before the attachment of the inserts, is not
eligible for a duty allowance under subheading 9802.00.80, HTSUS.
However, since the subsequent operations involving the remaining
components are considered to be either assembly operations or
operations incidental to assembly, you state that these other
components are eligible for the duty allowance.
ISSUE:
Whether the expandable 21-pocket letter file folder will
qualify for the partial duty exemption 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 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 of the Customs
Regulations (19 CFR 10.24).
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. See section 10.16(a), Customs
Regulations (19 CFR 10.16(a)).
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 19 CFR 10.16(a). Examples of operations
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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).
In United States v. Mast Industries, Inc., 515 F. Supp 43,
1 CIT 188, aff'd, 69 CCPA 47, 668 F.2d 501 (1988), the court
considered the legislative history of the phrase "incidental to
the assembly process," and found that Congress intended a
balancing of all relevant factors to ascertain whether an
operation of a "minor nature" was incidental to the assembly
process. The court stated that relevant factors included:
(1) whether the relative cost of the operation and time
required by the operation were such that the operation
may be considered minor;
(2) whether the operation is necessary to the assembly
process;
(3) whether the operation is so related to the assembly
that it is logically performed during assembly; and,
(4) whether economic or other practical considerations
dictate that the operation be performed concurrently
with assembly.
Steps 6-10, outlined in the facts above, constitute
acceptable assembly operations since they involve the joinder of
two or more solid components by gluing. See 19 CFR 10.16(a).
The fitting and crimping of the metal eyelet ring into the hole
on the back cover with flap is another assembly operation. See
19 CFR 10.16(a); HRL 554962 dated May 15, 1989 (force fitting of
"y"-shaped bracket to spiral-shaped metal tube, and crimping of
bracket so that "y"-shaped frame and metal tube are permanently
held together constitute an acceptable assembly operation.) The
insertion of the elastic ring through the eyelet results in a
secure joinder of the two components and constitutes the final
assembly operation.
We find that, pursuant to 19 CFR 10.16(b), the operation of
cutting the paper to length is incidental to the assembly
process. However, the combined subsequent operations of scoring
the paper, applying tape to its ends, folding this paper into
bellows and then into a U-shape, and crimping the U-shaped
bellows portion, constitute a fabrication of the component paper
within the meaning of 19 CFR 10.16(c). These operations are not
considered incidental to the assembly process, pursuant to 19 CFR
10.16(b)(5), since they constitute more than "adjustments in the
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shape or form of a component to the extent required by the
assembly being performed abroad." See Samsonite Corp. v. United
States, 12 CIT ___, 702 F. Supp. 908 (1988), aff'd, 8 CAFC ___,
889 F.2d 1074 (1989) (bending of steel strips into rectangular
shapes constituted a further fabrication because it created the
component to be assembled, the essence of which was its
configuration, and it was necessary before assembly could take
place). The primary purpose of folding the paper into bellows,
folding the bellows into a U-shape, and then crimping the U-
shaped paper is the further fabrication of the paper in a
particular configuration. This bellows configuration is not only
the essence of the U-shaped paper component, but also becomes the
foundation of the expandable pocket file folder because it is
essential to the completion of the other assembly steps. Without
the bellows, the pockets could not be formed by attaching the
inserts, and the remaining components could not be attached to
the pockets.
The process of punching a hole into the back cover with
flap to allow the fitting of the eyelet ring and the assembly of
the elastic cord is considered an operation incidental to the
assembly process. See HRL 555394 dated August 15, 1989 (punching
a hole in the upper pocket of a fabric vane for receipt of a
plastic hanger insert, which also has a hole punched in it, is an
operation incidental to the assembly process). Applying the Mast
criteria, we find the hole-punching operation to be minor in
nature. First, the company which performs the operations in
Mexico has informed us that the cost and time required by the
punching operation constitutes less than 5 percent of that
required for the overall assembly operation. Second, the hole-
punching operation is a prerequisite to the subsequent assembly
operations, outlined in steps 12 and 13. Finally, we have also
been informed that economic and practical considerations dictate
that the hole-punching be performed during the assembly.
The process of wrapping the expandable file folders,
together with an insert, in plastic, and then packing the folders
in shipping containers, will not disqualify the assembled
articles from the partial duty exemption under subheading
9802.00.80, HTSUS. See 19 CFR 10.16(f).
HOLDING:
The combined operations of scoring the paper, applying tape
to its ends, folding this paper into bellows and then into a U-
shape, and crimping the U-shaped bellows portion constitute a
fabrication of the component paper within the meaning of 19 CFR
10.16(c). Therefore, no allowance in duty is permitted under
subheading 9802.00.80, HTSUS, for the cost or value of the rolls
of paper and tape. However, allowances in duty may be made for
the cost or value of the remaining U.S. origin components, when
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returned to the U.S., upon compliance with the documentation
requirements of 19 CFR 10.24, because they have been advanced in
value or improved in condition only by processes which constitute
assembly operations or operations incidental to assembly.
Sincerely,
John Durant, Director
Commercial Rulings Division
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