HQ 555540: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to automobile high energy coils created by winding and cutting wire to length; soldering, crimping and clipping components together, and, encapsulating the finished product with epoxy.Fabricated components;19 CFR 10.14(a);General Instrument Corporation (1973);T.D. 74- 59;554962;555533;19 CFR 10.16(a);Assembly;555205; General Instrument (1974);555505;19 CFR 10.16(b);incidental operations;C.S.D. 81-52

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 555540

                         October 9, 1990

CLA-2 CO:R:C:V 555540 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 high energy coils created by
     winding and cutting wire to length; soldering, crimping and
     clipping components together, and, encapsulating the
     finished product with epoxy.Fabricated components;19 CFR
     10.14(a);General Instrument Corporation (1973);T.D. 74-
     59;554962;555533;19 CFR 10.16(a);Assembly;555205; General
     Instrument (1974);555505;19 CFR 10.16(b);incidental
     operations;C.S.D. 81-52

Dear Mr. Cain:

     This is in response to your letter of December 7, 1989, on
behalf of Wells Mfg. Co., requesting a ruling on the
applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to automobile high energy
coils to be imported from Mexico.  A photograph of the various
components was submitted for our consideration.  We regret the
delay in responding to your request.

FACTS:

     Nineteen products of the U.S. will be sent to Mexico for
assembly into high energy coils for automobiles.  The products
consist of rolls of wire and plastic sleeving, wire pigtails,
solder, terminals, laminations, housings, clips and epoxy resin
materials.

     The operations performed consist of twelve steps:

     (1)  copper wire is wound into a primary coil;
     (2)  plastic sleeving is cut to length;
     (3)  a wire pigtail is welded to a plate;
     (4)  the primary coil is soldered to the plate/pigtail
          subassembly;
     (5)  a terminal is crimped to a lead wire;
     (6)  poly wire, paper, a cardboard tube and insulation are
          wound into a secondary coil;
     (7)  the secondary coil is soldered to the primary coil and
          plate/pigtail subassembly;
     (8)  the coils are inserted into the plastic housing and
          wires are clipped to the side of the housing;
     (9)  the coils are preheated in an oven and epoxy resin
          materials are injected into the housing to encapsulate
          the coil assembly;
     (10) excess epoxy materials are trimmed off and terminals
          are attached;
     (11) coil housing assembly is bored to expose metal contact
          plate inside; and,
     (12) a lamination is inserted into the housing and the unit
          is tested, date stamped and individually packed.

     Following these various operations, the high energy coils
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).

     Fabricated Components subject to the exemption are provided
for at section 10.14(a), Customs Regulations (19 CFR 10.14(a)),
which provides, in part, that:

     The components must be in condition ready for assembly
     without further fabrication at the time of their exportation
     from the U.S. to qualify for the exemption....Materials
     undefined in final dimensions and shapes, which are cut into
     specific shapes or patterns abroad are not considered
     fabricated components.

     Regarding the solder and epoxy materials--comprising three
of the U.S. products exported, in General Instrument Corporation
v. United States, C.D. 4470, 71 Cust.Ct. 51 (1973), the court
determined that the encapsulation of assembled diodes by means of
a plastic transfer molding process did not defeat entitlement to
the duty allowance under this tariff provision as to the diodes.
The court did not hold that the plastic materials also were
entitled to the duty allowance.  Moreover, in discussing the
General Instrument case in T.D. 74-59, 8 Cust.Bull. 101 (1974),
we stated that although the assembled diodes were entitled to the
duty allowance, the plastic materials used for encapsulation were
not fabricated components of the type designed to be fitted
together with other components and, therefore, were ineligible
for the duty allowance.  See also, Headquarters Ruling Letter
(HRL) 554962 (May 15, 1989) (epoxy used in range heating
elements falls outside the scope of fabricated components
eligible for this tariff treatment).  Concerning the
ineligibility of the solder material, see HRL 555533 (June 4,
1990, abstracted at C.S.D. 90-82(9)), which held that U.S.-origin
solder was not entitled to the duty exemption, as it was not
exported in condition ready for assembly.

     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 soldering 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).  HRL 555205 (August 25, 1989)
(crimping terminals to spark plug wires).  Despooling and
winding operations to form coils have also been found to
constitute assembly steps rather than "further fabrication"
within the meaning of the tariff provision.  General Instrument
Corporation v. United States, C.A.D. 1128, 61 CCPA 86, 499 F.2d
1318 (1974), rev'g, C.D. 4421, 70 Cust.Ct. 151, 359 F.Supp. 1390
(1973).  See also, HRL 555505 (December 28, 1989, abstracted as
C.S.D. 90-32(1) (winding foil and Mylar to form cylinders for
automobile condensers).

     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 (1) adjustments in the shape or form of a
component to the extent required by the assembly; (2) cutting to
length of wire, thread, tape, foil, and similar products
exported in continuous lengths; (3) trimming off small amounts of
excess materials; and, (4) the testing of assembled articles.
Further, we have held that hole-drilling operations which are not
substantial and are merely incidental to the overall assembly
process are incidental thereto.  C.S.D. 81-52, 15 Cust.Bull. 844
(1981).  The hole-drilling operation in this case appears to meet
these requirements and is deemed an incidental operation.

     In the instant case, we are satisfied, based on the
description of the foreign operations, and the photograph of the
various U.S. products to be exported to Mexico, that all of the
products are eligible for the duty exemption, except the three
comprising the epoxy materials and solder, as these three
materials are not fabricated components of the type designed to
be fitted together with other components.  Regarding the other
sixteen components, they are all eligible components that
satisfy the three requirements of HTSUS subheading 9802.00.00.

HOLDING:

     On the basis of the photograph and descriptive information
provided, sixteen of the nineteen U.S. products used in the
assembly of high energy coils 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 two epoxy materials and the solder will not be
eligible for the exemption, as they are not fabricated components
of the type designed to be fitted together with other components.

                              Sincerely,





                              John Durant, Director
                              Commercial Rulings Division