HQ 555780: Applicability of subheading 9802.00.80, HTSUS, to disk subsystem storage device; soldering; use of fasteners, connectors, tape and other adhesives; stripping excess paint; use of touch-up paint; inspection; "tweaking"; snapping; plugging; drilling holes; cutting to length; assembly; incidental operations; 061429; 555564

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 555780

                          May 24, 1991

CLA-2  CO:R:C:S  555780 LS

CATEGORY:  Classification

TARIFF NO.:  9802.00.80

Jeffery E. Brown
Intertrans Corporation
250 Lee Burbank Highway
Revere, Massachusetts 02151

RE:  Applicability of subheading 9802.00.80, HTSUS, to disk
     subsystem storage device; soldering; use of fasteners,
     connectors, tape and other adhesives; stripping excess
     paint; use of touch-up paint; inspection; "tweaking";
     snapping; plugging; drilling holes; cutting to length;
     assembly; incidental operations; 061429; 555564

Dear Mr. Brown:

     This is in response to your letter of October 30, 1990,
requesting a ruling, on behalf of EMC-2 Corporation, concerning
the applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (HTSUS), to a disk subsystem
storage device.

FACTS:

     The following information is based upon your letter, and
telephone conversations of a member of my staff with a
representative of EMC-2 Corporation.  EMC-2 Corporation will be
shipping various components of U.S. and foreign origin to Ireland
for assembly into a product called the "ORION," which is a solid
state disk subsystem storage device to be used with a mainframe
computer.  It appears that the major components are of U.S.
origin.  The foreign components consist primarily of screws and
other fasteners, cables, a battery, and packaging.  The foreign
operations result in the creation of four subassemblies which are
then assembled together into the final product.  The four
subassemblies consist of a front panel assembly, a fan assembly,
a rear panel assembly, and a tower assembly or cabinet.  You have
submitted detailed assembly instructions for each subassembly in
a manual marked "Attachment C."  Since each subassembly operation
involves numerous steps, we will summarize the major steps which
are common to each in items 1 through 5 below.


     1.  Adhering label stickers or tie wrap mounts onto the
surface of other components by peeling off an adhesive backing.
A tie wrap mount is a plastic container which adheres to a metal
surface and is used to hold wrapped wires or cables to prevent
them from hanging loose.

     2.  Use of various types of fasteners to attach and secure
solid components together.  The fasteners include screws,
washers, nuts, hinge pins, and tape.  When the three sub-
assemblies, other than the tower assembly, are completed, they
are joined together by screwing or snapping.  They are then fit
into the tower subassembly or cabinet.  All the subassemblies are
then plugged into one power unit.  Another type of operation,
referred to as "tie wrapping," involves tying two or more wires
or cables together by use of a plastic connector known as a "tie
wrap."  The tie wraps are used to keep the wires in a bundle and
prevent them from hanging loose.  After the tie wrapping, the
wires are sometimes placed in a tie wrap mount.

     3.  Connecting two or more solid components by snapping them
together or plugging a component into a plug unit which serves as
a connector.  An example of such an operation, described on page
18 (step 8) of the manual, consists of plugging eight ribbon
cables into four grey bus/tag connectors and four black bus/tag
connectors.

     4.  Soldering one end of a cable to a ground filter.  The
other end of the cable is inserted into an eyelet of a ground
screw, bent backwards, and soldered in place.

     5.  Sliding one component onto another component by use of
cuts or tracks in the sheet metal.  Screws are then used to
further secure the components together.

     The following operations are limited to a particular
subassembly:

     6.  Using tape to join filler blanks to card cage, both of
which are components of the tower assembly.

     7.  Stripping paint from threaded studs on the rear of the
front panel component of the front panel assembly.  The studs are
metal protrusions which are used in joining the front panel
component to the controller board component.  This step, which is
employed only when there is excess paint on the threaded studs,
prevents such paint from interfering with the threads of the
studs when the studs are screwed into holes in the controller
board.  The stripping operation consists of the following steps:
(a) a drop of cutting oil is placed on the tip of the stud; (b) a
die is screwed onto the threads of the stud; and (c) the die is
removed by turning, as a result of which the paint is scraped
from the threads.

     8.  Inspection of the chassis of the tower assembly.

     9.  Minor modifications may be made to older designs of the
tower assembly chassis to enable a proper fitting of the hinge
within the chassis.  In these instances, a small piece of metal
is trimmed from the rear of the chassis by using a saw and file.

     10.  An adjustment to the hinges of the rear panel assembly
and the chassis of the tower assembly when these two sub-
assemblies are joined.  This adjustment is achieved through a
process known as "tweaking," which essentially involves a
jiggling operation to insure that the two subassemblies are
lined up properly.

     11.  After the rear panel assembly is inserted into the
tower assembly, any resulting scratches are removed from the
smooth finish of the rear panel using a pencil eraser.

     12.  Touch-up paint is then used to cover all other
blemishes or scratches where original paint was removed as a
result of the joinder of the various subassemblies.

     13.  Drilling holes in the grounding strip component of the
tower assembly to allow the grounding strip to be fastened to
the chassis by means of screws.

     14.  Cutting the "schroff insulators" (plastic strips with
holes along their body) to length.  The insulators, which are
part of the card cage component of the tower assembly, are
exported from the U.S. in a continuous strip and broken or cut
along existing perforations into six pieces, each 7 and 3/8
inches in length.

ISSUE:

     Whether the "ORION" product 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, Customs
Regulations (19 CFR 10.24).

     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,
laminating, 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 operation.  See 19 CFR 10.16(a).  Examples of operations
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, or which is
not related to the assembly process, is not regarded as
incidental to the assembly and precludes the application of the
exemption under subheading 9802.00.80, HTSUS.  See 19 CFR
10.16(c).

     The processes described in Steps 1 through 6, which result
in securely joining solid components together, constitute
acceptable assembly operations since they involve soldering; use
of fasteners, tape or other adhesive; and other processes which
are analogous to those described in 19 CFR 10.16(a).  See
Headquarters Ruling Letter (HRL) 555564 dated May 1, 1990 (eight
subassemblies were created and then joined into a final article,
a cellular telephone, using assembly operations such as
inserting, snapping, and sliding one component over another
component).

     Steps 7 through 14 constitute operations incidental to the
various assembly processes, pursuant to 19 CFR 10.16(b).  The
process of stripping paint from the threaded studs to permit the
studs to be used in a subsequent assembly is encompassed by 19
CFR 10.16(b)(4), which provides for "trimming, filing, or cutting
off of small amounts of excess materials."  The modifications
described in Step 9 also constitute a trimming operation.
Step 8 constitutes a form of testing, as described in 19 CFR
10.16(b)(7).  Step 10 constitutes a minor adjustment or alignment
which may be needed as a result of an assembly operation, and is
analogous to the type of adjustments encompassed by 19 CFR
10.16(b)(5).  Steps 11 and 12, which involve removing or covering
up scratches or other blemishes with touch-up paint or a pencil
eraser, both constitute a form of cleaning operation incidental
to assembly.  See 19 CFR 10.16(b)(1).  Step 14, which involves
separating the strip of insulators into individual lengths by
cutting or breaking, is encompassed by 19 CFR 10.16(b)(6).

     We find that Step 13, which involves drilling holes in the
grounding strip to allow the insertion of screws for use in
attaching or assembling the strip to the chassis, constitutes an
operation incidental to assembly.  See Miles v. United States,
C.A.D. 1202, 65 CCPA 32, 567 F.2d 979 (1978), rev'g, C.D. 4689,
78 Cust. Ct. 35, 427 F. Supp. 417 (1977) (burning of holes and
slots into Z-beams in Mexico, so that wear and support plates and
other components could be attached prior to the beams' joinder to
boxcars constituted an operation incidental to the assembly
because it was concomitant with the assembly and was not
substantial enough to preclude qualification under item 807.00,
Tariff Schedules of the United States (TSUS) (the precursor of
subheading 9802.00.80, HTSUS)).  Similarly, drilling holes in the
grounding strip is concomitant with the assembly of the strip to
the chassis and is not a substantial operation.  See HRL 061429
dated March 28, 1980 (holes drilled and punched through plastic
cabinet, wood decal, and oscillator shield to accommodate locks
and coil were deemed to be incidental to assembly).

HOLDING:

     The overseas processes outlined in this ruling constitute
either assembly operations or operations incidental thereto,
pursuant to 19 CFR 10.16(a),(b).  Thus, the "ORION" product will
be eligible for the partial duty exemption under subheading
9802.00.80, HTSUS, when imported into the U.S., upon compliance
with the documentary requirements of 19 CFR 10.24.  Based upon
the material you have submitted, we cannot specifically identify
which components in each process are of U.S. origin.  In each of
the operations described above, a duty allowance will be
permitted under subheading 9802.00.80, HTSUS, for the cost or
value of only those components which are of U.S. origin.

                                   Sincerely,




                                   John Durant, Director
                                   Commercial Rulings Division