HQ 556497: Applicability of partial duty exemption under HTSUSA subheading 9802.00.80 to imported pressure switches; assembly; incidental operations; 556293

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 556497

                         April 15, 1992

CLA-2 CO:R:C:S  556497  WAW

CATEGORY:  Classification

TARIFF No.:  9802.00.80

Mr. Philip Freeman
Cain Customs Brokers, Inc.
421 Texano
P.O. Box 150
Hidalgo, TX  78557

RE:  Applicability of partial duty exemption under HTSUSA
     subheading 9802.00.80 to imported pressure switches;
     assembly; incidental operations; 556293

Dear Mr. Freeman:

     This is in response to your letter of January 21, 1992, on
behalf of Furnas Electric Company, requesting a ruling on the
applicability of subheading 9802.00.80, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA), to pressure
switches to be imported from Mexico.  A sample of the merchandise
was submitted for our review.

FACTS:

     Furnas Electric Company intends to import a NEMA 1 type
Pressure Switch, Model No. 69WA.  The pressure switch is used in
the operation of water well pumps and other pumping systems.  You
claim that all of the parts which make up the pressure switch are
manufactured in the U.S.  The assembly process involves the
subassembly of the carrier and flipper and the final assembly of
the 69WA pressure switch assembly.

     The carrier subassembly is produced as follows: (1) the
spring is placed by hand on top of the contact assembly; (2) the
spring and contact assembly are inserted by hand into an opening
in the rear of the carrier body; (3) the spring and contact
assembly are then inserted into an opening in front of the
carrier body.  The flipper subassembly, part no. D29075-007, is
produced by sliding the helper spring onto the flipper body.

     The 69WA pressure switch assembly is produced as follows:
Station #1 - (1) the carrier and four stationary contacts are
inserted into the board; (2) the board is placed in the bender
fixture; (3) at the push of a button, the bender automatically
closes and opens, bending the terminals at a 90 degree angle; (4)
the board is removed from the bender and placed in the automatic
screwdriver fixture; (5) at the push of a foot pedal, the fixture
automatically drives four screws into the stationary contacts;
(6) the board is removed from the fixture.

     Station #2 - (1) two screws are inserted into the board
assembly from Station #1; (2) the board is placed upside down on
fixture T5603; (3) the screw and pad and mainspring are inserted
into the board; (4) the snap spring is hooked into the flipper
subassembly; (5) the other end of the snap spring is hooked to
the lever; (6) the flipper is folded under the lever and inserted
into the board; (7) the clamp on fixture T5603 is closed; (8) the
frame is placed on top of the board; (9) the diaphragm is placed
on top of the frame; (10) the enclosure is placed on top of the
diaphragm; (11) an operator pushes down on the enclosure with the
left hand, while pressing the foot pedal on the fixture, which
causes the fixture to automatically screw the two screws into the
enclosure; (12) the clamp on the fixture is released and the
assembly is removed and placed in fixture T5603-B; (13) two more
screws are inserted into the assembly and screwed down with an
Areo overhead driver; and (14) the switch assembly is removed
from fixture T5603-B.

     Station #3 - (1) the switch assembly is placed in the
calibration tester; (2) the clamp is closed; (3) air pressure is
turned on; (4) proper pressure is set with screwdriver; and (5)
the switch assembly is removed from the tester.

     Station #4 - (1) switch assembly is placed into dielectric
tester; (2) tester automatically tests switch; and (3) switch is
removed from tester.

     Station #5 - (1) label is placed inside cover; (2) grommet
is placed inside of cover; (3) cover is placed over switch
assembly; and (4) cover screw is inserted into cover and driven
down with air screwdriver.

     Upon completion of the above operations, the pressure
switches will be imported into the U.S.

ISSUE:

     Whether the pressure switches will qualify for the partial
duty exemption available under HTSUS subheading 9802.00.80 when
returned to the U.S.

LAW AND ANALYSIS:

     HTSUS subheading 9802.00.80 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, lubrication, 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 such U.S. components, 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,
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 operations.  However, any significant process,
operations or treatment whose primary purpose is the fabrication,
completion, physical or chemical improvement of a component
precludes the application of the exemption under HTSUS subheading
9802.00.80 to that component.  See 19 CFR 10.16(c).

     In HRL 556293 dated January 28, 1992, which involved a
different model pressure switch imported by Furnas Electric Co.,
we held that the assembly of the pressure switch in Mexico from
U.S. and foreign-origin components constitutes proper assembly
operations or operations incidental to assembly pursuant to
subheading 9802.00.80, HTSUSA.  In HRL 556293, the pressure
switches were assembled from six subassemblies: common terminal
subassembly, plunger, flipper and spring subassembly; stationary
contact subassembly; pad and screw subassembly; movable contact
subassembly; block subassembly.  The operations performed in
Mexico to create the six subassemblies and the subsequent
assembly of the final article involved securely joining
components together by snapping, screwing, and force fitting.

     We are persuaded by the documentation and sample provided
that, with the exception of the stationary contacts, all of the
U.S. components exported for assembly into the pressure switches
meet the three requirements of HTSUS subheading 9802.00.80 and,
therefore, are entitled to duty allowances under this tariff
provision.  The operations which result in securely joining
components together by force fitting, punching, screwing,
riveting, pressing, attachment by knot/grommet and snapping are
analogous to those operations in HRL 556293, and are considered
acceptable assembly operations pursuant to 19 CFR 10.16(a).
Completely and securely enclosing certain components within
other components is also considered an acceptable assembly
operation.  See HRL 554920 dated January 3, 1989 (completely
enclosing a metal weight in the bottom hem of vertical blinds is
an acceptable assembly process).

     The testing operation is also considered an operation
incidental to the assembly process pursuant to 19 CFR
10.16(b)(7), which states that final calibration and testing of
the assembled articles are considered operations incidental to
the assembly process.  Finally, inserting a label inside the
cover of the pressure switch will not preclude tariff treatment
under HTSUS subheading 9802.00.80.  See C.S.D. 79-314 (1979),
which found that "foreign stamping, markings, coding, or
printing, when serving the purpose of origin markings, trademark,
. . . or instruction for use, would not preclude tariff treatment
under item 807.00," Tariff Schedules of the United States (TSUS)
(the precursor to HTSUS subheading 9802.00.80).

     However, we believe that the bending of the stationary
contacts (terminals) at a 90 degree angle, by means of a bender
fixture is not an operation incidental to the assembly process.
Although 19 CFR 10.16(b)(5), permits "[a]djustments in the shape
or form of a component to the extent required by the
assembly. . . " as an operation incidental to the assembly
process, 19 CFR 10.16(c) provides that:

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

In Samsonite Corporation v. U.S., 12 CIT 1146, 702. F. Supp. 908
(1988), aff'd, 8 Fed. Cir. ___, 889 F.2d 1074 (1989), straight
strips of U.S. steel were bent into the shape of a square-sided
letter "C" for use in luggage.  The court found that the bending
process did more than "adjust" the article, as contemplated by 19
CFR 10.14(a)(5), and, in effect, created the component to be
assembled, the essence of which was its configuration.  Further,
the court found that the straight strips of steel could not have
been placed immediately into the luggage bags without the bending
operation.  The court concluded that neither the statute nor the
regulations covered a process which was as necessary to the
fabrication of the component as it was to subsequent assembly
thereof and denied the partial duty exemption available under
TSUS item 807.00.

     Consistent with Samsonite, we find that in the instant case,
the process of bending the stationary contacts (terminals) at a
90 degree angle does more than simply "adjust" the component to
be assembled; it effectively creates the component, the essence
of which is the shape of the letter "C".   The stationary
contacts are exported into Mexico in the shape of the letter "L"
and are not capable of immediately entering into the assembly
process as exported, but require the bending operation before
assembly can begin.  Therefore, we hold that the shaping of the
stationary contacts constitutes a further fabrication of the
exported component, and is not an operation incidental to
assembly, as it is a significant operation that is necessary for
the completion of the component.  Accordingly, the stationary
contacts are not entitled to the allowance in duty provided for
in HTSUS subheading 9802.00.80.  See also HRL's 554962 dated May
15, 1989; 555290 dated April 17, 1990; 555486 dated November 2,
1989.

HOLDING:

     Based on the information presented, it is our opinion that
the operations performed abroad on all of the U.S. components,
with the exception of the stationary contacts, which are exported
for assembly into the pressure switches are considered proper
assembly operations or operations incidental to the assembly
process.  Therefore, an allowance in duty may be made for the
cost or value of the U.S. components (excluding the stationary
contacts) which are incorporated into the pressure switch, upon
compliance with the documentary requirements of 19 CFR 10.24.
However, no such allowance may be granted under HTSUS subheading
9802.00.80 for the cost or value of the stationary
contacts (terminals) as they are not exported in condition ready
for assembly without further fabrication.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division