HQ 555119: Classification of silver jewelry from Mexico under subheading 9802.00.50, HTSUS, or 9802.00.80, HTSUS

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 555119

                                    May 30, 1989

          CLA-2-CO:R:C  555119 RA

          CATEGORY: Classification

          TARIFF NOS.: 9802.00.50, HTSUS; 9802.00.80, HTSUS

          Mr. Howard Shube
          Special Projects Manager
          Shube's Manufacturing, Inc.
          2010 Ridgecrest Drive, S.E.
          Albuqueque, New Mexico 87108

          RE:  Classification of silver jewelry from Mexico under
               subheading 9802.00.50, HTSUS, or 9802.00.80, HTSUS

          Dear Mr. Shube:

               This is in response to your letter of August 25, 1988,
          requesting a ruling on the eligibilty for reduced duty treatment
          of certain silver articles of jewelry cast in the U.S. and
          exported to Mexico for processing and return to this country.

          FACTS:

               You propose to export to Mexico certain silver rings,
          earrings, charms, and similar items, which were cast in the U.S.,
          for certain processing operations, which may include clipping,
          grinding, tumbling, soldering, and straightening.  The pieces are
          then inspected, tagged, and returned to the U.S. for finishing.
          The clipping consists of closely removing any unwanted material
          left by the U.S. clipping operation.  Any rough spots are then
          removed by means of a grinding wheel and then the silver articles
          are tumbled in a steel drum using an abrasive or steel shot media
          to remove scratches or oxides.  In the case of the rings, it may
          be necessary for them to be placed on a spindle and tapped until
          straightened and restored to true round.  Certain items, such as
          earrings, pins, or dangles, are subjected to assembly operations
          to attach wires, posts, or pins by soldering or crimping.  Burn
          marks or oxidation caused by soldering are removed by tumbling.
          The remaining processing steps are done on return to the U.S. and
          may include cutting facets, enameling, plating, and inspection.



















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          ISSUE:

               Whether the returned silver jewelry will be eligible for the
          partial duty exemption provided for in subheading 9802.00.50 or
          9802.00.80, Harmonized Tariff Schedule of the U.S. (HTSUS).

          LAW AND ANALYSIS:

               Subheading 9802.00.50, HTSUS, provides for the assessment of
          duty on the value of repairs or alterations performed abroad on
          articles exported for that purpose.  However, this partial duty
          exemption is applicable only when the exported article is in a
          finished condition.  Dolliff & Company Inc. v. U.S., 16 CCPA 77,
          C.A.D. 1225 (1979).  Alterations do not apply to intermediate
          operations which are performed in the manufacture of completed
          articles.  If the foreign processing is a step in the work needed
          to finish the articles for its intended use, the statutory
          provision for alterations will not apply.  Guardian Industries
          Corporation v. U.S., 3 CIT 9 (1982) and U.S. v. J.D. Richardson
          Co., 36 CCPA 15, C.A.D. 390 (1948).

               The clipping, grinding, tumbling, and straightening
          operations to be performed in Mexico all constitute processing
          which is a step in the manufacture of the jewelry items essential
          to their intended use after return to the U.S.  Accordingly, this
          processing amounts to more than an alteration, thereby precluding
          classification of the returned jewelry under subheading
          9802.00.50, HTSUS.

               Subheading 9802.00.80, HTSUS, applies to articles assembled
          abroad in whole or in part of fabricated components of U.S.
          origin with no operations performed thereon except the attachment
          of the components to form the imported merchandise and operations
          incidental thereto.  Duty is assessed on the total appraised
          value of the imported article less the cost or value of the
          fabricated components of U.S. origin.

               Operations such as combining parts of earrings or broach
          pins by attaching and soldering or crimping posts, wires, or pins
          are considered qualified assemblies under this provision.  See
          section 10.16(a), Customs Regulations (19 CFR 10.16(a)).
          However, in order to be eligible for this tariff treatment, the
          parts would have to be completely fabricated components when
          exported from the U.S. and ready for assembly with only
          incidental operations performed abroad.  Section 10.16(c)(5),
          Customs Regulations (19 CFR 10.16(c)(5)), provides, in part, that
          polishing, burnishing and similar processes are not considered
          incidental to the assembly operation.  Therefore, if it is













                                        - 3 -


          necessary to grind or tumble the various components before they
          are joined, subheading 9802.00.80, HTSUS, would not be applicable
          as these operations are more than incidental to assembly.  For
          your information, we have enclosed a copy of the Customs
          Regulations relating to subheading 9802.00.80, HTSUS.

          HOLDING:

               Silver items of jewelry which are cast in the U.S. and
          exported to Mexico where they are subjected to operations, such
          as clipping, grinding, tumbling, or assembly, are processed
          beyond the meaning of the term "alterations," and, therefore,
          subheading 9802.00.50, HTSUS, would not be applicable to these
          items.  Moreover, jewelry items assembled abroad by soldering or
          crimping wires or posts onto parts of earrings or broach pins
          would not be eligible for the partial duty allowance under
          subheading 9802.00.80, HTSUS, if the components are subjected to
          grinding or tumbling operations abroad prior to the assembly
          process.

                                        Sincerely,




                                        John Durant, Director
                                        Commercial Rulings Division

          Enclosure