HQ 555030: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to certain motor vehicles to be imported from Japan

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 555030

                                  December 9, 1988

          CLA-2 CO:R:C:V 555030 GRV

          CATEGORY:  CLASSIFICATION

          TARIFF NO.:  9802.00.80; 807.00

          Siegel, Mandell & Davidson, P.C.
          655 Fifteenth Street, N.W.
          Washington, D.C.  20005

          RE:  Applicability of partial duty exemption under HTSUS subhead-
               ing 9802.00.80 to certain motor vehicles to be imported from
               Japan

          Dear Sir:

                This is in response to your letter of May 25, 1988, on be-
          half of American Isuzu Motors, Inc., requesting a ruling on the
          applicability of subheading 9802.00.80, Harmonized Tariff Sched-
          ule of the United States (HTSUS), to certain U.S. fabricated
          components to be assembled in Mexico into automobile engines
          which will be shipped through the U.S. pursuant to a transporta-
          tion and exportation entry to Japan where they will be assembled
          into finished motor vehicles.

          FACTS:

                You state that certain U.S. fabricated components and other
          parts, apparently of foreign origin, will be assembled into com-
          plete automobile engines in Mexico.  These assembled engines will
          ultimately be shipped to Japan for assembly into finished motor
          vehicles.  In the course of transporting the engines from Mexico
          to Japan, they will be shipped through the U.S. pursuant to a
          transportation and exportation entry.  The motor vehicles to be
          assembled in Japan with these engines will be imported into the
          U.S. and entered for consumption.

          ISSUE:

                Whether the importation and subsequent exportation of the
          assembled automobile engines, pursuant to a transportation and
          exportation bond, affect the eligibility of the U.S. fabricated
          engine components to the duty exemption provided for in HTSUS
          subheading 9802.00.80 (item 807.00, Tariff Schedules of the
          United States (TSUS)) when the motor vehicles assembled in Japan
          are subsequently imported into the U.S. and entered for
          consumption.













                                        - 2 -


          LAW & ANALYSIS:

                Effective January 1, 1989, the Harmonized Tariff Schedule
          of the United States (HTSUS) will supersede and replace the Tar-
          iff Schedules of the United States (TSUS).  TSUS item 807.00 will
          be carried over into the HTSUS without change as subheading
          9802.00.80.  This tariff provision provides a partial duty exemp-
          tion for articles:

                ...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 with-
                out further fabrication, (b) have not lost their physi-
                cal 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 assem-
                bled and except by operations incidental to the assembly
                process such as cleaning, lubricating, and painting.

          An article entered under HTSUS subheading 9802.00.80 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 of the Customs
          Regulations (19 CFR 10.24).

                In General Instrument Corp. v. United States, 480 F.2d
          1402, 1406, 60 CCPA 178, C.A.D. 1106 (1973), the court stated
          that:

                [t]he only reasonable interpretation of item 807.00
                is that all elements that go into the imported final
                article which meet the conditions the item imposes on
                the fabricated components are subject to the exclusion
                it provides.

          Classification under the provisions of HTSUS subheading
          9802.00.80 is available only to articles entered, or withdrawn
          from warehouse, for consumption.  Thus, as the issue of HTSUS
          subheading 9802.00.80 eligibility does not present itself until
          the foreign assembled article is entered for consumption, a prior
          entry of the assembled article, or of a subassembly of the
          article, not for consumption and under a transportation and
          exportation bond, will not operate to disqualify the article from
          HTSUS subheading 9802.00.80 treatment when it is subsequently
          imported and entered for consumption, provided that the U.S.
          fabricated components otherwise meet the conditions the item
          imposes.

                Further, we have previously held that motors assembled in
          Mexico from U.S. components and shipped through the U.S. under











                                        - 3 -


          bond pursuant to a transportation and exportation entry were not
          precluded from TSUS item 807.00 treatment upon a subsequent im-
          portation.  C.S.D. 84-22, 18 Cust. Bull. 873 (May 31, 1983).  We
          stated that headnote 1(c), subpart B, part 1, Schedule 8, TSUS,
          which provides that subpart B "shall not apply to any article
          exported to comply with any law of the United States or regula-
          tion of any Federal agency requiring exportation,"

                ...does not apply to articles assembled abroad which are
                subsequently entered into the United States and then ex-
                ported pursuant to either a temporary importation bond
                or a transportation and exportation bond.

          We concluded that:

                ...for purposes of item 807.00, TSUS, the word "exported"
                as used in the Headnote applies only to the initial expor-
                tation of components prior to assembly and does not have
                reference to an exportation of the assembled article fol-
                lowing entry under cover of a temporary importation bond
                or transportation and exportation bond.

                Therefore, in regard to the facts of this case, as the
          automobile engines to be assembled in Mexico in part of U.S.
          components constitute assembled articles, their importation and
          exportation pursuant to a transportation and exportation entry
          will not cause the above referenced headnote to preclude HTSUS
          subheading 9802.00.80 treatment for the U.S. components when they
          are returned to the U.S. as part of the finished automobiles from
          Japan.

          CONCLUSION:

                On the basis of the information presented and assuming that
          the U.S. fabricated components otherwise qualify for HTSUS sub-
          heading 9802.00.80 treatment, the entry and exportation of the
          assembled engines pursuant to a transportation and exportation
          entry will not preclude application of that tariff provision to
          the U.S. components when they subsequently imported as part of
          the finished automobiles from Japan.

                                        Sincerely,




                                        John Durant, Director
                                        Commercial Rulings Division












          CO:R:CR:V:VILDERS:GRV;10/13/88:11/25/88