HQ 555048: Applicability of duty exemption of subheadings 9801.00.10 and 9802.00.80, HTSUS, to certain rubber products from Mexico

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 555048


                                    June 12, 1989


          CLA-2  CO:R:C:V 555048 DBI

          CATEGORY:  Classification

          TARIFF NO.:  9801.00.10, HTSUS; 9802.00.80, HTSUS

          Mr. Richard G. Seley
          Rudolph Miles & Sons, Inc.
          4950 Gateway East
          P.O. Box 144
          El Paso, Texas 79942

          RE:   Applicability of duty exemption of subheadings 9801.00.10
                and 9802.00.80, HTSUS, to certain rubber products from
                Mexico

          Dear Mr. Seley:

                This is in response to your letters dated May 30, 1988 and
          January 9, 1989, on behalf of DA/Pro Rubber, Inc., requesting a
          ruling concerning the applicability of items 800.00 and 807.00,
          Tariff Schedules of the United States (TSUS), to certain rubber
          products prepared for packaging in Mexico.

          FACTS:

                You advise that your client designs, develops and molds
          technical rubber products in the U.S.  These products are
          typically used as diaphragms for water level regulators in
          clotheswashers and gas control valves, and as bladders for the
          ink reservoir used in computer printers.  Your client wishes to
          send these products to Mexico where most of the items will be
          leak tested and all of the products will require preparation for
          packaging.

                You submitted four sample products, each of which requires
          a different operation to prepare it for packaging.  You state in
          regard to the first sample that it will be exported to Mexico
          with a number of small circular holes partially cut into the
          outside perimeter of the article.  In Mexico, the material within
          the circular perforated cuts will be removed by hand before the
          article is packaged.  You indicate that this operation must be
          performed before the article can be sold.















                                        - 2 -


                The second sample has excess material around the
          circumference that must be removed by hand in Mexico before
          packaging.  Additionally, some of the rubber products will be
          sent to Mexico with powder on them to keep the individual items
          from sticking together.  This powder is not evenly distributed
          over the article.  To correct the situation, the articles, along
          with additional powder, are placed in a powder tumbler in Mexico
          to evenly distribute the powder on the pieces before packaging.

                The third sample is required to have powder removed since
          the powder is not desirable for some items.  These articles are
          placed in a washing machine in Mexico to cleanse the powder from
          the items before packaging.

                The fourth sample requires post curing which consists of
          drying the item in an air circulating oven at 400 degrees
          Fahrenheit for 1 to 8 hours depending on the type of rubber used
          to make the product.  The purpose of post curing is to volatilize
          unused peroxide out of the compound.  You note that post curing
          does not enhance the physical properties of the item; it merely
          gets rid of potentially harmful elements, leaving the originally
          intended physical properties of the item.  You add that post
          curing merely speeds up a process which would otherwise occur
          naturally.  You state that this operation "is very important for
          medical items where the user would not want volatile elements
          being extracted in the natural occurrence."

                You inquire as to whether the described packaging
          preparations to be performed in Mexico would render the returned
          rubber products ineligible for duty-free treatment under item
          800.00, TSUS.  You also indicate that, after the packaging
          preparations are performed in Mexico, the rubber products may be
          used by a second company in Mexico in the assembly of new
          articles that would be imported into the U.S.  Under these
          circumstances, you ask whether the operations to prepare the
          products for packaging would be considered incidental to the
          assembly operation, thereby entitling the rubber components to
          the duty exemption provided for in item 807.00, TSUS.

          ISSUE:

                1. Whether the packaged rubber products, when returned to
          the U.S., will be eligible for the exemption from duty in
          subheading 9801.00.10, Harmonized Tariff Schedule of the United
          States (HTSUS) (formerly item 800.00, TSUS).

















                                         -3-



                2. Whether the rubber products, when returned to the U.S.
          as part of articles assembled in Mexico, would be exempt from
          duty as U.S. fabricated components under subheading 9802.00.80,
          HTSUS (formerly item 807.00, TSUS).

          LAW AND ANALYSIS:

                As you know, the HTSUS replaced the TSUS, on January 1,
          1989.  Item 800.00, TSUS, was carried over into the HTSUS as
          subheading 9801.00.10.  This provision provides for the free
          entry of articles of U.S. origin which are exported and returned
          without having been advanced in value or improved in condition
          while abroad.

                In regard to all four of the samples submitted, it is our
          opinion that the operations to be performed in Mexico to prepare
          them for packaging improves their condition.  The information you
          have submitted indicates that removing the perforated or excess
          material from certain rubber products, removing or evenly
          distributing powder, and post curing are all processes which not
          only must be performed prior to packaging, but are required
          before the products can be sold.  As a result, we believe that
          each of these processes advances the products in value and
          improves them in condition.

                Regarding the applicability of item 807.00, TSUS, that
          provision was carried over into the HTSUS as subheading
          9802.00.80, HTSUS.  This provision applies to articles assembled
          abroad in whole or in part of fabricated components, the product
          of the U.S., with no operations performed thereon except the
          attachment of the components to form the imported merchandise and
          operations incidental thereto.  An article classified under
          subheading 9802.00.80, HTSUS, is subject to duty upon the full
          appraised value of the imported article, less the cost or value
          of such products of the U.S.

                In the present case, we are unable to determine whether the
          packaging preparations to be performed in Mexico may be
          considered processes which are incidental to the assembly of
          rubber products into new articles.  You have not provided any
          descriptive information concerning the articles to be assembled
          or the assembly operations to be performed.  In order to
          determine whether a particular operation is considered incidental
          to assembly, we would require such information.
















                                         -4-



          HOLDING:

                On the basis of the information submitted, we are of the
          opinion that rubber products that are subjected to the described
          operations abroad to prepare them for packaging are advanced in
          value and improved in condition and, therefore, are not entitled
          to free entry as American goods returned under subheading
          9801.00.10, HTSUS.

                                     Sincerely,




                                     John Durant
                                     Director, Commercial
                                     Rulings Division