HQ 555290: Applicability of the duty exemptions under subheadings 9801.00.10 and 9802.00.80, HTSUS, to certain parts of a plastic sports bottle assembled and/or packed in 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 555290

                         April 18, 1990

CLA-2-CO:R:C  555290 RA

CATEGORY: Classification

TARIFF NOS.: 3923.50.00; 9801.00.10; 9802.00.80

Mr. Richard G. Seley
Rudolph Miles and Sons
P.O. Box 144
El Paso, Texas 79942

RE:  Applicability of the duty exemptions under subheadings
     9801.00.10 and 9802.00.80, HTSUS, to certain parts of a
     plastic sports bottle assembled and/or packed in Mexico

Dear Mr. Seley:

     This is in response to your letter of January 28, 1989,
requesting a ruling on behalf of International Warehouse Inc.,
on the tariff treatment of certain parts of a plastic sports
bottle assembled and/or packaged in Mexico.  We regret the delay
in responding to your request.

FACTS:

     Three plastic components molded in the U.S. and consisting
of a plastic lid, cap, and tube will be exported to Mexico for
processing, after which they will be returned to the U.S. for use
with a squeeze bottle for liquids.  When exported to Mexico, the
plastic tube (to be used as the bottle's outlet spout) will have
been cut to length and beveled at one end.  Once abroad, the tube
will be heated, bent to the required angle, and then pressed
through a hole in the plastic cap.  The plastic lid will merely
be packaged in Mexico with the assembled cap and tube and
returned to the U.S. for use as a stopper for the end of the
tube.  You believe that the assembled tube and cap should receive
the benefits of subheading 9802.00.80, Harmonized Tariff Schedule
of the United States (HTSUS), and that the lids should be free of
duty under subheading 9801.00.10, HTSUS.

ISSUE:

     Whether the plastic lids and the tube and cap assemblies are
entitled to the duty exemptions under subheadings 9801.00.10 and
9802.00.80, HTSUS, respectively, when returned to the U.S.



LAW AND ANALYSIS:

     Subheading 9801.00.10, HTSUS, provides for the free entry of
U.S. products that are exported and returned without having been
advanced in value or improved in condition by any means while
abroad.  In Superscope, Inc. v. United States, 13 CIT   , 727 F.
Supp. 629 (CIT 1989), the court held that certain glass panels of
U.S. origin that were exported, repacked abroad with certain
foreign components, and returned to the U.S. as part of
unassembled audio cabinets, were entitled to duty-free entry
under item 800.00, Tariff Schedules of the United States (TSUS)
(now subheading 9801.00.10, HTSUS).  The court reasoned that the
U.S. panel portion of the imported merchandise was "not 'advanced
in value or improved in condition...while abroad' but [was]
merely repacked."

     Applying the court's rationale in the Superscope decision to
the facts of the instant case, it is our opinion that the U.S
lids that are merely packaged abroad with the assembled caps and
tubes are entitled to duty-free treatment under subheading
9801.00.10, HTSUS, when returned to the U.S., upon compliance
with the documentary requirements of section 10.1, Customs
Regulations (19 CFR 10.1).

     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....

An article classified under this tariff provision is subject to
duty upon the full value of the imported assembled article less
the cost or value of the U.S. components, provided the
documentation requirements of section 10.24, Customs Regulations
(19 CFR 10.24), are met.

     Regarding the applicability of this tariff provision to the
cap and tube assembly, we find that pressing the tube through a
hole in the cap constitutes an acceptable assembly operation by
force fitting.  See section 10.16(a), Customs Regulations (19 CFR
10.16(a)).  As the cap component is exported from the U.S. in




condition ready for assembly without further fabrication, and is
not advanced in value or improved in condition abroad except by
being assembled with the tube, an allowance in duty may be made
under subheading 9802.00.80, HTSUS, for the cost or value of the
cap, upon compliance with the applicable documentation
requirements.

     However, we believe that heating and bending the U.S. tube
in Mexico prior to its assembly with the cap precludes similar
treatment for the tube component.  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 compo-
     nent,...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   , 702 F.Supp. 908
(1988), aff'd, 8 Fed.Cir.   , 889 F.2d 1074 (1989), the court
held that the bending of straight strips of U.S. steel into the
shape of a square-sided "C" for use in luggage "did more than
'adjust' the article.  The process created the component to be
assembled, the essence of which is its configuration."  After
stating that the statute and attendant regulations do not cover a
process which is as necessary to the fabrication of the component
as it is to the subsequent assembly thereof, the court concluded
that the bending of the steel was more a part of the fabrication
of the steel frames than of the assembly of the merchandise.
Thus, the court held that the strips of steel were not exported
in condition ready for assembly without further fabrication, as
required by clause (a) of the statute.

     Similarly, in the instant case, the process of heating and
bending the tube does more than adjust the component; it is a
continuation of the fabrication of the tube component, begun in
the U.S., and is necessary to the completion of the component to
be assembled.  Moreover, the heating and bending of the tube
clearly is more a part of the fabrication of the component than
of the subsequent assembly operation.









     With respect to the duty rate applicable to the tube and cap
assembly, it is our opinion that it is properly classifiable in
subheading 3923.50.00, HTSUS, which provides for articles for the
conveyance or packing of goods, of plastics; stoppers, lids, caps
and other closures, of plastics.  The rate of duty is 5.3 percent
ad valorem under the General Duty Rate Column.  You contend that
this provision is inapplicable to the tube and cap assembly
because, even with the lid installed on the end of the tube,
there is no total closure due to the presence of an air intake
hole in the cap.  However, we believe that your assertion is
without merit inasmuch as this tariff provision contains no
"total" closure requirement.  Moreover, the presence of such a
hole clearly does not make the article anything other than a cap.

HOLDING:

     The plastic lid of U.S. origin which is merely packaged
abroad with the assembled tube and cap is entitled to free entry
under subheading 9801.00.10, HTSUS, when returned to the U.S.,
upon compliance with the documentation requirements of 19 CFR
10.1.  An allowance in duty may be made under subheading
9802.00.80, HTSUS, for the cost or value of the U.S. cap which is
assembled with the tube abroad, provided the documentation
requirements of 19 CFR 10.24 are satisfied.  However, no such
allowance may be granted for the tube component as it is not
exported in condition ready for assembly without further
fabrication.  The tube and cap assembly is classifiable under
subheading 3923.50.00, HTSUS, dutiable at the rate of 5.3 percent

ad valorem.

                               Sincerely,




                               John Durant, Director
                               Commercial Rulings Division