HQ 555426: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to lead cables created by cutting-to-length continuous length components, stripping cable ends, twisting cable strands together, crimping clamps onto ends for force fitting into plastic blocks which are then either enclosed with insulating sleeves or sewn together with cord.Assembly; incidental operations;555205;085310;19 CFR 10.14(a);19 CFR 10.16(a);Marking;19 CFR 10.22

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 555426

                         August 6, 1990

CLA-2 CO:R:C:V 555426 GRV

CATEGORY:  CLASSIFICATION

TARIFF NO.:  9802.00.80

Mr. John W. Cain
Cain Customs Brokers, Inc.
421 Texano
P.O. Box 150
Hidalgo, Texas  78557

RE:  Applicability of partial duty exemption under HTSUS subhead-
     ing 9802.00.80 to lead cables created by cutting-to-length
     continuous length components, stripping cable ends, twisting
     cable strands together, crimping clamps onto ends for force
     fitting into plastic blocks which are then either enclosed
     with insulating sleeves or sewn together with cord.Assembly;
     incidental operations;555205;085310;19 CFR 10.14(a);19 CFR
     10.16(a);Marking;19 CFR 10.22

Dear Mr. Cain:

     This is in response to your letters of June 14, 1989, and
July 11, 1990, on behalf of General Electric Co., requesting a
ruling on the applicability of subheading 9802.00.80, Harmonized
Tariff Schedule of the United States (HTSUS), to lead cables to
be imported from Mexico.  Photographs and samples of the
components were submitted for examination.  You also inquire as
to whether the returned cables will be excepted from the country
of origin marking requirements under section 134.32(f) or (g),
Customs Regulations (19 CFR 134.32(f) or (g)).

FACTS:

     Rolls of insulated lead cable, strips of clamps/terminals,
individual plastic blocks, and spooled cord and insulating
sleeving, all of U.S. origin, will be exported to Mexico for
assembly into various models of lead cable assemblies used to
connect the windings of air conditioning or refrigeration
compressor motors to an electrical power source.  In Mexico, the
continuous length components will either be cut-to-length, in the
case of the insulated cable, cord and sleeving, or separated, in
the case of the terminal strips, before assembly operations
commence.  Also, the ends of the lead cable will be stripped of
their insulation.
     The assembly operations consist of five steps:

     (1)  at station no. 1, a cable stripping and terminating
          machine crimps a terminal onto one end of the stripped
          lead cable.  (For some models, both ends will have
          terminals crimped onto them);
     (2)  at station no. 2, a cable twisting machine twists the
          loose strands of the other end of the cable together;
     (3)  at station no. 3, the terminated end(s) of the cable is
          securely snapped into a plastic block;
     (4)  at station no. 4, an amp terminating machine crimps
          another terminal onto the non-blocked end of the cable
          and the operator places an insulating sleeve over the
          leads on some models; and,
     (5)  at station no. 5, a lacing machine sews the cable
          together with cord in a knotting operation, and a
          flameless torch is used to burn off excess cord.

     The various lead cable assemblies will be bulk packaged in
boxes, which then will be shrink wrapped for return to the U.S.
Upon importation, your client will attach the lead cables to
electric motors and sell the motors to manufacturers of air
conditioning or refrigeration equipment.

     Regarding country of origin marking requirements, you state
that the cable assemblies will not be sold at retail or as
replacement parts.  Rather, your client will attach them to
electric motors, either in Mexico or in the U.S., before retail
sale to domestic manufacturers of air conditioning or
refrigeration equipment.

ISSUES:

I.   Whether the returned lead cable assemblies are entitled to
the partial duty exemption under HTSUS subheading 9802.00.80.

II.  Whether the merchandise will be subject to country of
origin marking requirements.

LAW AND ANALYSIS:

I.   ASSEMBLY ABROAD

     HTSUS subheading 9802.00.80 provides a partial duty exemp-
tion for:

     [a]rticles assembled abroad in whole or in part of fab-
     ricated 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, lubricating, 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 the U.S. components assembled therein, provided
there has been compliance with the documentation requirements of
section 10.24, Customs Regulations (19 CFR 10.24).

     Assembly operations for purposes of HTSUS subheading
9802.00.80 are interpreted at section 10.16(a), Customs
Regulations (19 CFR 10.16(a)), which specifically enumerates
force fitting and sewing operations as acceptable means of
assembly.  We have also held that crimping and twisting
operations constitute acceptable assembly operations within the
meaning of 19 CFR 10.16(a).  Headquarters Ruling Letters 555205
(August 25, 1989) (crimping terminals) and 085310 (October 12,
1989) (twisting cable).  Further, this section provides that
assembly operations may be preceded, accompanied, or followed by
operations incidental to the assembly.

     Operations incidental to the assembly process are not
considered further fabrication, as they are of a minor nature and
cannot always be provided for in advance of the assembly
operation.  Examples of operations considered incidental to the
assembly process are delineated at 19 CFR 10.16(b), which
specifically enumerates cutting to length of finished components
exported in continuous lengths.

     In the instant case, the description of the foreign opera-
tions and an examination of the samples submitted show that the
lead cable assemblies to be imported will be eligible for the
partial duty exemption available under HTSUS subheading
9802.00.80.  The components are fully fabricated products of the
U.S., which are exported in continuous lengths or in bulk.  Once
abroad, the continuous length components are either cut-to-length
or severed, and the ends of the cable are stripped of insulation
--acceptable incidental operations under 19 CFR 10.16(b)(6), as
the ends cannot be stripped until the wire is cut to length.
See, General Instrument Corporation v. United States, C.A.D.
1128, 61 CCPA 86, 499 F.2d 1318 (1974), rev'g, C.D. 4421, 70
Cust.Ct. 151, 359 F.Supp. 1390 (1973).  The crimping of the
terminals onto the end(s) of the stripped cable, the twisting of
the cable strands, the snapping of the terminals into the plastic
block, and the sewing of the cables together with cord are all
acceptable assembly operations.  The use of the flameless torch
to remove excess cord is a minor operation and is deemed to
constitute an incidental operation in this case.  As the U.S.
components do not lose their physical identities in the assembly
operation, and are not otherwise advanced in value or improved in
condition except by assembly operations and operations incidental
thereto, the returned lead cable assemblies will be eligible for
the partial duty exemption under HTSUS subheading 9802.00.80.

II.  COUNTRY OF ORIGIN MARKING REQUIREMENTS

     Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that, unless excepted, every article of foreign
origin imported into the U.S. shall be marked in a conspicuous
place as legibly, indelibly, and permanently as the nature of the
article (or container) will permit, in such a manner as to
indicate to the ultimate purchaser in the U.S. the English name
of the country of origin of the article.  Part 134, Customs
Regulations (19 CFR Part 134), implements the country of origin
marking requirements and exceptions of 19 U.S.C. 1304.

     The exceptions from the marking requirements are set forth
in 19 U.S.C. 1304(a)(3) and 19 CFR 134.32.  You request an
exception from marking pursuant to 19 U.S.C. 1304(a)(3)(F) and 19
CFR 134.32(f) which except articles from marking if they are
imported for use by the importer and not intended for sale in
their imported or any other form.  In support of your claim you
indicate that the cable assemblies will not be sold at retail or
as replacement parts but that your client will attach them to
electric motors before retail sale to domestic manufacturers of
air condition or refrigeration equipment.  The above exception
applies only to imported articles actually used by the importer
in carrying on the business (e.g., supplies, machinery).  See HRL
732082 (March 14, 1989) (samples to be used by the importer by
showing them to prospective customers to solicit orders are
excepted from marking under 19 CFR 134.32(f)).  See also, HRL
709199 (June 28, 1978) (articles imported for showroom display or
for testing purposes are for the use of the importer and are
excepted from marking under 19 CFR 134.32(f)).  This exception
does not apply to articles to be further processed by the
importer and then sold, such as the imported lead cable
assemblies here.

     Articles to be used in the U.S. in manufacture may, however,
be excepted from marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR
134.32(d), articles for which the marking of the containers will
reasonably indicate the origin of the articles.  In order to
qualify for this exception, the U.S. manufacturing operations
must substantially transform the imported article into a new
article having a name, character or use differing from that of
the imported article.  In such case, the U.S. manufacturer is
considered the ultimate purchaser and the marking of the
container (in lieu of the article itself) will reasonably
indicate the country of origin to the ultimate purchaser.  See,
19 CFR 134.35.  In this case, insufficient information has been
presented to determine whether or not the imported lead cable
assemblies will be substantially transformed as a result of their
attachment to electric motors.  No cost figures or information
describing the manufacturing process performed was presented.

     You also request an exception from marking under 19 U.S.C.
1304(a)(3)(G) and 19 CFR 134.32(g), which except from marking
articles to be processed in the U.S. by the importer or for his
account otherwise than for the purpose of concealing the origin
of such articles and in such manner that any mark contemplated by
this part would necessarily be obliterated, destroyed, or
permanently concealed.  No evidence has been presented in support
of this claim.

     Based on the information presented, we cannot grant an
exception from marking the imported lead cable assemblies.
Therefore, they must be marked to indicate their country of
origin in accordance with the requirements of 19 U.S.C. 1304.
Pursuant to 19 CFR 10.22, assembled articles entitled to a duty
exemption under HTSUS subheading 9802.00.80, are considered
products of the country of assembly for purposes of 19 U.S.C.
1304.  This provision further states that if an imported
assembled article is made entirely of American-made materials,
the U.S. origin of the material may be disclosed by using a
legend such as "Assembled in       from material of U.S. origin,"
or a similar phrase.  Based on our determination that the
imported lead cable assemblies are entitled to a duty exemption
under HTSUS subheading 9802.00.80, they are considered products
of Mexico, the country of assembly.  Since all the components are
of U.S. origin, the subject cables may be marked "Assembled in
Mexico from material of U.S. origin," or a similar phrase.

HOLDING:

     On the basis of the described foreign operation and after
viewing the photographs submitted, the spark plug wire assemblies
will be eligible for the partial duty exemption under HTSUS
subheading 9802.00.80 when returned to the U.S., upon compliance
with the documentary requirements of 19 CFR 10.24.

     The returned merchandise are considered products of the
country of assembly for purposes of country of origin marking
requirements, and must be marked accordingly.

                              Sincerely,





                              John Durant, Director
                              Commercial Rulings Division