HQ 555484: Applicability of partial duty exemption under subheading 9802.00.80, HTSUS, to spring assemblies

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 555484

                                     March 8, 1990

            CLA-2 CO:R:C:V  555484 LS

            CATEGORY:  Classification

            TARIFF NO.:  9802.00.80

            Mr. Lothar A. Bauerle, President
            Kern-Liebers USA Inc.
            1510 Albon Road
            P.O. Box 396
            Holland, Ohio 43528-0396

            RE:  Applicability of partial duty exemption under subheading
                 9802.00.80, HTSUS, to spring assemblies

            Dear Mr. Bauerle:

                This is in response to your letters of August 23 and
            September 11, 1989, requesting a ruling on the applicability
            of subheading 9802.00.80, Harmonized Tariff Schedule of the
            United States (HTSUS), to spring assemblies to be imported
            from Mexico.  Samples of the components and the spring
            assemblies were submitted for examination.

            FACTS:

                The spring component of the spring assembly is
            manufactured in the U.S. from strip steel of U.S. origin and
            European Community (EC) origin.  The manufacturing process
            consists of cutting the steel into strips, coiling the
            springs, and stress relieving the springs by heating them in
            an oven.  In a conversation with an attorney on my staff, you
            stated that the process of manufacturing the springs is
            described in more detail in Headquarters Ruling Letter (HRL)
            083313, dated April 13, 1989, which ruled on the country of
            origin of the same seat belt retractor springs for tariff
            purposes.  In that ruling we stated that the springs are
            manufactured from coils of rolled steel by the following
            three-step process:  (1) the coil is split into strips; (2)
            the strips are processed into springs by cutting them to
            length and coiling; and (3) the spring coils are heated to 230
            degrees centigrade for 30 minutes.

                Under the facts of the instant case, the springs are
            exported to Mexico where they are assembled by your













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            Mexican affiliate using two alternative processes.  One
            process involves the assembly of the spring into a plastic
            spring housing which is of U.S. origin.  The spring is then
            lubricated.  The other process involves the assembly of the
            spring into a temporary wire retainer.  This retainer, which
            is imported from West Germany, is a round piece of wire
            enclosed by twisting the ends.  The temporary retainer is used
            to hold the wound-up spring until the spring is transferred
            permanently into another retainer.  You advised by telephone
            that the spring assembly consisting of the spring and
            temporary wire retainer is imported into the U.S. and then
            shipped back to Mexico to your customers.  These customers
            then transfer the spring into a permanent type of retainer.
            Both types of spring assemblies are for use in automotive seat
            belt retractor systems.

            ISSUE:

                (1)  Are the steel springs considered to be fabricated
            components of U.S. origin for purposes of subheading
            9802.00.80, HTSUS?

                (2)  Do the operations performed in Mexico constitute an
            assembly process, thereby entitling the spring assemblies to
            the partial duty exemption under subheading 9802.00.80, HTSUS?

            LAW AND ANALYSIS:

                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 such as cleaning, lubricating and
                painting.

            All three requirements of subheading 9802.00.80, HTSUS, must
            be satisfied before a component may receive a duty allowance.
            An article entered under this subheading 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, Customs
            Regulations (19 CFR 10.24).













                                         - 3 -


                We must first determine whether the steel springs which
            are manufactured in the U.S. from U.S. and imported strip
            steel are "fabricated components, the product of the United
            States."  Section 10.14(b), Customs Regulations (19 CFR
            10.14(b)), provides in pertinent part:

                Foreign-made articles or materials may become products
                of the United States if they undergo a process of
                manufacture in the United States which results in their
                substantial transformation.  Substantial transformation
                occurs when, as a result of manufacturing processes, a new
                and different article emerges, having a distinctive name,
                character, or use, which is different from that originally
                possessed by the article or material before being subject
                to the manufacturing process.

                In HRL 083313, we found that the processing of the same
            seat belt retractor springs from steel coils resulted in a new
            and different article which had a new name, character, and
            use.  The springs were used specifically in automotive seat
            belt retractor assemblies, while the steel sheets in coil were
            unfit for that use.  Although HRL 083313 involved the
            additional step of assembling the springs into plastic spring
            housings, the finding of substantial transformation also
            applied to the processing of the retractor springs before
            their assembly into the housings.

                Applying HRL 083313 to the facts of this case, we find
            that the steel springs manufactured in the U.S. from U.S. and
            imported strip steel are fabricated components which are
            products of the U.S. because the imported steel undergoes a
            substantial transformation in the U.S.

                 For purposes of subheading 9802.00.80, HTSUS, the term
            "assembly" means the fitting or joining together of fabricated
            solid components.  C.J. Tower & Sons of Buffalo, Inc. v.
            United States, 62 Cust. Ct. 643, C.D. 3840, 304 F. Supp. 1187
            (1969).  Force fitting is listed in section 10.16, Customs
            Regulations (19 CFR 10.16), as one of the acceptable means of
            assembly.  The operation of force fitting the spring into the
            plastic housing in Mexico is an acceptable assembly operation
            which entitles both the spring and housing to a duty allowance
            under subheading 9802.00.80, HTSUS.

                Section 10.16(b), Customs Regulations (19 CFR 10.16(b)),
            provides that an operation incidental to the assembly process,
            whether performed before, during, or after assembly, does not
            constitute further fabrication, and does not preclude the
            application of the exemption provided under subheading












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            9802.00.80, HTSUS.  Application of lubricants is listed in 19
            CFR 10.16(b) as an example of an operation incidental to the
            assembly process.  Therefore, the lubrication of the spring
            when it is assembled into the plastic housing is an acceptable
            incidental assembly operation.

                The process of securely fitting the spring into the
            temporary wire retainer in Mexico is similar to a force
            fitting operation and, therefore, constitutes an acceptable
            assembly operation.  The fact that the wire retainer serves as
            a temporary method of holding the spring in place until it is
            placed in a permanent retainer or housing does not disqualify
            the assembled article from the benefit of subheading
            9802.00.80, HTSUS.  In Mattel, Inc. v. United States, 67 CCPA
            74, C.A.D. 1248, 624 F.2d 1076 (1980), rev'g, 82 Cust Ct. 234,
            C.D. 4805, 475 F. Supp. 683 (1979), phonograph records
            packaged in envelopes and stapled to talking toy phones had no
            use independent of the toy phones and were not meant to be
            permanently attached to them.  The court held that the records
            were entitled to a duty allowance under item 807.00, Tariff
            Schedules of the United States (TSUS) (now subheading
            9802.00.80, HTSUS) as U.S. components of articles assembled
            abroad.

                We find that the U.S. fabricated components consisting of
            the steel springs and plastic housings are in a condition
            ready for assembly without further fabrication, do not lose
            their physical identities in the assembly operations, and are
            not otherwise advanced in value or improved in condition
            except by assembly operations and operations incidental
            thereto.  Therefore, the spring assemblies imported into the
            U.S. are eligible for the partial duty exemption under
            subheading 9802.00.80, HTSUS.

            HOLDING:

                The steel springs manufactured in the U.S. from U.S. and
            EC steel are fabricated components which are products of the
            U.S. because the EC steel undergoes a substantial
            transformation in the U.S. for purposes of subheading
            9802.00.80, HTSUS.  The operations of assembling the springs
            into the plastic spring housings and the temporary wire
            retainers are considered proper assembly operations.  The
            lubrication of the springs is an operation incidental to the
            assembly process.  Therefore, the imported spring assemblies
            may be entered under subheading 9802.00.80, HTSUS, with
            allowances in duty for the cost or value of the springs and
            the plastic spring housings, which are the U.S. components
















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            incorporated therein.  No allowance may be made under
            subheading 9802.00.80, HTSUS, for the cost or value of the
            wire retainer of West German origin.

                                       Sincerely,




                                       John Durant, Director
                                       Commercial Rulings Division


            cc:  Assistant Area Director, NIS
                 845327