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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.

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
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

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