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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.

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).

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.

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

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