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HQ 555057


March 15, 1990

CLA-2 CO:R:C:V 555057 GRV

CATEGORY: CLASSIFICATION

TARIFF NO: 9802.00.80

Mr. Bert Cadwell
Business Manager
Tyrolit Abrasives Corporation
1790 Corporate Drive, Suite 320
Norcross, Georgia 30093

RE: Applicability of partial duty exemption under HTSUS subhead- ing 9802.00.80 to certain industrial diamond cutting products imported from Austria

Dear Mr. Cadwell:

This is in response to letters of December 22, 1987, and February 6, 1990, from Tyrolit Abrasives Corporation, requesting a ruling on whether certain industrial diamond cutting products containing U.S.-manufactured diamonds are eligible for special tariff treatment when imported from Austria.

FACTS:

You state that your company purchases crushed synthetic diamonds in granular form from a U.S. supplier and exports them to Austria, where they are used in the manufacture of certain diamond wheels and segments, which are, in turn, used to make various industrial diamond cutting products (bonded abrasive grinding wheels, diamond wheels, diamond saw blades and diamond core drills). In Austria, the synthetic diamond granules are mixed with foreign-origin metal powder, consisting of different metals, and poured into various molds of the proper size to produce diamond wheels or segments. The molds are then subjected to high temperatures and pressure to bond the compound into a diamond wheel or segment. The diamond wheels become either abrasive grinding wheels or diamond wheels, and are cleaned by grinding or sandblasting. The segments are brazed onto metal cores to become either saw blades or core drills. Following these operations, the finished industrial diamond cutting products are imported into the U.S.

ISSUE:

Whether the various industrial diamond cutting products are eligible for the partial duty exemption available under subhead- ing 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), when imported into the U.S.
LAW AND ANALYSIS:

It appears from the information provided that the only special tariff provision that may be applicable to the U.S. synthetic diamond granules is HTSUS subheading 9802.00.80. This tariff provision provides a partial duty exemption 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.

An article entered under HTSUS subheading 9802.00.80 is subject to a duty upon the full value of the imported article, less the cost or value of the U.S. components assembled therein, provided their has been compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

It is clear from the legislative history of this tariff provision that it is limited to "fabricated" components of types which are designed to be fitted together with other components, and does not apply to chemical products, food ingredients, liquids, gases, powders, etc. See, H.R. Rep. No. 342, 89th Cong., 1st Sess. 49 (1965).

The terms "powder" and "granule" are defined in Webster's Third International Dictionary (1971) as follows:
powder - a substance composed of fine particles.
granule - a little grain (as of sugar): a small particle (as of pollen).

(See also 33 Words and Phrases 200 (1971), showing judicial interpretation of the word "powder" as including particles). This close association between the terms powder and granule-- denoted by the common use of the term particles--compels us to conclude that the crushed synthetic diamond granules in this case are of a type expressly precluded from the benefits of HTSUS subheading 9802.00.80 duty treatment.

Further, we have previously held that the application of this tariff provision is precluded where diamond-impregnated segments are manufactured by mixing diamonds and metal components in powder form and heat treating the mixture in a mold to temper- atures higher than the melting point of some of the components, as there can be no genuine assembly of parts where one of the components is a fungible mass of materials such as a powder or liquid. We stated that this special tariff provision applies only to fabricated U.S. components that were designed to be fitted with other components. Headquarters Ruling Letter 053616 (January 17, 1978). See also, HRL 024123 (February 2, 1973).

As the facts in the present case are substantially similar to the facts in HRL 053616, we believe that that ruling is controlling and find that the crushed diamond granules here will not be eligible for the partial duty exemption available under HTSUS subheading 9802.00.80, as they are deemed not to constitute "fabricated components" of a type which are designed to be fitted together with other components, but rather are materials of the type expressly prohibited from receiving the benefits of this tariff provision.

HOLDING:

On the basis of the information submitted, the industrial diamond cutting products will not be eligible for the partial duty exemption under HTSUS subheading 9802.00.80 when returned to the U.S., as the crushed synthetic diamonds, in granular form, are not "fabricated components" of a type designed to be fitted together with other components. Accordingly, the industrial diamond cutting products will be dutiable on their full value when imported.

Sincerely,


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