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HQ 555073


October 31, 1988

CLA-2 CO:R:C:V 555073 DBI

CATEGORY: MARKING CLASSIFICATION

TARIFF NO.: 9802.00.80; 807.00

Luis Chavez, Esq.
Kemp, Smith, Duncan and Hammond
3505 Boca Chica Boulevard, Suite 450
Brownsville, Texas 78521-4066

RE: Country of origin marking requirements and applicability of partial duty exemption of item 807.00, TSUS, to control mounting bracket, motor shield, water fitting and plug cover assemblies.

Dear Mr. Chavez:

This is in response to your four letters dated July 14, 1988, on behalf of the Whirlpool Corporation, concerning the country of origin marking requirements and the applicability of item 807.00, Tariff Schedules of the United States (TSUS), to four different products identified as a control mounting bracket, a motor shield, a water fitting and a plug cover assembly, each to be assembled in Mexico and imported by your client.

FACTS:

You advise that your client will be importing three subassembly devices used in refrigerators: a control mounting bracket assembly used to dispense ice and/or water and control lights, a plug cover assembly which provides an external seal for interior components, and a water fitting assembly, used to dispense water. Each of the three subassembly devices will be used in the assembly of the refrigerator units and will not be sold at the retail level as an individual unit. A motor shield assembly, which is a subassembly device used in washing machines to shield the motor will also be imported. The motor shield assembly may be sold at a service department at the retail level as an individual unit; but mainly, it will be utilized by your client in the assembly of washing machines.

Your client will be assembling the control mounting bracket, motor shield, water fitting and plug cover assemblies, in Mexico. Your letters contain detailed descriptions of the
assembly steps involved in producing each of the four products. The described processes include such operations as screwing, clamping, taping, press fitting and the use of an adhesive. The component parts are U.S.-made and the finished products will be returned to the U.S. for installation into refrigerators and washing machines.

You indicate that your client would like to mark the outermost container or holder of the component part either "Assembled in Mexico" or "U.S. Components Assembled in Mexico" in close proximity to their U.S. address.

ISSUES:

(1)Whether the described control mounting bracket, motor shield, water fitting and plug cover assemblies, when returned to the U.S., will be eligible for the partial exemption from duty in item 807.00, TSUS, (9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS)).

(2)Whether it is acceptable to indicate the country of origin of the subassembly devices on the outermost container or holder which reaches the U.S. plant instead of on the devices themselves.

LAW AND ANALYSIS:

Item 807.00, TSUS, applies to articles assembled abroad in whole or in part of fabricated components, the products 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 item 807.00, TSUS, 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. Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operations performed abroad may consist of any method used to join or fit together solid components, such as force fitting, gluing or the use of fasteners, and may be preceded, accompanied, or followed by operations incidental to the assembly as illustrated in paragraph (b) of this section.

In the present case, the described processes of screwing, clamping, press fitting, taping and the use of an adhesive, are all acceptable assembly operations under section 10.16(a). Moreover, the information submitted indicates that the U.S. components exported to Mexico for assembly into the four
products are not subjected to further fabrication in Mexico. Under these circumstances, it is our opinion that the control mounting bracket, motor shield, water fitting and plug cover assemblies are eligible for item 807.00, TSUS, treatment.

You also ask for confirmation that the assembler could correct deficiencies that are discovered during the assembly process with parts and assembly processes which will produce a product that complies with customer specifications. This may involve the removal and replacement of previously assembled parts. We are of the opinion that the described process of detecting and correcting deficiencies in the assembled products during the assembly process constitutes an operation which is incidental to assembly. See section 10.16(b), Customs Regulations (19 CFR 10.16(b)).

With regard to the country of origin marking requirements, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), requires, with certain exceptions, that every article of foreign origin (or its container) 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 an ultimate purchaser in the U.S. the English name of the country of origin of the article. An ultimate purchaser is defined in section 134.1(d), Customs Regulations (19 CFR 134.1(d)), as "the last person in the United States who will receive the article in the form in which it was imported."

Section 134.1(d)(1), Customs Regulations, provides that if an imported article will be used in manufacture in the U.S., the U.S. manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. Section 134.35, Customs Regulations (19 CFR 134.35), provides that in such circumstances, the imported article is excepted from marking and the outermost container of the imported article shall be marked. A substantial transformation occurs when the manufacturer converts or combines the imported article into an article having a name, character, or use different from the imported article. See United States v. Gibson-Thomsen Co. Inc., 27 CCPA 267 (C.A.D. 98) (1940). If, however, the manufacturing process is merely a minor one which leaves the identity of the imported article intact, section 134.1(d)(2), Customs Regulations, provides that the consumer or user of the article, who obtains the article after the processing, will be regarded as the ultimate purchaser and the article in question must be individually marked.

In this case, your client is the ultimate purchaser of the imported subassembly devices that are used in the manufacture of refrigerators or washing machines. While not specifically stated, it is clear that each subassembly device is a minor component, both in terms of cost and function, to the appliance into which it is assembled. By assembling the imported subassembly into a refrigerator or washing machine, your client converts it into an integral and permanent part of the completed appliance. Each subassembly loses its separate identity when it is used in this manner and is substantially transformed into an article having a different name, character or use.

Your client is not, however, the ultimate purchaser of the motor shield assembly that is sold in a service department at the retail level. Based on the information supplied, it appears that in such circumstances, the ultimate purchaser is the retail purchaser.

HOLDING:

On the basis of the information submitted, we are of the opinion that the operations performed abroad may be considered acceptable assemblies, and, therefore, allowances in duty may be made under item 807.00, TSUS, for the cost or value of the U.S. components exported for assembly into the control mounting bracket, motor shield, water fitting and plug cover assemblies, upon compliance with the applicable Customs Regulations (19 CFR 10.11-10.24).

The motor shield assemblies that are sold at a service department at the retail level cannot be marked with the country of origin only on the outermost container or holder in which they reach your client, but must be marked in a manner that will inform the retail purchaser of the country of origin.

The control mounting bracket, water fitting, motor shield and plug cover assemblies that are used in the assembly of refrigerators or washing machines may be marked in the outermost container or holder in which they reach your client provided the district director is satisfied that the articles will be used only in this manner and will not be individually
sold and the outermost containers are properly marked with the country of origin. The proposed marking "Assembled in Mexico" or "U.S. Components Assembled in Mexico" in close proximity to the U.S. address is acceptable.

Sincerely,


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