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HQ 555539

June 7, 1990

CLA-2 CO:R:C:V 555539 KAC


TARIFF NO.: 9802.00.80

Mr. Phil Freeman
Cain Customs Brokers, Inc.
421 Texano
P.O. Box 150
Hidalgo, Texas 78557

RE: Applicability of partial duty exemption under HTSUS subheading 9802.00.80 to imported toroids created by winding, cutting to length, stripping, and tinning wire.Assembly;incidental operations;Mast;General Instrument;HRL 555205;C.S.D. 90-6

Dear Mr. Freeman:

This is in response to your letters of December 1, 1989 and March 8, 1990, on behalf of Deltron, Inc., requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to toroids to be imported from Mexico.


Deltron will ship U.S. components to Mexico for assembly into toroids, which are used to protect computer power supplies from surges in electrical current. The foreign operations to be performed consist of assembling three basic toroid designs from which 125 variations will be possible. Variations are necessary to accommodate the output voltage and current in different Deltron power supplies. Variations may include using different grades of ferrite, gauges of wire, and number of turns for the wire, although superficially the toroids will appear identical. The work stations, tools and operations will not change. The foreign operations, which are representative of the operations to be performed on all toroid variations, consist of:

(1) cutting to length the magnet wire after it is unwound from a spool;
(2) winding the wire around a donut-shaped ferrite core on a winding machine;

(3) stripping the ends of the wire (removal of varnish from outside of wire); and
(4) tinning the ends of the wire (dipping the ends of the wire in flux and then into melted solder).

After the foreign operations are completed in Mexico, the toroids will be imported into the U.S.


Whether the toroids are entitled to the partial duty exemption available under HTSUS subheading 9802.00.80 when returned to the U.S.


HTSUS subheading 9802.00.80 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, lubrication, and painting....

All three requirements of HTSUS subheading 9802.00.80 must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision 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).

Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners.

Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under HTSUS subheading 9802.00.80 to that component. See, 19 CFR 10.16(c).

In United States v. Mast Industries, Inc., 515 F.Supp. 43, 1 CIT 188, aff'd, 69 CCPA 47, 668 F.2d 501 (1988), the court, in examining the legislative history of the meaning of "incidental to the assembly process," stated that:

[t]he apparent legislative intent was to not preclude operations that provide an "independent utility" or that are not essential to the assembly process; rather, Congress intended a balancing of all relevant factors to ascertain whether an operation of a "minor nature" is incidental to the assembly process.

The court then indicated that relevant factors included:

(1) whether the relative cost and time of the operation are such that the operation may be considered minor;
(2) whether the operation is necessary to the assembly process;
(3) whether the operation is so related to the assembly that it is logically performed during assembly; and (4) whether economic or other practical considerations dictate that the operations be performed concurrently with assembly.

Winding wire around a ferrite core constitutes an acceptable means of assembly, as the two components are securely joined together. 19 CFR 10.16(a). See also, C.S.D. 90-6, Headquarters Ruling Letter 555218 dated September 13, 1989, which held that winding of wrap wire around core wire to create guitar strings is an acceptable means of assembly. Cutting to length is an incidental operation pursuant to 19 CFR 10.16(b)(6). Stripping wire is also considered an acceptable incidental operation. See, General Instrument v. United States, C.A.D. 1128, 61 CCPA 86, 499 F.2d 1318 (1974), rev'g, C.D. 4421, 70 Cust.Ct. 151, 359 F.Supp. 1390 (1973), and Headquarters Ruling Letter 555205 dated August 25, 1989, which held that wire stripping is an incidental operation.

The tinning operation is not a proper assembly operation under this tariff provision as there is no joinder of two solid components. In order to determine if the tinning operation is incidental to the assembly process, the Mast criteria must be examined. The first of the Mast criteria involves a comparison of the relative cost and time required to perform the operation in question with the cost and time required to perform the entire assembly operation. However, as you have failed to supply the information which is necessary to enable us to determine if the
tinning operation is an incidental operation--although the information was requested by a member of my staff by telephone on March 15, and May 4, 1990--we will assume for purposes of this ruling that the operation is not incidental to assembly. Therefore, no allowance may be made for the cost or value of the magnet wire.


On the basis of the information provided, it is our opinion that the operations performed abroad, except for the tinning operation, are considered proper assembly operations or operations incidental to assembly. Therefore, an allowance in duty for the cost or value of the imported ferrite core is permissible under subheading 9802.00.80, HTSUS, upon compliance with the documentary requirements of 19 CFR 10.24.


John Durant, Director
Commercial Rulings Division

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