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HQ 555681

September 7, 1990

CLA-2 CO:R:C:V 555681 KAC


TARIFF NO.: 9802.00.80

Matthew J. Marks, Esq.
Marks Murase & White
Suite 750
2001 L Street, N.W.
Washington, D.C. 20036

RE: Applicability of subheading 9802.00.80, HTSUS, to relays created by mounting and soldering.Substantial transformation;assembly;Anheuser-Busch;Timex;19 CFR 10.12(e);19 CFR 10.14(b);19 CFR 10.16(a)

Dear Mr. Marks:

This is in response to your letter dated June 13, 1990, on behalf of Aromat Corporation ("Aromat"), requesting a ruling on the applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to relays imported into the U.S.


Aromat produces "DS2" relays composed of fourteen parts manufactured in the U.S. from U.S. and Japanese origin materials. The components produced in the U.S. from Japanese materials are:

1. The 142 and 143 yokes made from Japanese magnetic iron which is subjected to a flattening operation; 2. The residual plate made from Japanese stainless steel strip which is cut to form. The residual plate is then welded to the 142 and 143 yokes;
3. The 140 iron core made from Japanese material which undergoes a flattening and sorting operation. This component will later be incorporated into the coil block; 4. The fixed terminal A and B and movable spring made from Japanese nickel-silver strip and phosphorous bronze are die stamped, and gold contacts (four contacts for both the A and B terminal, and eight contacts for the movable spring) are welded into place. These components will later be merged with others to form the body block C assembly;
5. The coil terminal made from Japanese nickel-silver is die stamped, molded and cut into shape. This component will later be incorporated into the bobbin block assembly; 6. The 165 card made from Japanese polybutylenetere- phthalate ("PBT") plastic is transformed into its proper shape by injection molding. This component will later be merged into the coil block assembly;
7. The 313 case made from Japanese PBT plastic is transformed into its proper shape by injection molding. This component will later be merged with others to form the exterior of the DS2 relay;
8. The coil wire purchased in Japan is wound into a coil bobbin which is then molded into its proper shape; and 9. The 281 pellet material, an imidazole derivative, is purchased through a Japanese company.

In the U.S., the components are manufactured into the DS2 relays as follows:

1. molding of PBT plastic with the fixed terminal A and B to form the body block c assembly;
2. attaching the 142 and 143 yokes and a magnet to the body block c assembly;
3. molding the coil terminal in plastic to form the bobbin block assembly;
4. winding the bobbin block assembly with copper wire to form the coil block assembly;
5. inserting the 140 core into the coil block assembly and attaching the 165 card to both ends of the 145 core to form the coil core block assembly;
6. assembling the body c block assembly and the coil core block assembly together to form the coil, body assembly;
7. soldering a coil lead to the coil, body assembly; 8. attaching the 415 metal supporter to the coil, body assembly;
9. ultra-sonic cleaning, vacuum annealing, second annealing, magnetizing, cleaning, and adjusting operations to the coil, body assembly;
10. encasing the coil, body assembly with the 313 case; 11. adding the 281 pellet to the coil, body assembly; 12. curing the coil, body assembly;
13. filling the coil, body assembly with N2 gas and sealing (now known as relay);
14. marking the exterior of the relay case; 15. presoldering the relays;
16. inspecting the relay; and
17. inserting the relays into a tube.

Upon completion of the U.S. manufacturing processes, the DS2 relays will be exported to Mexico. In Mexico, the DS2 relays will be mounted and soldered to a printed circuit board. After the soldering operation is complete, the DS2 relays attached to the printed circuit board will be returned to the U.S.


Whether the DS2 relays will be entitled to the partial duty exemption under subheading 9802.00.80, HTSUS, 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 cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

According to section 10.12(e), Customs Regulations (19 CFR 10.12(e)), a "product of the United States" is an article manufactured within the customs territory of the U.S. and may consist wholly of U.S. components or materials, of U.S. and foreign components or materials, or wholly of foreign components or materials. If the article consists wholly or partially of foreign components or materials, the manufacturing process must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article.

A substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See, Anheuser- Busch Association v. United States, 207 U.S. 556, (1908); Timex Corporation v. United States, Slip Op. 88-90, 12 CIT , 691 F.Supp. 1445 (CIT 1988); and section 10.14(b), Customs Regulations (19 CFR 10.14(b)).

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.

We are of the opinion that the Japanese materials are substantially transformed into a product of the U.S. These raw materials, including magnetic iron, stainless steel strip, nickel-silver strip, phosphorous bronze and PBT plastic, are imported into the U.S. In the U.S., the materials are processed by flattening, cutting to form, welding, molding, and other operations to create distinctive components which are then assembled into DS2 relays. The relays clearly emerge as new and different articles with a distinctive name, character and use different from that possessed by the raw materials from which they are made.

Soldering is an acceptable assembly operation pursuant to 19 CFR 10.16(a). Therefore, an allowance in duty for the DS2 relay will be available under subheading 9802.00.80, HTSUS, after the PCB with DS2 relays are imported into the U.S.


Based on the information submitted, we are of the opinion that the Japanese materials are substantially transformed in the U.S. into U.S.-origin DS2 relays. The foreign operations performed on the DS2 relays are acceptable assembly operations. Therefore, the imported printed circuit boards with attached DS2 relays may be entered under subheading 9802.00.80, HTSUS, with an allowance in duty for the cost or value of the DS2 relays, upon compliance with the documentary requirements of 19 CFR 10.24.


John Durant, Director
Commercial Rulings Division

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