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HQ 555774


December 10, 1990

CLA-2 CO:R:C:V 555774 KCC

CATEGORY: CLASSIFICATION

Mrs. Orquidea Catalanotto
Sumitrans Corporation
1981 Marcus Avenue
Suite E-102
Lake Success, New York 11042

RE: Substantial transformation of Japanese wire by cutting to length and crimping operations performed in the U.S.19 CFR 10.12(e); 19 CFR 10.14(b); 055526; 067824; 723135; 731953; Anheuser-Bush; Timex; Superior Wire; National Juice

Dear Mrs. Catalanotto:

This is in response to your letters dated November 1, and 20, 1990, requesting a ruling concerning whether certain processing of Japanese-origin wire in the U.S. renders it eligible for the duty exemption available under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), when it is later incorporated into an electrical harness in Mexico. A sample of the wire before and after the U.S. processing, as well as a sample of the electrical harness into which the wire will be incorporated were submitted for examination.

FACTS:

Sumitrans manufactures wire for electrical harnesses used in automobiles and motorcycles. There are different lengths and diameters of wire used in the manufacture of the harnesses depending upon the automobile or motorcycle for which the harness is designed.

You intend to import Japanese origin wire into the U.S.. In the U.S., the wire will be cut to varying lengths and U.S.- origin electrical connectors will be crimped onto the ends of the wire. The wire now called "wire for an unassembled harness" is dedicated to use with a specific harness. The wire's value is 0.6166 cents and the U.S. terminals are worth 0.1139 cents. The operations performed in the U.S. increase the value of the wire by approximately 66 percent (U.S. processing adds 0.4100 cents). The wire for the unassembled harness and additional U.S. components will then be shipped to Mexico for incorporation into an electrical harness.

ISSUE:

Whether the Japanese-origin wire is substantially transformed into a product of the U.S., thereby rendering it eligible for the duty exemption available under subheading 9802.00.80, HTSUS, when incorporated into an electrical harness in Mexico.

LAW AND ANALYSIS:

For a component to be eligible for subheading 9802.00.80, HTSUS, treatment it must first be a "product of the United States." 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)).

We have previously held that wire which is cut to length, stripped and fitted with terminals has not been substantially transformed into a product of the country where the described operations have occurred. See, Headquarters Ruling Letter (HRL) 055526 dated June 6, 1978 (a substantial transformation does not occur when a coil assembly is formed by soldering terminals to electrical wire which has been machine wound cut, trimmed, and tinned); HRL 067824 dated November 1, 1982 (assembly of Japanese- origin wire with terminals does not create a new and different article of commerce with a different name, character, and use); HRL 723135 dated September 23, 1983 (wire rope with attached fittings has not been substantially transformed); and HRL 731953 dated April 27, 1990 (a substantial transformation does not occur when head assemblies are attached to the ends of a cable).

In this case, we are of the opinion that the Japanese-origin wire will not be substantially transformed into a product of the U.S. Although cutting the wire to length and attaching the terminals to the wire adds value to the wire, these operations do not create a new article with a new name, character or use.

You state that after the U.S. operations are complete the wire's name will be changed to "wire for an unassembled harness." The courts have held that although a name change may support a finding of substantial transformation, this fact is not necessarily determinative. Superior Wire, a Division of Superior Products Company v. United States, 669 F. Supp. 472 (CIT 1987), aff'd, 867 F.2d 1409 (Fed.Cir. 1989). Moreover, it has been stated that "a change in the name of the product is the weakest evidence of a substantial transformation." National Juice Products Ass'n v. United States, 628 F. Supp. 978 (CIT 1986).

Although the wire may appear to undergo a name change, according to the HTSUS the "wire" and the "wire for an unassembled harness" both are classified under the same heading. From your description and the samples submitted it would appear that the "wire" and the "wire for an unassembled harness" would be classified under heading 8544, HTSUS, which provides for insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors of fitted with connectors. The Explanatory Notes for this heading indicate that "wire, cable, etc., remain classified in this heading if cut to length or fitted with connectors (e.g., plugs, sockets, lugs, jacks, sleeves or terminals) at one or both ends." The fact that the "wire" and "wire for an unassembled harness" are classified under the same heading is evidence that the Japanese-origin wire has not been substantially transformed.

Furthermore, the "wire for an unassembled harness" does not possess a character and use different from the imported "wire." The essential character and use of the imported "wire" is to conduct electrical current. After the "wire" is cut to length and the terminals are attached, the essential character and use of the "wire for the unassembled harness" remains the same--it conducts electrical current.

In addition, the courts have often looked for a transition from producers' to consumers' goods, as another indication of substantial transformation. See, Superior Wire, 669 F. Supp. 479. Based on the information you have provided, the wire is clearly a producer good throughout the operations performed in the U.S., which reinforces our position that a substantial transformation does not occur.

HOLDING:

On the basis of the information and samples submitted, we are of the opinion that the Japanese wire is not substantially transformed into a product of the U.S., but rather remains a product of Japan. Therefore, the Japanese wire will not be eligible for the partial duty exemption available under subheading 9802.00.80, HTSUS, when it is imported into the U.S. incorporated in the electrical harness.

Sincerely,

John Durant, Director
Commercial Rulings Division

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