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HQ 556422

March 24, 1992
CLA-2 CO:R:C:S 556422 SER


TARIFF NO.: 9802.00.8060

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

RE: Applicability of partial duty exemption to air conditioning hoses from Mexico; 19 CFR 10.12, 10.16(a), (b), and (c), 10.24; Samsonite v. U.S.; HRL 555503

Dear Mr. Freeman:

This is in reference to your letter of November 25, 1991, on behalf of S & H Fabricating and Engineering, Inc. ("S & H"), concerning the eligibility for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of automobile air conditioning hoses from Mexico.


S & H plans to assemble and import from Mexico, automobile air conditioning hoses. The hoses are used to convey freon (liquid or gas) between the compressor, condenser, and evaporator in automobile air conditioning systems.

The air conditioning hoses consist primarily of aluminum tubing with steel fittings, nylon or rubber sheathing and plastic fittings, and in some models rubber hoses. You represented that all of these products are of U.S. origin consistent with the requirements of section 10.12(e) of the Customs Regulations (19 CFR 10.12(e)). S & H plans to produce several models of air conditioning hoses to fit different makes of automobiles. The following description of operations in Mexico, however, is representative of all models that will be assembled in and imported from, Mexico.

In Mexico, aluminum tubes, in coil form, are loaded on a tube cutting machine and are cut to the desired lengths. The cut tubes are swaged on both ends, and fittings are attached on one end. A hole or holes are pierced or drilled in the tubes and
valve bodies are attached to the tubes either by brazing or welding. Valve cores are then screwed into the valve bodies. The aluminum subassemblies are tested for leaks by applying 300 pounds air pressure and submerging under water for 45 seconds.

Rubber hoses are also shipped to Mexico in coil form and cut to length. In some models, nylon sheathing is cut to length and slipped over the cut rubber hoses. The tested aluminum tubes with fittings are then assembled to the rubber hoses by crimping a shell fitting onto the rubber hose. The aluminum tube and rubber hose subassemblies are then loaded onto a bending machine and bent into various shapes as required by the customer. Plastic end caps are then assembled to the fittings. In some models, plastic protective sheathing are cut to length and slipped over the tubing. The completed hoses are then inspected and packed.


Whether the automobile air conditioning hoses will qualify for the partial duty exemption available under subheading 9802.00.80, HTSUSA, when imported into the U.S.


Subheading 9802.00.80, HTSUSA, 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 subheading 9802.00.80, HTSUSA, 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).

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 gluing, laminating, welding soldering, riveting, force fitting, sewing, or the use of fasteners.

Operations incidental to the assembly process are not considered further fabrication operations, as they as of a minor nature and cannot always be provided for in advance of the assembly operations. Examples of operations which are incidental to the assembly process include trimming, filing, or cutting off of small amounts of excess materials. See, section 10.16(b), Customs Regulations (19 CFR 10.16(b)). 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 subheading 9802.00.80, HTSUSA, to that component. See, section 10.16(c), Customs Regulations (19 CFR 10.16(c)).

It is our position that a duty allowance may not be made for the aluminum tubes since they are not articles exported in a condition ready for assembly without further fabrication. The courts and Customs have ruled on bending operations for purposes of subheading 9802.00.80, HTSUSA. In Samsonite Corporation v. U.S., 702 F.Supp. 908 (CIT 1988), aff'd, 889 F.2d 1074 (Fed.Cir. 1989), straight steel strips were sent abroad for bending into a squared "C" shape and then assembled into luggage. The plaintiff argued that the bending of the strips was a mere adjustment in shape required by the assembly being performed abroad. The Court of International Trade held that the bending process to which the strips were subjected did more than adjust the article, the process created the component to be assembled, the essence of which is its configuration. Without the resultant shape the final article could not be completed, and, therefore, further fabrication was necessary.

Similarly, in this case, the tubes are bent to configurations required by the customer, and, therefore, the bending of the tubes goes beyond mere adjusting the aluminum tubes in the process of assembly. The bending creates the final configuration which is the essence of the tubing. Thus, the change in shape of the aluminum tube is a significant process and cannot be considered an operation incidental to assembly. As the aluminum tubing does not meet the requirement of section 10.16 of the Customs Regulations (19 CFR 10.16), no allowance in duty can be made for the cost or value of the U.S. aluminum.

An allowance in duty, however, can be made for the cost or value of the U.S. rubber hoses. The rubber hoses are cut to length and attached to the aluminum tubing by crimping a shell fitting to the hose. The cutting to length of the rubber hoses is considered an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(6). See also Headquarters Ruling Letter (HRL) 555503 dated March 15, 1990. Furthermore, the attachment of the rubber hoses to the aluminum tubing by crimping the shell fittings would be an acceptable assembly operation pursuant to 19 CFR section 10.16(a), which allows for assembly by the use of fasteners.

The cutting to length of the nylon sheathing, which is placed over the rubber hose, also would be an acceptable operation under the regulations. Therefore, an allowance in duty can be made for the cost or value of the U.S. sheathing.

The shell fitting, which is used to attach the rubber hose to the aluminum tubing, is stated to be deformed in the process to allow it to grip the rubber hose. It is our position that the deformation of the shell fitting in connection with its use to join together the aluminum tubing and rubber hose, is an operation which is incidental to the assembly process pursuant to section 10.16(b)(5) of the Customs Regulations (19 CFR 10.16(b)(5)). Therefore, the shell fittings will not be precluded from an allowance in duty under subheading 9802.00.80, HTSUSA. In addition, the remaining U.S.-origin fittings used in the assembly process would be eligible for a duty allowance under this subheading.


On the basis of the information presented, the bending of the aluminum tubing would constitute a further fabrication of the material and precludes a duty allowance under subheading 9802.00.80, HTSUSA, for the aluminum tubing. An allowance in duty may be made under subheading 9802.00.80, HTSUSA, for the cost or value of the U.S.-origin rubber hoses, nylon sheathing, shell and other type fittings, provided that the proper documentation requirements of 19 CFR 10.24 are satisfied.


John Durant, Director
Commercial Rulings Division

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