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HQ 555807

March 25, 1991

CLA-2 CO:R:C:S 555807 RA


TARIFF NOS.: 9802.00.50; 9802.00.80

Mr. Steve Sanders
Milne & Craighead Customs Brokers
P.O. Box 1568
Blaine, Washington 98230

RE: Applicability of subheading 9802.00.50 or 9802.00.80, HTSUS, to fire barrier putty inserted into fireguard units

Dear Mr. Sanders:

This is in response to your letter of May 21, 1990, addressed to the Customs office in Blaine, Washington, and forwarded to us for reply on the proper tariff classification and applicability of subheading 9802.00.50 or 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to "3M Fire Barrier Putty 303" of U.S. origin which is placed in fireguard units in Canada by your client, F.G.C. Fireguard Corporation of Vancouver, B.C. We regret the delay in responding. However, it has become necessary to refer that portion of your inquiry concerning the tariff classification to another office for further review and preparation of a response.


You state that your client will export canisters of 3M putty made in the U.S. to Canada where it will pumped into a Canadian-made steel housing of a fire protection device. After setting for a short period, the putty becomes rubbery solid and less volatile. It is then covered with a paper collar followed by a gasket. The process is completed by welding a steel plate to the bottom of the fireguard unit. The device is placed around pipes running through floors or ceilings and in case of a fire the 3M putty expands and makes a seal to help prevent spread of the fire. You believe that your client is entitled to a partial exemption for the value of the U.S. origin 3M putty.


Can the putty be considered a fabricated component assembled abroad within the scope of subheading 9802.00.80, HTSUS, or a product altered abroad under subheading 9802.00.50, HTSUS?


Subheading 9802.00.80, HTSUS, provides a partial exemption from duty for articles assembled abroad in whole or in part of U.S. fabricated components, provided the components (a) are exported in condition ready for assembly without further fabrication; (b) do not lose their physical identity by change in form, shape or otherwise, and; (c) are not advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under subheading 9802.00.80, HTSUS, 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)), states that the assembly operations performed abroad may consist of any method used to join or fit together solid components and may be preceded, accompanied, or followed by operations incidental to the assembly process. However, this provision further states that the combining of liquids, gases, chemicals, food ingredients, and amorphous solids with each other or with solid components is not regarded as an acceptable assembly.

We are of the opinion that the insertion of the 3M putty in the device is not a qualified assembly under subheading 9802.00.80, HTSUS, because the putty is an amorphous chemical substance which was not intended to receive the benefits of this tariff provision.

Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the U.S. after having been exported to be advanced in value Or improved in condition by means of an alteration, and duty is assessed only on the cost or value of the alteration abroad. The application of this provision is precluded where the operations abroad result in new or different articles or are for the purpose of finishing them to certain specifications. Thus, intermediate processing operations which are performed in the preparation of finished articles do not come within the scope of the term "alterations."

In Dolliff & Company, Inc v. U.S., 66 CCPA 77, C.A.D. 1225 (1979), the court found that the processing steps performed on exported greige goods were undertaken to produce the finished fabric and could not be considered as alterations. It was concluded that alterations are made to completed articles and do not include processing or the manufacture of finished articles. Congress did not intend to permit uncompleted articles to be exported and made into finished products in the foreign country and when returned to be subject to duties only on the cost of the so-called alterations. United States v.J.D. Richardson Co., 36 CCPA 15, C.A.D. 390 (1948).

It is clear from the holding in the above judicial decisions that a manufacturing operation which constitutes an intermediate step in the preparation of the finished product cannot be characterized as an alteration. The 3M putty in this case is processed in Canada by being inserted into the device. Accordingly, as the operation is an intermediate step in making a finished product, it exceeds the scope of an alteration.


For the reasons set forth above, the placing of U.S.-made 3M putty into a fireguard unit in Canada is not a qualified assembly under subheading 9802.00.80, HTSUS, or an alteration under subheading 9802.00.50, HTSUS.


John Durant, Director
Commercial Rulings Division

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