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HQ 556960

March 3, 1993

CLA-2 CO:R:C: 556960 BLS


TARIFF NO.: 9802.00.80

District Director of Customs
880 Front Street, Rm. 5-S-9
San Diego, California 92188

RE: Internal Advice 54/92; subheading 9802.00.80, HTSUS; identification of U.S. components, entry-by-entry basis; commingling; segregation of U.S. and foreign components; 19 CFR 10.24(a); 10.24(d); 10.24(e); HRL 071136

Dear Sir:

This is in reference to your undated memorandum received in this office October 5, 1992, concerning the applicability of subheading 9802.00.80, HTSUS, to certain remanufactured turbochargers imported by Garrett Aftermarket Division of Allied Signal, Inc. ("Garrett").


Garrett exports used turbochargers to their Mexican facility in Mexicali. There, they disassemble them, inspect the disassembled components, clean those components that are still of usable quality and then assemble turbochargers according to customer orders. Those components that do not meet quality standards will be scrapped.

Garrett also exports new U.S.-origin components, which it uses with the refurbished components, to assemble the turbochargers. The remanufactured turbochargers ("reman turbos") are shipped to the U.S.

Assembly of the reman turbos is dependent on specific customer orders. A customer order can be a minimum of 5 to 200 turbos. The average order is 50 turbos. Each order is considered a "lot". Each shipment to the U.S. can consist of up to 10 different lots. Garrett can identify the number, type and value of the new U.S.- origin components for each and every customer order or "lot", on each and every shipment to the U.S. However, Garrett is unable to identify the U.S. components in each individual turbocharger, since
the units are not produced individually and none of its internal documentation is set up by individual unit, but rather by production lot.

Garrett claims that the new U.S. origin components are physically and strictly segregated from the recycled components in the assembly process; that they are never commingled with refurbished components in common bins; that its internal requirements and controls can, without exception, identity the precise quantity and identity of the U.S. components in each lot, on an entry-by-entry basis. The company claims that it can provide records to identify the specific components of U.S. origin in particular shipments.


1) Whether the imported remanufactured turbochargers may be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, when the U.S. components cannot be identified on the basis of the individual turbocharger, but may be identified on an entry-by-entry basis.

2) In the alternative, may Garrett use its 6-month cost submission, currently used to reconcile its costs for appraisement purposes, to claim subheading 9802.00.80, HTSUS, for all importations made during the prior 6 month period, and to reconcile duties owed/refunded at that time.


Section 10.24(a), Customs Regulations (19 CFR 10.24(a)), requires the submission of a foreign assembler's declaration with the entry of articles claimed to be entitled to the exemption under subheading 9802.00.80, HTSUS. The declaration must state that, to the best of the asembler's "knowledge and belief", the articles being imported were assembled, in whole or in part, from components that are products of the U.S., and must contain certain information concerning the U.S. components, including their description, quantity and value. The declaration must also include a description of the assembly operations performed abroad, as well as an endorsement by the importer stating that the declaration and other documents submitted are correct and comply with all pertinent Notes of the HTSUS.

Please note that it is the position of this office that under 19 CFR 10.24, a subheading 9802.00.80, HTSUS, exemption may be granted only if the importer can demonstrate, for each and every entry for which the allowance is claimed, that those components claimed to be products of the U.S. are, in fact, products of the U.S. Also pursuant to section 10.24, the district director may waive the detailed entry-by-entry documentation when he/she is satisfied that the importer and assembler have established reliable controls, including the strict physical segregation of U.S. and foreign components and the maintenance of any other records pertaining to the U.S. components, so that the district director can identify by audit, if necessary, the specific components of U.S. origin in particular shipments for which a subheading 9802.00.80, HTSUS, allowance is claimed. See, for example, Headquarters Ruling 071136, dated December 27, 1983.

This position precludes from subheading 9802.00.80, HTSUS, treatment, any claim based on an accounting procedure, such as the aggregate-quantity method or the cost-ratio method, in which the U.S. and foreign components had been commingled in such a way that the precise quantity and value of the U.S. components in a given shipment could not be substantiated.

In the instant case, if Garrett is able to document the U.S. origin of the imported components on an entry-by-entry basis, or establish, to your satisfaction, that the required controls are maintained to strictly segregate new U.S. origin and foreign or refurbished components to prevent commingling, then the imported articles will be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS, provided all other documentary requirements of 19 CFR 10.24 are satisfied. The assistance of Regulatory Audit or other Customs office may be required to verify the required controls, and to ensure compliance with record- keeping requirements.

We reject as unacceptable Garrett's alternative request that the semi-annual computed value cost submission be used as a vehicle for reconciling the U.S. origin of the components for entries filed during the preceding 6 month period. Such approach is comparable to an "aggregate-quantity" method of accounting, and would permit commingling of U.S. and or refurbished foreign components. The quantity and identity of U. S. components in a given shipment could not be substantiated, contrary to 19 CFR 10.24(a), as enunciated in prior rulings of this office.


1) Remanufactured turbochargers will be entitled to the partial duty exemption under subheading 9802.00.80, HTSUS, assuming all documentary requirements are satisfied, if the importer can establish that reliable controls are in effect resulting in strict physical segregation of new U.S.-origin components and foreign or refurbished components, and specific U.S. components can be identified on an entry-by-entry basis.

2) A semi-annual cost submission reflecting the quantity and value of U.S. components imported during the preceding 6 month period cannot be used to determine the eligibility of the imported turbochargers for the partial duty exemption under subheading 9802.00.80, HTSUS.


John Durant, Director
Commercial Rulings Division

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