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HQ 558795

April 28, 1995

CLA-2-R:C:S 558795 DEC


TARIFF NO: 9802.00.80

Mr. Kumen B. Davis
Northern Outfitters
1083 North State Street
Orem, Utah 84057

RE: Assembly; Direct injection molding; HRL 557152; HRL 553808; 19 CFR 10.24; 19 CFR 10.14; 19 CFR 10.16

Dear Mr. Davis:

This is in response to your letter dated August 15, 1994, in which you seek a ruling regarding the eligibility for the partial duty exemption under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 9802.00.80. We apologize for the delay in responding to your ruling request.


Northern Outfitters is a manufacturer of specialized cold weather clothing and footwear. In your ruling request, you indicated that Northern Outfitters is proposing to use a Canadian subcontractor to attach the sole to the upper-outer shell of your Arctic boots. You are proposing to send the boot's upper-outer shell, which is manufactured in your Orem, Utah factory, to Canada. The Canadian company will attach the sole which is produced using a direct injection molding to the upper-outer and return the article to the United States so your company may finish the boot's construction. You state that the materials used in the compound to mold the sole originate in the United States.


Whether the United States-made materials and components that are transported to Canada for processing that includes injection molding of a sole and the attachment of the sole to a boot's upper will be entitled to the duty exemption under subheading 9802.00.80, HTSUS.


Subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), provides for 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, 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 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 United States components assembled abroad provided the section 10.24, Customs Regulations (19 CFR 10.24), documentary requirements are satisfied.

Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), states, in part, that

The components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components.

Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. 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, HTSUS, to that component. See 19 CFR 10.16(c).

In this case, you have indicated that the upper-outer shell that is manufactured in the United States will be sent to Canada to be assembled with a sole made using a
direct injection molding process containing all United States-origin materials. It is clear that the injection molding process completely changes the physical identity of the molding compound. See Headquarters Ruling Letter (HRL) 557152, dated June 18, 1993. In HRL 557152, Customs determined that a direct injection molding process to create a rotor body precluded an allowance in duty pursuant to subheading 9802.00.80, HTSUS, for the body because the injection molding process was deemed a further fabrication of the United States-origin granulated thermoplastic. In HRL 553808, dated October 11, 1985, Customs decided that a duty allowance was allowable for the U.S.-origin components involved in the assembly of footwear uppers. However, no duty allowance was allowed for the U.S. materials that were exported and reduced to a molten state and injection molded to form the outsoles of the shoes. Customs determined that a duty allowance was not appropriate because the materials lost their physical identity when the materials were changed in shape during the molding process. Consistent with the foregoing, we find that the full value of the subject article imported into the United States is subject to duty less the cost of the United States-origin upper outer shells, provided that the documentary requirements of section 10.24 are met.


The imported boot sole is not entitled to a duty allowance pursuant to subheading 9802.00.80, HTSUS, because the foreign processing (direct injection molding) results in a further fabrication of the U.S.-origin molding compound. However, the importer is entitled to a duty allowance with respect to the value of the U.S.-manufactured upper-outer shells that are assembled to the boot's sole in Canada, provided that the documentary requirements are met.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.


John Durant, Director

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