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HQ 560667




February 20, 1998

CLA-2 RR:CR:SM 560667 JML

CATEGORY: CLASSIFICATION

TARIFF NO: 8708.99, 9802.00.80

Mr. Rufus Jarman, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016

RE: Tariff classification of automotive connectors from Canada; country of origin marking; NAFTA; eligibility of the automotive connectors for duty allowances under subheading 9802.00.80, HTSUS.

Dear Mr. Jarman:

This is in response to your letter of September 23, 1997, requesting a binding ruling, submitted on behalf of your client ITT Automotive, Inc. ("ITT"), with respect to automotive connectors from Canada. Specifically, you ask for the tariff classification of the finished connectors, their country of origin and whether they are eligible for duty allowances under subheading 9802.00.80, HTSUS. You submitted a sample of the product for our review.

FACTS:

The facts submitted indicate that the product at issue is an automotive connector, part number H430, used to transport brake fluid or gas fluid in automobile brake or gas lines, respectively. The finished connectors consist of a metal tube approximately 24 inches in length. Two threaded fittings slide freely on the tube. The threads of the fittings face the ends of the tube. The ends of the tube are "end formed" or "flanged" so that the fittings do not come off (i.e. the ends are expanded). You state that the diameter of the tube determines its ultimate end use in either brake lines or gas lines of automobiles.

To produce the connectors, ITT will send U.S. origin metal tubing, cut to length, to Canada. In Canada, the two U.S. origin fittings will be assembled onto the tube and the tube will be "end formed" and "flanged" so that the fittings cannot come off. You state that the metal fittings are not further worked in Canada. The connectors will then be shipped to the United States for sale in the "aftermarket" (i.e. retail auto parts stores as replacement parts). You state that in their condition as exported, the finished connectors are dedicated for use solely as an auto part as described above.

ISSUES

1) What is the tariff classification of the finished connectors?

2) What is the country of origin of the finished connectors?

3) Whether the finished connectors are eligible for a partial duty exemption under subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

CLASSIFICATION

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States ("HTSUS") in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

There are two potential tariff provisions under which the finished connectors may be classified: heading 8708 (parts and accessories of the motor vehicles of headings 8701 to 8705) and heading 7306 (other tubes, pipes and hollow profiles (for example, open seamed or welded, riveted or similarly closed), of iron or steel). You contend that the finished connectors are specifically classifiable under subheading 8708.99.80, HTSUS (parts and accessories of the motor vehicles of headings 8701 to 8705:.....other parts and accessories: other:. other .. other.. other..other), the basket provision for auto parts.

The Harmonized Commodity Description And Coding System Explanatory Notes ("EN") constitute the official interpretation of the Harmonized System. While not legally binding and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the EN should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

With respect to heading 7306, HTSUS, we note the language of EN 73.06, which states "[t]he heading excludes....(f) [t]ubes, pipes and hollow profiles made up into specific identifiable articles, e.g., those prepared for use in structures (heading 73.08), tubular sections of central heating radiators (heading 73.22), exhaust manifolds for internal combustion piston engines (heading 84.09), other machinery parts (Section XVI), exhaust boxes (silencers) and exhaust pipes of vehicles of Chapter 87 (e.g., heading 87.08 or 87.14), saddle pillars and frames for cycles (heading 87.14)." Based upon your contention that the finished connectors are dedicated for use solely in a motor vehicle, and as such are clearly identifiable as connectors in brake lines or gas lines of motor vehicles, we find EN 73.06 persuasive in determining that the finished connectors are not classifiable in heading 7306, HTSUS.

Section XVII, Note 3 states in part: "[r]eferences in chapters 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those chapters." Moreover, EN 87.08 states "[t]his heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions:

(i) They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and

(ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).

The connectors are not excluded from heading 8708 by any legal note to Section XVII. In addition, the specific physical dimensions of the connectors, as described, lead us to conclude that they are principally, if not solely, used with the motor vehicles of headings 8701 to 8705. The connectors are provided for in heading 8708 (parts and accessories of the motor vehicles of headings 8701 to 8705). Based upon your contention that "[t]he diameter of the connector determines its ultimate end use in either the brake line or the gas line of the automobile," we believe that the principal use is determined likewise. That is, the principal use of the connectors (i.e. whether they are to be used as part of an auto brake line or gas line) is determined according to the diameter of the tube. We note, however, that connectors for brake and gas lines are not specifically provided for in the HTSUS. Connectors the diameter of which makes them suitable for use in brake lines are properly classified under subheading 8708.39.5050, HTSUS (parts and accessories of the motor vehicles of headings 8701 to 8705: brakes and servo-brakes and parts thereof: other: for other vehicles: other), dutiable at 2.6% ad valorem. Articles qualifying for NAFTA preference under this provision are entitled to a free rate of duty. Connectors of a diameter suitable for use with gas lines are properly classified under subheading 8708.99.80 (parts and accessories of the motor vehicles of headings 8701 to 8705: other parts and accessories: other: other ..other..other..other), the basket provision for auto parts. Articles classified under this tariff provision are dutiable at a rate of 2.6% ad valorem. Articles qualifying for NAFTA preference under this tariff provision are entitled to a free rate of duty.

COUNTRY OF ORIGIN

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. ?1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of ?1304.

Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as:

[t]he country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the country of origin' within the meaning of this part; however for a good of a NAFTA country, the NAFTA Marking
Rules will determine the country of origin.

The country of origin marking requirements for a "good of a NAFTA country" are determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993). Section 134.1(g), Customs Regulations (19 CFR 134.1(g)), defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at Part 102, Customs Regulations (19 CFR Part 102).

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. That section states that the country of origin of a good is the country in which:

(1)The good is wholly obtained or produced;

(2)The good is produced exclusively from domestic materials; or
(3)Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

"Foreign material" is defined in section 102.1(e), Customs Regulations (19 CFR 102.1(e)), as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced."

Since the finished connectors are made in Canada with materials of U.S. origin (i.e. tube and fittings), they are neither wholly obtained or produced, nor produced exclusively from domestic materials as those terms are defined under section 102.1, Customs Regulations (19 CFR 102.1). Accordingly, section 102.11(a)(3), Customs Regulations (19 CFR 102.11(a)(3)), is the applicable rule that must be applied to determine the origin of the subassemblies. Pursuant to section 102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20, Customs Regulations (19 CFR 102.20). Section 102.20 sets forth the specific tariff classification changes and/or other operations which are specifically required for the country of origin to be determined on the basis of operations performed on the foreign materials contained in a good.

You contend that the unfinished tube used to make the finished connectors is classified under subheading 7306, HTSUS (other tubes, pipes and hollow profiles (for example, open seamed or welded, riveted or similarly closed), of iron or steel) and the fittings are classifiable under heading 7307, HTSUS (tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel).

For the finished connectors dedicated for use with brake lines, which are classified under subheading 8708.39.50, HTSUS, the required change in tariff classification rule is located in section 102.20(p), Customs Regulations (19 CFR 102.20(p)), Section XVII: Chapters 86 through 89:

8708.39................. A change to subheading 8708.39 from any other heading.

Because the tube and the fittings are classifiable under headings 7306 and 7307, HTSUS, respectively, the applicable rule has been met. Consequently, for those finished connectors classified under subheading 8708.39.50, HTSUS, the country of origin is Canada.

For the finished connectors dedicated for use with automobile gas lines, which are classified under subheading 8708.99.80, HTSUS, the required change in tariff classification rule is located in section 102.20(p), Customs Regulations (19 CFR 102.20(p)), Section XVII: Chapters 86 through 89:

8708.99................. A change to subheading 8708.99 from any other subheading.

Because the tube and the fittings are classifiable under headings 7306 and 7307, HTSUS, respectively, the applicable rule has been met. Consequently, for those finished connectors classified under subheading 8708.99.80, HTSUS, the country of origin is Canada as well.

SUBHEADING 9802.00.80

Subheading 9802.00.80, HTSUS, 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, 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 U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

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

[t]he 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.

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

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. See 19 CFR 10.16(a). 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 the present case, you advise that, under certain circumstances, the tubes or fittings may be of foreign origin. Under all circumstances, however, either the tube or the fittings or both will be of U.S. origin. In accordance with the express language of subheading 9802.00.80, HTSUS, only those components of U.S. origin will be considered for 9802.00.80, HTSUS, treatment.

We are of the opinion that fitting together the fittings and the tube is an acceptable form of assembly for purposes of subheading 9802.00.80, HTSUS. See 19 CFR 10.16(a). Moreover, we find that end forming and flanging the tubes abroad so as to ensure that the fittings do not slide off the tube is an operation incidental to the assembly of the connectors. Section 10.16(b)(5), Customs Regulations (19 CFR 10.16(b)(5)), specifically states that operations incidental to assembly include "[a]djustments in the shape or form of a component to the extent required by the assembly being performed abroad." In HRL 555503, dated March 15, 1990, both ends of bare copper wire were bent into a specific angle to fit appropriate holes in a printed circuit board and soldered into position. We held in that case that the bending of the copper wire was an operation incidental to assembly under 19 CFR 10.16(b)(5). See also HRL 556422 dated March 24, 1992 (crimping a shell fitting which is attached to aluminum tubing so as to join the tubing to a rubber hose is an acceptable assembly, and the resulting deformation of the fitting is incidental to assembly under section 10.16(b)(5)).

Only the components of U.S. origin used to make the finished connectors will be eligible for duty exemptions under subheading 9802.00.80, HTSUS. The fitting together of the tube and the fittings, as well as end forming and flanging the tube so the fittings will not slide off the tube, are either acceptable forms of assembly or operations incidental thereto for purposes of that tariff provision. Therefore, the connectors may enter the United States under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. origin components assembled therein.

HOLDING:

Based upon the information provided, finished connectors suitable for use in automobile brake lines are properly classified under subheading 8708.39.5050, HTSUS (parts and accessories of the motor vehicles of headings 8701 to 8705: brakes and servo-brakes and parts thereof: other: for other vehicles: other), dutiable at 2.6% ad valorem. With regard to the finished connectors of a diameter suitable for use with automobile gas lines, however, they are properly classified under subheading 8708.99.80 (parts and accessories of the motor vehicles of headings 8701 to 8705:other parts and accessories: other: other ..other..other..other), the basket provision for auto parts. The country of origin of the finished connectors is Canada.

Additionally, it is our opinion that the operations performed abroad to create the finished connectors are considered proper assembly operations or operations incidental thereto. Therefore, the connectors may enter the United States under subheading 9802.00.80, HTSUS, with allowances in duty for the cost or value of the U.S. origin components assembled therein, provided the documentary requirements of 19 CFR 10.24 are satisfied.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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.

Sincerely,

John Durant, Director

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