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NY C86075

April 7, 1998

CLA-2-85:RR:NC:MM:109 C86075


TARIFF NO.: 9802.00.8065

Ms. Diane S. Nichols
Senior Manager Customs Compliance
Fairchild Semiconductor
333 Western Avenue
South Portland, Maine 04106

RE: Applicability of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS), to integrated circuit dice separated using a diamond saw.

Dear Ms. Nichols:

In your letter dated March 10, 1998, you requested a tariff classification ruling on the applicability of subheading 9802.00.80, (HTSUS), to integrated circuit (IC) dice separated using a diamond saw.

Your letter describes the United States manufacturing process and the foreign assembly process. A sample of a semiconductor wafer and a fully assembled (packaged) integrated circuit were provided. Fairchild Semiconductor Corporation and Fairchild Semiconductor Corporation of California manufacturer various types of integrated circuits in the United States. The integrated circuits are manufactured on wafers of silicon using numerous photographic and chemical processes. The number of integrated circuit dice per wafer vary from 60 to 3000 depending on the size of the wafer and the size of the circuit. Preliminary testing is conducted on about 20% of the dice. A pattern of lines are drawn on the wafers, which is later used for separating the dice from the wafer. These lines frame the integrated circuits in vertical and horizontal rows called "streets." The wafers containing the dice are now ready for export.

The first step in the overseas process is the testing of the previously untested dice (80%). The dice are then separated from the wafer using a diamond saw along the framing lines. Each die is then individually mounted inside a ceramic or plastic IC "package" (housing). After each die is mounted inside the "package," it is connected to the package leads, closed and sealed.

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

Articles . . . 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 that the section 10.24, Customs Regulations (19 C.F.R. 10.24), documentary requirements are satisfied.

Section 10.14(a), Customs Regulations (19 C.F.R. 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.

Section 10.14 contains an example that states where integrated circuit wafers containing individual integrated circuits have been scribed or scored in the United States, these articles are regarded as fabricated components. The example goes on to provide that separating the wafer into individual frames by cutting or the segmentation of the wafer into individual die by flexing or breaking along the scored lines is regarded as an operation incidental to the assembly process. Section 10.16(c), Customs Regulations (19 C.F.R. 10.16(c)), states that 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.

The facts presented in United States v. Texas Instruments Inc., C.A.D. 1178, 545 F. 2d 739 (1976) appear to be similar to those you have presented. The Texas Instrument case involved the production of transistors from silicon. The foreign assembly process involved the scoring of the silicon slice along the marks established in the United States. The appellate court held that the scribing operation and the separation of the transistor chips into separate individual transistor areas did not amount to a further fabrication. In addition, the court concluded that the scribing and breaking operations at issue were incidental to the assembly process within the meaning of clause (c) of the statute. See also Headquarters Ruling Letters (HRL) 555638, dated June 11, 1990 and 559071, dated August 24, 1995. Consequently, we find that the sawing of the wafers in this case along pre-drawn lines is an operation incidental to the foreign assembly process.

The separation of individual integrated circuit chips or dice by sawing a silicon wafer is not considered to be a further fabrication and is incidental to the assembly of the imported integrated circuits. The United States manufactured dice are eligible for the allowance in duty provided for in subheading 9802.00.8065, HTSUS, provided the documentary requirements of 19 C.F.R. 10.24 are satisfied.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Eileen S. Kaplan at 212-466-5673.


Robert B. Swierupski

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