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NY E87799

October 6, 1999

CLA-2-98:RR:NC:1:110 E87799


TARIFF NO.: 8473.30.1000; 9801.00.1043

Mr. Donald Fischer
PricewaterhouseCoopers LLP
4675 Mac Arthur Court, Suite 1600
Newport Beach, CA 92660-9881

RE: The tariff classification of memory modules from various countries; applicability of subheading 9801.00.10

Dear Mr. Fischer:

In your letter dated September 27, 1999, on behalf of Kingston Technology Corporation, you requested a tariff classification ruling.

The merchandise under consideration involves memory modules that are designed for use in desktop computers, notebook computers, computer workstations, computer servers, printers, video graphic cards, digital cameras, and hand-held PDAs. The memory modules are designed and completely assembled in Kingston’s United States facility. On occasion, the memory modules are exported from the U.S. and later reimported for repairs under warranty. While abroad, the memory modules do not undergo any advancement or improvement in condition prior to being reimported into the U.S.

The memory modules that are assembled in the U.S. consist of various components and involve various countries of origin, such as Korea, Taiwan, Japan, Germany, and the U.S. The components include bare printed circuit boards; DRAM, SDRAM, NAND-Flash DRDRAM, SGRAM; EEPROMS; PLL clock devices; buffer devices; capacitors; resistors; connectors; and clam shells.

The design, assembly and testing processes performed in the U.S. for the memory modules involves complex assembly and testing processes that substantially transform the individual components into new and distinct products. The design/engineering process consists of the electrical circuitry design phase, the PCB design phase, the prototype development phase, and the prototype testing phase. The assembly process involves seven complex phases which are: “kitting” of components; screen print/solder applications; surface mount technology placement; “reflow” phase; cleaning and drying; depaneling and quality control inspection; and testing.

The memory modules, which appear to be primarily used with ADP applications, would be covered by Legal Note 2 (b) to Section XVI of the HTS. Their principal use appears to be for ADP applications.

The applicable subheading for the memory modules will be 8473.30.1000, Harmonized Tariff Schedule of the United States (HTS), which provides for printed circuit assemblies; parts and accessories of the machines of heading 8471. The rate of duty will be free.

You ask about the applicability of subheading 9801.00.10 for the memory modules when they are returned to the U.S. for repair under warranty. The issue is therefore whether the complex assembly and testing processes performed in the U.S. substantially transforms the individual components into a new and distinctive product rendering the finished memory module a “product of the U.S.”.

Subheading 9801.00.10, HTS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of 19 CFR 10.1 are met. This tariff classification requires that the imported product satisfy three criteria: 1. The imported article must be a “product of “the U.S., 2. the imported article has not been advanced in value or improved in condition while abroad, and 3. The documentary requirements of 19 CFR 10.1 must be met.

Since the components that entered the U.S. originally were substantially transformed in the U.S. into a new and different article, the memory modules would be considered to be a product of the U.S., noting CSD-85-25, and HQ rulings 556924 and 560633. The memory modules were not advanced in value or improved in condition while abroad. Therefore, the memory modules will, upon return to the U.S for repairs, be subject to duty free-treatment under subheading 9801.00.1043, HTS, provided the documentary requirements of section 10.1 Customs Regulations (19 CFR 10.1) are met.

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 Art Brodbeck at 212-637-7019.


Robert B. Swierupski

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