The applicability of subheading 9802.00.80 to certain U.S. made plastic connectors returned from China

N296158 May 15, 2018 CLA-2-98:OT:RR:NC:N1:119 CATEGORY: Classification TARIFF NO.: 9802.00.80; 9801.00.10 Tammy Flanders Hetrick A.N. Deringer 173 West Service Road Champlain, NY 12919 RE: The applicability of subheading 9802.00.80 to certain U.S. made plastic connectors returned from China Dear Ms. Hetrick, In your letter dated April 17, 2018, on behalf of your client MedSource International, you requested a ruling on the eligibility of U.S. made plastic PRN connectors for a partial duty exemption under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). You presented this office with two different scenarios under which your product will be returned to the United States. In scenario one, the connectors will be sent to China in bulk where they will be individually packaged, sterilized, and packed into boxes of 100 units. In scenario two, the connectors will become part of either I.V. administration sets or I.V. administration extension sets. Based on your submission, the connectors are sent to China in bulk where they will be assembled with foreign components by twisting and/or gluing to form the finished products. These sets are then individually packaged, sterilized, and placed into boxes containing 100 units. Subheading 9802.00.80, HTS, provides a partial duty exemption for articles assembled abroad in whole or in part of fabricated components, the product of the United States, which were exported in condition ready for assembly without further fabrication, have not lost their physical identity in such articles by change in form, shape or otherwise, and 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, lubrication, and painting. All three requirements of subheading 9802.00.80, HTS, 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 value of the imported assembled article, less the cost or value of such U.S. components, 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 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 10.16 (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, laminating, sewing, or the use of fasteners. Operations incidental to the assembly are not considered further fabrication operations if they are of a minor nature. In the first scenario, the twisting and gluing of the connectors into the sets are considered acceptable assembly operations and the packaging and sterilization are viewed as operations incidental to this process. Therefore, the IV administration sets and the I.V. administration extension sets are eligible for partial duty exemption under subheading 9802.00.80, HTS, with allowances in duty for the cost or value of the U.S. made plastic PRN connectors which are incorporated therein, upon compliance with the documentary requirements of 19 CFR 10.24. In the second scenario, the connectors do not undergo an assembly process in China, and, as such, are ineligible for partial duty exemption under subheading 9802.00.80, HTSUS. However, they could qualify for another Chapter 98 provision. Subheading 9801.00.10, HTSUS, 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 Section 10.1, Customs Regulations (19 CFR 10.1), are met. The mere packaging and subsequent sterilization of the U.S. made connectors in China is considered neither an advancement in value nor an improvement in condition for the purposes of subheading 9801.00.10, HTSUS. As a result, the plastic PRN connectors, may be eligible for entry as American Goods Returned. 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 April Cutuli at [email protected]. Sincerely, Steven A. Mack Director National Commodity Specialist Division