CUSTOMS COMPLIANCE | 2026-10-04

Repaired, Altered, or Assembled Abroad: Paying Duty Only on the Foreign Value Under HTSUS 9802

When U.S. goods go overseas for repair, alteration, processing, or assembly, the full value of the returning product does not have to be dutiable. Chapter 98’s 9802 provisions confine the duty to what was added abroad — if the conditions are met and documented.

Sending equipment to an overseas facility for repair, shipping U.S.-made components to a foreign plant for assembly, or having parts processed abroad are routine moves in a global supply chain. What surprises many importers is the duty bill when the goods come back — assessed on the <strong>full val

Goods that leave the country, receive work overseas, and return should be taxed on the work — not on the American value they carried out with them. HTSUS 9802 is built on that principle. For a California importer sending equipment abroad for service, shipping U.S.-made components to a foreign plant for assembly, or having parts processed overseas, the difference between paying duty on the full returning value and paying duty only on the value added abroad can be very large. This guide explains how the 9802 provisions work, what each one requires, how CBP evaluates a claim, and how to structure and document overseas operations so the duty savings survive review.

Where 9802 Sits in the Tariff Schedule

Chapter 98 of the HTSUS contains special classification provisions that describe situations rather than products. Its companion provision, 9801.00.10, lets goods that return unchanged re-enter duty-free. Subheading group 9802 picks up where 9801 leaves off: it covers goods that were exported and then advanced in value or improved in condition abroad — repaired, altered, processed, or assembled — and it reduces the duty by excluding the U.S. value from the dutiable amount. The dividing question between the two provisions is simple to state: did the goods come back as they left (9801, duty-free), or were they changed by work performed overseas (9802, duty on the added value)?

It is important to understand what a 9802 provision does and does not accomplish. It is a valuation relief — it shrinks the dutiable base by excluding U.S. content or by confining duty to the foreign operation. It is not an origin rule and not a blanket exemption. The ordinary tariff classification of the returning article, and any additional or origin-based tariffs, remain their own separate questions.

Repairs and Alterations: 9802.00.40 and 9802.00.50

Articles exported for repairs or alterations and returned fall under 9802.00.40 (repairs or alterations made pursuant to a warranty) or 9802.00.50 (other repairs or alterations). Under both, the general rate is a duty assessed only on the value of the repairs or alterations performed abroad — not on the value of the article itself — and the special rate column provides free treatment for qualifying goods repaired in certain free-trade-agreement partner countries. Two limits define these provisions. First, an "alteration" must not destroy the article's identity or create a new or commercially different article — work that does so is manufacturing, not alteration, and falls outside the provision. Second, the operation must not be a step in completing an unfinished article; finishing what was never finished is not a repair or alteration. The governing regulation is 19 C.F.R. § 10.8.

These provisions fit a wide range of real operations: a machine shipped overseas to the original equipment maker for warranty service, an instrument sent abroad for recalibration, a textile returned for re-dyeing, a casting sent out for a finishing operation that does not create a different commercial article. The recurring trap is the article that leaves the United States incomplete. If the exported item was not a finished commercial article in its own right, the foreign work that completes it is not an "alteration" — it is part of the manufacture — and the repairs-and-alterations provisions will not apply.

Metal Processing: 9802.00.60

9802.00.60 applies to articles of metal manufactured in the United States, exported for further processing abroad, and returned to the United States for further processing here. Duty is assessed on the value of the foreign processing. The provision has strict sequencing requirements — U.S. manufacture, then foreign processing, then further processing back in the United States — and all three steps must be present. The requirement that the returned metal undergo additional processing in the United States is what most often defeats a 9802.00.60 claim: if the metal comes back in finished, ready-to-use form with no domestic processing to follow, the provision does not apply. The governing regulation is 19 C.F.R. § 10.9.

Assembly With U.S. Components: 9802.00.80

9802.00.80 is the most commercially significant 9802 provision. It covers articles assembled abroad, in whole or in part, from fabricated components that are products of the United States. The returning article is dutiable on its full value less the cost or value of the U.S. components. To qualify, the U.S. components must have been:

exported in condition ready for assembly without further fabrication;
not lost their physical identity in the assembled article by change in form, shape, or otherwise; and
not advanced in value or improved in condition abroad except by being assembled and by operations incidental to the assembly process.

The line between permissible operations incidental to assembly — cleaning, minor cutting to length, lubrication, trimming of flash, final testing — and disqualifying further fabrication is frequently contested. Operations that are part of joining the components together, or that merely prepare or finish the assembly, generally remain incidental; operations that transform a component into something it was not when it left the United States generally do not. The regulations at 19 C.F.R. §§ 10.11–10.24 address these distinctions in detail, including how the cost or value of the U.S. components is determined and documented.

The CBP Procedure, Step by Step

A 9802 claim is made on entry and must be supportable on CBP's demand. In practice the sequence looks like this:

Identify the correct provision. Determine whether the foreign operation is a repair/alteration (9802.00.40 or .50), metal processing (9802.00.60), or assembly of U.S. components (9802.00.80) — the provisions are mutually exclusive in a given shipment.
Establish U.S. origin and export. Keep manufacturer's affidavits and export records showing that the exported article or components were U.S. products and that they left the country.
Document the foreign operation and its cost. Obtain the foreign assembler's or repairer's declaration describing the work done and stating its cost or the value of the U.S. components, supported by invoices and production records.
Claim the provision on entry. File the entry with the 9802 subheading and the required declarations, computing duty on the reduced base.
Retain records. Preserve the supporting documentation for the statutory recordkeeping period so the claim can be substantiated if CBP reviews the entry.

Documentation Decides the Claim

A 9802 claim reduces duty, so CBP expects proof, and the importer carries the burden. Depending on the provision, that means records establishing the U.S. origin of the exported article or components, their export from the United States, the nature and cost of the foreign repair, processing, or assembly, and that the returning article is the same one (or contains the same components) that left. Declarations by the foreign operator and by the importer, supported by invoices, bills of materials, and production records, are the standard proof. The most common reason a valid 9802 claim fails is not the law — it is missing, inconsistent, or unsupported paperwork, and because the importer owes a duty of reasonable care, a claim that cannot be substantiated is worse than no claim at all.

How It Applies to California Importers

Southern California's manufacturing base — aerospace, medical devices, electronics, and industrial equipment — routinely sends U.S.-made parts abroad for assembly and sends finished equipment overseas for warranty and non-warranty service. For these companies, 9802 is not an abstraction; it is the difference between a duty computed on the full returning value and one computed on a fraction of it. A medical-device maker that ships U.S. subassemblies to a foreign plant for final assembly, an aerospace supplier sending a unit out for a repair, or a manufacturer exporting U.S. metal stock for a processing step can each capture real savings — but only if the operation is designed and documented to fit the specific provision.

Why It Matters in Today's Tariff Environment

When additional tariffs ride on the value of imported goods, the difference between paying duty on the full article and paying duty only on the foreign repair cost or foreign content is magnified. Companies restructuring supply chains — moving assembly to new countries, sending equipment out for service, or splitting production across borders — should evaluate 9802 at the design stage, before the first shipment, so the operation is structured and documented to qualify. It bears repeating that the country of origin of the returning article is a separate question: 9802 governs the dutiable value, and whether origin-based or additional tariffs apply to the returning article is determined under the ordinary origin and classification rules.

Common Mistakes

The claims that fail tend to fail for the same reasons. Exporting a component that is not yet ready for assembly and letting the foreign plant finish fabricating it defeats 9802.00.80. Letting foreign operations advance the value of U.S. components beyond assembly and incidental steps defeats it too. Treating manufacturing as "alteration" under 9802.00.50 when the work creates a new commercial article fails. Omitting the further U.S. processing step defeats 9802.00.60. And thin documentation of origin, export, and foreign cost sinks otherwise valid claims across every provision. Each of these is avoidable with planning.

Valuing the U.S. Components and the Foreign Operation

Because each 9802 provision works by shrinking the dutiable base, the valuation of what is excluded is where much of the money is made or lost. Under 9802.00.80, duty is computed on the full value of the assembled article less the cost or value of the U.S. components, so the importer must be able to prove the component values with documentation — purchase records, bills of materials, and the manufacturer's statements that tie each U.S. component to a value. Under the repair and metal-processing provisions, duty is computed on the value of the foreign operation, so the foreign repairer's or processor's charges must be identified and supported. The regulations at 19 C.F.R. §§ 10.11–10.24 govern how the cost or value of U.S. components is determined for assembly claims, and 19 C.F.R. § 10.8 and 19 C.F.R. § 10.9 govern the repair and metal-processing computations. A claim that asserts the right provision but cannot substantiate the values behind it will not survive review.

A practical point often overlooked: the burden of establishing the excluded value falls on the importer, and CBP will assess duty on the full value if the exclusion cannot be proven. The time to capture component costs and foreign-operation charges is at the time of the transaction, in the invoices and production records, not months later when the entry is under review.

9802 and Free Trade Agreements

The repair and alteration provisions interact with free trade agreements in a way that can produce a better result than the general rate. For goods repaired or altered in certain free-trade-agreement partner countries, the special rate column of 9802.00.40 and 9802.00.50 can provide free treatment rather than a duty on the repair value, provided the goods and the operation meet the applicable conditions. Where a repair or alteration is performed in such a partner country, the agreement-based treatment should be checked alongside the general 9802 analysis, because it may eliminate the duty on the repair entirely rather than merely confining it to the foreign value.

Interaction With Additional and Origin-Based Tariffs

A recurring source of confusion is the relationship between 9802's value relief and the additional tariffs that now attach to many imports based on country of origin. The two operate on different axes. 9802 reduces the dutiable value by excluding U.S. content or confining duty to the foreign operation; it does not change the article's country of origin, and it does not by itself exempt the article from origin-based or additional duties that apply to the returning product. Whether, and how, an additional tariff applies to the portion of value that remains dutiable after a 9802 computation is a separate question that turns on the specific tariff program and the origin of the goods. Companies planning around 9802 in a high-tariff environment should analyze both questions together, because the value relief and the origin determination each affect the final landed cost.

Recordkeeping and Reasonable Care

Every 9802 claim is ultimately a documentation exercise backed by a legal theory. The importer owes a duty of reasonable care in making its entry, and a reduced-duty claim it cannot support is a claim it should not make. The records that matter — manufacturer's affidavits of U.S. origin, export documentation, foreign-operator declarations describing and valuing the work, bills of materials, and production records establishing component identity — should be assembled before the entry is filed and retained for the statutory recordkeeping period. Building that record at the design stage of the overseas operation, rather than reconstructing it after an entry is questioned, is what separates a 9802 program that holds up from one that collapses on the first request for information.

Designing the Overseas Operation to Qualify

The most reliable 9802 claims are the ones designed in from the start. Before the first shipment, the key decisions can be made with the provision in mind: exporting U.S. components in a condition that is genuinely ready for assembly rather than needing further fabrication abroad; confining the foreign work to assembly and operations incidental to it; structuring metal-processing operations so that the required further processing occurs back in the United States; and arranging for the foreign operator to produce the declarations and cost breakdowns the claim will need. A supply chain that was built without regard to 9802 can sometimes be restructured to capture it, but the cleaner and far less expensive path is to engineer the operation and its documentation to qualify at the design stage, so the duty savings are available on every entry rather than contested on each one.

Frequently Asked Questions

What is the difference between 9801 and 9802?

9801.00.10 covers goods returned unchanged, duty-free. The 9802 provisions cover goods repaired, altered, processed, or assembled abroad, with duty limited to the value added abroad.

Are warranty repairs duty-free?

Not automatically. Warranty repairs (9802.00.40) and other repairs (9802.00.50) are both dutiable at the general rate on the value of the repair only; free treatment is available under special rates for qualifying goods repaired in certain free-trade-agreement partner countries.

What does 9802.00.80 require?

U.S. fabricated components exported ready for assembly, not losing their physical identity, and not advanced in value abroad except by assembly and incidental operations. Duty is on the full value less the cost or value of the U.S. components, under 19 C.F.R. §§ 10.11–10.24.

What does 9802.00.60 cover?

Articles of metal manufactured in the United States, exported for further processing abroad, and returned for further processing here, with duty on the value of the foreign processing under 19 C.F.R. § 10.9.

Can an "alteration" go too far?

Yes. If the work creates a new or commercially different article, or completes an unfinished one, it is not an alteration and 9802.00.40 or .50 does not apply.

Does 9802 change the country of origin?

No. 9802 governs the dutiable value. Country of origin, and any origin-based or additional tariffs, is determined separately.

Who has to prove the claim?

The importer. CBP expects documentation of U.S. origin, export, and the nature and cost of the foreign operation, typically through foreign-operator declarations, manufacturer's affidavits, invoices, and production records.

What usually defeats a 9802 claim?

Insufficient documentation of U.S. origin, export, the foreign operation and its cost, or the identity of the returning goods — and foreign work that exceeds what the chosen provision allows.

Related Customs & Trade Guides

Talk to a Customs Attorney About Work Performed Abroad

If your goods are repaired, processed, or assembled overseas, you may be paying duty on value that never left the United States. Trembach Law Firm helps California importers structure and document 9802 claims. Call (213) 645-2246.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

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