CLA-2 OT:RR:CTF:TCM H140915 TNA
Christopher Bowman, Import Specialist
Anchorage Service Port
U.S. Customs and Border Protection
605 W. 4th Ave., Suite 230 Anchorage, AK 99501
RE: Modification of HQ H012548; Definition of the term “cut but not set” in Subheading 7103.99.10, HTSUS
Dear Mr. Bowman:
This letter is in reference to Headquarters Ruling Letter (“HQ”) H012548, an Internal Advice issued to the Port of Anchorage on February 12, 2008, concerning the definition of the term “cut but not set” in Chapter 71, HTSUS. We have reviewed HQ H012548 and found it to be partly in error. For the reasons set forth below, we hereby modify HQ H012548.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice proposing to modify HQ H012548 was published on May 11, 2011, in Volume 45, Number 20, of the Customs Bulletin. CBP received one comment in response to this notice, which is addressed in the ruling.
FACTS:
On May 3, 2007, the Port of Anchorage requested internal advice on the definition of the term “cut but not set” as used in Chapter 71 of the Harmonized Tariff Schedule of the United States (“HTSUS”) and specifically, in subheading 7103.99.10, HTSUS, which provides for:
Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set; ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport: Otherwise worked: Other: Cut but not set, and suitable for use in the manufacture of jewelry.
[Emphasis supplied].
In the resulting ruling, HQ H012548, CBP defined the term “cut” to mean “a process that creates new facets, or angled surfaces, on the gemstone.” We distinguished “cutting” from the process of “polishing,” which we said “simply smoothes and brightens the surface of the gemstone.” Furthermore, we defined the term “set” to mean “a mount or a base, either permanent or temporary, that holds a stone in place and is a part of the jewelry itself.”
On February 8, 2011, CBP met with representatives of the Gemological Institute of America to obtain guidance regarding the industry definition of “cut” gemstones.
ISSUE:
What is the definition the term “cut but not set” as used in subheading 7103.99.10, HTSUS?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied.
Heading 7103, HTSUS, provides, in pertinent part:
7103 Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set; ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport:
7103.10 Unworked or simply sawn or roughly shaped:
7103.10.20 Unworked
7103.10.40 Other
* * * *
Otherwise worked:
7103.99 Other:
7103.99.10 Cut but not set, and suitable for use in the manufacture of jewelry
7103.99.50 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The EN to heading 7103, HTSUS, provides, in pertinent part:
The provisions of the second paragraph of the Explanatory Note to heading
71.02 apply, mutatis mutandis, to this heading.
The EN to heading 7102, HTSUS, provides, in pertinent part:
The heading covers unworked stones, and stones worked, e.g., by cleaving, sawing, bruting, tumbling, faceting, grinding, polishing, drilling, engraving (including cameos and intaglios), preparing as doublets, provided they are neither set nor mounted. [Emphasis in the original.]
The EN to subheading 7103.10, HTSUS, provides, in pertinent part:
This subheading includes stones roughly worked by sawing (e.g., into thin strips), cleaving (splitting along the natural plane of the layers) or bruting, i.e., stones which have only a provisional shape and clearly have to be further worked. The strips may also be cut into discs, rectangles, hexagons or octagons, provided all the surfaces and ridges are rough, matt and unpolished.
The EN to subheadings 7103.91, HTSUS, and 7103.99, HTSUS, provides, in pertinent part:
Subheadings 7103.91 and 7103.99 cover polished or drilled stones, engraved stones (including cameos and intaglios) and stones prepared as doublets or triplets.
As in HQ H012548, we begin our analysis by noting that the term “cut but not set,” as it is used in subheading 7103.99.10, HTSUS, is not defined by any of the relevant tariff headings, legal notes or ENs. As a result, CBP is permitted to consult dictionaries and other lexicographic materials to determine the term’s common meaning. See, e.g., Lonza, Inc. v. United States, 46 F.3d 1098 (Fed. Cir. 1995). The term in question is then construed in accordance with its common and commercial meanings, which are presumed to be the same. See, e.g., Nippon Kogasku (USA), Inc. v. United States, 69 CCPA 89, 673 F.2d 380 (1982); Toyota Motor Sales, Inc. v. United States, 7 C.I.T. 178 (Ct. Int’l Trade 1984); Carl Zeiss, Inc. v. United States, 195 F.3d 1375 (Fed. Cir. 1999); Lonza, 46 F.3d 1098.
I. The Definition of “Cut”
In HQ H012548, noting that the term “cut” is used interchangeably with the terms “fashioning,” “girdling,” and “bruting,” CBP defined the term “cut” as “a process that creates new facets, or angled surfaces, on the gemstone.” In coming to this definition, we relied on numerous lexicographic sources. See HQ H012548, citing to Mohsen Manutchehr-Danai, Dictionary of Gems and Gemology (2nd ed. 2005); Gemological Institute of America, The GIA Diamond Dictionary (3rd ed. 1993); Jewelers’ Circular-Keystone, Jewelers’ Dictionary (3rd ed. 1976).
Further research into the definition of the term “cut” shows that in both lexicographic sources and within the gemstone industry, the term is interpreted more broadly than as defined in HQ H012548. The Dictionary of Gems and Gemology, 6th ed., by Robert M. Shipley, defines “cutting” as:
a term in general use to mean fashioning and therefore to include the operations not only of sawing (which technically is only the cutting operation in fashioning), but of grinding, polishing and faceting.
It also defines “cut stone” as “a stone which has been fashioned as a gem, as distinguished from an uncut or rough stone.” See Robert M. Shipley, The Dictionary of Gems and Gemology, (6th ed. 2008).
Similarly, The Dictionary of Gems and Gemology, (3rd ed. 2009) edited by Mohsen Manutchehr-Danai, defines “cutting” as:
the process of cutting or sawing, grinding, polishing, faceting of precious stone, or other materials to improve its brilliancy, on revolving diamond-charged grinding wheels. After cutting normally, it has symmetrical shape, either in cabochon. Also called fashioning.
It defines “fashioning,” in turn, as “a general name for sawing, cleaving, rounding up, faceting, polishing, and other operations of manufacturing of diamonds and other gemstones.” Id.
Based on the foregoing, we find that the definition of “cut” as espoused in HQ H012548 is too narrow. Therefore, we now expand it to conform to its common and commercial meaning and find that the term “cutting,” also called “fashioning,” is a process whose application distinguishes the resulting gemstones from rough stones (i.e., stones which are unworked or simply sawn or roughly shaped). See subheading 7103.10, HTSUS. It can involve one or more of the following processes: carving, cleaving, sawing, girdling, bruting, grinding, faceting, polishing, cabbing, and tumbling.
In HQ H012548, CBP stated that cutting and polishing gemstones are two different processes. There, we noted that Mohsen Manutchehr-Danai’s Dictionary of Gems and Gemology (2nd ed. 2005) defines “polishing” as “the final process after placing the facets on the gemstone, which has been rubbed with various abrasives to smooth and brighten the surface. The final polishing by machine is used to achieve a lustrous surface.” See HQ H012548, citing Mohsen Manutchehr-Danai, Dictionary of Gems and Gemology (2nd ed. 2005). We therefore defined the term “polishing” as a process that “simply smoothes and brightens the surface of a gemstone” and concluded that the definition of “cut” did not include polishing.
Upon reconsideration, we note that some definitions of the term “cutting,” as it pertains to gemstones, includes the operation of polishing. See, e.g., Robert M. Shipley, The Dictionary of Gems and Gemology, (6th ed. 2008) (defining “cutting” as a term in general use to mean fashioning and therefore to include the operations not only of sawing, (which technically is only the cutting operation of fashioning) but of grinding…, polishing, and faceting.”); and Mohsen Manutchehr-Danai, The Dictionary of Gems and Gemology (3rd ed. 2009) (defining “cutting” as “the process of cutting or sawing, grinding, polishing, faceting of previous stone or other materials to improve its brilliancy.”). [Emphasis supplied.] As a result, we find that the process of cutting may include polishing.
CBP received one comment that challenged this new definition of “cut but not set.” The commenter argues that the nomenclature of subheading 7103.99.10, HTSUS, is restrictive, in contrast to the terms of subheading 7103.99.50, HTSUS, which, as a basket provision, should be broader in scope than the subheadings before it. As such, the commenter argues that this ruling expands the definition of “cut but not set” beyond what Congress intended when it implemented the tariff schedule. In support of this argument, the commenter submitted documents to show that the phrase “cut but not set” has been a part of the tariff schedule at least as far back as 1890. As a result, the commenter argues that employing the modern industry definitions of the term “cut” may detract from the original intent of the framers of this tariff provision.
In response, we note that the common and commercial definitions of tariff terms are derived from the current common and commercial meanings, rather than the meanings that may have been understood at the time of the tariff schedule’s implementation. First, the United States Customs Court, the predecessor to the Court of International Trade, stated that there is no presumption that a commercial designation is carried over from tariff schedule to tariff schedule. See E. Dillingham, Inc. v. United States, 30 Cust. Ct. 187; 1953 Cust. Ct. LEXIS 27. Thus, even if we agreed with the commenter that the term “cut” had a different meaning when the tariff schedule was first enacted, we would still be obligated to examine today’s commercial and common meaning.
Furthermore, the Court of international Trade has said that if a party wishes to show that merchandise is not included in the commercial definition, it would not be sufficient to show that at, or prior to, the enactment of the tariff law, the merchandise was always known by a name other than the tariff term. Bar Zel Expediters, Inc v. United States, 3 C.I.T. 84; 544 F.Supp. 868; 1982 Ct. Intl. Trade LEXIS 2047 (Ct. Int’l Tr. 1982). In the present case, the materials submitted do not exclude the possibility that the meaning of “cut” does not include today’s commercial meaning. See Bar Zel Expediters, Inc., 3 C.I.T. 84, 89. Lastly, tariff terms are written for the future as well as the present, which means that tariff terms are expected to encompass merchandise not known to commerce at the time of their enactment, as long as the new article possesses an essential resemblance to the one named in the statute. Id. at 101. We interpret this language as giving current commercial meanings more weight than past definitions. As a result, we will adhere to the current common and commercial definitions of the term “cut.”
II. The Definition of “Set”
In HQ H012548, we also defined the term “set” as it is used in Chapter 71, HTSUS. There, we stated that a “setting” was a “the part of a piece of jewelry into which a stone or other gem is directly set, with claws, bezel, or other means of clamping over the edge or girdle of the stone to hold it in place.” We further stated that a “setting” was “any kind of gemstones set in a mount.” See HQ H012548, citing to Jewelers’ Dictionary 3rd ed. Radnor, PA: Jewelers’ Circular-Keystone, 1976.; Dictionary of Gems and Gemology, 2nd ed. Germany: Springer, 2005.. We also concluded that a setting could be either permanent or temporary, and was not synonymous with the term “temporarily strung together for convenience of transport,” which meant not being held firmly in place by a definite setting. See HQ 959831 and HQ 959687, both dated April 1, 1997; Dictionary of Gems and Gemology, 2nd ed. Germany: Springer, 2005. Further research shows that this definition remains consistent with the common and commercial meaning of the term “set.” As a result, we continue to adhere to this definition.
HOLDING:
Gemstones classifiable under subheading 7103.99.10, HTSUS, must be “cut” i.e., a process whose application distinguishes the resulting gemstones from rough stones (i.e., stones which are unworked or simply sawn or roughly shaped) and which involves one or more of the following processes: carving, cleaving, sawing, girdling, bruting, grinding, faceting, polishing, cabbing, and tumbling. Furthermore, they cannot be “set” i.e., held in place by a mount or a base that forms a part of the jewelry itself.
EFFECT ON OTHER RULINGS:
HQ H012548, dated February 12, 2008 is MODIFIED.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division