CLA-2:OT:RR:CTF:TCM H231483 EGJ
U.S. Customs and Border Protection
John F. Kennedy International Airport Bldg #77 Jamaica, NY 11430
Attn: Chief, Trade Operations, Branch D
RE: Application for Further Review of Protest No. 4701-11-100197; Tariff Classification and GSP Eligibility of Gold Chains from India
Dear Port Director:
This letter is in response to your memorandum forwarding the Application for Further Review (“AFR”) of Protest 4701-11-100197, which was filed by counsel on behalf of IBI Customs Services (“IBI”) on February 17, 2011, as well as the AFR supplement dated July 10, 2012. IBI filed the instant Protest against U.S. Customs and Border Protection’s (CBP) tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) of sixty entries of gold chains from India. Additionally, IBI protests CBP’s determination that these entries were not entitled to preferential treatment under the Generalized System of Preferences (GSP). This decision only applies to the 53 entries for which the protest was timely filed by IBI.
FACTS:
The subject merchandise consists of gold chain necklaces imported from India between June 21, 2009 and November 13, 2009. IBI entered the gold chain necklaces under subheading 7113.19.21, HTSUS, which provides for gold rope chain necklaces. IBI claimed that these gold chain necklaces were eligible for preferential tariff treatment under the GSP.
On June 24, 2010, CBP issued a Request for Information (CF 28) to IBI for supporting documentation. IBI responded by providing six pictures of a gold chain necklace. Four of the pictures are marked with the style number 8R-S. These pictures are reproduced below:
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IBI asserted that this was the style of necklace in all of the 53 subject entries. According to IBI, the only difference in the chains was that the style number could be 5R, 6R, etc., according to the gauge of the chain. IBI further asserted that this style of necklace is the same gold chain necklace manufactured by Dynamix Chains Mfg. Pvt. Ltd., which was at issue in New York Ruling Letter (NY) N044686, dated December 15, 2008. In that ruling, CBP described and classified necklace style no. 8R-S as follows:
Style number 8R-S is a rope chain necklace that contains two types of links – “S Stations” and rope links…The applicable subheading for the mixed link gold chains, style numbers 8R-S, FRZ30-1041 and BRL-1040, will be 7113.19.2580, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal: Of other precious metal, whether or not plated with precious metal: Other: Necklaces and neck chains, of gold: Mixed link: Other”…. Articles classifiable under subheading 7113.19.2180 and 7113.19.2580, HTSUS, which are products of India, are currently entitled to duty free treatment under the Generalized System of Preferences (GSP) upon compliance with all applicable regulations.
Although claimed to be identical, IBI did not enter its gold chains under subheading 7113.19.25, HTSUS, per NY N044686, but rather under subheading 7113.19.21, HTSUS. On August 2, 2010, CBP issued a Notice of Action (CF 29), which informed IBI that CBP would be rate advancing the entries of gold chain necklaces. CBP stated that IBI had failed to substantiate its claims for classification in subheading 7113.19.21, HTSUS, and that the gold chain necklaces would be liquidated under subheading 7113.19.29, HTSUS, which provides for gold chain necklaces, other than rope or mixed link necklaces. CBP further stated that IBI had failed to substantiate its claims for preferential treatment under GSP. IBI did not provide any documentation to link its necklaces to the necklaces classified in NY N044686. The subject entries were reliquidated at the higher rate of duty between August 20, 2010, and November 19, 2010.
On February 17, 2011, IBI filed the instant Protest and AFR. On July 20, 2012, IBI submitted a supplement to its AFR. The AFR and its supplement included the following documentation for one entry made on October 29, 2009:
The above pictures of gold chain style no. 8R-S
A synopsis of a meeting with representatives of CBP’s National Commodity Specialist Division (NCSD), wherein IBI alleges that NCSD agreed that its necklaces were properly classified under subheading 7113.19.21, HTSUS
A copy of NY N044686
A chart allegedly supplied by Dynamix Chains Mfg. Pvt. Ltd. describing the manufacturing process for its gold chains (the flow sheet is not on letterhead)
The entry summary form (CBP Form 7501)
The entry/immediate delivery form (CBP Form 3461)
The ultimate consignee information list
Three House Airway Bills issued to three different consignees
Three invoices issued by H.K. Designs (India) to one of the consignees, all dated October 28, 2009 (invoices include pendants with gold rope chains)
Two invoices issued by KBS Creations (India) to one of the consignees, both dated October 28, 2009 (invoices include pendants with gold rope chains)
Two invoices issued by M/s S.J. International (India) to one of the consignees, both dated October 26, 2009 (invoices include pendants with gold rope chains)
A GSP Certificate of Origin for one of the seven invoices issued by SEEPZ Special Economic Zone, Ministry of Commerce, Mumbai, India
None of the documents had style numbers for the gold rope chain necklaces, and only the flow chart mentioned the name of the alleged manufacturer, Dynamix Chains Mfg. Pvt. Ltd. On September 28, 2011, CBP issued a Request for Information to IBI to supply the following documentation, which stated the following:
Please note, invoices attached with entries do not show style numbers, it cannot be determined that the style numbers referenced in protest are corresponding to the invoices, submit all information below to clarify that the merchandise on the invoice are in fact the same style numbers cited in ruling N044686…:
Photo images and style numbers of all chains
Submit affidavits with each specific entry included in the protest (signed affidavits with the name of officer and title of company from the middleman, manufacturer (exporter/supplier) stating the name of the manufacturer for the specific chains referenced on the invoice).
Between October 28, 2011 and December 9, 2011, counsel for IBI requested several deadline extensions to respond to the CF 28. The last deadline to respond was on December 9, 2011. Counsel for IBI never provided documents in response to CBP’s CF 28. Our office also asked IBI’s counsel for additional documentation in emails dated May 23, 2014, June 4, 2014, and December 22, 2014. Counsel did not respond to these requests for documentation. As such, this decision is limited to the information provided with the original AFR and its supplement.
The matter is protestable as a decision on classification. 19 U.S.C. §1514(a)(2). IBI’s AFR satisfies application criteria because IBI alleges that the Port’s liquidation of the gold chains under subheading 7113.19.29, HTSUS, is inconsistent with NY N044686. 19 C.F.R. § 174.24(a). IBI further alleges that classification of the gold chain necklaces involves questions of law or fact which have not previously been ruled upon by CBP. 19 C.F.R. § 174.24(b). Namely, IBI alleges that CBP practice has established treatment for its imports of gold chains to be classified under subheading 7113.19.21, HTSUS, and to receive preferential treatment under GSP. Thus, IBI claims that CBP’s reliquidation of the gold chains is a violation of 19 U.S.C. § 1625(c)(2). Finally, IBI alleges that CBP’s reliquidation of the merchandise from subheading 7113.19.21, HTSUS, to 7113.19.29, HTSUS, impacted the calculation for the competitive needs limitation waiver of gold chains from India under the GSP.
ISSUES:
1. What is the tariff classification of the gold chain necklaces?
2. Are the gold chain necklaces eligible for preferential tariff treatment under the GSP?
3. Has CBP’s prior classifications of the gold chain necklaces established treatment?
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context, which requires otherwise, by the Additional U.S. Rules of Interpretation. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. Under GRI 6, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to GRIs 1 through 5.
The HTSUS provisions at issue are as follows:
7113 Articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal:
7113.19 Of precious metal, whether or not plated or clad with precious metal:
Other:
Necklaces and neck chains, of gold:
7113.19.21 Rope.
7113.19.25 Mixed link.
7113.19.29 Other.
* * *
There is no dispute that the imported jewelry is classified under subheading 7113.19, HTSUS, as gold chain necklaces. The dispute arises at the eight-digit level, and whether the gold necklaces are classifiable as rope chain, mixed link chain or as a different type of chain. Applying GRI 6, we must determine the proper classification of the instant necklaces according to the terms of the subheadings.
A rope chain necklace consists of small oval-shaped links that are arranged into a spiral design to resemble rope. A mixed link chain consists of links of two or more different shapes or sizes. IBI claims that its gold necklaces are classified as rope chains of subheading 7113.19.21, HTSUS. For support, IBI produced invoices which describe the gold chains as “fashion pendants with rope type chains,” or as “studded jewelry pendant with rope chain.” IBI also produced pictures of a gold chain marked with style number 8R-S. IBI claims that this is the style number for the instant necklaces, and that these necklaces are identical to the necklace style number 8R-S which CBP examined in NY N044686.
However, while IBI claims that its necklaces should be classified the same as necklace style 8R-S in NY N044686, IBI did not enter the necklaces under subheading 7113.19.25, HTSUS, as per NY N044686. In NY N044686, CBP described necklace style 8R-S as having two different types of links – S-station links and rope links. As such, CBP classified necklace style 8R-S in subheading 7113.19.25, HTSUS, as a mixed link necklace. If IBI’s merchandise is identical to necklace style 8R-S in NY N044686, then IBI’s merchandise would also be classified as a mixed link necklace in subheading 7113.19.25, HTSUS, and would be eligible for preferential treatment under the GSP.
Regardless of whether the merchandise is classifiable as rope chain or mixed link chain necklaces, IBI has failed to substantiate that its imported necklaces are identical to style 8R-S. IBI’s invoices do not contain any style numbers. The pictures of the necklace submitted by IBI do not have any marking on them other than the style number. Finally, NY N044686 was issued to Dynamix Chains Mfg. Pvt. Ltd. The name of this manufacturer does not appear anywhere on IBI’s invoices or entry documents. As such, IBI has not provided sufficient documentation to classify the merchandise as either a mixed link chain or as a rope chain. Therefore, we support the Port’s classification of the gold chains under subheading 7113.19.29, HTSUS, which provides for gold necklace chains other than rope or mixed link chains.
Next, IBI claims that its imports of gold chains are eligible for preferential tariff treatment under the GSP. The GSP program is authorized by Title V of the Trade Act of 1974 (19 U.S.C. 2461, et seq.), as amended (the “1974 Act”), and is implemented in accordance with Executive Order 11888 of November 24, 1975, as modified by subsequent Executive Orders and Presidential Proclamations. Merchandise which is eligible for GSP must be a product of a designated GSP beneficiary developing country (BDC), and it must be classified under a subheading that is designated by the letter “A” or “A*” in the “Special” subcolumn of the HTSUS. See General Note 4, HTSUS. According to General Note 4(a), HTSUS, India is a designated BDC. While subheadings 7113.19.21 and 7113.19.25, HTSUS (2009), were GSP eligible subheadings, subheading 7113.19.29, HTSUS (2009), was not a GSP eligible subheading. As IBI has failed to substantiate the classification of its gold chains under a GSP eligible subheading, we do not find that IBI’s gold chains are eligible for preferential treatment under the GSP.
IBI’s next legal argument pertains to modification of treatment under 19 U.S.C. § 1625(c), which provides as follows:
(c). A proposed interpretive ruling or decision which would -
(1) modify (other than to correct a clerical error) or revoke a prior interpretative ruling or decision which has been in effect for at least 60 days; or
(2) have the effect of modifying the treatment previously accorded by the Customs Service to substantially identical transactions;
shall be published in the Customs Bulletin. The Secretary shall give interested parties an opportunity to submit, during not less than the 30-day period after the date of such publication, comments on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Customs Bulletin within 30 days after the closing of the comment period. The final ruling or decision shall become effective 60 days after the date of its publication.
In Precision Specialty Metals, Inc. v. United States, 24 C.I.T. 1016, 1043 – 1044 (2000), the U.S. Court of International Trade (CIT) stated that “the term ‘treatment’ looks to the actions of Customs, rather than its ‘position’ or ‘policy.’” The CIT further stated that the term treatment “is also distinct from the terms ‘ruling’ and ‘decision,’ which are governed by § 1625(c)(2).” Id. The CIT stated that their interpretation of the term recognized that “importers may order their actions based not only on Customs' formal ‘policy,’ ‘position,’ ‘ruling’ or ‘decision,’ but on its prior actions.” Id. Treatment is discussed at 19 C.F.R. § 177.12(c), which provides, in pertinent part, as follows:
(c) Treatment previously accorded to substantially identical transactions -- (1) General. The issuance of an interpretive ruling that has the effect of modifying or revoking the treatment previously accorded by Customs to substantially identical transactions must be in accordance with the procedures set forth in paragraph (c)(2) of this section. The following rules will apply for purposes of determining under this section whether a treatment was previously accorded by Customs to substantially identical transactions of a person: (i) There must be evidence to establish that: …
(C) Over a 2-year period immediately preceding the claim of treatment, Customs consistently applied that determination on a national basis as reflected in liquidations of entries or reconciliations or other Customs actions with respect to all or substantially all of that person's Customs transactions involving materially identical facts and issues;
Pursuant to 19 C.F.R. § 177.12(c)(i)(C), a party establishes treatment by producing evidence showing that “over a 2-year period immediately preceding the claim of treatment, Customs consistently applied that determination on a national basis as reflected in liquidations of entries or reconciliations or other Customs actions with respect to all or substantially all of that person's Customs transactions. IBI has not provided CBP with documentation to show that CBP has ever liquidated any of IBI’s entries of gold chains under subheading 7113.19.21, HTSUS. As such, we find that IBI has failed to establish a claim of treatment.
Regarding the competitive needs limitation waiver, in Presidential Proclamation 8539 of June 29, 2010, the President removed gold rope chain necklaces from India of subheading 7113.19.21, HTSUS, from the list of products eligible for preferential treatment under the GSP. See 75 F.R. 128, 38905 – 38906 (July 6, 2010). Therefore, IBI claims that a recalculation is necessary. Although the Port ran a query of IBI’s entries under subheading 7113.19.21, HTSUS, for the calendar year 2009, the total value of IBI’s line items under this subheading falls very short of the $11 million required to change the 50 percent CNL calculation. As such, we disagree with IBI that the Port’s reliquidation impacted the 50 percent CNL. Moreover, we note that this determination is not within the scope of CBP’s jurisdiction.
HOLDING
The Port correctly reliquidated IBI’s gold chain necklaces under subheading 7113.19.29, HTSUS, which provides, in pertinent part, for “Articles of jewelry …of precious metal or of metal clad with precious metal: of precious metal …: other: necklaces and neck chains, of gold: other.” The 2009 column one, general rate of duty is 5.5 percent ad valorem.
Protestant failed to provide supporting documentation substantiating that the instant gold chain necklaces were eligible for preferential tariff treatment under the GSP.
IBI has failed to substantiate its claim for treatment under 19 CFR. § 177.12(c).
The protest should be DENIED. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter.
Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division