CLA-2-71:OT:RR:NC:N4:433
Susan Byrne
Manager, Transportation & Customs Compliance
Tiffany & Co.
15 Sylvan Way
Parsippany, NJ 07054
RE: The country of origin and tariff classification of a Chinese, fresh water cultured pearl strand, assembled in the United States into a pearl necklace; and a freshwater pearl strand from China.
Dear Ms. Byrne:
In your letter dated February 28, 2012, you requested a country of origin and tariff classification ruling. Illustrative and descriptive literature, and a process/specification worksheet were provided.
The item is described as a Chinese, fresh water cultured pearl strand that is processed in the United States into a completed necklace. The description of the foreign process indicates: (1) partially strung 4-5mm fresh water cultured pearls imported from China, (2) the imported pearls from China are knotted at four pearl intervals using silk thread along the stand, and (3) the upper end of the strand is closed on either side by two knots, plus on either side of the strand there are four loose pearls above the closed knots. The description of the United States process indicates: (1) the final knotting of the four loose pearls of Chinese origin, and (2) the assembling of the Chinese, cultured pearl strand to jewelry findings (sterling silver jump-rings and chain tag of United States origin and sterling silver lobster clasp of Italian origin) in the formation of a pearl necklace.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulation (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
Stipulated in 19 CFR 134.1 (b), “country of origin” is defined as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.” For tariff purposes, the courts have held that a substantial transformation occurs if a new and different article emerges having a distinctive name, character or use. Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
In this case, the assembly process does not result in a substantial transformation, in that, the Chinese, cultured pearl strand, although incomplete, has the essential character of the pearl necklace. The fresh water pearl strand’s character and use remains the same even after final assembly into the pearl necklace. Thus, further evident of no substantial transformation, is the cost for the jump-rings, tag and clasp which are relatively inexpensive when compared against the cultured pearl strand. It is our opinion that the operation of positioning United States jump-rings, a United States chain tag and an Italian lobster clasp to an essentially complete fresh water pearl strand is considered simple versus complex assembly, and therefore does not confer a new and distinct article of commerce by formation of the pearl necklace. As such, the country of origin of the pearl strand and the completed necklace is China.
Classification of goods under the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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. Review of the process/specification worksheet, along with photos of the jump-rings, chain tag and lobster clasp, reveals that these jewelry findings are of minor constituents when compared to the entirety of the pearl necklace itself. Accordingly, by application of GRI 1, the pearl necklace, assembled in the United States from a stand of Chinese pearls, is classified in heading 7116, HTSUS – the provision in part for articles of natural and cultured pearls.
The applicable subheading for the fresh water cultured pearl strand assembled into a pearl necklace in the United States, having no new commercial identity, and country of origin remaining China, will be 7116.10.2500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Of natural or cultured pearls: Cultured.” The rate of duty will be 5.5% ad valorem.
Under GRI 2 (a), “any reference to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.” By application of GRI 2 (a), the fresh water cultured pearl strand of Chinese origin, although incomplete, has the essential character of the completed pearl necklace, and as such, the item is classified in heading 7116, HTSUS – the provision in part for articles of natural or cultured pearls.
The applicable subheading for the Chinese, fresh water cultured pearl strand, imported into the United States, having the essential character of the pearl necklace, will be 7116.10.2500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Of natural or cultured pearls: Cultured.” The rate of duty will be 5.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
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 Neil H. Levy at (646) 733-3036.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division