CLA-2-71:OT:RR:NC:N4:433
Roy K. Altman, Esq.
Podhurst Orseck, P.A.
One S.E. 3rd Avenue, 2300
Miami, FL 33131
RE: The tariff classification of jewelry from Mexico.
Dear Mr. Altman:
In your letter dated March 15, 2018, you requested a tariff classification ruling on behalf of Republic Metals Corporation (RMC). Description, illustrative literature and photographs were provided.
You indicate that the jewelry pieces listed below should be classified in heading 7112 of the Harmonized Tariff Schedule of the United States (HTSUS), as “scrap jewelry containing precious and semi-precious stones for the purpose only of refining the precious metals contained in the jewelry.”
Per your position paper, the “description of the transactions” taken by your client RMC are as follows: [“My client RMC is looking to import from Mexico scrap jewelry containing precious and semi-precious stones for the purpose only of refining the precious metals contained in the jewelry. During the process of refining the metals, the jewelry, as such, will be destroyed, after which my client will sell only the refined metal in the United States and return to the original owner any stones that are left over once the refining process is complete. My client must import the scrap jewelry in order to refine the metal here, rather than have the Mexican entity remove the stones in Mexico because the act of stripping the stones from the jewelry in Mexico would damage the stones. In order, therefore, to preserve the integrity of the stones, my client intends to import the jewelry into the United States intact, so that, through my client’s chemical refinement process, the stones can be removed without damage. Our understanding is that, under the Harmonized Tariff Schedule (HTS), my client would be required to pay an expensive tariff if he were importing jewelry for resale in the United States. But, since my client is not importing the jewelry for resale in the United States, because, instead, my client intends to destroy the jewelry during the refinement process, my client hereby respectfully requests permission to import the jewelry without payment of the tariff.”]
The merchandise concerned is described and depicted as follows:
Reference No. 1 is a gold cross pendant set with diamonds and rubies.
Reference No. 2 is a gold collar necklace set with diamonds.
Reference Nos. 3, 4, 5 are gold buckles set with diamonds.
Reference No. 6 is a gold pendant necklace set with diamonds having a center-cut emerald.
Reference Nos. 7 and 8 are gold bracelets set with diamonds.
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRIs). 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 (together known as legal 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 GRIs 2 through 6 may then be applied in order.
Heading 7112, HTSUS, states: “Waste and scrap of precious metal or metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal.
When interpreting and implementing the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, while neither legally binding nor dispositive, provide a guiding commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
In a plain reading of the ENs to heading 7112 “Waste and scrap of precious metal ….,” the note provides that “This heading covers waste and scrap in metallic form fit only for the recovery of the precious metal, or for use as a basis for the manufacture of chemicals.” Upon examination of the description of the transactions, you call attention to the circumstance that prior to the refining of the precious metal gold, that the precious and semiprecious gemstones will be removed and at some point later after refining returned to its original owner. This operation, the removal of the precious and semiprecious gemstones prior to refining is beyond the intended scope of heading 7112, HTSUS, because the jewelry pieces being imported will have two purposes, the recovery of the gemstones followed by the recovery of the precious metal. Consequently, heading 7112 with its subheading 7112.91 cannot be applied to the merchandise concerned.
Customs {CBP} has consistently followed the long-standing classification principle stated by the Supreme Court in United States v. Citroen, 223 U.S. 407, 414-15, 32 S. Ct. 259, 56 L.Ed. 486 (1911): … [t]he rule is well established that “in order to produce uniformity in the imposition of duties, the dutiable classification of articles imported must be ascertained by an examination of the imported article itself, in the condition in which it is imported.” Worthington v. Robbins, 139 U.S. 337,341, 35 L. Ed. 181, 182, 11 Sup. Ct. Rep. 581; Dwight v. Merritt, 140 U.S. 213, 219, 35 L. Ed. 450, 452, 11 Sup. Ct. Rep. 768; United States v. Schoverling, 146 U.S. 76, 82, 36 L. Ed. 893, 895, 13 Sup. Ct. Rep. 24; United States v. Irwin (C.C.A. 2d C.) 24 C.C.A. 349, 45 U.S. App. 746, 78 Fed. 799, 802. [Emphasis supplied.]
The Supreme Court in Citroen went on to state in relevant part: [“This, of course, does not mean that a prescribed rate of duty can be escaped by resort to disguise or artifice. When it is found that the article imported is in fact the article described in a particular paragraph of the tariff act, an effort to make it appear otherwise is simply a fraud on the revenue, and cannot be permitted to succeed. Falk v. Robertson, 137 U. S. 225, 137 U. S. 232. But when the article imported is not the article described as dutiable at a specified rate, it does not become dutiable under the description because it has been manufactured or prepared for the express purpose of being imported at a lower rate. Merritt v. Welsh, 104 U. S. 694, 104 U. S. 704; Seeberger v. Farwell, 139 U. S. 608, 139 U. S. 611. So long as no deception is practiced, so long as the goods are truly invoiced and freely and honestly exposed to the officers of customs for their examination, no fraud is committed, no penalty is incurred. Merritt v. Welsh, supra. The inquiry must be -- does the article, as imported, fall within the description sought to be applied?”]
Upon reviewing of the description of the transactions, we find that had the jewelry pieces been sent to the refiner in either waste or scrap form, or broken apart into segments, with no removal of the precious or semiprecious gemstones, and with the intent of only recovering the precious metal, then heading 7112, HTSUS, would be applicable. To reiterate, as imported, the jewelry pieces do not fall within the description of heading 7112, HTSUS, as they are not imported solely for the recovery of the precious metal, nor can it be determined in this instance, whether those jewelry pieces upon being destroyed are principally used for the recovery of the precious metal gold, or for the return of the precious or semiprecious gemstones. Consequently, based on Legal Note 2 (a) to Chapter 71, HTSUS, the jewelry pieces are classified in heading 7113, HTSUS, as articles of jewelry of precious metal.
We also make mention to Headquarters ruling HQ H168824 dated February 29, 2012, in which subheading 9817.00.90, HTSUS, was reviewed in context to gold and silver jewelry melted for the recovery of the precious metal. Subheading 9817.00.90, HTSUS, is an “actual use” provision, the rules of which are set forth in 19 Code of Federal Regulations (CFR) 10.133. Pursuant to 19 CFR 10.133, when the tariff classification of any article is controlled by its actual use in the United States, three conditions must be met. The three conditions are: 1) such use is intended at the time of importation; 2) the article is so used; and 3) proof of use is furnished within 3 years after the date the article is entered or withdrawn from warehouse for consumption.
In similar fashion to H168824, this office finds that none of the jewelry pieces listed and described above satisfy 19 CFR 10.133 because RMC has not demonstrated that its use, the recovery of precious metal, was intended at the time of importation. Rather, the jewelry pieces are first stripped of their gemstones followed by the recovery of the precious metal, and as such do not fulfill the ‘actual use’ condition of subheading 9817.00.90, HTSUS, which is the recovery of the metal content only as it relates to articles of metal remanufactured by melting or by shredding, shearing, compacting or similar processes. Consequently, subheading 9817.00.90 cannot be applied to the merchandise concerned.
The applicable subheading for reference numbers 2 (collar necklace) and 6 (pendant necklace) will be will be 7113.19.2900, 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 precious metal, whether or not plated or clad with precious metal: Of other precious metal, whether or not plated or clad with precious metal: Other: Necklaces and neck chains, of gold: Other.” The rate of duty will be 5.5% ad valorem.
The applicable subheading for reference numbers 1 (cross pendant), 3 (diamond buckle), 4 (diamond buckle), 5 (diamond buckle), 7 (diamond bracelet) and 8 (diamond bracelet) will be will be 7113.19.5090, 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 precious metal, whether or not plated or clad with precious metal: Of other precious metal, whether or not plated or clad with precious metal: Other: Other: Other.” 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 https://hts.usitc.gov/current.
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 [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division