CLA-2-71:OT:RR:NC:N4:433
Amy Hess
Corporate Legal Consultant
World Exchange, Inc.
11205 S. La Cienega Boulevard
Los Angeles, CA 90045
RE: The tariff classification of an earring stud, North American Free Trade Agreement (NAFTA) eligibility, and country of origin.
Dear Ms. Hess:
In your letter dated April 3, 2015, on behalf of Ronald Pratt Company (RPC), you requested a ruling for the tariff classification of an earring stud, the NAFTA eligibility for the earring stud and the country of origin for the earring stud.
Item number BD6049W-Sapphire is identified as the “Stainless Steel Daisy Crystal & Sapphire Ear Stud.” This ruling will apply to all BD6049W-Sapphire, earring studs assembled by identical means.
RPC manufactures 24K stainless steel ear studs with empty settings in the United States and purchases glass imitation gemstones from a United States supplier, who imports the imitation gemstones duty-paid from China. Each setting is designed to hold a total of five faceted, glass imitation gemstones (crystals) that forms the petals of the flower, sized each at 9pp and one, faceted, glass imitation gemstones (crystal) that forms the center of the flower, sized at 11pp. The glass imitation gemstones are affixed to the stud using United States origin 92A/92B adhesive. RPC intends to ship the stainless steel settings, the stones and adhesive to Mexico, where the stones will be manually glued into the setting using the adhesive. Upon assembly, the earring studs will be shipped back into the United States by RPC. No information was provided on the nature of the plating material.
Under the General Rules of Interpretation (GRIs) to the Harmonized Tariff Schedule of the United States (HTSUS), specifically at GRI 3(b), the Stainless Steel Daisy Crystal & Sapphire Ear Stud is composed of different components (stainless steel and glass) and is therefore considered a composite good. Regarding the essential character of composite goods, the Explanatory Notes (ENs) to GRI 3 (b) (VIII) of the HTSUS state that “the factor which determines essential character will vary between different kinds of goods. It may for example, be determined by the nature of the materials or components, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.” When the essential character of a composite good can be determined, the whole product is classified as if it consisted only of the material or component that imparts the essential character to the composite good.
We recognize per earring that the weight of the stainless steel setting is significantly greater than the weight of the glass imitation gemstones, the cost of the stainless steel setting and cost of the glass imitation gemstones are nearly equal, and that the steel stud without the glass imitation gemstones allows the earring to pierce through one’s ear. Nevertheless, per earring the volume of the six, faceted glass imitation gemstones that cover the visual surface area of the stud provides the beauty of this imitation gemstone earring. As such, the essential character of the stud is provided by the glass imitation gemstones, which give the overall appearance of a faux gemstone earring in the shape of a daisy.
The applicable subheading for the Stainless Steel Daisy Crystal & Sapphire Ear Stud(s) will be 7117.90.9000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Imitation Jewelry: Other: Other: Valued over 20 cents per dozen pieces or parts: Other: Other.” The rate of duty will be 11% ad valorem or free under NAFTA.
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/.
To be eligible for tariff preferences under NAFTA, goods, must be “originating goods” within the rules of origin in General Note 12 (b), HTSUS. In this particular case, to be an originating good the Stainless Steel Daisy Crystal & Sapphire Ear Stud(s) must be transformed in the territory of Mexico pursuant to General Note 12 (b) (ii), (A), which states: (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein. General Note 12 (t), Chapter 71, Note 2 to the HTSUS, is applicable. The rule states at Note 2: A change to headings 7113 through 7118 from any heading outside that group. We note that the glass imitation gemstones of Chinese origin are classified in heading 7018, HTSUS, and as such are classified outside of headings 7113 through 7118, resulting in the earring stud(s) being NAFTA originating.
Part 134, Customs Federal Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. In Section 134.1 (b), the country of origin of an article 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 for country of origin marking purposes. 19 CFR 134.1 (b) is not applicable for NAFTA goods, as country of origin will be determined in accordance with 19 CFR 102 – Rules of Origin.
19 CFR, Subpart B – Rules of Origin, § 102.11, General rules, at (a) “The country of origin of a good is the country in which: (3): Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.” Subpart A, General, – § 102.1 (e) defines the meaning of “foreign material” to be a material whose country of origin as determined under these rules is not the same country as the country in which the good was produced. As such, the 24K stainless steel ear studs with empty settings manufactured in the United States and classified in heading 7117 and the CZ stones of Chinese origin classified in heading 7104 are both considered foreign materials.
19 CFR, Section 102.20, “specific rule by tariff classification,” states: for 7117-7118 – A change to heading 7117 through 7118 from any other heading, including another heading within that group. A review of the criteria of § 102.17 “Non-qualifying operations” does not appear to be applicable to the merchandise concerned. Although the CZ stones of Chinese origin are classified in heading 7104, being of foreign material and classified outside of heading 7117, the 24K stainless steel ear studs with empty settings, classified in heading 7117, also being of foreign material, do not meet the specific rule by tariff classification as the settings are classified in the same heading as the criterion for the rule, a change to heading 7117 from any other heading….
Moving along the hierarchy of § 102.11 at (b) (1), the country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good.” 19 CFR, Section 102.18 (b) (1) elaborates on the meaning of “essential character” to include only those materials, both domestic and foreign, in which a change in tariff classification is not allowed under 19 CFR 102.20. As the only material for which a change in tariff classification did occur was the 24K stainless steel ear studs with empty settings manufactured in the United States, the country of origin for the Stainless Steel Daisy Crystal & Sapphire Ear Stud(s) is that of the United States.
Further, we find that 19 CFR 102.19 (NAFTA preference override) is implicated. 19 CFR 102.19 (b) states: “If, under any other provision of this part, the country of origin of a good which is originating within the meaning of 19 CFR 181 (q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.” It is our opinion that the affixing of faceted, glass imitation gemstones of Chinese origin, six per stud, to studs manufactured in the United States is an advancement in value and an improvement in condition of the assembled earrings. Accordingly, the country of origin for “duty purposes” is Mexico.
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 E-mail address: [email protected].
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division