CLA-2 OT:RR:CTF:TCM H012548 ADK
Christopher Bowman
United States Customs and Border Protection
605 W. 4th Ave, Ste 230
Anchorage, AK 99501
RE: Definition of the term “cut but not set” in chapter 71
Dear Mr. Bowman:
This is in response to your internal advice request, dated May 3, 2007, which is in accordance with Customs and Border Protection (CBP) Regulations Part 177 (19 CFR 177). This regulation allows requests for "advice or guidance to the interpretation or proper application of the Customs and related laws with respect to a specific Customs transaction . . . from the Headquarters Office at any time, whether the transaction is prospective, current, or completed." 19 CFR §177.11(a). Specifically, the request for internal advice was made pursuant to 19 CFR §177.11(b)(2), which provides:
When no ruling has been issued. Internal advice will be sought by a Customs Service field office with respect to a current transaction for which no ruling was requested or issued under the provisions of this part whenever a difference of opinion exists as to the interpretation or proper application of the Customs and related laws to the transaction, and the field office is requested to seek such advice by an importer or other person who would have been entitled, under § 177.1(c), to request a ruling with respect to the transaction, while prospective. The request must be submitted to the field office in writing and in accordance with the provisions of paragraph (b)(3) of this section.
According to the request, you are seeking internal advice as to the definition of the term “cut but not set” as used in chapter 71 of the Harmonized Tariff Schedule of the Untied States (HTSUS).
ISSUE:
What is the definition of the term “cut but not set” as used in chapter 71 of the HTSUS?
LAW AND ANALYSIS:
Classification under the 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. 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. The HTSUS provisions which refer to “cut” stones are as follows:
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:
7103.99.1000 Cut but not set, and suitable for use in the manufacture of jewelry
7103.99.5000 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. The relevant ENs are as follows:
The EN to heading 71.03 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 second paragraph of the EN to heading 71.02 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 original)
* * *
The EN to heading 71.16 provides, in pertinent part:
EN 71.16 thus includes:
(A) Articles of personal adornment and other decorated articles (e.g. clasps and frames for handbags, etc; combs, brushes; ear-rings; cuff-links, dress-studs and the like) containing natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed), set or mounted on base metal (whether or not plated with precious metal), ivory, wood, plastics, etc.
* * *
The Subheading EN to 7103.10 provides:
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 Subheading EN to subheadings 7103.91 and 7103.99 provides:
Subheadings 7103.91 and 7103.99 cover polished or drilled stones, engraved stones (including cameos and intaglios) and stones prepared as doublets or triplets.
* * *
Your request for internal advice asks for clarification as to the meaning of the phrase “cut but not set,” as used in subheading 7103.99.1000, HTSUSA. Prior to reaching this 10-digit subheading level, it is necessary to satisfy the terms of the related heading and subheading. We assume that you have determined that the stones at issue are “precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set” according to the terms of heading 7103, HTSUS. Furthermore, we assume that these stones have been “otherwise worked,” as required by the terms of subheading 7103.99, HTSUS.
At the 6-digit level, heading 7103, HTSUS, provides for both worked and un-worked stones. Semi-precious stones of subheading 7103.10, HTSUS, may be subjected to minor cutting or shaping operations, such as sawing, cleaving, or bruting, but the surfaces and ridges must remain “rough, matt and unpolished,” i.e., they must be in essentially the same condition as when they were mined from the earth. See EN 7103.10. HQ 951866, dated August 21, 1992. The “otherwise worked” stones of subheading 7103.99, HTSUS, must have been manufactured such that the surfaces are no longer rough, matt or unpolished. Such “otherwise worked” stones are then further divided between those that have been “cut but not set, and suitable for use in the manufacture of jewelry” and “other.”
We will first consider the meaning of the term “cut.” The term “cut” is not defined in the HTSUS or its corresponding ENs. When a tariff term is not defined in either the HTSUSA or its legislative history, the term's correct meaning is presumed to be its common meaning in the absence of evidence to the contrary. See Rohm & Haas Co. v. United States, 727 F.2d 1095 (CAFC 1984). The term “cut” is used interchangeably with the terms “fashioning,” “girdling” and “bruting.” These key terms, and their respective common meanings, are:
Cutting:
The process of the cutting or sawing, grinding…faceting of precious stones or other materials to improve its brilliancy on revolving diamond charged grinding wheels. After cutting, it normally has a symmetrical shape which is sometimes in cabochon. Also called fashioning. (Dictionary of Gems and Gemology. 2nd ed. Germany: Springer, 2005. ISBN: 3-540-23970-7);
See Fashioning (The GIA Diamond Dictionary. 3rd ed. Santa Monica, CA: Gemological Institute of America, 1993. ISBN: 0-87311-026-9);
See Girdling (Jewelers’ Dictionary. 3rd ed. Radnor, PA: Jewelers’ Circular-Keystone, 1976. ISBN: 0-931744-01-6);
Fashioning:
(1) General term used to describe the entire process of manufacturing a polished diamond from the rough, including design, cleaving, sawing, bruting, and polishing; also called cutting. (2) industry term for bruting (The GIA Diamond Dictionary. 3rd ed. Santa Monica, CA: Gemological Institute of America, 1993. ISBN: 0-87311-026-9);
General name for sawing, cleaving, rounding up, faceting…of manufacturing of diamonds and other gemstones (Dictionary of Gems and Gemology. 2nd ed. Germany: Springer, 2005. ISBN: 3-540-23970-7);
Girdling:
The process by which round diamonds are given their circular or fancy shape, also known as cutting, bruting or rounding (Jewelers’ Dictionary. 3rd ed. Radnor, PA: Jewelers’ Circular-Keystone, 1976. ISBN: 0-931744-01-6).
Also relevant to his analysis is the definition of the term “polishing.” Again, the term is not defined in the HTSUS or its corresponding ENs. Its common meaning is as follows:
Polishing:
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. (Dictionary of Gems and Gemology. 2nd ed. Germany: Springer, 2005. ISBN: 3-540-23970-7);
As shown by the above definitions, the terms “cutting” and “polishing” are not interchangeable. They refer to two different processes in gem manufacturing. The process of “cutting” creates new facets, angled surfaces, on the gemstone. The cutting process is time-consuming, requires specialized tools, and demands expert training and craftsman skill levels. The process of polishing, however, simply smoothes and brightens the surface of a gemstone. We note that there are two different methods of polishing
gems. Tumbling, also known as chemical polishing, is different from traditional abrasive
polishing in that the gemstones are not mounted individually and polished on a polishing wheel but are loaded, in bulk, into a chemical reactor. NY N018792, dated November 8, 2007. A gemstone that has been tumbled is rendered glossy and shiny by chemical treatment.
CBP has previously considered the classification of jewels under heading 7103, HTSUS. In Headquarters Ruling Letter (HQ) 951571, dated May 22, 1992, we classified Aroma Rocks which were coated with fragrant essential oils. These rocks were used as a combination of aromatherapy and crystal therapy. We noted:
The aroma rocks are polished (tumbled) …and are not set or mounted. Therefore, pursuant to EN 71.02 they are considered worked and are classifiable under heading 7103, HTSUS. As the aroma rocks are unset and polished semi-precious stones which are of jewellery [sic.] quality, they…are classified in subheading 7103.99.50, which provides for other worked semi precious stones.
Subheading 7103.99.10, HTSUS, provides for gemstones which have been “cut but not set.” As required by the terms of this subheading, the aroma rocks were “not set.” Nonetheless, they were excluded from the subheading because they were not “cut,” i.e., the manufacturing process did not create new facets, angled surfaces, on the gemstone. Instead, they were chemically polished. See also HQ 952813, dated November 20, 1992 (Identifying cutting and polishing as two different operations).
We note that the determination in ruling HQ 951571 is inconsistent with our conclusion in HQ 951866, dated August 21, 1992. In 951866, the term “tumbled” was used interchangeably with the term “cut.”
As a result of [the tumbling] process, the gemstones are cut into different shapes and are suitable for use in the manufacture of jewelry…It is our position that gemstones that are shaped by tumbling are more than "roughly shaped" and would be considered "otherwise worked" for HTSUS purposes. As the subject semi precious gemstones are tumbled, not set and suitable for use in the manufacture of jewelry, they would be classified in subheading 7103.99.10, HTSUS.
The above-mentioned ruling correctly identifies the gemstones as articles of subheading 7103.99, HTSUS. The rocks were shaped by tumbling, and were therefore “otherwise worked.” However, this office disagrees with the assessment that the gemstones were classifiable in subheading 7103.99.10, HTSUS. The stones were chemically polished but
were not cut. Nonetheless, they were identified as “cut but not set.” This determination is inconsistent with CBP’s position on the definition of the term “cut” as set forth in this ruling and in HQ 951571. As such, the ruling is potentially subject to revocation or modification.
We next consider the meaning of the term “set” as used in subheading 7103.99.10, HTSUS. Again, the term is not defined in the HTSUS or its corresponding ENs.
Setting:
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. Jewelers’ Dictionary
Any kind of gemstones set in a mount. Dictionary of Gems and Gemology
Mount:
A metal framework made of gold, silver, etc., into which a gemstone, glass, or pottery is set in various forms and techniques to improve the beauty of the stone. Also called mounting. Dictionary of Gems and Gemology
As demonstrated by the above definitions, a setting provides a mount or base which holds a stone in place and is part of the jewelry itself. A setting may be either permanent or temporary. See HQ 959831 and 959687, both dated April 1, 1997. We note that the terms “setting” or “mounting” are not synonymous with the term “temporarily strung for convenience of transport.” Stones that have been “temporarily strung for convenience of transport” are not firmly held in place by a firm setting. Instead, they are strung together merely for convenience and to “prevent mutual rubbing and chipping.” See Dictionary of Gems and Gemology.
HOLDING:
Gemstones classifiable under subheading 7103.99.10, HTSUS, must be cut, i.e. they must undergo a procedure in which new facets are created on the surface, and they must not be set, i.e. they cannot be held in place by a mount or a base.
No later than 60 days after the date of this letter, the Office of International Trade will take steps to 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