CLA-2 CO:R:C:M 950632 DFC
Mr. Leigh A. Schmid
Senior Manager
Peat Marwick Thorne
777 Dunsmuir Street
P.O. Box 10426
Vancouver B.C. Canada
V7Y1K3
RE: Jewelry, gold; FTA eligibility
Dear Mr. Schmid:
In a letter dated October 18, 1991, you inquired as to your
client's eligibility for reduced duty rates under the U.S.-
Canada Free-Trade Act for certain gold jewelry articles
manufactured in Canada.
FACTS:
The merchandise involved consists of gold jewelry articles
such as diamond rings(mostly engagement rings), gold wedding
bands, gold and diamond pendants and diamond earrings produced in
Canada. You maintain that all these goods are classifiable under
headings 7113 and 7116, Harmonized Tariff Schedule of the United
States Annotated (HTSUSA).
The only non-Canadian component of the jewelry articles are
the diamonds imported into Canada from Belgium under heading
7102, (HTSUSA).
The manufacturing processes completed in Canada are
extensive, involving a casting operation with 10 distinct
operations which you have described in detail.
ISSUE:
Are the articles of jewelry described above eligible for
reduced rates of duty as "goods originating in the territory of
Canada"?
-2-
LAW AND ANALYSIS:
A determination as to whether the articles of jewelry
qualify as "goods originating in the territory of Canada" is
governed by General Note 3(c)(vii), HTSUSA, which reads in
pertinent part as follows:
United States-Canada Free-Trade Agreement Implementation
Act of 1988.
* * * *
(B) For the purposes of subdivision (c)(vii) of this
note, goods imported into the customs territory of
the United States are eligible for treatment as
"goods originating in the territory of Canada"
only if --
(1) they are goods wholly obtained or produced in the
territory of Canada and/or the United States, or
(2) they have been transformed in the territory of
Canada and/or the United States, so as to be
subject--
(1) to a change in tariff classification in
Canada as described in the rules of
subdivision (c)(vii)(R) of this note, or
* * *
General Rule 3(c)(vii)(R) reads in pertinent part as
follows:
* * * *
Rule (14) Section XIV: Chapter 71
* * * *
(bb) A change to headings 7113 through 7118
from any other heading outside that
group, except that pearls, temporarily
or permanently strung but without the
addition of clasps or other ornamental
features of precious metals or stones,
shall be treated as a good of the
country in which the pearls were
obtained.
-3-
The articles of jewelry in issue are eligible for treatment
as "goods originating in the territory of Canada" because they
have been transformed in the territory of Canada so as to be
subject to a change in tariff classification. Specifically, the
diamonds imported into Canada under heading 7102 are set in gold
mountings--rings, pendants, earrings-- and the resulting jewelry
articles are classifiable in heading 7113, HTSUSA.
Classification in heading 7116, HTSUSA, which you claim is
applicable, is precluded by virtue of Note 2 (b) to Chapter 71,
HTSUSA, which provides that "[h]eading 7116 does not cover
articles containing precious metal or metal clad with precious
metal (other than as minor constituents)." The diamonds of
heading 7102, HTSUSA, have been combined with Canadian gold in
very extensive Canadian manufacturing processes that result in
gold jewelry articles of heading 7113, HTSUSA.
HOLDING:
The gold jewelry articles are "goods originating in the
territory of Canada" and as such are eligible for reduced duty
rates under the U.S.-Canada Free-Trade Agreement Implementation
Act of 1988.
Sincerely,
John Durant, Director
Commercial Rulings Division
6cc AD NY Seaport
1cc John Durant