OT:RR:CTF:VS H313088 EE
Ms. [X]
[X
X
X]
RE: Diamond Engagement Rings; Country of Origin Marking
Dear Ms. [X]:
This is in response to your correspondence, dated July 16, 2020, in which you request a ruling concerning the country of origin of certain diamond engagement rings. Your request, submitted as an electronic ruling request, was forwarded to this office on August 14, 2020 from the National Commodity Specialist Division for review. Our ruling is set forth below.
You have asked that certain information submitted in connection with this request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information designated as confidential in your request and contained within brackets in the ruling will not be released to the public and will be withheld from published versions of this ruling.
FACTS:
The articles under consideration are finished engagement rings imported by [X] (“the importer”). There are three main components of a diamond engagement ring: the shank, the ring-head, and the cut and polished loose diamond. The shank (often referred to as the setting), is the portion of the ring that is circular and fits around the finger. The ring-head is the part of the ring elevated from the shank of the ring that allows the diamond to be fastened securely to the shank. The diamond is a cut and polished loose diamond.
You state that the shank of the engagement ring can be either domestic or foreign. Foreign shanks are either imported directly from the foreign vendor or they are delivered to the importer from a domestic vendor who has imported the shanks from their foreign supplier. You state that the gold shanks are classified under subheading 7113.19.5090, HTSUS; platinum shanks are classified under subheading 7113.19.5025, HTSUS. You state that the ring-heads are sourced domestically. Gold ring-heads are classified under subheading 7113.19.5090, HTSUS. Platinum ring-heads are classified under subheading 7113.19.5025, HTSUS. The cut and polished Kimberley compliant diamonds are imported from various foreign vendors. The diamonds are classified under subheading 7102.00.3910, HTSUS, or under subheading 7102.39.0050, HTSUS.
You state that the entire end-to-end process of creating a finished engagement ring averages about 80-120 minutes per ring and requires the work of a skilled and highly trained jeweler using specialized equipment. You claim that the imported components undergo a substantial transformation when creating the finished engagement ring.
The manufacturing process for the engagement rings includes: the inspection of the ring-head, diamond, and shank; ring-head integration; sizing of the ring; polishing; setting of the diamond in the ring-head; and plating.
During the ring-head integration, a hole is drilled in the shank and the shank is filed to accommodate the ring-head. The two pieces are then joined together by soldering and then they are cleaned.
Sizing is the process of increasing (sizing up) or decreasing (sizing down) the diameter of the shank to fit the wearer’s finger. Sizing up the ring involves cutting the shank component with a hand saw, bending the two cut ends outward, fabricating a section of the same precious metal is the original shank, adding the new section to the shank, and soldering the section to the shank to fill in the gap. Sizing down the ring involves cutting and removing a small section of the shank using two incisions, bending the cut ends of the shank inward to remove the gap, and soldering the shank ends together.
Polishing includes removing surface material, improving the surface and preparing it for buffing by the use of sandpaper and/or coarse compounds. Buffing with the use of buffing wheels and buffing compounds makes the surface smooth, producing a high luster and mirror finish if desired.
The setting is the process of affixing the diamond in the ring-head. It involves cutting notches in the ring-head prongs using a drill and a burr, bending the prongs over the diamond to ensure a secure fit, and shaping the ends of the prongs to meet strict standards. The notches in the prongs are cut with a drill and burr, and are cut in the precise size and shape to fit the diamond. At the end of the process, the prongs are rounded to the crown of the diamond.
Plating with rhodium is an electro-chemical process to coat a fine layer of rhodium over white gold to increase durability and shine. It involves submerging a completed ring in a cleaning solution and a rhodium solution for a controlled amount of time.
Finally, the ring is placed in a solution for several minutes in an ultrasonic cleaner which uses ultrasound to remove unwanted particles and debris from the ring and steam cleaned where the ring is placed under a high-pressure jet of steam to remove any remaining particles and debris. The finished ring is then reviewed to ensure that all quality standards are met. Rings not meeting quality assurance standards are reworked and reprocessed as necessary.
ISSUE:
What is the country of origin for marking purposes of the diamond engagement rings?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was that the ultimate purchaser should be able to know by an inspection of the markings on the imported goods the country of which the good is the product. “The evident purpose is to mark the goods so at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).
Part 134, Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. 19 C.F.R. § 134.1(b), defines “country of origin” 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. A substantial transformation occurs “when as a result of a process an article emerges, having a distinctive name, character or use” from the original material subjected to the process. Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). If the manufacturing process is a minor one, which leaves the identity of the imported article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d per curiam, 702 F.2d 1022 (Fed. Cir. 1983).
CBP looks at the totality of the circumstances and makes decisions on substantial transformation on a case-by-case basis. The country of origin of the article’s components, the extent of the processing that occurs within a given country, and whether such processing renders a product with a new name, character, and use are primary considerations. In addition, facts such as resources expended on product design and development, extent and nature of post-assembly inspection procedures, and worker skill required during the actual manufacturing process are considered when analyzing whether a substantial transformation has occurred and no one factor is determinative.
CBP has previously considered whether the assembly of a ring with a stone is considered a substantial transformation of the components. CBP has consistently held that the setting of gold rings with precious stones does not constitute substantial transformation. In New York Ruling Letter (“NY”) N308134, dated December 23, 2019, CBP held that a gold ring, cast in Hong Kong, and diamonds from India, which were set in China where the finishing processes were performed, were not substantially transformed. Accordingly, CBP found that the country of origin of the gold ring was Hong Kong, where the gold ring was cast. In NY N271750, dated January 13, 2016, gold cast in the United States into rings was sent to the Dominican Republic to be set with melee diamonds, solitaire diamonds, and other solitaire stones for polishing and setting of the diamonds and stones. After assembling the rings in the Dominican Republic, the rings were sent back to the United States for final polishing. CBP held that the setting of the diamonds and other stones onto gold ring castings of U.S. origin did not substantially transform the rings into goods of the Dominican Republic. Accordingly, CBP found that the country of origin of the final rings was the United States, where the gold was cast. See also NY N251883, dated April 17, 2014.
Based upon the rulings above, we do not find that inspecting the ring-head, diamond, and shank; the ring-head integration; sizing of the ring; polishing; setting of the diamond in the ring-head; and plating are sufficient processing to be considered substantial transformation. Rather, the shank, the ring-head, and the cut and polished loose diamonds are ready for assembly and merely refined when processed in the United States and as such they are not substantially transformed when they are made into the finished diamond engagement rings. In accordance with the rulings cited, we find that the country of origin of the diamond engagement rings is the United States if the shank is the from the United States or the foreign country where the shank is produced.
19 C.F.R. § 134.1(d) defines the term “ultimate purchaser” as “generally the last person in the United States who will receive the article in the form in which it was imported.” Moreover, 19 C.F.R. § 134.1(d)(3) indicates that “[i]f an article is to be sold at retail in its imported form, the purchaser at retail is the ‘ultimate purchaser.’” In the instant case, the diamond engagement rings are not substantially transformed upon importation. As such, the ultimate purchaser is the consumer who purchases it from the importer.
The marking statute requires articles of foreign origin to be marked with their country of origin (19 U.S.C. § 1304). For the engagement rings with a shank from the United States, since the country of origin for marking purposes will be the United States, they will be excepted from country of origin marking requirements. Please note that if you wish to mark the diamond engagement rings or the packaging containing these rings to indicate that they are “Made in the USA,” the marking must comply with the requirements of the Federal Trade Commission (“FTC”). We suggest that you direct any questions on this issue to the FTC.
You state that due to the size and the delicacy of the diamond engagement rings, you are unable to etch the country of origin markings directly on the products. Further, die stamping or cast-in-the-mold lettering on these products would not be legible for the customer. Instead, you propose to mark the jewelry box on the outermost container with “Assembled in the United States, Diamond Made in India, Setting Made in Laos” in the event we do not find that the country of origin of the diamond engagement rings is the United States.
In Bausch & Lomb Incorporated v. United States, 17 CIT 790 (August 5, 1993), the United States Court of International Trade considered the question of whether imported sunglasses cases were disposable containers for purposes of the country of origin marking requirements. The outer layer of the cases consisted of pebble grain expanded vinyl with a hard plastic insert and a metal snap closure which secures the sunglasses in the case. The court pointed to the durability and protective quality of the sunglasses cases and noted that they were not similar to cans, bottles, paper or polyethylene bags, or paperboard boxes which 19 C.F.R. § 134.24 lists as examples of disposable containers not required to be individually marked with their own country of origin. The court found that the plaintiff failed to establish that the sunglass cases were ordinarily discarded by the consumer after any particular amount of usage or after any particular event and determined that they were not disposable containers exempt from the marking requirements under 19 C.F.R. § 134.24(c)(1). Relying on Bausch &
Lomb, in Headquarters Ruling Letter (“HQ”) 734691, dated January 7, 1994, CBP found that jewelry boxes which appear to be similar to the type in this case were separate articles of commerce that had to be individually marked with their own country of origin. Additionally, pursuant to 19 C.F.R. § 134.14, words or symbols were required on the jewelry box to show that the origin indicated was that of the jewelry box and not of the other articles with which it may be sold or combined. See HQ 559892, dated October 4, 1996. See also HQ 734691 dated January 7, 1994. Accordingly, in the instant case, each jewelry box must be marked with its own country of origin and the requirements of 19 C.F.R. § 134.14 must be satisfied by using a marking such as “Box Made in (country of origin).
We also note that the diamond engagement rings are subject to marking requirements. Hang tags or an adhesive stickers indicating the country of origin of the rings would be acceptable methods of marking the diamond engagement rings. For the diamond engagement rings with a shank from a foreign country, “assembled in” may not be used to indicate the country of origin of the diamond engagement rings since the assembly operations do not result in substantial transformation. See 19 C.F.R. § 134.43(e). Rather, the diamond engagement rings with a shank from a foreign country should be marked with the name of the country where the shank is from preceded by “Made in” or “Product of”.
HOLDING:
The country of origin of the diamond engagement rings for marking purposes is the United States if the shank is from the United States or foreign country if the shank is produced in a foreign country. If the shank is from the United States, the diamond engagement rings will be excepted from country of origin marking requirements. If the shank is from a foreign country, each diamond engagement ring must be marked with a hang tag or adhesive sticker indicating the country of origin of the diamond engagement ring. Additionally, each jewelry box must be marked with its own country of origin and the requirements of 19 C.F.R. § 134.14 must be satisfied by using a marking such as “Box Made in (country of origin).”
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Yuliya A. Gulis, Chief
Food, Textiles and Marking Branch