MAR-2 OT:RR:NC:N4:433
Jeffrey David D’Angelo
Vice President of Manufacturing
Narragansett Jewelry Co., Inc.
100 Dupont Drive
Providence, RI 02907
RE: THE COUNTRY OF ORIGIN MARKING OF GOLD RINGS MANUFACTURED IN THE UNITED STATES, SENT TO COSTA RICA FOR SETTING OF DIAMONDS, AND RETURNED TO THE UNITED STATES FOR FINISHING OPERTATONS
Dear Mr. D’Angelo:
This is in response to your letter dated March 26, 2014, requesting a ruling on the country of origin of gold rings manufactured in the United States, sent to Costa Rica for setting of diamonds, and returned to the United States for finishing operations. Described below are the manufacturing procedures of worked performed in the United States and Costa Rica for the merchandise concerned:
Procedure – 1: United States (Providence, Rhode Island)
Models are made of designs to be produced.
Procedure – 2: United States (Providence, Rhode Island)
Models are placed between two pieces of rubber and put in a vulcanizer to form molds of rings through heat and pressure. When the molds are complete the production of waxes can begin. Operators carefully inject the molds with special waxes to obtain copies of desired models. Wax pellets are melted and then injected into molds to form wax rings. Waxes are cleaned thoroughly to remove excess material and any imperfections.
Procedure – 3: United States (Providence, Rhode Island)
Pre/casting steps (1) In order to cast the pieces, they are placed on wax tubes called trees, and then rubber bases and steel flasks are added, (2) The flasks are then put into a vacuum investment machine where it gets filled with an investment slurry and vacuumed free of air bubbles, (3) The flasks must be left resting for 2 hours to allow the investment to set properly, and (4) The flasks are put in an oven for 18 hours until the wax inside is completely burned and gone.
Casting steps (1) After the waxes are burned, the flasks are placed into casting machines, (2) United States gold of 18k red casting grain is injected inside vacuum sealed compartments, (3) The flasks must be cooled down for 25 minutes at room temperature, and then submerged in cold water, so that the trees can be removed, (4) Operators carefully cut the trees, and (5) The cast rings go through bombing, which is a chemical process that cleans and improves the surface of the work pieces.
Procedure – 4: Costa Rica
Raw cast rings with country of origin United States are sent to Costa Rica. Diamonds having country of origin India are sent to Costa Rica. The diamonds of Indian origin are set onto the raw cast rings of United States origin in Costa Rica. Afterwards, the raw cast rings of United States origin set with diamonds of Indian origin in Costa Rica are returned to the United States for finishing operations.
Procedure – 5: United States (Providence, Rhode Island)
Rough cast rings with diamonds are polished in the United States with buffing wheels. Upon completion of polishing, the rings are washed, finally inspected and prepared for shipment to customers in the United States.
See New York ruling N248127 dated December 12, 2013, issued to Narragansett Jewelry Co., Inc., for similarities and differences in worked performed both domestically and abroad in the manufacture of precious metal rings, as compared against the merchandise concerned of this current ruling.
For duty purposes, the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (DR-CAFTA) governs the origination of goods from Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua or the United States. It is General Note 29 of the Harmonized Tariff of The United States that provides guidance and interpretation in following the DR-CAFTA. In pertinent part, GN 29 (b) (ii) is applicable to the merchandise concerned: A good produced entirely in the territory of one or more of the parties to the Agreement, and – (A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note, is an originating good for preferential duty treatment. For the merchandise concerned, Subdivision (n), change in tariff classification rules, provides: A change to heading 7113 from any other heading, except from heading 7116. Accordingly, the gold rings with diamonds classifiable in heading 7113 meet the tariff shift rule of origin as the diamonds of Indian origin are classifiable in heading 7102 – a tariff provision outside of the specified rule of origin, and therefore the gold rings with diamonds are eligible for preferential duty treatment under the DR-CAFTA.
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 U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. 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 marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that 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.” See United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
19 Code of Federal Regulations (CFR), Part 134, implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Stipulated in 19 CFR 134.1 (b) the term “country of origin” 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” within this part; however, for imported articles or goods of the North America Free Trade Agreement (NAFTA), the United States-Morocco Free Trade Agreement and the United States-Bahrain Free Trade Agreement, 19 CFR, Part 102, “Rules of Origin” will determine the proper country of origin. Because Costa Rica is not a party to NAFTA or the other two Free Trade Agreements, 19 U.S.C. §1304 as regulated by 19 CFR 134, are the applicable country of origin statutes and regulations for determining country of origin of the merchandise concerned.
A substantial transformation occurs when, as a result of manufacturing process, a new and different article emerges, having a distinct name, character or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See Texas Instruments, Inc. v. United States, 69 C.C.P.A. 142, 681 F.2d 778 (1982). Stated differently, yet with essentially the same meaning, a substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use that differs from the original material subjected to the process. See M.B.I. Merchandise Industries, Inc. v. United States, 16 C.I.T. 495, 502 (1992) (citing United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267, 270 (C.A.D. 98) (1940)).
Although not technically a Free Trade Agreement, the Caribbean Basin Initiative, 19 CFR 10.195, “Country of origin criteria,” is instructive in determining the country of origin of the merchandise concerned. 19 CFR 10.195 (a) (1) provides: No article or material shall be considered to have been grown, produced, or manufactured in a beneficiary country by virtue of having merely undergone simple (as opposed to complex or meaningful) combining or packaging operations, or mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article. Further in pertinent part, 10.195 (a) (2) (i) (B) clarifies “simple combining” to include, the fitting together of a small number of components by bolting, gluing, soldering, etc. Consistent with HQ 555801 dated January 2, 1991, in which the mounting of a gemstone onto a ring casting was considered a simple combining operation, we are of the opinion that the mounting or setting of a small number of diamonds onto a ring casting, such as in the case of the merchandise concerned, is also a simple combining or assembly operation. As such, the simple assembly operation does not substantial transform the rings into products of Costa Rica, thereby resulting in country of origin, United States. Those finishing operations performed in the United States purely embellish the gold rings with diamonds for purposes of enhancing consumer desirability.
If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase “Made in the USA” or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 on the propriety of proposed markings indicating that an article is made in the U.S.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 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
Acting Director
National Commodity Specialist Division