CLA-2-71:OT:RR:NC:N4:433
Catherine M. Zadeh, President
Zadeh New York
535 Fifth Avenue, Suite 603
New York, NY 10017
RE: The tariff classification of the “Dylan” bracelet; eligibility of the North American Free Trade Agreement (NAFTA) of the bracelet; and the country of origin of the bracelet.
Dear Ms. Zadeh:
In your letter dated October 3, 2017, you requested a tariff classification ruling. Illustrative literature and commercial invoices of core materials used in the production of the “Dylan” bracelet were presented. See New York ruling N289287 dated September 12, 2017 for previous list of documentation reviewed and additional resources used in connection with the “Dylan” bracelet.
In conversations with Canadian vendors (suppliers) pertaining to commercial invoices previously unrevealed facts came to light. The Canadian vendor supplying the finished gold bars of .9999 purity and gold coins to the producer of the “Dylan” bracelet clarified that the gold bars sold to the producer of the “Dylan” bracelet were of Canadian and United States origin and that the gold coins sold to the producer of the “Dylan” bracelet were of Canadian origin. Further conversation took place with the Canadian Mint verifying that the finished gold bars of .9999 purity were produced in Canada or the United States, and that the gold coins were minted in Canada. For purposes of this ruling finished gold bars are classified in subheading 7115.90 of the Harmonized Tariff Schedule of the United States (HTSUS) and gold coins are classified in 7118.90 of the HTSUS.
The merchandise concerned is identified as the “Dylan” bracelet. The Canadian producer of the “Dylan” bracelet hand slices the Asian Water Buffalo (Bubalus Bubalis) horn, pieces those slices together, and then molds them into the shape of a wrist, followed by the adding of a functional and decorative (hybrid) jewelry finding, the 18 karate gold clasp and decorative jewelry findings, the 18 karate gold accent bands, thereby completing the “Dylan” bracelet. During the production process there is an oil applied giving the bracelet a rich black luster, which will fade over time to the original gray patina of the natural horn.
Asian Water Buffalo (Bubalus Bubalis) horns originating from Laos are sold to a Canadian supplier, who in turn sells those horns to the Canadian producer of the “Dylan” bracelets. Gold bars of .9999 purity are purchased from a Canadian supplier and processed by the Canadian producer; the Canadian producer melts those bars into 18 karat, yellow, white and rose color functional and decorative clasps and decorative accent pieces for the “Dylan” bracelets. You indicate that the Asian Water Buffalo (Bubalus Bubalis) horns are derived from sustainably farm raised stock. This appears to be supported in an article written on cabi.org stating that the Laos, Asian Water Buffalo (Bubalus Bubalis) is present only in “captivity/cultivation,” and is a domesticated animal.
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.
Legal Note 2 (a) to Chapter 71 of the HTSUS states that “Headings 7113, 7114 and 7115 do not cover articles in which precious metal or metal clad with precious metal is present as minor constituents only, such as minor fittings or minor ornamentation (for example, monograms, ferrules and rims), and paragraph (b) of the foregoing note does not apply to such articles.” Legal Note 2 (b) to Chapter 71, HTSUS, states that “Heading 7116 does not cover articles containing precious metal or metal clad with precious metal (other than as minor constituents).”
Further at Legal Note 11 to Chapter 71 of the HTSUS, “for the purposes of heading 7117, the expression “imitation jewelry” means articles of jewelry within the meaning of paragraph (a) of note 9 above (but not including buttons or other articles of heading 9606, or dress combs, hair slides or the like, or hairpins, of heading 9615), not incorporating natural or cultured pearls, precious or semiprecious stones (natural, synthetic or reconstructed) nor (except as plating or as minor constituents) precious metal or metal clad with precious metal.” See Legal Note 9 (a) to Chapter 71, HTSUS, for a list of exemplars of articles of jewelry.
To reiterate, exemplars of the term “minor constituents” can be found in Legal Note 2 (a) to Chapter 71, HTSUS, which lists monograms, ferrules and rims being of minor constituents, and by means of the Explanatory Notes (ENs) to heading 7116, HTSUS),” in which a pearl necklace with a gold fastener remained classified in heading 7116, the provision for “Articles of natural or cultured pearls, precious and semi-precious stones (natural, synthetic or reconstructed).” In the case of the pearl necklace with a gold fastener, the gold fastener was considered a minor fitting in that the clasp did not form part of ornamentation of the pearl necklace.
We distinguish the pearl necklace with a gold fastener from the “Dylan” bracelet, as the gold fastener was merely a clasp hidden behind one’s neck, while the pearls provided the visible beautification of the necklace. By observation of the illustrative literature, the “Dylan” bracelet contains both a hybrid gold clasp and accent gold bands which embellishes the buffalo horn bracelet beyond a minor fitting or minor ornamentation when taken together. In accordance with Legal Note 2 (a) to Chapter 71, the “Dylan” bracelet is classifiable in heading 7113, HTSUS.
The applicable subheading for the “Dylan” bracelet will be 7113.19.5090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal: Of precious metal, whether or not plated or clad with precious metal: Of other precious metal, whether or not plated or clad with precious metal: Other: Other: Other: Other.” The rate of duty will be 5.5% ad valorem.
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 https://hts.usitc.gov/current.
The rules for determining whether the “Dylan” bracelet is an “originating good” of Canada and thus eligible for preferential tariff treatment under the provisions of the NAFTA Act are provided for in General Note 12 of the HTSUS, which provides, in relevant part, as follows:
(a) Goods in the territory of a party to the NAFTA are subject to duty as provided therein. For the purposes of this note –
(a) (i) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (whether or not the goods are marked) …, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Implementation Act.
(b) For purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if:
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico, and/or the United States so that --
(A) except as provided in subdivision (f) of this note [de minimis provision], 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, or....
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials....
Thus, by operation of GN 12, HTSUS, the eligibility of articles for NAFTA preferential treatment is predicated upon a finding that the goods are originating in the territory of a NAFTA party under GN 12 (b), and that they are goods of Canada or Mexico under the NAFTA Marking Rules.
Because the “Dylan” bracelet is classified in subheading 7113.19, HTSUS, we apply the “Change in Tariff Classification Rule” for that subheading. General Note 12(t)/71.2 states “A change to heading 7113 through 7118 from any heading outside that group.” Due to the fact that the Asian Water Buffalo horn and other non-originating materials are outside the excluded headings for the rule, and that the gold clasp and gold accent bands are produced from originating gold bars of Canadian and United States origin and gold coins of Canadian origin (minted in Canada), the tariff shift rule for subheading 7113.19 is satisfied, and as such, the “Dylan” bracelet [qualifies] as a NAFTA originating good in accordance with General Note 12(t)/71.2.
We turn next to the NAFTA Marking Rules of 19 CFR, Part 102 – “Rules of Origin.” The “Dylan” bracelet classified in subheading 7113.19, HTSUS, is subject in part to the “Specific Rule by Tariff Classification” as set forth in 19 CFR 102.20 – Rule 7113.11-7115.90: “A change to subheading 7113.11 through 7115.90 from any other subheading, including another subheading within that group.” This “Specific Rule by Tariff Classification” must be read in context with 19 CFR 102.11 (a) (3) which reads “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.”
19 CFR 102.1 provides definitions for the terms domestic material and foreign material. 102.1 (d) defines a “domestic material,” as a material whose country of origin as determined under these rules is the same country as the country in which the good is produced and 102.1 (e) defines a “foreign material,” as a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.
In the case of the “Dylan” bracelet made with non-originating (foreign) Water Buffalo horn from Thailand and other non-originating (foreign) materials from unknown countries of origin classified outside of subheadings 7113.11-7115.90, and originating Canadian gold coins (domestic materials) classified outside of subheadings 7113.11-7115.90, and finished gold bars of United States origin (foreign materials) classified within subheadings 7113.11-7115.90, we find that the applicable “Specific Rule by Tariff Classification,” 19 CFR 102.20 – Rule 7113.11-7115.90 is satisfied. The rule is satisfied because the non-originating Water Buffalo horn and other non-originating materials (collectively known as foreign materials) and Canadian gold coins (domestic materials) used in the production of the bracelet are classified outside of 7113.11-7115.90, and the finished gold bars of United States Origin (foreign materials) are classified in 7115.90, a different subheading from that of the “Dylan” bracelet 7113.19. Accordingly, under this set of conditions the “Dylan” bracelet is to be marked with country-of-origin Canada, and is entitled to duty-free treatment under the NAFTA.
In the case of the “Dylan” bracelet made with non-originating (foreign) Water Buffalo horn from Thailand and other non-originating (foreign) materials from unknown countries of origin classified outside of subheadings 7113.11-7115.90, and originating Canadian gold coins (domestic materials) classified outside of subheadings 7113.11-7115.90, and finished gold bars of Canadian origin (domestic material), we find that the “Rule of Origin” of 19 CFR 102.11 (a) (3) is not satisfied. The rule is not satisfied because the finished gold bars of Canadian origin are regarded under the category of a domestic material and not a foreign material, resulting in not being able to proceed to the “Specific rules by tariff classification” in 19 CFR 102.20. Consequently, we move down the “Rules of Origin.” 19 CFR 102.11 (b), states 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 – see 19 CFR 102.18 “Rules of interpretation,” essential character (b) (1); (b) (1) (i); (b) (1) (iii); and (b) (2). In spite of not proceeding to 19 CFR 102.20, the single material that does not meet 19 CFR 102.11 (a) (3) is the finished gold bars of Canadian origin. Accordingly, under this set of conditions the “Dylan” bracelet is to be marked with country-of-origin Canada, and is entitled to duty-free treatment under the NAFTA.
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 [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division