CLA-2-71:OT:RR:NC:N4:462
Arka Akkelian
Canadian Gem P.A. Inc
1002 Sherbrooke West Suite 2525
Montreal, Canada
RE: The tariff classification and country of origin of a pearl necklace from Canada
Dear Mr. Akkelian:
On April 25, 2022, you submitted a ruling request. Images and descriptive information were provided.
The item under consideration is a 16-inch pearl necklace mounted on a gold clasp. In your ruling request, you stated that, when importing the finished item from Canada to the United States, you have been classifying this necklace under subheading 7116.10.2500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Of natural or cultured pearls: Cultured,” You ask whether the more appropriate classification for this necklace is subheading 7113.19.5090, HTSUS, which provides for “Articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal: Of other precious metal, whether or not plated or clad with precious metal: Other: Other: Other.” The reason you provide for this proposed change in classification is due to the updated cost breakdown which includes higher expense costs for gold as well as the higher costs for the labor in Canada. However, the change in the value breakdown does not change the inherent characteristics of the necklace upon which the classification is based.
Therefore, the applicable subheading for the 16-inch pearl necklace mounted on a gold clasp, is 7116.10.2500, HTSUS, which provides for “Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Of natural or cultured pearls: Cultured.” The rate of duty will be 5.5% ad valorem.
In your submission you also request a country of origin determination for the necklace. Section 134.1(b) of the Customs Regulations (19 CFR 134.1(b)) provides that: “Country of origin" means 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; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter will determine the country of origin. Because the pearl necklaces are manufactured in part in Canada, the tariff shift rules set out in 19 CFR 102.20 will be considered. For a good of heading 7116, there must be “a change to heading 7116 from any other heading, except that pearls strung but without the addition of clasps or other ornamental features of precious metals or stones, shall have the origin of the pearls.”
You describe a scenario wherein the pearls come from China, the clasp from the United States, and the labor is done in Canada with the finished item then being shipped to the United States. The labor in Canada includes sorting the temporarily strung pearl strands, removing reject pearls based on client requirements, as well as mixing and matching sizes/colors from various temporarily strung loose goods. Further, you explain that all the pearls must be removed from their temporary strands and restrung on new thread with knots being made between each pearl. Lastly, a gold clasp from the United States is added to the necklace. Under this scenario, the tariff shift rule noted above is met, as temporarily strung pearls of heading 7101 are transformed into a pearl necklace with a gold clasp of heading 7116. We, therefore, find the country of origin of the necklace to be Canada.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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 the World Wide Web at https://hts.usitc.gov/current.
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, please contact National Import Specialist Sandra Sary at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division