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NY H86671

January 15, 2002

CLA-2-71:RR:NC:SP:233 H86671


TARIFF NO.: 7113.19.5000

Mr. C.J. Erickson
Hodgson Russ
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019

RE: The tariff classification of gold jewelry from the Dominican Republic.

Dear Mr. Erickson:

In your letter dated January 7, 2002, on behalf of Michael Anthony Jewelers, you requested a tariff classification ruling.

Michael Anthony Jewelers alloys and casts gold jewelry components in the Dominican Republic and assembles the pieces into finished articles for import directly into the United States. The manufacturing steps in the Dominican Republic include:
importation of 24 kt. fine gold;
alloying of gold into 18 kt. and 14 kt. fineness;
production of 14 kt. and 18 kt. gold shot from the alloyed solution;
casting of jewelry components including chain link, bangle, pendant and earring shells;
sanding, grinding, deburring, cutting-off excess gold;
assembly of components by chip or paste soldering;
tumbling and washout to remove solder flux;
gold or rhodium plating via dipping or pen plating;
diamond cutting, engraving or laser finishing;
finish polishing;
quality control;
tagging with country of origin marking;
packing in poly bags.

The applicable subheading for the gold jewelry will be 7113.19.5000, Harmonized Tariff Schedule of the United States (HTS), 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 other precious metal: of other precious metal, whether or not plated or clad with precious metal: other: other. The rate of duty will be 5.5% ad valorem.

You have inquired as to the eligibility of the merchandise for duty-free treatment under the Caribbean Basin Initiative (“CBI”). Under the CBI, eligible articles the growth, product or manufacture of designated beneficiary countries (BC's), may enter the U.S. free of duty if such articles are imported directly to the U.S. from the BC, and if the sum of (1) the cost or value of the materials produced in a BC or BC's, plus (2) the direct cost of processing operations performed in a BC or BC's, is not less than 35% of the appraised value of the article at the time it is entered into the U.S.

As stated in General Note 7(a) of the HTS, the Dominican Republic is a BC for CBI purposes. Under 19 C.F.R. §10.195, an eligible article may receive duty-free treatment if it is either wholly the growth, product, or manufacture of a beneficiary country or a new or different article of commerce which has been grown, produced, or manufactured in the BC. Accordingly, the materials imported into the Dominican Republic and used in the production of the final article must be substantially transformed into a new and different article of commerce, a “product of” the BC.

The test for determining whether a substantial transformation occurs is whether an article emerges from a process with a new name, character, or use different from that possessed by the article prior to processing. If an article is comprised of materials that are imported into the BC, the cost or value of those materials may be included in calculating the 35% value-content requirement only if they undergo a “double substantial transformation” in the BC.

The 24 kt. fine gold imported into the Dominican Republic undergoes a double substantial transformation and, therefore, is a substantially transformed constituent material which can be used in the calculation of the 35% value-content requirements. You indicate that the gold value, together with the direct costs of processing in the Dominican Republic far exceed the 35% value added. Accordingly, if the sum of the cost or value of the gold plus those direct costs of processing which meet the requirements of 19 C.F.R. §10.197 equal or exceed 35% of the appraised value of the jewelry at the time of entry into the U.S., they will qualify for duty-free treatment under the CBI.

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 Lawrence Mushinske at 646-733-3036.


Robert B. Swierupski

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