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HQ 560331




December 2, 1997

CLA-2 RR:TC:SM 560331 MLR

CATEGORY: CLASSIFICATION

John S. Rode, Esq.
Rode & Qualey
295 Madison Avenue
New York, NY 10017

RE: Eligibility of jewelry for duty-free treatment under the Caribbean Basin Economic Recovery Act (CBERA); U.S. Note 2(b), Subchapter II, Chapter 98, HTSUS; Subheading 9802.00.80; double substantial transformation; alloying; casting; setting

Dear Mr. Rode:

This is in response to your letter of February 20, 1997, requesting a ruling on behalf of Progressive Entities Dominicana, S.A. ("Progressive"), regarding whether certain jewelry from the Dominican Republic is eligible for duty-free treatment under the Caribbean Basin Economic Recovery Act (CBERA). A meeting was held at the Office of Regulations & Rulings on October 9, 1997, and additional information was submitted by letter dated October 27, 1997, wherein you requested a ruling regarding the applicability of duty-free treatment for the subject jewelry pursuant to Section 222 of the Customs Trade Act of 1990 (Public Law 101-382), which amended U.S. Note 2, Subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS), {hereinafter "Note 2(b)"}.

FACTS:

The articles at issue are finished jewelry pieces. In order to produce the jewelry in the Dominican Republic, it is stated that Progressive will either alloy gold in the Dominican Republic using metals which do not originate in a beneficiary country (BC) and then produce castings from such alloys of gold, or use raw castings which are products of the U.S. Whether the alloying and casting is performed in the Dominican Republic or the U.S., it is stated that the first step involves alloying gold bars with silver, copper, zinc, nickel, or brass to the desired specification. The molten alloy is then poured into a modeled mold to form a number of parts connected by one or more casting sprues. Each individual part is then removed from its sprues, usually by cutting.

Next, the castings, either produced in the Dominican Republic or the U.S., undergo the following processes in the Dominican Republic. The individual parts removed from the sprues are mechanically tumbled with a mild abrasive to remove any mold residue and to preliminarily smooth and compress the casting's surfaces. At this stage, it is stated that the casting has a relatively rough surface, with protruding sprue fragments, casting "flash", pits, scratches, and parting lines. In order to remove casting sprues, mold lines, and other gross excrescences, grinding wheels are used to return the casting to the shape of the original wax model. Grinding is followed by successively finer abrasives, using rubber and emery wheels to eliminate scratches and minor dents or bulges. The casting is then shaped, often by bending or stretching to conform to the desired configuration and size. It is stated that particular effort is required to reshape those portions of the casting which are designed to mate with other castings, such as adjoining links in a bracelet or a necklace. The finishing is performed by hand using hand-held gravers, hand-directed and controlled motor-driven grinders with grinding, rubber, and emery wheels on flexible shafts, plus buffing and grinding machines. When the castings are in final form for assembly, they are pre-polished by hand, machine-washed, and then ultrasonically cleaned to remove residual abrasives and polishing compounds.

The requisite number of component parts are then matched and assembled into bracelets, necklaces, earrings, etc. Depending on the design, the number of components will range between 5 and 40 and the assembly will involve rivets, wire, hammering, cutting, shaping, or soldering, or any combination of these to result in a permanent assembly. Additionally, it is stated that since the exact dimensions and configuration of any precious or semi-precious stones to be set is not known, the designs, wax models, and raw castings must all be prepared to accommodate a range of stones, and to that end sufficient excess metal will be incorporated so that the setter can shape, mold, cut and conform each individual stone mounting on the raw casting to receive the particular stones provided by a customer.

In order to set a stone, it is stated that each piece is set in shellac for support. The stones and gem sites on the castings are measured, and each mounting site on the casting is then adjusted to receive a particular stone, cutting away portions of the prongs or beads to proper size, and using a motor with a flex shaft and drills to open a hole in the casting to accommodate the base of the stone. When prongs are employed in the mounting, the surfaces from which portions have been cut or ground are then reshaped and polished to finished tolerances. If a bezel or beads are used instead of prongs, appropriate techniques are used to form the bezel or raise and shape the beads to support and retain each stone in the mounting.

Last, each piece is transferred to a polisher who "brushes" all of the surfaces using a variety of brushes of varying sizes driven by a horizontally mounted motorized tool and a mildly abrasive compound. Then, a lapper, using a vertically mounted driven abrasive disk and compound, laps all of the flat surfaces on the jewelry article to a smooth finish free of visible discontinuities. Each article is then washed and steamed to remove residual compound and alloy particles from the brushing and lapping operations. The final stage is done by a polisher, who employs power driven felt, muslin, and cotton wheels, and a polishing compound to make all surfaces of the piece perfectly smooth and flawless.

The finished jewelry piece is then imported into the U.S. For purposes of this ruling request, you ask Customs to assume that the direct costs of processing operations performed by Progressive in the Dominican Republic equal or exceed the 35 percent value-content requirement.

ISSUES:

I.a. Whether articles of jewelry alloyed, cast, and finished in the Dominican Republic from imported metals and precious and semi-precious stones from a country other than a BC or the U.S. will be eligible for duty-free treatment under the CBERA.

I.b. Whether articles of jewelry alloyed and cast in the U.S. will be eligible for duty-free treatment under the CBERA.

II. Whether articles of jewelry finished in the Dominican Republic from U.S.-origin castings and precious and semi-precious stones will be eligible for duty-free treatment under Note 2(b).

III. Whether articles of jewelry finished in the Dominican Republic from U.S.-origin castings and precious and semi-precious stones of U.S. or non-U.S. origin will be eligible for the partial duty exemption under subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

I. CBERA

Under the CBERA, eligible articles the growth, product, or manufacture of a designated BC, which are imported directly to the U.S. from a BC, qualify for duty-free treatment, provided the sum of (1) the cost or value of materials produced in a BC or two or more BCs, plus (2) the direct costs of processing operations performed in a BC or BCs is not less than 35 percent of the appraised value of the article at the time it is entered into the U.S. 19 U.S.C. 2703(a)(1). In addition, the cost or value of materials produced in the U.S. may be applied toward the 35 percent value-content minimum in an amount not to exceed 15 percent of the imported article's appraised value. See 19 CFR 10.195(c). As stated in General Note 7(a), Harmonized Tariff Schedule of the United States (HTSUS), the Dominican Republic is a designated BC under the CBERA.

To determine whether an article will be eligible to receive duty-free treatment under the CBERA, it must first be classified under a tariff provision for which a rate of duty of "Free" appears in the "Special" subcolumn followed by the symbol "E". It is stated that gold jewelry of the types imported by Progressive is classifiable in Chapter 71, HTSUS, all tariff provisions of which are CBERA-eligible provisions. Therefore, the jewelry will receive duty-free treatment if it is considered to be a "product of" the Dominican Republic, the 35 percent value-content requirement is met, and it is "imported directly" into the U.S. from the Dominican Republic.

Where an article is produced from materials that are imported into the BC, the article is considered "the growth, product or manufacture" of the BC only if the imported materials are substantially transformed there into a new and different article of commerce. See 19 CFR 10.195(a). Moreover, the cost or value of the U.S.- and foreign- origin materials to be imported into the Dominican Republic may be counted toward satisfying the 35 percent value-content requirement (over and above the 15 percent cap on U.S. materials) only if there is a finding that those materials were subjected to a "double substantial transformation" in the Dominican Republic. That is, the imported materials will be considered "materials produced" in the Dominican Republic only if they are substantially transformed in the Dominican Republic into a new and different intermediate article of commerce, which is then used in the Dominican Republic in the production of the final imported article, the finished jewelry. See 19 CFR 10.196(a). The test for determining whether a substantial transformation has occurred 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. See Texas Instruments Inc. v. United States, 69 CCPA 152, 156, 681 F.2d 778, 782 (1982).

A. Castings produced in the Dominican Republic

Under the first scenario, the alloying and casting is performed in the Dominican Republic. In Headquarter Ruling Letter (HRL) 555801 dated January 2, 1991, Customs held that casting non-beneficiary sourced precious metal alloys into the form of an article of jewelry, and setting foreign gem stones, resulted in a substantial transformation into a product of the Dominican Republic. Therefore, consistent with HRL 555801, we find that the jewelry in the instant case which is cast into various types of jewelry and then set with stones in the Dominican Republic will be considered "products of" the Dominican Republic.

The next issue relates to whether the materials imported into the Dominican Republic are subjected to a double substantial transformation in the production of the jewelry so as to permit the cost or value of the imported materials to be counted toward the value-content requirement (over and above the 15 percent cap on U.S. materials). In HRL 555546 dated January 30, 1990, Customs held that 24 karat gold imported into Mexico and converted into 14 karat gold shot by an alloying process, and cast into jewelry items resulted in a double substantial transformation for purposes of the Generalized Systems of Preferences (GSP). Therefore, in this case we also find that the cost or value of the gold bars, silver, copper, zinc, nickel, or brass which are alloyed to the desired specification and subsequently cast into the jewelry pieces in the Dominican Republic may be included in the 35 percent calculation. However, as Customs determined in HRL 556457 dated March 5, 1992, the finished precious and semiprecious stones which are imported into the Dominican Republic and set into the castings are not subjected to a double substantial transformation. Therefore, the stones' cost or value may not be included in the 35 percent calculation. Accordingly, in the first scenario, the jewelry articles will be entitled to duty-free treatment under the CBERA, provided they are imported directly into the U.S., they are classifiable in a CBERA-eligible tariff provision and the 35 percent value-content requirement is satisfied at the time of entry.

B. Castings produced in the United States

The second scenario involves casting the jewelry in the U.S. and shipping the castings to the Dominican Republic, that is, where the sprues are removed from the tree, and the grinding and polishing operations are performed to make finished pieces of jewelry. It is alleged that the operations performed in the Dominican Republic are not simple combining operations as defined in 19 CFR 10.195(a)(2)(i), as on average, between 20 and 40 discrete components are assembled into finished jewelry pieces. It is, however, noted that some jewelry pieces are only assembled from as few as five component pieces. Once in the Dominican Republic, the rough surfaces are removed from the castings or fine details are added which cannot be produced during the casting process.

Customs has held that cutting or bending materials into defined shapes or patterns suitable for use in making finished articles, as opposed to mere cutting to length or width which does not render the article suitable for a particular use, constitutes a substantial transformation. See HRL 055726 dated September 18, 1979 (a substantial transformation results from cutting, bending, and crimping wire into identifiable trigger pins for spring rings); HRL 071788 dated April 17, 1984 (forming 18 karat gold wire into circles, ovals, and other specially designed links for bracelets results in a substantial transformation); and HRL 556060 dated August 27, 1991 (gold and silver strip bent into a ring or bracelet shape and soldered into one piece, gold sheet cut to the desired size of a jewelry piece and soldering a bail onto the cut piece, or taking preformed ring blanks and cutting them in half and soldering a pin or a clip onto the cut ring blank to form an earring were considered substantial transformations).

However, in HRL 556060 Customs also found that U.S.-origin jewelry blanks already possessing the essential character of rings or bracelets did not undergo a substantial transformation into products of a beneficiary country for purposes of the GSP by further engraving, decorative cutting, polishing and cleaning. See also HRL 731963 dated July 26, 1989 (hand-faceting jewelry using a diamond tipped high-speed rotating wheel to cut away small pieces of silver did not result in a substantial transformation); and HRL 071314 dated May 10, 1983 (polishing, assembly of labels and catches, and packaging do not substantially transform jewelry).

In HRL 556457 dated March 5, 1992, Customs determined that base metal of U.S. origin, cast into ring forms in its condition as imported into Costa Rica, did not undergo a double substantial transformation when finished precious and semiprecious stones, imported into Costa Rica, were set into the castings. Therefore, the cost or value of the base metal used in the production of base metal jewelry could only be applied toward the 35 percent minimum in an amount not to exceed 15 percent of the jewelry's appraised value as the base metal casting was of U.S. origin.

In HRL 555801 dated January 2, 1991, Customs considered foreign gem stones mounted onto U.S. origin castings in the Dominican Republic, which produced unfinished rings. The unfinished rings were returned to the U.S. for grinding, buffing and polishing operations. It was held that the rings would not be entitled to duty free treatment under the CBERA pursuant to 19 CFR 10.195(a)(2)(i)(B) which provides that no article or material shall be considered to have been grown, produced, or manufactured in a BC by virtue of having merely undergone simple combining or packaging operations, including the fitting together a small number of components by bolting, gluing, soldering, etc. Customs found that since only two components were fitted together, the mounting of a gem stone onto a ring casting was considered a simple combining operation and, therefore, the rings were not considered "products of" the Dominican Republic. See also HRL 554448 dated August 25, 1987 (setting artificial stones into jewelry was not considered a substantial transformation of the jewelry into a "product of" a BC).

In HRL 558635 dated June 20, 1995, Customs considered imported gold tube made into hollow hoops used to make various items of jewelry, such as earrings, bracelets, chains, and bangles. In producing bracelets, the hoops were further processed by bending or winding to achieve oval shapes or smaller overall diameters. The shapes were also cut and soldered into links, buffed, cleaned, dried, and hand polished.
A hoop was also made into a necklace by combining, by hand, different links with different overall diameters of tubing, soldering them together, buffing, cleaning, polishing, soldering a clasp, hand polishing, quality control inspection, and packaging.
In producing earrings and other articles of jewelry, such as bangles, the hollow hoops were assembled without further change in shape or diameter with clasps, yokes, posts, jump rings, and other findings to produce the finished articles of jewelry. For purposes of the GSP, Customs found that the hollow hoops were a new and different article of commerce in comparison to imported gold tubes and were "products of" Bolivia. Furthermore, Customs found a second substantial transformation when hoops were further processed into bracelets or necklaces, as the operations involved bending or winding the tubing to achieve oval shapes or smaller diameters, cutting and soldering the resulting shapes into links, and combining the links by soldering and attachment of a clasp and the completed necklace or bracelet had an essential character different from the hoop from which it was derived. However, it was found that where an operation consisted merely of soldering the completed hoops together to form earrings, bangles or similarly produced articles of jewelry, and a clasp or other type closure was added, the essential character of the hoops was not changed and the hoops did not undergo a second substantial transformation when used to produce these items of jewelry.

In HRL 560333 dated July 24, 1997, published in the "Customs Bulletin", Volume 31, No. 33, August 13, 1997, Customs revoked HRL 556892 dated December 23, 1992, and HRL 556624 dated July 31, 1992, which held that weaving gold links in a beneficiary developing country into chain substantially transformed the links into a new and different article for purposes of the GSP. In HRL 560333, Customs ruled that the simple assembly or weaving of gold links into chain, even when coupled with a soldering operation, does not effect a substantial transformation of the gold links, as supported by National Hand Tool v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).

Accordingly, based upon the rulings above, it is our opinion that the U.S. origin castings imported into the Dominican Republic do not undergo a substantial transformation when they are made into finished jewelry pieces. It is clear that when ring forms are combined with stones, or earring forms are only combined with findings and other decorative operations occur, that there is no substantial transformation as the ring or earring forms already possess the essential character of the finished jewelry piece. Furthermore, while the rulings recognize that cutting sheet or bending wire is a substantial transformation, based upon the information presented in this case, the jewelry components are not created by cutting or bending but emerge ready for assembly from their cast molds in conjunction with refining operations.

In regard to bracelets or necklaces which are assembled together from cast components, in HRL 560333 Customs stated that assembling gold links does not constitute a substantial transformation. Accordingly, while bracelets or necklaces may be assembled together using numerous pieces, these pieces are already in their final form absent some minor shaping, grinding, or polishing operations which refine their shape. We recognize that various different components may be combined to create a certain style of jewelry; however, it is our opinion that the pieces already possess the essential character of a finished jewelry piece. Therefore, we find that in the second scenario, the operations do not result in a substantial transformation, and, therefore, the jewelry pieces may not be considered "products of" the Dominican Republic and eligible for duty-free treatment under the CBERA.

II. Note 2(b)

Section 222 of the Customs and Trade Act of 1990 (Public Law 101-382) amended U.S. Note 2, Subchapter II, Chapter 98, HTSUS, to provide for the duty-free treatment of articles (other than textile and apparel articles, and petroleum and petroleum products) which are assembled or processed in a Caribbean Basin Economic Recovery Act (CBERA) beneficiary country (BC) wholly of fabricated components or ingredients (except water) of U.S. origin.

Note 2(b) provides as follows:

(b) No article (except a textile article, apparel article, or petroleum, or any product derived from petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty, if--

(i) the article is--

(A) assembled or processed in whole of fabricated components that are a product of the United States, or

(B) processed in whole of ingredients (other than water) that are a product of the
United States, in a beneficiary country; and

(ii) neither the fabricated components, materials or ingredients, after exportation from the United States, nor the article itself, before importation into the United States, enters the commerce of any foreign country other than a beneficiary country.

To qualify for Note 2(b) duty-free treatment, an eligible article must be assembled or processed in a BC entirely of components or ingredients that are a "product of" the U.S. As used in this paragraph, the term "beneficiary country" means a country listed in General note 7(a), HTSUS, which includes the Dominican Republic. Although Note 2(b)(i)(A) and (B) are separated by the word "or", it is our opinion that Congress did not intend to preclude free treatment under this provision to an article which is created in a BC both by assembling and processing U.S. fabricated components and by processing U.S. ingredients.

In one scenario, it is stated that alloying and casting will be performed in the U.S. The castings are then shipped to the Dominican Republic where they are mechanically tumbled, ground to remove excess material, reshaped, polished and assembled together to form bracelets, necklaces, earrings, etc. In certain instances, it is stated that U.S.-origin stones will be set into the jewelry pieces. It is our opinion that the assembly, setting, and finishing operations performed in the Dominican Republic are encompassed by the operations specified in Note 2(b). Therefore, provided the castings and stones are of U.S.-origin, the castings and stones are shipped directly from the U.S. to the Dominican Republic, and the finished jewelry pieces are shipped directly to the U.S. without entering into the commerce of any foreign country other than a BC, the finished jewelry pieces will be entitled to duty-free treatment under Note 2(b), assuming all documentation requirements of Headquarters telex 9264071 dated September 28, 1990, are satisfied. See also HRL 555801, where it was held that U.S. origin gem stones mounted onto U.S. origin castings to produce unfinished rings qualified for duty-free entry pursuant to Note 2(b).

III. Subheading 9802.00.80

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

[a]rticles ... assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process, such as cleaning, lubricating and painting.

All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Section 10.14(a), Customs Regulations {19 CFR 10.14(a)}, states in part that:

[t]he components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components.

Section 10.16(a), Customs Regulations {19 CFR 10.16(a)}, provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, lamination, sewing, or the use of fasteners.

Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. See 19 CFR 10.16(a). However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under subheading 9802.00.80, HTSUS, to that component. See 19 CFR 10.16(c).

In HRL 555801, Customs held that attaching a foreign or U.S.-origin gem stone with a U.S.-origin ring casting was an acceptable assembly operation pursuant to 19 CFR 10.16(a). Therefore, a duty exemption under subheading 9802.00.80, HTSUS, was available for the cost or value of the U.S. origin components when the rings were returned to the U.S. However, in HRL 555801, the rings were returned to the U.S. in an unfinished state, and were subjected to further grinding, buffing, and polishing operations in the U.S.

In HRL 555119 dated May 30, 1989, Customs considered silver rings, earrings, charms, and similar items cast in the U.S. and exported to Mexico for certain processing operations. The processes included clipping which consisted of closely removing any unwanted material, removing any rough spots by means of a grinding wheel, tumbling in a steel drum using an abrasive or steel shot media to remove scratches or oxides, and in the case of rings, tapping to straighten and restore to true round. Certain articles, such as earrings, pins, or dangles, were subjected to assembly operations to attach wires, posts, or pins by soldering or crimping. Burn marks or oxidation caused by soldering were removed by tumbling. In HRL 555119, it was held that jewelry items assembled by soldering or crimping wires or posts onto parts of earrings or broach pins would not be eligible for the partial duty allowance of subheading 9802.00.80, HTSUS, if the components were subjected to grinding or tumbling operations abroad prior to the assembly process.

In HRL 555595 dated May 21, 1990, Customs considered leather-wrapped eyeglass temples and nylon sunglass frames. In the case of the leather-wrapped eyeglass temples, it was held that bending the temple so that it will fit behind the eyeglass wearer's ear was a "fabrication" or "completion" of the temple within the meaning of 19 CFR 10.16(c), and did not constitute an adjustment in the shape or form of the component pursuant to Samsonite Corp. v. United States, 702 F. Supp. 908 (CIT 1988), aff'd, 889 F.2d 1074 (Fed. Cir. 1989). However, with regard to the nylon sunglass frames, Customs determined that the pre-assembly process of removing mold closure marks by using a hand grinder with an abrasive wheel was an operation incidental to the assembly process pursuant to 19 CFR 10.16(b)(4), because it was a trimming or filing operation designed to remove small amounts of excess plastic after the molding of the frame fronts and temples. Furthermore, Customs held that polishing the areas of the temples or frame fronts where the mold closure marks were removed constituted an operation incidental to the assembly process. While 19 CFR 10.16(c)(5) states that polishing which imparts significant new characteristics or qualities to an article is not an incidental operation, in HRL 555595, Customs found that the polishing did not impart a significant new characteristic to the temple or frame front, but was instead analogous to a cleaning operation.

In this case, we find that riveting, wiring, soldering, and setting components together are acceptable assembly operations within the meaning of subheading 9802.00.80, HTSUS, as determined in HRL 555119 and HRL 555801. The degree of grinding, polishing, and/or straightening operations is dependent on the number of components to be assembled together, and whether or not Progressive wishes to perform such operations in the Dominican Republic or the U.S. Thus, the question that remains to be resolved is whether the grinding, tumbling, reshaping, and polishing operations performed in the Dominican Republic may be considered a further fabrication or incidental to the assembly process.

In HRL 555801, the grinding, buffing, and polishing operations were performed in the U.S. after assembly abroad, whereas in HRL 555119, Customs determined that components subject to grinding or tumbling operations prior to the assembly process would not be eligible for subheading 9802.00.80, HTSUS, treatment. However, in HRL 555595, Customs found that certain grinding and polishing operations were incidental to the assembly process. Therefore, the degree to which material is removed is critical as to whether or not the operation is incidental to assembly.

In this case, it is stated that the castings are ground and polished before assembly. As in HRL 555119, we find that grinding and polishing operations performed before assembly to finalize the shape of the casting or to impart a luster to the jewelry components, will not be incidental to the assembly process. In particular, 19 CFR 10.16(c)(5) states that "machining, polishing, burnishing" are not incidental to the assembly process as these operations impart significant new qualities to the exported components. While it may be more feasible to perform these operations in the Dominican Republic when the assembler determines which components are to be assembled together, it is our opinion that these constitute a further fabrication of the exported components. In such circumstances the components do not meet the initial subheading 9802.00.80 criterion of having been exported "in condition ready for assembly without further fabrication".

However, we find that if in the Dominican Republic only a small portion of a casting needs to be ground, polished, or straightened to allow it to fit together with another component, then this operation would be considered "incidental to assembly", as 19 CFR 10.16(b)(4), allows "trimming, filing, or cutting off of small amounts of excess materials" and 19 CFR 10.16(b)(5) allows "adjustments in the shape or form of a component to the extent required by the assembly being performed abroad". Furthermore, we find that re-polishing the assembled piece is incidental to assembly as this type of re-polishing to remove oil and dirt is akin to a cleaning operation which is allowed by 19 CFR 10.16(b)(1). Accordingly, we find that provided only small amounts of material are ground and polished away from a casting component and only minor straightening operations are performed in the Dominican Republic as necessary to permit the fitting together of fully fabricated components and the documentary requirements under 19 CFR 10.24 are met, the finished jewelry pieces will qualify for the partial duty allowance under subheading 9802.00.80, HTSUS.

HOLDING:

Based on the information provided, the jewelry articles alloyed and cast in the Dominican Republic will be entitled to duty-free treatment under the CBERA, provided they are imported directly into the U.S., they are classifiable in a CBERA-eligible tariff provision and the 35 percent value-content requirement is satisfied at the time of entry. However, the jewelry articles alloyed and cast in a non-BC and only assembled in the Dominican Republic may not be considered "products of" the Dominican Republic and will not be eligible for duty-free treatment under the CBERA.

Jewelry articles made in the Dominican Republic will be entitled to duty-free treatment under Note 2(b), assuming they are made wholly from materials of U.S. origin, and upon compliance with the documentation requirements set forth in Headquarters telex 9264071 dated September 28, 1990.

Riveting, wiring, soldering, and setting components together to form jewelry articles are acceptable assembly operations. However, we find that only certain grinding and straightening operations that adjust the shape of the casting but do not complete the fabrication of the casting will be incidental to the assembly process. Furthermore, we find that polishing that imparts an initial luster to the jewelry will not be considered as incidental to the assembly process, but only re-polishing which removes oil and dirt from the assembly article. Accordingly, we find that provided only small amounts of material are ground and polished away from a casting component and only minor straightening operations are performed in the Dominican Republic as necessary to permit the fitting together of fully fabricated components and the documentary requirements under 19 CFR 10.24 are met, the finished jewelry pieces will qualify for the partial duty allowance under subheading 9802.00.80, HTSUS.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director
Commercial Rulings Division

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