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HQ H007450




July 16, 2007

CLA-2 OT: RR: CTF: TCM H007450 ADK

CATEGORY: CLASSIFICATION

TARIFF NO.: 7116.20.3000

Area Port Director
United States Customs and Border Protection 605 W. 4th Ave, Ste 230
Anchorage, AK 99501

RE: 16-inch strands of cut and semi-precious stones; Protest No. 3195-07-100024

Dear Port Director:

The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 3195-07-100024, timely filed on behalf of Zarlene Imports Inc. (Zarlene), concerning classification of the strands of semi-precious stones under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject imports are cut and polished semi-precious stones which have been temporarily strung together for ease of transport. The stones have been segregated and strung together according to size, shape, color and by implication, quality. After entry to the United States, the stones are sold on their strands.

Zarlene entered the merchandise on November 21, 2005 at the United States Customs and Border Protection (CBP) Port at Anchorage, Alaska under subheading 7103.99.1000, Harmonized Tariff Schedule United States Annotated (HTSUSA). That subheading provides for: “Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set; ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport: Otherwise worked: Other: Cut but not set, and suitable for use in the manufacture of jewelry.”

On December 5, 2006, the Port at Anchorage issued a Notice of Action, informing Zarlene that CBP intended to reclassify the merchandise under subheading 7116.20.3000, HTSUSA. That heading provides for: “Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Other: Of semiprecious stones (except rock crystal): Graded semiprecious stones strung temporarily for convenience of transport.” The entry was liquidated on December 22, 2006 under subheading 7116.20.3000, HTSUSA. In response to the liquidation, Zarlene filed protest number 3195-07-100024, dated January 12, 2007.

ISSUE:

What is the proper classification, under the HTSUS, for the 16-inch strands of semi-precious stones?

LAW AND ANALYSIS:

Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The protest was timely filed, within 180 days of the Notice of Action issued for the last entry made on November 21, 2005. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).

Further Review of Protest No. 3195-07-100024 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 (b) because the decision against which the protest was filed involves or is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or the Customs courts.

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. The HTSUS provisions under consideration are as follows:

7103 Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set; ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport:

Otherwise worked:
7103.99 Other:

7103.99.1000 Cut but not set, and suitable for use in the manufacture of jewelry

7116 Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed):

7116.20 Of precious or semiprecious stones (natural, synthetic or reconstructed): Other:
Of semiprecious stones (except rock crystal): 7116.20.3000 Graded semiprecious stones strung temporarily for convenience of transport

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80. The relevant EN is as follows:

The EN to heading 7103, HTSUS (EN 7103), provides, in pertinent part:

The stones of this heading may be strung for convenience of transport, provided this method of assembly is temporary and that the stones have not been graded and are not directly usable for use as jewellery. (Emphasis in original)

The EN to heading 7116, HTSUS (EN 7116), provides, in pertinent part:

Articles of personal adornment and other decorated articles

It includes pearls or stones graded according to size, quality, shade, etc., and constituting an article ready for use as jewellery. But the heading excludes ungraded or graded pearls and ungraded stones merely temporarily strung for
facility of transport without any setting or fitting or metal or other material; these fall in heading 71.01, 71.03 or 71.04 (Emphasis in original)

The importer, Zarlene, alleges that the subject merchandise is classifiable under heading 7103, HTSUS, because “none of [the temporarily] strung beads are graded.” CBP agrees that the stones have been temporarily strung together for ease of transport. At issue is whether the subject semi-precious stones are graded prior to entry. If so, the 16-inch strands are prima facie excluded from heading 7103, HTSUS, which provides only for “ungradedsemi-precious stones.”

The term graded is not defined in the HTSUS, its corresponding legislative history or the ENs. When a tariff term is not defined, the term's correct meaning is presumed to be its common and commercial meaning in the absence of evidence to the contrary. See Rohm & Haas Co. v. United States, 727 F.2d 1095 (CAFC 1984). Generally, the term “graded” refers to stones that have been matched for “quality or value.” Dictionary of Gems and Gemology, Mohsen Manutchehr-Danai, (Springer 2005). Gemstones that have “been weighed and sorted for the quality of their color, clarity and cut before they are sold.” The Gemological Institute of America Diamond Dictionary (3rd ed., Santa Monica, CA: Gemological Institute of America (GIA) 1993). According to the GIA, this means that stones which have been sorted and strung according to their size, color, quality and shade are considered graded.

EN 7116 supports these definitions. According to the EN, heading 7116, HTSUS, applies to “pearls or stones graded according to size, quality, shade.” Emphasis added. This EN indicates that stones are considered graded if they are organized according to size, quality or shade. CBP has previously relied on this language in determining that “the term graded refers to stones which are separated by characteristics such as size, shape, color, quality, etc.” New York Ruling Letter (NY) 805861, dated January 27, 1995.

Applying these definitions to the subject merchandise, we find that the subject semi-precious stones are “graded.” According to the importer, the stones are matched together by size, shape and color prior to import and then temporarily strung for convenience of transport. The Port at Anchorage confirms that the stones are strung together according to size, shape, color and, by implication, quality. These graded semi-precious stones are therefore excluded from classification in heading 7103, HTSUS, based on the terms of the heading. Instead, they are classifiable in the broader heading 7116, HTSUS, which applies generally to articles of precious or semi-precious stones.

HOLDING:

By application of GRI 1, the subject 16-inch strands of semi-precious stones are classifiable under heading 7116, HTSUS. Specifically, they are classifiable under subheading 7116.20.3000 HTSUSA, which provides for: “articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed): Of precious or semiprecious stones (except rock crystal): Graded semiprecious stones strung together temporarily for convenience of transport.” The column one, general rate of duty is 2.1 percent ad valorem.

The protest should be DENIED. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Faciliation Division

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