CBP: US-Made Silver Bracelet Tweaked in India Still Qualifies as US Origin
A sterling silver bracelet that underwent production in the U.S. before being shipped to India to undergo additional processing is still considered as having U.S. origin and is thus exempt from duties, CBP recently ruled in NY N350026.
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The case involves a sterling silver bracelet classified under Harmonized Tariff Schedule subheading 7113.11.5000, 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 silver, whether or not plated or clad with other precious metal: Other: Other.”
The U.S. is where the bracelet is initially manufactured. Molten silver is poured into a mold and solidifies, and the material is subsequently cut, shaped and coiled before it undergoes an annealing process to restore the silver’s original malleability. The bracelet then undergoes some additional processing before it's shipped to India, where it undergoes final processing such as polishing and stamping. The finished bracelet is then shipped to the U.S.
The unnamed company seeking CBP's input wanted to know if the bracelets qualified for HTS subheading 9802.00.5060, which provides a partial or complete duty exemption for articles returned to the U.S. after having been exported to be advanced in value or improved in condition by any process of manufacture or other means, provided that the documentary requirements of 19 CFR 10.8 are satisfied.
Here, CBP agreed that the described foreign processing was acceptable for purposes of 9802.00.5060. In issuing its ruling, CBP referred to HQ H301619, dated Nov. 6, 2018, which discusses the substantial transformation analysis that can be applied. "The test for determining whether a whether a substantial transformation will occur 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."
"You propose that the country of origin of this bracelet is the United States. We agree. The casting of the bracelet in the United States provides the essence of the finished product. The addition of the end caps and polishing [in India] do not substantially transform the casting," CBP said. "As a result, the country of origin of the bracelet is the United States."
CBP continued in its July 8 decision: "Therefore, the finished bracelet will be considered a product of the United States for marking purposes and for purposes of trade remedies. Since the country of origin will be the United States, the bracelet will be excepted from country of origin marking requirements and will not be subject to additional trade remedy measures, such as reciprocal or global tariffs."
On a recent webinar, Flexport's Marcus Eeman, director of customs, noted the ruling's significance because it verifies that U.S.-origin goods may not be subject to the International Emergency Economic Powers Act reciprocal tariffs so long as the goods didn't undergo a substantial transformation when processing was conducted abroad.
"The reciprocal tariffs said [that] 9903.01.25 applies to any country not specified with its own rate. ... Well, the U.S. is a country, so that would sound like 'any country' doesn't apply," Eeman said during a recent Flexport webinar. But the ruling implies that the 10% duty doesn't apply to U.S.-origin goods, whether the importer claims the good under a 9801 heading for U.S. goods returned or if the importer uses some other potential tariff provision.