HQ 953359: Protest No. 0712-92-101137; Crystal Glass Jewels; Finished and Unassembled Crystal Chandeliers; GRI 2(a); Explanatory Note 2(a)(V); U.S.-Canada Free-Trade Agreement; General Notes 3(c)(vii)(B), (C)(1), (G), (L), and (R)(20(bb); 9405.91.60

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 953359
                          May 26, 1993


CLA-2 CO:R:C:M 953359 DWS

CATEGORY: Classification

TARIFF NO.: 9405.10.80

District Director
U.S. Customs Service
127 North Water Street
Ogdensburg, NY 13669

RE: Protest No. 0712-92-101137; Crystal Glass Jewels;
    Finished and Unassembled Crystal Chandeliers; GRI 2(a); 
    Explanatory Note 2(a)(V); U.S.-Canada Free-Trade Agreement;  
     General Notes 3(c)(vii)(B), (C)(1), (G), (L), and (R)(20(bb);
    9405.91.60

Dear District Director:

     The following is our decision regarding the request for
further review of Protest No. 0712-92-101137 concerning your action
in classifying and assessing duty on crystal chandeliers under the
Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

     The merchandise consists of finished and unassembled crystal
chandeliers imported from Canada.  Crystal glass jewels, imported
from Czechoslovakia, classifiable under subheading 9405.91.60,
HTSUS, as other glass parts of lighting fittings, are imported into
Canada.  In Canada, the glass jewels are joined together to form
crystal chains of varying lengths which form ornamental parts of
chandeliers.  These crystal chains are packaged with other
chandelier parts and exported to the U.S. as finished and
unassembled chandeliers, classifiable under subheading 9405.10.80,
HTSUS. 

     The merchandise was entered under subheading 9405.10.80,
HTSUS.  The entry was liquidated on October 9, 1992, also under
subheading 9405.10.80, HTSUS.  However, duty reduction benefits
under the U.S.-Canada Free-Trade Agreement (CFTA) were denied.  The
protest was timely filed by the protestant on October 13, 1992.

      The subheading under consideration is as follows:

     9405.10.80: [c]handeliers and other electric ceiling or wall
                 lighting fittings, excluding those of a kind used 
                 for lighting public open spaces or thoroughfares:
                 [o]ther.

     The general, column one rate of duty is 3.9 percent ad
     valorem.  Goods classifiable under this provision which     
      receive treatment under the CFTA are entitled to a duty rate 
     of 1.9 percent ad valorem.

     The protestant does not disagree with the classification of
the merchandise under the HTSUS.  However, it is argued that the
merchandise is entitled to duty reduction benefits under the CFTA.

ISSUE:

     Whether the finished and unassembled crystal chandelier
qualifies for duty reduction benefits under the CFTA?

LAW AND ANALYSIS:

     Classification of merchandise under the HTSUS is in accordance
with the General Rules of Interpretation (GRI's), taken in order.
GRI 1 provides that classification is determined according to the
terms of the headings and any relative section or chapter notes.

     GRI 2(a) states that:

     (a) Any reference in a heading to an article shall be taken
to
         include a reference to that article incomplete or       
          unfinished, provided that, as entered, the incomplete or
         unfinished article has the essential character of the
         complete or finished (or falling to be classified as
         complete or finished by virtue of this rule), entered
         unassembled or disassembled.

     In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized.  The Explanatory Notes, although not dispositive, are to
be used to determine the proper interpretation of the HTSUS.  54
Fed. Reg. 35127, 35128 (August 23, 1989).

     Explanatory Note 2(a)(V) (p. 2) states that:

     [t]he second part of Rule 2(a) provides that complete or    
      finished articles presented unassembled or disassembled are
     to be classified in the same heading as the assembled article.
     When goods are so presented, it is usually for reasons such
as       requirements or convenience of packing, handling or
transport.

     When the glass jewels are imported into Canada, they are used
to create finished crystal chandeliers.  Before exportation into
the U.S., for "convenience of packing, handling or transport", the
finished chandeliers are disassembled.  Under GRI 2(a), even though
entered unassembled, these chandeliers are classifiable under
subheading 9405.10.80, HTSUS. 

     Articles which are imported from Canada may be entitled to
certain tariff preferences under the CFTA if the articles are
"originating goods" defined by General Note 3(c)(vii)(B), HTSUS. 
There are two primary means in General Note 3(c)(vii)(B), HTSUS,
by which articles imported into the U.S. may be "goods originating
in the territory of Canada."  The first method is if goods are
"wholly obtained or produced in the territory of Canada and/or the
United States."  General Note 3(c)(vii)(B)(1), HTSUS.  The second
method is if the goods are "transformed in the territory of Canada
and/or the United States."  General Note 3(c)(vii)(B)(2), HTSUS.

     A product which is "wholly obtained or produced in the
territory of Canada and/or the United States" is one which is
grown, mined, harvested, born, and raised in Canada and/or the
U.S., or otherwise intimately connected to the two countries and
their land, air, and sea territories as defined in General Note
3(c)(vii)(L), HTSUS.  Because the crystal chandelier is
manufactured in part from glass jewels which are not from Canada
or the U.S., the chandelier is not "wholly obtained or produced in
the territory of Canada and/or the United States."

     The second method to become an originating good for CFTA
purposes is for an article made of foreign materials to be
transformed in Canada and/or the U.S. in accordance with General
Note 3(c)(vii)(B)(2), HTSUS.  A transformation is evident when a
change in tariff classification occurs which is authorized by
General Note 3(c)(vii)(R), HTSUS.

     In this instance, the foreign glass jewels, which are
classifiable under subheading 9405.91.60, HTSUS, are used to create
finished and unassembled crystal chandeliers which are classifiable
under subheading 9405.10.80, HTSUS.  For the crystal chandeliers
to be considered originating goods, a transformation must be
effected in accordance with General Note 3(c)(vii)(R)(20)(bb),
HTSUS, which states that:

     (R) Change in Tariff Classification Rules

     (1) - (19) xxx

     (20) Section XX: Chapters 94 through 96.

    (aa) xxx

    (bb) A change to any heading of this section from a parts    
          heading, or to any subheading from a parts subheading; 
         provided, that the value of materials originating in the 
         territory of Canada and/or the United States plus the
         direct cost of processing performed in the territory of
         Canada and or the United States constitute not less than
         50 percent of the value of the goods when exported to the
         territory of the United States.

     The glass jewels undergo the requisite change in tariff
classification from a parts subheading to a subheading of chapter
94, HTSUS, and all parties agree that the conversion costs
constitute at least 50 percent of the value of the goods when
exported to the U.S.  Therefore, as both requirements of General
Note 3(c)(vii)(R)(20)(bb), HTSUS, have been met, it is our position
that the required transformation has been effected and the
chandeliers are eligible for duty reduction benefits under the
CFTA.

     It is argued that the application of General Note
3(c)(vii)(C)(1), HTSUS, negates any benefits under the CFTA.  It
states that: 

     (C) Goods shall not be considered to originate in the       
          territory of Canada pursuant to subdivision
(c)(vii)(B)(2)
         merely by virtue of having undergone - -

     (1) simple packaging or, except as expressly provided by the
         rules of subdivision (c)(vii)(R) of this note, combining
         operations. (emphasis supplied).

     Because it is our position that the merchandise conforms to
the rules set forth under General Note 3(c)(vii)(R)(20)(bb), HTSUS,
General Note 3(c)(vii)(C)(1), HTSUS, does not apply.

     It is also argued that General Note 3(c)(vii)(G), HTSUS,
negates any benefits under the CFTA.  It states that:

     (G) Whenever the assembly of goods in the territory of Canada
         fails to result in a change of tariff classification
         because - - 

     (1) the goods were imported into the territory of Canada in
an
         unassembled or a disassembled form and were classified as
         unassembled or disassembled goods pursuant to [GRI] 2(a), 
         or

      (2) the tariff provision for the goods provides for both the 
         goods themselves and their parts,

     such goods shall not be treated as goods originating in the
     territory of Canada.

     (emphasis supplied).

     General Note 3(c)(vii)(G), HTSUS, does not apply to the
merchandise because it is our position that the assembly of the
goods in Canada does result in a change of tariff classification.

HOLDING:

     As both requirements of General Note 3(c)(vii)(R)(20)(bb),
HTSUS, have been met, it is our position that the required
transformation has been effected and the chandeliers are eligible
for duty reduction benefits under the CFTA.

                           Sincerely,



                           John Durant, Director
                           Commercial Rulings Division