MAR 05: RR:CR:SM 561544 MFC
Lori A. Manca, Esq.
Trade and Regulatory Counsel
Life Technologies, Inc.
9800 Medical Center Drive
Rockville, Maryland 20850
RE: Country of origin marking; substantial transformation; antibiotic
Dear Ms. Manca:
This is in reference to your letter dated October 7, 1999, requesting a ruling on the country of origin marking requirements for an antibiotic called Geneticin Selective Antibiotic (“Geneticin”) which Life Technologies, Inc. (“LTI”) imports and processes at its manufacturing facility in New York.
FACTS:
You describe Geneticin as an aminoglycoside related to Gentamicin. Geneticin is used as a selective antibiotic in molecular genetics experiments. Geneticin is toxic to bacteria, yeast, higher plant and mammalian cells, and protozoans and helminths. The product is used for laboratory research use.
LTI imports Geneticin Sulfate, also known as G-418, from Japan in powdered form, in bulk. In the U.S., LTI uses the Geneticin Sulfate to make Geneticin Selective Antibiotic. You assert that the imported Geneticin Sulfate is unfit for use in cell culture applications.
At LTI’s facility, the raw material is tested for appearance, rotation, elemental analysis (chemical structure), and ammonia level. LTI sends the material to another company which tests if for potency. The purpose of this potency testing is to determine what percentage of the raw material is active (verses inactive) Geneticin. If the potency is not adequate at the time of further manufacturing, more active ingredient is added.
As a first step in the production process, LTI places the raw material in a tank and dissolves the material into a solution by adding purified water to the tank. This water is specially processed by LTI to meet United States Pharmacopoeia (“USP”) Water for Injection (“WFI”) standards using a sophisticated water purification system. The water is tested on a daily basis for bacterial endotoxin, total organic carbon, and water conductivity levels to ensure that it meets WFI standards.
LTI then aseptically filters this solution through sterilizing grade filters. These filters remove all contaminants to 0.1-0.2 micron size. The filters themselves are sterilized before use by autoclaving. The Geneticin solution is then pumped by a peristaltic pump into sterile bottles that have been sterilized by gamma irradiation. Upon completion of the filtration step, the filters are pressure-tested to ensure their integrity throughout the filtration process. This filtering process occurs in a Class 10,000 Clean Room. In order to maintain this classification, every cubic foot of air in the room must contain less than 10,000 particles at 0.5 micron size. The bottling operations for Geneticin take place in a Class 100 laminar flow clean bench within the Clean Room. To meet this classification, every cubic foot of air at the bench must contain less than 100 particles at 0.5 micron size. There is an extensive monitoring program to ensure that the Clean Room conditions are maintained.
The finished Geneticin Antibiotic product is tested for sterility.
You contend that the processing in the U.S. results in a substantial transformation of the imported Geneticin Sulfate and, therefore, the Geneticin Antibiotic is excepted from country of origin marking.
ISSUE:
Whether the imported Geneticin Sulfate is substantially transformed in the U.S. as a result of processing into Geneticin Antibiotic.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (19 U.S.C. §1304), provides that unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The primary purpose of the country of origin marking statute is to “mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (C.C.P.A. 1940).
Part 134, Customs Regulations (19 CFR §134), implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.1(b) defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of the marking laws and regulations. In order for a substantial transformation to be found, the article must emerge from the processing having a new name, character, or use. See United States v. Gibson-Thomsen Co. Inc., 27 CCPA 267 (1940).
Section 134.35(a), Customs Regulations, (19 CFR §134.35(a)), provides that an imported article (other than a good of a NAFTA country) used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be considered substantially transformed, and therefore the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the ultimate purchaser and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked to indicate the articles’ origin.
You cite Headquarters Ruling Letter (“HQ”) 731731 (February 23, 1989), as support for your assertion that the Geneticin undergoes a substantial transformation in the U.S. In HQ 731731, a drug product, vancomycin hydrochloride, was imported in bulk from Japan. In the U.S., the vancomycin was tested for potency; nitrogen oxide was applied to prevent degradation during processing; the material was dissolved and filtered; the solution was tested; and the solution was placed into glass vials and freeze dried. Customs found that the vancomycin was substantially transformed as a result of this processing. However, we find that the processing of vancomycin is distinguishable from the processing of Geneticin. Since the end product of the processing of vancomycin is an intravenous antibiotic, several more processes must be applied to the bulk material before it is used as a human administerable antibiotic. Strict FDA requirements govern the production of vancomycin, while Geneticin is not subject to these requirements, as it is not for human or animal usage. Accordingly, we find that HQ 731731 is not controlling with regard to the instant case.
In HQ 735146 (November 15, 1993), Customs considered whether a substantial transformation occurred as a result of processing imported acetaminophen powder into granules in the U.S. In the U.S., the 100% pure imported acetaminophen powder was blended with excipients (starch, povidone and stearic acid) at a 10% level and then granulated into a directly compressible quality. In HQ 735146, Customs found that no substantial transformation resulted from the processing described above. Customs noted that there was no name change and that, unlike the vancomycin at issue in HQ 731731, the acetaminophen was fit for medicinal use as imported; thus, there was no change in use. Finally, Customs found that the granulating had only a minimal affect on the chemical and physical properties of the acetaminophen.
In HQ 733248 (August 22, 1990), Customs examined whether Immune Globulin (Human) Fraction II paste (“paste”) of U.S. origin was substantially transformed as a result of processing in Belgium that allowed it to be used intravenously. The paste, once diluted, is used for intramuscular injection in patients. The paste was processed by sterile filtering, buffering, and other processes and filled into vials and freeze-dried. As a result of this processing, the paste became Immune Serum Globulin Intravenous (“IGIV”), which is administered intravenously, a faster and more effective means for the patient than intramuscular injection. In this ruling, Customs cited to the Gibson-Thomsen case and also discussed National Juice Products v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), in which the Court of International Trade held that manufacturing concentrate imported into the U.S. for use in making frozen concentrated orange juice and reconstituted orange juice was not substantially transformed. In National Juice, the Court stated that the imported concentrate was the very essence of the retail product and that the addition of water, orange essences, and oils to the concentrate, while making it suitable for retail sale, did not change the fundamental character of the product. Customs found in HQ 733248 that the paste did not undergo a substantial transformation in Belgium as the “paste is the major part of the end product although the minor processing performed in Belgium was necessary to make the final product usable in intravenous form.” Customs also referenced C.S.D. 84-112 (July 2, 1984) in which honey that was processed and blended was found not to be substantially transformed. Customs pointed out in that case that the purification and filtration to remove contaminants from the honey are cleansing operations that do not substantially transform the article. Similarly, Customs stated in HQ 733248 that the processing performed in Belgium to the paste “is a cleansing operation…and therefore, should not be considered a substantial transformation.” See also HQ 559136 (August 3, 1995) (blood products freeze-dried and placed into a dual chamber syringe, do not undergo a substantial transformation).
The processing of Geneticin involves testing the imported material, removing impurities by filtration and placing it into sterile bottles. While much emphasis is placed on the maintaining the sterile environment, we note that the clean room production environment is widely used in the pharmaceutical and related industries. While we agree that the use of a clean room environment and the sterilization processes can be an expensive, intensive process, many pharmaceutical standards require that such processing occur in that environment if the facility is to be accredited to perform the processing operation. However, beyond the maintenance of the sterile conditions, the processing in this case essentially involves the removal of impurities from the bulk chemical and the placement of the chemical into smaller packaging. Accordingly, we find that the imported Geneticin Sulfate is not substantially transformed as a result of the processing in the U.S.
HOLDING:
Based on the information submitted, we find that the imported Geneticin Sulfate is not substantially transformed in the U.S. as a result of processing into Geneticin Antibiotic. Therefore, the Geneticin Antibiotic must be marked to indicate that it is a product of Japan.
A copy of this ruling should be attached to the entry documents filed at the time this merchandise is 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