MAR-2-05 CO:R:C:V jd
U.S. Customs Service
Chief, NIS Division
Branch 1
6 World Trade Center
New York, New York 10048-0945
RE: Country of origin marking requirements for vancomycin
hydrochloride
Dear Mr. Slomovitz:
This is in response to your request for internal advice, IA 38/88, dated August
24, 1988, concerning the country of origin marking requirements for a drug
product known as Sterile Vancomycin Hydrochloride U.S.P. An importer,
LyphoMed, Inc., received marking notices at the port of Chicago for failure
to provide repacking certification pursuant to { 134.25(a), Customs Regulations
(19 CFR 134.25(a)). After failure to satisfactorily resolve this matter at the
port, the importer has requested the port to seek internal advice.
FACTS:
According to the submission of the importer's attorney, a substance known as
vancomycin hydrochloride is imported in bulk in metal drums from Japan. As
imported, the substance is unfit for medical use.
At the importer's processing facility the following steps are performed: (1)
the raw material is tested for potency and if the potency is not adequate, more
active ingredient is added;
(2) nitrogen gas is applied to the material to prevent degradation
during further processing; (3) the material is dissolved into a solution and
filtered; (4) the filtered solution is tested for pyrogenicity, if positive, it
is rejected;
(5) filtered solution surviving the screening is placed in glass vials to be
freeze dried; and (6) freeze drying occurs in three stages- freezing, heating and
water extraction.
The imported raw material is procured at $5.00 per gram. Domestic processing
imparts value of over $6.00 per gram, a value added of over 120%. The finished
product is known as Lyphocin brand Sterile Vancomycin Hydrochloride USP. It is
an antibiotic capable of intravenous injection fit for human use.
-2-
ISSUE:
Is raw vancomycin hydrochloride, which when imported is unfit for human use,
substantially transformed by processing into a purified, finished antibiotic drug
capable of intravenous use by humans such that the importer/processor is
considered the ultimate purchaser for country of origin marking purposes?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides
that every article of foreign origin (or its container) imported into the United
States shall be marked in a conspicuous place as legibly, indelibly and
permanently as the nature of the article (or container) will permit, in such
a manner as to indicate to the ultimate purchaser in the United States the
English name of the country of origin of the article.
Section 134.35, Customs Regulations (19 CFR 134.35), provides that an
article 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 of the
imported article within the contemplation of 19 U.S.C. 1304(a).
Accordingly, the article shall be excepted from marking. However, in accordance
with 19 U.S.C. 1304(b) and { 134.22, Customs Regulations (19 CFR 134.22), the
outermost container of the imported article shall be marked to indicate the
country of origin of the article.
It is obvious that the use of the raw vancomycin hydrochloride has
changed as a result of the domestic processing. A raw substance unfit for human
use emerges as an injectable antibiotic fit for human use. Similarly, the
character of the raw substance changes from a powder of variable potency to
a purified solution of uniform potency levels. Even the name change
criterion is satisfied when comparing vancomycin hydrochloride with
Sterile Vancomycin Hydrochloride U.S.P. Although normally the addition of
an adjective in front of a product name is not persuasive, in this case the word
"sterile" is added only after considerable processing and U.S.P. (United States
Pharmacopeia) indicates adherence to a standardized composition for the
finished product.
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Our determination is consistent with the finding in ruling 725704 (November 14,
1984). That ruling involved a drug imported from England in bulk form which was
transformed in the U.S. into individual doses under conditions that required
substantial time, effort, cost and the application of sophisticated technology
and equipment. The domestic processing was held to be a substantial
transformation and accordingly, the repackaged product was not required to
indicate the English origin of the active ingredient.
HOLDING:
In light of the above considerations, it is the opinion of this office that
vancomycin hydrochloride in raw form is substantially transformed by the
processing described into a new article with a new name, character and use.
Accordingly, the importer/processor is the ultimate purchaser of the
raw vancomycin hydrochloride. The outermost container reaching the ultimate
purchaser, in this case the metal drums, must be marked to indicate the country
of origin of the raw drug contained therein. The importer need not submit any
repacking certificates such as those described in { 134.25(a) since the product
as put up for sale is no longer subject to the requirements of 19 U.S.C. 1304.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch