MAR-2-05 CO:R:C:V 733248 KG
John H. Heinrich
District Director of Customs
300 South Ferry Street
San Pedro, California 90731
RE: Country of origin marking of imported Immune Serum Globulin
Intravenous; substantial transformation; 19 CFR 134.32(m).
Dear Mr. Heinrich:
This is in response to your memorandum of March 27, 1990,
forwarding a letter dated January 30, 1990, from the law firm of
Katten Muchin & Zavis requesting internal advice on behalf of the
Hyland Division of Baxter Healthcare Corporation regarding an
imported product known as Immune Serum Globulin Intravenous.
FACTS:
Immune Serum Globulin Intravenous ("IGIV") is a human blood
fraction used for patients who have various immunodeficiencies.
The first step in making this product is to collect human blood
plasma from U.S. donors, to assure that the antibodies contained
in the IGIV can be used for treatment of the intended population,
i.e., U.S. residents. The Immune Globulin is processed by the
Cohn-Oncley method in the U.S. The human blood goes through
various precipitating, centrifuging and filtering processes. At
each level of processing, proteins such as an anticoagulant
solution and an antihemophilic factor are removed from the
plasma. In addition, reagents are added to the plasma, to help
in purification. At the end of the processing in the U.S., a
product known as Immune Globulin (Human) Fraction II paste
("Fraction II paste") is derived. The importer states that in
that form, with the addition of a diluent, it can be and is used
for intramuscular injection in patients.
The Fraction II paste is then sent to Belgium where it
undergoes additional sterile filtering, buffering, and other
processing and is filled into vials and freeze-dried. It is
changed from bulk form into dosage form. The importer states
that the purpose of this processing is solely to render the IGIV
fit to be administered intravenously. This form of
administration works much faster and is more effective for the
patient. Both the intramuscular and intravenous forms of IGIV
have the same name and are used for the same treatment. The only
difference is the form of administration.
The value of the Fraction II paste manufactured in the U.S.
and sent to the Belgium facility for further processing is
approximately $13.00 per unit. The value added by the processing
of the Fraction II paste in Belgium is approximately $11.50 per
unit.
The IGIV which is imported from Belgium had U.S. references
such as U.S. patent numbers and U.S. license information on the
packaging but no country of origin marking.
ISSUE:
Whether the imported Immune Serum Globulin Intravenous is
substantially transformed in Belgium and therefore, required to
be marked to indicate Belgium as the country of origin.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that, unless excepted, every article of foreign
origin imported into the U.S. 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 U.S. the English name
of the country of origin of the article.
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines the 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 this part."
A substantial transformation occurs when articles lose their
identity and become new articles having a new name, character or
use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at
270 (1940), National Juice Products Association v. United
States, 10 CIT 48, 628 F. Supp. 978 (CIT 1986), Koru North
America v. United States, 12 CIT ____, 701 F. Supp. 229 (CIT
1988).
In National Juice the court upheld Customs ruling that
manufacturing concentrate used to make frozen concentrated orange
juice and reconstituted orange juice was not substantially
transformed. The manufacturing concentrate is the "major part of
the end product, when measured by cost, value or quantity" and
the further processing in the U.S. to make the manufacturing
concentrate into frozen concentrated orange juice was considered
a minor manufacturing process. The court noted that the imported
product 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.
This case is very similar to National Juice. The Fraction
II paste is the major part of the end product although the minor
processing performed in Belgium is necessary to make the final
product useable in intravenous form. Although the Fraction II
paste is filtered, purified and made suitable for intravenous use
in Belgium, this processing does not change the fundamental
character of the product. The Fraction II paste can be and is
sold for intramuscular injection for the same treatment as the
final product and is known by the same name as the final product.
In another case, imported honey which is processed and
blended with domestic honey in the U.S. was determined not to be
substantially transformed in C.S.D. 84-112 (July 2, 1984). The
major processing done in the U.S. was: blending, purification and
filtration, and flash heating to destroy yeast and prevent
fermentation. Customs pointed out in that case that purification
and filtration to remove contaminants are cleansing operations.
The ruling states that "with respect to purification and
filtration to remove contaminants, we are bound to follow the
well-settled principle of Customs law that the mere cleansing of
an article, or 'getting it by itself,' is not a manufacturing
process which transforms the article." The argument that flash
heating constituted a substantial transformation was also
rejected. This case is analogous to honey in the sense that the
processing done in Belgium is a cleansing operation which
involves "getting it (the IGIV) by itself" and therefore, should
not be considered a substantial transformation.
Another relevant Customs ruling, HQ 729519 (May 18, 1988),
involved wine coolers. A wine cooler is a beverage which
consists of a liquid flavor base and carbonated water. The
flavor base is made in the U.S. and then exported to Canada to be
mixed with carbonated water, bottled and imported into the U.S.
as a finished product. In that case, Customs ruled that the
processing performed in Canada did not substantially transform
the U.S.-made liquid flavor base and therefore, the imported wine
cooler is treated as a U.S. product exported and returned which
is exempted from country of origin marking pursuant to 19 CFR
134.32(m). This conclusion was based on the view that the flavor
base imparted the "fundamental character of the wine cooler"
although the Canadian processing was necessary to make the
product salable and changed the character of the final product to
a certain degree. Further, the majority of the value of the end
product was attributable to the flavor base. This case is
similar to the wine cooler because the U.S.-made Fraction II
paste imparts the fundamental character of the finished product
even though the foreign processing is necessary to make the
product useable in an intravenous form and this foreign
processing does change the character of the final product to a
certain degree. Further, more than 50% of the value of the end
product was attributable to the Fraction II paste made in the
U.S.
Based on all the factors discussed above, we conclude that
the Fraction II paste is not substantially transformed in
Belgium. Since there is no substantial transformation in
Belgium, pursuant to 19 CFR 134.1(b), the country of manufacture,
which in this case is the U.S., remains the country of origin.
Section 134.32(m), Customs Regulations (19 CFR 134.32(m)),
excepts from individual marking products of the U.S. exported and
returned. Customs has interpreted this provision to mean that
American goods exported which are not substantially transformed
in a foreign country or not entitled to the partial duty
exemption under subheading 9802.00.80 of the Harmonized Tariff
Schedule of the United States ("HTSUS") are excepted from country
of origin marking requirements upon their return to the U.S. See
HQ 729316 (April 20, 1989). In this instance, the Fraction II
paste is not substantially transformed and does not appear to be
entitled to a partial duty exemption under HTSUS subheading
9802.00.80. Therefore, the imported IGIV is not subject to
country of origin marking requirements under 19 CFR 134.32(m).
HOLDING:
The Immune Serum Globulin Intravenous is not substantially
transformed in Belgium. Therefore, the country of origin of the
imported IGIV is the U.S. and there are no country of origin
marking requirements under 19 U.S.C. 1304 and 19 CFR 134.32(m).
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch