CLA-2 RR:CR:GC 963197 AM
Ms. Kellie Kong
Gilead Sciences
333 Lakeside Dr.
Foster City, CA 94404
Re: HQ 963197; L-Carnitine l-tartrate capsules
Dear Ms. Kong:
This is in reference to a facsimile transmission dated July 28, 1999, from JSI Shipping to Customs National Commodity Division on your behalf, concerning the classification, under the Harmonized Tariff Schedule of the United States, HTSUS, of L-Carnitine l-tartrate 250mg and 500mg capsules (Carnitine). We have also reviewed a letter of August 27, 1999, authored by Ms. Bridget P. Binko, of Gilead Sciences, concerning the same merchandise. These submissions were referred to this office for reply. We have also considered your two supplemental submissions both dated September 8, 2000 (although the second references a discussion on September 15, 2000). We regret the delay.
FACTS:
Carnitine has the chemical formula C18H36N2O12 and the chemical name 1-Propanaminium, 3-carboxy-2-hydroxy-N,N,N-trimethyl-, R-, salt with (R-(R*,R*))-2-3-dihydroxybutanedioic acid (2:1). It has been assigned CAS registry # 36687-82-8. We note that the CAS registry number is not listed in the chemical appendix or in Table 3 of the Pharmaceutical Appendix to the HTSUS. Carnitine is listed in Table 1 and Tartrate is listed in Table 2 of the Pharmaceutical Appendix to the HTSUS indicating that General Note 13 to the HTSUS may be relevant to the duty rate of the substance.
Carnitine is an essential cofactor of fatty acid metabolism, required for the transport of long-chain fatty acids across the inner mitochondrial membrane. It is synthesized by the body from lysine in skeletal muscle as well as in the kidneys and the liver. It is also found in meats and dairy products. Deficiency is observed in various genetic disorders, but can also be caused by severe liver disease, dietary deficiencies, and certain drug-induced depletions. Symptoms of Carnitine deficiency include: severe muscle weakness, cardiomyopathy, abnormal hepatic function, and hypoketotic hypoglycemia. The Merck Index assigns Carnitine the therapeutic category of "antihyperlipoproteinemic." Merck Index, §1898, (12th Edition, Merck & Co., Inc, 1996).
Carnitine has been marketed as Carnitor®, available in 330 mg tablets and multidose vials of oral solution. Carnitor® is also supplied in ampoules for parenteral use (by injection) (Physician's Desk Reference, (PDR), 53rd Edition, 1999). It received Orphan Product approval by the Food and Drug Administration (FDA) on July 14, 1992, as a substance used in the "treatment of primary and secondary Carnitine deficiency." The Orphan Drug Act (21 U.S.C. 360, et seq.) defines Orphan products as ones used to treat diseases or conditions affecting fewer than 200,000 persons in the United States. Such small patient populations reduce profit potential for sponsors, so the Act grants special privileges and marketing incentives.
Carnitine, provided in 250 mg and 500 mg capsules, is also listed in the PDR as a "dietary supplement" for use by those who may benefit from supplementation of this essential nutrient, especially renal dialysis patients, and individuals with immune system deficiencies.
Carnitine is indicated for use in the prevention and treatment of reduction of serum Carnitine associated with adefovir dipivoxil treatment for HIV and Hepatitis B infection. Adefovir dipivoxil is a drug currently under Investigational New Drug (IND) status with the FDA in phase III clinical studies. (21 CFR 312.21, et seq.). In order to administer Carnitine with the adefovir dipivoxil in the study, you state that the FDA requested an IND application be filed for Carnitine as well. As such, you intend to import Carnitine capsules containing L-Carnitine L-tartrate, silicon dioxide, croscarmellose sodium and magnesium stearate filled into hard gelatin capsules in a 250 mg and 500 mg dose, packaged in 30 count bottles or in bulk containers of capsules, labeled in accordance with FDA regulations for substances for use in clinical studies under the IND procedure.
ISSUE:
Whether Carnitine, imported in 250mg and 500mg capsules are classified in subheading 3004, HTSUS, as "medicaments," or in subheading 2106.90.99, HTSUS, as "other food supplements."
LAW AND ANALYSIS:
Merchandise imported into the U.S. is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context that requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs. Additional U.S. Rule of Interpretation 1(a) requires that "a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use". In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUSA. See T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).
The following headings and subheadings are relevant to the classification of this product:
Food preparations not elsewhere specified or included:
Other
2106.90.99 Other
* * * * *
3004 Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale (con.):
Other:
3004.90.60 Other
EN 21.06 states in pertinent part the following:
Provided that they are not covered by any other heading of the Nomenclature, this heading covers :
(A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption . . . .
* * * * * * * * * * *
Preparations, often referred to as food supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc. and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packagings with indications that they maintain general health or well-being. Similar preparations, however, intended for the prevention or treatment of diseases or ailments are excluded (heading 30.03 or 30.04).
EN 30.04 states, in pertinent part, the following:
This heading covers medicaments consisting of mixed or unmixed products, provided they are:
Put up in measured doses or in forms such as tablets, ampoules (for example, re-distilled water, in ampoules of 1.25 to 10 cm3, for use either for the direct treatment of certain diseases, e.g., alcoholism, diabetic coma or as a solvent for the preparation of injectible medicinal solutions), capsules, cachets, drops or pastilles, or small quantities of powder, ready for taking as single doses for therapeutic or prophylactic use. . . . .
The heading applies to such single doses whether in bulk, in packings for retail sale, etc.;
or
(b) In packings for retail sale for therapeutic or prophylactic use. This refers to products (for example, sodium bicarbonate and tamarind powder) which, because of their packing and, in particular, the presence of appropriate indications (statement of disease or condition for which they are to be used, method of use or application, statement of dose, etc.) are clearly intended for sale directly to users (private persons, hospitals, etc.) without repacking, for the above purposes.
These indications (in any language) may be given by label, literature or otherwise. However, the mere indication of pharmaceutical or other degree of purity is not alone sufficient to justify classification in this heading.
Both headings of the HTSUS under consideration are principal use provisions.
The principal use of the class or kind of goods to which an import belongs is controlling, not the principal use of the specific import. Group Italglass U.S.A., Inc. v. United States, 17 C.I.T. 1177, 1177, 839 F. Supp. 866, 867 (1993). "Principal use" is defined as the use "which exceeds any other single use." Conversion of the Tariff Schedules of the United States Annotated Into the Nomenclature Structure of the Harmonized System: Submitting Report at 34-35 (USITC Pub. No. 1400) (June 1983). As a result, "the fact that the merchandise may have numerous significant uses does not prevent the Court from classifying the merchandise according to the principal use of the class or kind to which the merchandise belongs." Lenox Coll., 20 C.I.T., Slip Op. 96-30.
When applying a "principal use" provision, the Court must ascertain the class or kind of goods which are involved and decide whether the subject merchandise is a member of that class. See supra Additional US Rule of Interpretation 1 to the HTSUS. In determining the class or kind of goods, the Court examines factors which may include: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise moves; (4) the environment of the sale (e.g. the manner in which the merchandise is advertised and displayed); (5) the usage of the merchandise; (6) the economic practicality of so using the import; and (7) the recognition in the trade of this use. United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377, cert. denied, 429 U.S. 979, 50 L. Ed. 2d 587, 97 S. Ct. 490 (1976); see also Lenox Coll., 20 C.I.T., Slip Op. 96-30, at page 5.
E. M. Chemicals v. United States, 20 C.I.T. 382, 923 F. Supp. 202 (1996 Ct. Intl. Trade). Therefore, the determinative issue is whether Carnitine as imported in 250 and 500 mg capsules, labeled with an indication of the condition it is intended to treat, is of the class or kind of good that is principally prepared for therapeutic or prophylactic use or whether it is of the class or kind of good that is principally used as a dietary supplement.
Medicaments principally prepared for therapeutic or prophylactic use in the U.S. are packaged for oral, parenteral (by injection), or dermatological administration. The ultimate purchaser expects that the substance will cure their condition or reduce its symptoms. The merchandise is regulated by the FDA as a drug and typically sold in pharmacies, over the counter or by prescription only or administered by health care personnel in hospitals or clinics. The merchandise is used according to a strict dosage schedule usually with a time limit on the recommended use.
By contrast, food supplements encompass a much more expansive group of items. They simply must be prepared for human consumption. As such, they are packaged for oral ingestion only as a capsule, tablet, powder or liquid. They are put up in packaging with indications that they maintain general health or well-being. The merchandise is often used daily without a strict dosage schedule or time limit recommended.
Carnitine, in 250mg and 500mg capsules, is presently used in the U.S. almost exclusively as a food supplement. It is available over the counter in pharmacies and health food stores and recommended generally as a part of an overall healthy diet. Although Carnitine has been designated an Orphan product, this indicates only that it is useful to less than 200,000 people in this country as a means of treatment for a specific disease or ailment. This limited use is far outweighed in the U.S. by the use as a dietary supplement to enhance bodily stores of this essential cofactor. As such, in compliance with the Dietary Supplement Health and Education Act of 1994, Carnitine packages most commonly contain the legally required disclaimer that "the product is not intended to diagnose, treat, cure or prevent any disease." Hence, it is not economically practical to sell Carnitine, on a large scale, for therapeutic use since the FDA has not yet approved the substance for such use. Rather, economic practicality, standards in the trade, and the sales of the product generally place Carnitine squarely under the tariff provisions for food supplements.
We are aware that the Carnitine at issue may enter the U.S. packaged without the disclaimer common on food supplements and may have labeling more akin to that described in EN 30.04 common on medicaments and excluded under EN 21.06 #16 from heading 2106, HTSUS. Also, EN 30.04 does describe items which appear to be common food items, ie: Sodium bicarbonate, distilled water, tamarind powder. However, a close examination of these examples reveals distinguishing features between them and the Carnitine of your ruling request.
Sodium bicarbonate, or baking soda, is sold as a food item used mainly in baked goods. Sodium bicarbonate, used for its therapeutic properties, is either mixed with other ingredients to form an oral antacid or a rectally administered laxative. Unmixed Sodium bicarbonate is also packaged in a parenteral form to correct electrolyte imbalance. All of these forms are clearly recognizable by their appearance, administrative route, and packaging as only medicinal forms of Sodium bicarbonate. These forms of Sodium bicarbonate could not be confused with baking soda. Likewise, re-distilled water is listed in the EN as that product which is packaged in ampoules of 1.25 to 10 cm3. It could not be confused as such with distilled water sold in grocery stores for drinking or for use in household appliances.
However, the Carnitine you intend to import is indistinguishable from that used as a food supplement. It is prepared in the same form and dose as the substance used as a dietary supplement. Hence, it is not a similar preparation to a food supplement that has indications for therapeutic use FDA compliance in labeling is insufficient here to indicate principle use of Carnitine as a therapeutic or prophylactic substance beyond that of any nutrient. See H. Reisman Corp v. U.S., 17 CIT 1260 (1993) (the court held that Vitamin B-12 "is not used in a therapeutic or prophylactic manner beyond the purposes provided by any nutrient, including ordinary grain feed or food of any kind.") Id.
Lastly, inclusion in the Pharmaceutical Appendix of the HTSUS does not automatically imbue a substance with therapeutic properties. The Pharmaceutical Appendix was incorporated into the HTSUS by Presidential Proclamation. See Proclamation No. 6763, 60 Fed. Reg. 1007 (1994). This Proclamation also added General Note 13 to the HTSUS. General Note 13 states that whenever a rate of duty of “Free” followed by the symbol “K” in parentheses appears in the “Special” subcolumn for a tariff provision, products classifiable in such provision shall be entered free of duty, provided that such product is listed in the Pharmaceutical Appendix.
The Pharmaceutical Appendix does not broaden or narrow the scope of tariff provisions containing a “K” in the “Special” subcolumn. The statement of administrative action and subsequent presidential proclamations (adding items to the Pharmaceutical Appendix) simply indicate that inclusion within the Pharmaceutical Appendix is the means by which duty-free treatment is to be extended to products that are otherwise classified in a subheading followed by the symbol “K” in the “Special” subcolumn. The existence of a product in the Pharmaceutical Appendix does not direct classification into such a provision.
HOLDING:
250 and 500 mg Carnitine capsules are classified in subheading 2106.90.99, the provision for "[F]ood preparations not elsewhere specified or included: [O]ther: [O]ther: [O]ther." The duty rate is 6.4% ad valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division