CLA-2 RR:CR:GC 965089 AM
Mr. Mathew T. McGrath
Barnes, Richardson & Colburn
1225 Eye St., N.W., Ste. 1150
Washington, D.C. 20005
Re: NY E86581: D-Oxyphene Base in Toluene > 95%
Dear Mr. McGrath:
This is in reference to your letter dated March 24, 2000, on behalf of Ganes Chemical, Inc., to the Director, Customs National Commodity Specialist Division, New York, requesting reconsideration of New York ruling (NY) E86581, dated November 8, 1999, concerning the classification, under the Harmonized Tariff Schedule of the United States, (HTSUS), of the chemical compound D-Oxyphene Base in Toluene > 95%. Your letter was referred to this office for reply. We regret the delay. We have also considered arguments you presented in a meeting at Customs Headquarters on December 10, 2001, and in a supplemental submission, dated January 3, 2002.
FACTS:
The substance D-Oxyphene Base has the chemical name (2S-3R)-4-Dimethyulamino-3-methyl-1,2-diphenylbutan-2-ol, and the CAS #38345-66-33. It is used as a pharmaceutical intermediate in the production of the analgesic ingredient dextro-propoxyphene. The production of both the D-Oxyphene Base and the dextro-propoxyphene requires the presence of a solvent. In this case, toluene is used for the manufacture of both products. The imported merchandise consists of >95% D-Oxyphene Base and <5% toluene, which has been left in the product after its addition during the production of the imported merchandise.
Customs laboratory report 2-1999-22346, dated November 4, 1999, states, in pertinent part, the following: “Laboratory analysis of this clear liquid and crystallized solid indicates that the sample is D-Oxyphene Base, an aromatic oxygen-function amino-compound (amino-alcohol), in toluene, an organic solvent . . . .” Hence, NY E86581 classified the substance in subheading 3824.90.28, HTSUS, the provision for “[P]repared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included: [O]ther: [O]ther: [M]ixtures containing 5 percent or more by weight of one or more aromatic or modified aromatic substances: [O]ther.
The toluene is added as a solvent during the manufacture of D-Oxyphene Base. A substantial portion of toluene is removed by distillation, but the distillation procedure is stopped when the mixture contains less than 5% toluene. At this level, there is no longer a substantial safety concern or environmental risk associated with the transportation of the product.
D-Oxyphene Base is commercially available without toluene or other solvents as a synthetic chemical reagent used for synthesizing optically active chemicals for laboratory use. (U.S. Patent & Trademark registry number 1233180). Our research confirms that the merchandise exists in 99% and 97% purity without toluene.
ISSUE:
The classification of D-Oxyphene Base in Toluene > 95%.
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. 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 of the HTSUS are under consideration:
2922 Oxygen-function amino-compounds; Amino-alcohols, their ethers and esters, other than those containing more than one kind of oxygen function; salts thereof:
3824 Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included:
Chapter Note 1(a) to chapter 29 states, in pertinent part, "[E]xcept where the context otherwise requires, the headings of this chapter apply only to: (a) [S]eparate chemically defined organic compounds, whether or not containing impurities;" Chapter Note 1(e) to chapter 29 states, in pertinent part, "[T]he products mentioned in (a), (b) or (c) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use."
The EN's to Chapter Note 1 to chapter 29 state, in pertinent part, the following:
(A) Chemically defined compounds
(Chapter Note 1)
Separate chemically defined compounds containing other substances deliberately added during or after their manufacture (including purification) are excluded from this Chapter. Accordingly, a product consisting of saccharin mixed with lactose, for example, to render the product suitable for use as a sweetening agent is excluded (see Explanatory Note to heading 29.25).
The separate chemically defined compounds of this Chapter may contain impurities (Note 1a)). . . . .
The term “impurities” applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process (including purification). The substances may result from any of the factors involved in the process and are principally the following:
(a) Unconverted starting materials.
(b) Impurities present in the starting materials.
(c) Reagents used in the manufacturing process (including purification).
(d) By-products.
It should be noted, however, that such substances are not in all cases regarded as “impurities” permitted under Note 1 (a). When such substances are deliberately left in the product with a view to rendering it particularly suitable for specific use rather than for general use, they are not regarded as permissible impurities. For example, a product consisting of methyl acetate with methanol deliberately left in with a view to improving its suitability as a solvent is excluded (heading 38.14). . . .
The subject merchandise is excluded from classification in chapter 29 because it is not a single chemical compound unless the toluene is (1) a permissible impurity, or (2) the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use. First, toluene is a solvent not a reagent. D-oxyphene base is not normally put up in toluene, nor does the addition of toluene enhance the safety of transportation. Rather, toluene is left in the product because its presence does not hinder and actually aids in the manufacture of the final product after importation as more toluene is added in the production of dextro-propoxyphene.
Second, even if toluene is considered somewhat akin to a reagent used in the manufacturing process, it is deliberately left in the product with a view to rendering it particularly suitable for the specific use of manufacturing dextro-propoxyphene rather than for general use. In fact, D-oxyphene base in toluene is unsuitable for general use as a synthetic chemical reagent used for synthesizing optically active chemicals for laboratory use. Hence, the toluene is an impermissible impurity for tariff classification purposes.
The substance is therefore a mixture of chapter 38, HTSUS. Specifically, the merchandise is classified in subheading 3824.90.28, HTSUS, the provision for “[P]repared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included: [O]ther: [O]ther: [M]ixtures containing 5 percent or more by weight of one or more aromatic or modified aromatic substances: [O]ther.
You state that the merchandise can not be classified in that provision because the toluene, an aromatic substance, constitutes less than 5 percent of the product. However, D-Oxyphene Base is also an aromatic substance, hence 100 percent of the mixture is aromatic and described by the above provision.
Lastly, you note that D-Oxyphene Base is listed in the Pharmaceutical Appendix to the HTSUS. You argue that court in Ciba-Geigy Corporation v. United States, Slip Op. 01-134 (November 16, 2001), allows listings in the Chemical Appendix to the HTSUS to be included "by any name known." Hence, Customs should find that D-Oxyphene Base in Toluene is listed in the Pharmaceutical Appendix, "by any name known."
Although we are not disputing the holding in Ciba-Geigy Corporation, supra, the facts of this case are quite different. In the Pharmaceutical Appendix, three products are listed "in the form of a solution in toluene" (p. 61, 69 and 70). D-Oxyphene Base is not so listed. Had the President intended for D-Oxyphene Base in the form of a solution in toluene to be listed in the Pharmaceutical Appendix, he could have so stated. For this reason, the "K" in the “Special” subcolumn next to subheading 3824.90.28, HTSUS, does not provide duty free status for the instant merchandise.
HOLDING:
D-Oxyphene Base in Toluene > 95% is classified in subheading 3824.90.28, HTSUS, the provision for “[P]repared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included: [O]ther: [O]ther: [M]ixtures containing 5 percent or more by weight of one or more aromatic or modified aromatic substances: [O]ther. The "K" in the “Special” subcolumn does not apply.
EFFECT ON OTHER RULINGS:
NY E86581 is affirmed.
Sincerely,
John Durant, Director
Commercial Rulings Division