OT:RR:CTF:TCM HQ H240193 AMM
Mr. Hjalmar Rodriguez
Supply Chain & Operational Excellence Manager
iPR Pharmaceuticals
San Isidro Industrial Park
P.O. Box 1624
Canóvanas, PR 00729
RE: Country of Origin Marking of Crestor® (rosuvastatin calcium salt) tablets imported in bulk containers
Dear Mr. Rodriguez
This is in response to your ruling request, dated November 13, 2012, filed on behalf of iPR Pharmaceuticals, Inc. (IPR), regarding the country of origin marking of Crestor® (rosuvastatin calcium salt), tablets when shipped from Puerto Rico to the United States in bulk containers.
FACTS:
According to the information you submitted, IPR imports fungible active pharmaceutical ingredient (API) from two different countries. The API is further manufactured into finished pharmaceutical tablets of various concentrations at IPR’s facility in Puerto Rico. The finished tablets are then packed into bulk drums and shipped from Puerto Rico to a third party packaging facility in mainland United States, where they are put into finished pack bottles. You assert that, although the API from the two countries of origin is fungible, they are not commingled in inventory or in the normal course of manufacturing. You further assert that the bulk drums of tablets are labeled with “Product of Belgium” or “Product of the United Kingdom,” depending on which country the API was imported from, in accordance with 19 C.F.R. §134.25(d).
In your submission, you request a ruling on the correct country of origin when the API from the two countries is commingled during manufacturing. The API is mixed with stabilizers and excipients, then pressed into tablets, coated, and packed into bulk containers for shipping. The API is held in a container, and dispensed to a mixer. When this container runs low, additional API is added so as not to interrupt the manufacturing line. If the container has API from one country, and API from the other country is added, then this batch would contain API from both countries. In order to prevent this commingling, IPR must shut down the manufacturing line to clean the Dispensary, and discard any residual API. This cleaning procedure represents a significant cost in labor, lost manufacturing time, and discarded API. Accordingly, IPR seeks to cease cleaning the Dispensary, which will result in the shipment of tablets in one of three scenarios. In the first scenario, a given batch of tablets is manufactured using only API sourced from Belgium. In the second scenario, a given batch is manufactured using only API from the United Kingdom. In the third scenario, a given batch is manufactured using API sourced from both Belgium and the United Kingdom.
You also requested that this office identify the correct country of origin labeling and declaration on CBP Form 7501 for these products when: 1) imported as API, to be further manufactured and packaged in the United States; 2) imported in tablet form, and repackaged in the United States; and 3) imported in tablet form as a finished packaged product.
Your submission provided information as to the cost associated with a third label for tablets made with API from both countries, which would presumably read “Product of Belgium and the United Kingdom”.
ISSUE:
What is the correct country of origin for Crestor® (rosuvastatin calcium salt) tablets shipped in bulk form for repacking, where the tablets contain fungible active pharmaceutical ingredient imported from both Belgium and the United Kingdom?
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 United States 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 United States the English name of the country of origin of the article. By enacting 19 U.S.C. §1304, Congress intended to ensure “that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. The evident purpose 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 (1940).
Section 134.1 (b), CBP Regulations (19 C.F.R. §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.
Section 134.35(a), CBP Regulations (19 C.F.R. §134.35(a)), states:
Articles other than goods of a NAFTA country. An article used in the United States in manufacture which results in an article having a name, character, or use differing from that of the imported article, will be within the principle of the decision in the case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98). Under this principle, the manufacturer or processor in the United States 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 section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part.
In determining whether a substantial transformation occurs in the manufacture of chemical products such as pharmaceuticals, CBP has consistently examined the complexity of the processing, and whether the final article retains the essential identity and character of the raw material. To that end, CBP has generally held that the processing of pharmaceutical products from bulk form into measured doses, filtering and packaging does not result in a substantial transformation. See Headquarters Ruling Letter (HQ) H215656, dated January 11, 2013; HQ H197582, dated August 9, 2012; HQ H073995, dated October 29, 2009; HQ 561975, dated April 3, 2002; and HQ 561544, dated May 1, 2000.
You assert that the fungible form of the API is to be sourced from two different countries, namely Belgium and the United Kingdom. This compound is shipped to Puerto Rico, where it is combined with stabilizers and excipients and manufactured into tablet form. The tablets are then shipped in bulk to the United States, where they are repacked into bottles for retail sale.
In this case, the processing in Puerto Rico does not result in a change in the medicinal use of the finished product and the API retains its chemical and physical properties and is merely put into a dosage form and packaged. The API does not undergo a change in name, character or use. Accordingly, we find that no substantial transformation occurs in Puerto Rico, and the imported product would be considered to be of the same country of origin as that of the API.
In the first scenario described above, the country of origin of the bulk tablets is Belgium, and it should be marked as such. In the second scenario, the country of origin of the bulk tablets is the United Kingdom, and it should be marked as such. In the third scenario, where the tablets contain a mixture of the fungible API from both countries, the country of origin is both Belgium and the United Kingdom.
In the past, CBP has allowed conjunctive marking schemes, when a product is made up of commingled fungible goods with more than one country of origin. See HQ 560776, dated May 4, 1999; HQ 559849, dated December 6, 1996; HQ 558647, dated November 30, 1994; HQ 734165, dated December 2, 1991. In HQ 734165, CBP considered the marking requirements for LEGO sets whose pieces were fungible, and came from Denmark, Sweden, and the USA. CBP found that the marking “Made in Denmark, Sweden, and the USA” was acceptable, as long as the sets contained pieces from all three countries. The third scenario described above is similar to the products considered in HQ 734165, in that it is composed of fungible goods sourced from more than one country. Therefore, in the instance where a batch of tablets are made from a mixture of API sourced from both Belgium and the United Kingdom, it would be required to mark those products as “Product of Belgium and the United Kingdom” or something similar.
In your ruling request, you assert that there is an inherent economic hardship in using three different labeling schemes, rather than only two. There is a cost associated with developing an additional label and tracking a third type of inventory. You specifically seek an exemption from employing the conjunctive marking scheme described above, for batches of tablets where the API is commingled. Instead, you suggest that when the batch contains more than 50% API from one of the countries, that the batch simply be marked as a product of that country.
CBP notes that certain articles need not be individually marked with the country of origin when they cannot be marked prior to shipment to the United States except at an expense economically prohibitive of their importation, or when they cannot be marked after importation except at an expense that would be economically prohibitive unless the importer, producer, seller, or shipper failed to mark the articles before importation to avoid meeting the requirements of the law. See 19 C.F.R. §134.32(c) and (o). However, drugs, when imported in tablet form, are already exempt from individual marking. See 19 C.F.R. §134.33. Only the outermost container need be marked with the country of origin. Id.
Several factors have been considered to help determine when marking an item would be economically prohibitive. These include situations in which the requirement to mark the article to indicate its country of origin would force the producer to incur a cost that would require the item to be marked at a price at which: (1) the item could not be sold since an individual would not buy it; (2) no profit could have been made; (3) the profit that could have been obtained would not have been sufficient to induce the importer to handle the item. See Note, Country of Origin Marking, 6 Law and Policy in Int'l Business 485, 501 502 (1974), citing Bur. Cust. Customs Information Exchange Ruling 114/51 (1951); See also, HQ 733889, dated September 13, 1991.
CBP does not consider the cost of correctly labeling the container of a bulk product with its country of origin to be a hardship of sufficient severity such that the requirements 19 U.S.C. §1304 may be ignored. We note that the tablets themselves need not be marked because of the exception in 19 C.F.R. §134.33.
With regard to the requirements for CBP Form 7501, we direct you to the CBP Form 7501 Instructions (last updated July 24, 2012). The country of origin must be indicated on Block 10 of CBP Form 7501. For API, bulk tablets, and tablets packed into finished bottles, with only one country of origin (in this case, either Belgium (BE) or the United Kingdom (GB)), that country must be identified in Block 10. According to the instructions, “[w]hen an entry summary covers merchandise from more than one country of origin, record the word ‘MULTI’ in [Block 10]. In column 27, directly below the line number, prefixed with the letter ‘O,’ indicate the ISO code corresponding to each line item.” See CBP Form 7501 Instructions, p. 5.
However, the current CBP Form 7501 does not allow two different countries to be entered in column 27. For product which must be marked with two countries of origin, as discussed above, please take the following actions: 1) record the word “MULTI” in Block 10, and 2) directly below the line number which corresponds to the product which has two countries of origin, record the letter “O” followed by two asterisks, such that it should read “O**”.
HOLDING:
The country of origin of the instant product, identified as Crestor® (rosuvastatin calcium salt), depends on the country of origin of the active pharmaceutical ingredient contained within.
For tablets and active pharmaceutical ingredient shipped to the United States from Puerto Rico, which contains only active pharmaceutical ingredient from Belgium, the outermost container must be marked with “Made in Belgium” or similar language.
For tablets and active pharmaceutical ingredient shipped to the United States from Puerto Rico, which contains only active pharmaceutical ingredient from the United Kingdom, the outermost container must be marked with “Made in the United Kingdom” or similar language.
For tablets and active pharmaceutical ingredient shipped to the United States from Puerto Rico, which contain active pharmaceutical ingredient from both Belgium and the United Kingdom, the outermost container must be marked with “Made in Belgium and the United Kingdom” or similar language.
Because the bulk tablets will be delivered to a repacker, who will then repack the tablets in bottles for retail sale, you must provide notice to the repacker in accordance with 19 C.F.R. §134.25(a)(2) and (d).
Sincerely,
Ieva O’Rourke, Chief
Tariff Classification and Marking Branch