OT:RR:CTF:CPMMA H303359 APP
Mr. Michael O’Neill
O’Neill & Whitaker, Inc.
1809 Baltimore Avenue
Kansas City, MO 64108
RE: Reconsideration of NY 869250, NY H85785, NY K86757, and NY H87465; Tariff classification of Doramectin, Ivermectin, Abamectin Technical, and Milbemectin Technical
Dear Mr. O’Neill:
This is to inform you that U.S. Customs and Border Protection (“CBP”) has reconsidered New York Ruling Letter (“NY”) 869250, dated February 6, 1992 (issued to Pfizer, Inc.); NY H85785, dated January 10, 2002 (issued to Austin Chemical Company); NY K86757, dated July 26, 2004 (issued to Nations Ag II); and NY H87465, dated
January 24, 2002 (issued to Sumitomo Corporation of America), regarding the classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of Doramectin, Ivermectin, Abamectin Technical, and Milbemectin Technical.
In NY 869250, CBP classified the Doramectin under heading 2941, specifically under subheading 2941.90.50, HTSUS, free of duty, which provided for “Antibiotics: Other: Other: Other.” In NY H85785, NY K86757, and NY H87465, CBP classified the Ivermectin, the Abamectin Technical, and the Milbemectin Technical, respectively, under heading 3824, specifically under subheading 3824.90.91, HTSUS, at a duty rate of 5% ad valorem, which provided for “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: Other: Other: Other: Other: Other.” We have determined that NY 869250, NY H85785,
NY K86757, and NY H87465 are in error. Therefore, for the reasons set forth below, we hereby revoke NY 869250, NY H85785 and NY K86757, and modify NY H87465.
Pursuant to section 625(c)(l), Tariff Act of 1930 (19 U.S.C. § 1625(c)(l)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice was published in the Customs Bulletin, Volume 53, No. 45, on December 11, 2019, proposing to revoke NY 869250, NY H85785 and NY K86757, and to modify
NY H87465, and to revoke any treatment accorded to substantially identical transactions. One comment in favor of and one in opposition to the instant action were received in response to the notice and are addressed below.
FACTS:
The Doramectin from Japan in NY 869250 is described as: “[Chemical Abstract Number (“CAS”)] 117704-25-3, … used as an antiparasitic agent for cattle and swine … it will be imported in bulk form.” According to the USP Dictionary online, the Doramectin’s chemical name is known as: Avermectin A1a, 25-cyclohexyl-5-O-demethyl-25-de(1-methylpropyl)-; (2) (2aE,4E,8E)-(5’S,6S,6’R,7S,11R,13S,15S,17aR,20R,20aR,20bS)-6’-cyclohexyl-5’,6,6’,7,10,11,14,15,17a,20,20a,20b-dodecahydro-20,20b-dihydroxy-5’,6,8,19-tetramethyl-17-oxospiro[11,15-methano-2H,13H,17H-furo[4,3,2-pq][2,6] benzodioxacyclooctadecin-13,2’-[2H]pyran]-7-yl 2,6-dideoxy-4-O-(2,6-dideoxy-3-O-methyl-a-L-arabino-hexopyranosyl)-3-O-methyl-a-L-arabino-hexopyranoside.
The Ivermectin (CAS No. 70288-86-7) from China in NY H85785 is described as: “a mixture of (10E,14E,16E,22Z)-(1R,4S,5'S,6S,6'R,8R,12S,13S, 20R,21R,24S)-6'-[(S)-sec-butyl]-21,24-dihydroxy-5',11,13,22-tetramethyl-2-oxo-(3,7,19-trioxatetracyclo [15.6.1.14,8.020,24] pentacosa-10,14,16,22-tetraene)-6-spiro-2'-(perhydropyran)-12-yl 2,6-dideoxy-4-O-(2,6-dideoxy-3-O-methyl-a-L-arabino-hexopyranosyl)-3-O-methyl-a-L-arabino-hexopyranoside (10E,14E,16E,22Z)-(1R,4S,5'S,6S,6'R,8R,12S, 13S,20R,21R,24S)-21,24-dihydroxy-6'-isopropyl-5',11,13,22-tetramethyl-2-oxo-(3,7,19-trioxatetracyclo[15.6.1.14,8.020,24] pentacosa-10,14,16,22-tetraene)-6-spiro-2'-(perhydropyran)-12-yl 2,6-dideoxy-4-O-(2,6-dideoxy-3-O-methyl-a-L-arabino-hexopyranosyl)-3-O-methyl-a-L-arabino-hexopyranoside … this product will be used as a pharmaceutical intermediate and will be packaged in bulk form.”
The Abamectin Technical from China in NY K86757 is described as a product, “which … will be used as a material for formulation into end-use products that are used as miticides/insecticides for the control of pests in agronomic, turf, nursery, and ornamental crops. The chemical name is Avermectin B1; 5-O-demethylavermectin Ala and 5-0-demethyl-25-de(1-methylpropyl)-25-(1-methylethyl) avermectinA1a(4:1).” The Abamectin Technical is a mixture of more than 80% avermectin B1a and less than 20% avermectin B1b, and will be mixed with water.
The Milbemectin Technical imported in bulk form from Japan in NY H87465 is described as consisting of “a natural (i.e., non-formulated), nonisomeric mixture composed of (by weight) approximately 30% milbemectin A3 (CAS-51596-10-2) and 70% milbemectin A4 (CAS-51596-11-3). The CAS Registry name for milbemectin is (6R,25R)-5-O-demethyl-28-deoxy-6,28-epoxy-25-ethylmilbemycin B mixture with (6R,25R)-5-O-demethyl-28-deoxy-6,28-epoxy-25-methylmilbemycin B.” The Milbemectin Technical is advertised as soluble in ethanol, methanol, dimethylformamide, or dimethyl sulfoxide, and having poor water solubility.
ISSUES:
Whether the Doramectin and the Ivermectin are classified in heading 2932, HTSUS, as heterocyclic compounds with oxygen hetero atoms only or in heading 2941, HTSUS, as antibiotics, or in heading 3824, HTSUS, as chemical products.
Whether the Abamectin Technical and the Milbemectin Technical are classified in heading 2932, HTSUS, as heterocyclic compounds with oxygen hetero atoms only or in heading as 3808, HTSUS, as insecticides, or in heading 3824, HTSUS, as chemical products.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. Pursuant to GRI 6, classification at the subheading level uses the same rules, mutatis mutandis, as classification at the heading level.
The HTSUS provisions under consideration in this case are as follows:
2932 Heterocyclic compounds with oxygen hetero-atom(s) only:
2941 Antibiotics:
3808 Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulfur-treated bands, wicks and candles, and flypapers):
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:
Note 2 to Section VI, HTSUS, states:
Subject to note 1 above, goods classifiable in heading … 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of the tariff schedule.
Additional U.S. note 2(a) to section VI, HTSUS, defines the term “aromatic” as “applied to any chemical compound refers to such compound containing one or more fused or unfused benzene rings.”
Note 1(a) to chapter 29, HTSUS, states as follows:
Except where the context otherwise requires, the headings of this chapter apply only to:
(a) Separate chemically defined organic compounds, whether or not containing impurities; ….
Note 7 to chapter 29, HTSUS, states:
Headings 2932, 2933 and 2934 do not include epoxides with a three-membered ring, ketone peroxides, cyclic polymers of aldehydes or of thioaldehydes, anhydrides of polybasic carboxylic acids, cyclic esters of polyhydric alcohols or phenols with polybasic acids, or imides of polybasic acids. These provisions apply only when the ring-position hetero-atoms are those resulting solely from the cyclizing function or functions here listed.
Note 1(a) to chapter 38, HTSUS, states:
This chapter does not cover:
(a) Separate chemically defined elements or compounds with the exception of the following: … (2) Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products put up as described in heading 3808[.]
In interpreting the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The ENs to chapter 29 state, in relevant part:
The term “impurities” applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process (including purification). These 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.
EN 29.32 states, in relevant part, that:
The heterocyclic compounds covered by this heading are: …
B) Lactones*.
These compounds may be considered as internal esters of carboxylic acids with alcohol or phenol function, formed by elimination of water. The molecules may contain one or more ester functions in a ring. They are known as mono-, di-, trilactones, etc., according to the number of ester functions present. However, cyclic esters of polyhydric alcohols with polybasic acids are excluded (see Note 7 to this Chapter).
Lactones are fairly stable compounds, but are characterized by the ease with which the lactone ring can be opened using an alkali ….
EN 29.41 states, in relevant part:
Antibiotics are substances secreted by living micro organisms which have the effect of killing other micro organisms or inhibiting their growth. They are used principally for their powerful inhibitory effect on pathogenic micro organisms, particularly bacteria or fungi, or in some cases on neoplasms. They can be effective at a concentration of a few micrograms per ml in the blood.
Antibiotics may consist of a single substance or a group of related substances, their chemical structure may or may not be known or be chemically defined ….
This heading also includes chemically modified antibiotics used as such. These may be prepared by isolating ingredients produced by natural growth of the micro organism and then modifying the structure by chemical reaction or by adding sidechain precursors to the growth medium so that desired groups are incorporated into the molecule by the cell processes (semi synthetic penicillins); or by bio synthesis (e.g., penicillins from selected amino acids).
Natural antibiotics reproduced by synthesis (e.g., chloramphenicol) are classified in this heading, as are certain synthetic products closely related to natural antibiotics and used as such (e.g., thiamphenicol) ….
EN 38.08 states, in relevant part:
This heading covers a range of products … intended to destroy pathogenic germs, insects (mosquitoes, moths, Colorado beetles, cockroaches, etc.), mosses and moulds, weeds, rodents, wild birds, etc. Products intended to repel pests or used for disinfecting seeds are also classified here.
These insecticides, disinfectants, herbicides, fungicides, etc., are applied by spraying, dusting, sprinkling, coating, impregnating, etc., or may necessitate combustion. They achieve their results by nerve poisoning, by stomach poisoning, by asphyxiation or by odour, etc …
These products are classified here in the following cases only:
(2) When they have the character of preparations, whatever the presentation (e.g., as liquids, washes or powders). These preparations consist of suspensions or dispersions of the active product in water or in other liquids … Intermediate preparations, requiring further compounding to produce the ready for use insecticides, fungicides, disinfectants, etc., are also classified here, provided they already possess insecticidal, fungicidal, etc., properties ….
EN 38.08 (I) defines “insecticides” as:
… products for killing insects, but also those having a repellent or attractant effect. The products may be in a variety of forms such as sprays or blocks (against moths), oils or sticks (against mosquitoes), powder (against ants), strips (against flies), cyanogen gas absorbed in diatomite or paperboard (against fleas and lice) …. The heading also includes products to control mites and ticks (acaricides), molluscs (molluscicides), nematodes (nematocides), rodents (rodenticides), birds (avicides), and other pests (e.g., lampreycides, predacides) ….
EN 38.24 states, in relevant part:
… The chemical products classified here are therefore products whose composition is not chemically defined, whether they are obtained as by products of the manufacture of other substances … or prepared directly.
The chemical or other preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions …. The preparations classified here may be either wholly or partly of chemical products (this is generally the case) or wholly of natural constituents ….
Doramectin and Ivermectin
No comments were received regarding the tariff classification of the Doramectin and the Ivermectin, and our analysis and conclusion remain the same.
The Ivermectin and its derivative, the Doramectin, can only be classified in
heading 3824 if they are not more specifically classifiable elsewhere in the HTSUS.
See Cargill, Inc. v. United States, 318 F. Supp. 2d 1279, 1278-88 (CIT 2004) (characterizing heading 3824 as a basket provision). Accordingly, we will first consider whether the Doramectin and the Ivermectin fall under the scope of headings 2932 and 2941, HTSUS. Only if they are not classifiable under one of these headings, we will then consider heading 3824, HTSUS.
The Doramectin is a non-aromatic lactone containing only oxygen hetero-atoms, which is a derivative of the Ivermectin. The Ivermectin is composed primarily of 2,23-dihydroavermectin B1a (CAS No. 71827-03-7) with lesser quantities of 22,23-dihydroavermectin B1b (CAS No. 70209-81-3). Specifically, the Ivermectin product is made of approximately 80% Ivermectin B1a and 20% Ivermectin B1b. The Ivermectin is synthesized through microbial fermentation using the bacterium Streptomyces avermitilis. Both the Ivermectin B1a and the Ivermectin B1b are produced by the bacteria in this process. The final product is therefore not a deliberate mixture of Ivermectin B1a and Ivermectin B1b; rather, both the Ivermectin B1a and the Ivermectin B1b are the direct result of the fermentation of the Streptomyces avermitilis. The Ivermectin B1b is typically left in the final product during purification. Therefore, Ivermectin B1b falls within the scope of “impurities” as described in the ENs to chapter 29; specifically Ivermectin B1b is a byproduct. Consistent with note 1(a) to chapter 29, HTSUS, separate chemically defined organic compounds with impurities meet the terms of chapter 29. The Ivermectin and its derivative the Doramectin both meet this description and are properly classified within the chapter.
Further, both the Doramectin and the Ivermectin are part of a class of compounds known as Avermectins, which are parasiticides used to treat primarily heartworm and mite infestations such as scabies. EN 29.41 defines “antibiotics” as “substances secreted by living micro-organisms, which have the effect of killing other micro-organisms or inhibiting their growth.” The Doramectin and the Ivermectin do not meet this definition because they are used to treat and control parasites, more specifically roundworms and cattle ticks, which are multicellular organisms generally visible to the naked eye, and not micro-organisms, which are unicellular and can be seen with a microscope. As non-aromatic lactones containing oxygen hetero-atoms, the Doramectin and the Ivermectin are classifiable in heading 2932, HTSUS, specifically under subheading 2932.20.50, HTSUS.
CBP has previously classified antiparasitic drugs in heading 2932, HTSUS. In Headquarters Ruling Letter (“HQ”) 956889, dated Jan. 2, 1996, CBP classified the antiparasitic drug Moxidectin, which is a Milbemycin, in heading 2932, HTSUS, specifically under subheading 2932.29.50, HTSUS. Avermectins are closely related to the Milbemycins. The Doramectin and the Ivermectin are part of compounds known as Avermectins, which are not specifically provided for in the HTSUS, and share a common macrocyclic lactone ring. Therefore, the Doramectin and the Ivermectin are classified in heading 2932, HTSUS, under subheading 2932.20.50, HTSUS, as non-aromatic lactones containing only oxygen hetero-atoms, and there is no need to resort to heading 3824, HTSUS.
Abamectin Technical and Milbemectin Technical
Two comments were received regarding the tariff classification of the Abamectin Technical and the Milbemectin Technical. The first commenter suggests that we consider heading 2932, HTSUS. The first commenter notes that the Abamectin Technical and the Milbemectin Technical are similar to the Ivermectin and the Doramectin in terms of their chemical composition. The first commenter states that if the Abamectin Technical and the Milbemectin Technical are used in drug formulation or for research and development purposes, they would be classifiable under subheading 2932.20.50, HTSUS.
The second commenter asserts that the Abamectin Technical should be classified in heading 2932, HTSUS, specifically under subheading 2932.19.51, HTSUS, which provides for “Heterocyclic compounds with oxygen hetero-atom(s) only: Compounds containing an unfused furan ring (whether or not hydrogenated) in the structure: Other: Other.”
The Abamectin Technical and the Milbemectin Technical can only be classified in
heading 3824 if they are not more specifically classifiable elsewhere in the HTSUS.
See Cargill, Inc., supra. Thus, we will first determine whether they fall under the scope of headings 2932 and 3808, HTSUS.
The Abamectin Technical and the Milbemectin Technical are both lactones and have a chemical composition analogous to the Ivermectin and the Doramectin. The Abamectin Technical is a mixture of avermectins containing more than 80% avermectin B1a and less than 20% avermectin B1b. The Milbemectin Technical is a non-formulated, nonisomeric mixture composed of 30% milbemycin A3 and 70% milbemycin A4. The Abamectin Technical and the Milbemectin Technical are synthesized through microbial fermentation using the bacteria Streptomyces spp. and the final product is not a deliberate mixture of avermectin B1a and avermectin B1b (in the case of the Abamectin Technical) and milbemycin A3 and milbemycin A4 (in the case of the Milbemectin Technical). Rather, both the avermectin B1a and the avermectin B1b, and the milbemycin A3 and
milbemycin A4, are the direct result of the fermentation of the Streptomyces spp. The avermectin B1b is typically left in the final avermectin product and the milbemycin A3 is typically left in the final milbemectin product during purification. Therefore, the avermectin B1b and the milbemycin A3 fall within the scope of “impurities” as described in the ENs to chapter 29. In accordance with note 1(a) to chapter 29, HTSUS, separate chemically defined organic compounds with impurities meet the terms of chapter 29, HTSUS. Thus, just like the Ivermectin and its derivative Doramectin, the Abamectin Technical and the Milbemectin Technical both meet this description of separate chemically defined organic compounds with impurities and are properly classified within chapter 29, HTSUS.
Accordingly, the Abamectin Technical and Milbemectin Technical are classified in heading 2932, HTSUS, under subheading 2932.20.50, HTSUS, as non-aromatic lactones containing only oxygen hetero-atoms. Insofar as the Abamectin Technical and the Milbemectin Technical are classifiable in heading 2932, HTSUS, per note 2 to section VI, HTSUS, they are not classifiable in other HTSUS headings, and resort to headings 3808 and 3824, HTSUS, is unnecessary.
HOLDING:
By application of GRIs 1 and 6, the Doramectin, the Ivermectin, the Abamectin Technical and the Milbemectin Technical are classified under heading 2932, HTSUS, specifically under subheading 2932.20.5050, Harmonized Tariff Schedule of the United States Annotated, as “Heterocyclic compounds with oxygen hetero-atom(s) only: Lactones: Other: Other: Other.” The current column one, duty rate is 3.7% ad valorem. The Doramectin, the Ivermectin and the Abamectin Technical are listed in the Pharmaceutical Appendix to HTSUS 2020, and are therefore duty free. The Milbemectin Technical is not listed in the Pharmaceutical Appendix to HTSUS 2020 and the current column one, duty rate, for the Milbemectin Technical is 3.7% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current.
EFFECT ON OTHER RULINGS:
NY 869250, dated February 6, 1992; NY H85785, dated January 10, 2002; and
NY K86757, dated July 26, 2004, are hereby REVOKED.
NY H87465, dated January 24, 2002, is hereby MODIFIED, with respect to the Milbemectin Technical.
In accordance with 19 U.S.C. § 1625(c), these rulings will become effective 60 days after their publication in the Customs Bulletin.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division
Cc: Mr. Joseph Chivini
Austin Chemical Company
1565 Barclay Blvd.
Buffalo Grove, IL 60089
Mr. John Bech
Nations Ag II
2901-12 Rivendell
Knoxville, TN 37922
Mr. H. Yamada
Sumitomo Corporation of America
600 Third Avenue
New York, NY 10016-2001
Mr. V.M. (Jim) DeLisi
Fanwood Chemical, Inc.
219 N. Martine Avenue
Fanwood, NJ 07023
Mr. Joseph Issa
Director, Global Trade Compliance
Merck & Co., Inc.
Office: K1-3131
2000 Galloping Hill Road
Kenilworth, NJ 07033