CLA-2 CO:R:C:F 953541 EAB
District Director U.S. Customs Service 1717 East Loop Houston, Texas 77029
Re: Application for Further Review of Protest Number 5301-2-100355, dated September 16, 1992 and liquidated June 19,
1992; phenothiazine; drugs; Lonza, Inc. v. U.S. (CIT 1994);
Technicolor Videocassette, Inc. (CIT 1994); NYRL 832995;
HRL 954994; GRI 6; uniform and established practice;
principal use
Dear Sir:
This is a decision on a protest filed September 16, 1992, against your decision in the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of merchandise entered in 1991-1992 and liquidated on June 19, 1992.
FACTS:
The protestant entered all goods in subheading 2934.30.3000, HTSUSA, a provision for, inter alia, other drugs of compounds containing a phenothiazine ring system, dutiable at the column 1 general rate of 8.2 percent ad valorem.
Customs reclassified the merchandise under subheading 2934.30.5000, HTSUSA, a residual provision for other compounds containing a phenothiazine ring system, dutiable at the column 1 general rate of 3.7 cents/kilogram plus 16.2 percent ad valorem.
Protestant seeks reclassification to subheading 2934.30.3000, HTSUSA, alleging that phenothiazine may be used as an anthelmintic in veterinary medicine.
On May 11, 1992, in a telephone conversation with a Customs official, Mr. Castrovinci, Business Manager of Pleuss-Stauffer International, Inc., stated that the imported phenothiazine is used as a pesticide, as a chemical intermediate and as an anthelmintic, and that phenothiazine is chiefly used as an inhibitor in plastics.
Over a period of time circa June, 1985 through December, 1988, the protestant made approximately 38 entries of medicinal grade phenothiazine at the ports of Houston and New York, all of which entries were liquidated as products suitable for medicinal use and drugs under the then applicable Tariff Schedules of the United States (TSUS).
Following a meeting held among attorneys of the Office of Regulations and Rulings and counsel for the protestant, in correspondence dated October 19, 1994, counsel for the protestant stated that, in its imported condition, the subject merchandise complied with USP standards set forth in National Formulary XII.
ISSUE:
Whether USP grade phenothiazine, a chemical compound with multiple uses, is classified under the HTSUSA as a drug.
LAW AND ANALYSIS:
Merchandise imported into the U.S. is classified under the HTSUSA. 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 which otherwise requires, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUSA and are to be considered statutory provisions of law for all purposes.
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 classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings and applicable subheading notes.
In NYRL 832995 (November 10, 1988), Customs held that phenothiazine was classifiable under subheading 2934.30.5000, HTSUSA. Whether the merchandise was USP grade was not set forth in that classification decision; however, in HRL 954994, dated October 18, 1993, Customs was of the opinion that salicylic acid that met or exceeded the USP standard would not necessarily be classified under an appropriate heading for salicylic acid "suitable for medicinal use."
In accordance with GRI 6, we must determine whether the compound is classifiable under subheading 2934.30.3000, HTSUSA, as drugs other than antidepressants, tranquilizers and other psychotherapeutic agents, or under subheading 2934.30.5000, HTSUSA, a residual provision for other compounds containing a phenothiazine ring system (whether of not hydrogenated), not further fused.
The meaning of a tariff term is question of law; the determination of whether particular merchandise fits within the meaning is a question of fact. Technicolor Videocassette, Inc. v. U.S., CIT Slip Op. 94-43 (1994).
As a matter of law, "the TSUS definition of 'drugs' survives as the common and commercial meaning of the term under the HTS." Lonza, Inc. v. U.S., CIT Slip Op. 94-50 (1994), Cus. Bull., Vol. 28, No. 15, April 13, 1994, 85, 95. Per Schedule 4, Part 1, subpart C, Headnote 5, TSUS (1963): "The term 'drugs' in this subpart means chiefly used as medicines or as ingredients in medicines." Lonza, supra, at 88.
We accept the fact that USP grade phenothiazine has therapeutic or medicinal properties and we note that in its condition as imported, the phenothiazine at issue here meets the USP standard. As probative as the foregoing may be, the imported phenothiazine fails the second part of the test for "drugs" because it is not principally used as a medicine or as an ingredient in medicine/s, but as an inhibitor in plastics.
Protestant argues that a uniform and established practice of classifying USP grade phenothiazine as a drug existed under the TSUS. We agree and note that a uniform and established practice of classifying non-USP grade phenothiazine according to its chemical structure also existed under the TSUS. We further note that the language of the TSUS required such a classification scheme, since item 411, TSUS, described "products suitable for medicinal use, and drugs." Under the HTSUSA, however, there is no such language in heading 2934, and, in the absence of special language or context that otherwise requires it, classification of goods controlled by use is to be determined by the principal use to which the goods are put at or immediately prior to their date of importation into the U.S. Protestant's own declaration is that the principal use of this phenothiazine is as an inhibitor in plastics.
We remain of the opinion that, although phenothiazine is used in the practice of veterinary medicine, such use is not the principal use of the USP grade phenothiazine here.
HOLDING:
The protest should be denied.
The USP grade phenothiazine is principally used as a plastics inhibitor and is properly classified under subheading 2934.30.5000, HTSUSA, a provision for "Other heterocyclic compounds: Compounds containing a phenothiazine ring system (whether or not hydrogenated), not further fused: Other: Other: Other." Merchandise entered in 1992 under the foregoing subheading was dutiable at the column 1 general rate of 3.7 cents/kilogram plus 16.2 percent ad valorem.
A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as a part of the notice of action on the protest.
In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1992, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to the mailing of this decision by your office. Sixty days from the date of this decision, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division