CLA-2 RR:CR:GC 964676 AM
Mr. Jeffrey A. Meeks
Meeks and Sheppard
1735 Post Road, Ste. 4
Fairfield, CT 06430
Re: P.E.S./P.E.T. Fiber Bundles Used in Dialysers
Dear Mr. Meeks:
This is in reference to your letter of October 16, 2000, on behalf of Baxter Healthcare, Inc., concerning the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of P.E.S./P.E.T. fiber bundles used in dialysers. In preparing this ruling, we have thoroughly considered arguments you presented in a meeting with representatives of my staff on July 12, 2001, as well as in your supplemental submissions dated September 5, 11 and 26, 2001.
FACTS:
The merchandise consists of a bundle of synthetic polyethersulfone textile monofilaments (P.E.S. hollow fibers) interspersed amongst polyester filaments (P.E.T. fibers), encased in a plastic sleeve. The merchandise consists of 81% by weight P.E.S. fibers and 19% by weight of P.E.T. fibers. (Customs Lab Report #CH20011295, dated November 16, 2001). Hollow fibers are engineered for specific applications such as blood oxygenation, reverse osmosis, biotech separation and dialysis. In the instant fiber bundle, the porosity and membrane layers of the P.E.S. fibers and the ratio of P.E.T. fibers to P.E.S. fibers is specific to its application in hemodialysis. Additionally, you state that the instant fiber bundles are only used in the manufacture of dialysers and are imported by a company well known in the health care market.
The yarns of the subject P.E.S./P.E.T. fiber bundle are approximately thirteen inches long; the bundle has a diameter of approximately one inch. The linear density of the P.E.S. fibers is 69.3 decitex and of the P.E.T. fibers is 6.2 decitex. (Lab Report #CH20011295, dated November 16, 2001).
After importation, each P.E.S./P.E.T. fiber bundle is inserted into a dialyser jacket and a potting compound is applied and forced to each end by centrifuge. This processs separates the inner and outer diameter of the monofilament so that blood will flow along one path and dialysate will flow along the other. "Assembling and potting (cementing together) of hollow-fiber bundles, . . . require great care and precision technology. The potting agent must be compatible with the function assigned to the fiber, as well as with the fiber material. For example, the potting materials employed in a hemodialysis cartridge must be blood-compatible and nontoxic, and adhere to the exterior surface of the fibers as well as to the fiber-housing unit. . . . In general, the potting agent must not shrink or evolve excess heat when cured; it must not penetrate the fiber, plug the bore, wick on the fiber walls, or damage any ultrathin coating." Encyclopedia of Chemical Technology, Volume 12, p. 506-7.
After the polyurethane potting compound is cured by an exothermic chemical reaction, several inches of material are trimmed from each end of the dialyser. The trimming opens the flow channels for the passage of blood through the monofilament, separate from the dialysate solution which circulates on the outside of the fiber bundle. The entire process takes over twelve hours. The cost of the above process is a significant portion of the cost of the finished dialyser.
The finished dialyser is used in a larger hemodialysis circuit system which performs hemodialysis on a patient. Hemodialysis is the exchange of certain elements between the blood and a dialysate solution (normally urea and low molecular weight toxins go from the patient's blood to the dialysate while bicarbonate and acetate move from the dialysate into the blood) by virtue of the difference in the rates of their diffusion through a semipermeable membrane, . . . Dorland's Illustrated Medical Dictionary, 28th Ed., p. 458, 748 (W.B. Saunders Co., 1994). It is only after the potting compound is added as described above, that the P.E.S./P.E.T. fiber bundles can function as a semipermeable membrane in the dialyser.
ISSUE:
Whether the P.E.S./P.E.T. fiber bundles are classifiable as parts of dialysers.
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 2(a) states "[A]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. . . ."
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 (official interpretation of the Harmonized System at the international level) generally indicative of the proper interpretation of the HTSUS. See T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).
Section XI note 2(A) states: “Goods classifiable in Chapters 50 to 55 or in heading 5809 or 5902 and of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates by weight over any other single textile material.”
The following HTSUS provisions are relevant to the classification of this product:
Synthetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex:
* * * * * * * * * * * *
5404 Synthetic monofilament of 67 decitex or more and of which no cross-sectional dimension exceeds 1 mm; strip and the like (for example, artificial straw) of synthetic textile materials of an apparent width not exceeding 5 mm:
* * * * * * * * * * * *
Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases; parts thereof:
* * * * * * * * * * * *
9018 Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electro-medical apparatus and sight-testing instruments; parts and accessories thereof:
* * * * * * * * * * * *
9810.00.85: Cellulosic plastics materials imported for use in artificial kidney machines or apparatus by a hospital or by a patient pursuant to prescription of a physician
* * * * * * * * * * * *
9817.00.96: Articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons; parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in the foregoing articles: Other
EN 54.04 states, in pertinent part, the following:
All these products are generally in long lengths, but remain classified here even if cut into short lengths and whether or not put up for retail sale. They are used according to their different characteristics in the manufacture of brushes, sports rackets, fishing lines, surgical sutures, upholstery fabrics, belts, millinery, braids, etc.
EN 84.21 states, in pertinent part, the following:
[T]he heading also covers dialysers, special type filters consisting essentially of a semi-permeable membrane through which liquids can pass by diffusion and thus be separated from colloidal particles. p.1281.
* * * * * * * * * *
PARTS
Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), the heading covers parts for the above-mentioned types of filters and purifiers. . . .
It should be noted, however, that filter blocks of paper pulp fall in heading 48.12 and that many other filtering elements (ceramics, textiles, felts, etc.) are classified according to their constituent material. (emphasis added).
Legal Note 2 to Chapter 90, HTSUS, states, in pertinent part, the following:
Subject to Note 1 above, parts and accessories for machines, apparatus, instruments or articles of this Chapter are to be classified according to the following rules :
Parts and accessories which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than heading No. 84.85, 85.48 or 90.33) are in all cases to be classified in their respective headings; . .
Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind;. . .
The fiber bundle is a mixture of two synthetic fibers of the same length (thirteen inches or 330.2 mm) but differing weight and decitex. Their length does not preclude them from classification as filament yarns in chapter 54. See General EN to Chapter 55. The P.E.S., a polyethylene, is classifiable in heading 5404, HTSUS, while the P.E.T., a polyester, is classifiable in heading 5402. By application of Section XI, note 2, the fiber bundle is in chief weight P.E.S. monofilament of over 67 decitex and classifiable in heading 5404, HTSUS.
We note that where the fiber bundles are part of an apparatus, such as a hollow fiber dialyser, heading 8421 would describe the merchandise as filtering apparatus, by application of note 2(a) to chapter 90. Our view is consistent with a recent decision on such merchandise published in the Compendium of Classification Opinions on the Harmonized Commodity Description and Coding System. See Opinion No. 8421.29/2 of the WCO’s Compendium of Classification Opinions, Amending Supplement No. 25 (January 2000). However, EN 84.21 identifies textile filtering elements as classified according to their constituent material. The instant fiber bundles are therefore excluded from consideration in heading 8421, HTSUS.
Furthermore, complete or finished hollow fiber membrane dialysers consist of monofilament bundles and potting compound, which create a semipermeable membrane, inside of a dialyser jacket. Therefore, the imported P.E.S./P.E.T. fiber bundles do not comprise a complete or finished semipermeable membrane of the dialyser. For the P.E.S./P.E.T. fiber bundles to qualify as a part under heading 8421, the evidence must establish that, as imported, the goods have the "essential character" of complete or finished semipermeable membrane as required by GRI 2(a), HTSUS.
You cite Baxter Healthcare Corp. of Puerto Rico v. U. S., 182 F. 3d 1333 (CAFC, 1999) for the proposition that the P.E.S./P.E.T. fiber bundles impart the "essential character" to the hollow fiber dialyser because their dimensions, and therefore, their identity, is fixed with certainty at the time of importation. In Baxter, monofilament was imported in rolls for use in oxygenators. In deciding whether the merchandise is classified as a material or as an unfinished part, the court discussed only the dimensions of the article to decide that the monofilament bundles there did not impart the "essential character" to the oxygenator.
However, the court also mentioned other factors, such as whether the monofilament had to undergo substantial transformation in order to function within the oxygenator to oxygenate blood, in deciding the "essential character" question. In this regard, the Baxter court cited with approval the case of Benteler Indus., Inc. v. United States, 17 C.I.T. 1349, 840 F.Supp. 912 (1993), wherein articles used exclusively as side door impact beams were classified as "parts" rather than "material" even though they were cut to length subsequent to importation because the imported pipes required no additional parts or assembly. Baxter, supra. (emphasis added).
In stark contrast to the impact beams in Benteler, supra, the instant merchandise requires substantial additional assembly to become a semipermeable membrane functional within the dialyser. It must be unwrapped, inserted into a dialyser jacket, separated by application of a potting compound, cured and trimmed. The addition of the potting compound and resulting separation of the fibers is an essential, time-consuming and costly process in producing a functioning dialyser. Without this process, the diffusion of elements between blood and dialysate solution could not occur across the membrane because the solutions would mix instead of traveling alternatively through and around the membranes which allows for the exchange of elements to occur. As such, the imported fiber bundles do not function as useable dialysis membranes and hence, lack the essential character of a complete or finished semipermeable membrane. They are simply fibers. Encyclopedia of Chemical Technology, supra.
To bolster your argument for your client’s preferred classification in heading 9018, HTSUS, you cite New York Ruling (NY) 899381, dated July 20, 1994, for the proposition that "the dialyser equipment, in which these membranes are used, are themselves classified under HTS heading 9018 as medical instruments and appliances." October 16, 2000 submission, p. 4. NY 899381 discusses the classification of a peritoneal dialysis cycler set which does not include a dialyser or membrane because the patient's peritoneum acts as the membrane across which diffusion occurs. NY 899381 is therefore inapplicable to the classification of the instant hollow fiber monofilament bundles.
Furthermore, you argue that the P.E.T./P.E.S. fiber bundle is classifiable under heading 9018, HTSUS, as a “part” of a dialyser, even though the completed dialyser is classified in heading 8421 as discussed above. You state “. . .since Chapter 84 does not apply to these parts, . . . due to Note 1 (e) of Section XVI (sic), then Chapter 90, Note 2(a) does not apply either. Rather, Note 2(b) to Chapter 90 would prevail and require classification under 9018.90.75.” Supplemental Submission, September 11, 2001, p.4.
We do not agree. The imported fiber bundle is used in the manufacture of dialysers. A dialyser is a part of a hemodialysis circuit system. A hemodialysis circuit system generally consists of a motorized pump with fittings for the dialyser and the requisite tubings -- in short, it is a machine classifiable in heading 9018, HTSUS. The dialyser is a part that fits into the machine, and because it is also, in itself, a filtering apparatus, it is classified in heading 8421, HTSUS. Even assuming that the imported fiber bundle is a “part” of a dialyser, it is not a part of the hemodialysis circuit system, the machine that is classified in heading 9018, HTSUS. Therefore, Note 2(b) to chapter 90 does not apply.
You suggest two other possible classifications for the merchandise, headings 9810 and 9817, HTSUS. You claim that the subject synthetic membrane will replace cellulosic membranes in some hollow fiber dialysers. While the instant merchandise may be more biocompatible than cellulosic plastics and therefore better for the patient, we cannot disregard the clear language of heading 9018, HTSUS, specifying "cellulosic plastic materials." The instant item is textile fiber; not cellulosic plastic. Since the subject merchandise does not meet the terms of subheading 9810.00.85, HTSUS, it cannot be classified in that provision.
The Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials Act of 1982 expanded the scope of the Florence Agreement primarily by expanding duty free treatment for certain articles for the use or benefit of the handicapped in addition to providing duty free treatment for articles for the blind. The 97th Congress passed Pub. L. 97 446 to ratify the Nairobi Protocol in the United States. The Senate stated that one of the goals of this law was to benefit the handicapped and show U.S. support for the rights of the handicapped. However, the Senate stated that a modification or adaptation must be significant so as to clearly render the article for use by handicapped persons. S. Rep. No. 97 564, 97th Cong. 2nd Sess. (1982). Furthermore, U.S. Note 4(b), subchapter XVII, Chapter 98, HTSUS, excludes articles for acute or transient disability from classification in subheading 9817.00.96, HTSUS.
People who suffer from end-stage renal failure are considered handicapped, and articles specifically designed almost exclusively for their benefit are classifiable as articles for the handicapped. Travenol Laboratories, Inc. v. United States, 813 F. Supp. 840, 844 (CIT 1993)( See also, HRL 559120, dated October 20, 1995). Finding that chronic renal failure is considered a physical handicap, however, does not end our inquiry. Subheading 9817.00.96, HTSUS, requires that the fiber bundles be specially designed or adapted for the use or benefit of handicapped persons and that the article be designed for use in other than acute or transient disability.
The meaning of the phrase “specially designed or adapted” has been decided on a case-by-case basis. In HQ 556449, dated May 5, 1992, Customs set forth factors it would consider in making this case-by-case determination. These factors include: 1) the physical properties of the article itself, i.e., whether the article is easily distinguishable, by properties of the design, form, and the corresponding use specific to this unique design, from articles useful to non-handicapped persons; 2) whether any characteristics are present that create a substantial probability of use by the chronically handicapped so that the article is easily distinguishable from articles useful to the general public and any use thereof by the general public is so improbable that it would be fugitive; 3) whether articles are imported by manufacturers or distributors recognized or proven to be involved in this class or kind of articles for the handicapped; 4) whether the articles are sold in specialty stores which serve handicapped individuals; and 5) whether the condition of the articles at the time of importation indicate that these articles are for the handicapped.
Taking these factors in turn, the instant fiber bundle is engineered for the specific application of dialysis. It is distinguishable from those fiber bundles used in blood oxygenation, reverse osmosis and biotech separation by the number and layered configuration of its pores. The importer in this case is well known in the health care industry and therefore sells some products that belong to the class or kind of articles produced for the handicapped. Although the imported merchandise is manufactured into dialysers that could be used in acute or transient renal failure, their recommended use is in the treatment of patients with chronic renal failure. (Supplemental submission, dated September 11, 2001, p. 5). On balance, we find that duty free treatment under subheading 9817.00.96, HTSUS, under U.S. Note 4, subchapter XVII, Chapter 98, HTSUS, should be accorded this article.
HOLDING:
P.E.S./P.E.T. fiber bundles used in dialysers are classified in subheading 5404.10.8080, HTSUS, the provision for "[S]ynthetic monofilament of 67 decitex or more and of which no cross-sectional dimension exceeds 1 mm; strip and the like (for example, artificial straw) of synthetic textile materials of an apparent width not exceeding 5 mm: [M]onofilament: [O]ther: [O]ther." Duty free treatment for these specially produced P.E.S./P.E.T. bundles for use in the treatment of chronic renal failure is provided under subheading 9817.00.96, HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division