OT:RR:NC:N3:140
Mr. Mark Tallo
Sandler, Travis & Rosenberg P.A.
1300 Pennsylvania Ave NW, Suite 400
Washington D.C. 20004
RE: The country of origin of N-Stable 25 N-Butylthiophosphoric triamide fertilizer additive
(“N-Stable 25 fertilizer aid”).
Dear Mr. Tallo:
In your letter dated February 10, 2021, you requested a country of origin ruling determination on behalf of your client, Keystone Specialty Chemicals, LLC.
The merchandise under consideration is called N-Stable 25 N-Butylthiophosphoric triamide fertilizer additive “N-Stable 25 (“N-Stable 25 fertilizer aid”).
Keystone Specialty Chemicals requests a binding ruling on the country of origin of liquid N-Stable 25 N-Butylthiophosphoric triamide fertilizer additive, (“N-Stable 25 fertilizer aid”) that Keystone plans to import through various US ports of entry. You indicate in your request that:
In your request you indicate that, Keystone requests verificiation, that the processing undertaken in Canada, which transforms powder NBPT, N-Butylthiophosphoric triamide (“NBPT solid” or “NBPT powder”) into N-Stable 25 fertilizer, results in a substantial transformation.
You also specify that: “This request does not consider whether the product qualifies under the U.S.- Mexico-Canada Free Trade Agreement (“USMCA”).” We will therefore not review the products status under that FTA. We do note that there are specific requirements under that trade program that may apply to the instant product when imported into the United States.
Liquid N-Stable 25 fertilizer aid will be produced from processing different chemicals, solvents, and dyes in Canada. The principal chemical component is powder N-Butylthiophosphoric triamide (“NBPT”), which would be imported from another country. NBPT’s Chemical Abstract Number is 94317-64-3 and its molecular formula is C4H14N3PS.
You describe NBPT as a solid off-white crystalline powder. You provided a chemical structure and data, as well as a complete list of ingredients and processing summary for the fertilizer aid. NBPT solid is hygroscopic, meaning that it tends to absorb moisture from the air, thus over time the powder tends to form a solid cake.
NBPT is a urease inhibitor, which means it prevents urease (a crystallizable enzyme occurring in numerous bacteria and fungi) from catalyzing urea, either natural or synthetic, into ammonia and carbon dioxide. This ability to prevent ammonia and carbon dioxide buildup is the mechanism by which the compound achieves its main function of assisting the plant to utilize nitrogen more efficiently.
We note that product as imported is described as a fertilizer aid and is not a complete stand-alone fertilizer of Ch. 31. It does not, as formulated, provide sufficient fertilizing elements for plant growth.
You suggest that NBPT solid cannot be used in its solid state as a fertilizer aid. To obtain the urease-inhibiting power of NBPT solid in agriculture, NBPT powder must be precisely formulated and processed into a new product. During the mixing process, NBPT solid is transformed into liquid. You suggest that simply sprinkling NBPT powder on fields would have virtually no urease inhibiting effect, because the powder would not properly combine with the urea fertilizer. By turning NBPT into liquid N-Stable 25 fertilizer aid, the product can be evenly spread throughout the crop fields and ensure absorption into the urea granule.
Additionally, you describe that the NBPT solid (i.e., powder form) has a pungent smell that would make its use in large swaths of agricultural lands undesirable. The processing and formulation, you profess, is necessary to “alleviate the smell.” You also indicate that the selection of an appropriate solvent package to dissolve the NBPT powder is “critical in developing a successful final product.”
You also indicate that: “Typical organic solvents or water are not suitable to dissolve solid NBPT, since they either do not solubilize the NBPT or they degrade the active ingredient. The solvents used must then be further refined with combinations of solvents and the resulting solutions must then be tested over time to ensure physical stability of the formulation.”
The specific formulation and processing with proprietary solvents transforms the NBPT solid input into the finished product, N-Stable 25 fertilizer aid. You indicate that the processing also permits the product to be stored at ambient temperature without the need of refrigeration (contrary to NBPT in powder form). Manufacturers with different solvent systems can easily end up with products with completely different properties and end uses, even when they contain the same concentration of NBPT.
You provided a full list of chemical ingredients and processes performed in the production of the finished preparation. You suggest that classification of the instant product should be under Heading 2929, HTSUS. We disagree. The instant product being a preparation and containing additive and solvents chosen for a specific purpose, is not a separately identifiable organic chemical under the terms of Chapter 29, Note 1. Additionally, it is evident that the solvent system used is specifically chosen to render the product particularly suitable for specific use, rather than for general use. Based on these factors, the instant product is excluded from classification as such in Chapter 29.
The instant product will be classified as an “Other:” plant-growth regulator of subheading 3808.93. Although not directly functioning as a plant growth regulator (i.e.-as a hormone), the instant product helps regulate nitrogen uptake to facilitate and enhance the growth of the plant. You did not request a classification or a review of the applicability or the USMCA for the instant product. As such we will only review the Country of Origin of the instant chemical preparation.
First, we note as indicated in your follow up request that this product contains only one active ingredient (NBPT). Other ingredients function as solvents, colorants, or odor control agents. Although specifically chosen to enhance the function and purpose of the active ingredient, only the NBPT is considered an active ingredient. We note that the solvents are added to assist in the main purpose of the active ingredient, via allowing dispersion or binding to the surface of the urea. You provided an in-depth review of the specificity and necessity of the specific ingredients in the function of the imported chemical preparation. We note that you cite several CIT Cases and previous rulings to support your case. Upon review we do not agree that those citations support your conclusions.
In part, the rulings that you cite (NY N137515, dated, February 25, 2011, and HQ H257210, dated May 21, 2015) both refer to chemically pure N-(n-Butyl) thiophosphoric triamide (NBPT), CAS No. 94317-64-3. Classification of the pure chemical product was given in N137515 under subheading 2929. They are not applicable to this product. The instant product is not a pure chemical compound, but is a preparation. We also do not agree that the findings in “Natural Juice Products” supports, as you infer, a determination that the processing involved in the manufacture of liquid N-Stable 25 fertilizer aid, results in a substantial transformation. There is no change in name, character, or use. The essential character remains that of the NBPT, which does not change in any way, other than being made into a liquid, which is a more dispersible form. The chemical name of the active ingredient and its structure remain unaltered. It is a urease inhibitor before and after it is mixed and prepared.
You further indicate that you “believe CBP ruling, HQ 555597, dated May 24, 1990, is instructive and the analysis applicable to the instant production of N-Stable 25 fertilizer aid.” The fact that the NBPT continues to have its same chemical structure after transformation into N-Stable 25 is one issue that Customs must consider, but as you state, “it does not alone answer the question of whether a substantial transformation occurred.” In HQ 555597, you indicate that Customs “reviewed the issue of substantial transformation, for purposes of a HTSUS 9801.00.10 claim, in the manufacturing and subsequent packaging of contraceptive drugs and found that a substantial transformation occurred even though the active ingredients were not changed.”
However, in HQ555597 the product reviewed consisted of multiple active ingredients, which were mixed, with additional adjuvants, to create a new product. HQ555597 deviates from the instant case, where we have a single active ingredient that is simply mixed, diluted and made ready for use.
The "country of origin" is defined in 19 CFR 134.1(b) as "the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 this part.
The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
It is our opinion that there is no change in name, character or use under the production scenario described in your request letter. The active ingredient remains unchanged, it is not mixed with other active ingredients and its function remains the same as when imported into Canada. Although adjuvants have been added to enable better dispersion, better adherence, and to alleviate certain odors, no substantial transformation occurs in our opinion. The Country of Origin will remain that of the raw NBPT.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Paul Hodgkiss at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division