• HQ H039775
• Apr 17, 2009

• Type : Classification • HTSUS :
•  Related:   J83207; 562887; 964676; 556449   

OT-RR:CTF:VS H039775 RSD

Port Director
U.S. Customs and Border Protection
10 Causeway Street - Room 603Boston, MA 02222

RE: Application for Further Review of Protest Number 0401-08-100154 Eligibility for Glucose Test Strip Layers for Duty Free Treatment as Articles for the Handicapped under Subheading 9817.00.96 of the Harmonized Tariff Schedule of the United States (HTSUS)

Dear Port Director:

This is our decision regarding the Application for Further Review of Protest number 0401-08-100154, timely filed on behalf of Nova Biomedical Corporation by the law firm of Middleton & Shrull regarding the eligibility of various test strip layers for glucose test meters for duty-free treatment as articles specially designed or adapted for the use or benefit of handicapped persons under subheading 9817.00.96, HTSUS. Samples of the products at issue were submitted for our consideration. FACTS:

The focus of Protestant’s business, Nova Biomedical Corporation (Nova), is hospital blood testing analyzers, chemistry analyzers for biotechnology, self testing diabetes products, and medical device development and manufacturing. Some of its focus includes developing technology and products for fast whole blood analyzers to support the care of critically ill patients.

The products that are the subject of this protest are parts designed for producing test strips used in testing the glucose (sugar) level in whole blood. The test strips are a part of the Nova’s blood glucose monitor. The glucose monitor measures a patient’s glucose level in his capillary whole blood. The way the glucose monitor works is that the test strips are inserted into the glucose test monitor. The patient lances a finger and draws a small amount of blood sufficient to fill the wells on the test strip, and the test monitor instantaneously reads the blood sample and provides the reading on the monitor screen.

There are two types of test strips. One type of test strip is composed of four layers and the other type of test strip is composed of five layers. Nova holds a patent for the manufacture of the finished test strips. The five layer test strips are employed in the glucose testing monitors that hospitals use. The first layer of material is manufactured in the United States, while the remaining four layers used in making the test strips are imported. The final processing of the test strips involves combining all of the different layers into the finished test strips, which is performed in the United States.

Since the first layer is made in the United States, we do not need to consider it. The second layer of the test strips is a single sided medical grade adhesive film. The layer is composed of a polyethylene terephthalate (PET) film substrate. The white film undergoes a corona treatment which improves the “wettability” and the adhesion characteristics of the substrate. The “wettability” of the material is a critical characteristic not only because of its use in processing the blood sample, but also in accepting the specially blended medical adhesive material. The product is imported in 6 x 10 inch sized sheets. Each of these sheets contains 200 prefabricated perforated and aligned test strips. Four circular holes will line up to create the “wells” (where the chemistry to test the blood samples are deposited), and the vent-hole rectangles adjacent to each 4 hole group.

The third layer of the test strips also consists of a PET film substrate that has also undergone corona treatment. In addition, this layer includes a specially blended medical grade adhesive material, a custom formulated pressure sensitive adhesive, and a special release liner. This layer contains 200 rectangular die-cuts which create the fluid channel for each sensor.

The fourth product layer also consists of a PET film substrate that has undergone a corona treatment similar to the other two layers. One side of the substrate is coated with a special blended hydrophilic formulation which makes the material more “wettable”. This layer has 200 rectangular vent-holes and 200 circular holes that get cut in half in the final cutting which separates the 200 individual sensors and creates the “inlet-notch”. Layers three and four are bonded abroad and are imported as a single layer. The product is imported in 6 x 10 inch sized sheets. Each sheet contains 200 prefabricated, perforated and aligned test strips.

The fifth layer consists of single sided adhesive film and is only used with hospital model blood testing analyzers. This product layer consists of a PET substrate coated with a special adhesive on one side with a release liner and a carbon ink printing which is die-punched to the final dimensions for use in the finished product. Like the other layers, the fifth layer also uses a specialty

blended adhesive (medical grade) and a custom formulated pressure sensitive adhesive. Although this layer is not referred to in the patent, it provides the ability to identify which unique test sensor type has been inserted in the meter and/or allows differentiation between the sensor test and analytic type tests.

In summarizing the nature of the test strips, the protestant indicates that there are four unique layers of materials used in making the product. Three of the four imported substrate layers are special corona discharge treated to improve the coating application of proprietary specially formulated medical-grade adhesive, special release liners, and proprietary specially formulated hydrophilic solutions. The chemical formulas are customized to deliver precise flow properties to the final product. The fifth layer is printed with a specialized carbon ink for use in the hospital model product. All layers are solely for use in the manufacture of glucose test strips. The layer material is slit to size and is die-punched for precise final assembly. When the layers are combined together, they provide an electrochemical sensor which can measure a small blood sample without the use of a mesh layer in the sample path. The major characteristics of these layers allows the sensor to use very small volumes of blood to provide fast response time (i.e. five seconds), and operate over a wide linear measurement range.

ISSUE:     Whether the imported substrate layers are eligible for duty-free treatment under subheading 9817.00.96, HTSUS? LAW AND ANALYSIS:

The Nairobi Protocol to the Agreement on the Importation of Educational, Scientific, and Cultural Materials Act of 1982, established the duty-free treatment for certain articles for the handicapped. Presidential Proclamation 5978 and section 1121 of the Omnibus Trade and Competitive Act of 1988, provided for the implementation of the Nairobi Protocol into subheadings 9817.00.92, 9817.00.94, and 9817.00.96, HTSUS. These tariff provisions specifically provide that "[a]rticles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons" are eligible for duty-free treatment.  United States Note 4(a) to Subchapter XVII, Chapter 98, HTSUS, provides: "For purposes of subheadings 9817.00.92, 9817.00.94 and 9817.00.96, the term 'blind or other physically or mentally handicapped persons' includes any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working."

U.S. Note 4(b), Chapter 98, HTSUS ("U.S. Note 4(b)"), which established limits on classification of products in these subheadings, states that subheadings 9817.00.92, 9817.00.94 and 9817.00.96 do not cover (i) articles for acute or transient disability; (ii) spectacles, dentures, and cosmetic articles for individuals not substantially disabled; (iii) therapeutic and diagnostic articles; or (iv) medicine or drugs. First, we note that in New York Ruling (NY) J83207, dated May 7, 2003, CBP considered the applicable tariff classification in the HTSUS for the identical merchandise that is the subject of this case, partially manufactured blood glucose test strips from plastic sheets. The ruling indicated that a Taiwanese vendor cut and printed the three different layers of sheets containing multiple blood glucose test strips. After importation, the importer bonded the multiple sheets, cut the individual strips, and added a diagnostic reagent to produce the final blood glucose test strips.  The applicable subheading for the partially manufactured blood glucose test strips was subheading 3926.90.98, HTSUS, as: for other articles of plastics, other. Because a claim for duty-free treatment under subheading 9817.00.96, HTSUS was not raised, NYJ83207 need not be modified as the Chapter1-97 classification is correct.

Regarding the applicability of subheading 9817.00.96, HTSUS to the imported substrate layers, in several previous rulings, CBP determined that persons with diabetes are considered physically handicapped under U.S. Note 4(a), HTSUS. For example, CBP held in Headquarters Ruling Letter ("HQ") 561020, dated October 14, 1998, that persons with diabetes are considered physically handicapped persons under U.S. Note 4(a) because they have limited ability to perform a broad range of jobs. The ruling points out that people with severe diabetes must be able to monitor their blood sugar, inject insulin if prescribed, and have work restrictions due to excessive urination, possible nausea, dizziness and fainting.

We note that CBP has already ruled on the question of the eligibility of diabetic test strips holding that that they are specially designed or adapted for the use or benefit of handicapped persons under subheading 9817.00.96, HTSUS. In HQ 562887 dated January 7, 2004, we stated that clearly, the test strips were not related to the treatment of an acute disability, related to a cosmetic item or a drug or medicine. The ruling further cited the Court of International Trade’s (CIT) decision in Travenol Laboratories, Inc. v. United States, 813 F. Supp. 840 (CIT 1993), in which the CIT held that devices used with a dialysis machine were not therapeutic, and therefore, eligible for duty-free treatment under subheading 9817.00.96, HTSUS. The court ruled that kidney dialysis is not curative and that whether an article cures or heals is the standard with regard to the tariff meaning of the term "therapeutic". Following the court’s analysis, in HQ 562887, we explained, that the glucose test strips are not used to cure or heal the patient's underlying condition. Instead, they merely assist a patient in monitoring their health on a daily basis, and thus the test strips were not therapeutic. Further, because there is no diagnostic use for the test strips, we concluded that the test strips were not excluded from subheading 9817.00.96, HTSUS, treatment by U.S. Note 4(b) and that they were "specially designed or adapted" for the use or benefit of handicapped persons.

While we have previously determined that finished glucose test strips were eligible for duty-free treatment under subheading 9817.00.96, HTSUS, in this case, the specific products under consideration are the various substrate layers made of PET that will be combined together after importation to make the finished test strips. The superior text in subheading 9817.00.96 was amended in 1995 by Presidential Proclamation 6821, 60 Fed. Reg. 47663 at 47674, to provide for parts and accessories specially designed or adapted for goods that are specifically designed or adapted for use of physically or mentally handicapped persons. In other words, the issue to be resolved is whether the imported parts of an article eligible for duty preference under subheading 9817.00.96, HTSUS, are specially designed or adapted to be used in articles that are “specially designed or adapted”.

In HQ 964676 dated January 7, 2002, CBP considered the eligibility of certain fiber bundles that were used in producing dialysis machines employed in treating people who have severe kidney failure. The merchandise consisted of a bundle of synthetic polyethersulfone textile monofilaments (P.E.S. hollow fibers) interspersed amongst PET fibers, encased in a plastic sleeve. Hollow fibers were engineered for a specific application such as blood oxygenation, reverse osmosis, biotech separation and dialysis. In the fiber bundles, the porosity and membrane layers of the P.E.S. fibers and the ratio of PET to P.E.S. fibers were specific to its application in hemodialysis. The fiber bundles were only used in the manufacture of the dialysers and they were imported by a company that was well known in the health care market.

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, CBP set forth factors to consider: 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 their importation indicate that these articles are for the handicapped.

Accordingly, in HQ 964676, we determined that the fiber bundles were engineered for the specific application of dialysis and distinguishable from other fiber bundles used in blood oxygenation and reverse osmosis. In applying the factors set forth in HQ 556449 to the case at hand, we observe that the imported substrate film layers are all specifically designed, manufactured and used in producing the glucose test strips. Three of the four imported PET film substrate are specifically identified in Nova’s patent for the test strips, while the fifth layer is designed and used exclusively for the hospital version of the test strips. Significantly, the film substrate layers do not have a commercial use or purpose other than to serve as parts for glucose test strips. Each layer is distinguishable by its design for its end use as a part used in producing the glucose test strips. It is also evident that the general public will not use them. In other words, at the time they are imported, the substrate film layers are dedicated for use in making the finished glucose test strips. In addition, the film layers are also imported by the NOVA, a recognized manufacturer and distributor of medical products and devices used to assist diabetics. Accordingly, we find that the substrate film layers are specially designed and dedicated for use as parts for articles specially designed or adapted for the use or benefit of physically or mentally handicapped persons, and are eligible for duty-free treatment under subheading 9817.00.96, HTSUS.

HOLDING: The PET substrate film layers for the NOVA glucose monitor test strips described above are specially designed or adapted for the use or benefit of the physically handicapped, and therefore, eligible for duty-free treatment under subheading 9817.00.96, HTSUS. Consequently, the protest should be granted in full.

In accordance with the Protest/Petition Processing Handbook (CIS HB, December 2007), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the office

of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division