CLA–2 OT:RR:CTF:TCM H128140 AMM
Mr. Alla Kutsenko
ICC Chemical Corporation
460 Park Avenue
New York, NY 10022
RE: Modification of New York Ruling Letters C88143 and F86114; classification of antibiotic drug Azithromycin
Dear Mr. Kutsenko,
This is in regard to New York Ruling Letter (NY) F86114, dated May 5, 2000, regarding the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of the antibiotic drug Azithromycin. In NY F86114, Customs and Border Protection (CBP) classified the Azithromycin under subheading 2941.50.00, HTSUS, as a derivative of Erithromycin. We have reconsidered this ruling and have determined that Azithromycin is provided for in subheading 2941.90.50, HTSUS, as an other antibiotic.
CBP also intends to revoke NY C88143, dated July 13, 1998, which classified Azithromycin under heading 2941, HTSUS, specifically in subheading 2941.50.00, HTSUS.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice proposing to revoke NY F86114 and NY C88143 was published on August 24, 2011, in Volume 45, Number 35, of the Customs Bulletin. CBP received no comments in response to this notice.
FACTS:
Azithromycin (CAS-83905-01-5) is described in the technical literature as a semisynthetic derivative of Erythromycin (CAS-114-07-8), a naturally occurring macrolide antibiotic. In structure, the central skeleton of Erythromycin consists of a 14-membered lactone ring (13-ethyl-13-tridecanolide) with ten asymmetric centers, and two linked sugars. The first sugar can be either L-Cladinose or L-Mycarose. The second sugar is D-Desosamine. Azithromycin differs chemically from Erythromycin in that a methyl-substituted nitrogen atom is incorporated into the lactone ring, thus making the lactone ring a 15-membered ring that does not contain the original Erythromycin skeleton.
ISSUE:
Is the antibiotic drug Azithromycin properly classified under subheading 2941.50.00, HTSUS, which provides for: “Antibiotics: Erythromycin and its derivatives; salts thereof”, or under subheading 2941.90.50, HTSUS, as “Antibiotics: Other: Other: Other”?
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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.
The HTSUS provisions at issue are as follows:
2941 Antibiotics:
2941.50.00 Erythromycin and its derivatives; salts thereof
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2941 Antibiotics:
2941.90 Other:
Other:
2941.90.50 Other
Note 1 of Chapter 29, HTSUS, states, in pertinent part: “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…”
Subheading Note 1 of Chapter 29, HTSUS, states:
Within any one heading of this chapter, derivatives of a chemical compound (or group of chemical compounds) are to be classified in the same subheading as that compound (or group of compounds) provided that they are not more specifically covered by any other subheading and that there is no residual subheading named ‘Other’ in the series of subheadings concerned.
The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN for Heading 29.41 states, in pertinent part, the following: “In this heading, the term ‘derivatives’ refers to active antibiotic compounds which could be obtained from a compound of this heading and which retain the essential characteristics of the parent compound, including its basic chemical structure.”
The EN for Subheading 2941.50 states, in pertinent part, the following:
Erythromycin derivatives are active antibiotics whose molecules contain the following constituents of the erythromycin skeleton : 13-ethyl-13-tridecanolide with linked desosamine and mycarose (or cladinose). Esters are also considered as derivatives. This subheading includes, inter alia, clarithromycin (INN) and dirithromycin (INN). However, azithromycin (INN) which contains a 15-atom central ring and picromycin which contains no cladinose or mycarose, are not regarded as erythromycin derivatives.
There is no dispute that Azithromycin is classified in heading 2941, HTSUS. Rather, the issue is the proper 8-digit national tariff rate that is applicable. As a result, GRI 6 applies.
GRI 6 states:
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.
Azithromycin is an antibiotic, and the technical literature describes it as a semi-synthetic derivative of Erythromycin. Classification of derivatives proceeds under Subheading Note 1 of Chapter 29, HTSUS. Here, derivatives are specifically covered by subheading 2941.50, so the definition of the word “derivative” is at issue.
The word “derivative” is not specifically defined in Chapter 29 of the HTSUS. “Derivative” is “a term used in organic chemistry to express the relation between certain known or hypothetical substances and the compound formed from them by simple chemical processes in which the nucleus or skeleton of the parent substance exists.” Van Nostrand’s Scientific Encyclopedia, 5th Edition, 2005, p. 475. Under the Explanatory Notes for Heading 29.41, a derivative must “retain the essential characteristics of the parent compound, including its basic chemical structure.”
The basic chemical structure of Erithromycin contains a 14-member lactone ring. The chemical structure of Azithromycin is similar, but it contains a 15-member lactone ring instead. Additionally, the ketogroup attached to the carbon atom in the 10th position has been removed, and a methyl-substituted amine group has been added to the ring between the carbon atoms in the 10th and 11th position of the Erythromycin ring. The Azithromycin ring has 15 members, whereas the Erythromycin ring has 14 members. Azithromycin no longer contains the nucleus or skeleton of the parent substance, as specified in Van Nostrand’s Encyclopedia, nor the parent compound’s basic chemical structure, in accordance with EN 29.41. In addition, the EN to subheading 2941.50 specifically excludes Azithromycin from classification as an Erythromycin derivative.
Azithromycin is not a derivative of Erythromycin, and cannot be classified under subheading 2941.50, HTSUS. It must be classified under subheading 2941.90, HTSUS, instead. The product then properly falls under subheading 2941.90.50, HTSUS, which provides for: “Antibiotics: Other: Other: Other.”
Our analysis also applies to NY C88143, dated July 13, 1998, which classified Azithromycin under heading 2941, HTSUS, specifically in subheading 2941.50.00, HTSUS, which provides for “Antibiotics: Erythromycin and its derivatives; …”. As the Azithromycin of NY C88143 is substantially similar to the Azithromycin of NY F86114, we find that it is also properly classified by operation of GRI 1 under subheading 2941.90.50, HTSUS, which provides for “Antibiotics: Other: Other: Other”, based on all of the foregoing.
HOLDING:
By application of GRI 6, the antibiotic drug product Azithromycin is classified in subheading 2941.90.50, HTSUS, which provides for: “Antibiotics: Other: Other: Other.” The column one, general rate of duty is free.
Duty rates are provided for convenience only and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
EFFECT ON OTHER RULINGS:
New York Ruling Letters C88143, dated July 13, 1998, and NY F86114 dated May 5, 2000, are hereby MODIFIED.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division