DRA-4-OT: RR: CTF: ER
H157615 TT
Ms. Judy Piercy
E.R. Hawthorne & Co., Inc.
9370 Wallisville Road
Houston, TX 77013
RE: Request on behalf of Amsyn, Inc. for a ruling on whether grinding is a manufacturing process
Dear Ms. Piercy: This is in response to your letter, dated March 22, 2011, on behalf of Amsyn, Inc. (“Amsyn”) regarding whether the process of grinding a benzothiazole derivative from coarse to fine powder is considered a manufacture pursuant to 19 C.F.R. § 191.2. Please find our office’s determination below.
FACTS:
Amsyn is the producer of various types of chemical compositions. Among its products is a benzothiazole derivative, which is an organic corrosion inhibitor designed for metal surfaces. Amsyn imports benzothiazole derivative as a “coarse powder.” The coarse powder is put into a “Jet Mill” to grind down or mill to a finer powder. Nothing is added. According to Amsyn, there is no chemical change, nor change in volume. Amsyn states, “there is no change to the name of the product other than an internal designation of the fine powder versus the coarse powder.” The difference in particle size affects the magnitude of surface area that can be covered by spraying these products. Specifically, the fine powder is able to cover a broader surface area than the coarse powder.
Per the technical data sheets supplied, the coarse powder benzothiazole derivative is marketed and sold as Flash-X 350D, while the fine powder is named Halox 650. Flash-X 350D is described as a “more active 97-100% solids organic corrosion inhibitor designed to stop flash rust, in-can corrosion, and provide temporary corrosion protection.” Halox 650 is described as “an organic corrosion inhibitor primarily designed for coatings and primers on metal surfaces” and “is specifically designed for use in solvent-borne or powder coating applications to provide long term corrosion protection.” Promotional materials for these products describes Flash-X 350D as “a 60% active filter cake in water for effective control of in-can corrosion, temporary unpainted steel corrosion, and flash rust,” and Halox 650 as a “100% active solid corrosion inhibitor for solvent borne systems.” Amsyn inquires as to whether its processing is a manufacture for purposes of drawback.
ISSUE:
Whether Amsyn’s proposed operations of grinding a benzothiazole derivative from coarse to fine power is a manufacture per 19 C.F.R. § 191.2.
LAW AND ANALYSIS:
Amsyn argues that the milled benzothiazole should qualify for unused merchandise, pursuant to 19 U.S.C. § 1313(j) drawback. To qualify as unused there cannot be a manufacture or production. However, as the analysis below explains, Amsyn’s proposed grinding process is a manufacture.
CBP regulation, 19 C.F.R. § 191.2(q) defines “manufacture or production” within the drawback context as follows:
(q) Manufacture or production. Manufacture or production means: . . . (2) A process, including, but not limited to, an assembly, by which merchandise is made fit for a particular use even though it does not meet the requirements of paragraph (q)(1) of this section.
C.S.D. 82-67 (1981) adopts the “fit for a particular use” standard established by the former Court of Customs and Patent Appeals in United States v. International Paint Co., Inc., 35 C.C.P.A. 87, 94 (1948). C.S.D. 82-67 states that the decision in International Paint:
appears to support Customs more recent interpretation of “manufacture” as a process brought about by significant investment of capital and labor to produce articles or commodities which, despite the fact they are in some cases much the same as their conditions prior to processing, have been made suitable for a particular intended use. In determining what constitutes a manufacture, we have held in our administrative rulings that if an operation involves special treatment of merchandise to obtain certain properties required for a specific use by the entity performing the operation or his customers and the operation involves significant capital and labor expenditure, then that operation is a manufacture or production.
Therefore, in determining whether there is a manufacture it is important to examine whether the merchandise has been fitted for a particular use.
In this case, Amsyn’s milling of the coarse powder constitutes a manufacture or production within the meaning of 19 C.F.R. § 191.2(q) because it is fitted for a particular use. The coarse powder is named Flash-X 350D and when milled, the fine powder is named, Halox 650. The product description of the two products demonstrates that they have different uses. The product description for the coarse powder, Flash-X 350D, states “Flash-X 350D is a more active 97-100% solids organic corrosion inhibitor designed to stop flash rust, in-can corrosion.” (emphasis added). In contrast, the fine powder, Halox 650, contains a different product description that states, “Halox 650 is an organic corrosion inhibitor primarily designed for coatings and primers on metal surfaces.” (emphasis added). Thus, Halox 650 or the fine powder, is designed or fitted for the use of being used for coating and primers on metal surfaces. In contrast, the coarse powder or Flash-X 350D has a different use of stopping flash rust in-can corrosion. Further, Halox 650 is “specifically designed for use in solvent-borne or powder coating applications.” Flash-X 350D is an “effective replacement for toxic nitrite based flash rust inhibitors.” Last, Flash-X 350D provides temporary corrosion protection while Halox 650 provides long-term corrosion protection.
International Paint explained that, “if an operation performs the function of fitting a substance for a use for which otherwise it is wholly unfitted, it falls within the letter and the spirit of the term ‘manufactured. . . .’” 35 C.C.P.A. at 94. In this case, the coarse benzothiazole derivative is fitted for a distinctive use as it is ground to a fine powder to provide long term protection, whereas the coarse powder is “wholly unfit” for this purpose as it is designed for temporary corrosion protection. Id. Therefore, the product descriptions demonstrate that the milling that produces the fine powder was fitted for a distinctive use. 19 C.F.R. § 191.2(q). Accordingly, the analysis of Amsyn’s proposed process of grinding coarse to fine powder reveals that this is a manufacture.
Finally, in a previous Headquarters ruling it has been determined that, milling, as defined therein as “reduc[ing] the particle size of the active ingredient” is a “manufacture.” HQ H065777 (September 18, 2009). Amsyn’s milling procedure also “reduce[s] the particle size” of the benzothiazole derivative. Therefore, our conclusion is consistent with this previous ruling.
HOLDING:
For the reasons discussed above, Amsyn’s proposed operations of grinding a benzothiazole derivative from coarse to fine power is a manufacture per 19 C.F.R. § 191.2.
Sincerely,
Myles B. Harmon,
Director
Commercial and Trade Facilitation Division