OT:RR:CTF:VS H340257 AM
other inert ingredients used as formulation aids, such as dispersants, wetting agents, diluents, etc., to improve the form, and effectiveness of the final product. Rimsulfuron and Nicosulfuron are both active ingredients produced in China and imported into Taiwan for manufacturing. Rimsulfuron makes up 12.5% of the subject herbicide as Nicosulfuron makes up 25.2% of it. The inert ingredients described above make up the remaining 60%. The protestant described the manufacturing process as follows: 1. All ingredients are placed into a mixer and mixed for 30-40 seconds until uniform. 2. The ingredients are jet-milled. 3. The mixed product is placed into another mixer for 20-30 minutes. 4. The product is placed into a trough-type mixer and 15-16 kg of water is sprayed for each 100 kg of powder. It is then kneaded. 5. The kneaded materials are extruded into granules. 6. The wet granules are placed in fluid-bed equipment, and the temperature is set to 6575?, and the product is dried for 40-45 minutes. 7. After the drying process, the granules are placed into a shaking-screen. 8. The granules that do not pass through the sieve are collected together, passed through straightening equipment, and returned to sieving again. Additionally, the fine powders are returned to kneading. 9. The product is packaged, labeled, and exported to the United States. Protestant asserts the country of origin of the herbicide is Taiwan. ISSUE: What is the country of origin of the herbicide product for purposes of Section 301 trade remedies? LAW AND ANALYSIS: The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25 percent will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20, Harmonized Tariff Schedule of the United States (“HTSUS”). When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling (“HQ”) H301619, dated November 6, 2018. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See Nat’l Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). If the manufacturing or combining process is a 2
minor one which leaves the identity of the article intact, a substantial transformation has not occurred. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940). U.S. Customs and Border Protection (“CBP”) has generally held that mere mixing of two substances in another country, not involving a chemical reaction and without additional processing, does not result in a product of such other country. See HQ 561986, dated Aug. 21, 2001. However, CBP has previously held that when chemical compounds are mixed together to form a different substance and the individual properties of each ingredient are no longer discernible, a substantial transformation has occurred. See HQ 563303, dated Sept. 30, 2005; HQ 555609, dated Nov. 5, 1990; and HQ 555032, dated Sept. 23, 1988. Where the finished product retains the identity and character of the precursor ingredients, CBP has found that no substantial transformation occurs. See, e.g. HQ H304539 (April 20, 2020) (no substantial transformation occurs where perfume oil base is combined with ethyl alcohol and water, as the oil base is the essence of the eau de toilette). To determine whether a substantial transformation occurs, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative. In HQ 561330, dated July 2, 1999, four scenarios were presented to determine whether a substantial transformation occurred in the processing of insecticides and herbicides. In the third scenario, the imported bulk Bentazon was mixed with another active ingredient, Atrazine, as well as formulation and application aids. CBP held that there was a substantial transformation because the addition of another active ingredient changed the nature of the Bentazon because the number of plants that the herbicide is effective against is significantly increased. Additionally, in New York Ruling (“NY”) N337948, dated February 23, 2024, two separate active ingredients from the Netherlands, Ethynodiol Diacetate and Ethinyl Estradiol, were mixed to create a fixed combination drug that offered additional medicinal benefits compared to taking each API alone. CBP found that the mixing of the active ingredients in China resulted in a substantial transformation and the country of origin of China. This office consulted CBP Laboratories and Scientific Services Directorate (“LSSD”), concerning the instant case. LSSD informed us that the production process of the herbicide takes place in Taiwan does not result in “a chemical reaction with each other or any of the other components during the process of manufacture.” However, in mixing operations of herbicides, pesticides, and other agricultural finished products, where no chemical reaction occurs, “the active ingredient provides the essential character regardless of the origin of the other constitutes.” LSSD stated that N337948 and this case are analogous as two active ingredients from the same country are being mixed in another country yielding a distinct final product. Therefore, we find that the subject ingredients are substantially transformed by the mixing and formulation operations occurring in Taiwan. 3
Based on the foregoing, we determine that the manufacturing process that takes place in Taiwan constitutes a substantial transformation. As a result, Section 301 remedies are not applicable to the Sparrow herbicide product. HOLDING: This protest should be GRANTED. Based on the information provided, we find that the country of origin for purposes of Section 301 remedies of the imported Sparrow herbicide product is Taiwan and is not subject to Section 301 measures. You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, which can be found on the CBP website at https://www.cbp.gov and other methods of public distribution.
Sincerely,
for Yuliya A. Gulis, Director Commercial Trade and Facilitation Division 4