CLA-2 RR:CR:SM 563264 KSG
Eleanore Kelly-Kobayashi, Esq.
Rode & Qualey
55 West 39th Street
New York, NY 10018
RE: Eligibility of diabetes take home kit for Nairobi Protocol; NAFTA Marking Rules; 19 CFR 134.46
Dear Ms. Kobayashi:
This is in response to your letter dated January 28, 2005, on behalf of Becton Dickinson Infusion Therapy Systems, asking whether an imported diabetes take home kit is eligible for duty-free treatment under subheading 9817.00.96, of the Harmonized Tariff Schedule of the United States ("HTSUS"). You also asked what the country of origin marking requirements under 19 U.S.C. 1304 would be for the imported kit. A sample kit was submitted for our review.
The imported article is the BD Getting Started Take Home Kit. The kit is a complimentary sample which is given free of charge to patients who have diabetes and recently begun injecting insulin as part of their diabetes therapy. There are two versions of the kit. One version contains 10 single-use insulin syringes in a plastic bag, 5 single-use lancets in a plastic bag, alcohol swabs, glucose tablets for low blood sugar reactions and instructional literature on the care and treatment of diabetes. The second version of the kit is the same except that it will contain pen needles instead of syringes. The syringes, alcohol swabs, glucose tablets, and instructional literature are made in the U.S. The lancets and the pen needles are made in Ireland. The various articles will be shipped to Mexico where they are packaged. The packaged kits are then imported into the U.S.
The sample box submitted has a New Jersey address on the front of the box.
Whether the imported diabetes take home kit is eligible for duty-free treatment under subheading 9817.00.96, HTSUS?
What is the proper country of origin marking for the imported kit?
LAW AND ANALYSIS:
The National Import Specialist determined that the imported articles are classified under General Rule of Interpretation 3(b) in subheading 9018.31.0040 of the Harmonized Tariff of the United States (“HTSUS”).
The Agreement on the Importation of Educational, Scientific and Cultural Materials, known as the Florence Agreement, is an international agreement drafted by the United Nations Educational, Scientific, and Cultural Organization ("UNESCO") and adopted by it in Florence, Italy in July 1950 (17 UST 1835; TIAS 6129).
It provides for duty-free treatment and the reduction of trade obstacles for imports of educational, scientific and cultural materials in the interest of facilitating the international free flow of ideas and information. Materials falling within the coverage of the Florence Agreement include: books, publications and documents; works of art and collector's pieces; visual and auditory materials; scientific instruments and apparatus; and articles for the blind.
The Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials Act of 1982 expanded the scope of the Florence Agreement primarily by expanding duty-free treatment for certain articles for the use or benefit of the handicapped in addition to providing duty-free treatment for articles for the blind. The 97th Congress passed Pub. L. 97-446 to ratify the Nairobi Protocol in the U.S. The Senate stated in its Report that one of the goals of this law was to benefit the handicapped and show U.S. support for the rights of the handicapped. The Senate, however, did state that it did not intend "that an insignificant adaptation would result in duty-free treatment for an entire relatively expensive article…the modification or adaptation must be significant so as to clearly render the article for use by handicapped persons."
S. Rep. No. 97-564, 97th Cong. 2nd Sess. (1982). The Senate was concerned that persons would misuse this tariff provision to avoid paying duties on expensive products.
Section 1121 of the Omnibus Trade and Competitiveness Act of 1988 and Presidential Proclamation 5978 provided for the implementation of the Nairobi Protocol by inserting permanent provisions, subheadings 9817.00.92, 9817.00.94, and 9817.00.96 into the HTSUS. These tariff provisions specifically state that “articles specifically designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons” are eligible for duty-free treatment.
U.S. Note 4(a), Chapter 98, HTSUS (“U.S. Note 4(a)”), states that 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)”), 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.
Customs held in Headquarters Ruling Letter ("HRL") 561020, dated October 14, 1998, that persons with diabetes are considered physically handicapped persons under U.S. Note 4(a) because they are limited in their ability to perform a broad range of jobs because they 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. Therefore, persons with diabetes suffer from a permanent or chronic physical impairment which substantially limits a major life activity and therefore, are considered physically handicapped persons under U.S. Note 4(a).
We also must determine if any of the U.S. Note 4(b) exclusions apply. Clearly, the take home kits are not related to the treatment of an acute disability, related to a cosmetic item or a drug or medicine. In Travenol Laboratories, Inc. v. United States, 813 F. Supp. 840 (CIT 1993), the court held that devices used with a dialysis machine were not therapeutic and therefore, the devices were eligible for duty-free treatment under subheading 9817.00.96, HTSUS. The court found 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”. Similarly, we find that diabetes treatment is not curative and the take home kits are not therapeutic. Further, there is no diagnostic use for the take home kits. Based on the above, we conclude that the take home kits are not excluded from subheading 9817.00.96, HTSUS, treatment by U.S. Note 4(b).
The take home kits must be “specially designed or adapted” for the use or benefit of handicapped persons, as required by the superior text in subheading 9817.00.96, HTSUS, to qualify for duty-free treatment under subheading 9817.00.96. It is clear in this case that the take home kits are designed solely for the use of people with diabetes and that any other use would be secondary. Accordingly, we find that the take home kits are eligible for duty-free treatment under subheading 9817.00.96, HTSUS.
Country of Origin Marking
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940). Part 134 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
Pursuant to 19 CFR 134.1(j), the NAFTA Marking Rules are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to a NAFTA originating good as set out in Annex 302.2. Paragraph (a) of this section states that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the various articles in the kit are processed in Mexico, Ireland and the U.S. and therefore the imported article is neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).
Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20....”
However, 19 CFR 102.17(c) states that: A foreign material shall not be considered to have undergone an applicable change in tariff classification specified in 102.20 or 102.21 or to have met any other applicable requirements of those sections merely by reason of one or more of the following…simple packing, repacking or retail packaging without more than minor processing.
As the country of origin cannot be determined under this section and this is a good classified as a set pursuant to General Rule of Interpretation 3, analysis proceeds to 19 CFR 102.11(c).
Section 102.11(c) provides:
Where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, the country of origin of the good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the good.
In this case, the syringes, the pen needles, lancets and glucose tablets equally merit consideration for determining the country of origin of the good. Therefore, the countries of origin for both versions of the kit would be the U.S. and Ireland.
Pursuant to 19 CFR 134.32(m), products of the U.S. exported and returned are excepted from marking requirements. However, the kits must be marked to indicate that the lancets and pen needles are from Ireland. Customs
does not object to an indication that the U.S. is the country of origin of the other articles in the kit. The determination of whether a good may be marked as a product of the U.S. is within the jurisdiction of the Federal Trade Commission (“FTC”). We suggest that you contact them at 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
Further, we note that there is a New Jersey address on the sample kit box. This would trigger the special marking requirements of 19 CFR 134.46.
Section 134.46, Customs Regulations (19 CFR 134.46), as revised by T.D. 97-72, dated August 20, 1997, provides:
In any case in which the words “United States,” or “American,” the letters “U.S.A.,” any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” “Product of,” or other words of similar meaning.
Section 134.46 provides that its special marking requirements are triggered when Customs determines that the non-origin marking may mislead or deceive the ultimate purchaser as to the actual country of origin of the article. Customs has ruled that in order to satisfy the “close proximity” requirement, the country of origin marking must appear on the same sides(s) or surface(s) in which the name of the locality other than the country of origin appears. See HRL 708994, dated April 24, 1978. Therefore, the country of origin of the kits must be marked in close proximity to the New Jersey address, in comparable size and on the same side of the box.
The diabetes take home kits are entitled to duty-free treatment under subheading 9817.00.96, HTSUS.
The country of origin of both versions of the diabetes take home kits is the U.S. and Ireland. The kits must be labeled to reference the components of the kits that are made in Ireland. Customs will not object to a marking that also indicates the U.S. origin of certain components if this is acceptable to the FTC.
Pursuant to 19 CFR 134.46, the country of origin marking must appear in close proximity and the same box surface as the New Jersey address.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Myles B. Harmon, Director
Commercial Rulings Division