MAR-2-05 CO:R:C:V 735146 RC
Mr. Christian Torske
Helm New York Chemical Corp.
1110 Centennial Avenue
Piscataway, NJ 08855-1333
RE: Country of origin marking of Acetaminophen manufactured in
China; 19 CFR 134.35; 19 CFR 134.46.
Dear Mr. Torske:
This is in response to your letter of April 21, 1993,
requesting a ruling regarding the country of origin marking of
Acetaminophen manufactured in China as a powder and further
processed in the U.S. into granules.
FACTS:
Your company imports Acetaminophen, a raw material used in
headache medicines. It is manufactured in China as a powder,
100% pure. The U.S. processor (your customer) will take this
imported material and blend it with excipients (Starch, Povidone
and Stearic Acid) at a 10% level. This combination is then
granulated using a fluid-bed dryer which will convert the
material to a directly compressible quality. Your submission
states that the relative costs of the granulated acetaminophen
are as follows: Chinese product $3.20-3.40/kg; U.S. Customs duty
$0.22/kg; U.S. processing $1.85/kg. On November 4, 1993, you
advised us by telephone that the Acetaminophen, as imported,
already has its particular medicinal properties. You also stated
that the granulated Acetaminophen is later sold to generic
pharmaceutical companies to process into tablets for retail sale
under private labels.
ISSUES:
Do the domestic operations performed on the imported raw
Acetaminophen by your customer substantially transform it for
purposes of 19 CFR 134.35?
Which of the following country of origin markings is
acceptable under 19 CFR Part 134: (1) MADE IN CHINA, GRANULATED
IN THE U.S.A. (2) (No indication of origin); or (3) MADE IN
U.S.A.?
LAW AND ANALYSIS:
The marking statute, section 304 of the Tariff Act of 1930,
as amended (19 U.S.C. 1304), provides that, unless excepted,
every article of foreign origin (or its container) imported into
the U.S. shall be marked in a conspicuous place as legibly,
indelibly, and permanently as the nature of the article or its
container will permit, in such manner as to indicate to the
ultimate purchaser in the U.S. the English name of the country of
origin of the article. Part 134, Customs Regulations (19 CFR
Part 134), implements the country of origin marking requirements
and exceptions of 19 U.S.C. 1304.
The "ultimate purchaser" is generally defined, in section
134.1(d), (19 CFR 134.1(d)), as the last person in the United
States who will receive the article in the form in which it was
imported. The marking must be conspicuous to the ultimate
purchaser.
The country of origin for marking purposes is defined by
section 134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean
the country of manufacture, production, or growth of any article
of foreign origin entering the U.S. Further work or material
added to an article in another country must effect a substantial
transformation in order to render such country the country of
origin. A substantial transformation occurs when the work
performed results in an article having a new name, character, or
use.
The question of when a substantial transformation occurs for
marking purposes is a question of fact to be determined on a
case-by-case basis. Uniroyal Inc. v. United States, 3 CIT 220,
542 F.Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022
(1983). Assembly operations which are minimal or simple, as
opposed to complex or meaningful, will generally not result in a
substantial transformation. See, C.S.D. 85-25 (September 25,
1984).
Several previous rulings have examined the substantial
transformation of medicinal products. In HQ 731731 (February 23,
1989), bulk vancomycin hydrochloride as imported from Japan was
unfit for medical use. However, after it underwent extensive
domestic processing it resulted in an antibiotic capable of
intravenous injection fit for medical use. There, Customs found
the domestic processing constituted a substantial transformation.
In HQ 733248 (August 22, 1990), Immune Serum Globulin
Intravenous (IGIV), a human blood fraction obtained from U.S.
donors, was processed in the U.S. and later exported to Belgium
where it underwent sterile filtering, buffing, and other
processing and filled in vials and freeze-died. The sole purpose
of the later processing was to render the IGIV fit for
intravenous administration. Both forms, before and after
processing, had the same name and were used for the same
treatment. In that ruling, Customs found that the processing in
Belgium was not a substantial transformation.
Unlike the bulk vancomycin hydrochloride in HQ 731731, this
Chinese Acetaminophen is fit for medical use as imported.
Furthermore, as under the facts presented in HQ 733248, the U.S.
granulation has as its sole purpose the preparation of the 100%
pure Acetaminophen into tablets for a particular administration.
The substantial transformation criteria of change in name,
character, or use are not met here. Firstly, the Acetaminophen
is referred to as "Acetaminophen" before importation and
continues to be so named after the U.S. processing. Thus, the
domestic processing does not result in a change of the imported
article's name. Secondly, as imported, the Acetaminophen is used
for medicinal purposes. Its character as a medicine remains so
after the domestic processing. Lastly, the granulating affects
the chemical and physical properties of the Acetaminophen
minimally. The U.S. processing is performed to prepare the
Acetaminophen for its sale to subsequent manufacturers for its
production into tablets, as opposed to another form. This
involves little added cost. Once made into tablets, the
Acetaminophen continues to serve its original general purpose as
a medicine.
In sum, we find that the domestic processing does not effect
a substantial transformation. From this, it follows that the
domestically processed Acetaminophen remains an article of
Chinese origin subject to the marking requirements of 19 USC 1304
and Part 134, Customs Regulations.
The Acetaminophen must be marked to indicate China as the
country of origin. Given our conclusion that the Acetaminophen
is an article of foreign origin and subject to marking as such,
it is clear that to designate this product as "Made in the USA"
would be impermissible. It would be acceptable for Customs
purposes to indicate that the Acetaminophen is granulated in the
U.S. provided that the Chinese origin of the article is clearly
indicated. The extent to which an article may be described by
reference to the U.S. is regulated by Section 5 of the Federal
Trade Commission Act (15 USC 45). The Federal Trade Commission
(FTC) has principal responsibility for its enforcement. We
advise you to consult with the FTC on this matter.
HOLDING:
The U.S. processing of the Chinese Acetaminophen by mixing
with excipients and granulation does not effect a substantial
transformation in the United States. Accordingly, pursuant to 19
U.S.C. 1304, the granulated Acetaminophen must be marked to
indicate China as the country of origin. The country of origin
marking "MADE IN CHINA, GRANULATED IN THE U.S.A." is acceptable
for Customs purposes.
Sincerely,
John Durant, Director