OT:RR:CTF:VS H327732 AP
Richard A. Mojica, Member
Miller & Chevalier
900 16th Street N.W.
Washington, D.C. 20006
RE: Country of Origin; Cyclopure DEXSORB Absorbent; Section 301 trade remedy
Dear Mr. Mojica:
This is in response to your October 4, 2022 ruling request, on behalf of Cyclopure, Inc. ("importer"), regarding the country of origin of the Cyclopure DEXSORB absorbent ("DEXSORB") for purposes of Section 301 measures. A meeting with counsel and the importer was held on December 23, 2022.
FACTS:
DEXSORB is a polymer absorbent used for removal of per- and polyfluoroalkyl substances ("PFAS") and organic micropollutants from water. It is comprised of beta-cyclodextrins, rigid crosslinking monomers called tetrafluoroterephthalonitrile ("TFN"), and choline chloride. Apart from crosslinking elements, the beta-cyclodextrins make up the entirety of DEXSORB. The beta-cyclodextrins are carbohydrates derived from cornstarch used as odor agents, finishing agents, paint and coating additives, and solids separation agents.[1] Each beta-cyclodextrin consists of seven glucose molecules linked together in a ring.
In China, TFN and choline chloride are added to German-originating beta-cyclodextrins. When beta-cyclodextrin is placed in water, hydrophobic molecules, such as TFN, displace water molecules in the beta-cyclodextrin cavity where they are immobilized and separated from water. It is stated that the beta-cyclodextrin molecules are interconnected together into crosslinked cyclodextrin by process of nucleophilic aromatic substitution. This process links trillions of beta-cyclodextrin molecules together in a uniform assembly for use to remove micropollutants from drinking water. It is stated that the beta-cyclodextrin cavities remain intact to perform absorption functions and are the "essence" of the DEXSORB. The DEXSORB is a network of beta-cyclodextrin molecules crosslinked together.
You explain that the crosslinking of the beta-cyclodextrin molecules is a simple assembly of molecules that is not "complex or meaningful" that does not change their essential character and that DEXSORB's ability to function as filter media is derived from the product's composition of beta-cyclodextrins. You also explain that the end-use of adsorption functionality of beta-cyclodextrin is interchangeable with that of the DEXSORB.
On December 8, 2022, U.S. Customs and Border Protection ("CBP") Laboratory and Scientific Services ("LSS"), New York Laboratory determined that the crosslinking "creates polymeric matrix of beta-cyclodextrins. Although the essential character of the beta-cyclodextrin is not change[d] or altered, the reactions render beta-cyclodextrin to be used only as a chromatographic media [] changing the overall character of the molecule."
ISSUE:
What is the origin of the DEXSORB 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 Section 301 measures, the substantial transformation analysis is applicable. The test 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. 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 Ct. Int'l Trade 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993). Applying the name, character and use test to the instant merchandise, we find a change in name from beta-cyclodextrin to DEXSORB absorbent, a network of beta-cyclodextrin molecules interconnected together into crosslinked cyclodextrin. However, the beta-cyclodextrin is called "beta-cyclodextrin" before and after the processing in China. The courts have held that the change in name is "the least persuasive factor and is insufficient by itself to support a holding that there is a substantial transformation." Superior Wire v. United States, 867 F.2d 1409, 1414 (Fed. Cir. 1989).
In terms of character and use, the courts have held that when the properties and uses of a product are predetermined by the material from which it was made, no substantial transformation occurs. In Superior Wire v. United States, 11 Ct. Int'l Trade 608 (1987), aff'd, 867 F.2d 1409 (Fed. Cir. 1989), wire rod was drawn into finished wire. The tensile strength of the final product was increased by approximately 30 to 40 percent as the rod was reduced in cross-sectional area by about 30 percent and was elongated. The end use of the wire rod was generally known before the rolling stage. The court determined that the drawing operation did not result in a substantial transformation, pointing out that the properties of the wire rod and its uses were determined by the chemical content of the rod.
If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. In Nat'l Juice Prods. Ass'n v. United States, 628 F. Supp. 978 (Ct. Int'l Trade 1986), the court considered whether foreign manufacturing concentrate processed into frozen concentrated orange juice or reconstituted orange juice in the United States was substantially transformed. In the United States, the manufacturing concentrate was mixed with purified and dechlorinated water, orange essences, orange oil, and in some cases, fresh juice. The court found that the U.S. processing added relatively minor value to the product and that the manufacturing concentrate imparted the essential character to the juice and made it orange juice. Thus, the imported manufacturing juice concentrate was not substantially transformed in the United States when it was processed into retail orange juice products.
In Headquarters Ruling Letter ("HQ") H303279, dated September 10, 2019, coarse mica flakes processed into super fine mica by jet milling and screening did not undergo a substantial transformation. The layers of coarse mica were divided up into thinner flakes of super fine mica. The milling process changed the physical properties of the mica, including its particle size distribution, particle shape, and brightness. There were no significant changes in the name when coarse mica flakes were processed into super fine mica. Jet milling coarse mica into super fine mica did not result in a change in character because both coarse mica flakes and super fine mica flakes were made up of layers of finer flakes and had the same chemical composition. Further, the uses of the super fine mica were predetermined by the properties of the coarse mica. The properties of the super fine mica flakes, which made them appropriate for different applications, were already present in the coarse mica flakes. See also HQ H323601, dated June 7, 2022 (U.S. catalyst used in a reactor in China without being further worked was not substantially transformed because the chemical composition and mechanical properties of the palladium and aluminum substrate remained unchanged by the catalyst's use); HQ 561978, dated Dec. 22, 2000 (even though adding filler materials to the Polytetrafulouroethylene ("PTFE") changed the rigidity, hardness and color of the product, there was no change in its essential character because the essence of the filled PTFE was imparted by the constituent PTFE polymer).
Examining the character of the subject DEXSORB, we find that the beta-cyclodextrins and the DEXSORB have the same chemical composition. The DEXSORB is made up of interconnected beta-cyclodextrin molecules. The essence of beta-cyclodextrin, which is the hydrophobic cone shaped cavity that enables adsorption, remains intact. As the importer explained in its submission, the crosslinking of the beta-cyclodextrin molecules is "a simple assembly of molecules" and does not change their essential character and the overall character of the beta-cyclodextrin. In Nat'l Juice Prods. Ass'n, the court found that the imported manufacturing concentrate was the very essence of the completed orange juice and the addition of water, orange essences, and oils to the concentrate did not change the fundamental character of the product. In HQ H323601, the catalyst did not undergo a change in character because there was no change in the chemical composition and physical properties of its main components. Similarly, the beta-cyclodextrin molecule here retains its essential character and physical properties, and the beta-cyclodextrin molecules interconnected together into crosslinked cyclodextrin by process of nucleophilic aromatic substitution do not undergo a change in character. As in HQ 561978, the beta-cyclodextrins imparts the essence of the DEXSORB just like the PTFE polymer imparted the essence of the filled PTFE.
Next, we turn to use. The use of the DEXSORB as chromatographic media is already present in the beta-cyclodextrins, which are used as an odor agent, finishing agent, paint and coating additive, and solids separation agents. Each individual beta-cyclodextrin has a "pre-determined end-use" prior to the crosslinking. The commercial application of beta-cyclodextrin is the solubilization and stabilization of guest molecules. The beta-cyclodextrin in DEXSORB is used for the same purpose to filter out micropollutants. Much like the super fine mica flakes and the coarse mica flakes in HQ H303279, and the wire rod and thin wire in Superior Wire, the use of the DEXSORB as chromatographic media is predetermined by the properties of the beta-cyclodextrin. Generally when the end use is predetermined, the courts have found that the use criterion does not constitute a substantial transformation. See Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1319 (Ct. Int'l Trade 2016). Thus, the nucleophilic aromatic substitution process converting the beta-cyclodextrins into the DEXSORB does not constitute a substantial transformation and the country of origin of the DEXSORB is Germany.
HOLDING:
Based on the information presented, the country of origin of the DEXSORB for purposes of Section 301 measures is Germany. As the DEXSORB is not a product of China, Section 301 measures will not apply.
Please note that 19 C.F.R. 177.9(b)(1) provides that "[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based."
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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch
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[1] See NIH National Library of Medicine, PubChem, Beta-Cyclodextrin, https://pubchem.ncbi.nlm.nih.gov/ compound/beta-CYCLODEXTRIN (last visited Dec. 14, 2022).