[Federal Register Volume 80, Number 219 (Friday, November 13, 2015)]
[Notices]
[Pages 70243-70245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28827]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Acyclovir
Tablets
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
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SUMMARY: This document provides notice that U.S. Customs and Border
Protection (``CBP'') has issued a final determination concerning the
country of origin of certain Acyclovir tablets. Based upon the facts
presented, CBP has concluded that the country of origin of the
Acyclovir Tablets is China and India for purposes of U.S. Government
procurement.
DATES: The final determination was issued on November 5, 2015. A copy
of the final determination is attached. Any party-at-interest, as
defined in 19 CFR 177.22(d), may seek judicial review of this final
determination no later than December 14, 2015.
FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and
Special Programs Branch, Regulations
[[Page 70244]]
and Rulings, Office of International Trade (202) 325-0132.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on November 5,
2015, pursuant to subpart B of Part 177, U.S. Customs and Border
Protection Regulations (19 CFR part 177, subpart B), CBP issued a final
determination concerning the country of origin of certain Acyclovir
Tablets, which may be offered to the U.S. Government under an
undesignated government procurement contract. This final determination,
HQ267177, was issued under procedures set forth at 19 CFR part 177,
subpart B, which implements Title III of the Trade Agreements Act of
1979, as amended (19 U.S.C. 2511-18). In the final determination, CBP
concluded that the processing in the United States does not result in a
substantial transformation. Therefore, the country of origin of the
Acyclovir tablets is China and India for purposes of U.S. Government
procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that a
notice of final determination shall be published in the Federal
Register within 60 days of the date the final determination is issued.
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial
review of a final determination within 30 days of publication of such
determination in the Federal Register.
Dated: November 5, 2015.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of
International Trade.
HQ H267177
November 5, 2015
MAR-2 OT:RR:CTF:VS H267177 RSD
CATEGORY: ORIGIN
Ms. Karen Yu, Regulatory Affairs, Carlsbad Technology Inc., 5923
Balfour Court, Carlsbad, California 92008
RE: U.S. Government procurement; Trade Agreements Act; Country of
Origin of Acyclovir Tablets; Substantial Transformation
Dear Ms. Yu: This is in response to your ruling request dated July
7, 2015, requesting a final determination on behalf of Carlsbad
Technology Inc., (Carlsbad) pursuant to subpart B of Part 177 of the
U.S. Customs and Border Protection (CBP) Regulations (19 CFR part 177).
Under these regulations, which implement Title III of the Trade
Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. 2511 et seq.),
CBP issues country of origin advisory rulings and final determinations
as to whether an article is or would be a product of a designated
country or instrumentality for the purposes of granting waivers of
certain ``Buy American'' restrictions in U.S. law or practice for
products offered for sale to the U.S. Government.
This final determination concerns the country of origin of
Acyclovir Tablets. As a U.S. manufacturer of a like product, Carlsbad
Inc. is a party-at-interest within the meaning of 19 CFR 177.22(d)(1),
and is entitled to request this final determination.
FACTS:
Acyclovir is a pharmaceutical product used as a synthetic
nucleoside analogue active against herpes viruses. The active
pharmaceutical ingredient (``API''), Acyclovir is manufactured in China
and India. The API is shipped to the U.S., where it undergoes five
manufacturing steps. Inactive ingredient (excipients) used in the
production of the product in the U.S. are corn starch, microcrystalline
cellulose, magnesium stearate, and sodium starch glycolate.
The first stage of U.S. manufacturing is the sizing of the active
and inactive ingredients including the corn starch glycolate, by
passing them through a sieve to remove any larger granules.
The second stage of U.S. manufacturing is the preparation of
Acyclovir granules. The Acyclovir API, corn starch, and sodium starch
glycolate are de-lumped and granulated with a binding suspension of
corn starch. The wet granules are then sieved through a comil and
discharged into stainless steel drums. These granules are then moved to
a tray dryer for a drying process for 10 to 18 hours or until it meets
its dryness specification. The dried granules will then be sieved
through a comil again and discharged into stainless steel drums. The
third stage of U.S. manufacturing is the preparation of the tablet
blend. The inactive ingredients, microcrystalline cellulose and sodium
starch glycolated are de-lumped by passing them through a sieve and
added to the de-lumped acyclovir granules for preblend. Then the
magnesium stearate is sieved and added to the final blend. All the
blended product is discharged into stainless steel drums. The fourth
stage of U.S. manufacturing is tablet compression. The blended granules
are then fed to a tablet press machine where the tablets are formed.
The bulk tablets are collected into plastic bags, which are sealed and
packaged in containers. The fifth stage of U.S. manufacturing is
packaging in high density polyethylene plastic bottles. These bottles
are then put into cartons for distribution in the U.S.
ISSUE:
What is the country of origin of the Acyclovir tablets processed as
described above for purposes U.S. Government procurement?
LAW AND ANALYSIS:
Pursuant to Subpart B of Part 177, 19 CFR 177.21 et seq., which
implements Title III of the Trade Agreements Act of 1979, as amended
(19 U.S.C. 2511 et seq.), CBP issues country of origin advisory rulings
and final determinations as to whether an article is or would be a
product of a designated country or instrumentality for the purposes of
granting waivers if certain ``Buy American'' restrictions in U.S. law
or practice for products offered for sale to the U.S. government.
Under the rule of origin set forth under 19 U.S.C. 2518(4)(B):
An article is a product of a country or instrumentality only if (i)
it is wholly the growth, product, or manufacture of that country or
instrumentality, or (ii) in the case of an article which consists in
whole or in part of materials from another country or instrumentality,
it has been substantially transformed into a new and different article
of commerce with a name, character, or use distinct from that of the
article or articles from which it was so transformed.
See also 19 CFR 177.22(a).
In rendering advisory rulings and final determinations for purposes
of U.S. government procurement, CBP applies the provisions of subpart B
of part 177 consistent with the Federal Acquisition Regulations. See 19
CFR 177.21. In this regard, CBP recognizes that the Federal Acquisition
Regulations restrict the U.S. Government's purchase of products to
U.S.-made or designated country end products for acquisitions subject
to the TAA. See 48 CFR 25.403(c)(1). The Federal Acquisition
Regulations define ``U.S.-made end product'' as:
. . . an article that is mined, produced, or manufactured in the United
States or that is substantially transformed in the United States into a
new and different article of commerce with a name, character, or use
distinct from that of the article or articles from which it was
transformed.
48 CFR 25.003
A substantial transformation occurs when an article emerges from a
process with a new name, character and use different from that
possessed by the article prior to processing. A substantial
transformation will not result from a minor manufacturing or combining
process that leaves the identity of the article intact. See United
States v.
[[Page 70245]]
Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940); and, National Juice
Products Association v. United States, 628 F. Supp. 978 (Ct. Int'l
Trade 1986).
In determining whether a substantial transformation occurs in the
manufacture of chemical products such as pharmaceuticals, CBP has
consistently examined the complexity of the processing and whether the
final article retains the essential identity and character of the raw
material. To that end, CBP has generally held that the processing of
pharmaceutical products from bulk form into measured doses does not
result in a substantial transformation of the product. See e.g.,
Headquarters Ruling Letter (``HQ'') 561975, dated April 3, 2002; HQ
561544, dated May 1, 2000; and, HQ 735146, dated November 15, 1993.
For instance, in HQ 561975, the anesthetic drug sevoflurane
imported into the U.S. in bulk form and processed into dosage form by
extensive testing operations, followed by filtering and packaging into
bottles, was found not to have undergone a substantial transformation
in the U.S. There was no change in name (the product was identified as
sevoflurane in both its bulk and processed form). The sevoflurane
retained its chemical and physical properties after the U.S.
processing. Lastly, because the imported bulk sevoflurane had a
predetermined medicinal use as an inhalable anesthetic drug, the
processing in the United States resulted in no change in the product's
use.
Likewise, in HQ 561544, the testing, filtering and sterile
packaging of Geneticin Sulfate bulk powder, to create Geneticin
Selective Antibiotic, was not found to have substantially transformed
the antibiotic substance because the processing only involved the
removal of impurities from the bulk chemical and the placement of the
chemical into smaller packaging.
In HQ 735146, 100 percent pure acetaminophen imported from China
was blended with excipients in the United States, granulated and sold
to pharmaceutical companies to process into tablets for retail sale
under private labels. It was found that the process in the United
States did not substantially transform the imported product because the
product was referred to as acetaminophen before importation and after
U.S. processing, its use was for medicinal purposes and continued to be
so used after U.S. processing, and the granulating process minimally
affected the chemical and physical properties of the acetaminophen.
In HQ H233356 dated December 26, 2012, mefenamic acid imported from
India was blended with excipients and packaged into dosage form in the
United States. Based on prior rulings, we found that the specific
processing consisting of blending the active ingredients with inactive
ingredients in a tumbler and then encapsulating and packaging the
product did not substantially transform the mefenamic acid because its
chemical character remained the same. As such, we found that the
country of origin of the Ponstel (mefenamic acid) capsules was India,
where the mefanamic acid was manufactured.
In this case, the processing performed in the U.S. does not result
in a change in the medicinal use of the finished product and the active
ingredient. The Acyclovir retains its chemical and physical properties
and is merely put into a dosage form and is packaged for sale. The
active ingredient does not undergo a change in name, character or use.
Therefore, in accordance with our prior rulings, we find that no
substantial transformation occurs in U.S., and for purposes of
government procurement, the Acyclovir tablets would be considered a
product where the active ingredient was produced, which would be China
and India.
HOLDING:
Based upon the facts in this case, we find that the imported
Acyclovir is not substantially transformed in U.S. Accordingly, the
country of origin for government procurement purposes of the Acyclovir
tablets is China and India, where the active ingredient is produced.
Notice of this final determination will be given in the Federal
Register, as required by 19 CFR 177.29. Any party-at-interest other
than the party which requested this final determination may request,
pursuant to 19 CFR 177.31 that CBP reexamine the matter anew and issue
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days of publication of the Federal Register
notice referenced above, seek judicial review of this final
determination before the Court of International Trade.
Sincerely,
Myles B. Harmon Acting Executive Director
Office of Regulations and Rulings
Office of International Trade
[FR Doc. 2015-28827 Filed 11-12-15; 8:45 am]
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