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HQ 733248

August 22, 1990

MAR-2-05 CO:R:C:V 733248 KG

CATEGORY: MARKING

John H. Heinrich
District Director of Customs
300 South Ferry Street
San Pedro, California 90731

RE: Country of origin marking of imported Immune Serum Globulin Intravenous; substantial transformation; 19 CFR 134.32(m).

Dear Mr. Heinrich:

This is in response to your memorandum of March 27, 1990, forwarding a letter dated January 30, 1990, from the law firm of Katten Muchin & Zavis requesting internal advice on behalf of the Hyland Division of Baxter Healthcare Corporation regarding an imported product known as Immune Serum Globulin Intravenous.

FACTS:

Immune Serum Globulin Intravenous ("IGIV") is a human blood fraction used for patients who have various immunodeficiencies. The first step in making this product is to collect human blood plasma from U.S. donors, to assure that the antibodies contained in the IGIV can be used for treatment of the intended population, i.e., U.S. residents. The Immune Globulin is processed by the Cohn-Oncley method in the U.S. The human blood goes through various precipitating, centrifuging and filtering processes. At each level of processing, proteins such as an anticoagulant solution and an antihemophilic factor are removed from the plasma. In addition, reagents are added to the plasma, to help in purification. At the end of the processing in the U.S., a product known as Immune Globulin (Human) Fraction II paste ("Fraction II paste") is derived. The importer states that in that form, with the addition of a diluent, it can be and is used for intramuscular injection in patients.

The Fraction II paste is then sent to Belgium where it undergoes additional sterile filtering, buffering, and other processing and is filled into vials and freeze-dried. It is changed from bulk form into dosage form. The importer states that the purpose of this processing is solely to render the IGIV fit to be administered intravenously. This form of administration works much faster and is more effective for the patient. Both the intramuscular and intravenous forms of IGIV have the same name and are used for the same treatment. The only difference is the form of administration. The value of the Fraction II paste manufactured in the U.S. and sent to the Belgium facility for further processing is approximately $13.00 per unit. The value added by the processing of the Fraction II paste in Belgium is approximately $11.50 per unit.

The IGIV which is imported from Belgium had U.S. references such as U.S. patent numbers and U.S. license information on the packaging but no country of origin marking.

ISSUE:

Whether the imported Immune Serum Globulin Intravenous is substantially transformed in Belgium and therefore, required to be marked to indicate Belgium as the country of origin.

LAW AND ANALYSIS:

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 U.S. 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 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. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines the country of origin as "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 other country the 'country of origin' within the meaning of this part."

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT 48, 628 F. Supp. 978 (CIT 1986), Koru North America v. United States, 12 CIT ____, 701 F. Supp. 229 (CIT 1988).

In National Juice the court upheld Customs ruling that manufacturing concentrate used to make frozen concentrated orange juice and reconstituted orange juice was not substantially transformed. The manufacturing concentrate is the "major part of the end product, when measured by cost, value or quantity" and the further processing in the U.S. to make the manufacturing concentrate into frozen concentrated orange juice was considered a minor manufacturing process. The court noted that the imported product was the very essence of the retail product and that the addition of water, orange essences and oils to the concentrate, while making it suitable for retail sale, did not change the fundamental character of the product.

This case is very similar to National Juice. The Fraction II paste is the major part of the end product although the minor processing performed in Belgium is necessary to make the final product useable in intravenous form. Although the Fraction II paste is filtered, purified and made suitable for intravenous use in Belgium, this processing does not change the fundamental character of the product. The Fraction II paste can be and is sold for intramuscular injection for the same treatment as the final product and is known by the same name as the final product.

In another case, imported honey which is processed and blended with domestic honey in the U.S. was determined not to be substantially transformed in C.S.D. 84-112 (July 2, 1984). The major processing done in the U.S. was: blending, purification and filtration, and flash heating to destroy yeast and prevent fermentation. Customs pointed out in that case that purification and filtration to remove contaminants are cleansing operations. The ruling states that "with respect to purification and filtration to remove contaminants, we are bound to follow the well-settled principle of Customs law that the mere cleansing of an article, or 'getting it by itself,' is not a manufacturing process which transforms the article." The argument that flash heating constituted a substantial transformation was also rejected. This case is analogous to honey in the sense that the processing done in Belgium is a cleansing operation which involves "getting it (the IGIV) by itself" and therefore, should not be considered a substantial transformation.

Another relevant Customs ruling, HQ 729519 (May 18, 1988), involved wine coolers. A wine cooler is a beverage which consists of a liquid flavor base and carbonated water. The flavor base is made in the U.S. and then exported to Canada to be mixed with carbonated water, bottled and imported into the U.S. as a finished product. In that case, Customs ruled that the processing performed in Canada did not substantially transform the U.S.-made liquid flavor base and therefore, the imported wine cooler is treated as a U.S. product exported and returned which is exempted from country of origin marking pursuant to 19 CFR 134.32(m). This conclusion was based on the view that the flavor base imparted the "fundamental character of the wine cooler" although the Canadian processing was necessary to make the product salable and changed the character of the final product to a certain degree. Further, the majority of the value of the end product was attributable to the flavor base. This case is similar to the wine cooler because the U.S.-made Fraction II paste imparts the fundamental character of the finished product even though the foreign processing is necessary to make the product useable in an intravenous form and this foreign processing does change the character of the final product to a certain degree. Further, more than 50% of the value of the end product was attributable to the Fraction II paste made in the U.S.

Based on all the factors discussed above, we conclude that the Fraction II paste is not substantially transformed in Belgium. Since there is no substantial transformation in Belgium, pursuant to 19 CFR 134.1(b), the country of manufacture, which in this case is the U.S., remains the country of origin.

Section 134.32(m), Customs Regulations (19 CFR 134.32(m)), excepts from individual marking products of the U.S. exported and returned. Customs has interpreted this provision to mean that American goods exported which are not substantially transformed in a foreign country or not entitled to the partial duty exemption under subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States ("HTSUS") are excepted from country of origin marking requirements upon their return to the U.S. See HQ 729316 (April 20, 1989). In this instance, the Fraction II paste is not substantially transformed and does not appear to be entitled to a partial duty exemption under HTSUS subheading 9802.00.80. Therefore, the imported IGIV is not subject to country of origin marking requirements under 19 CFR 134.32(m).

HOLDING:

The Immune Serum Globulin Intravenous is not substantially transformed in Belgium. Therefore, the country of origin of the imported IGIV is the U.S. and there are no country of origin marking requirements under 19 U.S.C. 1304 and 19 CFR 134.32(m).

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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