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HQ 225535




November 29, 1994

CON-9-09/FOR-2-03-CO:R:C:E 225535 CC

CATEGORY: ENTRY

John W. Ropa
Operations Manager, International Logistics Abbott Laboratories
One Abbott Park Road
Abbott Park, IL 60064-3500

RE: Removal of merchandise from a FTZ by a TIB entry; date of importation; subheadings 9813.00.05, 9813.00.30, HTSUS

Dear Mr. Ropa:

This is in response to your letter concerning the removal of pharmaceutical and diagnostic products from a foreign trade zone (FTZ) by a temporary importation under bond (TIB) entry.

FACTS:

You state that Abbott Laboratories (Abbott) proposes to admit to its FTZ ingredients for manufacture of drug substances (chemical compounds and diagnostic reagents). These manufactured drugs, in bulk or dosage form, would later be imported from the FTZ for specified research and development testing required by the Food and Drug Administration (FDA). You have submitted an attachment listing various categories of clinical tests.

You state that the required research and testing will be conducted as an integral part of clinical trials to be performed by Abbott and its subcontractors to whom Abbott will supply the experimental compounds, free of charge. The drug substances will be used in both bulk and final dosage forms (i.e., tablets, capsules, granules, and solutions contained in ampuls); the reagents will be similarly used bulk (liters) and in unit of measure issues (i.e., vials of specified milliliters).

All of the drugs and reagents, except those drugs and reagents which will be used for stability testing and retention samples, will be administered to and consumed by the patients participating in the clinical trials, or otherwise physically destroyed in conjunction with the clinical trials. Drugs and reagents used for stability testing and retention samples may or may not be entered from the FTZ. If they are to be entered, they will be appropriately classified and imported duty paid.

The experimental chemical compounds which are imported as bulk drug substances or reagents will be processed into dosage forms by Abbott or by one of its subcontractors. Ownership of the drugs and reagents will always be held by Abbott. Subsequently, these compounds and reagents will be consumed in the clinical trials in the same manner as the premeasured dosages.

You state that Abbott will maintain records to show the place, date, and other relevant circumstances pertaining to the consumption of the tablets, capsules, granules, solutions, or units of use as required by the FDA protocols. Also, Abbott will retain strict inventory control over every importation, and all imported material. You state that all record keeping and inventory procedures will be sufficient to satisfy the requirements of subheading 9813.00.30 of the Harmonized Tariff Schedule of the United States (HTSUS) and Subchapter XIII U.S. Note 3, Subheading 9813.00.05, HTSUS, and U.S. Note 2(b).

ISSUE:

What is the date of importation for merchandise removed from a FTZ by a TIB entry?

Whether the merchandise is eligible for entry under subheading 9813.00.05, HTSUS, or under subheading 9813.00.30, HTSUS?

LAW AND ANALYSIS:

You have asserted that the date of importation is the date merchandise is removed from the FTZ by the TIB entry, and not when merchandise is admitted to a FTZ. An importation is the arrival of goods at a United States port from a foreign port or place with the intent then and there to unlade them. United States v. Estate of Boshell, 14 Ct. Cust. App. 273, T.D. 41884 (1922); Porto Rico Brokerage Co. United States, 76 F.2d 605, 23 CCPA 16 (1935); East Asiatic Co., Inc. v. United States, 27 CCPA 364 (1940); Sherwin-Williams Co. v. United States, 38 CCPA 13 (1950); United States v. John V. Carr & Sons, 266 F. Supp. 175, aff'd 396 F.2d 1017, 55 CCPA 111 (1967). Consequently, the admission of merchandise into a FTZ is an importation.

In addition, section 101.1(h) of the Customs Regulations (19 CFR 101.1(h)) defines the "date of importation" as the following:

... in the case of merchandise imported otherwise than by vessel, the date on which the merchandise arrives within the Customs territory of the United States. In the case of merchandise imported by vessel, "date of importation" means the date on which the vessel arrives within the limits of a port in the United States with intent then and there to unlade such merchandise.

We have ruled for merchandise removed from a FTZ under a TIB entry, the date of importation is the date defined by section 101.1(h) of the Customs Regulations. See C.S.D. 79-454 of April 2, 1979, and C.S.D. 81-119 of November 12, 1980. Consequently, the date of importation is the date the merchandise is admitted into the FTZ. In addition, we found in the above-cited decisions that if the merchandise has been in a FTZ for longer than 1 year, a TIB entry for nonprivileged foreign merchandise may not be made.

Under subheading 9813.00.30, HTSUS, articles intended solely for testing, experimental, or review purposes may be entered duty-free, temporarily, under bond for their exportation within one year from the day of importation unless an extension for one or more additional periods, which when added to the initial period does not exceed three years, is granted by the district director. Likewise, articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States) may be entered under subheading 9813,00.05, HTSUS.

We have held that if drugs are administered to selected patients as a means of testing the drug itself and its effect on the general class of humans, as opposed to the effect on a particular patient's malady, then the procedure employed to obtain FDA approval of a chemical compound is a test or experiment within subheading 9813.00.30, HTSUS. See Headquarters Ruling Letter (HRL) 223589, dated March 20, 1992.

Under U.S. Note 3, upon satisfactory proof that any article admitted under subheading 9813.00.30, HTSUS, has been destroyed because of its use for any purpose provided for therein, the obligation under the bond to export such article shall be treated as satisfied.

Pursuant to 19 CFR 10.39(a), in the case of articles entered under subheading 9813.00.30, HTSUS, which are destroyed because of their use for the purposes of importation, the bond charge shall not be canceled unless there is submitted to the district director a certificate of the importer that the articles were destroyed during the course of a specifically described use, and the district director is satisfied that the articles were so destroyed as articles of commerce within the period of time during which the articles may remain in the Customs territory of the United States under bond.

"An article is destroyed when its value, usefulness, and that which makes it what it is are completely lost." United States v. Pastene & Co., 22 Treas. Dec. 725, at 727, T.D. 32458 (April 17, 1912). Any article undergoing testing has not lost its value or usefulness, while it remains under testing, unless it is destroyed by the testing. An article must be rendered utterly worthless to be considered destroyed. H.A. Johnson Co. v. United States, 21 Cust. Ct. 56, at 61, C.D. 1127 (August 25, 1948).

Under C.S.D. 80-24, dated June 30, 1979, we have stated that the "Customs Service, not only under the present law but under its predecessor, section 308(4), Tariff Act of 1930, as amended, has repeatedly ruled that substances or drugs imported for testing which are not destroyed or consumed by such testing, must be destroyed." In addition Customs has held that consumption by selected patients participating in the test of pharmaceuticals, would be deemed a destruction for purposes of section 10.39(a). See HRL 222827 of March 1, 1991, and HRL 223589 of March 20, 1992.

From the information submitted, it is unclear whether a clinical test takes place under subheading 9813.00.30, HTSUS, in each of the six category of tests you list in the attachment. In addition, from the information provided, we are unable to determine whether a destruction takes place for purposes of section 10.39(a) for each of these categories. To make these determinations we would need more information concerning the proposed testing.

HOLDING:

When merchandise is removed from a FTZ by a TIB entry, the date of importation is the date the goods are admitted to the FTZ.

Sincerely,

John Durant, Director

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