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HQ 964401




November 7, 2000

CLA-2 RR:CR:GC 964401 AM

CATEGORY: CLASSIFICATION

TARIFF NO.: 2934.90.30

Mr. Matthew J. McConkey
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Ave., N. W.
Washington, DC 20036-5339

RE: NY F82445 revoked; IB-367 imported in bulk form

Dear Mr. McConkey:

This is in reference to NY F82445, issued to you on February 22, 2000, concerning the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of IB-367. We have reviewed the decision in NY F82445 and have determined that the classification set forth in that ruling for IB-367 is in error. This ruling revokes NY F82445.

Pursuant to section 625(c)(1) Tariff Act of 1930 (19 U.S.C. 1625(c)(1)) as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, (Pub. L. 103-82, 107 Stat. 2057, 2186), notice of the proposed revocation of NY F82445 was published on September 27, 2000, in the CUSTOMS BULLETIN, Volume 34, Number 39. One comment was received in response to this notice.

FACTS:

IB-367 is a synthetic drug derived from Protegrins, a family of naturally occurring mammalian peptides. Protegrins contain 16 to 18 amino acids and were originally purified from porcine leukocytes. Like the naturally occurring mammalian peptides, IB-367 exhibits broad-spectrum antimicrobial activity against gram-positive and gram-negative bacteria, and Candida albicans. It is imported in bulk as a white to off-white powder for further formulation into Protegin IB-367 Rinse, a pharmaceutical product used in the treatment of oral mucositis, a condition characterized by painful mouth ulcers that form as a side effect of cancer therapies. Protegin IB-367 Rinse completed Phase II Food and Drug Administration (FDA) clinical trials in August of 1999.

IB-367 is a cyclic polypeptide with the molecular formula C78H126N30O18S4•x HCl•y H2O, and the chemical name L-Arginamide, L-arginylglycylglycyl-L-leucyl-L-cysteinyl-L-tyrosyl-L-cysteinyl-L-arginylglycyl-L-arginyl-L-phenylalanyl-L-cysteinyl-L-valyl-L-cysteinyl-L-valyglycyl-, cyclic (5→14), (7→12)-bis (disulfide), hydrochloride, hydrate (9CI). IB-367 has been assigned CAS registry # 244015-05-02 and is not listed in the Chemical Appendix or the Pharmaceutical Appendix to the Tariff Schedule.

ISSUE:

Whether IB-367 is classified in subheading 2941.90.30, HTSUS, as "Antibiotics: Other: Other: Aromatic or modified aromatic," or in subheading 2934.90.30, HTSUS, as " . . . other heterocyclic compounds: Other: Drugs."

LAW AND ANALYSIS:

Merchandise imported into the U.S. is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context that requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any related section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs. In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUSA. See, T.D. 8980, 54 Fed. Reg. 35127 (August 23, 1989).

Chapter 29 of the HTSUS, with exceptions inapplicable here, provides only for “[s]eparate chemically defined organic compounds, whether or not containing impurities.” Note 1(a), Chapter 29, HTSUS. Hence, the instant merchandise, an unmixed compound, imported in bulk for incorporation within pharmaceutical or other products, is appropriately classified in Chapter 29, HTSUS. The following headings in Chapter 29, HTSUS, are relevant to the classification of this product:

2934: Nucleic acids and their salts; other heterocyclic compounds:

2934.90 Other [than compounds containing an unfused thiazole ring (whether or not hydrogenated) in the structure: Compounds containing a benzothiazole ring-system (whether or not hydrogenated), not further fused: Compounds containing a phenothiazine ring-system (whether or not hydrogenated), not further fused]

Other: [than Aromatic or modified aromatic]

2934.90.30 Drugs

2941 Antibiotics:

2941.90 Other: [than Ampicillin and its salts Penicillin G salts; Carfecillin, sodium; Cloxacillin, sodium; Dicloxacillin, sodium; Flucloxacillin (Floxacillin); and Oxacillin, sodium; Streptomycins and their derivatives; salts thereof: Dihydrostreptomycin and its derivatives; salts thereof Tetracyclines and their derivatives; salts thereof; Chloramphenicol and its derivatives; salts thereof; Erythromycin and its derivatives]

Other: [than Natural antibiotics]

2941.90.30 Aromatic or modified aromatic

EN 29.41 states in pertinent part, as follows:

Antibiotics are substances secreted by living micro-organisms which have the effect of killing other micro-organisms or inhibiting their growth. They are used principally for their powerful inhibitory effect on pathogenic micro-organisms, particularly bacteria or fungi, or in some cases on neoplasms. They can be effective at a concentration of a few micrograms per ml in the blood.

Antibiotics may consist of a single substance or a group of related substances, their chemical structure may or may not be known or be chemically defined. They are chemically diverse and include the following:

(6)Polypeptides, e.g., actinomycins, bacitracin, gramicidins, tyrocidin.

This heading also includes chemically modified antibiotics used as such. These may be prepared by isolating ingredients produced by natural growth of the micro-organism and then modifying the structure by chemical reaction or by adding sidechain precursors to the growth-medium so that desired groups are incorporated into the molecule by the cell-processes (semi-synthetic penicillins); or by bio-synthesis (e.g., penicillins from selected amino-acids).

Natural antibiotics reproduced by synthesis (e.g., chloramphenicol) are classified in this heading, as are certain synthetic products closely related to natural antibiotics and used as such (e.g., thiamphenicol).

In NY F82445, this merchandise was classified in subheading 2941.90.30, HTSUS. However, IB-367 was originally synthesized from porcine leukocytes, not from a living micro-organism. Hence, while IB-367 is a synthetic product used as an antibiotic, it is not "closely related to natural antibiotics," in the sense that it is not originally secreted by living micro-organisms. Rather, IB-367 is an "other heterocyclic compound" classified within subheading 2934.90

The commenter quotes "such key reference works as Zinsser's Microbiology, and the Oxford English Dictionary" which "define 'antibiotic' in the wider sense as a chemical compound derived from a living organism (not just a micro-organism) that is capable of inhibiting or killing micro-organisms." (commentator submission, p.2). Zinsser is copyrighted in 1968 and the Oxford English Dictionary (OED) second edition in 1989. Since the ENs were issued in 1989, we presume the commenter's proffered definition was rejected by the drafters of the ENs, which clearly state that antibiotics are substances secreted by "living micro-organisms." Also, it is not clear that the Zinsser and OED definitions refer to leukocytes as "living organisms." An organism is defined as "a plant or animal." Webster's II New College Dictionary, 772 (Houghton Mifflin Company, 1999). Protegrins are not derived from an animal per se. They are derived from the white cells in the animal's blood.

The commenter also submits numerous articles on the development of protegrin based antimicrobial substances. We note a structural difference between the protegrin substances and antibiotics of heading 2941, HTSUS. Protegrins contain disulfide bridges between cystein pairs and the polypeptide antibiotics of heading 2941, HTSUS, do not. The commenter argues that these bridges are not necessary to the antimicrobial activity exhibited by protegrins. This statement is irrelevant to the classification decision. In fact, the structure of the substance is distinctly different from substances classified in heading 2941, HTSUS.

For the reasons listed above, we cannot ignore the EN. Specifically, we believe that the language "closely related to natural antibiotics" must mean in a way other than by the function when followed by the phrase "and used as such." If both phrases referred to the way antibiotics are used, ie, as antibacterials, antifungals, etc., then one of the phrases would be redundant. As shown above, IB-367 is neither closely related to natural antibiotics in its structure nor in its derivation.

In “Guidance Concerning the Tariff Classification of Pharmaceutical Products Imported for Clinical Research,” May 24, 2000, CUSTOMS BULLETIN, Vol. 34, No. 21, Customs announced its intention to classify separate chemically defined organic compounds imported in bulk, for use in Phase II or III FDA clinical trials, in the "drug" provisions of Chapter 29.

At the time NY F82445 was issued, IB-367 was used in the latter phases of FDA mandated clinical trials. Hence, the proper classification for this substance is subheading 2934.90.30, HTSUS, the provision for "Nucleic acids and their salts; other heterocyclic compounds: Other: Drugs."

HOLDING:

IB-367 is classified in subheading 2934.90.30, HTSUS, the provision for "Nucleic acids and their salts; other heterocyclic compounds: Other: Drugs."

EFFECT ON OTHER RULINGS:

NY F82445, dated February 22, 2000, is revoked.

Sincerely,

John Durant, Director

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