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HQ 562396




August 16, 2002

CLA-2 RR:CR:SM 562396 KSG

CATEGORY: MARKING

Port Director
U.S. Customs Service
Los Angeles Seaport

RE: Country of origin of glycine; Internal Advice; substantial transformation; chemical reaction; Antidumping Duty Order A-570-836

Dear Director:

This is in reference to your memorandum of April 10, 2002, forwarding an internal advice request filed by counsel, on behalf of its client, GNC Group, Inc., Inc., regarding the country of origin of glycine. Counsel has withdrawn their request for confidentiality.

FACTS:

The Department of Commerce published its final determination of its sales-at-less-than-fair-value investigation of glycine from the People's Republic of China on January 30, 1995 (60 Fed. Reg. 5620, dated January 30, 1995). Antidumping Duty Order A-570-836, 60 Fed. Reg. 16116, dated March 29, 1995, covers glycine of all purity levels.

Glycine is a free-flowing crystalline material, like salt or sugar. Glycine is produced at varying levels of purity and is used as a sweetner/taste enhancer, a buffering agent, reabsorbable amino acid, chemical intermediate and a metal complexing agent. Glycine is classified in subheading 2922.49.4020 of the Harmonized Tariff Schedule of the United States ("HTSUS").

Glycine exists as sweet tasting, odorless, white monoclinic crystals that are soluble in water. Glycine occurs naturally in many proteins and is especially abundant in silk fibroin, gelatin and sugar cane. However, it is synthetically manufactured for commercial purposes. It is sold commercially as either USP grade or technical grade material.

Ammonium glycinate can be used for: (1) surface modification of lime chemical absorbent; (2) smut removal, with agent contingent from copper-laminated circuit boards; (3) a neutralizing agent for hair spray; (4) hydrothermal growth of calcite single crystals from original salt solutions; and (5) stimulating color development in fruits and vegtables. It is classified in subheading 2922.49.80, HTSUS.

In this case, ammonium glycinate is manufactured in China and shipped to South Korea. In South Korea, the ammonium glycinate is dissolved with purified water and heat; acidified with hydrochloric acid; decolored by putting in active carbon and agitating; filtered to remove active carbon; concentrated; cooled; separated with a centrifuge; desalted with methanol; dried; inspected and packed. The finished product as a result of the processing in South Korea is glycine.

The glycine was imported by GNC Group, Inc. ("GNC"), who has exclusive rights to market the glycine in the U.S.

GNC received a Request for Information (CF 28), dated February 14, 2001, from your office asking for information about their entries of glycine. It later received a CF 29, dated July 31, 2001, stating that Customs had tentatively determined that its June 13, 2000, entry of glycine was subject to the Antidumping Order for glycine from China. GNC received a second CF 29, dated November 20, 2001, granting GNC an extension and suggesting that they obtain a scope ruling from the Department of Commerce.

ISSUE:

What is the country of origin for Customs purposes of the imported glycine, manufactured as described above.

LAW AND ANALYSIS:

Counsel asserts that the ammonium glycinate from China is substantially transformed in South Korea into a new article, resulting in a change in the country of origin of the imported glycine.

The well-established test for determining whether a substantial transformation has occurred is derived from Anheuser-Busch Brewing Association v. United States, 207 U.S. 556 (1908). The court stated as follows:

There must be transformation; a new and different article must emerge, having a distinctive name, character or use.

In National Juice Products Association v. United States, 628 F. Supp. 978 (CIT 1986), the court considered whether foreign manufacturing concentrate processed into frozen concentrated orange juice in the U.S. and reconstituted orange juice was considered substantially transformed. The U.S. processing involved blending the manufacturing concentrate with other ingredients to create the end product; the manufacturing concentrate was mixed with purified and dechlorinated water, orange essences, orange oil, and in some cases, fresh juice. The foreign manufacturing concentrate was blended with domestic concentrate, with ratios of 50/50 or 30/70 (foreign/ domestic).

The court considered 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. The court concluded that the foreign manufacturing juice concentrate was not substantially transformed in the U.S. when it was processed into retail orange juice products.

The Department of Commerce recently issued a Scope Review, dated May 3, 2002, in which it determined that crude glycine of Chinese origin refined in South Korea to a higher grade is within the scope of Antidumping Duty Order A-570-836. Similarly, Customs ruled in Headquarters Ruling Letter ("HRL") 562274, dated June 12, 2002, that crude glycine from China was not substantially transformed when it was processed in South Korea into glycine. In HRL 562274, crude glycine from China was processed in essentially, a "refining operation" in South Korea into glycine of a higher grade. Customs cited a line of cases that conclude that the mere refining or purification of a crude substance does not result in a substantial transformation.

Counsel argues that this case is distinguishable from HRL 562274 and the Scope Review because they begin with ammonium glycinate rather than crude glycine and the ammonium glycinate undergoes a chemical reaction that results in a substantial transformation into a new article with a new name, character and use.

In determining whether a substantial transformation occurs in the manufacture of products from chemicals, Customs has consistently examined whether a chemical reaction occurs when two chemicals are mixed in the production of the final article. See HRL 559936, dated January 31, 1997, HRL 555248, dated April 9, 1990; and HRL 556064, dated March 29, 1990.

The Office of Laboratories and Scientific Services reviewed the submission in this case and concluded as follows:

In our opinion, the manufacturing process to convert ammonium glycinate to glycine is more than a refining process to remove impurities or change the form of the products such as from liquid to a solid. Rather, the processing performed in South Korea to convert ammonium glycinate to glycine involves a chemical reaction that fundamentally alters its chemical structure. As a result, the two chemicals have distinct chemical formulas, names and unique Chemical Abstract Services ("CAS") numbers.

With regard to the character and use of glycine, technical literature indicate that it is a nonessential amino acid that is marketed as a food supplement for use as a growth hormone releaser and general detoxifier. In addition, glycine is also used as a pH buffer and stabilizer, flavor enhancer and masker, and in biochemical research. In contrast, the character and use of ammonium glycinate is markedly different. Technical literature indicates that ammonium glycinate is not used in products for human or animal consumption, but rather for industrial products such as smut-removing agents and surface modifiers.

Counsel points out that as result of the processing in South Korea, there is not only a change in name but also a change in the chemical formula (Chemical Abstract Service Number) and each product is separately recognized as its own chemical product.

With regard to a change in character, the manufacturing process in South Korea results in both an alteration in the chemical composition of the ammonium glycinate and a chemical reaction. The Office of Laboratories and Scientific Services concluded that a "specific chemical reaction occurs when an aqueous solution of ammonium glycinate is acidified by the addition of hydrochloric acid. The process removes the ammonium ion from ammonium glycinate and replaces it with a single hydrogen atom creating a glycine molecule."

With respect to a change in use, as discussed above, the ammonium glycinate and glycine have different uses. Glycine, unlike ammonium glycinate, is fit for use in products for humans and animals. Based on the above, we find that this case is distinguishable from HRL 562274 and that the ammonium glycinate becomes a new article with a new name, character, and use. Accordingly, the ammonium glycinate is substantially transformed into glycine in South Korea.

HOLDING:

On the basis of the information provided, ammonium glycinate from China is substantially transformed into a new and different article as a result of processing in South Korea. Accordingly, the processed glycine is a product of South Korea for Customs purposes.

This decision should be mailed by your office to the internal advice requester no late than sixty (60) days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other means of public distribution.

Sincerely,

Myles B. Harmon
Acting Director,
Commercial Rulings Division

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