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HQ H017425




December 17, 2007

CLA-2 OT:RR:CTF:TCM H017425 ARM

CATEGORY: CLASSIFICATION

TARIFF NO: 3913.90.20

Paula M. Connelly, Esq.
Middleton & Shrull
50 Mall Road, Suite 205
Burlington, MA 01803-4508

RE: Classification of Sodium Hyaluronate (pharmaceutical grade)

Dear Ms. Connelly:

This is in reference to your request submitted on April 23, 2007, to the Customs Information Exchange in New York, seeking a binding ruling concerning the classification of Sodium Hyaluronate (pharmaceutical grade), under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was forwarded to our office for a response.

FACTS:

The merchandise at issue consists of sodium hyaluronate in bulk powder form from two different sources. Sodium hyaluronate, CAS 9067-32-7, is the sodium salt of Hyaluronic Acid (HA), a natural high-viscosity mucopolysaccharide with alternating beta (1-3) glucuronide and beta (1-4) glucosaminidic bonds. It is found in the umbilical cord, in vitreous humor, in synovial fluid, in pathologic joints, in group A and C hemolytic streptococci, and in Wharton's jelly. (Merck, 11th ed.).

The first product, imported from Japan, is extracted from rooster combs. After importation, the sodium hyaluronate is formulated and sterilized into the finished drug products Amvisc®, Orthovisc®, Hyvisc® and Incert-S®. Amvisc® is a viscoelastic solution used in ophthalmic intraocular surgeries. Othovisc® is a viscoelastic solution contained in a single use syringe for the treatment of osteoarthritis in the knees. Hyvisc® is a clear, colorless viscous fluid contained in a disposable syringe intended for use in the treatment of osteoarthritis in horses. Incert-s® is an anti-adhesion gel intended as a barrier gel to inhibit post surgical adhesions supplied in a syringe.

The second product consists of sodium hyaluronate from France derived from bacterial fermentation using Streptococcus equi. The imported product from this source is used in Orthovisc® (described above) and in a cosmetic tissue augmentation product for dermal filling of the face.

The CBP Laboratory analyzed samples of both products. Report #NY20070973, dated May 29, 2007, states in pertinent part, the following:

It is our opinion that two samples – one is white powder in a plastic container labeled “sodium HA . . . .” and the other one is white powder in a plastic container labeled “HA Powder, . . .” are two polysaccharides having the same repeating unit and possibly differing in the number of the repeating unit.

You submitted Certificates of Analysis for each of the products by facsimile. Handwritten on the top of the certificates are the words “avian” and “fermented.” Otherwise, the certificates do not appear to show any material differences in the two substances. You also submitted an information document issued on February 19, 1998, entitled “30-Day Notices and 135-Day PMA Supplements for Manufacturing Method or Process Changes, Guidance for Industry and CDRH.” This document discusses the Food and Drug Administration regulations that require submissions for changes in manufacturing processes or method of manufacture.

ISSUES:

Is the subject merchandise derived from rooster comb classifiable as an “other animal substance” in heading 3001, HTSUS, or as “natural polymers” of heading 3913, HTSUS?

Is the subject merchandise derived from Streptococci bacteria classifiable as an “other animal substance” in heading 3001, HTSUS, or as “cultures of multiorganisms (excluding yeasts and similar products” of heading 3002, HTSUS, or as “natural polymers” of heading 3913, HTSUS?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.

When interpreting and implementing the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, while neither legally binding nor dispositive, provide a guiding commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. Customs and Border Protection (CBP) believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS provisions at issue are as follows:

3001 Glands and other organs for organotherapeutic uses, dried, whether or not powdered; extracts of glands or other organs or of their secretions for organotherapeutic uses; heparin and its salts; other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included:

3001.20.00 Extracts of glands or other organs or of their secretions . . .

3001.90.01 Other . . .

3002 Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; anti-sera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products:

3002.90 Other:

3002.90.51 Other . . .

3913 Natural polymers (for example, alginic acid) and modified natural polymers (for example, hardened proteins, chemical derivatives of natural rubber), not elsewhere specified or included, in primary forms:

3913.90 Other:

3913.90.20 Polysaccharides and their derivatives . . .

The ENs for heading 3001 state, in pertinent part, the following:

This heading covers: . . .

(D) Other human or animal substances prepared for therapeutic or prophylactic uses and which are not specified or included in more specific headings of the Nomenclature, including :

(1) Red bone marrow preserved in glycerol.

(2) Snake or bee venom put up in dried flakes and the non-microbial crypto-toxins formed from such venom.

These products ((1) and (2) above), when put up as medicaments in measured doses or in forms or packings for retail sale, fall in heading 30.04.

(3) Bone, organs and other human or animal tissue, whether living or preserved, suitable for permanent grafting or implantation, put up in sterile packings which may bear indications as to method of use, etc.

The heading excludes: . . .

(c) Separate chemically defined compounds and other products of Chapter 29 obtained by the treatment of extracts of glands or other organs, e.g., amino-acids (heading 29.22), vitamins (heading 29.36), hormones (heading 29.37).

The ENs for heading 3002, state, in pertinent part, the following:

This heading covers:

(C) Antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes.

The heading covers, inter alia, the following products derived from blood: “normal” sera, human normal immunoglobulin, plasma, thrombin, fibrinogen, fibrin and other blood coagulation factors, blood globulins, serum globulins, and hemoglobin.  This group also includes modified haemoglobins obtained by means of biotechnological processes, e.g., cross-linked haemoglobins such as hemoglobin crosfumaril (INN), hemoglobin glutamer (INN) and hemoglobin raffimer (INN).

The heading further includes blood albumin (e.g., human albumin obtained by fractionating the plasma of whole human blood), prepared for therapeutic or prophylactic uses.

CBP has classified bulk sodium hyaluronic acid in subheading 3913.90.20, HTSUS, the provision for “Natural polymers (for example, alginic acid) and modified natural polymers (for example, hardened proteins, chemical derivatives of natural rubber), not elsewhere specified or included, in primary forms: Other: Polysaccharides and their derivatives,” in numerous rulings (see New York Ruling Letters (NY) 870775, dated February 19, 1992, NY 881465, dated January 20, 1993, NY 890398, dated October 6, 1993, NY A88459, dated October 28, 1996, NY D87202, dated February 4, 1999, and NY K87872, dated July 22, 2004). Sterile pre-filled syringes containing hyaluronic acid gel for dermal filling are classified in heading 3304, HTSUS, as “preparations for the care of the skin” in accordance with the specific inclusion for such products in EN 33.04 (see NY R04609, dated Septemeber 5, 2006). In NY H89822, dated April 4, 2002, NY I81075, dated April 26, 2002, and in NY N004962, dated January 9, 2007, CBP classified finished hyaluronic acid products packaged for injection in the treatment of stomatitis, ophthalmic and cataract surgery, respectively, in heading 3004, HTSUS, which provides for: “Medicaments . . . consisting of mixed or unmixed products for therapeutic or prophylactic uses . . .”

The importer claims that the instant rooster-comb derived product is like the chondroitin sulfate discussed in Inabata Specialty Chems. v. United States, 366 F. Supp. 2d 1358, (Ct. Int’l Trade 2005), in that it is mucopolysaccharide derived from an animal and prepared for therapeutic use. However, the court in Inabata made two observations that distinguish the instant merchandise. First, the court stated: “It is undisputed that the merchandise at issue is prepared from bovine cartilage and is an animal substance or product, thus satisfying the first requirement of plaintiff's claimed classification. It is also undisputed that it is a natural polysaccharide polymer as provided in the classification chosen by Customs (citations omitted).” Id. at 1360.

The instant merchandise may or may not have been produced in a similar extraction and drying process to that of the chondroitin sulfate in the Inabata case. It appears that the rooster comb product is produced in a similar fashion, but the streptococcal derived product is not produced in a similar fashion. Moreover, the streptococcal derived product is manufactured from a bacteria, not an animal, and therefore could not be classified in heading 3001, HTSUS, in any case. Upon importation the source of the bulk sodium hyaluronate is not discernable. Sodium hyaluronate powder derived from rooster comb is commercially and chemically indistinguishable from sodium hyaluronate derived from streptococcus equi (see Customs Laboratory report, supra). Hence, there is no way to validate whether bulk sodium hyaluronate is derived from an animal or not. This is not the factual scenario in the Inabata case.

Second, the Inabata court states that heading 3001, HTSUS, is a principal use provision within the meaning of Additional U.S. Rule of Interpretation 1(a) and proceeds to analyze the merchandise under the Carborundum factors. The court states:

Tariff classification law relies heavily on commercial practice and understandings. Tariff classifications are mainly about the marketplace. In determining whether a particular item falls within the class or kind of merchandise principally used in the manner described by a tariff heading, the courts have considered the following factors: (1) general physical characteristics; (2) expectations of the ultimate purchaser; (3) channels of trade in which the merchandise moves; (4) environment of sale; (5) use in the same manner as merchandise which defines the class; (6) economic practicality of so using the imported merchandise; and (7) recognition in the trade of this use. Lenox Collections v. United States, 19 CIT 345, 347 (1995); United States v. Carborundum Co., 536 F.2d 373, 377, 63 C.C.P.A. 98 (C.C.P.A. 1976). By application of these factors to the CS at issue, the overwhelming weight of the evidence points to CS belonging to the class or kind of merchandise described in HTSUS Heading 3001. Id. at 1364.

In determining that the merchandise belonged to the class or kind of merchandise described in heading 3001, HTSUS, the court relied heavily on the fact that chondroitin sulfate was perceived to have no other use in the marketplace than as an arthritis treatment. Id. That is not the case here. Bulk sodium hyaluronate is used both in medicinal products of heading 3004, HTSUS, and in cosmetic products of heading 3304, HTSUS. Although we agree that the instant product is imported in a high state of purity, no evidence was submitted as to whether that high state of purity commercially distinguishes the product from that used in cosmetic applications. In fact, you state that the streptococcal derived product is used in cosmetic products and it is said to be “pharmaceutical grade” as well. Hence, we find the facts here readily distinguish themselves from those in the Inabata case and that the imported product cannot be classified in heading 3001, HTSUS, as an “animal substance for therapeutic or prophylactic use,” as stated above, because neither the claimed animal origin of the substance, nor the principal use to which the merchandise is put, has been adequately supported. The product consists of bulk sodium hyaluronate powder. No evidence of chemical or commercial distinctions based on origin or principal use of the bulk powder has been submitted. Therefore, classification under heading 3001, HTSUS, is precluded.

Lastly, you claim classification in heading 3002, HTSUS, for the streptococcal derived merchandise. Yet, the hyaluronic acid is not secreted, ground, pulverized, crushed or otherwise obtained from any animal organ, nor is it recognizable as having been derived from an animal originally. Furthermore, the product is not described by the terms of heading 3002, as blood, sera, vaccine, toxin or culture of animals or like any of the substances listed in the ENs. The instant merchandise is completely separated from the bacteria that produced it. It is not a microorganism or culture, but a substance produced from a culture and separated from it. The bulk sodium hyaluronate therefore does not meet the terms of heading 3002, HTSUS.

The bulk powder indisputably consists of a polymer found in nature. Specifically, it consists of a muccopolysaccharide. It therefore is described by the terms of heading 3913, HTSUS, which provides for “natural polymers”. We note that heading 3913 has a “K” listed in the special column indicating that products listed in the Pharmaceutical Appendix receive a free rate of duty. The Pharmaceutical Appendix was incorporated into the HTSUS by Presidential Proclamation. See Proclamation No. 6763, 60 Fed. Reg. 1007 (1994). This Proclamation also added General Note 13 to the HTSUS. General Note 13 states that whenever a rate of duty of “Free” followed by the symbol “K” in parentheses appears in the “Special” subcolumn for a tariff provision, products classifiable in such provision shall be entered free of duty, provided that such product is listed in the Pharmaceutical Appendix. However, as the sodium hyaluronate is not listed in the Appendix, it is not eligible for duty–free treatment.

HOLDING:

By application of GRI 1, bulk sodium hyaluronate is classified in heading 3913, HTSUS, specifically in subheading 3913.90.20, HTSUS, which provides for: “Natural polymers (for example, alginic acid) and modified natural polymers (for example, hardened proteins, chemical derivatives of natural rubber), not elsewhere specified or included, in primary forms: Other: Polysaccharides and their derivatives.” The column one, general rate of duty is 5.8% ad valorem.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.

Sincerely,

Gail A. Hamill, Chief

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