[Federal Register Volume 80, Number 219 (Friday, November 13, 2015)]
[Notices]
[Pages 70243-70245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28827]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Acyclovir 
Tablets

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of certain Acyclovir tablets. Based upon the facts 
presented, CBP has concluded that the country of origin of the 
Acyclovir Tablets is China and India for purposes of U.S. Government 
procurement.

DATES: The final determination was issued on November 5, 2015. A copy 
of the final determination is attached. Any party-at-interest, as 
defined in 19 CFR 177.22(d), may seek judicial review of this final 
determination no later than December 14, 2015.

FOR FURTHER INFORMATION CONTACT: Robert Dinerstein, Valuation and 
Special Programs Branch, Regulations

[[Page 70244]]

and Rulings, Office of International Trade (202) 325-0132.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on November 5, 
2015, pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of certain Acyclovir 
Tablets, which may be offered to the U.S. Government under an 
undesignated government procurement contract. This final determination, 
HQ267177, was issued under procedures set forth at 19 CFR part 177, 
subpart B, which implements Title III of the Trade Agreements Act of 
1979, as amended (19 U.S.C. 2511-18). In the final determination, CBP 
concluded that the processing in the United States does not result in a 
substantial transformation. Therefore, the country of origin of the 
Acyclovir tablets is China and India for purposes of U.S. Government 
procurement.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

    Dated: November 5, 2015.
Myles B. Harmon,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.
HQ H267177
November 5, 2015

MAR-2 OT:RR:CTF:VS H267177 RSD

CATEGORY: ORIGIN

Ms. Karen Yu, Regulatory Affairs, Carlsbad Technology Inc., 5923 
Balfour Court, Carlsbad, California 92008
RE: U.S. Government procurement; Trade Agreements Act; Country of 
Origin of Acyclovir Tablets; Substantial Transformation

    Dear Ms. Yu: This is in response to your ruling request dated July 
7, 2015, requesting a final determination on behalf of Carlsbad 
Technology Inc., (Carlsbad) pursuant to subpart B of Part 177 of the 
U.S. Customs and Border Protection (CBP) Regulations (19 CFR part 177). 
Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. 2511 et seq.), 
CBP issues country of origin advisory rulings and final determinations 
as to whether an article is or would be a product of a designated 
country or instrumentality for the purposes of granting waivers of 
certain ``Buy American'' restrictions in U.S. law or practice for 
products offered for sale to the U.S. Government.
    This final determination concerns the country of origin of 
Acyclovir Tablets. As a U.S. manufacturer of a like product, Carlsbad 
Inc. is a party-at-interest within the meaning of 19 CFR 177.22(d)(1), 
and is entitled to request this final determination.

FACTS:

    Acyclovir is a pharmaceutical product used as a synthetic 
nucleoside analogue active against herpes viruses. The active 
pharmaceutical ingredient (``API''), Acyclovir is manufactured in China 
and India. The API is shipped to the U.S., where it undergoes five 
manufacturing steps. Inactive ingredient (excipients) used in the 
production of the product in the U.S. are corn starch, microcrystalline 
cellulose, magnesium stearate, and sodium starch glycolate.
    The first stage of U.S. manufacturing is the sizing of the active 
and inactive ingredients including the corn starch glycolate, by 
passing them through a sieve to remove any larger granules.
    The second stage of U.S. manufacturing is the preparation of 
Acyclovir granules. The Acyclovir API, corn starch, and sodium starch 
glycolate are de-lumped and granulated with a binding suspension of 
corn starch. The wet granules are then sieved through a comil and 
discharged into stainless steel drums. These granules are then moved to 
a tray dryer for a drying process for 10 to 18 hours or until it meets 
its dryness specification. The dried granules will then be sieved 
through a comil again and discharged into stainless steel drums. The 
third stage of U.S. manufacturing is the preparation of the tablet 
blend. The inactive ingredients, microcrystalline cellulose and sodium 
starch glycolated are de-lumped by passing them through a sieve and 
added to the de-lumped acyclovir granules for preblend. Then the 
magnesium stearate is sieved and added to the final blend. All the 
blended product is discharged into stainless steel drums. The fourth 
stage of U.S. manufacturing is tablet compression. The blended granules 
are then fed to a tablet press machine where the tablets are formed. 
The bulk tablets are collected into plastic bags, which are sealed and 
packaged in containers. The fifth stage of U.S. manufacturing is 
packaging in high density polyethylene plastic bottles. These bottles 
are then put into cartons for distribution in the U.S.

ISSUE:

    What is the country of origin of the Acyclovir tablets processed as 
described above for purposes U.S. Government procurement?

LAW AND ANALYSIS:

    Pursuant to Subpart B of Part 177, 19 CFR 177.21 et seq., which 
implements Title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. 2511 et seq.), CBP issues country of origin advisory rulings 
and final determinations as to whether an article is or would be a 
product of a designated country or instrumentality for the purposes of 
granting waivers if certain ``Buy American'' restrictions in U.S. law 
or practice for products offered for sale to the U.S. government.
    Under the rule of origin set forth under 19 U.S.C. 2518(4)(B):
    An article is a product of a country or instrumentality only if (i) 
it is wholly the growth, product, or manufacture of that country or 
instrumentality, or (ii) in the case of an article which consists in 
whole or in part of materials from another country or instrumentality, 
it has been substantially transformed into a new and different article 
of commerce with a name, character, or use distinct from that of the 
article or articles from which it was so transformed.

See also 19 CFR 177.22(a).

    In rendering advisory rulings and final determinations for purposes 
of U.S. government procurement, CBP applies the provisions of subpart B 
of part 177 consistent with the Federal Acquisition Regulations. See 19 
CFR 177.21. In this regard, CBP recognizes that the Federal Acquisition 
Regulations restrict the U.S. Government's purchase of products to 
U.S.-made or designated country end products for acquisitions subject 
to the TAA. See 48 CFR 25.403(c)(1). The Federal Acquisition 
Regulations define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the United 
States or that is substantially transformed in the United States into a 
new and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was 
transformed.

48 CFR 25.003

    A substantial transformation occurs when an article emerges from a 
process with a new name, character and use different from that 
possessed by the article prior to processing. A substantial 
transformation will not result from a minor manufacturing or combining 
process that leaves the identity of the article intact. See United 
States v.

[[Page 70245]]

Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940); and, National Juice 
Products Association v. United States, 628 F. Supp. 978 (Ct. Int'l 
Trade 1986).
    In determining whether a substantial transformation occurs in the 
manufacture of chemical products such as pharmaceuticals, CBP has 
consistently examined the complexity of the processing and whether the 
final article retains the essential identity and character of the raw 
material. To that end, CBP has generally held that the processing of 
pharmaceutical products from bulk form into measured doses does not 
result in a substantial transformation of the product. See e.g., 
Headquarters Ruling Letter (``HQ'') 561975, dated April 3, 2002; HQ 
561544, dated May 1, 2000; and, HQ 735146, dated November 15, 1993.
    For instance, in HQ 561975, the anesthetic drug sevoflurane 
imported into the U.S. in bulk form and processed into dosage form by 
extensive testing operations, followed by filtering and packaging into 
bottles, was found not to have undergone a substantial transformation 
in the U.S. There was no change in name (the product was identified as 
sevoflurane in both its bulk and processed form). The sevoflurane 
retained its chemical and physical properties after the U.S. 
processing. Lastly, because the imported bulk sevoflurane had a 
predetermined medicinal use as an inhalable anesthetic drug, the 
processing in the United States resulted in no change in the product's 
use.
    Likewise, in HQ 561544, the testing, filtering and sterile 
packaging of Geneticin Sulfate bulk powder, to create Geneticin 
Selective Antibiotic, was not found to have substantially transformed 
the antibiotic substance because the processing only involved the 
removal of impurities from the bulk chemical and the placement of the 
chemical into smaller packaging.
    In HQ 735146, 100 percent pure acetaminophen imported from China 
was blended with excipients in the United States, granulated and sold 
to pharmaceutical companies to process into tablets for retail sale 
under private labels. It was found that the process in the United 
States did not substantially transform the imported product because the 
product was referred to as acetaminophen before importation and after 
U.S. processing, its use was for medicinal purposes and continued to be 
so used after U.S. processing, and the granulating process minimally 
affected the chemical and physical properties of the acetaminophen.
    In HQ H233356 dated December 26, 2012, mefenamic acid imported from 
India was blended with excipients and packaged into dosage form in the 
United States. Based on prior rulings, we found that the specific 
processing consisting of blending the active ingredients with inactive 
ingredients in a tumbler and then encapsulating and packaging the 
product did not substantially transform the mefenamic acid because its 
chemical character remained the same. As such, we found that the 
country of origin of the Ponstel (mefenamic acid) capsules was India, 
where the mefanamic acid was manufactured.
    In this case, the processing performed in the U.S. does not result 
in a change in the medicinal use of the finished product and the active 
ingredient. The Acyclovir retains its chemical and physical properties 
and is merely put into a dosage form and is packaged for sale. The 
active ingredient does not undergo a change in name, character or use. 
Therefore, in accordance with our prior rulings, we find that no 
substantial transformation occurs in U.S., and for purposes of 
government procurement, the Acyclovir tablets would be considered a 
product where the active ingredient was produced, which would be China 
and India.

HOLDING:

    Based upon the facts in this case, we find that the imported 
Acyclovir is not substantially transformed in U.S. Accordingly, the 
country of origin for government procurement purposes of the Acyclovir 
tablets is China and India, where the active ingredient is produced.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31 that CBP reexamine the matter anew and issue 
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days of publication of the Federal Register 
notice referenced above, seek judicial review of this final 
determination before the Court of International Trade.

 Sincerely,

Myles B. Harmon Acting Executive Director
Office of Regulations and Rulings
Office of International Trade

[FR Doc. 2015-28827 Filed 11-12-15; 8:45 am]
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