[Federal Register Volume 89, Number 65 (Wednesday, April 3, 2024)]
[Notices]
[Pages 23036-23038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07065]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Omega-3-Acid
Ethyl Esters Capsules
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 Omega-3-Acid Ethyl Esters Capsules. Based upon the
facts presented, CBP has concluded that the Norwegian-origin Omega-3-
Acid Ethyl Esters do not undergo a substantial transformation in China
when combined with certain inactive ingredients and encapsulated into
dosage form.
DATES: The final determination was issued on March 28, 2024. 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 May 3, 2024.
FOR FURTHER INFORMATION CONTACT: Mitchell Emery, Valuation and Special
Programs Branch, Regulations and Rulings, Office of Trade, at (202)
325-0321.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on March 28,
2024, U.S. Customs and Border Protection (CBP) issued a final
determination concerning the country of origin of Omega-3-Acid Ethyl
Esters Capsules for purposes of title III of the Trade Agreements Act
of 1979. This final determination, Headquarters Ruling (HQ) H331488,
was issued at the request of Epic Pharma LLC, under procedures set
forth at 19 CFR part 177, subpart B,
[[Page 23037]]
which implements Title III of the Trade Agreements Act of 1979, as
amended (19 U.S.C. 2511-18). In the final determination, CBP has
concluded that, based upon the facts presented, the Omega-3-Acid Ethyl
Esters are not substantially transformed in China when combined with
certain inactive ingredients and encapsulated into dosage form.
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.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H331488
OT:RR:CTF: VS H331488 MLE
CATEGORY: Origin
Mr. Pei Zhang, Ph.D., Associate Director, Regulatory Affairs, Epic
Pharma, LLC, 227-15 N Conduit Avenue, Laurelton, NY 11413
RE: U.S. Government Procurement; Title III, Trade Agreements Act of
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of
Origin of Omega-3-Acid Ethyl Esters Capsules.
Dear Mr. Zhang:
This is in response to your March 29, 2023 request, on behalf of
Epic Pharma, LLC, for a final determination concerning the country of
origin of certain Omega-3-Acid Ethyl Esters capsules pursuant to Title
III of the Trade Agreements Act of 1979 (``TAA''), as amended (19
U.S.C. 2511 et seq.), and subpart B of Part 177, U.S. Customs and
Border Protection (``CBP'') Regulations (19 CFR 177.21, et seq.). Epic
Pharma, LLC, is a party-at-interest within the meaning of 19 CFR
177.22(d)(1) and 177.23(a) and is therefore entitled to request this
final determination.
FACTS
Epic Pharma is a New York-based company specializing in the
production of generic pharmaceuticals. At issue in this case are Omega-
3-Acid Ethyl Esters capsules, which you describe are intended as an
``adjunct to diet to reduce triglyceride (`TG') levels in adult
patients with severe (>=500 mg/dL) hypertriglyceridemia.'' You state
that Omega-3-Acid Ethyl Esters, which are the sole Active
Pharmaceutical Ingredient (``API'') in the final product, are produced
in Norway. You state that in China the API is combined with inactive
ingredients of various origins to produce the finished capsules.
The manufacturing processes in China include the following: first,
inactive ingredients including gelatin glycerin, and purified water are
combined to create an encapsulating gel. Second, the API is
encapsulated into dosage form. Third, imprinting ink is applied for any
trademark or content information.
You state that ``[n]o change in name occurs in China because the
product is referred to as `Omega-3-Acid Ethyl Esters' both before and
after encapsulation.'' You also state that the processes performed to
produce the final product do not result in any changes to the chemical
characteristics of the Omega 3-Acid Ethyl Esters, or to any other
ingredients. Finally, you claim that no change in use occurs, as the
product retains the same predetermined medicinal use. In short, you
characterize the operations in China as purely mechanical, intended to
process the Omega-3-Acid Ethyl Esters into dosage form.
ISSUE
What is the country of origin of the Omega-3-Acid Ethyl Esters
capsules for the purposes of U.S. Government procurement?
LAW AND ANALYSIS
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, pursuant
to subpart B of Part 177, 19 CFR 177.21-177.31, which implements Title
III of the TAA, as amended (19 U.S.C. 2511-2518).
CBP's authority to issue advisory rulings and final determinations
is set forth in 19 U.S.C. 2515(b)(1), which states:
For the purposes of this subchapter, the Secretary of the Treasury
shall provide for the prompt issuance of advisory rulings and final
determinations on whether, under section 2518(4)(B) of this title, an
article is or would be a product of a foreign country or
instrumentality designated pursuant to section 2511(b) of this title.
Emphasis added.
The Secretary of the Treasury's authority mentioned above, along
with other customs revenue functions, are delegated to CBP in the
Appendix to 19 CFR Part 0--Treasury Department Order No. 100-16, 68
Fed. Reg. 28, 322 (May 23, 2003).
The rule of origin set forth under 19 U.S.C. 2518(4)(B) states:
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 Procurement Regulation
(``FAR''). See 19 CFR 177.21. In this regard, CBP recognizes that the
FAR restricts 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 FAR, 48 CFR 25.003, defines ``designated country end product''
as: a WTO GPA [World Trade Organization Government Procurement
Agreement] country end product, an FTA [Free Trade Agreement] country
end product, a least developed country end product, or a Caribbean
Basin country end product.
Section 25.003 defines ``WTO GPA country end product'' as an
article that:
(1) Is wholly the growth, product, or manufacture of a WTO GPA
country; or
(2) In the case of an article that consists in whole or in part of
materials from another country, has been substantially transformed in a
WTO GPA country 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. The term refers to a product offered for
purchase under a supply contract, but for purposes of calculating the
value of the end product includes services (except transportation
services) incidental to the article, provided that the value of those
incidental services does not exceed that of the article itself.
As indicated above, the Omega-3-Acid Ethyl Esters are produced in
Norway, which is a WTO GPA country. See FAR, 48 CFR 25.003. The
encapsulation process takes place in China, which is not a designated
country for the purpose of government procurement.
In order to determine whether a substantial transformation occurs,
CBP
[[Page 23038]]
considers the totality of the circumstances and makes such
determinations on a case-by-case basis. The country of origin of the
item's components, extent of the processing that occurs within a
country, and whether such processing renders a product with a new name,
character, and use are primary considerations in such cases.
Additionally, CBP considers factors such as the resources expended on
product design and development, the extent and nature of post-assembly
inspection and testing procedures, and worker skill required during the
actual manufacturing process when determining whether a substantial
transformation has occurred. No one factor is determinative.
In deciding 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 held that the processing of
pharmaceutical products from bulk form into measured doses does not
result in a substantial transformation of the product, even when the
API is combined with other inactive ingredients. See, e.g.,
Headquarters Ruling (``HQ'') 561975, dated April 3, 2002; HQ 561544,
dated May 1, 2000; HQ 735146, dated November 15, 1993; HQ H267177,
dated November 5, 2016; HQ H233356, dated December 26, 2012; HQ
H284694, dated August 22, 2017, and New York Ruling (``NY'') C85112,
dated March 27, 1998.
For instance, in HQ 561975, CBP held that the processing of
imported bulk Japanese-origin anesthetic drugs into dosage form in the
United States did not constitute a substantial transformation. Although
the bulk form of the drug underwent testing operations, filtering, and
packaging in the United States, these processes did not change the
chemical or physical properties of the drug. Furthermore, there was no
change in the product's name, which was referred to as sevoflurane in
both its bulk and processed form. Additionally, because the imported
bulk drug had a predetermined medicinal use as an anesthetic drug, the
processing in the United States did not result in a change in the
product's use. The country of origin of the finished product was
therefore Japan.
More recently, in HQ H284694, CBP reviewed the country of origin of
quinine sulfate capsules. In that case, the German-manufactured API
quinine sulfate was exported to India in bulk form, where it was
combined with several inactive ingredients, granulated, sieved and
placed into gelatin capsules. No change in its name occurred because
the product was referred to as ``quinine sulfate'' both before and
after processing. Additionally, no change in character occurred because
the product maintained the same chemical and physical properties in its
processed form. Finally, because the product had a predetermined
medical use as an antimalarial drug, no change in use occurred after
processing. Therefore, the county of origin of the final product
remained Germany.
Similar to the encapsulation here, in NY C85112, CBP reviewed the
country of origin of leuprolide acetate, sold under the trade name
Lupron Depot 7.5 mg. In that case, U.S.-manufactured leuprolide acetate
powder was exported to Japan where it was combined with certain
excipients and encapsulated into sterile microspheres. The purpose of
microencapsulating the leuprolide acetate was to modify its delivery
rate from daily into a form that would be released in the human body
over a period of one to four months. CBP determined that the
fundamental character of the leuprolide acetate was unchanged by the
encapsulation processing and that the foreign processing did not result
in a substantial transformation of the U.S.-manufactured leuprolide
acetate.
The facts here closely follow the cases cited above, as does our
decision. The processing of bulk imported pharmaceuticals into dosage
form, even with the addition of inactive ingredients, will not result
in a substantial transformation. In this case, the processing begins
with the Norwegian-origin bulk Omega-3-Acid Ethyl Esters, and after the
product is processed and combined with inactive ingredients in China,
it results in Omega-3-Acid Ethyl Esters capsules. There is no change in
name after processing. Furthermore, no change in character occurs in
China, as the Omega-3-Acid Ethyl Esters maintain the same chemical and
physical properties both before and after processing. Finally, because
the Omega-3-Acid Ethyl Esters have a predetermined medical use to
``reduce TG levels in adult patients with severe (>=500 mg/dL)
hypertriglyceridemia,'' no change in use occurs after it is processed
in China. Under these circumstances, and consistent with previous CBP
rulings, we find that the county of origin of the final product is
Norway, where the active pharmaceutical ingredient was produced.
HOLDING
Based on the information outlined above, we determine that the
Omega-3-Acid Ethyl Esters made in Norway, do not undergo a substantial
transformation when encapsulated into individual doses and combined
with inactive ingredients in China. Therefore, the country of origin of
the Omega-3-Acid Ethyl Esters capsules for purposes of U.S. Government
procurement is Norway.
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 U.S. Court of International Trade.
Sincerely,
Alice A. Kipel,
Executive Director,
Regulations and Rulings,
Office of Trade.
[FR Doc. 2024-07065 Filed 4-2-24; 8:45 am]
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