Tariff classification of Asahi Kasei Medical American, Inc., Integrity Test Solution Kits; Application for Further Review of Protest Number 4701-08-100796.

HQ H053976 December 9, 2010 CLA-2 OT:RR:CTF:TCM H053976 RES CATEGORY: Classification TARIFF NO.: 3824.90.92 ATTN: Chief of Trade Operations Branch A Area Director U.S. Customs and Border Protection JFK International Airport Area Bldg # 77 JFK International Airport Jamaica, NY 11430 RE: Tariff classification of Asahi Kasei Medical American, Inc., Integrity Test Solution Kits; Application for Further Review of Protest Number 4701-08-100796. Dear Chief of Trade Operations Branch A: This letter is in reply to your memorandum dated February 27, 2009, regarding the Application for Further Review (“AFR”) of Protest Number 4701-08-100796 filed on behalf of Asahi Kasei Medical America, Inc. (“Asahi”). The protest is against U.S. Customs and Border Protection’s (“CBP”) classification of the AGP-HA Integrity Test Solution Kit (“Test Kit”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). Further, we have considered arguments made in a meeting between Asahi and members of my staff on December 6, 2010. FACTS: The AGP-HA Integrity Test Solution Kits are used to test the integrity of Planova filters. As described by Asahi, Planova filters are used for virus removal in the purification process of biological therapeutics, such as human plasma-derived products. The Test Kits are designed to be used with only Asahi’s Planova filters and no other manufacturer’s virus-removal filters. The Test Kits are sold and imported both with the Planova filters and separately. The function of the test kit is to test the post-production integrity of Planova filters to determine whether the filters are properly performing their virus removal purification. The Test Kits consist of one bottle containing a mixture of a colloidal gold solution and other chemicals (“particle solution”) and one bottle of sodium lauryl sulfate (“SDS”). The particle solution is composed of the following chemicals: hydrogen tetrachloroaurate (III) tetrahydrate; polyvinlypyrrolidone K-15, SDS, tri-sodium citrate dehydrate, and water. The testing process is performed by the following steps: (1) the Planova filter (“test filter”) to be tested that has just been used in the purification of a biotherapeutic product is cleaned to remove proteins that may be adhering to its membranes; (2) the SDS is dissolved with water and then mixed with the particle solution to create a mixed test solution (“filtrate”); (3) the filtrate is then pumped through the used test filter; (4) after the filtrate has been drawn through the test filter, the filtrate is collected and examined by a spectrophotometer (“spectro”) to determine how much of the gold particles in the filtrate were excluded or trapped by the test filter; (5) the spectro readings are then used to calculate the gold particle removal rate for the test filter; (6) the test filter’s calculated gold particle removal rate is then compared with the removal rate of model virus conducted in specific conditions by Asahi as a standard; (7) if the test filter calculated removal rate falls below the standard rate, this indicates that the test filter is not filtering properly and the biotherapeutic product would need to be refiltered using a new filter or discarded. The instant AFR involves nineteen entries with entry dates between June 18, 2007, through April 9, 2008, inclusive. The Test Kits were entered under heading 3822, HTSUS, as “[d]iagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents, whether or not on a backing, other than those of heading 3002 or 3006; certified reference materials.” The Test Kits were liquidated between the dates of May 9, 2008, and August 22, 2008, under heading 2843, HTSUS, as “[c]olloidal precious metals; inorganic or organic compounds or precious metals, whether or not chemically defined; amalgams of precious metals.” Asahi filed its protest on November 5, 2008. Asahi asserts that the proper classification of the Test Kits is under heading 8421, HTSUS, as “[c]entrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases; parts thereof.” ISSUE: Whether the subject Test Kits are classified under heading 8421, HTSUS, as parts of filtering or purifying machinery or under heading 3824, HTSUS, as chemical products and preparations of the chemical or allied industries not specified or included elsewhere? LAW AND ANALYSIS: Initially, CBP notes that the protest was timely filed on November 5, 2008, which is within 180 days after the earliest liquidation date of the nineteen entries above which was May 9, 2008. See 19 U.S.C. § 1514(c)(3) (2006). Additionally, CBP’s classification of the merchandise is a protestable matter under 19 U.S.C. § 1514(a)(2). Further Review of Protest No. 4701-08-100796 is properly accorded to protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Court of International Trade. 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 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 GRI 2 through 6 may be applied in order. In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, 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 HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989). The following HTSUS provisions are under consideration: 3824 Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: 8421 Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases; parts thereof: As discussed supra, the articles at issue are Test Kits that are used to analyze a Planova filter’s filtering adequacy after the filter has performed its filtering function. Asahi claims that the Test Kits are parts of a filter and should be classified accordingly. Asahi asserts that the Test Kits meet the test for parts established by the courts because: (1) the kits are dedicated solely for use with Planova filters; (2) the kits are not designed to be used independently from Planova filters; (3) the kits are not sold to be used independently from Planova filters and cannot be used with other types or brands of filters; (4) the kits act directly on the filters because the colloidal mix is pumped through the filters, and (5) the use of the kit is necessary for safe usage of an individual Planova filter and not for the filtering activity. Asahi asserts that the Test Kits meet the definition of “parts” pursuant to the different standards elucidated by the courts in United States v. Willoughby Camera Stores, Inc., 21 C.C.P.A. 322 (1933) and United States v. Antonio Pompeo, 43 C.C.P.A. 9 (1955) and further refined by the progeny of those cases. A review of the case law cited by Asahi on the issue of “parts” is instructive in determining how to analyze whether an article legally constitutes a part and determining the applicability of these case law standards against the fact pattern involving the Test Kits. The standard applied in Willoughby when analyzing whether an imported component is considered a “part” of another article, is to consider whether the imported component is essential to the functioning and use of the article which the component is said to be a part of. Willoughby, 21 C.C.P.A. at 326. The court in Pompeo clarified that the standard set out in Willoughby is applicable only in fact patterns that are similar to the facts in Willoughby. Pompeo, 43 C.C.P.A. at 11-12. The Pompeo court stated that it is not enough that a component is dedicated for a specific use with an article the component is said to be a part of, but rather what must be factored into consideration is examining the specific use of that component in the overall function of said article to determine the extent of the role the component plays in the overall function of the article. Id. at 14. Thus, the alternative standard expressed by the Pompeo court for fact patterns different than that of Willoughby is that when analyzing whether a component is considered a “part”, if such a component at the time of importation is dedicated to a specific use the primary consideration then is determining the nature of the component as it is applied to that use. Id. at 13-14. In other words, once the imported component is installed, integrated, or attached to an article it is alleged to be a part of, does the component become essential to the overall function of the article during its operation. The court in Gallagher & Ascher Company v. United States, 52 C.C.P.A. 11 (1964), citing both Pompeo and Willoughby, further refined the Pompeo standard in holding that an analysis of whether an imported component is considered to be a “part” of another article turns on whether the component is both dedicated to a sole specific use with the other article and, once that component is attached or integrated with the other article, whether its function’s contribution is necessary to the efficient operation of the article it is asserted to be a part of. Id. at 16. See also Trans Atlantic Company v. United States, 48 C.C.P.A. 30 (1960) (inferring that a probative consideration in a “part” analysis is the function of the article in question in regard to the overall function of the machine it is alleged to be a part of). In Bauerhin Technologies Limited Partnership, et al v. United States, 110 F.3d 774, 774 (Fed. Cir. 1997), the Circuit Court applied Rule 1(c) of the Additional U.S. Rules of Interpretation (“ARI”) in conjunction with the premise in Pompeo that an imported article dedicated solely for use with another article is a “part” of the other article, and affirmed the Court of International Trade’s (“trial court”) conclusion that a provision for a part must prevail over a basket provision. Id. at 776-79; See Bauerhin Technologies Limited Partnership and John V. Carr & Son Inc., v. United States, 19 C.I.T. 1441, 1450-51 (Ct. In’t Trade 1995). In Mita Copystar America v. United States, 160 F.3d 710 (Fed. Cir. 1998), the Circuit Court cited the factors employed in Amersham v. United States, 728 F.2d 1453 (Fed. Cir. 1984) as controlling when analyzing whether an article that is a container with a substance inside is a “part” as opposed to being a composite article for classification purposes. Mita, 160 F.3d at 712-13. The factors considered were whether: the container is designed/capable of reuse; the container is sold with the substance inside; the container is the standard device for providing the substance to the machine it is used with; and whether the substance remains in the container throughout its commercial use with the machine it is used with. Mita, 160 F.3d at 712-13; Amersham, 728 F.2d at 1456. Asahi’s reliance and interpretation of the Circuit Court’s review in Mita is misplaced. Asahi asserted that the holding in Mita, on whether an article is considered a part, is simply to establish that the article in question plays “an essential role in the functioning of the machine.” Although the Circuit Court stated this, the actual issue that was the subject of the appeal was the trial court’s finding that the toner cartridges were composite articles and then the trial court’s subsequent application of GRI 3(b). Mita, 160 F.3d at 711-13. The propriety of the trial court’s use of the GRI 3(b) essential character analysis was what the Circuit Court was primarily reviewing as the Circuit Court secondarily reviewed the trial court’s finding that the toner cartridges themselves were parts of a photocopier. Mita, 160 F.3d at 711-13. See Mita Copystar America, Inc., v. United States, 21 C.I.T. 611, 613-14 (Ct. In’t Trade 1997). The Circuit Court did not review the correctness of the trial court’s application of the Willoughby and Pompeo parts analysis standards. Moreover, the Circuit Court in Mita did not make any reference to the Willoughby, Pompeo, or Bauerhin cases which were discussed by the trial court. Thus, because the issue here with the Test Kits is whether they are parts and not whether they are composite articles, the Circuit Court’s review in Mita is not applicable. In the last case cited by Asahi, Rollerblade, Inc., v. United States, 282 F.3d 1349 (Fed. Cir. 2002), the Circuit Court stated that, based on the common meaning of the term “part”, as a threshold of whether an article is considered a “part” the article “must have a direct relationship to the primary article rather than to the general activity in which the primary article is used.” Id. at 1353. The proposition in Rollerblade is that when analyzing whether an article is a “part” is to determine whether the article in question has a direct relationship with the primary article of which it is alleged to be a part of as opposed to whether the article simply has a relationship to the general activity in which the primary article is used. Id. In regard to the holding in Rollerblade, Asahi cites this case as support in its assertion that the Test Kit is a part because “the use of the kit is necessary for safe usage of an individual Planova filter and not for the filtering activity.” However, there is a notable difference between the factual situation of Rollerblade and the Test Kits in that the protective gear was employed during the actual skating activity the inline skates where involved in while the Test Kits are not actually used during the actual filtering activity of the Planova filters. Overall, neither Mita nor Rollerblade are applicable to the facts in Asahi’s protest. Instead, the standards described in Willoughby and Pompeo, and further clarified by the Court of International Trade in Bauerhin, are the basis for analyzing whether the Test Kits are parts as further explained below. The Court of International Trade in Bauerhin Technologies Limited Partnership and John V. Carr & Son Inc., v. United States, 19 C.I.T. 1441, 1450-51 (Ct. In’t Trade 1995), noted that Willoughby and Pompeo represented two different line of cases as authority in the rule governing determination of when an article is a “part” and which analytical approach to use depends on the facts of the matter at hand. On appeal, the Circuit Court reviewing Bauerhin affirmed the trial court’s conclusion that the rule in Willoughby was not applicable to the facts at issue and that the trial court’s application of the rule in Pompeo was the proper approach. Bauerhin, 110 F.3d at 779. The trial court and the Circuit Court in Bauerhin described the general rule in Willoughby as being whether an article is necessary to the completion of the article of which it is supposed to be a part, such that the article to which it is joined could not function without it. Bauerhin, 110 F.3d at 778-79; Bauerhin, 19 C.I.T. at 1449-50. The Bauerhin trial court stated that the general rule in Pompeo was first to decide whether an item is dedicated solely for use with another article and second, does the item satisfy a specific and integral need in the operation of the article to which is joined. Bauerhin, 19 C.I.T. at 1450 (finding that canopies qualified as parts because (1) they satisfy a specific and integral need when baby seats are used and (2) because the canopies have no other use than as a seat attachment). Thus on the question of which rule is applicable to a specific set of facts, the Circuit Court in Bauerhin instructs that “if an imported item is dedicated solely for use with another article and is not a separate and distinct commercial entity”, then the rule in Pompeo is the precedent to follow. Bauerhin, 110 F.3d at 779. Because the Test Kits are dedicated to be used solely with Planova filters, the rule in Pompeo is the standard to employ in analyzing whether the Test Kits are parts. The Planova filters perform their function of filtering without the Test Kits. A Test Kit is not used with the filters while they are performing their actual filtering function nor does a Test Kit assist, enhance, facilitate or have any affect on the actual filtering of a substance. Matter of fact, once a Test Kit is used with a filter, the filter itself is not reusable and must be discarded. Even though the Test Kits are dedicated solely for use with Planova filters, this fact alone is not dispositive on the issue of whether the Test Kits are “parts” of the Planova filters. The apparent role of the Test Kits is after-the-fact quality control and not anything to do with actual filtering and they are not employed during the operation of the Planova filtering systems. In addition to the case law, Asahi cited a number of CBP rulings in its memorandum in support of its claim that the Test Kits qualify as parts. In Headquarters Ruling (“HQ”) 089944, dated September 19, 1991, the merchandise under consideration was a filtration system used to remove contaminants from polymers, food, and fibers that pass through its screen and others parts of the system. The issue of this ruling was not whether a specific article was considered a part of a filtration system but rather what specific heading a filtration system and its parts would be classified under. This ruling is not applicable to Asahi’s situation because the issue in HQ 089944 was not whether an article was actually considered a “part” of filtration system. Instead, the issue was in what heading are parts of filtration systems properly classifiable. In HQ 088828, dated July 3, 1991, the merchandise under consideration were categorized as affinity chromatography gels and apparatus that consisted of various adsorbent gel matrices and a protein isolation kit consisting of ten tubes filled with a different adsorbent that were used in the purification of biomolecules. The issue was whether the adsorbent gels that were used in the protein isolation kits were part of an analytical instrument or acted as parts of a filtration/purification system. CBP determined that the merchandise was classifiable under heading 8421, HTSUS, as parts of a filter and not under heading 9027, HTSUS, as parts of a chromatograph because the adsorbents performed the actual purification function. Under the premise that an article is considered a part of a primary article if the primary article cannot be used for its intended purpose without that part, CBP found that because the purpose of the protein isolation kits is to purify biomolecules and the kits cannot be used without the adsorbent gels, which perform the actual purification of the biomolecules, then the adsorbent gels are parts of the protein isolation kits and hence, classifiable under heading 8421. Asahi claims that the merchandise in this ruling is analogous to the Test Kits. However, the adsorbents in this ruling were involved in the actual purification function, while the Test Kits are not involved in filtering or during the filtering process. Thus this ruling is not applicable here. In HQ 950630, dated March 13, 1992, the merchandise under consideration were control knobs for washers and dryers. The issue was whether the knobs are classified as “parts for general use” or as parts used solely or principally with washers or dryers. CBP determined that the knobs were classifiable as parts used solely with washers and dryers because the knobs were designed to be utilized with washers or dryers and not with any other type of apparatus or machine, such as furniture, doors, windows, etc., and that the knobs were integral working parts of washers and dryers. Asahi cites this ruling, claiming it reiterates the CIT’s Bauerhin test that if an item is “solely and principally used” with another good, it is a “part” of that good. However, the issue in this ruling—whether an item is classifiable as “parts of general use” or as a part of a specific machine—differs from the issue in Asahi’s protest. In HQ 957599, dated August 29, 1995, the merchandise under consideration was a screw press used for concentrating sludge waste in sludge dewatering equipment. The screw press compacts sludge in a vertical chamber to concentrate the sludge by forcing the water out of it. The dewatered sludge is then burned to produce energy. The issue was whether the screw press was part of machinery used in filtering/purifying machines or in machinery for making pulp of fibrous material. CBP determined that the screw press was classifiable under heading 8421, HTSUS, as filtering/purifying machinery because it does not actually make pulp of fibrous cellulosic material and because CBP had previously classified screw press machinery under the precursor to the HTSUS—the Tariff Schedules of the United States (“TSUS”)—as filtering and purifying machinery. In HQ 962650, dated October 4, 1999, the merchandise under consideration were bubble jet ink cartridges used in color bubble jet printers. The issue was whether the ink cartridges were classified as printing ink or as parts for printers. Citing the factors the Court of International Trade enumerated in Mita, CBP held that the bubble jet ink cartridges are classifiable as parts for printers because the cartridges: are sold with ink inside; remain with the ink through the use by the printer; are standard devices for providing ink to the printer; and are not designed for reuse. As similarly explained, supra, in regard to the Mita cases, the issue in HQ 962650 is about categorizing a printing cartridge article on the basis that it is either a composite article or a complete article and then classifying it by applying the proper GRI rule. This is not the issue for the Test Kits as they are not classified on the basis that they are composite articles under a GRI 3(b) essential character analysis. Accordingly, previous CBP rulings do not contradict the analysis of the Test Kits under the controlling case law and thus do not direct finding that the Test Kits are classifiable as parts. Because the Test Kits do not meet the definition of parts, they are not classifiable under heading 8421, HTSUS, as parts of filtering machinery. Instead, the Test Kits are classifiable in heading 3824, HTSUS, because they are chemical mixtures that are not specifically provided for in another heading of the HTSUS. Therefore, the AGP-HA Integrity Test Solution Kit for Planova Filters are classified under heading 3824, HTSUS, as “[p]repared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of nature products), not elsewhere specified or included.” HOLDING: Pursuant to GRI 1, the AGP-HA Integrity Test Solution Kit for Planova Filters is classified under heading 3824, HTSUS, specifically subheading 3824.90.9290, HTSUSA, as “[p]repared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of nature products), not elsewhere specified or included: [o]ther: [o]ther.” The 2007/2008 general, column one, rate of duty was 5 percent, ad valorem. You are instructed to DENY the Protest, except to the extent reclassification of the merchandise as indicated above results in a partial allowance. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing the decision. A copy of this ruling should be attached to the CBP Form 19 and provided to the protestant as part of the notice of action on the protest. Sixty days from the date of the decision the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division