Request for Reconsideration of NY056869; Country of Origin of Orthene Pellet.

HQ H083656 June 16, 2015 CLA-2 OT:RR:CTF:TCM H083656 PTM CATEGORY: COUNTRY OF ORIGIN Robert Lawrence, Esq. Orrick, Herrington & Sutcliffe, LLP Columbia Center 1152 15th Street, N.W. Washington, D.C. 20005-1706 RE: Request for Reconsideration of NY056869; Country of Origin of Orthene Pellet. Dear Mr. Lawrence, We are writing in response to the request for reconsideration you filed on November 3, 2009, on behalf of your client, Arysta LifeScience N.A. (“Arysta”), concerning New York (NY) ruling N056869 regarding the tariff classification and country of origin on Orthene Pellet. Arysta is not contesting the classification of Orthene Pellet, but requests that U.S. Customs & Border Protection (“CBP”) reconsider its determination that the country of origin of the Orthene Pellet is India. In N056869, we described the product and its use as follows: The subject product, Orthene® Pellet, is a concentrated organophosphate insecticide containing Acephate (CAS-30560-19-1) (97.4%) as the active ingredient. Orthene® Pellet is a form of Acephate in which Acephate Technical powder (see NY Ruling Letter N045356) is extruded into pellets with the aid of a vinyl pyrollidone-vinyl acetate copolymer.  In this form, the merchandise may be applied directly by professional pest control operators after dilution with water. It is used as a spray to control cockroaches, ants, crickets, firebrats, earwigs, pillbugs, sowbugs, pantry pests, and wasps within industrial, institutional and commercial buildings, including restaurants, warehouses, stores, hospitals, hotels, manufacturing plants and ships. Acephate Technical powder is a product used for further manufacturing of direct application pesticides. It is not used in the field. Orthene® Pellet is intended for direct application by professional pest control applicators in the field. It is the opinion of this office that, for tariff classification purposes, Orthene® Pellet has the characteristics of a pesticidal preparation. *              *              * … [Y]ou import Acephate Technical from India in bulk powder form.  In the United States it is mixed with additional processing aids (such as the vinyl pyrollidone-vinyl acetate copolymer mentioned above) and converted to a solid pellet. The bulk powder has a tendency to clump or agglomerate. It has a short shelf life and also presents health and safety problems for formulators, end users, and the environment. Previous formulations of Acephate such as dusts and organic solvent sprays presented similar difficulties. The pelletized form affords a stable product reducing dust problems, odors, and safety hazards to the end users or the environment. It is also easier and more economical to apply since it requires simple dilution in water with no organic solvents, emulsifiers or binding agents. We have examined the technical literature in order to better understand the processing involved in pelletizing Acephate. In U.S. Patent 6,337,323 we found the following: “Acephate Technical powder having a minimum purity of about 97% by weight (preferably 98% or greater, more preferably 99% or greater and most preferably 99.5% or greater purity) is first subjected to a delumping step in a conventional mill or the like, if necessary to reduce or eliminate clumps of material that may have formed due to the material's agglomeration tendency described above. Delumped technical powder provides for better flowability during extrusion.Next, the delumped Acephate Technical powder can be blended with a small quantity (e.g., from about 0.5 to about 3.0% by weight) of a processing aid (other than water), such as the Agrimer VA-6 [the vinyl pyrollidone-vinyl acetate] copolymer described above. However, such a step is not necessary to achieve pellets in accordance with the present invention, but may assist flowability during extrusion, particularly for some insecticidal compounds…As described above, however, such processing aids are not essential in practicing the present invention. If desired, however, other processing aids besides Agrimer VA-6 can be used, as would be apparent to one of ordinary skill in the art. The blend thus formed, or the delumped technical, can be stored in drums until needed. Alternatively, delumping and blending, if carried out, can be part of a continuous in-line process.The Acephate Technical powder is then placed into a suitable apparatus for supplying the powder to the extruder. The supply can either be continuous over the course of a desired production run, or alternatively, measured batches can be supplied… Arysta states that Acephate, in its technical form, is a hydrophilic chemical that attracts moisture. Moisture breaks down the active ingredient in the Acephate Technical and causes the powder clump into cakes, which makes the product difficult to use. Conversion into pellet forms prevents the bulk powder from clumping. Additionally, the shelf life of the active ingredient improves when it is converted into pellet form: Orthene Pellet is stable at temperatures below 122 degrees Fahrenheit, while bulk Acephate Technical degrades within one year when stored at ambient temperature. Additionally, pelletizing the Acephate Technical reduces the toxicity of the product and makes it safe to handle. We consulted with CBP’s Laboratory and Scientific Service Directorate (“LSDD”) regarding Acephate Technical and orthene pellet, and it provided additional information. Acephate is a polar pesticide which is highly soluble in water, thus, it is hydrophilic. In addition to Orthene and Orthene pellet, Acephate Technical can be used in other formulated pesticides such as Asataf, Pillarthene, Kitron, Aimthane, Ortran, Ortho 12420, Ortril, and Chrevron RE 12420. Orthene in powder form can be used in dry applications (i.e. direct application) and liquid applications (i.e. measured and dissolved in water to be applied as a spray), however, Orthene Pellet is primarily suitable for use in liquid applications. The additive used, vinyl pyrollidone-vinyl acetate copolymer (aka PVP/VA and copovidone), is a water soluble, hygroscopic (attracts and holds water molecules) polymer which forms a film over an intended target material. In this case, it acts as a barrier from water moisture and therefore is most likely used to extend the shelf life of the product. There are no chemical differences between the Acephate in Acephate Technical and the Acephate in Orthene Pellets.  The Acephate Technical did not undergo any chemical reactions or changes in the process of manufacture to make the Orthene Pellets. Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. By enacting 19 U.S.C. §1304, Congress intended to ensure “that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940). Section 134.1 (b), CBP Regulations (19 C.F.R. §134.1(b)), defines “country of origin” as the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of the marking laws and regulations. Section 134.35(a), CBP Regulations (19 C.F.R. §134.35(a)), states: Articles other than goods of a NAFTA country. An article used in the United States in manufacture which results in an article having a name, character, or use differing from that of the imported article, will be within the principle of the decision in the case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98). Under this principle, the manufacturer or processor in the United States who converts or combines the imported article into the different article will be considered the "ultimate purchaser" of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part. In determining whether a substantial transformation occurs in the manufacture of chemical products such as insecticides, CBP has consistently examined the complexity of the processing, and whether the final article retains the essential identity and character of the raw material. In NY N056869, we interpreted these rules as they apply to Orthene Pellet. In that ruling, we stated, in pertinent part: In the instant case, we find that the processing of Acephate Technical powder into Orthene® Pellet involves only a physical transformation. Orthene® Pellet in its “new form” is still 97.4 per cent pure Acephate active ingredient. The pelletization is directed to create a more chemically stable, low moisture active ingredient product. No other active ingredient is added and no chemical changes are made. The addition of processing aids during pelletization, while serving to assist flowability during extrusion, does not transform the imported chemical into a new article with a new end use. Pellets have the practical advantages of reducing dust safety problems, eliminating odors, increasing stability, and facilitating use. The end use is not changed. The end user shifts from a manufacturer/formulator to a field applicator, but there is no impact on the insecticide. This scenario has been addressed in numerous court and administrative decisions. We find that the country of origin of the finished insecticide will be the country of origin of the active ingredient, namely India. Upon reconsideration, we find that our country of origin determination in NY N056869 was correct. CBP has consistently found that the processing of bulk product into a separate form does not constitute a substantial transformation for the purposes of determining the country of origin of a product. For example, in HQ H197582 (Aug. 9, 2012), CBP found that chemicals imported in bulk and then tested, characterized and packaged for use as a certified reference standard did not undergo a substantial transformation because the operation did not change the chemical composition of the products and the primary function of the chemicals was unaltered. Similarly, in HQ H734558 (Jul. 22, 1992), CBP did not find a substantial transformation when an herbicide was exported in bulk to France where it was encapsulated into a water-soluble film. The operation did not change the chemical composition of the herbicide; it simply facilitated its use as an herbicide in the field. In HQ 561975 (Apr. 3, 2002), CBP found that an anesthetic drug imported into the United States in bulk form and processed into dosage form by filtering and packaging was found not to have undergone a substantial transformation because the imported bulk drug retained its predetermined medical use. In HQ 562889 (Jan. 21, 2004), CBP held that the enteric coating of lasoprazole did not cause a substantial transformation because it did not change the chemical composition of the active pharmaceutical ingredient, it simply altered the delivery mechanism. Arysta cites to Drexel Chemical Co. v. United States, 27 CIT 804 (2003) for the proposition that a bulk material that remains chemically unchanged nevertheless can still be found to undergo a substantial transformation when the physical form of the product is changed. In that case, Drexel subjected a bulk herbicide, Diuron Technical, to an air-milling process to grind the product into particles of five microns or less. The grinding process did not change the intrinsic structure of the Diuron molecule, however, it freed valance bonds which enabled the Diuron to adsorb to a plant leaf in large enough quantities to act as an herbicide. See 27 CIT at 807. Further, silica and clay was added to the Diuron in solution to assist the adhesion process of the molecule to the plant leaf. Diuron is insoluble in water, so without the fine grinding, not enough of the Diuron could be absorbed into the plant leaf for the product to be effective. Id. The court found a substantial transformation had occurred because “the final product has gained new identifying characteristics in addition to the Diuron molecule…the air milling process causes not only a physical change in size of the particle, but also a chemical change as valance bonds are freed, enabling the Diuron molecule to adsorb to a plant leaf.” Id. at 810. Further, for herbicides and pesticides, Arysta states that Drexel provides that a process that affects the raw material’s ability to dissolve in or attract water does not effect a substantial transformation. While a change in chemical composition may not be per-se required for a substantial transformation to be found, we nevertheless find that no substantial transformation has occurred in this instance. The Diuron herbicide is distinguishable from Acephate Technical in several respects. The Diuron herbicide was a solid material that needed to be ground in order to dissolve in water, while the Acephate Technical here is a powder that may be pelletized to improve shelf life. Furthermore, the silica and clay added to the Diuron in solution was instrumental in assisting the adhesion of the Diuron molecule to the surface of the plant leaf. Thus, the Diuron product that was the subject of the Drexel case was incapable of being used as an herbicide without the air-milling and combination with silica and clay. Consequently, the court’s focus in Drexel was on the usability of the product at issue as opposed to the nature of the manufacturing process involved. In this case, the Acephate Technical chemical is unchanged by the pelletization. In contrast to the Diuron herbicide, no grinding is necessary to achieve water solubility for Acephate Technical. It is a hydrophilic substance capable of dissolving in water and is capable of use as a pesticide without pelletization. Pelletization simply improves the shelf life of the Acephate Technical and makes it easier to be handled. It also helps prevent the powder from clumping into cakes, although the clumping may not occur for some time and may not occur at all. However, the character and use of Acephate Technical remains unchanged: it is a pesticide that is used to kill insects on plants. Consequently, the pelletization simply assists in the delivery method of the pesticide. Acephate Technical may also be dissolved in water and applied as a pesticide without pelletization. Based on the foregoing, we find that the holding in Drexel is inapplicable to the present case. LSSD stated that pelletization did not change the chemical composition or function of the product. There is no chemical difference between the Acephate in the Technical bulk powder and the Acephate in the Orthene pellets. LSSD found that formulating Acephate Technical with other additives essentially aids in the delivery of the pesticide for its intended use. Further, the only transformation is a physical one: converting the powder Acephate into a pellet. Arysta has produced no evidence that contradicts LSSD’s findings. Further, it is “well settled that the methods of weighting, measuring and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Aluminum Company of America v. United States, 477 F.2d 1396, 1398. Absent a conclusive showing that the testing method used by the CBP laboratory is in error, or that customs’ laboratory results are erroneous, there is a presumption that the results are correct. See Exxon Corp v. United States, 462 F. Supp. 378. Because the chemical composition and function of the Acephate Technical remains unchanged, we find that no substantial transformation has occurred and that the country of origin is India. NY N056869 is AFFIRMED. Sincerely, Ieva O’ Rourke, Chief Tariff Classification and Marking Branch