The country of origin, status under the North American Free Trade Agreement (NAFTA) of Dificid tablets; NAFTA Preference Override; ARTICLE 509

N243567 July 26, 2013 MAR-2 OT:RR:NC:2:238 CATEGORY: MARKING Mr. Eamon Doran Astra Zeneca Pharmaceuticals LP 1800 Concord Pike Wilmington, DE 19850 RE: The country of origin, status under the North American Free Trade Agreement (NAFTA) of Dificid tablets; NAFTA Preference Override; ARTICLE 509 Dear Mr. Doran: In your letter dated June 28, 2013, you requested a country of origin and North American Free Trade Agreement (NAFTA) eligibility status determination for Dificid tablets. A marked sample was not submitted with your letter for review. The subject product, Dificid tablets, is a macrolide antibacterial drug that is indicated for treatment of Clostridium difficile-associated diarrhea in adults 18 years of age and older. Fidaxomicin, the active pharmaceutical ingredient (API) of Dificid tablets, is imported into Canada from India and is stated to be classified in subheading 2941.90, HTSUS, Harmonized tariff Schedule of the United States, which provided for “Antibiotics: Other....” Fidaxomicin, in granular form will be used as the API in the final formulation of Dificid tablets. In your letter, you stated that Fidaxomicin (Indian-origin) will be mixed with various other ingredients from several different countries (U.S., Spain, Ireland, Germany and France) via a wet granulation process, compressed into tablets and then coated. The other ingredients are excipients such as pregelatinized starch, hydroxypropyl cellulose, magnesium stearate, sodium starch glycolate, microcrystalline cellulose and butylated hydroxytoluene. After formulation into the finished Dificid tablets, Astra Zeneca will ship Dificid tablets from Canada in bulk drums to the United States for final packaging and export to Brazil. Upon importation into the United States, the Dificid tablets are stated to be classified in subheading 3004.20, HTSUS, which provides for “Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale: Containing other antibiotics….” General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if-- (i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that-- (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or (B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; Based on the stated classifications provided, Dificid tablets qualify as originating under GN12(t)/Chapter 30(5). The good will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. In addition, pursuant to GN 12(a)(i), in order to receive preferential duty treatment under NAFTA, the goods must qualify to be marked as goods of Canada. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. 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 U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“NAFTA”), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations. Section 134.1(b) of the regulations, 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. Section 134.1(j) of the regulations, provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a “good of a NAFTA country” may be marked with the name of the country of origin in English, French or Spanish. Part 102 of the regulations, sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that, 19 C.F.R. § 102.11(b)(1) is the hierarchical rule that must be applied. Under this rule, the country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good. In this case, the active ingredient, fidaxomicin (Indian-origin), imparts the essential character of the good and it is the only ingredient that is not allowed to change tariff classification under the Section 102.20 rule. We find that the country of origin for marking purposes of the imported Dificid tablets is a good of India. However, 19 C.F.R. § 102.19(a) contains a “NAFTA preference override”: Except in the case of goods covered by paragraph (b) of this section, if a good which is originating within the meaning of § 181.1(q) of this chapter is not determined under § 102.11(a) or (b) or § 102.21 to be a good of a single NAFTA country, the country of origin of such good is the last NAFTA country in which that good underwent production other than minor processing, provided that a Certificate of Origin . . . has been completed and signed for the good. Section 181.1(q), Customs Regulations, provides that “[o]riginating . . . means a good or material qualifies as originating in the United States, Canada, and/or Mexico under the rules set forth in General Note 12, HTSUS, and the appendix to this part.” As determined above, the Dificid tablets are originating goods under section 181.1(q). The NAFTA preference override applies to originating goods for which the country of origin found under sections 102.11(a) and (b) and 102.21 is not a NAFTA country, which is the situation here. Therefore the Dificid tablets qualify for NAFTA preferential treatment, and the country of origin under 19 C.F.R. § 102.19(a) is Canada, the last NAFTA country in which the good underwent production, provided that a Certificate of Origin is completed and signed for the good. This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 181). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Judy Lee at (646) 733-3033. Sincerely, Thomas J. Russo Director National Commodity Specialist Division