Prototypes; Subheading 9817.85.01, HTSUS; EPX-16006

HQ H029331 June 13, 2008 OT-RR:CTF:VS H029331 GOB CATEGORY: Classification Jon Mason Chemical Inventory Manager EPIX Pharmaceuticals, Inc. 4 Maguire Road Lexington, MA 02421 RE: Prototypes; Subheading 9817.85.01, HTSUS; EPX-16006 Dear Mr. Mason: This is in response to your correspondence of May 22, 2008 on behalf of EPIX Pharmaceuticals, Inc. (“EPIX”). In response to our request, you provided additional information on June 4 and June 5, 2008. Our ruling follows. FACTS: You describe the pertinent facts as follows. EPIX will import EPX-16006, which is a drug substance in the pre-production stage, for the sole purpose of pre-clinical and clinical studies to support human therapeutic use. The effectiveness and safety of EPX-16006 will be tested in a controlled environment in scientific studies. The total quantity of EPX-16006 that EPIX requires to conduct the pre-clinical and clinical studies is estimated at between two and five kilograms (between 4.4 and 11 pounds) for the period of the present through December 2009. None of the EPX-16006 imported by EPIX will be sold or made available commercially. You state that you believe that the EPX-16006 is not subject to quantitative restrictions, antidumping orders or countervailing duty orders. ISSUE: Whether EPX-16006 is eligible for classification under subheading 9817.85.01, HTSUS? LAW AND ANALYSIS: Subheading 9817.85.01, HTSUS, provides for duty-free treatment for “[p]rototypes to be used exclusively for development, testing, product evaluation, or quality control purposes.” U.S. Note 7 to Subchapter XVII, HTSUS, provides in pertinent part as follows: The following provisions apply to heading 9817.85.01: (a) For purposes of this subchapter, including heading 9817.85.01, the term “prototypes” means originals or models of articles that- (i) are either in the preproduction, production, or postproduction stage and are to be used exclusively for development, testing, product evaluation, or quality control purposes; and (ii) in the case of originals or models of articles that are either in the production or postproduction stage, are associated with a design change from current production (including a refinement, advancement, improvement, development, or quality control in either the product itself or the means of producing the product). . . . (b) (i) Prototypes may be imported only in limited noncommercial quantities in accordance with industry practice. (ii) Except as provided by the Secretary of the Treasury, prototypes or parts of prototypes may not be sold after importation into the United States or be incorporated into other products that are sold. (c) Articles subject to quantitative restrictions, antidumping orders, or countervailing duty orders may not be classified as prototypes under this note. Articles subject to licensing requirements, or which must comply with laws, rules, or regulations administered by agencies other than the United States Customs Service before being imported, may be classified as prototypes if they comply with all applicable provisions of law and otherwise meet the definition of “prototypes” under paragraph (a). [Emphasis in original.] “Prototypes” are defined in U.S. Note 7(a), in part, to be originals or models of articles that are either in the preproduction, production, or postproduction stage and are to be used exclusively for development, testing, product evaluation, or quality control purposes. In HQ 563136, dated February 8, 2005, Customs and Border Protection (“CBP”) held that slightly over 100 kilograms of a chemical compound imported to assess its efficacy as an active ingredient in a drug to treat HIV-1, Human immunodeficiency virus was eligible for classification in subheading 9817.85.01, HTSUS. In NY R02705, dated November 4, 2005, CBP held that certain pharmaceutical compounds for use in the early stages of drug discovery testing and research were eligible for classification in subheading 9817.85.01, HTSUS. You state that the EPX-16006: is in the preproduction stage and will be used exclusively for development, testing, product evaluation, or quality control purposes; will be imported only in noncommercial quantities; will not be sold or incorporated into other products which are sold; and you believe that the EPX-16006 is not subject to quantitative restrictions, antidumping orders or countervailing duty orders. Based upon the facts presented, we find that the EPX-16006 is eligible for classification in subheading 9817.85.01, HTSUS, as: “[p]rototypes to be used exclusively for development, testing, product evaluation, or quality control purposes,” provided that all of the requirements referenced above are complied with. Please note that, pursuant to Note 7(c), for eligibility under subheading 9817,85.01, HTSUS, the EPX-16006 may not be subject to quantitative restrictions, antidumping orders, or countervailing duty orders. Further with respect to Note 7(c), if the EPX-16006 is subject to any licensing requirements or must comply before importation with the laws, rules or regulations of any agency other than CBP before being imported, it must comply with all applicable provisions of law in order to be eligible for subheading 9817.85.01, HTSUS. HOLDING: Based upon the facts presented and as provided above, the EPX-16006 is eligible for classification in subheading 9817.85.01, HTSUS, as: “[p]rototypes to be used exclusively for development, testing, product evaluation, or quality control purposes,” provided that all of the requirements referenced above are complied with. A copy of this ruling letter should be attached to the entry documents filed at the time the subject goods are entered. If the documents have been filed without a copy, this ruling letter should be brought to the attention of CBP. Sincerely, Monika R. Brenner Chief Valuation & Special Programs Branch