Eligibility of STPP granular for preferential tariff treatment under the U.S.-Israel FTA; substantial transformation

HQ H083961 February 17, 2010 CLA-2 OT:RR:CTF:VS H083961 KSG CATEGORY: Classification Barry D. Reichenberg American Metals & Chemical Corporation P.O. Box 1048 Dania, FL 33004 Re: Eligibility of STPP granular for preferential tariff treatment under the U.S.-Israel FTA; substantial transformation Dear Mr. Reichenberg: This is in reply to your letter dated October 29 11, 2009, concerning the eligibility of sodium tripolyphosphate (“STPP”) granular for preferential tariff treatment under the Trade Area Agreement between the U.S. and Israel. FACTS: This case involves imported STPP which you state is classified in subheading 2835.31.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”). You state that Chinese STPP powder is sent to Israel where it is processed into granular form via a spray-drier. You describe the Israeli processing as including: dissolving the STPP powder in water into a slurry, and then spraying the slurry in a spray tower through nozzles into a stream of heated air. You state that this would increase the particle size and reduce its bulk density from about 50-60 lbs. per cubic foot to about 35 lbs. per cubic foot. You state that the processing would change the physical form of the STPP, but that its chemical composition is not changed. However, you state that the uses of powder and granular form are different. In addition, some anyhydrous STPP powder will be converted to sodium tripolyphosphate hexahydrate, which you state differs chemically from the STPP powder as the molecule would contain six parts of water. No details of the processing of this product was submitted. ISSUE: Whether the imported STPP granular is eligible for preferential tariff treatment pursuant to the Trade Area Agreement between Israel and the U.S. (“U.S.-Israel FTA”)? LAW AND ANALYSIS: Under the U.S.-Israel FTA, eligible articles the growth, product, or manufacture of Israel which are imported directly to the U.S. from Israel qualify for duty-free treatment as “products of Israel” provided ; (i) each article is the growth, product or manufacture of Israel or is a new or different article of commerce that has been grown, produced or manufactured in Israel; (ii) each article is imported directly from Israel (or directly from the West Bank, the Gaza Strip or a qualifying industrial zone as defined in general note 3(v)(G)to the tariff schedule) into the customs territory of the United States; and (iii) the sum of— (A) the cost or value of materials produced in Israel, and including the cost or value of materials produced in the West Bank, the Gaza Strip or a qualifying industrial zone pursuant to general note 3 (a)(v) to the tariff schedule plus (B) the direct costs of processing operations performed in Israel, and including the direct costs of processing operations performed in the West Bank, the Gaza Strip or a qualifying industrial zone pursuant to general note 3(a)(v) to the tariff schedule, is not less than 35% of the appraised value of each article at the time it is entered. See 19 U.S.C. 2112 note, and General Headnote 8(b), of the Harmonized Tariff Schedule of the United States (“HTSUS”). Clearly, the STPP powder is not wholly the growth, product, or manufacture of Israel. Therefore, the issue in this case is whether the Chinese-origin STPP powder is substantially transformed in Israel when processed into granular form. A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). In Headquarters Ruling Letter (“HRL”) 559932, dated October 8, 1996, Customs ruled that imported Kathon MWX bulk granular microbicide (“MWX”) was not substantially transformed in the U.S. because the MWX and the active ingredient were chemically similar and the imported product did not undergo a chemical reaction in the U.S. by being loaded onto silica. In HRL 734558, dated July 22, 1992, Customs ruled that there was no substantial transformation when a herbicide was encapsulated into a water-soluble film, since the operation did not change the chemical composition but only facilitated its use. Customs ruled in HRL HQ 561975, dated April 3, 2002, that an anesthetic drug imported in bulk form and processed into dosage form was not substantially transformed. Customs ruled in several rulings that purification and/or filtration of a product and putting it into smaller packaging or measured doses does not result in a substantial transformation. See HRL 561544, May 1, 2000. In HRL 735146, dated November 15, 1993, Customs ruled that imported acetaminophen powder processed into granules in the U.S. were not substantially transformed. Based on the above rulings, we find that the STPP powder, processed in Israel into granular form, is not substantially transformed. While its uses may be changed, its chemical character remains the same. Therefore, it would not be considered a product of Israel and would not be eligible for preferential tariff treatment under the U.S.-Israel FTA. In addition, it does not appear that the conversion of STPP powder into sodium tripolyphosphate hexahydrate would be a substantial transformation as there is no true chemical bonding change. However, you submitted no details on this conversion. If you disagree, you may wish to submit further information and make a new ruling request. HOLDING: The imported STPP is not considered a product of Israel under the U.S.-Israel FTA and would not be eligible for preferential tariff treatment under the U.S.-Israel FTA. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs official handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation & Special Programs Branch