Eligibility of Ubiquinol beadlets for partial duty exemption under subheading 9802.00.50, HTSUS

N120943 September 8, 2010 CLA-2-98:OT:RR:NC:2:228 CATEGORY: Classification TARIFF NO.: 9802.00.50 Mr. Steven Lehat Steven B. Lehat Customs, International Trade, and Administrative Law Practice 1025 Connecticut Avenue N.W. Washington, DC 20036 RE: Eligibility of Ubiquinol beadlets for partial duty exemption under subheading 9802.00.50, HTSUS Dear Mr. Lehat: In your letters dated August 6, 2010 and August 25, 2010, on behalf of OmniActive Health Technologies, Inc., West Short Hills, NJ, you requested a tariff classification ruling. Additional information, samples, and a production flow chart were submitted with your second letter. The samples were examined and disposed of. U.S.-made Ubiquinol crystals (minimum 96 percent Ubiquinol (coenzyme Q10), maximum 2 percent ubiquinone, and less than one percent water) will be exported to India and processed into Ubiquinol 25% beadlets. In India, the crystals will be combined with tocopherols and placed into a solvent to reduce the size of the crystalline particles. The mixture is then combined with a carrier matrix composed of cellulosic gums, and dispersed through a sprayer onto sugar spheres, creating the beadlet particles. The beadlets are then dried and placed into containers. A sample of the Ubiquinol crystals indicates the exported material is in the form of a yellow-colored powder; the sample of the imported beadlets is in the form of yellow-colored, free-flowing, tiny spheres. The beadlets will be used as ingredients in human dietary supplements. In your letter, you state the purpose of processing into beadlets is to make the Ubiquinol easier to use and give it a longer shelf life. The molecular structure and formula of Ubiquinol will not change, and the Chemical Abstracts Service number, 992-78-9, is the same for the exported and imported product. Further, you assert the creation of beadlets only changes the form, not the character or use of the exported Ubiquinol crystals, which were complete for their intended use as dietary supplements when exported. Finally, you advise that the exported crystals and the imported beadlets are marketed and sold to customers as separate products for the same use. Subheading 9802.00.50, Harmonized Tariff Schedule of the United States (HTSUS), provides a partial duty exemption for articles that are returned after having been exported to be advanced in value or improved in condition by means of repairs or alterations, provided that the documentary requirements of 19 CFR 10.8 are met. For qualifying articles, duty is assessed only on the cost or value of the foreign processing. In circumstances where the operations abroad destroy the identity of the exported article or create a new or commercially different article, entitlement to subheading 9802.00.50, HTSUS, is precluded. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1956), aff’d C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corporation v. United States; 3 CIT 9 (1982). Additionally, entitlement to this tariff treatment is not available where the exported articles are incomplete for their intended purposes prior to their foreign processing and the foreign processing is a necessary step in the preparation or manufacture of the finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (CIT 1978), aff’d, 599 F.2d 1015 (Fed. Cir. 1979). Based on the information you have provided we find that the imported Ubiquinol beadlets, processed as described above, are eligible for a partial duty exemption pursuant to subheading 9802.00.50, HTSUS, provided that the documentation requirements of 19 CFR 10.8 are met. This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at 301-575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). 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 Stanley Hopard at (646) 733-3029. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division