The tariff classification of Propoxycarbazone-sodium (CAS-181274-15-7) and OLYMPUS™ 70% Water Dispersible Granular Herbicide; and the applicability of subheading 9802.00.50, HTS, to U.S.-origin Propoxycarbazone-sodium returned to the U.S. after exportation to Germany for formulation and granulation

NY R01874 May 6, 2005 CLA-2-:RR:NC:2:238 R01874 CATEGORY: Classification TARIFF NO.: 2935.00.7500; 3808.30.1500; 9802.00.50 Mr. Stephen R. Johnsen Bayer Corporate and Business Services LLC 100 Bayer Road Pittsburgh, PA 15205-9741 RE: The tariff classification of Propoxycarbazone-sodium (CAS-181274-15-7) and OLYMPUS™ 70% Water Dispersible Granular Herbicide; and the applicability of subheading 9802.00.50, HTS, to U.S.-origin Propoxycarbazone-sodium returned to the U.S. after exportation to Germany for formulation and granulation Dear Mr. Johnsen: In your letter dated March 7, 2005, resubmitted on April 29, 2005, on behalf of your client, Bayer CropScience LP (BCS), you requested a tariff classification ruling on Propoxycarbazone-sodium (trade name: OLYMPUS™ Technical) and OLYMPUS™ 70% Water Dispersible Granular Herbicide (EPA Reg. No. 264-809), a formulated herbicide containing (by weight) 70% Propoxycarbazone-sodium as the active ingredient. In addition, you requested a ruling on the applicability of subheading 9802.00.50, HTS (partial duty exemption) to U.S.-origin Propoxycarbazone-sodium exported to Germany for formulation and granulation (to make it more marketable and user-friendly), and then returned to the U.S. BCS produces Propoxycarbazone-sodium at its Kansas City plant. You indicate that, once produced, it is complete for its intended use as an herbicide. However, due to its dry, powdery consistency, it will be exported to Germany for formulation with inert ingredients, followed by granulation, to make it more marketable and user-friendly. You also indicate that no chemical reaction occurs during formulation or granulation. The formulated and granulated Propoxycarbazone-sodium, now known as OLYMPUS™ 70% WDG, will then be returned to the United States and sold as an herbicide for post-emergence control of certain grasses and broadleaf weeds in wheat. With respect to the tariff classification of Propoxycarbazone-sodium, since this compound contains a heterocyclic ring with nitrogen hetero-atoms only, you believe it is correctly classified under heading 2933, HTS. However, pursuant to Explanatory Note 29.35, HTS, Propoxycarbazone-sodium also meets the criteria for classification as a sulfonamide under heading 2935, HTS. Note 3 to Chapter 29, HTS, states that “Goods which could be included in two or more headings of this chapter are to be classified in that one of those headings which occurs last in numerical order.” Accordingly, pursuant to note 3 to Chapter 29, HTS, the applicable subheading for Propoxycarbazone-sodium will be 2935.00.7500, Harmonized Tariff Schedule of the United States (HTS), which provides for “Sulfonamides: Other: Other: Products described in additional U.S. 3 to section VI.” The rate of duty will be 6.5 percent ad valorem. The applicable subheading for OLYMPUS™ 70% Water Dispersible Granular Herbicide will be 3808.30.1500, HTS, which provides for “Herbicides, anti-sprouting products and plant-growth regulators: Containing any aromatic or modified aromatic herbicide, anti-sprouting agent or plant-growth regulator: Other.” The rate of duty will be 6.5 percent ad valorem. This merchandise may be subject to the requirements of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), which are administered by the U.S. Environmental Protection Agency, Office of Pesticide Programs. You may contact them at 1200 Pennsylvania Ave., NW, Washington, DC 20460, telephone (202) 260-2090. Articles returned to the United States after having been exported to be advanced in value or improved in condition by repairs or alterations may qualify for the partial duty exemption under subheading 9802.00.50, HTS, provided the foreign operation does not destroy the identity of the exported articles or create new or commercially different articles through a process of manufacture. See A.F. Burstrom v. United States, 44CCPA 27, C.A.D. 631 (1956), aff’g C.D. 1752, 36 Cust. Ct. 46 (1956); Guardian Industries Corp. v. United States, 3 CIT 9 (1982). Accordingly, entitlement to this tariff treatment is precluded where the exported articles are incomplete for their intended purpose prior to the foreign processing, and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Dolliff & Company, Inc. v. United States, 455 F. Supp. 618 (1978), aff'd, 599 F.2d 1015 (Fed.Cir. 1979). Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations when returned to the United States, provided the documentary requirements of §10.8, Bureau of Customs and Border Protection Regulations, are satisfied. In our opinion, the operations performed in Germany do not destroy the identity of the Propoxycarbazone-sodium, because the chemical composition has not been changed by the addition of the inert ingredients (formulation) or by the granulation process. Furthermore, the foreign operations do not appear to result in any significant change in the quality or character of the herbicide, since it retains its weed-killing properties. Therefore, on the basis of the information submitted, and consistent with the court cases mentioned above, and HRL 555740 and HRL 556320, we find that the formulation and granulation processes carried out in Germany constitute alterations within the meaning of subheading 9802.00.50, HTS. Accordingly, U.S.-origin Propoxycarbazone-sodium exported to Germany for formulation and granulation (to make it more marketable and user friendly) will be entitled to classification, upon return to the U.S., under subheading 9802.00.50, HTS. Upon compliance with the documentary requirements of §10.8, Bureau of Customs and Border Protection Regulations, the duty to be assessed will be only on the value of the foreign processing. 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 Harvey Kuperstein at 646-733-3033. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division