HQ 225535: Removal of merchandise from a FTZ by a TIB entry; date of importation; subheadings 9813.00.05, 9813.00.30, HTSUS

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 225535

                        November 29, 1994




CON-9-09/FOR-2-03-CO:R:C:E   225535 CC 

CATEGORY:  Entry

John W. Ropa
Operations Manager, International Logistics
Abbott Laboratories
One Abbott Park Road
Abbott Park, IL  60064-3500

RE:  Removal of merchandise from a FTZ by a TIB entry; date of   importation; subheadings 9813.00.05, 9813.00.30, HTSUS

Dear Mr. Ropa:

     This is in response to your letter concerning the removal of
pharmaceutical and diagnostic products from a foreign trade zone
(FTZ) by a temporary importation under bond (TIB) entry.  

FACTS:

     You state that Abbott Laboratories (Abbott) proposes to
admit to its FTZ ingredients for manufacture of drug substances
(chemical compounds and diagnostic reagents).  These manufactured
drugs, in bulk or dosage form, would later be imported from the
FTZ for specified research and development testing required by
the Food and Drug Administration (FDA).  You have submitted an
attachment listing various categories of clinical tests.    

     You state that the required research and testing will be
conducted as an integral part of clinical trials to be performed
by Abbott and its subcontractors to whom Abbott will supply the
experimental compounds, free of charge.  The drug substances will
be used in both bulk and final dosage forms (i.e., tablets,
capsules, granules, and solutions contained in ampuls); the
reagents will be similarly used bulk (liters) and in unit of
measure issues (i.e., vials of specified milliliters).

     All of the drugs and reagents, except those drugs and
reagents which will be used for stability testing and retention
samples, will be administered to and consumed by the patients
participating in the clinical trials, or otherwise physically
destroyed in conjunction with the clinical trials.  Drugs and
reagents used for stability testing and retention samples may or
may not be entered from the FTZ.  If they are to be entered, they
will be appropriately classified and imported duty paid. 

     The experimental chemical compounds which are imported as
bulk drug substances or reagents will be processed into dosage
forms by Abbott or by one of its subcontractors.  Ownership of
the drugs and reagents will always be held by Abbott. 
Subsequently, these compounds and reagents will be consumed in
the clinical trials in the same manner as the premeasured
dosages.  

     You state that Abbott will maintain records to show the
place, date, and other relevant circumstances pertaining to the
consumption of the tablets, capsules, granules, solutions, or
units of use as required by the FDA protocols.  Also, Abbott will
retain strict inventory control over every importation, and all
imported material.  You state that all record keeping and
inventory procedures will be sufficient to satisfy the
requirements of subheading 9813.00.30 of the Harmonized Tariff
Schedule of the United States (HTSUS) and Subchapter XIII U.S.
Note 3, Subheading 9813.00.05, HTSUS, and U.S. Note 2(b).

ISSUE:

     What is the date of importation for merchandise removed from
a FTZ by a TIB entry?

     Whether the merchandise is eligible for entry under
subheading 9813.00.05, HTSUS, or under subheading 9813.00.30,
HTSUS?

LAW AND ANALYSIS:

     You have asserted that the date of importation is the date
merchandise is removed from the FTZ by the TIB entry, and not
when merchandise is admitted to a FTZ.  An importation is the
arrival of goods at a United States port from a foreign port or
place with the intent then and there to unlade them.  United
States v. Estate of Boshell, 14 Ct. Cust. App. 273, T.D. 41884
(1922); Porto Rico Brokerage Co. United States, 76 F.2d 605, 23
CCPA 16 (1935); East Asiatic Co., Inc. v. United States, 27 CCPA
364 (1940); Sherwin-Williams Co. v. United States, 38 CCPA 13
(1950); United States v. John V. Carr & Sons, 266 F. Supp. 175,
aff'd 396 F.2d 1017, 55 CCPA 111 (1967).  Consequently, the
admission of merchandise into a FTZ is an importation.  

     In addition, section 101.1(h) of the Customs Regulations (19
CFR 101.1(h)) defines the "date of importation" as the following: 
     
          ... in the case of merchandise imported otherwise
     than by vessel, the date on which the merchandise
     arrives within the Customs territory of the United
     States.  In the case of merchandise imported by vessel,
     "date of importation" means the date on which the
     vessel arrives within the limits of a port in the
     United States with intent then and there to unlade such
     merchandise. 
     
     We have ruled for merchandise removed from a FTZ under a TIB
entry, the date of importation is the date defined by section
101.1(h) of the Customs Regulations.  See C.S.D. 79-454 of April
2, 1979, and C.S.D. 81-119 of November 12, 1980.  Consequently,
the date of importation is the date the merchandise is admitted
into the FTZ.  In addition, we found in the above-cited decisions
that if the merchandise has been in a FTZ for longer than 1 year,
a TIB entry for nonprivileged foreign merchandise may not be
made.                                                       

     Under subheading 9813.00.30, HTSUS, articles intended solely
for testing, experimental, or review purposes may be entered
duty-free, temporarily, under bond for their exportation within
one year from the day of importation unless an extension for one
or more additional periods, which when added to the initial
period does not exceed three years, is granted by the district
director.  Likewise, articles to be repaired, altered or
processed (including processes which result in articles
manufactured or produced in the United States) may be entered
under subheading 9813,00.05, HTSUS.

     We have held that if drugs are administered to selected
patients as a means of testing the drug itself and its effect on
the general class of humans, as opposed to the effect on a
particular patient's malady, then the procedure employed to
obtain FDA approval of a chemical compound is a test or
experiment within subheading 9813.00.30, HTSUS.  See Headquarters
Ruling Letter (HRL) 223589, dated March 20, 1992.  

     Under U.S. Note 3, upon satisfactory proof that any article
admitted under subheading 9813.00.30, HTSUS, has been destroyed
because of its use for any purpose provided for therein, the
obligation under the bond to export such article shall be treated
as satisfied.  

     Pursuant to 19 CFR 10.39(a), in the case of articles entered
under subheading 9813.00.30, HTSUS, which are destroyed because
of their use for the purposes of importation, the bond charge
shall not be canceled unless there is submitted to the district
director a certificate of the importer that the articles were
destroyed during the course of a specifically described use, and
the district director is satisfied that the articles were so
destroyed as articles of commerce within the period of time
during which the articles may remain in the Customs territory of
the United States under bond.

     "An article is destroyed when its value, usefulness, and
that which makes it what it is are completely lost."  United
States v. Pastene & Co., 22 Treas. Dec. 725, at 727, T.D. 32458
(April 17, 1912).  Any article undergoing testing has not lost
its value or usefulness, while it remains under testing, unless
it is destroyed by the testing.  An article must be rendered
utterly worthless to be considered destroyed.  H.A. Johnson Co.
v. United States, 21 Cust. Ct. 56, at 61, C.D. 1127 (August 25,
1948).

     Under C.S.D. 80-24, dated June 30, 1979, we have stated that
the "Customs Service, not only under the present law but under
its predecessor, section 308(4), Tariff Act of 1930, as amended,
has repeatedly ruled that substances or drugs imported for
testing which are not destroyed or consumed by such testing, must
be destroyed."  In addition Customs has held that consumption by
selected patients participating in the test of pharmaceuticals,
would be deemed a destruction for purposes of section 10.39(a). 
See HRL 222827 of March 1, 1991, and HRL 223589 of March 20,
1992.

     From the information submitted, it is unclear whether a
clinical test takes place under subheading 9813.00.30, HTSUS, in
each of the six category of tests you list in the attachment.  In
addition, from the information provided, we are unable to
determine whether a destruction takes place for purposes of
section 10.39(a) for each of these categories.  To make these
determinations we would need more information concerning the
proposed testing.  

HOLDING:

     When merchandise is removed from a FTZ by a TIB entry, the
date of importation is the date the goods are admitted to the
FTZ. 


                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division