H327732

HQ H327732 January 19, 2023 OT:RR:CTF:VS H327732 AP CATEGORY: Origin Richard A. Mojica, Member Miller & Chevalier 900 16th Street N.W. Washington, D.C. 20006 RE: Country of Origin; Cyclopure DEXSORB® Absorbent; Section 301 trade remedy Dear Mr. Mojica: This is in response to your October 4, 2022 ruling request, on behalf of Cyclopure, Inc. (“importer”), regarding the country of origin of the Cyclopure DEXSORB® absorbent (“DEXSORB®”) for purposes of Section 301 measures. A meeting with counsel and the importer was held on December 23, 2022. FACTS: DEXSORB® is a polymer absorbent used for removal of per- and polyfluoroalkyl substances (“PFAS”) and organic micropollutants from water. It is comprised of beta-cyclodextrins, rigid crosslinking monomers called tetrafluoroterephthalonitrile (“TFN”), and choline chloride. Apart from crosslinking elements, the beta-cyclodextrins make up the entirety of DEXSORB®. The beta-cyclodextrins are carbohydrates derived from cornstarch used as odor agents, finishing agents, paint and coating additives, and solids separation agents. Each beta-cyclodextrin consists of seven glucose molecules linked together in a ring. In China, TFN and choline chloride are added to German-originating beta-cyclodextrins. When beta-cyclodextrin is placed in water, hydrophobic molecules, such as TFN, displace water molecules in the beta-cyclodextrin cavity where they are immobilized and separated from water. It is stated that the beta-cyclodextrin molecules are interconnected together into crosslinked cyclodextrin by process of nucleophilic aromatic substitution. This process links trillions of beta-cyclodextrin molecules together in a uniform assembly for use to remove micropollutants from drinking water. It is stated that the beta-cyclodextrin cavities remain intact to perform absorption functions and are the “essence” of the DEXSORB®. The DEXSORB® is a network of beta-cyclodextrin molecules crosslinked together. You explain that the crosslinking of the beta-cyclodextrin molecules is a simple assembly of molecules that is not “complex or meaningful” that does not change their essential character and that DEXSORB®’s ability to function as filter media is derived from the product’s composition of beta-cyclodextrins. You also explain that the end-use of adsorption functionality of beta-cyclodextrin is interchangeable with that of the DEXSORB®. On December 8, 2022, U.S. Customs and Border Protection (“CBP”) Laboratory and Scientific Services (“LSS”), New York Laboratory determined that the crosslinking “creates polymeric matrix of beta-cyclodextrins. Although the essential character of the beta-cyclodextrin is not change[d] or altered, the reactions render beta-cyclodextrin to be used only as a chromatographic media [] changing the overall character of the molecule.” ISSUE: What is the origin of the DEXSORB® for purposes of Section 301 trade remedies? LAW AND ANALYSIS: The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25 percent will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20, Harmonized Tariff Schedule of the United States (“HTSUS”). When determining the country of origin for purposes of applying Section 301 measures, the substantial transformation analysis is applicable. The test is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing. Texas Instruments, Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See Nat’l Hand Tool Corp. v. United States, 16 Ct. Int’l Trade 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). Applying the name, character and use test to the instant merchandise, we find a change in name from beta-cyclodextrin to DEXSORB® absorbent, a network of beta-cyclodextrin molecules interconnected together into crosslinked cyclodextrin. However, the beta-cyclodextrin is called “beta-cyclodextrin” before and after the processing in China. The courts have held that the change in name is “the least persuasive factor and is insufficient by itself to support a holding that there is a substantial transformation.” Superior Wire v. United States, 867 F.2d 1409, 1414 (Fed. Cir. 1989). In terms of character and use, the courts have held that when the properties and uses of a product are predetermined by the material from which it was made, no substantial transformation occurs. In Superior Wire v. United States, 11 Ct. Int’l Trade 608 (1987), aff’d, 867 F.2d 1409 (Fed. Cir. 1989), wire rod was drawn into finished wire. The tensile strength of the final product was increased by approximately 30 to 40 percent as the rod was reduced in cross-sectional area by about 30 percent and was elongated. The end use of the wire rod was generally known before the rolling stage. The court determined that the drawing operation did not result in a substantial transformation, pointing out that the properties of the wire rod and its uses were determined by the chemical content of the rod. If the manufacturing or combining process is a minor one, which leaves the identity of the article intact, a substantial transformation has not occurred. In Nat’l Juice Prods. Ass’n v. United States, 628 F. Supp. 978 (Ct. Int’l Trade 1986), the court considered whether foreign manufacturing concentrate processed into frozen concentrated orange juice or reconstituted orange juice in the United States was substantially transformed. In the United States, the manufacturing concentrate was mixed with purified and dechlorinated water, orange essences, orange oil, and in some cases, fresh juice. The court found that the U.S. processing added relatively minor value to the product and that the manufacturing concentrate imparted the essential character to the juice and made it orange juice. Thus, the imported manufacturing juice concentrate was not substantially transformed in the United States when it was processed into retail orange juice products. In Headquarters Ruling Letter (“HQ”) H303279, dated September 10, 2019, coarse mica flakes processed into super fine mica by jet milling and screening did not undergo a substantial transformation. The layers of coarse mica were divided up into thinner flakes of super fine mica. The milling process changed the physical properties of the mica, including its particle size distribution, particle shape, and brightness. There were no significant changes in the name when coarse mica flakes were processed into super fine mica. Jet milling coarse mica into super fine mica did not result in a change in character because both coarse mica flakes and super fine mica flakes were made up of layers of finer flakes and had the same chemical composition. Further, the uses of the super fine mica were predetermined by the properties of the coarse mica. The properties of the super fine mica flakes, which made them appropriate for different applications, were already present in the coarse mica flakes. See also HQ H323601, dated June 7, 2022 (U.S. catalyst used in a reactor in China without being further worked was not substantially transformed because the chemical composition and mechanical properties of the palladium and aluminum substrate remained unchanged by the catalyst’s use); HQ 561978, dated Dec. 22, 2000 (even though adding filler materials to the Polytetrafulouroethylene (“PTFE”) changed the rigidity, hardness and color of the product, there was no change in its essential character because the essence of the filled PTFE was imparted by the constituent PTFE polymer). Examining the character of the subject DEXSORB®, we find that the beta-cyclodextrins and the DEXSORB® have the same chemical composition. The DEXSORB® is made up of interc

The United States Trade Representative (“USTR”) has determined that an additional ad valorem duty of 25 percent will be imposed on certain Chinese imports pursuant to USTR’s authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). TheSection 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20, Harmonized Tariff Schedule of the United States (“HTSUS”).When determining the country of origin for purposes of applying Section 301 measures, the substantial transformation analysis is applicable. The test is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing. Texas Instruments, Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See Nat’l Hand Tool Corp. v. United States, 16 Ct. Int’l Trade 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). Applying the name, character and use test to the instant merchandise, we find a change in name from beta-cyclodextrin to DEXSORB® absorbent, a network of beta-cyclodextrin molecules interconnected together into crosslinked cyclodextrin. However, the beta-cyclodextrin is called “beta-cyclodextrin” before and after the processing in China. The courts have held that the change in name is “the least persuasive factor and is insufficient by itself to support a holding that there is a substantial transformation.” Superior Wire v. United States, 867 F.2d 1409, 1414 (Fed. Cir. 1989). In terms of character and use, the courts have held that when the properties and uses of a product are predetermined by the material from which it was made, no substantial transformation occurs. In Superior Wire v. United States, 11 Ct. Int’l Trade 608 (1987), aff’d, 867 F.2d 1409 (Fed. Cir. 1989), wire rod was drawn into finished wire. The tensile strength of the final product was increased by approximately 30 to 40 percent as the ro