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HQ 223589

March 20, 1992

CON-9-04-CO:R:C:E 223589 DHS


John S. Rode, Esq.
Rode & Qualey
295 Madison Avenue
New York, New York 10017

RE: Temporary importation under bond for processing and testing experimental pharmaceutical products; Subheading 9813.00.05 HTSUS; Subheading 9813.00.30; 19 CFR 10.39(a)

Dear Mr. Rode:

This is in response to your letter of November 26, 1991, on the application of subheading 9813.00.05 and 9813.00.30 of the Harmonized Tariff Schedule of the United States (HTSUS), to pharmaceutical products imported in bulk and dosage forms, for use in performance research and development testing.


Boehringer Mannheim Pharmaceutical Corporation (BMPC) proposes to import new drug substances (chemical compounds), in bulk and dosage forms, from Germany and Italy for specified research and development testing required by the Food and Drug Administration (FDA) as a condition to obtaining FDA approval for the sale of new pharmaceutical products in the United States.

The required research and testing will be conducted as an integral part of clinical trials to be performed by BMPC and its subcontractors to whom BMPC 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, and solutions contained in ampuls) as prescribed in the pertinent protocols established and supervised by the FDA. All of the drug substances, except the drugs 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.

The experimental chemical compounds which are imported as bulk drug substances will be processed into dosage forms by BMPC, or by one of its subcontractors. Ownership of the drugs will always be held by BMPC. Subsequently, these capsules, tablets, and ampuls containing the solution of the chemical compound will be consumed in the clinical trials in the same manner as the premeasured imported dosages.
You have stated that BMPC, and its subcontractors, will maintain records to show the place, date, and other relevant circumstances pertaining to the consumption of the tablets, capsules or solution as required by the FDA protocols. Furthermore, BMPC will retain strict inventory control over every importation, and all imported material. All recordkeeping and inventory procedures will be sufficient to satisfy the requirements of Subheading 9813.00.30, HTSUS, and Subchapter XIII U.S. Note 3, Subheading 9813.00.05, HTSUS and U.S. Note 2(b).

A portion of the imported chemical compound, from the bulk and dosage forms, will be designated for stability testing or as retention samples. The purpose of stability testing is to determine the length of time during which a particular drug substance will maintain its potency. Whereas, retention samples are retained for analytical evaluation after a particular passage of time. Since this portion of the importation will not be destroyed or exported before the expiration of the bond period, BMPC will enter the chemical compound to be used for the retention samples and the stability testing as a consumption entry.

Finally, you have stated that similar merchandise has been imported through Dulles International Airport, but has not been entered under either of these subheadings.


Whether the processing and testing of the experimental pharmaceutical products permits their entry under subheadings 9813.00.30 and 9813.00.05, HTSUS, (formerly items 864.30 and 864.05, TSUS).


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.

The procedure described to obtain FDA approval of the chemical compound is a test or experiment within subheading 9813.00.30, HTSUS, since the 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. See, HRL 214134, dated April 23, 1982.

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 cancelled 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 totally 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, Headquarters Ruling Letter (HRL) 210532, dated June 30, 1979, we 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." See the following: Bureau letter to Collector of Customs, Tampa, May 17, 156 (515.23)(fructose used as test with diabetics); Bureau letter to law firm of O'Conner & Farber, September 12, 1955 (412.6)(common cold medicine for distribution as part of a test); Bureau letter to Collector, Indianapolis, August 8, 1955 (516.23)(tablets used for testing on persons suffering from hypertension)."

Accordingly, Customs has consistently held that consumption by selected patients participating in the test of pharmaceuticals, would be deemed a destruction for purposes of section 10.39(a). The chemical compounds used for testing under the facts presented would therefore, be eligible for treatment under subheading 9813.00.30, HTSUS.

Conversion of the imported bulk chemical compound into specific quantities for distribution as medication would constitue a process of the chemical compound. Therefore, subheading 9813.00.05, HTSUS, would additionally be applicable to that merchandise entered in bulk and processed into dosage form. There is no objection to entering merchandise under more than one TIB provision on a single entry, when an article is entitled to entry under multiple provisions due to the use that the article will be put while in the United States. See, C.S.D. 83-45, HRL 221835, dated August 27, 1990.

However, to qualify for duty-free treatment under these TIB provisions, the importer must also comply with all of the accountability requirements under the U.S. Notes of Subchapter XIII. In particular, subheading 9813.00.05, HTSUS, U.S. Note 2(b) states that if any processing of such merchandise results in an article manufactured or produced in the United States: (i) a complete accounting will be made to the Customs Service for all articles, wastes and irrecoverable losses resulting from such processing; and (ii) all articles and valuable wastes resulting from such processing will be exported or destroyed under customs supervision within the bond period; except that in lieu of the exportation or destruction of valuable wastes, duties may be tendered on such wastes at rates in effect at the time of importation.

To further amplify, in C.S.D. 81-224, Customs found that the intent of Congress is to allow tender of duty and retention in the U.S. of valuable waste where exportation or destruction is uneconomic. Any evidence, satisfactory to the district director, that is sufficient to identify the valuable waste and show its description and quantity is adequate. Such evidence might be a statement of the importer, or other persons having knowledge of the facts, setting forth the circumstances of the production of the valuable waste.

You have also pointed out, the chemical compound which will be used for retention samples and stability testing will be treated as a dutiable consumption entry since they will not be destroyed or exported within the requisite statutory period. This is in conformance with C.S.D. 80-24 (HRL 210532), dated June 30, 1979; wherein, we concluded that drugs undergoing stability testing "for shelf life" are not considered destroyed within the meaning of U.S. Note 3 (previously, headnote 3, schedule 8, part 5, subpart C, TSUS), unless it can be shown that because of the length of such testing, the drugs have completely deteriorated. The drugs which have not completely deteriorated must be exported timely or the importer will incur liquidated damages.

Finally, we are unable to approve the segregation procedure or the method of accounting without the submission of details regarding this procedure and copies of records demonstrating compliance with the statutes and regulations. See, 19 CFR 177.2(b) and 177.7.


Based upon the actions of BMPC to maintain strict inventory control over every importation and all imported material, to agree not to sell the imported material and to use and handle the merchandise entered temporarily free under bond in the manner and for the purpose of entitling it to duty-free treatment, Customs holds that:

Subheading 9813.00.30, HTSUS, is applicable to the chemical compound entered in dosage form for use in tests detailed in this submission for approval by the FDA.

Subheading 9813.00.30 and 9813.00.05, HTSUS, are applicable to the chemical compound entered in bulk form which is processed into dosage form, for use in the previously described tests.

The portion of the chemical compound retained by the importer for retention samples and stability testing must be entered as a consumption entry and duty paid.


John Durant, Director

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