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HQ 227905

July 31, 1998

CON-9-09 RR:CR:DR 227905 CB


Richard M. Belanger, Esq.
Powell, Goldstein, Frazier & Murphy
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004

RE: Request for Binding Ruling on a Temporary Importation under Bond for processing and testing of experimental pharmaceutical products; Subheadings 9813.00.30 and 9813.00.05, HTSUS; Cancellation of TIB entries on a First-In, First-Out (FIFO) basis; Schedule X, Appendix to 19 CFR Part 181.

Dear Mr. Belanger:

This is in response to your letter of February 17, 1998, on behalf of Dupont Merck Pharmaceutical Co. (Dupont Merck) regarding the applicability of subheadings 9813.00.05 and 9813.00.30 of the Harmonized Tariff Schedule of the United States (HTSUS), to pharmaceutical products imported in bulk form.


According to your letter, Dupont Merck is planning to import the active ingredient in bulk form for a new pharmaceutical compound known as Sustiva . Dupont Merck will process the imported bulk drug into dosage form in the United States. The chemical will be imported under subheading 9813.00.05 and/or 9813.00.30, HTSUS. When approved for commercial use by the Food and Drug Administration (FDA), Sustiva will be used as a drug to treat individuals infected with the human immunodeficiency virus (HIV). You state that, as of this time, the FDA has classified Sustiva as an investigational new drug (IND). This means that the drug is currently being tested and reviewed by the FDA for the purpose of obtaining FDA approval. During this IND phase, some of the drug will be exported, and the balance will be consumed in clinical investigations pursuant to the FDA approval process. According to your request, the clinical investigations will be in the form of traditional clinical trials, and also in the form of the FDA's expanded access program.

You state that the FDA and Public Health Service have recently created a collection of programs to allow for wider use of drugs during the clinical investigation phase of the approval process. The expanded access program that is relevant to Sustiva is set forth in 21 C.F.R. ?312.34 which provides for a "treatment protocol" or "treatment IND" as part of the clinical investigation. Development of a treatment IND permits applicants for FDA drug approval to make the drug available to patients for use on a wider basis than previously available. You state that all of the drugs will be dispensed under carefully controlled circumstances requiring each participating physician/investigator to account for each dosage, and requiring that all Sustiva dispensed through expanded access be consumed by patient volunteers or be destroyed. Furthermore, the contract that Dupont Merck has with its supplier of the bulk active ingredient specifically provides for supply to be consumed in preclinical and clinical studies only, and that none of the chemical will be used for commercial supply.

Dupont Merck plans to import Sustiva in bulk form that will be processed into dosage form. During the processing, ingredients are added to allow for tableting, encapsulation, or the manufacturing of syrups. You state that this is necessary to allow for the consumption of the products during testing. Dupont Merck proposes to place these goods in an inventory where it will be commingled with fungible merchandise. For these reasons, Dupont Merck is unable to directly identify the TIB goods upon export or destruction. You state that Dupont Merck's records will be able to show the total fungible merchandise commingled, the date of such commingling, the record of each input into the commingled material and the record of each withdrawal (including date and quantity).


1. Whether the processing and testing of the experimental pharmaceutical product permits its entry under subheading 9813.00.05 and 9813.00.30, HTSUS.

2. Whether the TIBs may be canceled on a first-in, first-out (FIFO) basis .


Issue #1

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 date 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 Customs Service has previously held that the procedures to obtain FDA approval of a pharmaceutical 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 effects on the general class of humans. See Headquarters Rulings (HQ) 223589, dated March 20, 1992. Under U.S. Note 3, Chapter 98, subchapter XIII, HTSUS, upon satisfactory proof that any araticle admitted under subheading 9813.00.30, HTSUS, has been destroyed because of its use for any purpose provided for therein, the obligation under thje bond to export such article shall be treated as satisfied.

Pursuant to 19 C.F.R. ?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 port director a certificate from the importer stating that the articles were destroyed during the course of a specifically described use, and the port director is satisfied that the articles were so destroyed within the period of time during which the articles may remain in the Customs territory of the United States under bond. Customs has consistently held that consumption by selected patients participating in the test of pharmaceuticals, is deemed a destruction for purposes of 19 C.F.R. ?10.39(a). The imported Sustiva used for testing under the facts presented is eligible for treatment under subheading 9813.00.30, HTSUS.

You have also indicated that imported Sustiva may be processed into dosage form. During the processing, ingredients are added only to allow for tableting, encapsulation , or the manufacturing of syrups. This is necessary to allow for the consumption of the products during testing. Customs has held that the conversion of an imported bulk chemical compound into specific quantities for distribution as medication would constitute a process of the chemical compound. See HQ 223589, supra. Therefore, subheading 9813.00.05, HTSUS, would also be applicable to any Sustiva entered in bulk and processed into dosage form. We have previously held that merchandise may be entered 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 and HQ 221835, dated August 27, 1990. However, the importer must also comply with all of the accountability requirements under the U.S. Notes of Subchapter XIII.

Issue #2

The Customs Service has interpreted the temporary importation under bond provisions as usually requiring direct identification of each particular article to show timely exportation. Customs has approved the identification of fungible merchandise that is commingled through first-in, first-out (FIFO) accounting methods. See C.S.D. 86-16. Illustrations of the application of such FIFO accounting records are set forth in Schedule X, Appendix to 19 C.F.R. Part 181 and 19 C.F.R. ?191.14(c) (1998 ed.).

You state that Dupont Merck's inventory control system is adequate to account for TIB and non-TIB merchandise, and it contains records consistent with those listed in C.S.D. 88-1 and Schedule X, Appendix to 19 C.F.R. Part 181. We are unable to specifically approve Dupont Merck's accounting records without the submission of copies of records demonstrating compliance with the statutes and regulations. See 19 C.F.R. matching the illustrative examples cited above, Dupont Merck should be able to satisfactorily identify specific lots of the temporarily imported drug so as to meet the requirements of Subchapter XIII, Chapter 98, HTSUS, and 19 C.F.R. ?10.39.


Based upon the information provided, Sustiva may be imported under subheading 9813.00.30 and/or 9813.00.05, HTSUS, for use in tests as detailed in the FACTS portion of this ruling.


John A. Durant, Director
Commercial Rulings Division

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