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NY D81284

August 27, 1998

CLA-2-29:RR:NC:2:239 D81284


TARIFF NO.: 2935.00.7500

Ms. Kathleen Murphy
Katten Muchin & Zavis
525 West Monroe St., Suite 1600
Chicago, IL 60661-3693

RE: The tariff classification of 4'-Sulphonamidophenylhydrazine (CAS 17852-52-7) from Japan and China.

Dear Ms. Murphy:

In your letter dated July 31, 1998, you requested a tariff classification ruling for 4'-Sulphonamidophenylhydrazine which you have stated is used as a chemical intermediate in the production and manufacture of pharmaceuticals.

You state in your letter that this compound is described in heading 2928.00.2500, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), under the provision for Organic derivatives of hydrazine or of hydroxylamine:...Other:...Aromatic, or in heading 29.35, HTS, as a sulfonamide compound, based on different functional groups in the compound structure. You assert, first, that the compound is classifiable in heading 29.28, HTS. You state that the hydrazine moiety in the compound is "the reactive portion" and that the sulfonamide group remains relatively inert and unreactive; and, thus, pursuant to GRI 3(b), the classification of this compound is properly in heading 29.28, HTS.

Alternatively, in the event that the compound is classified in heading 29.35, HTS, you feel that classification should be in heading 2935.00.6000, HTSUSA, which provides for "Sulfonamides: ...Other...Drugs:...Other. In this latter case, your classification is supported by your statement that this compound is a chemical intermediate used in the production of an analgesic/anti-inflammatory agent which, in turn, is used as a pain reliever in the treatment of arthritis. You note that this analgesic/anti-inflammatory agent, for which the instant compound is an intermediary, has not yet been approved by the Food and Drug Administration and remains an "investigational drug." Noting the decision in Lonza, Inc. V. United States (46 F.3d 1098 (Fed. Cir, 1995), you would argue that "a substance is a drug for tariff classification purposes if it 1) possesses therapeutic or medicinal properties,' and 2) is chiefly used as medicines or as ingredients in medicines.' Id. At 1101-02, citing Schedule 4, Part 1, subpart C, Headnote 5, TSUS (1963) (emphasis added)."

Finally, should this compound not be classified as a drug in subheading 2935.00.6000, you believe that it should be classified in the residual subheading 2935.00.7500, HTSUSA, as Sulfonamides:...Other:...Other:...Products described in additional U.S. note 3 to section VI, since the compound is not listed by name or Chemical Abstracts Services Registration Number in the Chemical Appendix to the Tariff Schedule, HTSUSA.

As you are aware, the classification of goods in the Harmonized Tariff Schedule (HTS) is governed by the General Rules of Interpretation (GRIs), taken in order. GRI 1 requires, in relevant part, that "for legal purposes, classification shall be determined according to the terms of the headings and an relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:" [following are the remaining GRIs, numbered 2 - 6]. The classification of the instant compound will be in accordance with GRI 1.

Regarding the classification of this compound under GRI 1, please note that the first thirty-five headings in Chapter 29 describe the products provided for therein in terms of various functional groups, which may be present in the compound structure. The enumerated functional groups are the primary,--indeed, the exclusive,--criteria for defining the scope of the individual headings. The concepts of "use" or the relative reactive properties of these functional groups in a given compound are not descriptive elements in any of these headings, nor are they conditional to classification therein. Thus, on the basis of the presence of a hydrazine derivative in the compound structure, heading 29.28, which provides for compounds containing such derivatives, may be said to describe the instant compound. Similarly, because the compound contains a sulfonamide functional group within its structure, heading 29.35, which provides for sulfonamide compounds, may be said to describe the instant compound. 4'-sulphonamidophenylhydrazine monohydrochloride, then, is described in these two headings.

While you suggest the application of GRI 3 to these two headings as a means of determining a final classification, resorting to GRI 3 would be inappropriate in the present circumstances. GRI 1 mandates classification under the terms of the headings and legal notes of the tariff, first, and only under the remaining GRIs, "provided such headings or notes do not otherwise require." In the instant case, a Chapter note is determinative in choosing the heading in which this compound will be classified. Note 3 in Chapter 29, HTSUSA, provides 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, 4'-Sulphonamidophenyl-hydrazine monohydrochloride will be classified in heading 29.35, HTS, as that "heading which occurs last in numerical order."

Regarding classification of this compound as a "drug" in subheading 2935.00.6000, HTSUSA, we believe that this subheading would include only such products as are approved by the Food and Drug Administration and which are bought and sold commercially, and principally used, as drugs in the United States. The instant product, which is in the process of testing for efficacy and safety prior to approval for marketing in the United States, would not be considered "drugs" for tariff purposes.

Since this compound is not specially provided for under any subheading of 29.35, HTS, and is not listed in the Chemical Appendix to the Tariff, HTSUSA, the applicable subheading will be 2935.00.7500, Harmonized Tariff Schedule of the United States (HTUSA), which provides for sulfonamides:...other:...Products described in additional U.S. note 3 to section VI.. The rate of duty will be 10.7 percent ad valorem.

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 Thomas Brady at 212-466-5747.


Robert B. Swierupski

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