April 5, 2006 CBP Bulletin Notices on a CD Softcase with Speaker and Everolimus

With respect to the CD softcase, CBP states that it is also proposing to revoke any treatment it has previously accorded to substantially identical transactions. With respect to the Everolimus, CBP states that the revocation is effective for subject merchandise entered or withdrawn from warehouse for consumption on or after June 5, 2006. CBP also states that these notices cover any rulings on the subject merchandise that may exist but have not been specifically identified.

CBP states that any party who has received a contrary ruling or decision on merchandise subject to the proposed ruling, or any party involved with a substantially identical transaction, should advise CBP by May 6, 2006, the date that written comments on the proposed ruling are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agent for importations subsequent to the effective date of the final decision in this notice.

Proposed Revocation of a Classification Ruling

CD softcase with speaker. At issue is an article described as the "I'm A Speaker" Softcase with Integrated Loudspeaker, available in both mono and stereo models. The subject article is a single loudspeaker that is imported within a softcase that has the capacity of storing up to 12 compact discs (CDs).

CBP is proposing to issue HQ 968051 in order to revoke NY J84601 and reclassify the subject article under HTS 4202.92.9050, as cases designed to protect and transport CDs, CD ROM disks, CD players, cassette players and/or cassettes; rather than under 8518.21.0000, as single loudspeakers, mounted in their enclosures.

Since the issuance of NY J84601, CBP states that it has reviewed the classification for the subject CD softcase and has determined that the cited ruling is in error. CBP finds that the CD softcase is described by both HTS headings 4202 and 8518, as it is a case, as well as a loudspeaker. Because the subject article is classifiable under two headings, CBP notes that it cannot be classified according to General Rule of Interpretation (GRI) 1.

Instead, CBP considers GRI 3(b), which states in part that composite goods shall be classified as if they consisted of the material or component which gives them their essential character.

CBP explains that the portable loudspeaker and the CD case components are attached to each other to form a practically inseparable whole, and are thus considered a composite good. As a result, CBP states that it must consider which component (the loudspeaker or the CD softcase) imparts the essential character of the subject article.

CBP finds that the CD softcase imparts the essential character to the article-contending that a consumer's motivating impetus to purchase this article would primarily be the need or desire for a container which can store, protect and transport a CD player and CDs. Among other things, CBP notes that although the subject article can also amplify music, it is unlikely that a consumer would purchase this article primarily for use as an amplifier.

Therefore, CBP finds that the essential character of the subject loudspeaker/softcase is imparted by the HTS 4202 component and should be classified accordingly under HTS 4202.92.9050.

proposed: HTS 4202.92.9050, 17.6%; current: 8518.21.0000, 4.9%.

Revocation of a Classification Ruling

Everolimus. CBP states that Everolimus is a macrocycylic lactone immunosuppressive drug being investigated for use in reducing graft vasculopathy, and is a semisynthetic derivative of Rapamycin, currently known as Sirolimus. Everolimus is also an organic compound that is stabilized with a second antioxidant organic compound; as such, it is a mixture of two organic compounds.

CBP notes that the manufacturer of Everolimus submitted information in its request for reconsideration which was not included in the original request that evidences that Everolimus is an antibiotic that has bacteriostatic properties that kill or inhibit the growth of microorganisms.

CBP is issuing HQ 967895 in order to revoke NY R00794 and reclassify subject merchandise under HTS 2941.90.5000, which provides for antibiotics: other: other: other; rather than under HTS 2934.99.4700, which provides for "Nucleic acids and their salts, whether or not chemically defined; other heterocyclic compounds: other: other: other: drugs."

According to CBP, subject merchandise is prima facie classifiable in Heading 2941 as an antibiotic and Heading 2934 as a heterocyclic compound.

CBP explains that HTS heading 2941 provides for antibiotics, which are described in part by the Explanatory Note (EN) to 2941 as "substances secreted by living microorganisms which have the effect of killing other microorganisms or inhibiting their growth."

Additionally, Note 3 to HTS Chapter 29 states 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."

Thus, in accordance with Note 3 to HTS Chapter 29, the EN to HTS heading 2941, and a referenced court case, CBP finds that Everolimus is classified in subheading HTS 2941.90.5000.

new: HTS 2941.90.5000, duty-free; previous: 2934.99.4700, 3.7%.

(See ITT's Online Archives or 01/06/06 news, 06010635, for BP summary of proposed HQ 967895 on Everolimus.)

April 5, 2006 CBP Bulletin (Vol. 40, No. 15) available athttp://www.cbp.gov/xp/cgov/toolbox/legal/bulletins_decisions/bulletins_2006/vol40_04052006_no15/