Biotech Company Wins Tariff Classification Dispute with U.S. Customs

January 10, 2012

In December of 2011, the Court of International Trade (CIT) overruled a decision by Customs and Border Protection (CBP) to classify a Cell Culture Bioreactor under tariff heading 8419: as machinery . . . for the treatment of materials by a process involving a change of temperature, which has a duty rate of 4.2%. (See Applikon Biotechnology, Inc. v. United States, 2011 Ct. Intl. Trade LEXIS 154 (Ct. Int'l Trade Dec. 12, 2011)). (A motion for rehearing is pending.)

Agreeing with the importer, who was represented by Carl Cammarata of Tuttle Law Offices, the court classified the Cell Culture Bioreactor under tariff heading 8479, as “Other machines . . . not specified or included elsewhere in chapter 84, for Mixing or stirring,” duty free.

In distinguishing this case from Applied Biosystems v. United States, 34 CIT    , 715 F. Supp. 2d 1327 (2010), the court said: “while the Bioreactor Systems can regulate the temperature of the material placed in it, that is not its primary function.” Its primary function, noted the court, was to grow cells, and that “[t]he heat control function . . . is not essential to achievement of this purpose in the same manner that the mixing function is always used when the Bioreactor System is in operation.”  

Heading 8419 excludes machinery designed for mechanical operation, in which a change of temperature, even if necessary, is subsidiary to the overall purpose. Because it was “undisputed” that the principal purpose of the Bioreactor System is to grow cells, a purpose, the court said, which is not described in any heading in Chapter 84, it concluded that the Bioreactor System falls in Heading 8479 by operation of Note 7 to Chapter 84.

Unlike other types of articles, such as semiconductor manufacturing equipment, which has its own tariff classification provision (heading 8486), equipment used in the biotechnology industry does not, and articles are classified in Chapters 84, 85, or 90 of the Tariff Schedules according to the provision which most specifically describes that article.  

If you have any questions with regard to this newsletter, please do not hesitate to contact Carl Cammarata or George R. Tuttle, III, at (415) 986-8780, or at info@tuttlelaw.com.


Carl Cammarata and George R. Tuttle, III, are attorneys with the Law Offices of George R. Tuttle in San Francisco.

 

The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright © 2012 by Tuttle Law Offices. 

All rights reserved.  Information has been obtained from sources believed to be reliable.  However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

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