Opinion ID: 687717
Heading Depth: 3
Heading Rank: 1

Heading: ADC-6 satisfies the definition of drugs found in the TSUS.

Text: 40 Based upon the evidence presented at trial, and prior caselaw, the court agrees with Lonza that ADC-6 is a substance that possesses therapeutic properties and is chiefly used as an ingredient in medicine. First, with respect to whether ADC-6 possesses therapeutic properties, it is undisputed that ADC-6 contributes all of the atoms in Imipenem's beta-lactam ring; as Lonza's expert witness, Dr. Thomas N. Salzmann, testified, the beta-lactam ring is the antibiotic's killing site, without which the substance is useless as an antibacterial agent. In addition, ADC-6 contributes the entire hydroxyethyl side-chain, without which Imipenem is both defenseless and unable to identify target bacteria. Clearly, absent the ADC-6 moiety, Imipenem is bereft of therapeutic (i.e. antibacterial) value. Just as D(-) mandelic acid was held to possess therapeutic properties because it impart[s] properties to ... other substances which are necessary to produce an effective antibiotic, ADC-6 merits a similar evaluation. Indeed, whereas D(-) mandelic acid contributes only a defense element, ADC-6 imparts a killing element, a recognition element, and a defense element to the final antibiotic product. The significance of these contributions can hardly be ignored. 41 The government urges, however, that in order to be considered therapeutic, a substance must itself be curative. It is conceded that ADC-6 neither kills nor inhibits the growth of microorganisms. Nonetheless, ADC-6 is properly characterized as having therapeutic properties because the elements it imparts are crucial to the ultimate formation of an effective antibiotic. This is the standard sanctioned by our appellate court, 19 and this standard is met in the present case. The government simply fails to recognize Austin 's distinction between therapeutic uses and therapeutic properties. 20 The court concludes that although ADC-6 itself may not be used as an antibacterial agent, the curative qualities it imparts to Imipenem are of such import that ADC-6 is properly regarded as exhibiting therapeutic properties. 42 Secondly, the court concludes that ADC-6 is properly considered an ingredient used in the production of Imipenem. At trial, the government's expert witness, Ms. Patricia Gafney, characterized ADC-6 as a mere stepping stone between the parent substance and the final product, i.e. a chemical intermediate whose identity is lost during the process of synthesizing Imipenem. Ms. Gafney also testified that the term ingredient is not synonymous with the term chemical intermediate in the field of chemistry. And finally, the government referred the court to the Physician's Desk Reference (46th ed. 1992), which lists the ingredients in PRIMAXIN TM as: (1) a sterile formulation of Imipenem; (2) sodium cilastatin; and (3) sodium bicarbonate. ADC-6 is noticeably absent from this list. 43 Dr. Salzmann testified, however, that characterizing a substance as an ingredient is a functional judgment that is facilitated by identifying the atoms contributed by a substance to the final compound. In addition to this functional analysis, it has long been recognized that when ascertaining the meaning of a tariff term, the court may consult extrinsic sources. 21 See, e.g., Productol Chemical Co. v. United States, 74 Cust.Ct. 138, 142, C.D. 4598 (1975). The court notes that The Oxford English Dictionary (2d ed. 1989) defines ingredient as: 44 3.a. Something that enters into the formation of a compound or mixture; a component part, constituent, element. Primarily used of medical compositions and other artificial material mixtures, but also of natural compounds and of things immaterial, actions, conditions, etc. 45 The court is persuaded that the government adopts too narrow a view. As a substance that enters into the formation of a medical compound, ADC-6 satisfies this dictionary definition. Furthermore, under Dr. Salzmann's functional analysis, the court notes that the sole purpose of ADC-6 is to contribute to the formation of Imipenem. And finally, the exhibits introduced at trial clearly indicate that the ADC-6 moiety remains cognizable as a portion of the final synthesized compound. Just as D(-) mandelic acid was determined to be an ingredient used in the production of Cefamandole Nafate, so too is ADC-6 accurately described as an ingredient used in the production of Imipenem. 46 2. The TSUS definition of drugs constitutes the common and commercial meaning of the term under the HTS. 47 Although the court finds that ADC-6 meets the definition of drugs found in the TSUS, this conclusion is not dispositive. The second issue to be addressed is whether the TSUS definition of drugs continues to apply under the HTS. Lonza argues that notwithstanding the fact that the HTS fails to include an express definition of the term, the TSUS definition of drugs continues to govern tariff classification because it reflects the common and commercial meaning of the term, and that meaning has not changed since the HTS was enacted. 48 Unless a contrary legislative intent is shown, tariff terms are construed in accordance with their common and commercial meanings, which are presumed to be the same. See, e.g., Nippon Kogaku (USA), Inc. v. United States, 69 CCPA 89, 92, 673 F.2d 380, 382 (1982); Schott Optical Glass, Inc. v. United States, 67 CCPA 32, 34, 612 F.2d 1283, 1285 (1979). The common meaning of a tariff term presents a question of law to be decided by the court. American Express Co. v. United States, 39 CCPA 8, 10, C.A.D. 456, 1951 WL 5377 (1951). In cases where a term is defined by statute, the court need not undertake a common-meaning inquiry, for the statutory definition is controlling. Overton & Co. v. United States, 85 Cust.Ct. 76, 80-81, C.D. 4875 (1980). Absent an express definition, however, the court may consult dictionaries, lexicons, scientific authorities, and other such reliable sources in its effort to determine common meaning. C.J. Tower & Sons of Buffalo, Inc. v. United States, 69 CCPA 128, 133-34, 673 F.2d 1268, 1271 (1982). 49 As noted, the TSUS definition of drugs was drafted in light of prevailing customs practice as well as usage in the industry. 22 Congress' definition was thus intended to coincide with the common and commercial meaning of the term. This definition remained intact as an express provision in each of the eighteen editions of the TSUS, which spanned over twenty-five years. Although it appears that the TSUS definition of drugs was deliberately abandoned (in light of the fact that an earlier draft of the HTS contained an amended definition of the term), the HTS failed to provide any alternative definition despite retaining the term drugs in various subheadings within Chapter 29. The common meaning of a tariff term, once established, remains controlling until a subsequent change in statute compels a revised construction of the term's meaning. United States v. Great Pacific Co., 23 CCPA 319, 324, T.D. 48192, 1936 WL 2997 (1936); see Sears, Roebuck & Co. v. United States, 46 CCPA 79, 83, C.A.D. 701, 1959 WL 7589 (1959). The mere retraction of an express definition from the controlling tariff schedule, in and of itself, does not compel a revised construction. Absent clear evidence of legislative intent to embrace an alternative statutory definition, and in light of its historical pedigree, the court cannot help but conclude that the TSUS definition of drugs survives as the common and commercial meaning of the term under the HTS. 23 50 3. The TSUS definition of drugs does not govern the classification of antibiotics under the HTS. 51 Having determined that the TSUS definition of drugs survives as the common meaning of the term under the new tariff schedule, the court must address whether this definition impacts the classification of antibiotics under the HTS. The court concludes that it does not. There are four elements to the court's analysis. 52 First, as the government noted at trial, Congress effected an express change in the tariff description of antibiotics when it implemented the HTS; antibiotics are no longer classified as a subset of the broader heading drugs, as they were under the TSUS. Instead, the term antibiotics has been elevated as the sole descriptor of Heading 2941. Subchapter 13, Chapter 29, HTS, unambiguously indicates that the only prerequisite to classification under Heading 2941 is satisfaction of the criteria embraced by the term antibiotics. 53 Lonza responds to the government's observation with two points. First, Lonza offers the court a side-by-side comparison of Items 411.60 through 411.76, TSUS, and Heading 2941, HTS, in support of its argument that no material change was intended in the tariff treatment of antibiotics under the HTS. This comparison is deficient in one major respect; namely, it fails to acknowledge the deliberate omission of the term drugs as a general descriptor of antibiotics under the HTS. It is immaterial that specific provisions for antibiotics remained unchanged in the new tariff schedule. What is significant is that under the HTS, antibiotics constitute an independent Heading within Chapter 29; this is a marked departure from the TSUS framework, which placed antibiotics within the broader descriptor drugs. Secondly, Lonza notes that in converting the TSUS into the Harmonized System, the ITC was directed to avoid changes in rates of duty wherever possible; 24 and, if the TSUS definition of drugs does not apply to Heading 2941, the duty assessed upon imports of ADC-6 will be increased. This drafting guideline, however, simply cannot overcome the actual framework adopted, and the specific language chosen, by Congress when it enacted the HTS. 25 The term drugs is expressly limited to sixty-three subheadings in Chapter 29, in utter contrast to its scope under the TSUS. Furthermore, the term is employed nowhere among the eleven subheadings within Heading 2941. 26 The implication is clear. The classification of imports as antibiotics is confined solely to those substances that independently satisfy the criteria for an antibiotic; the term drugs is no longer relevant to this classification decision under the HTS. 54 Second, the court rejects Lonza's assertion that antibiotics should be treated as drugs simply by virtue of their location in Chapter 29. Lonza argues that the HTS incorporates a distinction between drugs and medicaments by classifying the former solely within Chapter 29, while the latter are classified solely within Chapter 30. Lonza bases its position on the fact that [t]he term 'drugs' appears throughout Chapter 29, while [t]he term 'medicaments' as well as specific types of medicaments are employed throughout Chapter 30. Pretrial Memorandum of Plaintiff at 16 n. 4, 18. As the court noted, however, Congress made limited use of the term drugs in Chapter 29; had Congress intended that all organic chemicals provided for in Chapter 29 of the HTS be treated as drugs, it would have utilized the term more broadly, just as it did in the TSUS. Furthermore, Lonza's argument is undermined by reference to subheadings 2918.21.10 and 2918.23.10, HTS. Subheading 2918.21.10 describes Salicylic acid and its salts: Suitable for medicinal use. Subheading 2918.23.10 describes Salol (Phenyl salicylate) suitable for medicinal use. If the distinction between drugs and medicaments under the HTS were as absolute as Lonza asserts, these substances should have been provided for under Chapter 30. Instead, they are included in Chapter 29. The historical distinction between drugs and medicaments thus appears irrelevant to the classification of organic chemicals under the HTS. 55 Third, Lonza asserts that antibiotics are commonly understood to be drugs, and that therefore Heading 2941, HTS, incorporates the TSUS definition of drugs. The court first notes that The Oxford English Dictionary (2d ed. 1989) defines the term antibiotic as: 56