CBP Rules Reprocessed Spent Catalysts Are Products of US
Spent catalysts used for chemical production in China then sent back to the U.S. for reprocessing are not substantially transformed by their use in China, and remain of U.S. origin upon re-importation, CBP said in ruling HQ H323601.
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The chemical catalysts at issue are manufactured in South Carolina and contain a platinum group metal in the form of a solution, CBP said. The solution is sprayed onto an aluminum oxide substrate. The catalysts are exported to China where they are added to reactors to produce fine chemicals, oleochemicals and petrochemicals, the ruling said. During their use in reactors in China, the catalysts degrade in effectiveness over time due to a variety of factors that reduce reactivity.
Once the catalysts’ effectiveness falls below their tolerance level, they are removed from the reactor in China, packaged, and returned to the U.S. for refining, entering under subheading 7112.92.01 as “Waste and scrap of precious metal or of metal clad with precious metal; other waste ... of a kind used principally for the recovery of precious metal other than goods of heading 8549: Other: Of platinum... ." During the refining process in the U.S., the active palladium will be removed from the substrate, put into a solution, and sprayed onto a new substrate for use as a new catalyst, CBP said.
CBP said it makes substantial transformation determinations on a case-by-case basis. CBP has previously ruled that new and different articles of commerce have undergone a change in commercial designations or identity. The central issue is the extent of the operations performed and whether the materials lose their identity and become an integral part of the new article, it said.
Even though the catalyst is physically transformed in China due to its use, CBP ruled that no substantial change in character or use occurs and the catalyst is not made into a component of a new product. Though the catalyst undergoes a transformation, it is not "further worked" by the Chinese reactors with the purpose of creating a new product, it said.