DRA-4-CO:R:C:E 224368 PH
Deputy Regional Director
Commercial Operations
Pacific Region
RE: Internal Advice Request; Substitution Same Condition Drawback;
Fungibility of Jet Fuel, Diesel Fuel, Heating Fuel, Gas Oil,
Automotive Gasoline, Reformate; 19 U.S.C. 1313(j)(2); 19 CFR
191.2(l)
Dear Sir:
With your memorandum of December 7, 1992 (File: DRA-
1:SF:O:C:T (TDV), you forwarded a request for internal advice
submitted on behalf of the drawback claimant in the referenced
matter. Our ruling on the internal advice request follows.
FACTS:
As part of an audit of the drawback claimant in this matter,
Customs conducted a technical evaluation of the fungibility of
petroleum products covered in 26 substitution same condition
drawback claims. The technical evaluation resulted in conclusions
that there was not fungibility in 10 of the claims (and therefore
that drawback should be denied in these claims). The merchandise
in the claims in which non-fungibility was found and is contested
in the internal advice request is jet fuel (claims 4, 5, 9, 19, and
21); diesel fuel/gas oil (claim 7, 8, and 10); and unleaded
gasoline/reformate (claims 3 and 6).
In the case of the jet fuel, non-fungibility was found because
the aromatic content of the exported merchandise was greater than
20% in claims 4, 19, and 21. Non-fungibility was found in claims
5 and 9 because the merchandise was commercially distinguished by
different names, as indicated on the claimant's records. In regard
to claim 5 it was also noted that no information was provided to
substantiate or refute the presence of the antistatic additive ASA
3 in the designated imports. In regard to claim 9 it was also
noted that there were substantial differences in API gravity and
no information on the freezing point for the designated imports.
In the case of the diesel fuel/gas oil, non-fungibility was found
because the merchandise was commercially distinguished by different
names, as indicated on the claimant's records. In the case of the
unleaded gasoline/reformate, non-fungibility was found because the
merchandise was commercially distinguished by different names, as
indicated on the claimant's records. In addition, in regard to
claim 3, it was noted that the aromatic content was very high for
the exported merchandise.
ISSUE:
As described in this case, is the imported merchandise
fungible, for purposes of the substitution same condition drawback
law, with the exported merchandise?
LAW AND ANALYSIS:
Under section 313(j)(2), Tariff Act of 1930, as amended (19
U.S.C. 1313(j)(2)), upon the exportation or destruction under
Customs supervision of merchandise (whether imported or domestic)
which is fungible with imported merchandise, assuming compliance
with other requirements in the statute and applicable regulations
(19 CFR Part 191), substitution same condition drawback may be
claimed.
The term "fungible merchandise" is defined in the Customs
Regulations as "merchandise which for commercial purposes is
identical and interchangeable in all situations." (Emphasis
added.) This definition is consistent with the clearly expressed
intent of the Congress when it enacted 19 U.S.C. 1313(j)(2). (See
House Report (Ways and Means Committee) No. 98-1015, September 12,
1984, reprinted at 1984 U.S.C.C.A.N. 4960, 5023; see also 129 Cong.
Rec. E 5339 (daily ed. November 4, 1983).) This definition is also
consistent with the common meaning of the term, as defined by the
lexicographers (see Webster's Third New International Dictionary
(1986); Webster's New World Dictionary, Third College Edition
(1988); The Random House Dictionary of the English Language (1973);
and Black's Law Dictionary (6th Edition, 1990)).
The Court of International Trade (CIT) and the Court of
Appeals for the Federal Circuit (CAFC) have recently reviewed
Customs interpretation of fungibility for substitution same
condition drawback purposes (see Guess? Inc. v. United States, 14
CIT 770, 752 F. Supp. 463 (1990); 944 F. 2d 855 (1991)). This case
involved certain domestic cotton denim wearing apparel which was
identical in all respects to imported cotton denim wearing apparel
except that the labels identifying the country of manufacture were
different. The CIT followed Customs interpretation of the word
"fungible" and held that the wearing apparel was not fungible. The
CAFC vacated and remanded the decision of the CIT on the basis that
the factual determination of whether there was a customer
preference for the wearing apparel identified with the United
States as the country of manufacture was disputed. On the question
of Customs interpretation of fungibility, however, the CAFC stated
that Customs interpretation of the term in 19 CFR 191.2(l) is "a
reasonable construction of the statute and is consistent with
Congress' intent" (944 F.2d at 858). (See also Tandom Corp. v.
United States, Slip Op. 92-197 (CIT October 29, 1992), Vol. 26,
Cust. Bull. & Dec. No. 47, p. 38, November 18, 1992.)
In Customs Service Decision (C.S.D.) 91-3, Customs held that
two shipments of automotive gasolines which meet the ASTM Standard
Specifications for Automotive Gasoline, Designation ASTM D 439, on
a volatility for volatility class basis, that contain the same
octane ratings, that are substituted on the basis of leaded-for-
leaded or unleaded-for-unleaded, and contain the same additives (if
any) are fungible for purposes of 19 U.S.C. 1313(j)(2). In C.S.D.
91-21, Customs held that two shipments of aviation turbine fuels
which meet the ASTM Standard Specifications for Aviation Turbine
Fuels, Designation D 1655 (i.e., jet A for jet A, jet A-1 for jet
A-1 or jet B for jet B, citing Table 1 of the standards) are
fungible for purposes 19 U.S.C. 1313(j)(2).
In general regard to the inquirer's contention that allowance
should be made by Customs in applying the ASTM standards to
laboratory reports for "precision' variations ("repeatability" or
"reproducibility"), we note the statement of the CIT in Guess? that
"[w]e are not dealing here [i.e., in regard to the issue of
fungibility] with a question of whether a party has satisfied a
commercial contract" (14 CIT at 773). In its decision on appeal,
the CAFC quoted this statement and continued: "We are dealing
instead with an exemption from duty, a statutory privilege due only
when enumerated conditions are met. 'Such a claim is within the
general principle that exemptions must be strictly construed, and
that doubt must be resolved against the one asserting the
exemption.'" (944 F. 2d at 858) On this basis, we disagree with
this contention by the inquirer.
Some of the laboratory reports for the claims under
consideration are partially illegible or may not have been signed
or initialed by a responsible party (this may be as a result of
the copying of the reports; the originals may not have this
deficiency). In this regard, your attention is invited to 19 CFR
151.13(a) and (i)(5)(vi), under which Customs accredited laboratory
reports must have the initials or signature of the person accepting
technical responsibility for a gauging or analysis report and
Customs is not required to accept reports which do not comply with
this requirement.
JET FUEL
In regard to the finding of non-fungibility for jet fuel
because the aromatic content of the exported merchandise was
greater than 20% (claims 4, 19, and 21), it is argued that the ASTM
standards permit slight statistical variances, based on a test
method's "precision." See our position above in regard to this
contention. In any event, we note that such variances are not
permitted for this ASTM standard (ASTM D 1655, see note A: "The
requirements herein are absolute and are not subject to correction
for tolerance of the test methods").
It is also argued that the aromatic content for jet fuel under
ASTM D 1655 may be up to 25%, on the basis of footnote C to the
table in that ASTM standard. Under that footnote,
Fuels with an aromatic content over 20 volume % but not
exceeding 25 volume % are permitted provided the supplier
(seller) notifies the purchaser of the volume, distribution
and aromatic content within 90 days of date of shipment
unless other reporting conditions are agreed to by both
parties.
According to the inquirer, all commercial parties in the jet
fuel industry routinely ignore this footnote and accept product
containing up to 25% aromatics without notice and without prior
agreement. The inquirer states that the airline customers of the
claimant in this case (a major petroleum refiner) have never
requested, and the claimant has never provided, notice that jet
fuel contains between 20% and 25% aromatics, nor is there any
evidence that any other seller or purchaser provides or requires
such notice. The inquirer states that there is no price
differential between jet fuel containing 20% or less aromatics and
jet fuel containing between 20% and 25% aromatics. The inquirer
provides a table of Engine Manufacturer's Requirements for General
Electric and Pratt & Whitney engines in which the maximum aromatics
for General Electric is listed as 25% and that for General Electric
as 20%, with a footnote stating "Waiver currently in effect
authorizing up to 25 vol. % Aromatics, as necessary." Therefore,
according to the inquirer, "the 'commercial world' unqualifiedly
ignores the notice requirement contained in ASTM D 1655 footnote
C and treats jet fuel containing up to 25% aromatics as fungible
...."
We are not satisfied that the above arguments establish that
jet fuel containing 20% or less aromatics and jet fuel containing
20% to 25% aromatics are identical and interchangeable in all
situations. While it is true that one of the United States engine
manufacturers may permit aromatics of up to 25% (the other only
"currently" waives the 20% maximum), that does not eliminate the
possibility of a commercial preference by the customers of the jet
fuel (as opposed to the manufacturers of the engines in the
airplanes of the customers). We note that higher amounts of
aromatics in jet fuel result in a greater likelihood of the fuel
smoking (Petroleum, Prehistoric to Petrochemicals, G. A. Purdy
(1958), p. 66; see also ASTM D 1655-92c, paragraph X1.4.2.3). We
also note that the newly revised ASTM standard for jet fuel (ASTM
D 1655-92c) retains a limit on aromatics (now set at 22% instead
of 20%) with the footnote provision that aromatics may be up to 25%
"provided the supplier (seller) notifies the purchaser of the
volume, distribution and aromatic content within 90 days of
shipment ...."
Although this modification to the ASTM standard cannot operate
to change the limit on aromatics to 22% for the merchandise under
consideration (i.e., because fungibility must be determined at the
time of substitution and at that time the 20% limit was in effect),
it is objective evidence that there is a consciously derived
differentiation between high and low aromatic-content jet fuel.
In light of the effect of a higher content of aromatics in jet fuel
(i.e., resulting in a greater likelihood of the fuel smoking), in
this environmentally conscious age we are unable to conclude that
the ASTM standard on aromatics in jet fuels, the best evidence
available, may be ignored. As for the argument of the inquirer
that such a conclusion may create sub-groups of jet fuel (for
fungibility purposes), we note that if this is so, the sub-groups
are created by recognized industry standards. We conclude that the
imported jet fuel and the exported jet fuel in claims 4, 19, and
21 are not fungible.
In regard to claim 19, the inquirer has submitted an alternate
amended claim 19 (filed with Customs within 3 years of exportation)
based on the theory that if jet fuel with more than 20% aromatics
is not fungible with jet fuel with less than 20% aromatics, jet
fuel with between 20% and 25% aromatics is fungible with jet fuel
with the same range of aromatic content. As to the fact that in
the amended claim the imported merchandise is described as "jet A-
1" and the exported merchandise is described as "jet fuel (DERD-
2494)", see the discussion of this issue in regard to claim 9,
below. If the condition set forth there is met, a finding of
fungibility is not precluded on this basis. However, the
laboratory reports for the imported merchandise and the exported
merchandise in the amended claim 19 indicate that the imported
merchandise has an electrical conductivity additive and the
exported merchandise does not (i.e., the specification for the
imported merchandise is 53 and that for the export is 1). In view
of the inquirer's statement (in regard to claim 5, below) that the
claimant does not supply jet fuel containing the antistatic ASA 3
except on special request and that the claimant is aware of no jet
fuel producer that routinely manufactures jet fuel containing that
antistatic, we believe that this difference precludes fungibility.
We conclude that the imported merchandise and the exported
merchandise in the amended claim 19 are not fungible.
In regard to the finding of non-fungibility for jet fuel
because of the use of different names for the merchandise, the
inquirer notes that the specifications for "jet A" and "jet A-1"
are the same except that the maximum freezing point for jet A is
-40 degrees Centigrade (C) (-40 degrees Fahrenheit (F)) and that
for jet A-1 is -47 degrees C (-52.6 degrees F). According to the
laboratory report for the imported jet fuel in claim 5, the maximum
freezing point ranged between -54 and -67 degrees F and that for
the export was -55 degrees C. Thus, the freezing points for both
imported and exported jet fuel meet the specifications for jet A-
1, as recognized in the Customs technical evaluation of
fungibility.
As for the description of the exported jet fuel in claim 5
as "jet A-1 without ASA 3", the inquirer notes that ASA 3 is an
electrical conductivity additive (i.e., an antistatic) which is
permitted in certain concentrations in jet fuel, according to the
pertinent ASTM standard. The specification in ASTM D 1655 for
electrical conductivity is in footnote J to the table in the ASTM
standard and states "A limit of 50 to 450 conductivity units (Ps/m)
applies only when an electrical conductivity additive is used and
under the condition at point of use." There is no indication of
electrical conductivity in the laboratory report for the imported
jet fuel in claim 5 and the report for the export resulted in a
finding of 3 Ps/m. The inquirer states that the claimant does not
supply jet fuel containing ASA 3 except on special request and,
even then, normally only after shipment of the fuel from the
refinery at or near the purchaser's facility. The inquirer states
that the claimant is aware of no jet fuel producer that routinely
manufactures jet fuel containing ASA 3. In this regard, we note
that there are 4 additives (antioxidants, metal deactivators,
electrical conductivity additives, and fuel system icing
inhibitors) which may be added to each type of jet fuel subject to
the standards in ASTM D 1655. We do not believe that a drawback
claim must affirmatively establish the presence or absence of these
additives to establish fungibility, although, as noted above in
regard to the amended claim 19, the presence of an additive in one
lot of merchandise and the absence of the additive in the lot of
merchandise which is claimed to be fungible may preclude a finding
of fungibility.
Although we conclude that the characteristics cited above are
not fatal to fungibility in claim 5, we are unable to conclude that
the imported merchandise and the exported merchandise in this claim
are fungible. This is so because of the absence of significant
specifications in the laboratory reports for this claim (e.g.,
aromatic content for the imports, as well as many other
specifications provided for in ASTM D 1655; and distillation
temperatures for the exports).
In claim 9, non-fungibility was found because the imported
merchandise and the exported merchandise are given different
commercial names ("jet fuel DERD 2494" and "jet fuel" or "jet A1"
for the imports and "jet A-1" for the exports) and because there
are substantial differences in the API gravity and no information
on the freezing point for the imports. The inquirer states that
"DERD 2494" is a European standard for jet fuel which specifies
properties analogous to those of ASTM D 1655 in the United States
and that jet fuel meeting the DERD 2494 specifications also
satisfies the specifications in ASTM D 1655. Assuming that the
inquirer is correct, we conclude that the term "DERD 2494", as it
is used in this situation, is a modifier indicating that the jet
fuel will meet the specifications in DERD 2494. The use of "DERD
2494" in this case does not preclude a finding of fungibility,
provided that the inquirer provides a copy of the specifications
in DERD 2494 and that Customs is satisfied that fuel which meets
those specifications would also meet the specifications in ASTM D
1655.
Although API gravity was formerly included in the
specifications for jet fuel, with a range of 37 - 51 (see, e.g.,
ASTM D 1655-83), ASTM D 1655 does not now have a specification for
API gravity, nor did it at the time of the substitution. In view
of this fact, and in view of the fact that the API gravities for
the imported and exported jet fuel in this claim meet the former
specifications for API gravity, we conclude that a finding of
fungibility is not precluded on this ground. Because the inquirer
has now provided laboratory reports with freezing points for the
imported merchandise and because those freezing points meet the
freezing point specification for jet A-1, a finding of fungibility
is not precluded on this basis either. However, we note that the
laboratory reports for the imported and exported merchandise in
claim 9 do not include specifications for all of the criteria
provided for in ASTM D 1655. (I.e., in the October 24, 1986,
report on imports, there is no specification for acidity and
although there is a specification on the smoke point, there is no
specification on napthalenes (napthalenes must be less than 3% in
volume if the smoke point is between 20 and 25, as is indicated in
the report). In the August 15, 1987, report on imports, there is
no specification for the net heat of combustion and the figure for
density at 15 degrees C is illegible. In the report on exports,
there is no specification for the net heat of combustion.)
Accordingly, we are unable to conclude that the imported
merchandise and the exported merchandise in claim 9 are fungible.
If the above deficiencies in the laboratory reports are corrected
to your satisfaction and if the condition with regard to the DERD
2494 specifications is satisfactorily met, fungibility may be found
in regard to this claim.
DIESEL FUEL/HEATING FUEL/GAS OIL
Initially, we note, for your information, that, as is true
with jet fuel (discussed above), the ASTM standard for diesel fuel
(ASTM D 975) has been modified from that which was applicable at
the time of the substitution in this case (i.e., ASTM D 975-90 is
applicable in this case; the current standard is ASTM D 975-92a).
In claim 7, non-fungibility was found because the imported
merchandise was given different commercial names ("high pour
diesel", "diesel" and "#2 diesel oil") from those given the
exported merchandise ("diesel" and "gas oil"). The term "gas oil"
is generally used to describe distillate-type fuel oils (see G. A.
Purdy, Petroleum, Prehistoric to Petrochemicals, page 258 (1958)).
Diesel fuel meeting the grade 2-D specifications in ASTM D 975 is
a distillate-type fuel oil and may properly be called "gas oil" (in
this regard, see Appendix X1.2.3 to ASTM D 975, in which grade 2-
D diesel fuel is described as including "the class of distillate
gas oils of lower volatility" (emphasis added)). "#2 diesel oil"
refers to a grade of diesel oil covered in ASTM D 975 (i.e., grade
2-D), the specifications for which the imported and exported
merchandise are claimed to meet. We note that the pour point for
the imported merchandise called "high pour diesel" does not vary
significantly from those of the other merchandise (i.e., -18
degrees C, versus -9 through -15 degrees C; as compared to -24
degrees C for the exported merchandise).
Based on the above, we do not believe that the commercial
names referred to above preclude a finding of fungibility for this
merchandise. However, the specifications in the laboratory report
for the imported merchandise are insufficient to determine whether
the imported merchandise meets the specifications for grade 2-D
diesel fuel under ASTM D 975 (i.e., there are no specifications for
kinematic viscosity, carbon, or sulfur given for any of the
imports). Also, the distillation temperature for 90% recovery for
the imported merchandise described in the laboratory reports dated
May 8 and May 12, 1986 (650 degrees F and 648 degrees F,
respectively) exceeds the maximum in the ASTM D 975 specifications
and that for the imported merchandise described in the laboratory
report dated May 22, 1988, is only for the end point (the ASTM
specification is for 90% recovery), but based on a comparison with
the other laboratory reports, it appears that it would also exceed
the ASTM D 975 specification for the distillation temperature for
90% recovery. The specifications for the exported merchandise in
claim 7 also are insufficient because the kinematic viscosity was
measured at 30 degrees C (that in ASTM D 975 is measured at 40
degrees C). Furthermore, the flash point (109 degrees F) for the
merchandise described in the laboratory report dated December 27,
1988 (tank 952) is lower than the minimum flash point in the ASTM
D 975 specifications (125 degrees F). We are unable to make a
finding of fungibility as to the imported merchandise described in
the September 24, 1988, laboratory report and as to the exported
merchandise described in the December 27 (tank 950), 28, and 29,
1988, laboratory reports for claim 7. We conclude that the
imported and exported merchandise described in the other laboratory
reports for claim 7 is not fungible.
In claim 8, non-fungibility was found because the imported
merchandise was described as "Algerian gas oil" and the exported
merchandise was described as "gas oil". The inquirer contends that
the modifier "Algerian" merely identifies the origin of the gas oil
and does not describe its physical or chemical properties. The
inquirer provides evidence asserting that the imported merchandise
is No. 2 heating oil meeting ASTM D396 grade 2 and the exported
merchandise is No. 2 diesel fuel meeting ASTM D-975 grade 2
(actually, this would be grade 2-D). The inquirer contends that
the exported merchandise satisfies the criteria for both ASTM
standards for grade 2 and "possesses technical specifications which
are commercially identical to those of the designated import."
As stated above, the term "gas oil" is generally used to
describe distillate-type fuel oils. Both heating oil meeting the
grade 2 specifications in ASTM D 396 and diesel fuel meeting the
specifications grade 2-D in ASTM D 975 are distillate-type fuels
and may properly be called "gas oil." Merchandise which is
commercially identical may be fungible when the merchandise
originated in different countries unless a customer preference for
merchandise originating from one of the countries can be shown
(Guess?, supra).
Thus, fungibility is not precluded as a result of the
description of the imported merchandise as "Algerian gas oil" and
that of the exported merchandise as "gas oil." However, we do not
agree with the argument by the inquirer that grade 2 heating oil
(under ASTM D 396) is fungible with grade 2-D diesel fuel (under
ASTM D 975). As stated in the ASTM, the former "covers grades of
fuel oil intended for use in various types of fuel-oil-burning
equipment ..." (ASTM D 396 paragraph 1.1) (see also paragraph 1.1.1
"... for use in domestic and small industrial burners" and Appendix
X1, paragraph X1.3.2 "... for use in atomizing type burners ...").
The latter "covers [one of] three grades of diesel fuel oils
suitable for various types of diesel engines" (ASTM D 975 paragraph
1.1) (see also paragraph 1.1.2 "... for automotive diesel engines,
which is also suitable for use in non-automotive applications,
especially in conditions of frequently varying speed and load" and
Appendix X1, paragraph X1.2.3 "... for use in high-speed engines
in services involving relatively high loads and uniform speeds, or
in engines not requiring fuels having the higher volatility or
other properties [of] Grade No. 1-D"). (See also, G. A. Purdy,
supra, pages 352-370.)
In addition to the fact that grade 2 heating oil and grade
2-D diesel fuel are for two very different uses, the specifications
in the ASTM vary significantly. ASTM D 396 has general
requirements (see paragraphs 3.1 and 3.2) and ASTM D 975 does not.
The flash point and the maximum kinematic viscosity are different
in the specifications and ASTM D 396 grade 2 includes
specifications for API density and pour point while ASTM D 975
grade 2-D does not and ASTM D 975 grade 2-D includes specifications
for maximum ash, minimum Cetane number, and (by reference to an
ambient temperature map) maximum cloud point.
We conclude that the imported "Algerian gas oil" and the
exported "gas oil" in claim 8 are not fungible because the former
is acknowledged to be grade 2 heating oil and the latter grade 2-
D fuel oil which are not commercially identical. Even if that were
not the case, we note that the specifications for the imported
merchandise and the exported merchandise differ significantly
(i.e., the flash point for the import is 154 degrees F, that for
the export is 110, and the minimum under ASTM D 396 is 100 and that
under ASTM D 975 is 125; there is no 90% distillation recovery
specification for the import, although there is for the export and
in each of the ASTM specifications; there is no kinematic viscosity
specification for the import, although there is for the export and
in each of the ASTM specifications; there is a cloud point
specification for the import, but not for the export; and there is
a specification for API density for the import, but not for the
export).
In claim 10, non-fungibility was found because the imported
merchandise was described as "diesel fuel" and the exported
merchandise was described as "gas oil". As stated above, the term
"gas oil" is generally used to describe distillate-type fuel oils
and diesel fuel meeting the grade 2-D specifications in ASTM D 975
is a distillate-type fuel and may properly be called "gas oil."
However, we note that the distillation temperature for 90% recovery
for the imported merchandise exceeds the maximum specification in
ASTM D 975 (the imported merchandise specification is 645 degrees
F and the maximum specification in the ASTM is 640 degrees F). We
conclude that the imported merchandise and the exported merchandise
in claim 10 are not fungible.
UNLEADED GASOLINE/REFORMATE
Initially, we note, for your information, that the ASTM
standard for automotive gasoline which was applicable at the time
of the substitution in this case (i.e., ASTM D 439-89) was
discontinued in 1991 and has been replaced by ASTM D 4814-90a.
In claim 3, non-fungibility was found because the imported
merchandise and the exported merchandise were given different
commercial names (i.e., "gasoline, unleaded" for the import and
"reformate" for the export). The inquirer states that the term
"reformate" is often used in the United States to describe a very
high quality gasoline precursor with an octane rating of
approximately 100 which is "blended down" to produce commercial
grade unleaded gasoline, but the term is also used by the
international petroleum industry to describe merchandise which
meets the ASTM D 439 standard for unleaded gasoline. This latter
usage is consistent with our review (i.e., see G. A. Purdy, supra,
pages 175, 184, wherein reformate is described as the product of
thermal or catalytic reforming which increases octane numbers but
does not necessarily result in the very high quality gasoline
precursor referred to above).
It was also noted, in regard to claim 3, that the aromatic
content of the exported merchandise was very high. In this regard,
we note that there is no aromatic specification in ASTM D 439.
However, we also note that aromatics are desirable components in
gasoline because they can increase the octane number (see G. A.
Purdy, supra, page 66). In the case of the laboratory reports for
the exported merchandise in claim 3, there is no motor octane
number or anti-knock index. In view of the importance of the anti-
knock index in determining the quality of gasoline (see Appendix
X1, paragraphs X1.1, X1.2, and X1.3 of ASTM D 439 and the same
appendix in ASTM D 4814; see also C.S.D. 91-3, which provides,
among other requirements, that automotive gasoline must have the
same octane ratings), we believe this omission is fatal to a
finding of fungibility. This is particularly true when the name
given to the merchandise may indicate that it is of a higher grade
than the imported merchandise and one of its qualities (i.e., a
high aromatic content) may substantiate that indication.
Even if the above were not so, significant specifications
necessary to determine fungibility are omitted from the laboratory
reports for claim 3 and there is clear evidence to indicate that
the imported merchandise and the exported merchandise are not
fungible. In addition to the anti-knock rating (octane),
volatility is described as defining the general characteristics of
gasoline (Appendix X1, paragraph X1.1 of ASTM D 439 and ASTM D
4814). Customs has ruled that gasoline of different volatility
classes (i.e., Class B and Class C) is not fungible for
substitution same condition drawback purposes (ruling 224003,
February 17, 1993; see also C.S.D. 91-3, referred to above).
Volatility limits for gasoline are established in terms of vapor-
liquid ratio, vapor pressure, and distillation properties (Appendix
X1, paragraph X1.5.3 of ASTM D 439, and paragraph X1.7.3 of ASTM
D 4814). Vapor/liquid ratios are not given in the laboratory
reports for the exported merchandise in claim 3 and the Reid vapor
pressure specifications in the laboratory reports indicate that the
volatility class of exported merchandise is Class A and that most
of the imported merchandise, as conceded by the inquirer, appears
to be Class B or Class C in volatility. We conclude that the
imported merchandise and the exported merchandise in claim 3 are
not fungible.
In claim 6, non-fungibility was found because the imported
merchandise and the exported merchandise were given different
commercial names (i.e., "gasoline, unleaded regular" for the import
and "reformate" for the export). On the basis of the discussion
of the uses of the term "reformate" above, we conclude that the use
of these different terms is not fatal to a finding of fungibility.
However, the laboratory report for the exported merchandise does
not have specifications for the vapor/liquid ratio, corrosion, gum,
and sulfur. As noted above, volatility and the anti-knock rating
(octane) are described as defining the general characteristics of
gasoline and the vapor-liquid ratio is used to establish volatility
limits. In the absence of a specification for the vapor/liquid
ratio for the exported merchandise in claim 6, as well as the other
omissions in the specifications, we are unable to conclude that the
imported merchandise and the exported merchandise are fungible.
HOLDING:
The imported merchandise is not fungible, for purposes of the
substitution same condition drawback law, with the exported
merchandise in claims 4, 19, and 21 and amended claim 19 (jet
fuel), claims 7 (partial), 8, and 10 (diesel fuel/heating fuel/gas
oil), and claim 3 (gasoline/reformate).
Because of insufficient information in the laboratory reports
provided by the inquirer, we are unable to determine whether the
imported merchandise is fungible, for purposes of the substitution
same condition drawback law, with the exported merchandise in
claims 5 and 9 (jet fuel), part of claim 7 (diesel fuel/gas oil),
and claim 6 (gasoline/reformate).
Sincerely,
John Durant, Director