- Type : • HTSUS :
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Related:
858227
DRA-4-RR:CR:DR
228642 CK
Tower Group International
Attn: Bruce Bell
84 State Street
4th Floor
Boston, MA 02109
RE: Ruling request; commercial interchangeability; 19 U.S.C. 1313(j)(2); Ferrous Corp.; fuel additives; MP-3; MP-4
Dear Mr. Bell:
This is in reply to your request on behalf of your client, Ferrous Corp (Ferrous), for a determination of commercial interchangeability, dated October 21, 1999. Your original request sought a determination of commercial interchangeability between two fuel additives, MP-3 and MP-4. However, in a telephone conversation with your client, Ferrous, on August 30, 2000, Ferrous withdrew its request for a commercial interchangeability determination between the two additives MP-3 and MP-4. Ferrous instead, sought a commercial interchangeability determination for each product, MP-3 for MP-3 and MP-4 for MP-4.
Ferrous is in the business of selling and distributing fuel additive products, most of which are imported from Bycosin AB located in Sweden. The fuel additives are mainly used in commercial marine applications onboard ocean going vessels, to eliminate problems associated with marine bunker fuels including emissions, deposits and poor combustion.
Ferrous is both the importer and exporter of the merchandise, which is the subject of the drawback claims.
Both the MP-3 and the MP-4 are fuel additives solely imported from Sweden and no domestically purchased or manufactured products are ever provided in substitution for either of these products. The merchandise is both imported and exported in 200-liter drums. The drums do not have serial or part numbers, but they do have production identification labels.
According to the submission, both MP-3 and MP-4 are classified under subheading 3811.900004, HTSUS.
Attached is the drum label for Bycosin MP-3. Bycosin Marine is listed as the International distributor, and Ferrous Corporation is listed as the North American distributor. Content states, “Petroleum distillate, (25-35% Aromatics) 30-100%.”
The attached technical bulletin for MP-3 contains the following information.
Appearance
Dark reddish brown liquid
Viscosity
28 cSt @ 25C
Flash Point
150ºF (65ºC) PMCC
Pour Point
-13ºF (-25ºC)
Odor
Mild Solvent/Hydrocarbon
Attached is the drum label for Bycosin MP-4. Bycosin Marine is listed as the International distributor, and Ferrous Corporation is listed as the North American distributor. Content states, “Petroleum distillate, (>96% Aromatics)” and “Petroleum distillate, (25-35% Aromatics) 10-30%.”
The attached technical bulletin for MP-4 contains the following information.
Appearance
Dark reddish brown liquid
Viscosity
7 cSt @ 25C
Flash Point
144ºF /62ºC (PMCC)
Pour Point
-13ºF (-25ºC)
Odor
Slightly Aromatic
Also attached is a spectrochemical analysis from Pacific Northern Analytical dated May 27, 1999, for both the MP-3 and the MP-4.
MP-3
MP-4
Aluminum
<0.01
<0.01
Chromium
<0.01
<0.01
Copper
<0.01
<0.01
Iron
2.84
3.59
Lead
<0.01
0.01
Manganese
0.02
0.02
Nickel
<0.01
<0.01
Silver
<0.01
<0.01
Tin
<0.01
<0.01
Titanium
0.02
0.03
Vanadium
<0.01
<0.01
Boron
<0.01
<0.01
Silicon
<0.01
<0.01
Sodium
<0.01
<0.01
Barium
<0.01
<0.01
Calcium
<0.01
0.05
Magnesium
0.06
0.21
Molybdenum
<0.01
<0.01
Phosphorus
<0.01
<0.01
Potassium
<0.01
<0.01
Zinc
<0.01
<0.01
According to the attached safety data sheet the CAS number for MP-3 is 68334-30-5. According to the attached safety data sheet the CAS number for MP-4 is 68333-88-0.
Also attached is binding ruling for the classification for the MP-3 and MP-4, NY 858227, dated January 9, 1991. Both MP-3 and MP-4 are classified under subheading 3811.90.0000, HTSUS.
Attached is a CF 7501 for entry 849-8, entered February 15, 1999. Ferrous Corp. is the importer of record, and it contains one line of merchandise, “antiknock Preparations, other”, classified under subheading 3811.90.0000, HTSUS. Attached to the CF 7501 is an invoice from Bycosin, number 103/99 dated January 11, 1999, for Ferrous. The order is for Bycosin MP-4- 80 x 200 liter at xx.xx (SEK) per unit.
Also attached is an invoice for purchase order number EDE 1008, dated September 28, 1999. Ferrous is listed as the maker of a 200 liter drum of MP-4 for shipment to Sea-Land Service Inc at $x.xx per unit. Next is a Ferrous invoice number 014011 for sale of MPR- to Sea-Land Corp. The merchandise was shipped September 29, 1999, and was for purchase order EDE 1008. The merchandise is listed as four drums of MP-4, packed in 200 liter drums. The price is $x.xx per unit. Next is the delivery invoice to Sea-land from Ferrous for 4 drums of MP-4 on September 29, 1999.
Next is sales invoice 012678 for the sale of 2 drums of 200 liters of MP-4 to Cunard Line Ltd, dated February 19, 1998. However, Cunard was charged at the MP-3 rate which is $x.xx per unit. Next is the purchase order for VW 0598 dated January 15, 1998 from Ferrous for Cunard. The description states Bycosin MP4 has been subsituted for MP3, as the MP3 was not available, price is MP3 price. Therefore, 400 liters at $x.xx. Next is the request from Cunard to Ferrous for the above-described order. Next is invoice 1350 for the shipment of the 2 drums (400 liters) of MP4 on Tropic Oil Company letterhead dated February 18, 1998, for purchase order VW0598.
Next is sales invoice 012951 from Ferrous to Crowley Petroleum Transp. For 3 drums (600 liters) of MP4. The order states, “substitute MP4 for MP3 at Lower MP3 price.” Price is $x.xx per unit. Next is an invoice from Ferrous to Crowley for purchase order CR 10348v, for 3 drums of MP-4 (sub for MP-3) to be delivered June 22, 1998.
Next is an Invoice from Bycosin to Ferrous number 225/98. The merchandise listed is 10000 liters of MP-4 at xx.xx (SEK) and 6000 liters of MP-3 at xx.xx (SEK). Attached to that invoice is the CF 7501 for entry 404-9, entered February 15, 1999.
Next is invoice number 014011, dated October 6, 1999 from Ferrous to Sea-land for the sale of 800 liters of MP-4 with a price of $x.xx per liter.
ISSUE:
Is the fuel additive MP-3 commercially interchangeable with MP-3 and is MP-4 commercially interchangeable with MP-4 for purposes of 19 U.S.C. 1313(j)(2)?
LAW AND ANALYSIS:
Under 19 U.S.C. §1313(j)(2), as amended, drawback may be granted if there is, with respect to imported duty-paid merchandise, any other merchandise that is commercially interchangeable with the imported merchandise and if the following requirements are met. The other merchandise must be exported or destroyed within three years from the date of importation of the imported merchandise. Before the exportation or destruction, the other merchandise may not have been used in the United States and must have been in the possession of the drawback claimant. The party claiming drawback must either be the importer of the imported merchandise or have received from the person who imported and paid any duty due on the imported merchandise a certificate of delivery transferring to that party, the imported merchandise, commercially interchangeable merchandise, or any combination thereof. The statute did not define commercially interchangeable.
The drawback statute was substantively amended by section 632, title VI - Customs Modernization, Pub. L. No. 103-182, the North American Free Trade Agreement Implementation ("NAFTA") Act (107 Stat. 2057), enacted December 8, 1993. The foregoing summary of section 1313(j)(2) is based on the law as amended by Public Law 103-182. Title VI of Public Law 103-182 took effect on the date of enactment of the Act (section 692 of the Act). The amendments to the drawback law (19 U.S.C. §1313) are applicable to any drawback entry made on or after the date of enactment as well as to any drawback entry made before the date of enactment if the liquidation of the entry is not final on the date of enactment (H. Report 103-361, 103d Cong., 1st Sess., 132 (1993); see also provisions in the predecessors to title VI of the Act; H.R. 700, 103d Cong., 1st Sess., section 202(b); S. 106, 103d Cong., 1st Sess., section 202(b); and H.R. 5100, 102d Cong., 2d Sess., section 232(b)).
Before its amendment by Public Law 103-182, the standard for substitution was fungibility. House Report 103-361, 103d Cong., 1st Sess., 131 (1993) contains language explaining the change from fungibility to commercial interchangeability. According to the House Ways and Means Committee Report, the standard was intended to be made less restrictive, i.e., "the Committee intends to permit substitution of merchandise when it is ‘commercially interchangeable,' rather than when it is ‘commercially identical'" (the reference to "commercially identical" derives from the definition of fungible merchandise in the Customs Regulations, prior to their amendment in 1998 (19 C.F.R. §191.2(l)). The report, at page 131, also states:
The Committee further intends that in determining whether two articles were commercially interchangeable, the criteria to be considered would include, but not be limited to: Governmental and recognized industry standards, part numbers, tariff classification, and relative values.
The Senate Report for the NAFTA Act (S. Rep. 103-189, 103d Cong., 1st Sess., 81-85 (1993)) contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability. The amended Customs Regulations, 19 C.F.R. §191.32(c), provide that in determining commercial interchangeability:
...Customs shall evaluate the critical properties of the substituted merchandise and in that evaluation factors to be considered include, but are not limited to, Governmental and recognized industrial standards, part numbers, tariff classification and value.
In order to determine commercial interchangeability, Customs adheres to the Customs regulations, which implement the operational language of the legislative history. The best evidence whether those criteria are used in a particular transaction are the claimant’s transaction documents. Underlying purchase and sales contracts, purchase invoices, purchase orders, and inventory records show whether a claimant has followed a particular recognized industry standard, or a governmental standard, or any combination of the two, and whether a claimant uses part numbers to buy, sell, and inventory the merchandise in issue. The purchase and sale documents also provide the best evidence with which to compare relative values. Also, if another criterion is used by the claimant to sort the merchandise, the claimant’s records would show that fact which will enable Customs to follow the Congressional directions.
Our review of the aforementioned commercial documentation with respect to the above-referenced criteria for commercial interchangeability yields the following analysis.
1. Government or Industry Standards
In regard to this criterion, no government of industry standards exist for these products. However, Ferrous states that it has only one supplier for the MP-3 and the MP-4, and that is Bycosin. Ferrous states that the chemical and physical properties of MP-3 and MP-4 do not change regardless of when it orders and receives the MP-3 and MP-4. Therefore, all MP-3 and MP-4 it orders and imports from Bycosin should result in the following chemical analysis.
MP-3
MP-4
Aluminum
<0.01
<0.01
Chromium
<0.01
<0.01
Copper
<0.01
<0.01
Iron
2.84
3.59
Lead
<0.01
0.01
Manganese
0.02
0.02
Nickel
<0.01
<0.01
Silver
<0.01
<0.01
Tin
<0.01
<0.01
Titanium
0.02
0.03
Vanadium
<0.01
<0.01
Boron
<0.01
<0.01
Silicon
<0.01
<0.01
Sodium
<0.01
<0.01
Barium
<0.01
<0.01
Calcium
<0.01
0.05
Magnesium
0.06
0.21
Molybdenum
<0.01
<0.01
Phosphorus
<0.01
<0.01
Potassium
<0.01
<0.01
Zinc
<0.01
<0.01
Therefore, as long as the MP-3 and MP-4 continue to contain the above chemical analysis then the MP-3 would be interchangeable with MP-3 and the MP-4 would be interchangeable with MP-4.
Part Numbers:
Ferrous has not submitted any documents showing it uses any part numbers
beyond identifying the merchandise as MP-3 and MP-4. Additionally, the purchase invoice from Bycosin shows the fuel additives are identified by their trade names MP-3 and MP-4. The labels submitted show that the merchandise is identified by the trade names MP-3 and MP-4. Finally, the sales invoices submitted show that Ferrous identifies and sells the fuels additives by MP-3 and MP-4.
Therefore, as the fuel additives are identified only by the trade names, MP-3 and MP-4, and those names are used to both purchase and sell the merchandise this criterion is met.
Tariff Classification:
In regards to this criterion, Ferrous states that the both the MP-3 and the MP-4 are classified under subheading 3811.90.0000, HTSUS. Furthermore, Ferrous has provided NY ruling 858227, dated January 9, 1991 stating that both fuel additives are classified under subheading 3811.90.000, HTSUS. While we do not have any export documentation stating the tariff classification of the MP-3 and MP-4, the submitted ruling shows that the two fuel additives are classified under one subheading. Therefore, at most, this criterion would be indeterminate.
Relative Values:
In regards to this criterion for MP-4 Ferrous submitted an invoice from Bycosin, number 103/99 dated January 11, 1999, for sale to Ferrous. The order is for Bycosin MP-4 80 x 200 liter at xx.xx (SEK) per unit.
Also submitted for this criterion for MP-3 is invoice 225/98, the merchandise listed is 10000 liters of MP-4 at x.xx (SEK) and 6000 liters of MP-3 at x.xx (SEK).
Additionally, handwritten on the above invoice is the conversion rate for figuring the U.S. dollar amount from the Swedish crone, which is .12439400.
Therefore, the price paid for MP-4 for invoice 103/99 is $x.xx, and the amount paid on invoice 225/98 for MP-4 is $x.xx, and MP-3 is $x.xx.
According to the sales invoice EDE 1008, dated September 28, 1999. The merchandise is listed as four drums of MP-4, packed in 200 liter drums. The price is $x.xx per unit.
Also submitted is sales invoice 012678 for the sale of 2 drums of 200 liters of MP-4 to Cunard Line Ltd, dated February 19, 1998. The invoice states, “MP4 substituted for MP3 at MP3 price.” The price is $x.xx per unit.
Next is sales invoice 012951 from Ferrous to Crowley Petroleum Transp. For 3 drums (600 liters) of MP4. The order states, “substitute MP4 for MP3 at Lower MP3 price.” Price is $x.xx per unit.
Next is invoice number 014011, dated October 6, 1999 from Ferrous to Sea-land for the sale of 800 liters of MP-4 with a price of $x.xx per liter.
The difference in value of the imported and substituted merchandise may be expressed for in percentages. In this case, the percentage would represent how much greater the export value is in comparison to the import value. In this case for MP-3 that percentage is between 25.7% and 32.2%. For MP-4 the percentage is between 25.1% and 26.8%.
The differences in values do not support a finding of commercial interchangeability, however, the value difference does not preclude a finding of commercial interchangeability. Instead, we find this criterion to be inconclusive, and therefore of little weight.
Upon thorough review of the evidence submitted, we find that Ferrous’s imported and substituted MP-3 is of the same standard and quality, as long as the chemical analysis of the MP-3 corresponds to the analysis submitted. We also find that Ferrous’s imported and substituted MP-4 is of the same standard and quality as long as the chemical analysis of the MP-4 corresponds to the analysis submitted. However, since no government or industry standards exist this criterion is neutral. We conclude that Eastman uses the trade names MP-3 and MP-4 as both a description and as a part number for both its imported and substituted MP-3 and MP-4, and therefore this criterion is met. In this case the tariff classification for importation into the U.S. is met, however, no evidence has been submitted for exported MP-3 and MP-4, therefore, this criterion is neutral. In this case the relative value criteria does not support nor does it preclude a finding of commercial interchangeability. Those criteria that are neutral should be given little weight in the analysis. We therefore conclude, that the imported and substituted MP-3 for MP-3 and the MP-4 for the MP-4 are commercially interchangeable for purposes of 19 U.S.C. 1313(j)(2).
HOLDING:
The imported and substituted MP-3 is commercially interchangeable with MP-3 for purposes of 19 U.S.C. 1313(j)(2). Additionally, imported and substituted MP-4 is commercially interchangeable with MP-4 for purposes of 19 U.S.C. 1313(j)(2).
Sincerely,
William G. Rosoff, Chief
Duty and Refund Determination Branch