DRA 4 RR:CR:DR 230207 EAB
Mr. James W. Brown
Danzas AEI Drawback Services
1718 Fry Road, Suite 240
Houston, Texas 77084
Re: Substitution unused manufacturing drawback; commercially interchangeable; 19 U. S. C. § 1313 (j) (2) ; polyethylene terephthalate; PET; bottle grade resin
Dear Mr. Brown:
This is in response to your letter dated November 26, 2003, in which you equest on behalf of B&H Polymers, Inc., 2193A Viscount Road, Orlando, Florida 32809 ("B&H of Orlando"), a ruling concerning a potential claim for drawback with respect to certain polyethylene terephthalate ("PET").
No drawback claims have been filed with CBP in this matter; accordingly, this issue is properly before this Office as a prospective ruling request under 19 C. F. R. 177.1 (d) (1) . See 19 C. F. R. 177.1 (a) .
FACTS:
B&H of Orlando purchases, imports, sells and exports PET resin/s. A representative Entry Summary (CF 7501) and supporting documents submitted with your request reveal that B&H of Orlando purchases and enters for consumption PET, classifiable as such under subheading 3907.60.0010, Harmonized Tariff Schedule of the United States ("HTSUS") . Such product, from the manufacturer's specification sheet, has an Intrinsic Viscosity "Typical Value" of 0.82 +/ 0.02 unit. The specifications include a melting point of 243-247 C, a maximum acid value (COOH) of 30 ueg/g, a maximum acetaldehyde content of 1 ppm and a maximum moisture percent of .25%. From representative
transaction documents (other than a Shipper's Export Declaration, which was not submitted with your request, we note that B&H of Orlando sold and exported PET, classifiable as such under subheading 3907.60.0010, HTSUS. Such product, from the manufacturer's specification sheet, has an Intrinsic Viscosity "Typical Value" of 0.82 +/ 0.02 units. The corresponding specifications for the exported PET include a melting point of 246-250 C, a maximum acid value of 30 ueg/g, a maximum acetaldehyde content of 1ppm and a maximum moisture percent of .4%. The invoice price of the exported PET is about 17% more than the invoice price of the imported PET.
ISSUE:
Whether the foreign and domestic PET are "commercially interchangeable" as that phrase is used in 19 U.S.C. 1313(j)(2), thereby entitling B&H to claim the benefit of substitution unused merchandise drawback.
LAW AND ANALYSIS:
In as much as drawback is a creature of statute, we begin with applicable provisions of the law concerning substituted unused merchandise eligible for drawback:
if there is, with respect to imported merchandise on which was paid any duty, tax, or fee imposed under Federal law because of its importation, any other merchandise (whether imported or domestic), that
(A) is commercially interchangeable with such imported merchandise
(B) is, before the close of the 3 year period beginning on
the date of importation of the imported merchandise, . . exported and
(C) before such exportation . . .
(i) is not used within the United States, and
(ii) is in the possession of . . .
the party claiming drawback under this paragraph, if that party
(I) is the importer of the imported merchandise, . . . then upon the exportation . . . of such other merchandise the amount of each such duty, tax, and fee paid regarding the imported merchandise shall be refunded as drawback . . . .
19 U. S. C. 1313 (j) (2) .
We first note from the documents included with and made a part of this application that PET from country "A" has been regularly entered for consumption. See representative Customs Form 7501 pertaining to 144,000 kg polyethylene terephthalate under entry no. PPPPNNN7573, entered November 9, 2000.
We further note that 348864 kg of polyethylene terephthalate were exported to country "B" on October 30, 2003 (bill of lading of even date), i.e., within three (3) years from the date of importation of the product from country "A".
We turn therefore, to the crux of the matter, whether the imported and the exported PET resins are "commercially interchangeable".
We have stated consistently and often (HQ 228575 dated October 3, 2000; HQ 225188 dated May 10, 2000 and HQ 230160 dated December 2, 2003), that the legislative history suggests specific criteria (government or recognized industry standards, part numbers, tariff classification and relative values) which have been set forth in the Customs Regulations at 19 C.F.R. 191.32(c). Furthermore, the "best evidence whether those criteria are used in a particular transaction are [sic] 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 [sic] 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 . . . .
HQ 228642, supra.
Government or industry standards
There are US Food and Drug Administration food safety standards with respect to the preparation and chemical content of the base sheet, the base sheet and base polymer, coatings and emulsifiers used in the production of polyethylene phthalate polymers used or as components of plastics intended for use in contact with food. 21 CFR § 177.1630. The product specification sheet for the PET resin exported to country B indicates compliance with the foregoing provision; however, you have not provided this Office with an similar declaration of regulatory compliance for the imported PET resin that is a product of country A, so we are unable to find that this, i.e. government standard, criterion has been satisfied.
Part numbers,
Part numbers are not used for this product. While there is a reference to Grade A on the invoices, no definition of that grade was provided. The criterion for part numbers does not appear to be relevant to a determination of commercial interchangeability.
Tariff classification
The entry documents, noted above, set forth subheading 3907.60.0010 of the HTSUS. No Shipper's Export Declaration pertaining to the outbound shipment or a proper statement of exemption from this requirement has been submitted with this request. However, based on the export invoice description and product specification sheet, the export PET would be classifiable in subheading 3907.60.0010,HTSUS.
Relative values
The invoice price of the exported PET is about 17% higher than the invoice price of the exported PET.exported to country B, so we cannot compare that with the data submitted on the purchase orders underlying the representative importation and exportation of PET resin. From the submitted invoices, the imported PET was purchased for about 17 percent less in 2000 and then the exported PET was sold in 2003. While straight line comparison may be academically flawed, we find that a 3year evolution resulting in a 17 % increase in the invoice price of PET in the face of a devalued currency is indicative of relative value conformity. We find that the relative values of the imported and export PET resin compare favorably, and that this criterion for commercially interchangeability has been met.
Product Specifications
The manufacturer's invoice for the imported PET resin identifies "HUAPET 6801 IV 0.82 +/ 0.02" as a requirement for the product. The manufacturer's product specification sheet describes "HUALON 6801" as having an intrinsic viscosity "typical value" of ".82 ± .02" and, among other properties, a melting point (°C) of "245 ± 2". The invoice for the exported PET resin identifies "ELIXIR PET Polyethylene Terephthalate (PET) I.V. .82 +/ .02" as the merchandise shipped. The product specification sheet describes "Elixir PET" as having an intrinsic viscosity "typical value" of "0.82 + 0.02" and, among other properties, a melting point (°C) of "248 + 2". From these documents we find that the product specifications appear
to be the basis on which PET is bought and sold and there is no
remarkable commercial distinction between the imported and exported PET resin.
HOLDING:
The Imported and exported PET resin are commercially interchangeable.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division