HQ 225193
DRA-4-CO:R:C:E 225193 CB
Mr. Dennis J. Helms
Secretary/Treasurer
Juice Farms Incorporated
P.O. Box 1368
Mount Dora, FL 32757
RE: Request for ruling under 19 U.S.C. 1313(j)(2); Substitution
of frozen concentrated orange juice; commercially interchange-
able determination
Dear Mr. Helms:
This is in reply to your letter of February 2, 1994, wherein
you requested a determination regarding substitution same condition
drawback eligibility of frozen concentrated orange juice. You have
not provided sufficient information to enable this office to issue
a ruling. Therefore, we are providing you with an information
letter.
Juice Farms, Inc. is engaged in the business of importing
frozen concentrated orange juice at approximately 65 degree brix.
The concentrate is imported from Brazil, Mexico, Costa Rica and
other countries. The imported product is concentrated orange juice
for manufacture as identified in Section 146.153 of Title 21, Code
of Federal Regulations that meets the Grade A standards of the
Department of Agriculture for concentrated orange juice for
manufacturing, Section 2852.221, Title 7, Code of Federal
Regulations. The duty-paid, duty-free, or domestic merchandise is
concentrated orange juice for manufacture that meets the Grade A
standards.
You state that product may or may not be blended for a
multitude of reasons. The most common reason is for consistency.
Some customers prefer a consistently higher or lower sugar to acid
ratio. Another reason for blending is for color. Brazilian
concentrated orange juice has consistently high color score.
Domestic concentrated orange juice produced from early and mid
season fruit usually has low color scores. Therefore, early and
mid season juice is often blended with valencia or Brazilian juice
to raise the color scores.
Juice Farms will be the importer of record and will, from time
to time, issue a Certificate of Delivery for product sold to a
domestic customer. Your letter also indicates that merchandise
imported through the port of Wilmington, Delaware is stored at a
tankfarm facility. This product is subsequently sold to both
domestic and foreign manufacturing companies. From time to time,
domestic product is purchased, stored and sold FOT tankfarm in
Delaware. This product may or may not be commingled with imported
product and subsequently sold to both domestic and foreign
manufacturing companies.
Generally, 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 provided certain
requirements are met. The other merchandise must be exported or
destroyed within 3 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 be either 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 issue is whether the imported merchandise is "commercially
interchangeable" with the exported merchandise, for purposes of 19
U.S.C. 1313(j)(2). The drawback law was substantively amended by
section 632, title VI- Customs Modernization, Public Law 103-182,
the North American Free Trade Agreement Implementation Act (107
Stat. 2057), enacted December 8, 1993. Before its amendment by
Public Law 103-182, the standard for substitution under section
1313(j)(2) was "fungibility". House Report 103-361, 103d Cong.,
1st Sess. (1993), contains language explaining the change from
fungibility to commercial interchangeability. According to the
Report (at page 131), the standard was intended to be made less
restrictive (i.e., "the Committee intends to permit the
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 (19
CFR 191.2(1))). 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 industrial
standards, part numbers, tariff classification, and
relative values.
The Senate Report for the NAFTA Act (S. Rep. 103-189, 103d Cong.,
1st Sess. (1993), pp. 81-85) contains similar language and states
that the same criteria should be considered by Customs in
determining commercial interchangeability.
Thus, before we are able to make a "commercially
interchangeable" determination, you will have to provide the
following information: any Governmental and recognized industrial
standards, tariff classification, and relative values (of both the
imported and substituted concentrates).
Please be aware that this is an "information letter" as
defined in section 177.1(d)(2), Customs Regulations (19 CFR
177.1(d)(2)), and not a "ruling" (see 19 CFR 177.1(d)(1)).
Sincerely,
William G. Rosoff, Chief
Entry Rulings Branch