Customs Ruling HQ 228008 - Request for Ruling; Citrosuco North America, Inc.; Juice Farms, Inc.; Substitution Unused Merchandise Drawback; Commercial Interchangeability; 19 U.S.C. §1313(j)(2); Frozen Concentrate Orange Juice for Manufacture; COJM; FCOJM; HQ 22647/222789, 226100, 226225, 226444; 225936.

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HQ 228008
Apr 30, 1999

Type : Drawback • HTSUS :
Related: 226100; 226225; 226444; 225936; 021999; H47265; T00501; 032194; 032195; 186652; 186676; 186677; 021812

DRA-4-RR:CR:DR 228008 BJB

Robert G. Kalik, Esq.
Nateman & Kalik L.L.P
1200 G Street, N.W.
Suite 360
Washington, D.C. 20005

RE: Request for Ruling; Citrosuco North America, Inc.; Juice Farms, Inc.; Substitution Unused Merchandise Drawback; Commercial Interchangeability; 19 U.S.C. §1313(j)(2); Frozen Concentrate Orange Juice for Manufacture; COJM; FCOJM; HQ 22647/222789, 226100, 226225, 226444; 225936.

Dear Mr. Kalik:

This is in response to your letter of April 30, 1998, submitted on behalf of Citrosuco North America, Inc. (“Citrosuco”), and received by Customs on May 8, 1998. In your letter, you requested a ruling with respect to the commercial interchangeability of certain concentrated orange juice for manufacture, pursuant to 19 U.S.C. §1313(j)(2). Your letter, a follow-up to an information letter issued by this office on September 11, 1996, presented a request for advice on whether Citrosuco qualified for substitution unused merchandise drawback provided for under 19 U.S.C. §1313(j)(2), and whether Citrosuco has complied with the statutory requirements of commercial interchangeability.

FACTS:

Citrosuco, formerly Juice Farms, Inc., (hereinafter referred to as “Citrosuco”) is an importer of Concentrated Orange Juice for Manufacture (“COJM”), as defined in the Standards of Identity of the Food and Drug Administration (21 C.F.R. §146.153), and meets the Grade A Standards of the United States Department of Agriculture (7 C.F.R. §52.1551, Table IV). The COJM merchandise is U.S.D.A. Grade A Certified upon its importation. Citrosuco imports COJM from Brazil, Costa Rica, and Mexico and sells the product to orange juice processors and reconstituters in the United States and Canada. Citrosuco stores juice on a contractual basis at a storage facility within a foreign trade zone, in Wilmington, Delaware, where it stores COJM imported through the Port of Wilmington for sale and distribution. Products destined for Florida processors are imported directly through Port Manatee or the Port of Tampa. Citrosuco also purchases COJM from domestic processors for sale to its customers in the U.S. and, at times, for sale to the export market.

In the present case, Citrosuco has imported Brazilian COJM into the United States and is exporting domestic U.S. COJM or Brazilian COJM that has been brought to the United States, placed into a foreign trade zone (“FTZ”), withdrawn and entered, and then exported to Canada. Citrosuco claims to have exported the substituted COJM from a foreign trade zone to Canada. To achieve domestic status for the exported COJM, the merchandise must be entered for consumption before it is admitted into the FTZ. Citrosuco has provided some documentation related to the entry or admission of imported COJM into a FTZ.

Citrosuco is the exporter of record of COJM to its Canadian purchasers. Even when Citrosuco is not the exporter of record it has retained the drawback rights on such transactions. Citrosuco claims that its exports fall within the requirements of unused merchandise substitution drawback (19 U.S.C. 1313(j)(2)).

Citrosuco filed two drawback claims, Drawback Entry # R74-XXXXX356 and Drawback Entry #R74-XXXXX703 (“Claim 356" and “Claim 703,” respectively,) with the Port of Boston seeking a total of $393,657.37 in duty refund. These claims are reviewed here to determine whether Citrosuco complied with the requirements of 19 U.S.C. §1313(j)(2), and whether it is entitled to drawback.

Drawback Claim R74-XXXXX35-6

Drawback claim R74-XXXXX35-6 consists of the claim and supporting documents for “the importation of the imported product” and the supporting documents for the “exportation of domestic product.”

The claim lists 18 import entries and 50 export shipments.

Designated Import

The first listed import entry is C11-XXXX620-2. The entry (CF 7501) shows that the date of entry was April 18, 1990, and covered 629,377 single strength liters of Brazilian Frozen Concentrated Orange Juice, 66.5 brix. The manufacturer is listed as Ansubnvcur and the export date is shown as February 16, 1990. The importing carrier is shown as FTZ 99 and relevant bill of lading is 15001-15004. The consumption entry consists of 10 removals from the zone to various locations. The zone admission (CF 214) lists the merchandise as Brazilian Frozen Concentrated Orange Juice at 66.5 brix, with a quantity of 5,696,264 single strength liters. The export date is February 16, 1990, and the date of import into the U.S. is March 1, 1990. Customs

verified receipt at the zone on March 2, 1990. The concentrate was in non-privileged foreign status. An invoice (SUB 5438-A) documents a sale between Subana, N.V. of Curacao Netherlands Antilles and Juice Farms (Citrosuco’s predecessor) pursuant to Juice Farms’ purchase order 0214 of February 15, 1990. The vessel “MS Sol de Brazil” and voyage (55) is the same on the invoice and zone admission. The zone admission shows that the shipment was placed in zone lot 99J-00501.

The entry (CF 3461) lists the Sol de Brazil, voyage 55 as the importing vessel and relevant bills of lading as 15001-15002. The CF 3461 describes the merchandise as Brazilian FCOJ 66.5 brix, and domestic 58.63 and 58.34 brix. The drawback claim designates only FTZ Release 2065-9 as the designated, imported duty-paid merchandise covered by import entry C11-XXXX620-2. The calculation worksheet on the drawback claim identifies invoice 21812 for the merchandise covered by import entry C11-XXXX620-2. Bill of lading 13950, which lists 2065-9 as the agent’s number, covers a shipment to McCain Citrus on April 18, 1990, and references what appears to be McCain’s purchase order h-41689 to Juice Farms (Citrosuco’s predecessor). The bill of lading describes the goods as Frozen Concentrated Orange Juice from Brazil, 66.45 brix, with a net weight of 48,000 pounds containing 31,896 pounds/solids. The calculation worksheet prepared by Juice Farms, converts the 31,896 pounds/solids to 115,104.32 single strength liters. There is a U.S.D.A. continuous inspection (H-70890) dated April 18, 1990. The goods were described as Brazilian Concentrated Orange Juice for Manufacturing brix. 66.42 to 66.45, with an average brix of 66.45, U.S. Grade A with an average score of 95. The weight (48,000 pounds) and tanker identification and seals match those on the bill of lading with the CF7501 (FL T9821D, 8424, 8425, 8426 respectively). Also, the release number on the drawback claim export summary matches that on the bill of lading and U.S.D.A. inspection (2065-9).

The zone admission (CF 214) shows that the concentrate from the MS Sol de Brazil was put in zone lot 99J-00501. The entry (CF3461) indicates that the concentrate covered by the entry was drawn from zone lots 99J-00512, 99J-00502, and 99J-00511, by listing those numbers in the block titled “arrival date.” The Subana M.V. invoices SUB 5438-A and SUB 5433-A list the relevant zone lots as 99J-00501, and 00502.

The drawback claim Chronological Summary of Imports asserts that the concentrate covered by the designated import entry has a score of 95.

Export Shipments

As noted above with respect to the designated import entry, the drawback claim states that 115,104.32 single strength liters were designated against export shipments. The first three export shipments listed on the chronological summary of exports total 116,322 single strength liters (54,782; 3,257; and 58,283 respectively).

The first three exports on the chronological summary are stated to have been exported on March 3, 1993, and are identified as being covered by consumption entry C11-XXXX106-9. The first and second shipments are further identified on the summary by release No. 21752. The third shipment is identified by release 21692. The first two shipments are said to have a score of 94 while the third shipment is said to have a score of 93.

The export shipments covered by consumption entry C11-XXXX106-9 were also from a foreign trade zone. The first and second export shipments are covered by bill of lading 21618. That bill of lading is dated March 4, 1993, and was to be delivered to the Canadian customer on March 8, 1993. There is a U.S.D.A. inspection certificate dated March 4, 1993 (J-31732) which references the release number on the chronological summary of exports (2175-2) and for which the seal numbers and carrier match that of the bill of lading (0304, 0549, 0550, and 6048, and Bynum, respectively). The U.S.D.A. certificate shows that the concentrate was U.S. Grade A with an average score of 95. The certificate states that the concentrate contains product made from citrus fruit grown in Brazil. The bill of lading contains the following handwritten notation:

99J-00689: 22,650# Domestic 99J-00687: 23,997# Brazilian 99J-00690: 1,347# Domestic 47,994#

The bill of lading for the tanker shipment is stated to be for a net weight of 48,000 pounds. The consumption entry (CF 3461) records refer to zone lots in the block titled “arrival date” as 99J-00677, 99J-00687, and domestic lots 99J-00689, 99J-00690, 99J-009691, 99J-00692m, and 99J-00693. There is an unlabeled document attached to the relevant Zone Constructive Transfer Application which lists the export shipment as consisting of 22,650 pounds of domestic concentrate and 22,650 pounds of foreign concentrate. Transportation Entry 192,355,376 of February 1, 1993 (CF7512), identifies the shipment as Brazilian Frozen Concentrate that had been imported on the Yasaha Reefer on February 1, 1993 from Brazil and refers to zone lot 99J-0677. The consumption entry (CF 3461) lists the vessels that carried the merchandise as the Sol de Brazil #86 (presumably voyage 86), Yasaha Reefer and domestic product. Block 19 on the CF7501 references bills of lading 15001-15004 and lists the manufacturer as ANSUBNVCUR. The consumption date is March 4, 1993. The chronological summary of exports lists the first shipment as coming from zone lot 99J-00689. The same summary lists the second shipment as coming from zone lot 99J-00690. The third export shipment is identified on the chronological summary as coming from zone lot 99J-00691 and is covered by bill of lading 21621. Bill of lading 21621 covers a shipment to Canada. It is dated March 4, 1993, and states that delivery is to be made on March 5, 1993. The agent number on the bill of lading matches the release number (2169-2) and is referenced on the U.S.D.A. inspection certificate. That certificate describes the merchandise as concentrated orange juice for manufacturing 65.32 brix, U.S. Grade A, average score 95, and states that it contains concentrate made from Brazilian fruit. The related Transportation Entry (CF7512)(No. 192,355,380) states that the goods were imported from Brazil on the Yasaha Reefer on February 1, 1993. The transportation entry is dated February 1, 1993 and references zone lot 99J-00677. The seals referenced on the bill of lading and U.S.D.A. inspection certificate match (0226, 0378, 0229, and 228), as does the truck identification.

While the transportation entries (CF7512) are dated February 1, 1993 and purport to cover an export movement from Wilmington, Delaware to Canada, the zone release numbers, which appear to have been created in March, 1993, are listed on both transportation entries.

The 1993 zone admission (CF214) for the Brazilian concentrate imported on the Sol de Brazil, apparently voyage 86, and the Yasaha Reefer was not present in the file. The CF3461 covering consumption entry C11-XXXX106-9 refers to the Sol de Brazil #86.

Drawback Claim R74-XXXXX70-3

The claim consists of 21 import shipments covered by 11 consumption entries and 58 export shipments. As in drawback claim R74-XXXXX35-6, the exports are identified by consumption entries from a foreign trade zone. There were 13 such consumption entries from a foreign trade zone covering the 58 export shipments. The imports are stated to have occurred from May 9, 1990 to June 8, 1990. The exports are stated to have occurred from April 2, 1993 to April 30, 1993.

Consumption Entry C11-XXXX635-0

The first designated import entry is C11-XXXX635-0 of May 9, 1990. The drawback claim chronological summary of imports states that the designated duty-paid merchandise was concentrated orange juice for manufacture (COJM) 66.45, brix score 95, 115,104 single strength liters. That claim summary identifies the importation as covered by release 2194-9, bill of lading 14082 and invoice 21999.

A zone admission (CF214) identifies imported merchandise as Brazilian Frozen COJM, 66.5 brix, 5,696,264 single strength liters, that was imported by the “Sol de Brazil” voyage 55 on March 1, 1990, and put in zone lot 99J-00501. The Subana MV invoice references the MS “Sol de Brazil”, voyage 55 and states that the shipment is covered by Juice Farms purchase order 0214 of February 15, 1990. The COJM was in non-privileged foreign status.

Consumption entry C11-XXXX635-0 of May 9, 1990 covers the entry of 345,345 single strength liters of Brazilian COJM, 66.5 brix. The designated imported duty-paid COJM is stated to be covered by release 2194-9, bill of lading 14082 and invoice 21999. A U.S.D.A. inspection certificate (H-70515) refers to release 2194-9. The certificate covers 48,000 pounds of FCOJ, 66.45 brix U.S. Grade A, score 95. The Juice Farms invoice 021999 covers COJM, 66.45 Brix 31896 pounds/solids. The invoice lists the buyer’s purchase order H47265. The bill of lading was not in the file. The drawback claim calculation sheet asserts that 31,896 pounds/solids equals 115,104.32 single strength liters.

Export Shipments

The first four identified export shipments on the chronological summary of exports are said to cover 176,645 single strength liters of COJM. The first four export shipments are covered by one consumption entry C11-XXXX127-5. The four export shipments are said to be from three foreign trade zone lots (99J-010772, 99J-00773, and 99J-00774.)

Consumption entry C11-XXXX127-5 (CF3461) of April 2, 1993 references the three zone lots noted above and four other lots. The entry lists the covered COJM as coming from Brazilian COJM imported by the Sol de Brazil, voyage 86 and domestic sources. The zone constructive transfer (CF215) lists the amount transferred from lot 99J-00772 as Domestic COJM, 63.62 brix, 3,358 gallons, 36,628 pounds. The same form lists the amount transferred from zone lot 99J-00773 as Domestic COJM; 63.05 brix, 4,307 gallons; 46,860 pounds. The form lists the amount transferred from lot 99J-00774 as 1,841 gallons, 20,138 pounds.

Zone release 2377-2 is listed on bill of lading 21801 which states that it covers 48,000 pounds and two zone lots (99J-0072 and 99J-0073). The U.S.D.A. inspection certificate (J-34283) refers to release 2377-2 and covers 48,000 pounds. The U.S.D.A. inspection certificate lists the COJM as U.S. Grade A, score 95, 65.53 brix, and states that it contains product made from Brazilian fruit. The total listed weight for the two shipments identified by zone release 2377-2 is 28,800 pounds, which are stated to be 65,094 single strength liters. (17,671 + 47,423 = 65,094). Transportation entry (CF7512) (192,355,866) of March 3, 1993 references FTZ entry 99J-00687 and lists Release 2377-2 and bill of lading 21801. The entry states that it covers Brazilian COJM (48,000 pounds) imported by the Sol de Brazil, voyage 86 on February 16, 1993. It references bills of lading 15001-15004.

There are two copies of bill of lading 21801. One copy contains the handwritten notation:

SDB #86 99J-00687 19200 99J-00772 7833 99J-00773 20967 Total 48000

The truck identification and seal numbers match those on the U.S.D.A. inspection certificate (FL T00501, and CCI2719, 2716, 2720, respectively).

Juice Farms invoice 032194 lists four line items of COJM, 65.53 brix. The total pounds/solids for the four line items is 31,454.40. The bill of lading lists the same amount of pounds/solids.

The third export shipment is identified by release 2380-2, bill of lading 21804 and invoice 32195 and is listed as COJM, 64.19 brix with a score of 95. Bill of lading 21804 references release 2380-2 as the agent number and references seals 2740, 2840, and 2837 and identifies the goods as COJM, 65.48 brix. The U.S.D.A. inspection certificate (J-34286) references the same release and seal numbers. The certificate states that the COJM is U.S. Grade A, score 95, 65.48 brix, and amounts to 48,000 pounds. Transportation Entry 192,355,892 of March 3, 1993 references the release and bill of lading and identifies the trailer number as 3356; which is also identified on the U.S.D.A. Certificate Invoice 032195 covers two line items of COJM totaling 31430.4 pounds/solids, brix 65.48. There are two copies of bill of lading 21804. One copy contains handwritten notations:

SDB#86 99J-00687- 19200 99J-00774- 17219 99J-00775- 11581 Total 48000

The bill of lading refers to the 4800 COJM as containing 31,430.4 pounds/solids.

The fourth export shipment is identified by FTZ lot 99J-00774, release 23892, bill of lading 21813, and invoice 32202. It is listed as covering COJM, score 95, and 64.19 brix. The Zone Admission of March 22, 1993, covering zone lot 99J-00774, covers 48,960 pounds of COJM, 64.19 brix from Sun Pac Foods, Winter Haven, Florida. The U.S.D.A. inspection certificate (J-34606) states that the COJM is U.S. Grade A, score 95, with a brix of 64.19. The seals and truck license numbers on the Sun Pac shipping order match those covered by the U.S.D.A. certificate. The 37-page document titled “Drawback Claim R74-XXXXX70-3 Supporting Documents for Exportation of Domestic Product” does not contain bill of lading 21813 invoice 32202. None of the papers in that 37-page document refers to release 23892.

Citrosuco also submitted a copy of a letter sent to Customs, dated April 14, 1998, and produced by Joseph J. O’Neill, Secretary of the Citrus Associates of the New York Cotton Exchange, Inc. The letter pertains to Customs reliance upon the Cotton Exchange Standards as “recognized industry standards.” Mr. O’Neill states that, “to the extent that Customs has relied upon Section 82(a) and (b) to support its policy [setting recognized citrus industry standards of commercial interchangeability], this reliance is misplaced.” Mr. O’Neill also states in his letter, “[a]lthough the specific criteria set forth in Section 82(a) are narrower than those provided in the U.S.D.A. standards, the fact is of little significance since less that five percent (5%) of all deliveries of FCOJM in the United States take place under Exchange contracts.” There is no evidence or documentation as to how he determined that 95% of all FCOJM deliveries did not take place under the Cotton Exchange standards. Thus, Customs claimed that for its purposes, it is sufficient that drawback claimants based their transactions on the Cotton Exchange standards, for them to be regarded “a recognized industry standard” of interchangeability. Mr. O’Neill was also given an opportunity to further explain how he knew that 95% of all orange juice sales took place outside of the Cotton Exchange standards and that the terms of those sales were without reference to the Cotton Exchange terms. He failed to respond further.

Under Claims 356 and 703, there were a total of 39 designated import entries and 100 designated export entries. Despite this large number of transactions, Citrosuco has provided only one underlying COJM contract. This one contract was for two million gallons of COJM annually (September through August) over a four year period and very general in its terms. The contract provided that each shipment would be “[p]riced at time of shipment, duty paid in applicable, and competitive with other major Brazilian suppliers in Canada for like quality.” Citrosuco stated on several occasions that contracts with its customers were conducted on a verbal basis and there were no written contracts. On numerous occasions Citrosuco was requested to provide underlying purchase orders for its import purchases of COJM/FCOJM and for its sales transactions on the export side of the transactions. Although Citrosuco provided a number of invoice documents which listed specific purchase order numbers, Citrosuco did not provide Customs with its primary underlying purchase order documentation. Citrosuco provided Customs with numerous invoices for export transactions but failed to provide the purchase orders referenced on the invoices for either its export sales or its import purchases. Citrosuco stated that, “[s]eparately, all sales invoices, bills of lading, U.S.D.A. quality certificates, scale tickets and Customs forms were submitted to Customs Boston office. (Citrosuco Letter to Customs dated August 27, 1998).”

Numerous purchase order numbers appear on the sales invoices, and bills of lading provided by Citrosuco, however, Citrosuco has failed to produce the actual purchase orders referenced.

ISSUE:

Whether the U.S.D.A. Grade A alone is the only recognized industry or government standard used in sales of orange juice concentrate so as to base commercial interchangeability for substitution unused merchandise drawback on that standard?

LAW AND ANALYSIS:

Under 19 U.S.C. §1313(j)(2), as amended, substitution unused merchandise drawback may be granted if, inter alia, imported duty-paid merchandise is “commercially interchangeable” with the exported merchandise.

In order to determine commercial interchangeability, Customs adheres to the Customs regulations which implement the operational language of the statute’s 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 requirements found in the Legislative history.

The drawback law was 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 enactment by Public Law 103-182, the standard for substitution was “fungibility.” The language has since been changed to alter the standard from “fungibility” to “ commercial interchangeability.” House Report 103-361, 103d Cong., 1st Sess., 131 (1993), sets out language explaining the change from fungibility to commercial interchangeability as a standard of substitution drawback under 19 U.S.C. §1313(j)(2). According to the House Ways and Means Committee 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” is derived from the definition of fungible merchandise in the Customs Regulations (19 C.F.R. 191.2(1), (1993)). The Report (at page 131) provides:

“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., 81-85 91993)) contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability.

Prior to the amendment of 19 U.S.C. §1313(j)(2) by Public Law 103-182, Customs followed the standards of the Citrus Associates of the New York Cotton Exchange, Inc. (“Cotton Exchange”). In HQ decision 22264/222789, dated April 24, 1991, Customs held that for fungibility purposes, “[w]e are satisfied that [the standards] represent industry standards for COJM.” The Cotton Exchange has historically provided two standard contracts for frozen orange juice futures. In Headquarters Decision (HQ) 226100, issued on December 5, 1995, and in HQ 225936, issued November 4, 1998, Customs recognized the Cotton Exchange standards as representative and recognized industry standards for FCOJM. HQ 226100 held that the Cotton Exchange:

“In their rules governing contracts for futures deliveries of COJM require minimum scores of 94 and 92. Therefore, under industry standards, a batch of juice that meets a score of 90 is not commercially interchangeable with a batch that meets a score of 94 or above even though both are within the U.S.D.A. Grade A standards.”

Citrosuco argues that meeting a U.S.D.A. Grade A standard alone is a sufficient method to determine commercial interchangeability. Citrosuco has stated that both its imported and exported COJM under these present claims meet a general U.S.D.A. Grade A standard as well as a standard based upon “market reality.” Specifically, Citrosuco has stated that a U.S.D.A. Grade A standard was followed in these claimed transactions and submitted U.S.D.A. inspection certificates with total scores as evidence of its conformance with general U.S.D.A. Grade A specifications.

The U.S.D.A. Grade A requirements are based on a scoring system for color, defects, and flavor, with minimum points attributed to each. A batch of FCOJM must have a minimum total/average score of 90 to meet the U.S.D.A. Grade A standard. Customs has ruled that the amended by-laws of the Citrus Associates of the New York Cotton Exchange, Inc., represent industry standards of interchangeability for COJM, and that Customs will continue to consider them under the amended law. The Cotton Exchange, in their rules governing contracts of futures deliveries of COJM, requires minimum scores of 94 and 92. Therefore, under that industry standard, a batch of juice that meets a score of 90, is not commercially interchangeable with a batch that meets a score of 94, or above even though both are within the U.S.D.A. Grade A standards. In order to be commercially interchangeable, COJM must be of U.S.D.A. Grade A standard with a score of 94 or above under a contract of the Cotton Exchange. In the present case, Citrosuco claims to have followed the U.S.D.A. Grade A, but not the Cotton Exchange standards.

The evidence presented does not support the assertion that commercial transactions of orange juice concentrate are governed by reference to the U.S. grade alone. For the reasons already discussed, the assertion that less than five percent of all transactions occur without regard to the Cotton Exchange Standards is not persuasive. Further, the documentary evidence in the two illustrative claims demonstrates that U.S.D.A. grade and score were used by the parties in each sales transaction as shown by the presence of the U.S.D.A. inspection certificate in the sales documentation for the two claims.

The one contract supplied by Citrosuco is a part of Claim 703. The few specific terms of the contract do not support Citrosuco’s claim that the quality standard relied upon by Citrosuco, at least with this particular buyer of two million gallons of COJM annually, was simply a broad U.S.D.A. Grade A. This contract was for a period dating from “1991-1995,” for the purchase of 2,000,000 gallons annually (September through August). Nowhere in this contract, or in supporting documentation do the parties define what constitutes “Premium Quality FCOJM meeting [the Buyer’s] standards.” However, where the contract deals with price, it provides that the COJM shall be “[p]laced at the time of shipment, duty paid if applicable, and competitive with other major Brazilian suppliers in Canada for like quality.” This requirement of “like quality” is an indication that the COJM required under contract, had to be of a “like quality,” as agreed upon for each shipment. The question of what quantity and quality would be ultimately purchased, on what date, is left open in the contract. Despite these ambiguities, it appears that Citrosuco’s

buyer was not going to pay for COJM priced at the quality of a U.S.D.A. score of 96, when its actual quality scored a meager U.S.D.A. score of 92 or 93.

If other criteria were used, evidence to show such usage was not made available.

The Subana invoice to Juice Farms covering the designated imported orange concentrate for drawback claims R74-XXXXX35-6 and R74-XXXXX70-3 references Juice Farms’ purchase order 0214. The sales made by Juice Farms on the export shipments also reference the customer’s order. The first three export shipments on drawback claim R74-XXXXX35-6 are referenced on the two Juice Farms’ invoices covering the three listed shipments: the first two shipments are covered by Juice Farms’ invoice 31995 and reference McCains’ order 186652, and the third shipment is covered by Juice Farms’ invoice 31994 which refers to Fairlee Fruit’s order 15207. The four export shipments on drawback claim R74-XXXXX70-3 are covered by three Juice Farms’ invoices. Juice Farms’ invoice 32194 covers two listed export shipments and references McCains’ order 186676. Juice Farms’ invoice 32195 covers the third export shipment and references McCains’ order 186677. The fourth shipment is said to be covered by Juice Farms’ invoice 32202 but that invoice was not made available. In any event, both the concentrate designated as the basis for drawback and the concentrate exported were transferred in transactions in which the documentary evidence included U.S.D.A. inspection certificates that identified both the U.S. grade and score. As such, the evidence is insufficient to show that commercial interchangeability can be based on U.S.D.A. grade alone. Consequently, there is no reason to depart from the position taken in HQ 226100, and HQ 225936.

The following is an examination of the specific documentation provided by Citrosuco for its two claims, numbered 356 and 703.

A. Claim 356:

The first designated entry for Claim 356 is C11-XXXXX202. There are 18 designated import entries under Claim 356. The first designated entry shows that on April 18, 1990, 262,470 pounds of Brazilian COJM, equaling 629,377 single strength liters of COJM, was imported. Juice Farms, Inc. (“Citrosuco”) was the importer of record.

Of the ten customers listed on the document entitled, the “Citrus Coolstore, Inc. Entry Summary Supporting Data,” the date of shipment was April 18, 1990. The designated shipment is accompanied by a U.S.D.A. Continuous Inspection Certificate (“certificate” or U.S.D.A. scoresheet”). The certificate appears to represent 48,000 pounds of COJM at a brix value of 66.42 to 66.7, and with a U.S.D.A. Score of 95. The date of inspection was April 18, 1990. The COJM was removed from FTZ 99 and sold to one of Citrosuco’s customers under release number 2065-9. On the certificate of “Entry/Immediate Delivery,” (CF 3461) COJM is shown to have been imported under FTZ Lot #’s 99J-00512, 99J-00511, and 99J-00502. The manifest quantity was 262,470.47 pounds or 119,054.60 kilos. The first entry number appears on this document and the quantity numbers match those appearing on first entry form (CF7501). The H.T.S.U.S. number is the same, 2009.11.00.60.1, and the country of origin is Brazil. Under the category listed as the IT/BL/AWB No., bills of lading numbers are listed as 15001-15004.

A tanker transport company name is listed, though absent a tanker or truck identification number. There is no reference to a release number or of an average U.S.D.A. score. The importer number is identical on the CF 7501. This fact alone cannot said to be conclusive of anything more than the fact that Citrosuco imported both quantities of COJM. On both the CF7501, and on the “Entry/Immediate Delivery” certificate the “Manufacturers number” listing, “ANSUBNVCUR,” is the same. This also appears limited in its significance. Even though both documents use this designation there is no indication that the COJM listed is the same as asserted on Citrosuco’s Chronological Summary of Imports 356. On the “Entry/Immediate Delivery” certificate, the COJM is described as being “Brazilian FCOJ 66.5 Brix and Domestic 58.63 & 58.34 Brix.” This apparent blending of domestic and foreign merchandise and subsequent range does suggest a variance between the COJM designated on the entry document CF 7501, listed as “FCOJ Brix of 66.5,” and that represented on the “Entry/Immediate Delivery” certificate noted above.

Tracking the COJM through the comparison of these two documents, raises further ambiguities. For example, that the CF7501 for this entry lists four bills of lading, 15001, 15002, 15003, and 15004. The value of merchandise in the shipment is listed as totaling an approximate $296,900. However, on the Entry/Immediate Delivery Certificate the same total value, $296,900, is shown, where only two bills of lading, 15001-15002, are listed for the entire 262,470.47 pounds of merchandise which represents, according to the CF7501, ten separate shipments. This paradox is further emphasized when it was discovered that each of the 18 designated import entry summaries list all four bill of lading numbers, 15001-15004, as do all 21 of the export entry summary documents.

This being said, on the exports for claim 356, at least two of the Transportation Entry documents, (“CF7512"s), list bill of lading numbers other than 15001-15004. While there may well be a reasonable explanation for this use of identical bill of lading numbers, without the bills of lading themselves, or without an explanation from Citrosuco, Customs is unable to determine the significance of this apparent anomaly.

Citrosuco provided two invoices from Subana N.V., located in Curacao, Netherlands Antilles, for Claim 356 and Claim 703. The invoices are dated February 28, 1190. The invoices or copies and attached one for each claim. The first invoice, numbered SUB 5433-A is for approximately 857,768 gallons of COJM. The second invoice, numbered SUB 5438-A is for a total of 1,242,966 gallons of COJM. Both invoices indicate in a notation of a “customer’s reference number,” which cites in turn a purchase order number 0214, is dated February 15, 1990. Citrosuco did not provide a copy of this purchase order to Customs. Citrosuco also failed to provide the terms and conditions of the sales documentation in order for Customs to verify Citrosuco’s claim for drawback entitlement.

On both of these Subana N.V. invoices, FTZ 99 Lot numbers are listed. They are 99J-00501 and 00502.

Under Claim 356, the CF214 for Zone Lot No. 99J-00501 (“FTZ Application”), shows an import date of 3-1-90. It is attached to an invoice from Subana N.V. of Curacao, Netherlands Antilles, numbered SUB 5438-A with a customer’s reference number, P.O. No. 0214, and dated February 15, 1990. The invoice is for 1,242,966 U.S. GALLONS of Brazilian frozen concentrated orange juice 66.5 degrees Brix. The invoice does not list any FTZ 99 lot numbers. This photocopy (“SUB 5438-A number two”) does not show the date it was signed, however the document is the same in all other respects as the copy of the Subana N.V. invoice that accompanied the first designated import entry documentation and the designated imports under Claim 703 except for the inclusion of “FTZ Lot #99J-00501, 00502.” The FTZ Application for zone lot numbered 99J-00501 also lists bills of lading numbers 15001-15004. Absent these bills of lading or additional information to identify the contents of the shipments and which shipments go with which bill of lading it appears impossible to link the COJM listed on the first designated import entry with the inspected COJM.

Further ambiguity is raised upon examination of the “Entry/Immediate Delivery” certificate. On this document three FTZ lot numbers are listed: 99J-00512, 99J-00511, and 99J-00502. Only 99J-00502 appears on both the CF7501 for the first designated import entry and on the “Entry/Immediate Delivery” certificate. No direct evidence is available to demonstrate that the COJM from FTZ Lot # 99J-00502 of COJM is of the same COJM documented on the CF7501.

There is no indication on the documentation provided that the imported merchandise came from the same FTZ Lot # 502, 512, or 511. The Subana invoices discussed further below, are linked to FTZ Lot #’s 501 and 502. The documentation doesn’t demonstrate what is, or was, in FTZ Lot # 502 at the time merchandise was entered or withdrawn. The evidence to link the entered merchandise with the imported merchandise is insufficient. Further, although the date, the amount, the degrees brix, and the description of COJM as having come from Brazil generally suggest that the merchandise reflects that the merchandise on the import entry is that in FTZ 99. However, no direct link is established between these quantities of import and domestic COJM.

Citrosuco also provided a Juice Farms, Inc. Invoice, numbered 021812, with a notation for a customer order, number H-41689. This customer order number also appears as a purchase order number, H-1468 on a Juice Farms, Inc. bill of lading, numbered 13950 for 31,896 pounds/solid of COJM and dated April 18, 1990. That invoice shows this case order number, 011994, under the Juice Farms Inc., invoice category entitled, “our order no.” Citrosuco has not submitted the documentation or purchase order information connected with this order number, 011994, either. The COJM shown on invoice 021812 has a brix of 66.45. There is no evidence to directly link the COJM invoiced here with the imported COJM removed from FTZ Lot #99J-00502.

On its Chronological Summary of Exports for Claim 356, Citrosuco presents 50 export entries of COJM, totaling 1,948,680 single strength liters. This amount matches the quantity of single strength liters presented on Citrosuco’s Chronological Summary of Imports for Claim 356. The first designated export entry on the Chronological Summary of Exports (“Export Summary 356"), for claim 356 is export entry number C11-XXXXX69. It was released from FTZ Lot # 99J-00689 under release number 21752 and according to Export Summary 356, exported on March 4, 1993. This export is within the three-year time limit from the date of import of the substituted merchandise as required under 19 U.S.C. §1313(j)(2). The Export Summary 356 also lists this entry with a U.S.D.A. total score of 94. However, on the accompanying U.S.D.A. scoresheets for this entry, the U.S.D.A. score issued is 95. There is an additional page (“U.S.D.A. scoresheet page two”) of the U.S.D.A. Score Sheet, dated like the first page, March 4, 1993, and signed by the same U.S.D.A. inspector. The U.S.D.A. scoresheet page two provided a specific breakdown of all of the elements of the U.S.D.A. average or total score. In this case, for Claim 356's first export entry, the tanker carrier is listed as Bynum tanker #451, which matches the carrier name on Citrosuco’s Export Summary 356 and the tanker number on the CF7512 or T&E, from entry # 1XXXX5,736, (“TE1") dated March 4, 1998, listing 21,772.4 kilos of Brazilian Frozen Concentrated Orange Juice (Net Weight of 48,000 lbs.). The “release number,” 2175-2, matches with the Export Summary 356, and with the release number listed on TE1. However, on the Export Summary 356 the “Domestic Brix” for this first designated export under release number 21752, is listed as 64.58 degrees brix. On the TE1, the brix is listed as 65.42. This variance in brix concentration alone, is not necessarily a substantial factor, however, the brix listed on the U.S.D.A. scoresheet for this first designated export entry is also 65.42. At the very least, this would appear to mean that one out of the three listings does not match and there is not any apparent reason as to why they do not match. The aggregate of these discrepancies does cast doubt on the overall accuracy of Export Summary 356.

TE1 also provides a bill of lading number STS31696,7O whereas all but one of the other T&E’s appear to have the bill of lading number 15001-15002 listed. The bills of lading were not in the file.

Of the first 10 designated export entries listed in chronological order on Export Summary 356, eight have U.S.D.A. scores that do not match the actual U.S.D.A. scoresheet scores issued and signed by the U.S.D.A. inspectors. Only two of the first ten scores appearing on the Claim 356 Export Summary accurately mirror the U.S.D.A. issued scores as appear on the signed U.S.D.A. scoresheets. The two scores that do match are from two different shipments stemming from the same export entry, C11-XXXXX119. Of the first 10 designated export entries, only 7 reflect the same brix degrees measurement indicated on the U.S.D.A. scoresheets and as appear on the Export Summary 356. However, when these 10 designated export entries are compared to the FTZ zone transfer certificates and the CF 7501s, only one of the brix values matches up accurately.

B. Claim 703:

The second claim, claim 703 is for exports of 2,350,063 single strength liters of COJM. The first designated import entry is C11-XXXXX5-0. This first designated import entry for claim 703, shows 144,000 pounds equaling 345,3345 single strength liters shipped on May 9, 1990. Juice Farms, Inc. (“Citrosuco”) was the importer of record. Citrosuco imported the COJM into FTZ 99 in Wilmington, Delaware. The COJM was classified under the H.T.S.U.S. heading 2009.11.00.60.1 with 66.5 brix.

The following is a review of the information shown on the documents provided by Citrosuco to support its first designated import under claim 703:

Four customers are listed on the document entitled, the “Citrus Coolstore Inc. Entry Summary Supporting Data (“Coolstore Entry Summary”) for the first designated import entry. The shipments were shipped on May 9, 1990. Only one of the shipments is actually designated for Claim 703. Citrosuco submitted a Juice Farms Incorporated invoice, dated May 9, 1990 and numbered 021999, to show which of the four shipments it intended to designate for import entry CXXXXX635-0.

Further, the designated shipment of the first designated entry is accompanied by a U.S.D.A. Continuous Inspection Certificate (“certificate” or “U.S.D.A. scoresheet”). The certificate is an inspection of 48,000 pounds of COJM at a brix value of 66.45. The U.S.D.A. Score found on the scoresheet, is 95. The date of inspection took place on May 9, 1990. The COJM was removed from FTZ 99, ostensibly from FTZ Lot #501, as is suggested by the CF214 (“FTZ Application”) dated March 2, 1990, and attached to the import entry document and U.S.D.A. scoresheet. The 48,000 pounds of COJM listed on the U.S.D.A. scoresheet shows the merchandise was transported by an Indian River Tanker numbered 1156, and received a release number, 2194-9.

None of the 21 designated import entries under Claim 703 include a certificate of “Entry/Immediate Delivery” (CF 3461) unlike the designated import entries under Claim 356.

The FTZ Application is for 5,696,264 single strength liters of Brazilian Frozen Concentrated Orange Juice, classified under H.T.S.U.S. 2009.11.00.0060.1. On the FTZ Application, bill of lading numbers 15001-15004 are listed, but again, have not been provided. These bill of lading numbers are the same that appear on the CF 7501s for Claim 356 designated entry documents. Whether these are the same bills of lading or others is unknown and cannot be determined with the available documentation.

On the FTZ Application, Zone Lot No. 99J-00501 is also listed, along with the date of importation, March 1, 1990, and the export date, February 16, 1990. Nowhere else on the supporting documentation for this first designated import entry does this FTZ Lot number appear.

The next supporting document is a Subana invoice marked SUB 5438-A, an apparent copy of the one filed with Claim 356. This Subana invoice is attached to Claim 703 for Brazilian COJM of 66.5 degrees brix, for the same 1,242,966 U.S. gallons. On the invoice there is a category designated as “Customers’ Ref. No.” with a notation P.O. No. 0214, dated February 15, 1990. Again, Citrosuco has not provided a copy of the purchase order 0214 or its terms and therefore Customs cannot determine how its terms and conditions might demonstrate a recognized industry standard.

An invoice from Juice Farms dated May 9, 1990, and numbered 021999, for 31,896 pounds of COJM, is the next document provided. This amount of COJM was sold to a Juice Farms’ customer under Customer order number H47265. The customer purchase order was not provided. This Juice Farms’ invoice also included a category entitled, “Our Order No.” This category is presumably a Juice Farms’ sales order number. The order number shown is, “012138.” It has not been provided.

The accompanying transport receipt from the Citrus Coolstore Inc., numbered 13110, included a notation “Load No. 21949.” This number appears on the Coolstore Entry Summary for the first designated entry, but does not appear on the Juice Farms invoice number 021999. On the Juice Farms invoice #021999, there is a notation under the category “Ship Via,” listing “IRT #1156,” that apparently refers to the transport company, Indian River, and corresponds to Indian River Tanker (Trailer) number 1156. This tanker number 1156 appears on the Citrus Coolstore Inc. transport receipt and on the U.S.D.A. scoresheet. This information appears to link the COJM inspected and transported from the Citrus Coolstore facilities under release number 2194-9 to the Juice Farms invoice 021999, and in turn, to the COJM inspected by the U.S.D.A. However, there is no evidence that can clearly link the COJM appearing on the first designated entry summary for Claim 703 (CXXXXX635-0) with the imported COJM.

Citrosuco’s Chronological Summary of Imports for Claim 703 (“Import Summary 703"), generally appears to be more accurate than the Import Summary for Claim 356. However, a number of the U.S.D.A. scores appearing on the U.S.D.A. Scoresheets accompanying Claim 703, are not altogether accurately transcribed. The degrees brix numbers, although generally inaccurate as presented on Export Summary 703, are generally not at great variance with the figures that actually correspond to the data appearing on the U.S.D.A. Scoresheets. However, except for the relatively circumstantial evidence represented by corresponding cumulative amounts of COJM, corresponding shipping dates, the fact that the COJM was stored in FTZ #99, the common H.T.S.U.S. classification numbers, there is little evidence to substantiate that the COJM designated on the CF7501 (for the first import entry), is the same imported merchandise that was released from FTZ 99, as evidenced on the tanker transport receipt. Moreover, prima facie inconsistencies still pervade the “Export Summary 703.” The documents submitted in support of the exports and some of the inconsistencies that arise from these documents and the data appearing on the Export Summary 703, are discussed below.

Citrosuco submitted the following documents in support of the four exports covered by consumption entry C11XXX127-5. The Entry Summary (CF 750) provides inter alia the export entry number C11XXX127-5; the date of entry, April 2, 1993; the importer of record, Juice Farms; the bills of lading numbers, 15001-15004; the nature of merchandise, Brazilian FCOJ at 66 degrees brix and the H.T.S.U.S. tariff classification number, 2009.11.00.60.1.

The “Citrus Coolstore, Inc. Entry Summary Supporting Data” document is a spread sheet including the following categories for each of the 12 shipments that comprise this first designated export country of customer, release number, weight of shipment in pounds, degrees brix, pounds to gallons measure, conversion to single strength liters, duty rate, duty to be paid, invoice value, ocean freight cost, entered value, and “User Fee. 19% of entered value.” These numbers correspond to the information appearing on the CF 7501, and the FTZ Application and other documents submitted.

The “Application To Constructively Transfer Foreign Trade Zone Merchandise” (“FTZ Application”), CF 215 provides inter alia, zone lot number, marks and numbers, a description of merchandise, and a category entitled “quantity and weights-measures.” The CF 215 shows that the applicant was Juice Farms, and the consignee was Citrus Coolstore. The FTZ Lot numbers correspond to those seven shipments that comprise this first designated export and appear on the Export Summary 703. These are FTZ Lot numbers, 99J-00687, 99J-00677, 99J-00776, and 99J-00615.

The “Entry/Immediate Delivery,” or CF 3461, lists seven FTZ Lot numbers. Five of these FTZ Lot numbers 99J-00772, 00773, 00774, 00775, and 00777 appear on the Export Summary, and on the FTZ Application and comprise the seven Lot numbers (some appear more than once) on the Export Summary. FTZ Lot number 99J-00776 and 99J-00687 do not appear on the Export Summary. This document shows the designated export, the importer number, the nature of the merchandise as being Brazilian FCOJ of 66 degrees brix, the H.T.S.U.S. classification number that matches the CF 7501, the transport company names and the total value. However, unlike the CF 7501, which lists four bills of lading, numbers 15001-15004, this “Entry/Immediate Delivery” document only shows two, “Bill of Lading” numbers, 15001-15002.

The Juice Farms, Inc., “Bills of Lading” reflect the bills of lading numbers on the Export Summary 703: 21801, 21804, 21805, 21808, and 21813. These bills of lading do not reflect the terms and conditions of Citrosuco’s transactions. All of these bills of lading refer to purchase order numbers. One such example is that of bill of lading number 21801. The purchase order number 186676 appears as P.O.186676. Citrosuco did not provide this document.

There are eight bills of lading. However, none of them list the bill of lading numbers that appear on the CF 7501 or on the “Entry/Immediate Delivery” document. Of the eight bills of lading, two numbered 21806 and 21807, were submitted but are not listed on the Export Summary. These documents appear to be quantities of COJM that are not designated under the first designated export under Claim 703.

There are four U.S.D.A. “Scoresheets.” Each one is accompanied by an additional or second page of data gathered by a U.S.D.A. inspector. The U.S.D.A. Scoresheets are all signed. They provide release numbers and transport tanker company names and numbers, quantities, U.S.D.A. total scores, the name of the applicant and names of buyers, the date inspected, the

degrees brix, and grade. All four U.S.D.A. Scoresheets have a total score of 95. Three are for 48,000 pounds of COJM and the fourth is for 47,420 pounds of COJM.

There are four “Transportation Entry and Manifest of Goods Subject to Customs Inspection and Permit,” (T&E, CF 7512 documents). Each document lists an entry number from FTZ Lot #99J-00687, dated March 3, 1993. There is another entry number 192,XXXX66, T.E. On each of the four T&E documents, these T&E numbers are different. They are not readily linked by or to any other element or document. Additionally, each of the four CF 7501s lists four bills of lading numbers, 15001-15004. Each of the CF 7501s lists the transport trailer or tanker number, the release number, and an additional bill of lading number. These three numbers are listed on the Export Summary 703. The brix of each bill of lading shipment is listed. None of these brix numbers match either the degrees brix listed on the Export Summary or on the U.S.D.A. Scoresheets. These documents describe the merchandise as Brazilian COJM, and provide the weight, value per gallon. They also show Juice Farms Inc., as being the exporter of record.

There are four Citrus Coolstore, Inc., Gate receipts. They contain the following information: a number, the letterhead, the tare, net weight, and gross weight, the date and time stamp of entry and departure; the name of the Seller - Juice Farms, Inc.; the Customer; the driver; the tractor and Load No.; the Trailer; the Weigher; and a space for remarks.

There are also “Juice Farms, Inc. Customer Invoices.” Inter alia, each of the documents provides the following information: the name and address of the customer; the buyer number which matches the purchase order number on the Juice Farms, Inc., bill of lading; the transport company, that matches the transport companies listed on the gate receipts and the Export Summary; the merchandise, COJM, the pounds/solids, the value or cost, and the average brix. None of the brix scores match the brix scores found on the Export Summary. These brix scores do match the CF 7512s, although all of the brix scores on the CF 7512s were handwritten.

It is impossible to know, therefore, whether these scores were added before or after the CF 7512s were signed, an act which, if performed before signing would affirm their veracity.

The Export Summary shows, for example, seven shipments for the first designated export entry numbered C11XXX127-5. Each shipment was exported on April 2, 1993, and each shipment was taken from FTZ #99 in Wilmington, Delaware. Each shipment came from a different lot within FTZ #99. A number of the shipments have identical release numbers. Thus, the shipment from FTZ Lot #99J-00772 and 99J-00773, for 17,671 single strength liters and for 47,423 single strength liters, have the same bill of lading number, 21901, and same invoice number 32194. These shipments were transported by the same transport company named, “Oakley.” FTZ Lot #99J-00774 and FTZ Lot #99J-00775, for 41,723 single strength liters and 28,028 single strength liters respectively, also have the same release number, 23802, the same bill of lading number, 21804, the same carrier, Indian River Company, and the same invoice number, 32195.

For the COJM transported under release number 23772, apparently taken from FTZ Lot numbers 99J-00772 and 99J-00773, Export Summary 703 lists U.S.D.A. scores of 94 and 93 respectively. However, on the actual U.S.D.A. Scoresheets marked with release number 23772, and signed by a U.S.D.A. inspector, the score is 95. Although the Export Summary lists U.S.D.A. scores for FTZ Lot numbers 99J-00774 and 99J-00775, as 95 and 94 respectively, the only U.S.D.A. Scoresheets provided by Citrosuco with release number 23802 on it, shows a U.S.D.A. score of 95. Moreover, the degrees brix on the U.S.D.A. Scoresheet is 65.48 degrees, whereas the Export Summary shows two different results for these two shipments, 64.19 degrees and 64.43 degrees. For the shipment from FTZ Lot #99J-00774, under release number 23892, bill of lading 21813, invoice number 32202, and listed as having been transported by “Oakley,” Export Summary 703 lists a U.S.D.A. score of 95. This 95 score appears, despite the fact that there is no U.S.D.A. Scoresheet marked with this release number 23893, the corresponding FTZ Lot number, the bill of lading number, the invoice number, or even the same carrier. The FTZ Lot #99J-00775 shipment documentation does not appear to be accurately reflected on the Export Summary 703. The FTZ Lot # 99J-00775 shipment is marked with release number 23792, bill of lading number 21805, invoice number 32199, and transported by “Oakley.” This shipment appears to be matched with a U.S.D.A. Scoresheet, signed by a U.S.D.A. inspector marked with the release number 23792, that has a score of 95 and degrees brix of 64.70. The Export Summary 703 lists a U.S.D.A. score of 94, and a degrees brix of 64.43.

The final shipment of this first designated export entry, is listed as coming from FTZ Lot #99J-00777, marked with release number 23832, bill of lading number 21808, invoice number 32198, and transported by “Conley.” The U.S.D.A. Score is listed as 93 and the degrees brix as 63.03. The signed U.S.D.A. Scoresheet marked with release number 23832, and showing transport by a Conley Tanker, shows a U.S.D.A. score of 95 and degrees brix as 65.42.

The last two shipments that comprise entry C11XXX127-5, both list FTZ Lot #99J-00777. On the Export Summary, the release numbers listed for these shipments from FTZ Lot #99J-00777, are 23832 and 23812 respectively. The transporters listed are: Conley and Indian River; the U.S.D.A. scores are 94 and 93 respectively; and a degrees brix value is 63.03 for both. However, the U.S.D.A. Scoresheet documentation submitted with these shipments show a score of 95 for the shipment transported by a Conley tanker listed with release number 23832. The degrees brix also do not match. The U.S.D.A. scoresheet shows a 65.42 brix value, instead of the 63.03 degrees brix listed on the Export Summary 703. The Export Summary 703 data for these shipments also shows bill of lading number 21808 and 21817. Only bill of lading 21808 was available in the accompanying documentation. The Juice Farms, Inc. bill of lading 21808 is clearly marked with the release number 23832.

However, among the pages of documentation provided by Citrosuco is an FTZ Application marked with FTZ “Zone Lot No. 99J-0777.” This FTZ Application, dated March 22, 1993, shows a degrees brix value of 63.03, which accurately reflects the degrees brix value on the Export Summary. Moreover, the accompanying, signed U.S.D.A. scoresheet, dated March 18, 1993, lists a U.S.D.A. score of 93, and the 63.03 degree brix value. There is a handwritten notation, “FTZ Lot #99J-00777” on the U.S.D.A. Scoresheet. However, it is unclear whether this notation was written by the U.S.D.A. inspector or by some other individual at a later date.

There is an obvious lack of clarity in the documentation here. As a further example, there is no apparent link between this amount of COJM and the amount presented under release number 23832, as noted with bill of lading 21808, other than the handwritten notation, “FTZ Lot #99J-00777.” It is possible that this COJM was shipped a first time by the “Bynum” Company listed, and a second time by “Conley” Transport. Where the COJM under release number 23832, and bill of lading 21808, were shipped by Conley Transport on April 2, 1993, the accompanying U.S.D.A. scoresheet submitted by Citrosuco, had a substantially different score of 95 and a brix value of 65.42. Both documents have references to FTZ Lot #99J-00777, although each shipment has a different U.S.D.A. score and a different brix value. Which are the correct U.S.D.A. score and degrees brix value? Given the degree of conflicted and omitted documentation Customs is unable to determine the answer.

Discrepancies in the Claim Documentation

The review of the documentary evidence disclosed numerous inconsistencies, apart from the apparent reliance on the U.S.D.A. grade and score certificates by Juice Farms, its suppliers, and its customers. Those discrepancies will need to be explained or resolved.

While the merchandise designated as the first imported, duty-paid merchandise in drawback claim R74-XXXXX35-6 was covered by a U.S.D.A. inspection certificate which showed that the merchandise was U.S. Grade A with a score of 95, this evidence was insufficient to link that merchandise to the asserted importation itself.

The designated importation was said to be a shipment of Brazilian orange concentrate brought into the U.S. on the Vessel Sol de Brazil, voyage 55 and placed in FTZ 99. The zone admission (CF 214) in the file covers zone lot 99J-00501 which lists 5,696,264 single strength liters or 1,078,254 kilograms. There are two Subana invoices covering the shipment. Invoice 5438-A covers 1,242,966 U.S. gallons. Invoice 5433-B covers 857,768 U.S. gallons. Both invoices contain references to zone lots 99J-00501 and 99J-00502. Both invoices identify the concentrate as 66.5 brix. The CF 3461 on the consumption entry C11-XXXX620-2 states that the merchandise covered by the entry consists of Brazilian concentrate of 66.5 brix and domestic shipments of 58.63 brix and 58.34 brix and references zone lots 99J-00511 to concentrate drawn from other zone lots is unclear. Consumption entry C11-XXXX620-2 covers 629,377 single strength liters (119,055 kg or 262,470 lbs.). There were 10 shipments said to be released from the zone under this entry. The documents covering release 2074-9 and release 4-1 were not present. The 10 releases total 437,694.47 pounds. The eight releases for which there is documentation describe the released merchandise as concentrate from Brazil.

For the one release that is designated on the drawback claim, there is no link to show that this merchandise came from zone lot 99J-00501 or 99J-00502. The 10 releases total (437,694.47) and exceed the entered amount (262,470 pounds). The Brazilian concentrate is described in the Subana invoices as 66.5 brix concentrate. The zone admission for zone lot 99J-00501 also refers to the concentrate as 66.5 brix. For the right releases for which evidence exists, the brix values differ:

Release 2059-9 66.49 Release 2064-9 66.47 Release 2065-9 66.45 Release 3-1 66.5 Release 2073-9 62.58 Release 2113-9 66.46 Release 2119-9 66.42 Release 5-1 66.5

There is a document in the consumption entry which refers to a blend of foreign and domestic product in zone lots 99J-00511 and 99J-00512; the relevance of that blend and its relationship to the imported concentrate that appears to have been placed in zone lots 99J-00501 and 99J-00502 is unclear, particularly since the documents with each release describe the merchandise as concentrate from Brazil.

In any event, there is a failure of evidence linking the shipment designated as the basis for drawback with the imported concentrate.

Similar discrepancies exist with respect to the designated import entries reviewed on drawback claim R74-XXXX70-3. The zone admission document covers concentrate in zone lot 99J-00501. Subana’s invoice 5438-A was included within the supporting documents for importation of foreign product. That invoice lists zone lots 99J-00501 and 99J-00502.

The CF 3461 on consumption entry C11-XXXX635-0 references 99J-00502. It covers 65,317.3 kg (144,000 lbs.). There are four releases associated with the consumption entry which total 192,000 pounds. Again, the brix values differ from those on the zone admission and Subana invoice: Release 2215-9, 66.4; Release 2227-9, 66.43; Release 2194-9, 66.45, and Release 2226-9, 66.42. The concentrate covered by release 2194-9 was the designated merchandise. Unlike the situation in consumption entry C11-XXXX620-2, the zone lot that is listed on the CF 3461 is one of the two zone lots listed on the Subana invoice. However, it is not the zone lot covered by the zone application filed with the drawback claim. While each release document describes the merchandise as concentrate from Brazil, the amounts covered by the releases (192,000 pounds) exceed the amount entered (144,000 pounds).

There are discrepancies with the export documentation as well.

The zone admission of February 16, 1990 refers to bills of lading 15001-15004. Consumption entries C11-XXXX620-2 and C11-XXXX635-0 also refer to bills of lading 15001-15004.

Consumption entry C11-XXXX106-9 of March 18, 1993, the first export listed on drawback claim R74-35-6, also refers to bills of lading 15001-15004.

Consumption entry C11-XXXX127-5 of April 2, 1993, the first listed export on drawback claim R74-XXXXX70-3, references bills of lading 15001-15004, as well.

The referenced bills of lading were not present in the file. Because the imports and exports are three years apart, it is unclear why the same apparent bills of lading are referenced in the imports and exports. The domestic concentrate in zone lot 99J-00689 is listed on the claim export summary as the apparent source of the export shipment covered by consumption entry C11-XXXX106-9. The zone application (CF 214) covers 46,540 pounds of 64.58 brix COJM shown as coming from Winter Haven, Florida, and admitted in domestic status.

Consumption entry C11-XXXX106-9 covers zone lots 99J-00677, 99J-00687, 99J-00689, 99J-00690, 99J-00691, 99J-00692, and 99J-00693, and is said to cover foreign and domestic concentrate. Since merchandise in domestic status for which the identity has been maintained is to be removed from a zone without entry, under the second proviso to 19 U.S.C. §81c(a) and 19 C.F.R. §146.43(c), the reason for the consumption entry is unclear. If the removed concentrate was a blend of foreign and domestic concentrate, the file does not contain an approved manufacture or manipulation application (CF 216) as required by 19 C.F.R. §146.52. As noted under the “Facts” section of this ruling one copy of bill of lading 21618 contains handwritten notations that indicate the export shipment was composed of concentrate from three zone lots rather than from zone lot 99J-00689 as listed on the export summary for drawback claim R74-XXXX35-6. Further, the release number and the truck and seal identifications covering the shipment are referenced on transportation entry 192,355,376, which is said to cover 48,000 pounds of Brazilian concentrate from zone lot 99J-00677. In CSD 85-49, Customs held that foreign merchandise in a zone was not eligible to be an exportation for drawback purposes. That position was stated as being consistent with Congressional intent. See H. Rept. 103-361, part 1, pg. 130 (Nov. 15, 1993) and S. Rept. 103-189, pg. 84 (Nov. 18, 1993) when that practice was codified as 19 U.S.C. §1313 (u).

If the export shipment was unentered foreign concentrate as indicated by the transportation entry, it would not be eligible to support drawback. If the merchandise was entered foreign merchandise, the purpose of the transportation entry is unclear. Likewise, if the merchandise was domestic merchandise, the basis for the consumption entry and the transportation entry referencing the same release, truck identification and bill of lading, is unclear. In any event, the evidence does not show that the export shipment consisted of domestic concentrate coming from zone lot 99J-00689, as asserted on the drawback claim.

Without adequate linkage between the domestic merchandise asserted to be the export and the actual merchandise shipped, the potential for multiple payments exists.

The same discrepancies are evident in the remaining export shipments covered by consumption entry C11-XXXX1006-9, and consumption entry C11-XXXX127-5, the first four export shipments in drawback claim R74-XXXXX70-3.

HOLDING:

The evidence does not show that the standards approved in HQ226100 and HQ225936 are incorrect.

The Office of Regulations and Rulings will take steps to make this decision available to Customs personnel, and to the public, electronically via public access channels 60 days from the date of this decision.

Sincerely,

John Durant, Director
Commercial Rulings Division