RR:CR:DR 228810 RND
AEI Drawback Services, Inc.
Attn: Jim Stanka
20501 Katy Freeway
Suite 214
Katy, TX 77450
RE: Unused merchandise drawback; Commercial interchangeability; OLOA 249S; §191.32(c) C.R.; 19 U.S.C. §1313(j)(2).
Dear Mr. Stanka:
This is in response to your April 24, 2000 ruling request, on behalf of your client, Chevron Chemical Company, LLC ("Chevron"), regarding the commercial interchangeability of imported and domestic lubricating oil additives for purposes of substitution, unused merchandise drawback under 19 U.S.C. § 1313(j)(2). See 19 C.F.R. § 191.32. For the reasons stated below, this office is unable to rule that a category of domestic and imported goods, e.g., lubricating oil additives, are "commercially interchangeable" for purposes of substitution, unused merchandise drawback.
The Customs laboratory provided the following information regarding the commercial interchangeability of domestic and imported lubricating oil additives. A lubricating oil additive is a chemical substance added to a petroleum product to impart or improve certain properties. The variety of products that can be called additives are unlimited and includes products such as anti-foam, anti-icing, and anti-wear agents, corrosion inhibitor, demulsifier, detergent, dispersant, emulsifier, oxidation inhibitor, pour point depressant, rust inhibitor, tackiness agent and viscosity improver. The additive can be either a liquid or a solid. Because of this complexity, there is no standard specification that covers the entire spectrum of products described as lubricating oil additives. Accordingly, this office cannot issue a ruling on the commercial interchangeability of lubricating oil additives categorically.
However, you did include enough information regarding OLOA 249S for this office to determine whether imported and domestic OLOA 249S are "commercially interchangeable." This analysis should also serve as a guideline and model for future determinations of commercial interchangeability for other lubricating oil additives. Other domestic and imported lubricating oil additives meeting the same criteria discussed below, that is, having the same tariff classification; the same unique code number and relative values should also be deemed "commercially interchangeable" for purposes of substitution, unused merchandise drawback, without the need for a separate ruling on each lubricating oil additive.
FACTS:
Chevron produces, buys and sells various lubricating oil additives. The company imports oil additives produced by affiliates in bulk liquid form from France, Mexico, Brazil and Singapore and exports oil additives to various countries. The additives are marketed under the OLOA( Brand (Oronite Lubricating Oil Additive) name. These additives are generally blended with petroleum oil, and then used in a variety of diesel, gasoline and natural gas engines and transmissions, as well as in industrial applications. An item number, product name, and product description is assigned to each lubricating oil additive. These names and descriptions are assigned in all cases, whether the merchandise is imported, produced or exported by Chevron. The item names and numbers are used to identify the merchandise in Chevron’s computerized inventory from receipt at Chevron Chemical to shipment to customers. In all instances the item number, product name and product description for imported, domestically produced, and exported merchandise is identical.
You state that OLOA 249S, item number 39314, is a high-overbased calcium sulfonate made from synthetic feedstocks. As evidence of an importation of this material you included a Customs Form (CF) 7501, dated September 16, 1999, for an entry of OLOA 249S; an invoice for this transaction and a certificate of analysis for the material shipped. The OLOA 249S was shipped from France to Louisiana and described as a “lubricating oil additive with petrol,” classified under 3811.21.0000, (HTSUS). The certificate of analysis, number 92496/1, supplied for this importation shows the values for the following characteristics, as tested by ASTM methods: color, calcium, sulfur, viscosity, base number and density.
As evidence of domestic OLOA 249S you include documentation for an export of domestic OLOA 249S: an invoice dated December 20, 1999; a straight bill of lading for a shipment of OLOA 249S from Chevron, New Orleans to Oronite Japan Limited in Yokohama, Japan. You also include a certificate of analysis for this shipment of a product described as OLOA 249S; a CF 7511 (Notice of Exportation of Articles with Benefit of Drawback); and a ship and barge load report. The certificate of analysis contains values for these characteristics, as tested by OPM methods: calcium, sulfur, specific gravity, viscosity, color, base number, sediment and foreign matter. The invoice included shows the quantity, and price of goods shipped and describes such goods as OLOA 249S (component additives), additives of lubricating oil. The tanker bill of lading for this exportation describes the commodity as “OLOA 249S additives of lubricating oil.”
ISSUE:
Whether the imported and domestic lubricating oil additive OLOA 249S is commercially interchangeable for purposes of 19 U.S.C. § 1313(j)(2)?
LAW AND ANALYSIS:
Under 19 U.S.C. § 1313(j)(2), as amended, substitution unused merchandise 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 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 statute does 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. 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 (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.
Thus, in order to determine whether the domestic OLOA 249S and imported OLOA 249S are commercially interchangeable, an analysis of these factors is required.
Governmental and Recognized Industry Standards
Industry consensus standards ensure that all products meeting a standard are used in the same manner, regardless of manufacturer. Under normal circumstances, materials that meet the same industry accepted standard can be used to produce the same products or utilized for the same purposes. These uses are normally stated in the standard. However, there is no evidence of governmental or industry standards for OLOA 249S included in the submission. Nor could the Customs laboratory confirm any such standards. From this we conclude that there are no applicable governmental or industry standards for OLOA 249S, and therefore, the Governmental and Recognized Industry Standards criterion is irrelevant to the instant analysis.
Tariff Classification
With respect to the tariff classification, according to both the CF 7501 for import of OLOA 249S and the CF 7511, both the imported and domestic OLOA 249S would be classified under subheading 3811.21.00.00, HTSUS, as “additives for lubricating oils containing petroleum oils or oils obtained from bituminous minerals.” The tariff classification criterion, therefore, has been met.
Part Numbers
Based on the evidence presented in the submission, OLOA 249S is a bulk commodity and is not assigned a part number. As such, part numbers are not a relevant criterion in this analysis of commercial interchangeability. However, although no part number is designated for this additive, it is traded using a unique coding system that clearly differentiates one additive from another. Further, the Customs Service Laboratory is of the opinion that this unique code number distinguishes this additive from others.
Relative Values
Based on the invoices included for the import and export transactions, the difference in the price per kilogram at the stated quantities with two months between transactions is negligible. Therefore the imported and domestic OLOA 249S are determined to have the same relative value.
Additional Relevant Factors
The lubricating oil additive at issue is identified using a unique trade name, i.e., OLOA 249S, that defines a specific kind of lubricating oil additive, which is formulated for use in a specific application. The use of a unique trade name to identify this specific kind of lubricating oil additive, formulated for use in a specific application, indicates that any material bearing this name is the same material. Finally, the Customs laboratory, after reviewing the three certificates of analysis submitted concludes that the imported and domestic material named OLOA 249S is the same commercial product.
After evaluating all the relevant criteria suggested by the legislative history and the additional relevant factors, we find that commercial interchangeability of OLOA 249S has been established because both the imported and domestic OLOA 249S (1) are classifiable as “additives for lubricating oils containing petroleum oils or oils obtained from bituminous minerals” under the same HTSUS subheading, 3811.21.00.00; (2) have the same relative value; (3) have the same unique trade name, i.e., OLOA 249S; (4) have the same item number, i.e., 39314, and (5) have the same product description, a high-overbased calcium sulfonate.
HOLDING:
Based on the above determinations, we conclude that the imported and domestic OLOA 249S are commercially interchangeable for purposes of the substitution, unused merchandise drawback law of 19 U.S.C. §1313(j)(2).
This decision is limited to the specific facts set forth herein. If the terms of the import or export contracts vary from the facts stipulated to herein, this decision shall not be binding on the Customs Service as provided in 19 C.F.R. §177.2(b)(1), (2) and (4) and 177.9(b)(1) and (2).
Sincerely,
John Durant
Director, Commercial Rulings Division