OT:RR:CTF:ER H004675
Mr. J. W. Brown
AEI Drawback Services, Inc.
d/b/a DANZAS AEI Drawback Services
22210 Highland Knolls Drive
Houston, TX 77450
RE: Celanese Ltd.; Unused merchandise drawback; Commercial interchangeability; 19 C.F.R. §191.32(c); 19 U.S.C. §1313(j)(2); vinyl acetate.
Dear Mr. Brown:
This is in response to your 12/19/2006 ruling request, on behalf of your client, Celanese Ltd. (Celanese), regarding the commercial interchangeability of imported and domestic vinyl acetate (VA), for purposes of substitution, unused merchandise drawback under 19 U.S.C. § 1313(j)(2). No other issue is considered.
FACTS:
As evidence of the imported VA, an entry summary, invoice and certificate of analysis have been provided. The entry summary, dated 12/14/2005, shows an amount of vinyl acetate, also referred to as “vinyl acetate, esters of AC,” imported by Celanese International on 12/2/2005. The VA is classified under subheading 2915.32.00, Harmonized Tariff Schedule of the United States (HTSUS). The 2005 HTSUS reflects that vinyl acetate was classified as an “ester of acetic acid” under an eo nominee provision, to wit, subheading 2915.32.00. The invoice number stated on the entry summary is the same as that on the provided invoice, dated 11/8/2005. The invoice associated with this importation reflects the same amount of “vinyl acetate HQ 3-5” as that reported on the entry summary. The “vinyl acetate HQ 3-5” is identified by “material number 50002030.”
A certificate of analysis is provided for the importation which reflects the same amount of VA as the entry summary and invoice. The certificate of analysis refers to the VA as “HQ 3-5” and this indicates the parts per million of hydroquinone. Hydroquinone (HQ) is a polymerization inhibitor that prevents polymerization of acrylic acid, methyl methacrylate, etc. The analysis is dated 11/21/2006. It states the following:
Characteristic
Uom
Value
Limit
Vinyl Acetate (assay)
%(m)
>99.90
min. 99.95
Water
%(m)
0.0026
max. 0.0200
Acidity, as Acetic Acid
%(m)
<0.0020
max. 0.0025
Aldehydes, as Acetaldehyde
%(m)
0.0041
max 0.0040
Hydroquinone (HQ)
ppm(m)
4.0
3.0-5.0
Color
Pt-Co unit
<5.0
max. 5.0
The evidence of the exported VA consists of a tanker bill of lading, certificate of analysis and a commercial invoice. The BOL states that an amount in metric tons of “vinyl acetate HQ 3-5” was laded on 8/25/2006, and destined for Texas. The invoice, dated 8/25/2006, states the price paid for the same amount of VA as appears on the invoice. The invoice refers to “vinyl acetate HQ 3-5” as material number 50002030. A certificate of analysis dated 8/31/2006, is provided. It describes the product as “vinyl acetate HQ 3-5” and product number 50002030. The certificate shows the following:
Characteristic
Uom
Value
Limit
Vinyl Acetate (assay)
%(m)
99.97
min. 99.95
Aldehydes, as Acetaldehyde
%(m)
< 0.0010
max 0.0040
Acidity, as Acetic Acid
%(m)
< 0.0010
max. 0.0025
Water
%(m)
0.0090
max. 0.0200
Ethyl Acetate
ppm(m)
210
max. 250
Methyl Acetate
ppm(m)
14
max. 25
Benzene
ppm(m)
<0.1
max. 0.1
Total Org. Impurities (TQI)
ppm(m)
227
max. 300
Hydroquinone (HQ)
ppm(m)
4.3
3.0-5.0
Color
Pt-Co unit
3.0
max. 5.0
Specific gravity @ 20/20°C
n/a
.09340
0.9335-0.9345
Distillation Range
°C
0.2
max. 0.5
Appearance
clear and free
According to the Vinyl Acetate Council “Vinyl acetate monomer [VAM] is a chemical building block used to manufacture a wide variety of polymers including: polyvinyl acetate; polyvinyl alcohol; polyvinyl acetals; ethylene vinyl acetate copolymers; and, ethylene vinyl alcohol.” Its synonyms are vinyl ester acetic acid, ethenyl ester, vinyl acetate monomer, , ethenyl acetate and 1-Acetoxyethylene. Its Chemical Abstract Service (CAS) name is ethenyl ester and its CAS Registry Number is 108-05-4 (www.vinylacetate.org). Celanese also publishes its sales specifications on its internet site www.celanese.com. The table below reflects those specifications.
Characteristic
Limits
Vinyl Acetate (assay)
min. 99.9
Aldehydes, as Acetaldehyde
max 0.0010
Acidity, as Acetic Acid
max. 0.005
Water
max. 0.04
Hydroquinone (HQ)
3-5 or 14-17
Color
max. 5.0
Distillation Range
max. 0.5
Appearance
colorless
According to its request, Celanese stores both the imported VA and domestic VA in the same tanks and orders for domestic sales or export are filled from the same tanks. VA is assigned a material number or product code 50002030. Celanese also states that both the imported and domestic VA are necessarily 99.95 percent pure VA by weight.
ISSUE:
Whether the imported and domestic vinyl acetate are commercially interchangeable for purposes of 19 U.S.C. § 1313(j)(2)?
LAW AND ANALYSIS:
Substitution, unused merchandise drawback is provided by 19 U.S.C. §1313(j)(2), but the statute does not define “commercially interchangeable.” The CBP Regulations reflect the legislative history that explained the change from fungibility to commercial interchangeability as the standard for substitution. Section 191.32 provides:
In determining commercial interchangeability, Customs shall evaluate the critical properties of the substituted merchandise and in that evaluation factors to be considered include, but are not limited to, Governmental and recognized industrial standards, part numbers, tariff classification and value.
(19 C.F.R. § 191.32(c)). In Texport Oil Co. v. United States, (185 F.3d 1291 (Fed. Cir. 1999)) the Federal Circuit Court of Appeals (CAFC) discussed the meaning of “commercially interchangeable.” The CAFC concluded that commercially interchangeable is “an objective, market-based consideration of the primary purpose of the goods in question.” (Id.) The CAFC explained:
Therefore, “commercially interchangeable” must be determined objectively from the perspective of a hypothetical reasonable competitor; if a reasonable competitor would accept either the imported or the exported good for its primary commercial purpose, then the goods are “commercially interchangeable” according to 19 U.S.C. § 1313(j)(2).
(Id. at 1295). Thus, per the CAFC in Texport commercial interchangeability is determined using an “objective standard.” Accordingly, an exported good is commercially interchangeable with an imported good if a buyer, in an arms’-length transaction, would accept either good at the specified price for the purpose intended. In order to determine if either good at the specified price for the purpose intended the relevant characteristics of the imported good with those characteristics of the specific exported good. Those pertinent characteristics include any governmental or industry standards applicable to the good, the tariff classification, part numbers if any, value, and any other important characteristics, for both the imported and exported good.
Standards or grades established by the government or industry consensus standards aid in the determination of commercial interchangeability in that such standards establish markers by which the commodity in issue may be measured. Further, such standards indicate that products meeting a specified standard are used in the same manner, regardless of manufacturer. Typically, commodities that meet the same government-established or industry accepted standard can be used to produce the same products or utilized for the same purposes. In this case there are no government standards but vinyl acetate is assigned the Registry Number 108-05-4. According to the CAS, each registry number “is a unique numeric identifier” and designates only one substance.” Both import and export documents refer to the product number 50002030. Also, two values of HQ are specified on the web site, “3-5” or “14-17.” It appears then that VA is traded with one of two values of HQ. The VA described on the import and export documents is VA with a hydroquinone value of between 3 and 5 parts per million.
The values on the import and domestic VA certificates were also compared against a competitor’s offering which stated the approximate values of its vinyl acetate. The table below sets out the characteristic measured, the import value, export value, the values published by a competitor and the sales specifications as they appear on Celanese’s web site.
Characteristic
Import
Export
Competitor
Celanese
Vinyl Acetate (assay)
>99.90
99.97
99.90
min. 99.9
Aldehydes, as Acetaldehyde
0.0041
< 0.0010
max. 0.010
Acidity, as Acetic Acid
<0.0020
< 0.0010
.005
max. 0.005
Water
0.0026
0.0090
.04
max. 0.04
Ethyl Acetate
210
Methyl Acetate
14
Benzene
<0.1
Total Org. Impurities (TQI)
227
Hydroquinone (HQ)
4.0
4.3
3-5
3-5 or 14-17
Color
<5.0
3.0
Specific gravity @ 20/20°C
.09340
.934.9335-.9345
Distillation Range
0.2
max. 0.5
Appearance
clear and free
colorless liquid
Both certificates of analysis provide the “Limit” for the respective values reported. Where the certificates report the value of the same characteristics, the limits are identical. However, some of the values stated for the foreign VA do not meet the limits stated on the certificate. Specifically, the purity on the certificate for the export is >99.90 and the minimum is states as 99.95. The water and aldehydes as acetaldehyde values for the export both minimally exceed the stated limit on the certificate. However, all values for both the import and export are within the “sales specifications” stated on the Celanese web except the import “aldehydes, as acetaldehyde.” The imported, domestic and competitor’s vinyl acetate all meet a minimum purity of 99.9 percent. Thus, the table reflects that when values are given for the imported and domestic VA, they meet the sales specifications and fall within the range of the competitor’s typical properties. This is evidence that the VA HQ 3-5 is bought and sold using these criteria.
With respect to the tariff classification, per NY 807446 (5/8/1995), “The applicable HTSUS subheading for Vinyl Acetate Monomer, CAS 108-05-4, will be 2915.32.0000, HTSUS, which provides for vinyl acetate.” According to the entry summary the imported vinyl acetate is classified under subheading 2915.32.00, HTSUS. Celanese states that the subheading for the exported vinyl acetate would also be 2915.32.0000, HTSUS. We note that subheading 2915.32.00 is an eo nominee, by name, provision. Therefore only “vinyl acetate monomer” is classified here. Because the import and export are classified under the same subheading, the tariff classification criterion, therefore, has been met.
Goods that are commercially interchangeable will have generally very similar values when sold at the same place, at the same time, to like buyers from like sellers. When the time or place of the sale or the buyers or sellers vary, goods that are commercially interchangeable may be traded for different prices. Accordingly, when price paid and charged for purportedly commercially interchangeable goods are significantly different, it must be demonstrated that the difference is attributable to market forces or some circumstance other than a material difference between the imported and exported goods.
In this case the foreign VA was imported on 12/2/2005; the domestic VA was exported on 8/25/2006. Based on the approximately 8 month time difference, the price of the domestic VA, as evidenced by the invoice, and the price of the import as reflected on the entry summary and export invoice, the difference in the price per kilogram at the stated quantities is less than $1.00 which is within an acceptable range. Therefore the imported and domestic vinyl acetate are determined to have the same relative value.
Celanese explains that the imported and domestic VA it sells are stored in the same tanks and sales destined for the foreign and domestic market are filled from these tanks. This is evidence that buyers and sellers consider either the imported and domestic VA stored in these tanks is acceptable to fill a sales order.
HOLDING:
Based on the above determinations, we conclude that the imported and domestic vinyl acetate 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,
William G. Rosoff, Chief
Entry Process and Duty Refunds Branch