- Type : • HTSUS :
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Related:
230149
DRA-4 OT:RR:CTF:ER H050955 DCC
Thomas Ferramosca
Thomas Ferramosca Associates, LLC
87 Fillmore Avenue
Staten Island, NY 10314
Dear Mr. Ferramosca:
This letter is in response to your submissions, dated January 12, 2009, filed on behalf of the American Seafoods Company LLC (“ASC”). We also considered information that you provided in two submissions dated August 10 and 19, 2008. Your request concerns the commercially interchangeability of various imported and substituted articles for purposes of substitution drawback under 19 U.S.C. §§ 1309(b) and 1313(j)(2).
FACTS:
The subject merchandise involves 19 articles imported by ASC for use aboard the company’s fish processing vessels. Based on information contained in your submissions, including entry documents for sample transactions, the following table describes the imported merchandise.
Product Name /
Invoice Description
Use
Tariff Code (HTSUS)
Invoice Price
(per unit in U.S. $)
Sugar (Granulated cane sugar)
Polarization: 99.8 degrees up, 20 lb. blue poly bag.
Stabilizes surimi
Within quota 1701.99.1090
$11.00 - $15.00
per kg
Over quota 1701.99.5090
$20.00 - $25.00
per kg
Strapping Band
½-inch 100% polypropylene strapping band.
Size: 0.55(T) x 12(w) mm x 3,017 meter / coil (±5%), 8 x 8 core
Secures surimi box
3920.20.0050
$16.00 - $28.00
per roll
Block Bags
100% polyethylene bags clear on rolls. Size: 22 x 12 x 24” (±5%), 0.0015 mil clear
Prevents dehydration and contamination
3923.21.0000
$29.00 - $55.00
per roll
Fishmeal Bags
1,000 denier polypropylene bags. Dual-sided laminated white film: 30 microns each. Size: 580(±10%) x 1020 mm (±10%). Print: 2 colors
Holds fishmeal byproducts
3923.29.0000
$0.35 –
$0.38
each
Fishmeal Supersacks (new)
1,600 denier polypropylene supersacks (new). Size: 1,980 x 1,370 x 1,050 mm. 2 belts strap bar: 40 mm 14 x 14 weave / sq. inch polypropylene
Consolidates fishmeal bags
3923.29.0000
$15.50 - $17.00
each
Fishmeal Supersacks (used)
Polypropylene supersacks (used: collected and cleaned). Size: 1,930 mm x 1,320 mm x 1,020 mm
Consolidates fishmeal bags
3923.29.0000
$2.50 each
H&G Liners
Polyethylene liners in rolled sheet. Size: 42” x 42,” 1.25 mil, clear, 500 pcs / roll
Wraps fish products, and prevents dehydration and contamination
3920.10.0000
$27.50 -
$51.00
per roll
Stretch Wrap
Size: 17.8 Mic. X 18”(w) x 1500’ / roll (±5%), clear, 4 rolls / case
Secures fish products on pallets
3920.10.0000
$24.50 - $33.00
per carton
Surimi Bags (Dark blue)
LDPE (47%), LLDPE (50%) and EVA (3-4%). Size: 3 mil x 16.5” x 29?,” 1 color print black-dk blue bag (FA)
Grade FA
Identifies product grade by color. Prevents dehydration and contamination
3923.21.0080
$33.50 - $64.00
per roll
Surimi Bags (Green)
LDPE (47%), LLDPE (50%) and EVA (3-4%). Size: 3 mil x 16.5” x 29?,” 1 color print black-green bag (A)
Grade A
Identifies product grade by color. Prevents dehydration and contamination
3923.21.0080
$55.00
per roll
Surimi Bags (Yellow)
LDPE (47%), LLDPE (50%) and EVA (3-4%).
Size: 3 mil x 16.5” x 29?,”
1 color print black
Grade KA
Identifies product grade by color Prevents dehydration and contamination
3923.21.0080
$38.50 – $64.00
per roll
Surimi Bags (Pink)
LDPE (47%), LLDPE (50%) and EVA (3-4%).
Size: 3 mil x 16.5” x 29?,”
1 color print black-yellow bag
Grade B
Identifies product grade by color. Prevents dehydration and contamination
3923.21.0080
$33.50 –
$64.00
per roll
Surimi Bags (Red)
LDPE (47%), LLDPE (50%) and EVA (3-4%).
Size: 3 mil x 16.5” x 29?,”
1 color print black-red bag
Grade Special Recipe
Identifies product grade by color. Prevents dehydration and contamination
3923.21.0080
$43.00 – $52.00
per roll
Surimi Bags (Light Blue)
LDPE (47%), LLDPE (50%) and EVA (3-4%). Size: 3 mil x 16.5” x 29?,” 1 color print black
Grade KA
Identifies product grade by color. Prevents dehydration and contamination
3923.21.0080
$52.00 – $55.00
per roll
Surimi Film (Dark blue)
LDPE (30%), LLDPE (70%), and EVA (3-4%). Size: 3 mil x 34” x 1,900,’
1 color print black
Grade FA
Identifies product grade by color. Prevents dehydration and contamination
3920.10.0000
$85.00 - $127.00
per roll
Surimi Film (Green)
LDPE (30%), LLDPE (70%), and EVA (3-4%).
Size: 3 mil x 34” x 1,900,’
1 color print black
Grade A
Identifies product grade by color. Prevents dehydration and contamination
3920.10.0000
$65.50 - $127.00
per roll
Surimi Film (Pink)
LDPE (30%), LLDPE (70%), and EVA (3-4%).
Size: 3 mil x 34” x 1,900,’
1 color print black
Grade B
Identifies product grade by color. Prevents dehydration and contamination
3920.10.0000
$105.00 - $110.00
per roll
Surimi Film (Light blue)
LDPE: 30%; LLDPE: 70%; and EVA: 3-4%. Size: 3 mil x 34” x 1,900,’
1 color print black
Grade SA
Identifies product grade by color. Prevents dehydration and contamination
3920.10.0000
$84.00 –
$110
per roll
Surimi Film (Yellow)
LDPE (30%), LLDPE (70%), and EVA (3-4%).
Size: 3 mil x 34” x 1,900,’
1 color print black
Grade KA
Identifies product grade by color. Prevents dehydration and contamination
3920.10.0000
$65.50 - $112.00
per roll
You provided information regarding the use of these articles after importation. ASC previously filed unused merchandise drawback claims under 19 U.S.C. § 1313(j)(1), i.e., unused merchandise direct identification. Because that method requires maintaining inventory records to directly connect imported and exported articles, ASC now seeks approval to file claims under section 1313(j)(2), which allows the substitution of unused merchandise for imported merchandise when exported as supplies necessary for the operation of a vessel for purposes of 19 U.S.C. § 1309(b). Although the imported and substituted articles would be the same, according to ASC, use of substitution, unused merchandise drawback would allow the company to claim drawback without directly identifying imported and substituted merchandise.
ISSUES:
Whether the merchandise described above constitutes vessel supplies for purposes of section 309(b) of the Tariff Act of 1930; and
Whether the imported articles are commercially interchangeable with the substituted articles, for purposes of substitution, unused merchandise drawback pursuant to 19 U.S.C. § 1313(j)(2).
LAW & ANALYSIS:
Vessel Supplies
Section 309(b) of the Tariff Act of 1930, codified at 19 U.S.C. § 1309(b) states, in pertinent part, that:
Articles withdrawn from bonded warehouses, bonded manufacturing warehouses, continuous customs custody elsewhere than in a bonded warehouse, or from a foreign-trade zone, imported articles, and articles of domestic manufacture or production, laden as supplies upon any such vessel or aircraft of the United States . . . shall be considered to be exported within the meaning of the drawback provision of this chapter.
You indicate that the imported merchandise will be used for various purposes related to the processing and packaging of harvested fish. Specific uses include the prevention of dehydration and contamination, containment of fishmeal byproducts, packaging finished products, and identification of product grade by packaging color.
The scope of what constitutes vessel supplies for purposes of section 1309(b) was addressed in TD 49815(4), dated February 16, 1939. In that decision, CBP held that “supplies” as used in section 1309(b), includes “all consumable articles necessary and appropriate for the propulsion, operation and maintenance of the vessel.”
In HQ 230149, dated April 2, 2004, this office applied TD 49815(4) to determine whether cryoprotectants used on-board fishing vessels to manufacture fish paste, i.e., surimi, was eligible for direct identification unused merchandise drawback pursuant to 19 U.S.C. § 1313(j)(1). In that case, the drawback claimant imported cryoprotectant for use on its fishing vessel for the production of surimi at sea, outside the three-mile U.S. territorial waters, but within the 200-mile U.S. exclusive economic zone. According to the ruling, the cryoprotectants were, “mixed into the fish meat just prior to the packaging and freezing of the product.” We further noted that, “the production of surimi involves the addition of cryoprotectants, which preserve the integrity of the fish protein during freezing and in frozen storage.”
Because the claimant’s fishing vessel operated not only as a means of fishing and transportation, but also as fish processor, and based on the description of the use of the cryoprotectants, we determined that the imported materials were supplies necessary to the “operation of the vessel.” As such, the cryoprotectant constituted vessel supplies within the scope of section 1309(b). Because lading the cryoprotectant onto the vessel constituted an exportation under section 1309(b), and because the cryoprotectant was not used until it was laded on the fishing vessel, we held that the imported duty-paid cryoprotectant was eligible for drawback under section 1313(j)(1).
Unused Merchandise Drawback
Substitution, unused merchandise drawback is provided by section 313(j)(2) of the Tariff Act of 1930 (the “Act”), codified at 19 U.S.C. § 1313(j)(2). The statute, however, does not define the term “commercially interchangeable.” The CBP Regulations reflect the legislative history that explained the change from fungibility to commercial interchangeability as the standard for substitution, unused merchandise drawback. Section 191.32 provides as follows:
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).
Governmental and Recognized Industry Standards
Standards or grades established by the government or industry consensus aid in the determination of commercial interchangeability in that they establish markers by which the product is commoditized and measured against like products for use in the same manner, regardless of manufacturer. Generally, products that meet the same industry accepted standard may be used to produce the same products or utilized for the same purposes. These uses are typically indicated in the standard. In the United States, government standards are typically set by the National Institute of Standards and Technology (“NIST”) and the American National Standards Institute (“ANSI”), while industry standards may be established by national organizations such as the American Society for Testing and Materials (“ASTM”) or international organizations such as the International Organizations for Standardization (“ISO”) and the International Electrotechnical Commission (“IEC”).
In this case, governmental and industry standards are not used by ASC identify the technical specifications for the imported and substituted merchandise. Consequently, the governmental and recognized industry standards criterion is not relevant to a determination of commercial interchangeability for the imported and substituted merchandise.
Part Numbers
The invoices for 19 of the imported articles include an alphanumeric code, which represents ASC’s purchase order number. Because this code corresponds to ASC’s order transactions, it does not identify specific products. In fact, several of the imported articles use the same purchase order number. Because the imported and substituted articles are not identified by number, the part number criterion would not be relevant to a determination of commercial interchangeability.
Tariff Classification
With respect to the tariff classification criterion, you provide the classifications for the 19 imported articles. In order to be commercially interchangeable, the substituted articles must have the same tariff classifications to the 10-digit level as the imported articles at the time of lading aboard ASC’s fish processing vessels. Therefore, the imported and substitute merchandise must be classified as indicated in the above table.
Relative Values
Goods that are commercially interchangeable will have similar values when sold at the same place, at the same time, to like buyers from like sellers. You provided the prices ACS pays to its foreign suppliers for various products based on the value contained in the commercial invoices issued by ASC’s suppliers. In order to be commercially interchangeable, the substituted articles must have values similar to range of values for the imported articles at the time of lading aboard ASC’s fish processing vessels as indicated in the above table.
Other Relevant Criteria
In addition to above criteria, the courts have allowed the use of standards established on a contract basis to be used to determine whether imported and substituted goods are commercially interchangeable. In Texport Oil Co. v. United States, 185 F.3d 1291 (Fed. Cir. 1999), the U.S. Court of Appeals for the Federal Circuit noted that in addition to the criteria of governmental and industry standards, part numbers, tariff classification, and relative values, the commercial interchangeability analysis may also include a review of “the description of the goods on bills of sale or invoices.” Texport at 1295. See also Pillsbury Co. v. United States, 293 F. Supp. 2d 1351, 1356 (Ct. Int’l Trade 2003) (noting that the determination of commercial interchangeability may consider whether “the designated and substitute [merchandise] may be traded on contract standards specific to individual labels”).
In this case, the contract specifications for the imported merchandise are established by the product description in the invoices. To the extent that the product descriptions contain sufficiently detailed information, those invoices may be used to determine the contract standards for purposes of analyzing the commercial interchangeability of the imported and substituted merchandise. Sufficient information would describe the material composition, dimensions, thickness, and color. Here, the commercial invoices describe the merchandise as indicated in the “Product Name / Invoice Description” field in the table above.
In addition to contract standards, CBP may also consider whether the particular use of the imported and substitute merchandise to determine whether such merchandise is commercially interchangeable. In Pillsbury, the court examined the particular use of cut asparagus in its analysis of the commercial interchangeability of the imported and substitute merchandise. In that case, the court noted that although the substitute asparagus underwent more processing than the imported asparagus, such processing did not preclude a finding of commercial interchangeability since it had a negligible effect on how the product could be used. See Pillsbury, 293 F. Supp. 2d at 1359.
In support of its claim, ASC provided information regarding the intended use of the imported merchandise, as shown in the “Use” field in the table above. Because ASC will not subject the imported merchandise to further processing before lading it aboard its fish processing vessels, the intended use of the imported and substituted merchandise are apparently the same. Consequently, the “use” criteria of commercial interchangeability, as described in Pillsbury, is satisfied.
Finally, in order to be commercially interchangeable, ASC’s inventory records for the substituted articles must contain the same product description information as the imported articles at the time of lading aboard the fish processing vessels. Consequently, ASC should maintain import and inventory records to substantiate its claims of substitution, unused merchandise drawback. Such records should contain sufficient information—including product descriptions, tariff classifications, and values—to ensure the imported merchandise is in fact the same as the substituted merchandise laded onto ASC’s fish processing vessels, and therefore commercially interchangeable.
HOLDING:
Based on the above analysis, we conclude that the imported and substituted fish processing vessel supplies are commercially interchangeable for the purposes of the substitution, unused merchandise drawback law of 19 U.S.C. § 1313(j)(2), provided the supplies are identified by the same product names and descriptions on all invoices and inventories records classified within the same 10-digit tariff subheading and have the same uses.
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 CBP.
Sincerely,
William G. Rosoff, Chief
Entry Process & Duty Refunds Branch