DRA-4 OT:RR:CTF:ER
H095404 PTM
Mr. J.W. Brown
AEI Drawback Services, Inc.
d/b/a DANZAS AEI Drawback Services
22210 Highland Knolls Drive
Katy, TX 77450
RE: Commercial Interchangeability; 19 U.S.C. §1313(j)(2); 19 CFR §191.32(c)
Dear Mr. Brown,
This is in response to your letter, dated January 28, 2010, on behalf of The Dow Chemical Company (herein “Dow”) regarding the commercial interchangeability of imported and substituted Dipropylene Glycol Ether, also known as DPM Glycol Ether and Dowanol.
FACTS:
Dow is engaged in the manufacture, import, purchase and resale of DPM Glycol Ether. DPM Glycol Ether is described in the Dow product information sheet as a mid to slow evaporating solvent. It is suited for use as a coupling agent in a wide range of solvent systems, and is often incorporated into latex emulsion coatings.
Dow manufactures DPM Glycol Ether in the United States, but also imports DPM Glycol Ether to maintain consistent inventory for supply and to ensure its ability to meet market demands. Dow imports DPM Glycol Ether in its own name, and exports it in its own name to overseas customers. All of the imported DPM Glycol Ether is discharged and commingled with domestic DPM Glycol Ether in dedicated shore tanks in the Port of Houston.
In support for Dow’s claim for interchangeability, you provided documents representing a typical import and export transaction. For the import entry, you provided an entry summary (CBP Form 7501) number 1XXXX0-7 dated June 30, 2009, which describes the imported product as “ETHER ALCOHOLS, OTHER.” There is a hand-written notation on the entry summary further describing the merchandise as “DPM Glycol Ether.” The product is classified as 2909.49.6000 in the Harmonized Tariff Schedule of the United States (“HTSUS”), which is “Ether-alcohols and their halogenated, sulfonated, nitrated or nitrosated derivatives, other.” The corresponding invoice number 50/XXXXXX64 shows a shipment of Dowanol, DPM Glycol Ether Bulk, shipped from Antwerpen, Belgium to Texas City, TX, showing Dow as the importer of record and ultimate consignee, and is dated May 18, 2009. There is a certificate of analysis for each batch in the purchase order showing the DPM Glycol Ether as having a purity measurement of 99.6%. The certificate of analysis also shows that the imported product was tested for water content (0.03 percent) and color (3). The certificate of analysis and the invoice list the same customer order number.
For the export transaction you provide a bill of lading showing a shipment of DPM Glycol Ether shipping from Texas City, Texas to Buenos Aires, Argentina dated December 11, 2009, classified under the tariff subheading 2909.49.60.00. You also provided the corresponding invoice, number 050/43/XXXXXX33, showing the shipment of Dowanol DPM Glycol Ether from Dow and a price difference of 0.86% from the imported DPM Glycol Ether Glycol Ether. The corresponding Certificate of Analysis for the export shows a purity of 99.6%. The exported product was also tested for water content (0.02 percent) and color (2). The certificate of analysis and the invoice list the same customer order number.
ISSUE:
Whether the imported DPM Glycol Ether is commercially interchangeable with the substituted merchandise, for purposes of substitution unused merchandise drawback, pursuant to 19 U.S.C. §1313(j)(2).
LAW AND ANALYSIS
Under 19 U.S.C. § 1313(j)(2), as amended, drawback may be granted if there is, with respect to imported duty-paid merchandise, 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 three 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 must have received from the party that imported and paid owed duties on the imported merchandise, a certificate of delivery transferring to that party, the imported merchandise, commercially interchangeable merchandise, or any combination thereof.
The Customs and Border Protection (“CBP”) Regulation, 19 C.F.R. § 191.32(c), further provides that 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.
The best evidence of whether the above quoted criteria are used in a particular transaction is the claimant’s transaction documents. See, e.g., HQ H048135 (Mar. 25, 2009); and HQ H122535 (Feb. 9, 2011). 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. Id. The purchase and sales documents also provide the best evidence with which to compare relative values. Id.
In Texport Oil Co. v. United States, the United States Court of Appeals for the Federal Circuit determined that: “[c]ommercial interchangeability 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)).” 185 F.3d 1291, 1295 (Fed. Cir. 1999). Thus, the Federal Circuit set forth an “objective standard—analyzed from the perspective of a hypothetical reasonable competitor.” Id. Therefore, we analyze commercial interchangeability pursuant to 19 C.F.R. § 191.32(c), for a hypothetical reasonable competitor.
Government and Recognized Industry Standards
One of the factors CBP considers is whether the imported and exported merchandise adhere to government and recognized industry standards. Governmental and recognized industry standards assist in the determination of commercial interchangeability, because such standards “establish markers by which the product is commoditized and measured against like products for use in the same manner, regardless of manufacturer . . . products that meet the same industry standard may be used to produce the same products” or used for the same purposes. HQ H090065 (Mar. 23, 2010).
Dipropylene glycol monomethyl ethers is assigned Chemical Abstract Service (CAS) number 34590-94-8. The CAS is a division of the American Chemical Society and is an authoritative and comprehensive source for chemical information. CAS Registry Numbers are unique numerical identifiers assigned by the "Chemical Abstracts Service" to every chemical described in the open scientific literature (currently including those described from at least 1957 through the present) and including elements, isotopes, organic and inorganic compounds. The imported and substituted merchandise were
tested for purity, water content and color. The CAS for dipropylene glycol monomethyl ethers provides standards for each of the properties tested. The imported and substituted DPM Glycol Ether Glycol Ether conformed to the CAS standard for each property, as shown on the respective certificate of analysis for the import and export and summarized in the table below:
CAS Standard
Import
Export
Purity
99% minimum
99.6%
99.6%
Water Content
0.1% maximum
0.03%
0.02%
Color
15 maximum
3
2
Furthermore, the CBP Laboratory and Scientific Services (“LSS”) analyzed the certificates of analysis imported and substituted products. LSS determined that the imported and substituted merchandise were tested against and met this standard. Because the imported and substituted merchandise exhibit similar chemical properties and meet the industry recognized CAS standard for the properties tested, we determine this criterion to be met.
Part Numbers
In evaluating the critical properties of the merchandise, CBP also considers the part numbers of the merchandise. If the same part numbers or product identifiers are used in catalogues, and in the import and export documents, it would support finding them to be commercially interchangeable. See, e.g., HQ H074002 (Dec. 2, 2009); and HQ H122535 (Feb. 9, 2011). Dow informs us that part numbers are not used in the purchase and sale of DPM Glycol Ether. Therefore, this criterion is not applicable and does not factor into the commercial interchangeability determination.
Tariff Classification
Another factor CBP considers when determining commercial interchangeability is whether the imported and exported goods are classified under the same subheading of the Harmonized Tariff Schedule of the United States (“HTSUS”). See, e.g., HQ H074002 (December 2, 2009). You state that the HTSUS number for imported and substituted DPM Glycol Ether is 2909.49.6000. Both import and export documents classify the product in this tariff subheading. Because the imported and exported merchandise is classified under the same subheading, we find that the criterion is established.
Value
Goods that are commercially interchangeable generally have similar values when sold at the same place, at the same time, to like buyers from like sellers. See, e.g., HQ H090065 (Mar. 23, 2010) (finding a price difference of 4.5 percent to be acceptable). The price difference between the imported and exported DPM Glycol Ether is only 0.86% percent. Since the difference in price is negligible in this case, we hold that the value criterion is satisfied for the purposes of 19 U.S.C. §1313(j)(2).
Other Factors
CBP may consider additional factors in determining commercial interchangeability. See 19 C.F.R. §191.32(c), see also HQ H122535 (Feb. 9, 2011). In this case, the imported DPM Glycol Ether is discharged and commingled with domestic DPM Glycol Ether in dedicated shore tanks in the Port of Houston. The fact that the imported and substituted products are commingled in the same tank is further indication that they are commercially interchangeable. See, HQ H062357 (Aug. 24, 2009), which stated that the fact that imported and substituted Tripropylene glycol methyl ether was commingled was evidence of commercial interchangeability. Consequently, we find that the fact that the imported and substituted DPM Glycol Ether is commingled provides additional support that it is commercially interchangeable.
HOLDING:
Based on the above findings, we determine that the imported DPM Glycol Ether and substituted DPM Glycol Ether are commercially interchangeable for the purposes of substitution drawback pursuant to 19 U.S.C. §1313(j)(2). If the terms of the import or export contracts vary from the facts stipulated to herein, this decision shall not be binding on Customs and Border Protection as provided in 19 C.F.R. § 177.2(b)(1), (2) and (4), and § 177.9(b)(1).
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division