United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1996 HQ Rulings > HQ 226089 - HQ 226535 > HQ 226444

Previous Ruling Next Ruling
HQ 226444

February 13, 1996

DRA-4-RR:IT:EC 226444 GOB


Chief, Drawback
U.S. Customs Service
Room 102
P.O. Box 025280
Miami, FL 33102-5280

RE: Drawback; 19 U.S.C. 1313(j)(2); Commercial interchangeability; Concentrated orange juice for manufacturing

Dear Madam:


This is in response to your letter dated September 26, 1995, which asked whether certain Concentrated Orange Juice for Manufacturing ("COJM") which would be imported by Lykes Pasco, Inc. ("Lykes") was commercially interchangeable with certain COJM which would be substituted for the imported merchandise pursuant to 19 U.S.C. 1313(j)(2).


Whether certain COJM imported by Lykes is commercially interchangeable for the purpose of 19 U.S.C. 1313(j)(2) with certain COJM which would be substituted for the imported COJM and exported.


Under 19 U.S.C. 1313(j)(2), as amended, 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 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 either be 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 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 CFR 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.

The Senate Report for the NAFTA Act (S. Rep. 103-189, 103d Cong., 1st Sess., 81-85 (1993)) contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability.

We note that one of the export sales shown by Lykes indicates that the COJM is exported to Canada. Pursuant to section 203(a)(7) of NAFTA (19 U.S.C. 3333(a)(7)), a citrus product that is exported to Canada is not a "good subject to NAFTA drawback." Accordingly, the issue of commercial interchangeability pursuant to 19 U.S.C. 1313(j)(2) is appropriate with respect to an export of COJM to Canada.

Lykes' submissions to your office were dated August 15, 1995 and August 28, 1995. We made two requests for additional information from Lykes. Lykes' first response was dated October 18, 1995. Lykes' second response was also dated October 18, 1995, but since this letter was in response to our request which followed receipt of Lykes first response, we will refer to this as the November submission. In fact, we received this letter in early or mid-November.

Part Numbers

No information has been provided with respect to part numbers. There is no evidence to suggest that part numbers is a pertinent criterion for COJM.

Tariff Classification

We note that COJM may be classified under subheading 2106.90.48, Harmonized Tariff Schedule of the United States ("HTSUSA"), which applies to orange juice which is fortified with vitamins or minerals or under subheading 2009.11.00, HTSUSA, which pertains to frozen orange juice, not fortified with vitamins or minerals.
We have not been provided with information as to whether one of the two subheadings, supra, is applicable for all of the COJM to be imported and exported by Lykes.

Governmental and Recognized Industry Standards

The Standards for Grades of Orange Juice for COJM are stated in 7 CFR 52.1557, Table IV. There are two grades, Grade A and Grade B. COJM must have a minimum of 90 score points to be within Grade A.

The scores for Grade A are set out as follows in Table IV of 7 CFR 52.1557.

Reconstitution - Reconstitutes properly. (No Score Points.)

Color - Good. (Equal to or better than USDA OJ 6.) Score Points: 36-40.

Defects - Practically free. Score Points: 18-20.

Flavor - Very Good. Score Points: 36-40.

Total Score Points - Minimum - 90.

Lykes' submission dated August 15, 1995 states that the imported and exported COJM meet "the Grade A standard of the U.S.D.A. (7 CFR 52.1557, Table IV)."

Lykes' submission dated August 28, 1995 indicates that the imported and exported COJM are USDA Grade A. This submission states in part:

The imported article is tested by the USDA in Winter Haven, who issues an affidavit (see Document "A") stating that the product meets the requirements of Chapter 20-69 of the Florida Citrus Code. This is available for all imports into Florida. The affidavit also shows the results of their analytical tests. Although the affidavit does not specifically state that the product is USDA Grade "A", the combined scores for color, flavor, and defects imply that the article does meet the minimum standards for USDA Grade "A."

Furthermore, LPI'S purchase product specifications require that the article meet the minimum standards for USDA Grade "A." Document B is a LPI internal analysis that indicate [sic] the product has met our specification, and specifically met the minimum scores for color, flavor, and defects necessary to meet the USDA Grade "A" standard. ...
The substituted article will also be tested by the USDA when it is produced. For this article we will request a USDA Grade Certificate (see Document "C"). This certificate will attest that the article meets the minimum requirements for Grade "A."

Although we would not use the substituted article in any fashion, LPI would however perform our own lab tests upon receipt of the product. Those tests, and the accompanying documents (see Document "B" again) would attest to the fact that the product met LPI minimum specification, which includes the minimum scores for color, flavor, and defects necessary to meet the USDA Grade "A" standard.

Relative Values

Lykes' November letter states in pertinent part:

Lykes Pasco did not issue, nor sign, any specific purchase or sales contracts regarding imported or exported orange juice. We use a purchase order as a purchase contract, however, agreements made to purchase orange juice from foreign suppliers are verbal and relate to quantities and qualities of juice that vary from season to season, depending on the particular growing conditions for that season. Furthermore, during the previous year Lykes Pasco sold orange juice without the need for a specific sales contract.

We note, however, that certain of the documentation submitted by Lykes does appear to be purchase and sales orders.

In its submission of October 18, 1995, Lykes provided the following documentation: three invoices with a handwritten notation "import merchandise" indicating the purchase of frozen concentrated orange juice at the following unit prices and shipment dates - $.8066 (November 3, 1992), $.8806 (February 2, 1995), and $.9786 (June 30, 1995); and two invoices with the handwritten notation "export merchandise" indicating the export of merchandise at the following unit prices and shipment dates: $.8400 (October 2, 1995), and $.8400 (September 18, 1995).


After a review of the evidence of record, we are unable to conclude that the imported and substituted COJM, as described by Lykes, are commercially interchangeable for the purpose of 19 U.S.C. 1313(j)(2). There is not enough clear and probative evidence submitted for us to make such a determination.


We are unable to conclude that the imported and substituted COJM, as described by Lykes, are commercially interchangeable for the purpose of 19 U.S.C. 1313(j)(2).


International Trade Compliance

Previous Ruling Next Ruling

See also: