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HQ 230402

May 19, 2004

DRA-4 RR: CR: DR HQ 230402MK

Kirk Swensen
Nukabe Automotive Parts Sales, Inc.
410 Richmond Ave.
Mattoon, IL 61938

RE: Ruling Request; commercial interchangeability; unused merchandise drawback; automotive parts; 19 U.S.C. 1313(j)(2).

Dear Mr. Swensen:

This is in response to your February 4, 2004 ruling request on behalf of Nukabe Automotive Parts Sales, Inc. (“Nukabe”), regarding the commercial interchangeability of imported and domestic strut bars for purposes of substitution, unused merchandise drawback under 19 U.S.C. 1313(j)(2).


Nukabe is a distribution center for Cusco, Japan, a manufacturer of high quality aftermarket performance parts for import cars. Nukabe functions as a wholesale distributor and a retail front. Nukabe imports parts solely from Cusco for use primarily in cars available in the Japanese market, but are interchangeable with many of the models imported to North America.

Nukabe imports parts by their specific part numbers, in this instance, strut bars are identified as part number 135540A. This part number is used to identify this particular strut bar in the importation, exportation, and inventory documents.

The import records for part number 135540A consist of entry 510-xxxx344-3 (“344-3”), dated April 1, 2003. The Customs Form (“CF”) 7501 describes the merchandise as “OTH PARTS FOR SUSPENSION SYSTE” and states these goods are classifiable in subheading 8708.99.7060, Harmonized Tariff Schedule United States (“HTSUS”). With this CF 7501 are two invoices. The first invoice, reference number POC 322503-1, on NKB letterhead and dated March 11, 2003, shows that on March 19, 2003, three strut bars, products number 135 540 A, at a specific per unit Yen price were shipped on the YM Tacoma from Tokyo, Japan to Chicago, USA. The second invoice, number 343-28842, on Nippon Express USA, Inc. letterhead and dated April 11, 2003, shows that the YM Tacoma vessel was received with auto parts laden. Also included with the entry documents is an “Inventory of 1st Ocean Shipment- received 4/8” dated April 16, 2003 and on NAPS letterhead. This inventory includes three strut bars, “OS, front, AW 11, MR2,” model number 135 540 A at the same per unit price in Yen. Finally, included with the entry documents is a “Nukabe Automotive Parts Sales, Inc. Purchases by Item Detail” dated April 8, 2003. This document shows three “OS, Front, AW11, MR2,” type 135 540, A were received on April 8, 2003.

The export documents consist of an invoice, air waybill, and inventory. The invoice, number REC031126, on Nukabe letterhead and dated December 16, 2003, shows that two OS front strut bars, part number 135 540A, with the same per unit price in Yen, were being returned to Tokyo, Japan from Chicago. The Yusen Air & Sea Service (USA) Inc. air waybill shows that Nukabe shipped auto parts to Gumma- Ken, Japan on December 19, 2003. The Nukabe “Find Report,” dated December 16, 2003, shows a credit in American dollars for the exact amount as previously stated for two strut bars, OS, front, AW11, MR2, item number 135 540A.


Whether the imported and domestic strut bars are commercially interchangeable for purposes of 19 U.S.C. 1313(j)(2)?


Under 19 U.S.C. §1313(j)(2), as amended, drawback may be granted if there is, with respect to imported dutypaid 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 only issue raised here is one of commercial interchangeability.

The drawback statute was substantively amended by section 632, title VI  Customs Modernization, Pub. L. No. 103182, the North American Free Trade Agreement Implementation ("NAFTA") Act (107 Stat. 2057), enacted December 8, 1993. The foregoing summary of section 1313(j)(2) is based on the law as amended by Public Law 103182. Title VI of Public Law 103182 took effect on the date of enactment of the Act (section 692 of the Act).

Before its amendment by Public Law 103182, the standard for substitution was fungibility. House Report 103361, 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, prior to their amendment in 1998 (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.

The Senate Report for the NAFTA Act (S. Rep. 103189, 103d Cong., 1st Sess., 8185 (1993)) contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability. The amended Customs Regulations, 19 CFR 191.32(c), provide 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.

In order to determine commercial interchangeability, Customs adheres to the Customs regulations which implement the language of the legislative history. The best evidence whether those criteria are used in a particular transaction are the claimant’s transaction documents. 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. The purchase and sale documents also provide the best evidence with which to compare relative values. Also, if another criterion is used by the claimant to sort the merchandise, the claimant’s records would show that fact which will enable Customs to follow the Congressional directions.

Our analysis of the four factors and critical properties follows.

Government and Recognized Industry Standards

Industry consensus standards ensure that all products meeting a standard are used in the same manner, regardless of manufacture. 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 government or industry standards for strut bars included in the submission. From this we conclude that there are no applicable governmental or industry standards for strut bars, and therefore, the Government and Recognized Industry Standards criterion is irrelevant to the instant analysis.

Tariff Classification

With respect to tariff classification, according to the CF 7501 the auto parts that are entered are done so under subheading 8708.99.7060, HTSUS. There is no indication of a tariff classification on any of the exported documents. However, since the part number is the same on all inventory records and export documents, it is assumed that the exported strut bars would be classifiable under the same tariff subheading as the imported strut bars.

Part Numbers

Although the CF 7501 only states “OTH PARTS FOR SUSPENSION SYSTE,” and not specifically strut bars, the invoices and inventories all identify the merchandise specifically as part number 135 540 A. This distinguishes the strut bars from other auto parts. Therefore the company’s use of part number, 135 540 A, designating a particular strut bar can be said to have met this criterion for commercial interchangeability.

Relative Values

Based on the invoices included for the imported and exported transactions, there is no change in the price of the part number. The imported goods were identical in price to the exported goods. Therefore, the relative value criterion can also be said to have been met.

After evaluating all the relevant criteria suggested by the legislative history, we find that commercial interchangeability of the auto parts has been established.


Based on the above determinations, we conclude that the imported and domestic strut bars identified by the same part numbers on all invoices and inventories are commercially interchangeable for the purposes of the substitution, unused merchandise drawback law of 19 U.S.C. §1313(j)(2).


Myles B. Harmon, Director
Commercial Rulings Division

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