Customs Ruling HQ 225936 - Request for Internal Advice; Substitution Unused Merchandise Drawback; Commercial Interchangeability; 19 U.S.C.1313(j)(2); Frozen Concentrate Orange Juice for Manufacture; COJM; FCOJM; HQs 222647/222789, 226100, 226225, 226444.

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HQ 225936
Nov 04, 1998

Type : Drawback • HTSUS :
Related: 025280; 226100; 226225; 226444; 225493

DRA-4-RR:CR:DR 225936 BJB

Ms. Joyce Stark
Chief, Drawback Branch U.S. Customs Service
P.O. Box 025280
Miami, Florida 33102-5280

RE: Request for Internal Advice; Substitution Unused Merchandise Drawback; Commercial Interchangeability; 19 U.S.C.1313(j)(2); Frozen Concentrate Orange Juice for Manufacture; COJM; FCOJM; HQs 222647/222789, 226100, 226225, 226444.

Dear Ms. Stark:

This is in response to a memorandum from Nora Ehrlich former Chief, Drawback Branch of the Southeast Region, dated January 19, 1995 [DRA-4-0:C:L JTS], concerning a request for drawback by Alcoma Packing Company, Inc. ("Alcoma"). The memorandum requested advice on whether Alcoma qualified for substitution unused merchandise drawback pursuant to 19 U.S.C. 1313(j)(2) and whether it has complied with the statutory specifications concerning commercial interchangeability requirements.

FACTS:

Alcoma is an importer of U.S. Department of Agriculture ("USDA") Grade A Frozen Concentrated Orange Juice for Manufacturing ("FCOJM"), as defined in the Standards of Identity of the Food and Drug Administration (21 C.F.R. 146.153). Alcoma also produces USDA "Grade A" FCOJM from high-quality fresh Florida fruit. Alcoma buys and sells FCOJM on a per pound solids basis, at any given Brix, as published by the U.S. Bureau of Standards. Alcoma sells most of its product in the United States but also sells in the international market. Under the present claim for substitution unused merchandise drawback Alcoma exported six shipments of frozen concentrate orange juice to Mitsubishi Corporation in Japan. The six import entries of FCOJM were from Brazil and Alcoma submitted Certificates of Delivery for these import entries. Alcoma was not the importer of record.

While Alcoma is not generally an exporter of record for its exports, in the present circumstances Alcoma's sales were made with the understanding that Alcoma would retain the duty drawback rights and would receive a formal waiver of those rights from its clients who may serve as the exporter of record.

In a letter dated December 14, 1994, Alcoma claimed substitution unused merchandise drawback under 19 U.S.C. 1313(j)(2) for USDA Grade A FCOJM. Alcoma's contracts for its import entries and exports of FCOJM conformed to the specifications set in the Citrus Associates of the New York Cotton Exchange, Inc. contract provision as follows:

"U.S. Grade A" with a Brix value of not less than 57 degrees having a Brix value to acid ratio of not less than 14.0 to 1 not more than 18.0 to 1 and a minimum score of 94, with the minimums for the component factors fixed at 37 for color, 37 for flavor and 19 for defects."

Alcoma submitted entry and export documents, including customs invoices, inspection and control certificates, import and export summaries, and transport forms. The specific facts represented by these documents are outlined in detail in the course of the analysis presented below.

By letter dated February 26, 1997, Alcoma limited its request to qualifying for substitution unused merchandise drawback claim of $255,699.19 in its initial request. To qualify for drawback Alcoma proposed to substitute USDA Grade A FCOJM produced from entirely domestic fresh fruit, to which oils, essences and/or flavoring components were added prior to its USDA Grade Certification for imported Brazilian FCOJM USDA Grade A.

ISSUE:

Whether the imported frozen orange juice concentrate for manufacture is "commercially interchangeable" with the exported substituted unused merchandise in accordance with the requirements of 19 U.S.C. 1313(j)(2)?

LAW AND ANALYSIS:

Under 19 U.S.C. 1313(j)(2), as amended, substitution unused merchandise drawback may be granted if, inter alia, imported duty-paid merchandise is "commercially interchangeable" with the exported merchandise. To qualify for this type of drawback, the other (substituted) merchandise must be exported or destroyed within three (3) years from the date of importation of the imported merchandise. Also, before the exportation or destruction, the substituted merchandise may not have been used in the United States and must have been in the possession of the drawback claimant. Further, the party claiming drawback must be either 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.

In order to determine commercial interchangeability, Customs adheres to the Customs regulations which implement the operational 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.

At issue in this case is the applicability of the substitution drawback provision (19 U.S.C. 1313(j)(2)) to frozen concentrated orange juice for manufacture and concentrated orange juice for manufacture. If the requirements in 19 U.S.C. 1313(j)(2) are met, drawback may be granted. The requirements under 19 U.S.C. 1313(j)(2) are as follows:

1. There must be imported merchandise on which was paid any duty, tax, or fee imposed under federal law because of its importation;

2. The drawback claimant must have either:

(a) Imported the imported merchandise; or

(b) 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;

3. There must be other (substitute) merchandise which is:

(a) Commercially interchangeable with the imported merchandise; and

(b) Exported or destroyed under Customs supervision within 3 years of the date of importation of the imported merchandise; and

4. Before the exportation or destruction of the other (substitute) merchandise, that merchandise: (a) May not be used (except as permitted under 1313(j)(3)) in the United States; and . . . . (d) Must be in the possession (as described in the amended section 1313(j)(2(C)(ii)) of the person claiming drawback.

Alcoma stated that while it was not the importer of record, Alcoma does hold certificates of delivery from the importer of the merchandise in this case, and that duties were paid. Alcoma also declared that it had possession of and title to both the imported and substituted merchandise (possession of the imported merchandise is not required; see 19 U.S.C. 1313(j)(2), see also, B.F. Goodrich Co. v. United States, 16 CIT 333, 794 F. Supp. 1148 (1992)). Alcoma also stated that the substituted merchandise was exported within 3 years from the date of importation of the imported merchandise. Provided that the above statements are true and that Alcoma is able to establish these statements to be correct, all of the requirements for drawback under 19 U.S.C. 1313(j)(2) will have been met, except for the requirement that the imported merchandise and the substituted merchandise be commercially interchangeable.

The drawback law was amended by section 632, Title VI - Customs Modernization, Public Law 103-182, the North American Free Trade Agreement Implementation Act (107 Stat. 2057), enacted December 8, 1993. Before its enactment by Public Law 103-182, the standard for substitution was "fungibility." The language has since been changed to alter the standard from "fungibility" to "commercial interchangeability." House Report 103-361, 103d Cong., 1st Sess., 131 (1993), sets out language explaining the change from fungibility to commercial interchangeability as a standard for substitution drawback under 19 U.S.C. 1313(j)(2). According to the House Ways and Means Committee Report (at page 131), the standard was intended to be made less restrictive (i.e., "the committee intends to permit the substitution of merchandise when it is commercially interchangeable,' rather than when it is commercially identical'") (the reference to "commercially identical" derived from the definition of fungible merchandise in the Customs Regulations (19 C.F.R. 191.2(1), (1993)). The Report (at page 131) provides:

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 industrial 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.

Prior to the amendment of 19 U.S.C. 1313(j)(2) by Public Law 103-182, Customs followed the standards of the Citrus Associates of the New York Cotton Exchange, Inc. ("Cotton Exchange"). In HQ decision 222647/222789, dated April 24, 1991, Customs held that for fungibility purposes, "[w]e are satisfied that [the standards] represent industry standards for COJM." The Cotton Exchange has historically provided two standard contracts for frozen orange juice futures. In Headquarters Decision (HQ) 226100, issued on December 5, 1995, Customs recognized the Cotton Exchange standards as representative industry standards for FCOJM. The decision noted that the Cotton Exchange,

"in their rules governing contracts for futures deliveries of COJM require minimum scores of 94 and 92. Therefore, under industry standards, a batch of

juice that meets a score of 90 is not commercially interchangeable with a batch that meets a score of 94 or above even though both are within the USDA Grade A standards."

Thus under industry standards, a batch of juice that meets a score of 90 is not commercially interchangeable with a batch that meets a score of 94 or above, even though both are within USDA Grade A standards. Alcoma states that its import purchases and export sales of FCOJM have complied with contract specifications of the Cotton Exchange.

In order to be commercially interchangeable, Alcoma must demonstrate that its' import entries and export sales, as evidenced by entry documents, company invoices, and bills of lading meet recognized industry Cotton Exchange and government USDA Grade A standards expressed above.

Alcoma has provided documentation related to each of its six import entries and six exports of FCOJM. It is necessary at this point to examine both what constitutes "commercial interchangeability" and the nature and quality of the FCOJM purchased and sold by Alcoma to determine whether Alcoma's imports and exports are commercially interchangeable.

Alcoma has stated that both the imported and exported FCOJM under these claims meet USDA Grade A and the Cotton Exchange standards. Specifically, Alcoma has stated that USDA and Cotton Exchange standards were followed in these claimed transactions and submitted Exhibit "D" as evidence of its conformance with specifications from the Cotton Exchange standards.

The USDA Grade A requirements are based on a scoring system for color, defects, and flavor, with minimum points attributed to each. A batch of FCOJM must have a minimum total/average score of 90 to meet the USDA Grade A standard. Customs has held that the more restrictive "standard of fungibility" based on USDA grade alone, is unacceptable because the ranges given for USDA grading are much too broad. This remains Customs position under the terms of "commercial interchangeability" as well. However, Customs has ruled that the amended by-laws of the Citrus Associates of the New York Cotton Exchange, Inc. represent industry standards for FCOJM, and that Customs will continue to consider them under the amended law. The Cotton Exchange, in their rules governing contracts for futures deliveries of FCOJM, requires minimum scores of 94 and 92. Therefore, under industry standards, a batch of juice that meets a score of 90 is not commercially interchangeable with a batch that meets a score of 94 or above even though both are within the USDA Grade A standards. In order to be commercially interchangeable, FCOJM must be of USDA Grade A standard with a score of 94 or above under a contract of the Cotton Exchange (Alcoma Exhibit "D"). In the present case Alcoma has followed the USDA Grade A and Cotton Exchange standards requiring a total USDA score of 94 or above for its FCOJM. [Footnote 1: HQ 226100, December 5, 1995 at 7.]

Under the FDA standards of identity for FCOJM, any batch of juice of at least 20 degrees Brix is a measurement of the quantity of the soluble solids (sugar) in a concentrate. It is not a measure of its quality. Under the USDA standards for frozen concentrated orange juice (FCOJM), the degree Brix must be a minimum of 41.8 degrees (for unsweetened). Under Section 82 of the Cotton Exchange by-laws, the rules governing futures contracts permit FCOJM with a Brix level of 57 degrees or more to be delivered under a contract. Accordingly, even though a batch of 20 degrees Brix and a batch of 65 degrees Brix may meet the FDA Standards of Identity for FCOJM and the USDA Grade A standards, the industry would not treat the two batches as commercially interchangeable. With a 65 degree Brix, a lower degree of concentration is required to produce FCOJM, whereas, with a batch of 35 Brix, an increase in the concentration is necessary. All of Alcoma's import entries show at least a 66 degrees Brix and its export documentation shows a narrow range of 63.74 to 65.00 degrees Brix.

In HQ 226100, Customs ruled on the applicability of commercial interchangeability to FCOJM pursuant to the requirements of 19 U.S.C. 1313(j)(2). In HQ 225493, a ruling dated July 19, 1995, Customs gave great weight to accepted industry standards, concerning crude peanut oil, where Customs found some of the subject merchandise deemed "fungible," and derivatively, commercially interchangeable where the standards were met, the tariff classification was the same, and the discrepancy in cost was $.2585 per pound on the imports and $.45 per pound on the exports.

The question of whether Alcoma's imported and substituted merchandise have met the commercially interchangeable requirements of 19 U.S.C. 1313(j)(2) is examined below on the basis of four criteria: I) Governmental and Recognized Industry Standards; II) Part Numbers; III) Tariff Classification; and IV) Relative Values.

I. Governmental and Recognized Industry Standards

Alcoma claims substitution unused merchandise drawback under 19 U.S.C. 1313(j)(2) in accordance with the USDA and industry standards. Alcoma maintains that all of its imported and exported FCOJM product fit within the USDA Grade A and the Cotton Exchange standards. Alcoma based its contracts for six importations of FCOJM from Brazil and six exports of FCOJM to Japan on "USDA Grade A" with a Brix value of not less than 57 degrees having a Brix value to acid ratio of not less than 14.0 to 1 nor more than 18.0 to 1, and a minimum score of 94, with the minimums for the component factors fixed at 37 for color, 37 for flavor and 19 for defects, in conformity with the quality of FCOJM that is deliverable under Cotton Exchange contract, provided that frozen concentrated orange juice with a Brix value of more than 66 degrees shall be calculated as having 7.278 pounds of solids per gallon delivered.

A. The Imported Merchandise:

Alcoma has filed six import entries for COJM imported from Brazil. Alcoma provided USDA total/average score sheets for four of these six import entries. Each of these four import entries has a total or average USDA score of 95. Two of Alcoma's six import entries are not accompanied by USDA total/average score sheets. Unless specifically requested by the importer, the USDA does not automatically provide defect scores on drum products. Absent defect scores a total/average USDA score cannot be ascertained. Alcoma failed to make a specific request of the USDA, leaving two of the import entries, 032-XXXX146-9 and 113-XXXX304-6, without defect and total/average USDA scores. Alcoma did provide partial USDA documentation for import entry 032-XXXX146-9, and supplemented this documentation with Brazilian origin inspection documents that corroborated its claim. However, absent this essential USDA inspection data, commercial interchangeability for the amounts of FCOJM cited in import entry numbered 113-XXXX304-6, cannot be determined.

The following import entries and USDA scores were provided by Alcoma:

1) 032-XXXX644-2: Total Score 95; Attached to the entry summary for import entry #032-XXXX644-2, Alcoma provided a single Certificate of Delivery, (CF 331), dated July 26, 1991, for 60,687 gallons of FCOJM. This represents a total of 271,593.78 Single Strength Liters of Frozen Concentrated Orange Juice for Manufacture with 15 USDA Certificates of Quality and Inspection showing that the imported FCOJM was assigned Brix value over 66, and that the FCOJM qualified for a USDA Grade A average/total score of 95 points, which reflected the required minimum values for flavor - 37, color - 38, and defects - 20;

2) 032-XXXX390-9: Total Score 95;

Attached to the entry summary for import entry #113-XXXX304-6, Alcoma provided 10 Certificates of Delivery, (CF 331), dated October 25, 1991, each for 72 Drums of FCOJM, or 3,837.1 Brix gallons per certificate. This represents a total of 38,371 Brix gallons or 101,675.03 Single Strength Liters of Frozen Concentrated Orange Juice for Manufacture with 10 USDA certificates of Quality and Inspection showing that the imported FCOJM was assigned a Brix value of 66.50, and that the FCOJM qualified for USDA Grade A on the basis of an average score of 95 points, which reflected the required minimum values for flavor -38, color - 37, and defects - 20.

3) 032-XXXX146-9: No USDA Total Score Available:

Under import entry 032-XXXX146-9 no USDA score documentation was submitted by Alcoma. Absent total or average USDA score sheet totals that include figures for flavor, color, and defects, the submission is defective and there is insufficient evidence to determine commercial interchangeability. 4) 113-XXXX304-6: No USDA Total Scores Available:

Under import entry 113-XXXX304-6, Alcoma provided a USDA comparable score of 94-95 on its self-generated summary sheet. These total scores were based upon Brazilian inspection scores using USDA standards but not upon actually performed by, or attested to, by a USDA inspector. Nonetheless, Alcoma relied upon this documentation and these scores for the purchase of its Brazilian FCOJM. Additionally, the flavor and color scores provided by the USDA inspector in charge, upon the FCOJM's arrival in the United States, corroborate the flavor and color scores provided by the Brazilian inspector. Moreover, this evidence was filed contemporaneously with Customs as part and parcel of the importer's entry documentation. The evidence provided for this claim is found to be sufficient and the claim is found to be commercially interchangeable.

5) JO3-XXXX966-3: Total Score 95:

Under import entry JO3-XXXX966-3, Alcoma provided three Certificates of Delivery (CF 331), dated September 1, 1991, for 16,455 Single Strength Liters, 16,391 Single Strength Liters, and 16,391 Single Strength Liters respectively. This represents a total of 49,252 Single Strength Liters. The accompanying three USDA certificates of Quality and Inspection show that the imported FCOJM was assigned an average sample Brix value of 66.34 and that the FCOJM qualified for USDA Grade A on the basis of a total score of 95 points. The USDA total score of 95 reflects the required minimum values for flavor - 38, color - 37, and defects - 20.

6) JO3-XXXX779-0: Total Score: 95:

Under import entry # JO3-XXXX779-0, Alcoma provided 4 Certificates of Delivery, (CF 331), dated September 1, 1991, for 4 shipments of 16,383 Single Strength Liters, 16,485 Single Strength Liters, 16,455 Single Strength Liters, and 16,467 Single Strength Liters respectively for a total of 65,790 Single Strength Liters, with an average Brix of 66.31, Brix value acid ratio of 15.7, color - 38, flavor - 37, and defects - 37 for a total USDA score of 95,

B. The Exported Merchandise:

Regarding the evidence of the exported merchandise, each of the invoices submitted covers FCOJM certified to be USDA Grade A, with a narrow range of average total scores 95-97. These total/average scores of 95 to 97 are all well within the USDA Grade A and Cotton Exchange contract standards followed by Alcoma, the industry and recognized by Customs. Alcoma has submitted bills of lading and USDA score sheets for the exportation of six shipments of FCOJM, a total of 2,792,238.0 single strength liters, to Japan. Alcoma claims the following six export shipments of FCOJM are commercially interchangeable with its six import entries of FCOJM:

1. LSA 958819/21/23-25: On May 11, 1992, Alcoma exported 563,400.69 single strength liters of FCOJM to Japan on a vessel named the Margrethe Maersk. Alcoma submitted documentary evidence of the exported merchandise including a bill of lading and USDA score sheets. The five USDA score sheets reflect the contents of the five containers of exported FCOJM. The average-total scores were 96-97. Specifically, the USDA graded the FCOJM in the following manner:

A-054473 USDA Average - Total score: 96 - 113,335.91 SSL; A-054472 USDA Average - Total score: 97 - 113,632.78 SSL; A-054469 USDA Average - Total score: 96 - 112,077.79 SSL; A-054470 USDA Average - Total score: 96 - 111,938.01 SSL; A-054471 USDA Average - Total score: 96 - 112,416.20 SSL. ________________ Total amount: 563,400.69 Single Strength Liters

2. LSA 962563/65/67/69/70: On May 18, 1992, Alcoma exported 563,989.02 single strength liters of FCOJM to Japan on a vessel named McKinney Maersk. Alcoma submitted documentary evidence of the exported merchandise including a bill of lading and five USDA score sheets. The USDA score sheets showed the following average-total scores:

A-054476 USDA Average-Total score: 96 - 111,666.89 SSL A-054475 USDA Average-Total score: 97 - 113,531.31 SSL A-054474 USDA Average-Total score: 96 - 114,109.11 SSL A-054477 USDA Average-Total score: 96 - 112,042.92 SSL A-054478 USDA Average-Total score: 96 - 112,638.79 SSL ________________ Total Amount: 563,989.02 Single Strength Liters

3. LSA 966039/41/43/45/49: On May 25, 1992, Alcoma exported 558,957.05 single strength liters of FCOJM to Japan on a vessel named the Mette Maersk. Alcoma submitted documentary proof of the exported merchandise including a bill of lading and USDA score sheets reflecting the USDA average-total scores for each of the five containers of FCOJM in the shipment. The USDA score sheets showed the following amounts and average/total scores:

A-054479 USDA Average-Total score: 96 - 111,772.45 SSL A-054480 USDA Average-Total score: 96 - 111,827.36 SSL A-054482 USDA Average-Total score: 97 - 111,830.62 SSL A-054483 USDA Average-Total score: 96 - 111,917.40 SSL A-054481 USDA Average-Total score: 96 - 111,609.22 SSL ________________ Total Amount: 558,957.05 Single Strength Liters

4. LSA 969915/920-922: On June 1, 1992, Alcoma exported 445,819.66 single strength liters of FCOJM to Japan on the vessel named the Majestic Maersk. Alcoma submitted documentary proof of the exported merchandise including a bill of lading and four USDA score sheets. The USDA score sheets showed the following average total scores:

A-054485 USDA Average-Total score: 96 - 111,600.16 SSL A-054486 USDA Average-Total score: 96 - 111,377.28 SSL A-054484 USDA Average-Total score: 96 - 111,509.95 SSL A-054487 USDA Average-Total score: 97 - 111,332.27 SSL _____________ Total Amount: 445,819.66 Single Strength Liters

5. LSA 972804/05/08-10: On June 8, 1992, Alcoma exported 556,260.28 single strength liters of FCOJM to Japan on the vessel named the Madison Maersk. Alcoma submitted documentary proof of the exported merchandise including a bill of lading and five USDA score sheets. The USDA score sheets showed the following average total scores:

A-054492 USDA Average-Total score: 96 - 112,200.43 SSL A-054493 USDA Average-Total score: 96 - 111,160.01 SSL A-054491 USDA Average-Total score: 96 - 111,404.82 SSL A-054490 USDA Average-Total score: 96 - 111,546.37 SSL A-054494 USDA Average-Total score: 97 - 110,948.65 SSL ______________ Total Amount: 556,260.28 Single Strength Liters

6. H-36845: On September 22, 1992, Alcoma exported 103,147.63 single strength liters of FCOJM to Japan on the vessel named the Ever Given. Alcoma submitted documentary proof of the exported merchandise including a bill of lading and a USDA score sheet. The USDA score sheet showed a USDA Grade A average/total score of 95 points.

One FCOJM import entry, 113-XXXX304-6, lacks defect and average/total scores altogether, (USDA or Brazilian), and cannot be accurately matched to FCOJM exports presented by Alcoma. Therefore, the amounts in this claim, representing a total of 1,016,750.30 single strength liters, do not qualify for substitution unused merchandise drawback as commercial interchangeability cannot be established. The remaining five import entries, four of which received USDA average/total scores of 95, appear to fall within range of existing government and industry standards as specified in the technical literature and accepted by the commercial trading industry. Although Alcoma was unable to provide total/average USDA score sheet data for this fifth import entry, numbered 113-XXXX304-6, Alcoma was able to provide sufficient evidence to demonstrate the commercial interchangeability of the claim.

Four of Alcoma's import entry documents for FCOJM, those for 032-XXXX644-2, 032-XXXX390-9, JO3-XXXX966-3, and JO3-XXXX779-0, are accompanied by full USDA inspection documentation demonstrating that these quantities of FCOJM are commercially

interchangeable with Alcoma's FCOJM exports which qualified for USDA average/total scores of 96-97. A fifth import entry, 032-XXXX146-9, shows FCOJM with a total/average score range of 94-96. Even though no total/average USDA scores have been provided for this fifth entry, 032-XXXX146-9, Alcoma was able to provide USDA inspection score sheets covering FCOJM flavor and color scores. Alcoma also provided Brazilian inspection documentation from Citrosuco Paulista S/A Quality Control for total/average scores of 94-96. This documentation included flavor, color, and defect scores, as well as total/average scores, all based upon USDA inspection criteria. The flavor and color scores appearing on the Brazilian inspection documents, with limited variance, correspond to the flavor and color scores evidenced on the USDA inspection score sheets. These documents were originally filed with the USDA and with Customs upon entry of the FCOJM into the United States. These factors, as well as the fact that Alcoma has relied upon these documents for its own purchase of this amount of FCOJM, are significant in reaching a determination of commercial interchangeability. No less significant however, is Alcoma's reliance upon Cotton Exchange contract terms and its ability to demonstrate that it met these terms, which required a USDA average/total score of 94 and above for its FCOJM sales and purchases. Alcoma has successfully demonstrated the commercial interchangeability of these five of its six import entries. [Footnote 2: Import entry 113-XXXX304-6 was for 1,016,750.30 single strength liters as evidenced by 10 Entry Certificates transferred from Juice Farms, Inc. to Alcoma and submitted to Customs.]

II. Part Numbers:

In lieu of part numbers, Alcoma submitted five (5) copies of USDA Grade Certificates and/or Score Sheets, indicated as Exhibits F (1-5). Exhibit F-1 is a certificate accompanying a purchase of imported FCOJM in order to demonstrate that part numbers are not a relevant factor when dealing with FCOJM. In HQ 225493, cited above (peanut oil, commercial interchangeability), no evidence was presented to show that part numbers were applicable to that merchandise. In HQ 225493 Customs determined that part numbers were not a relevant factor necessary to establish commercial interchangeability. In the instant case Alcoma has presented USDA Grade Certificates and/or Score Sheets to argue that part numbers are not a relevant factor to the determination of commercial interchangeability of FCOJM. Alcoma has noted that FCOJM is a product further processed and packaged for domestic sale and therefore must maintain its original identity for marking purposes. Alcoma has also noted, and we affirm, that there are no distinctions shown on the certificates other than origin for its finished product and that all of the certificates identify the product as USDA Grade A Frozen Concentrated Orange Juice for Manufacturing. Based on the submitted evidence, part numbers are not a relevant criteria in this case.

III. Tariff Classification

In its December 14, 1994 letter to Customs, Alcoma stated that, "[b]oth the imported and the domestic FCOJM would be classified in the Harmonized Tariff Schedule of the United States (HTSUS 1994) as 2009.11.00.60 and dutiable at $0.0925 per liter (MFN)." Both the imported FCOJM and domestic FCOJM conform to the FDA standards of Identity for Frozen Concentrated Orange Juice, and the USDA Grade A requirements for concentrated orange juice for manufacturing. FCOJM is imported under 2009.11.0060 [H]TSUS when imported in quantities of more than 3.785412 liters, as in the present case. With regard to the tariff classification of the other (substituted) merchandise, we are satisfied that it is identical for the imported merchandise.

Ordinarily, the HTSUS article/merchandise classification number is included on the Customs Form 7501 (CF7501) entry summary and export documents. However, under the circumstances in this case, where Alcoma was not the importer of record, but was the exporter of record, Alcoma does not have the CF 7501's in its files. Alcoma did receive the Certificates of Delivery and Alcoma has provided CF331 Certificates of Entry for each of the six import entries. The descriptions of the FCOJM included on the CF331s, for each of the six entries, provide sufficient detail to evidence that frozen concentrate orange juice for manufacture in containers of more than 3.785 liters was imported. While none of the export documents presented by Alcoma include a reference to the HTSUS 2009.11.0060 classification, the bills of lading, and USDA inspection documents provide sufficient descriptive information needed to determine that frozen concentrate orange juice for manufacture was exported in containers larger than 3.785 liters.

IV. Relative Values:

Initially, Alcoma attempted to demonstrate relative values of its imported and exported FCOJM by providing invoices of transactions from the same comparable time period. Alcoma's illustration of relative values through the submission of five invoices, Exhibits G (1-5) dealt with shipments of FCOJM not involved with the present drawback claim. Each sample invoice was accompanied by additional supporting documentation including remittance checks, and USDA Grade Certificates. Exhibit G-1 is an invoice billed to Alcoma from a supplier of the imported FCOJM, showing Alcoma's purchase price of $1.35 per pound solid on August 28, 1992. Exhibit G-2 is an Alcoma invoice and other supporting documents, dated July 27, 1992, to a domestic client for FCOJM showing a sales price of $1.3628 per pound solid. Exhibit G-3 is an Alcoma invoice and supporting documents, dated September 21, 1992, to its Japanese purchaser client showing a sales price of $1.35 per pound solid. Alcoma has provided cost information relevant to the specific imports and exports of FCOJM to provide a basis for the "relative pricing" of FCOJM. Alcoma also provided export invoices showing a per pounds solid cost of $1.39 for all six shipments of FCOJM. Further, Alcoma provided documentation of its imported FCOJM per pound solid costs for its import entries: 032-XXXX146-9 at $1.24; 113-XXXX304-6 at $1.24; 032-XXXX644-2 at $1.669; 032-XXXX390-9 at $1.35; and JO3-XXXX966-3 and JO3-XXXX779-0 at $1.54.

Alcoma has represented that the prices per pound solid of the purchases and sales directly involved in the present claim are not the same. In fact, Alcoma believes that there may even be a considerable variance in the per pounds solid price, for its claimed transactions. In its letter of August 27, 1998, Alcoma represented that the variance in purchase and sale prices is substantially a function of market forces magnified over the time period between the dates of importation and the dates of exportation. Further, Alcoma represented that the variance in prices between imports and exports for these specific claims are "not because of changes in quality of the merchandise," but are often factors outside any particular buyer or seller's control. The variance in prices of FCOJM per pound solid on the invoices provided by Alcoma, do not appear significant on their face.

Nonetheless, a further factor to consider is that the price per pound solid shown on the purchase invoices may not accurately reflect the actual cost of the FCOJM in light of underlying contractual arrangements governing the transactions. Based upon the evidence presented by Alcoma no radical variance between import and export prices exists. Furthermore, where substantial other evidence of compliance with accepted and recognized industry standards, has been presented, an inability to accurately apply the "Relative Value criterion" here, would not bar a finding of commercial interchangeability.

HOLDING:

On the basis of the foregoing, we find the imported merchandise and the exported merchandise (with the exception of one of the six import entries noted above), to be commercially interchangeable. The merchandise meets the recognized industry and governmental standards, part numbers are not relevant in this case, the tariff classification is the same, and the disparity in price does not appear to be a significant factor with respect to the relative value criteria.

The information presented by Alcoma satisfactorily establishes that five import entries, JO3-XXX779-0, JO3-XXXX966-3, 032-XXXX390-9, 032-XXXX644-2, and 032-XXXX146-9, are commercially interchangeable with the exported FCOJM based on the applicable criteria. One import entry, 113-XXXX304-6, is not found to be commercially interchangeable. Assuming the other factors regarding eligibility for substitution unused drawback under 19 U.S.C. 13131(j)(2) are met, Alcoma's request for the five import entries listed above, should be approved.

The Office of Regulations and Rulings will take steps to make this decision available to Customs personnel, and to the public, electronically via public access channels 60 days from the date of this decision.

Sincerely,

Director,
Commercial Rulings Division

Enclosure