DRA-4-RR:IT:EC 226995 IOR

Port Director
U.S. Customs Service
Miami International Airport
P.O. Box 52-3215
Miami, FL 33152-3215

RE: Unused merchandise drawback; Commercial interchangeability; Polyester staple fiber; 19 U.S.C. 1313(j)(2)

Dear Sir:

This is in response to your May 13, 1996 request for internal advice (DRA-1 PD:A:TC:D JTS), which request was initiated by Wonalancet Company ("Wonalancet"), concerning whether certain imported and domestic high tenacity polyester staple fibers are "commercially interchangeable" for purposes of substitution, unused merchandise drawback under 19 U.S.C. 1313(j)(2).

Our file includes Wonalancet's responses to questions listed in Customs Directive number 099 3740-08, dated April 1, 1993, samples of the imported and exported product, product specifications for the imported merchandise, invoices to Wonalancet for the imported merchandise, specifications for the domestic merchandise, sales contract and purchase order for the exported merchandise, purchase contract for the domestic merchandise, Customs laboratory report, 4-96-11162-002, dated July 22, 1996 ("Savannah lab report"), and Customs laboratory report dated January 8, 1997 ("Headquarters lab report").


The imported and exported merchandise in this case consist of high tenacity polyester staple fibers (hereinafter referred to as "fibers"). The imported fibers were produced by JCT Fibres Limited, in New Delhi, India. The domestic fibers were produced by Wellman, Inc., in Darlington, South Carolina. The imported fiber is 1.4d x 38mm Semi Dull, High Tenacity Polyester Staple Fiber, and the exported fiber is 1.2d x 38mm Semi Dull, Optically Brightened, High Tenacity Polyester Staple Fiber. Wonalancet states that the differences between the two are very minor denier (the import has a 1.4 denier and the domestic has a 1.2 denier) and finish variations. The fibers are used to produce fine count sewing thread which requires the use of high tenacity fiber. Wonalancet states that the denier variation and difference in finish (the domestic fiber has an optically bright finish) does not in any way affect the processing of the fiber and end use applications. Wonalancet states that the commercial world accepts both the substitute and imported fiber as being interchangeable in all instances. According to Wonalancet, the prices of the merchandise can vary depending on market conditions at the time of import and the time of export.

The Savannah lab report found that the differences in the fibers are as follows:

Drawback Import Domestic Substitution

Fiber diameter 11.34 microns 10.23 microns Staple length 36.06 millimeters 35.54 millimeters Denier per filament 1.25 1.02

The report concludes that the fibers are commercially interchangeable.

The Headquarters lab report has reviewed the fiber manufacturers' specifications, Wonalancet's request and the Savannah lab report, and concludes that the specifications given for the imported and domestic fibers are sufficient to establish commercial interchangeability. With regard to the specifications and the Savannah lab report, the Headquarters lab report found as follows:

The Customs laboratory reviewed the submitted specifications and tested the imported and domestic fibers to determine the fiber diameter, staple length, and denier per filament properties. While there are no government or industry standards for the merchandise, Customs has traditionally considered denier, length, tenacity and luster as critical criteria for "same kind and quality" drawback. The submitted specifications include denier, staple length, luster and tenacity. The denier values are similar according to the specifications and as tested by the laboratory. The staple length and luster are essentially identical. Both the imported and domestic fibers are of high tenacity, and have tensile strength and elongation values in the same range. We consider the tenacity to be the most critical specification because high strength is an essential property for sewing thread.

The imported and domestic fibers differ in that the domestic fiber has been optically brightened, while the imported fiber has not. Optical brighteners or fluorescent whiteners are applied to polyester in aqueous dispersions similar to commercial disperse dyeing processes. The brighteners can be applied to yarns (thread) as well as to fibers. If the optically brightened fibers or yarns are dyed a deep or dark color, the effects of the brightener are essentially negated. Therefore, we do not consider optical brighteners to significantly affect the processing of the imported and domestic polyester staple fibers for use in sewing thread.

The documents provided indicate that the imported fiber was purchased pursuant to a November 11, 1993 invoice and the export fiber was sold on the basis of a December 7, 1995 sales contract.


Whether the imported and substituted fibers are commercially interchangeable for purposes 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 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 3 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 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 statute did not define commercially interchangeable.

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 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. 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.

In order to determine whether the fibers are commercially interchangeable, the following factors must be analyzed:

1. Governmental and Recognized Industry Standards

As stated above, the Savannah lab report found the imported and domestic merchandise to be commercially interchangeable. However, the Savannah lab report's conclusion is irrelevant as it does not appear to be based on the Congressional standards set forth above. The Headquarters lab report is relevant however, as it made the narrower conclusion that the specifications given for the imported and domestic fibers are "sufficient to establish commercial interchangeabilty." As stated by the Headquarters lab report, there are no recognized industry or government standards regarding polyester staple fibers. However, the producers' specifications for 1.4d and 1.2d fiber provides the following information: Foreign Domestic

Denier 1.2 1.4 1.2

Tenacity (Gm/den) 6.6-6.9 6.5-6.8 6.8

Elongation at break % 17-22 19-24 25

Crimps (arcs/cms) 5.8-6.3 5.7-6.2 No specs.

Boiling water shrinkage max % 1.0 1.0 No specs.

Thermal shrinkage max % (30 minutes at 180 deg C) 5.0 5.0 No specs.

From the above foreign producer's specifications, it is evident that except for the denier, given the ranges in specifications, the imported and domestic fibers could be identical as to all remaining specifications, or have variations in specifications yet meet the criteria for both 1.2d or 1.4d. The domestic producer's specifications did not include all of the elements as the foreign producer, however, the tenacity for 1.2 denier fiber of the domestic producer could meet the specifications of the imported 1.4 denier fiber. The Headquarters lab report states that for the imported and domestic fiber the denier values are similar, the staple length and luster are essentially identical, both are of high tenacity, and have tensile strength and elongation values in the same range. The tenacity of the import and export meets the requirements of either 1.2 or 1.4 denier, and according to the Headquarters lab report, the tenacity is the most critical specification, as high strength is an essential property for sewing thread. According to Wonalancet, fiber producers have a standard deviation of approximately 20%, or a .2 to .25 range. Under such a range, the sample fibers, tested by Customs, are within an acceptable range of the producer's specifications.

An important factor for us in determining commercial interchangeability is that the processing of the fiber and end use applications is not affected by the variations in the denier and the finish. That indicates that either the domestic or the imported fiber could be purchased for the same purpose. The Headquarters lab report states that it does not "consider optical brighteners to significantly affect the processing of the imported and domestic polyester staple fibers for use in sewing thread." According to Wonalancet, the "very minor denier variation and difference in finish...do not in any way affect the processing of the fiber and end use applications."

Based on the foregoing we find that the requirements for commercial interchangeability are met with respect to this first factor.

2. Tariff Classification

With respect to the tariff classification, both the imported and domestic fibers are classified under subheading 5503.20, Harmonized Tariff Schedule of the United States (HTSUS), as "synthetic staple fibers, not carded, combed or otherwise processed for spinning: of polyesters...." The tariff classification criterion, therefore, has been met.

3. Part Numbers

The invoices describe the merchandise as 1.2 d or 1.4d, with no apparent part number. The documents for Wonalancet's sale of the domestic fiber refers to a "type 4-547." According to Wonalancet, the company gives a different number to each supplier and product for identification purposes. A product with identical specifications from a different supplier would have a different type number assigned to it. Wonalancet states that the assigned type numbers have no relation to the characteristics or specifications of a product. We are satisfied that product codes are meaningless other than for identification purposes. As such, part numbers are not a relevant criterion in this analysis of commercial interchangeability.

4. Relative Values

Based on the price per kilogram of the imported fibers, purchased in November, 1993, and the exported substitute fibers, sold in December, 1995, the export price is 35% greater than the import price. In its submission, Wonalancet does state that the prices of the merchandise can vary depending on market conditions at the time of import and the time of export. In an April 10, 1997, telephone conversation with a member of the Entry and Carrier Rulings Branch, J. Jerry Dunn, President of Wonalancet described the causes of fluctuations in the price of polyester staple fiber. According to Mr. Dunn, a fire at a U.S. plant and an explosion in an Italian plant, occurred in 1993. Both of these plants manufactured PTA which is a main chemical in the fiber. As a result of decreased production of PTA, there was a world shortage of polyester staple fiber beginning in late 1993, through 1994 and into 1995, during which time the prices for the fibers increased. At the time of the export sale, the prices of polyester staple fiber were beginning to become competitive, as a greater supply of the fiber was becoming available.

As substantiation of the foregoing, by letter dated April 30, 1997, Wonalancet submitted copies of text from the publication "Nonwovens Markets" and from what appears to be a different trade publication, dated November, 1993, August, 1994 and October, 1994. The November, 1993 text refers to tight supply of the basic building block for polyester resin, with no known expansions, which would result in a price increase for polyester polymer. The publication also states that polypropylene polymer prices may increase. The publication provides a chart comparing September, 1993 prices with those of October, 1993, and the prices for the 9 materials, appear stable. The August, 1994 publication states:

Somewhat higher prices also seem to be in store for manmade fibers. The opening gun was fired a few months ago when polyester staple producers raised prices about a nickel, to 76 cents. And there's some talk about another boost by fall or winter as supplies remain on the snug side.

The October, 1994 publication includes a chart comparing September, 1994 prices to October, 1994 prices, and there is a 4% -5% increase in the price of polyester staple fiber. The text refers to price increases for polyester resin, and predicts that from September, 1994 to the end of 1995, polyester resin will have increased by $0.12/lb. There are no prices to compare the $0.76 and $0.12/lb figures with, therefore we are unable to determine the percentage of the increases in price.

There is no apparent connection between the specifications of the merchandise and the prices. The difference in price for the imported merchandise and the domestic merchandise appears to be the result of market fluctuations at the time of purchase and not of the products themselves. However, none of the evidence submitted substantiates the shortage of PTA, specifically, and although there are references to tight supplies of polyester resin and price increases, none of the information provided substantiates the 35% price difference. If the price difference were substantiated by credible evidence, we could conclude that this criterion is inconclusive or, at best, neutral on the issue of commercial interchangeability in the instant case because of the forces driving the fluctuations in market prices for polyester staple fiber. However until such evidence is provided to Customs, the relative value criteria for commercial interchangeability is not met.

After evaluating all the relevant criteria suggested by the legislative history, we find that commercial interchangeability of the fibers has not been established because insufficient evidence has been provided with respect to the relative value of the merchandise. If sufficient relative value information were provided, we would find that commercial interchangeability between the merchandise had been established because (1) the laboratory concluded that the specifications for the fibers were sufficient to establish commercial interchangeability; (2) the variations in the fibers are immaterial to the processing of the fiber and end use applications of the fiber; (3) the foreign producer's specifications for 1.2d and 1.4d fibers are nearly identical; and (4) both the imported and domestic fibers are classifiable under the same tariff provision.


Insufficient evidence has been provided on the relative value criterion and therefore commercial interchangeability of the subject merchandise has not been established. However, if the relative value criterion were met, based on the fact that the laboratory analysis indicates that both products have the same tensile strength and denier which are the most important considerations and which are so reflected in the evidence presented, that the variations in the fibers is immaterial to the processing of the fiber and end use applications of the fiber and that the tariff subheading is favorable to the drawback claimant, we would that the imported and domestic high tenacity polyester staple fibers are commercially interchangeable for purposes of the substitution unused merchandise drawback law of 19 U.S.C. 1313(j)(2).

This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and to the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.


International Trade Compliance