DRA-4 OT:RR:CTF:ER H190457RDC
Mr. Micah McDonald
AEI Drawback Services, Inc. d/b/a DHL Drawback Services
22210 Highland Knolls Drive
Katy, TX 77450
RE: Unused merchandise drawback; Commercial interchangeability; 19 C.F.R. §191.32(c); 19 U.S.C. §1313(j)(2); Butyl Acrylate.
Dear Mr. Scarbrough:
This is in response to your request on behalf of Rohm and Haas Company (RHCo) for a ruling on whether domestic butyl acrylate and imported butyl acrylate are commercially interchangeable for purposes of drawback pursuant to 19 U.S.C. § 1313(j)(2).
RHCo imports, exports and manufactures butyl acrylate. Butyl acrylate is a clear, colorless liquid and is used in the production of homopolymers and co-polymers, such as acrylic acid and its salts and esters. Acrylate polymer belongs to a group of polymers that is referred to generally as plastics and commonly known as acrylics or polyacrylates. Acrylics and polyacrylates are noted for their transparency, resistance to breakage and elasticity. Our research reveals that butyl acrylate is assigned Chemical Abstract Service (CAS) Number 141-32-2. Research also revealed that butyl acrylate, CAS number 141-32-2 is offered for sale based on purity, water content, color, acidity and parts per million of inhibitor (hydroquinone monomethyl ether (MEHQ)). We found that sellers identify 99.5 purity as the specification when butyl acrylate is offered for that According to RHCo the minimum purity specification for the imported or substituted is 99.5% and the material needs to meet specifications on color, inhibitor, acidity and water.
RHCo stores both the imported and the substituted (domestic) butyl acrylate in the same tanks, i.e., RHCo treats the imported and substituted (domestic) butyl acrylate as identical. Both the imported and domestic butyl acrylate must have a minimum purity of 99.5%. RHCo states that the specifications of the imported and substituted butyl acrylate are identical. Both imported and domestic butyl acrylate are identified only as “butyl acrylate” in its inventory system from receipt to shipment and needed butyl acrylate is taken from a tank containing the blended imported and substituted (domestic) butyl acrylate.
As evidence of an import transaction RHCo supplied an entry summary (CBP Form 7501), an invoice, a certificate of quality and two bills of lading. The entry summary describes the imported good as butyl acrylate, classified under heading 2916.12.50, Harmonized Tariff Schedule of the United States (HTSUS). The invoice is dated July 8, 2010, and describes the goods as bulk butyl acrylate as do the bills of lading. The value of the imported butyl acrylate is the same on the invoice and the entry summary. The certificate of quality contains the following information:
Total acidity (as wt), ppm
Inhibitor (MQ), ppm
Specific Gravity (20ºC/4ºC)
As evidence of an export transaction RHCo supplied an invoice dated February 16, 2011, to a foreign customer for bulk butyl acrylate classified for export under 2916.12.50, HTSUS. A bill of lading reflects that the good shipped is bulk butyl acrylate, which was laded in Texas and bound for Indonesia. A certificate of analysis for this export provides the following information:
Color APHA/ Hazen Pt-Co
According to RHCo, the imported and substituted (domestic) butyl acrylate will have values that fall between the lower and upper limits of the values shown on this certificate of analysis above for these same characteristics.
The certificates of analysis and quality for the imported and substituted butyl acrylate were sent to CBP’s Office of Laboratory and Scientific Services (OLSS) for an opinion on whether the imported or the substituted could be used interchangeably. It is the opinion of the OLSS, as stated in a memorandum dated June 7, 2012, that, “if imported and exported butyl acrylate fell within the technical specifications as listed in the documentation, the two could be used interchangeably on a technical basis.”
ISSUE: Whether the imported butyl acrylate and the substituted butyl acrylate are commercially interchangeable for purposes of 19 U.S.C. § 1313(j)(2)?
LAW AND ANALYSIS:
Substitution, unused merchandise drawback is provided by 19 U.S.C. §1313(j)(2), but the statute does not define “commercially interchangeable.” The U.S. Customs and Border Protection (CBP) Regulations reflect the legislative history that explained the change from fungibility to commercial interchangeability as the standard for substitution unused merchandise drawback. Section 191.32 provides:
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.
(19 C.F.R. § 191.32(c)). In Texport Oil Co. v. United States, (185 F.3d 1291 (Fed. Cir. 1999)) the Federal Circuit Court of Appeals (CAFC) discussed the meaning of “commercially interchangeable.” The CAFC concluded that commercially interchangeable is “an objective, market-based consideration of the primary purpose of the goods in question.” Id. The Texport court explained:
. . . . “[C]commercially interchangeable” 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).
Id. at 1295. Thus, per the Texport decision, commercial interchangeability is determined using an “objective standard.”
Accordingly, an imported good is commercially interchangeable with a substituted good if a buyer, in an arms’ length transaction, would accept either good for the principal purpose intended. In order to determine if either good would be acceptable for the purpose intended, the relevant characteristics of the imported good are compared with those characteristics of the substituted good. See 19 C.F.R. § 191.32(c).
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.
Governmental and recognized industry standards assist in the determination of commercial interchangeability in that they “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 (March 23, 2010); and HQ H074002 (December 2, 2009).
There are no governmental standards for butyl acrylate. However, RHCo has identified internal standards and CBP’s OLSS has confirmed that when the butyl acrylate falls with these specifications, the imported and substituted butyl acrylate can be used interchangeably. According to RHCo the imported and substituted (domestic) butyl acrylate will have a minimum purity specification of 99.5%. The other specifications, acidity, color, inhibitor and water content must fall within the upper and lower limits set forth below.
Assay Purity or %
Acidity % or (as wt), ppm
Color APHA/ Hazen Pt-Co number
Inhibitor Mehq ppm
Water Content %
We are persuaded by the OLSS opinion that, in the case of butyl acrylate with characteristics that fall within the above range, the governmental and recognized industrial standards criterion is met.
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”). The 2012 Harmonized Tariff System, United States (HTSUS) reflects that butyl acrylate is classified as an "ester of acrylic acid" under an eo nominee provision, to wit, subheading 2916.12.50. The U.S. Census Bureau - Foreign Trade Schedule B (2012) also assigns 2916.12.50. to butyl acrylate. Consequently, the classifications of the imported and substituted butyl acrylate support a finding of commercial interchangeability.
In evaluating the critical properties of the merchandise, CBP also considers whether the imported and substituted product share the same part numbers. 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 (December 2, 2009). Since butyl acrylate is a bulk chemical there are no part numbers. However, both imported and substituted butyl acrylate are identified only as “butyl acrylate” in RHCo’s inventory system from receipt to shipment and the imported and substituted (domestic) butyl acrylate are stored together in the same tank. This treatment of butyl acrylate, both the single name assigned to the imported and substituted merchandise and the commingling of the imported and substituted butyl acrylate also supports a finding of commercial interchangeability.
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 of the imported butyl acrylate, according to the entry summary and the invoice, is roughly 8% less than the value of the substituted butyl acrylate, as reflected on the invoice. The approximately 6 months between the import and the export, the import invoice is dated July 8, 2010, and the export invoice is dated February 16, 2011, helps to explain the price difference. We determine that an 8% price difference does not preclude our finding that these products are commercially interchangeable. See, e.g., HQ 228580 (August 20, 2002) (holding that a value difference of 27% attributed to processing and manufacturing costs did not preclude a finding of commercial interchangeability when the critical properties criterion had been met); HQ 228655 (November 2, 2001) (holding that a value differential in excess of 32% is acceptable because the merchandise qualified under the critical properties criterion); HQ 227220 (February 10, 1997) (determining that price difference in excess of 24% is acceptable because the imported and exported merchandise qualified under the applicable industry standards; therefore, relative value did not have as much weight when determining commercial interchangeability).
Given that the OLSS considers imported and substituted butyl acrylate with characteristics that fall within the specifications provided above technically interchangeable, the HTSUS criterion was satisfied as well as the fact that the imported and substituted butyl acrylate have the same chemical name and are commingled in a common storage tank, we determine that imported and substituted butyl acrylate, when the characteristics fall within the ranges specified above, are commercially interchangeable for the purposes of 19 U.S.C. § 1313(j)(2).
The imported butyl acrylate and the substituted butyl acrylate as described above are commercially interchangeable for purposes of 19 U.S.C. § 1313(j)(2).
This decision is limited to the specific facts set forth herein. If the terms of the import or export contracts vary from the facts stipulated to herein, this decision shall not be binding on CBP as provided for in 19 C.F.R. § 177(b)(1), (2) and (4), and §177.9(b)(1) and (2).
Sixty days from the date of this letter, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other public methods of distribution.
Carrie L. Owens
Chief, Entry Process & Duty Refunds Branch