OT:RR:CTF:ER H150758 PTM
Mr. William Hagedorn
Vice President
C.J.Holt & Co., Inc.
466 Kinderkamack Road
Oradell, NJ 07649-1529
RE: BASF Corporation; Commercial interchangeability; 19 C.F.R. §191.32(c); 19 U.S.C. §1313(j)(2); Boscalid Technical.
Dear Mr. Hagedorn:
This is in response to your January 26, 2011, ruling request, on behalf of your client, BASF Corporation (BASF), regarding the commercial interchangeability of imported and domestic Boscalid Technical, for purposes of substitution, unused merchandise drawback under 19 U.S.C. § 1313(j)(2).
FACTS:
BASF states that it is engaged in the manufacture, import, and export of Boscalid Technical, which is a fungicide. You state that the imported Boscalid Technical is produced in a plant in Brazil that is approved by the U.S. Environmental Protection Agency (“EPA”) under EPA Establishment Number 7969-BRA-1. Boscalid Technical is a regulated fungicide under the Federal Insecticide Fungicide and Rodenticide Act (“FIFRA”), which is administered by the EPA. Boscalid Technical is registered to BASF under EPA Registration Number 7969-198. The Registration notice lists fourteen separate conditions relating to the quality and safety of the product, and requires a product purity of 99%. All Boscalid Technical shipped by BASF must meet the criteria enumerated in the notice.
As evidence of a typical importation to BASF, you provided an entry summary, invoice, certificates of analysis and other commercial documents. Boscalid Technical is described in the entry documents as a pyridine ring fungicide. The entry summary, dated 04/22/2008, shows an amount of “Pyridine Ring: Fungicide 58621748” imported by BASF on 04/03/2008. The product is classified under subheading 2933.39.2100, Harmonized Tariff Schedule of the United States (“HTSUS”) on U.S. Customs and Border Protection (“CBP”) Form 7501. The commercial invoice for the importation matches the order number onf the CBP Form 7501 and identifies the Article Number as 58621748. The certificate of analysis for the import shows a purity percentage of Boscalid Technical of 99%.
You provided a commercial invoice dated April 8, 2008, showing the export of the substituted merchandise. The commercial invoice shows a certain number of kilograms of Boscalid Technical were shipped to Frankfurt, Germany on April 28, 2008. The export invoice identifies the Article Number as 58621748. The certificate of analysis for the substituted product shows a purity percentage of Boscalid Technical of 99.2%.
ISSUE:
Whether the imported Boscalid Technical is commercially interchangeable with the substituted merchandise, for purposes of substitution unused merchandise drawback, pursuant to 19 U.S.C. §1313(j)(2).
LAW AND ANALYSIS:
Under 19 U.S.C. § 1313(j)(2), as amended, drawback may be granted if there is, with respect to imported duty-paid merchandise, 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 be either, the importer of the imported merchandise or must have received from the party that imported and paid owed duties on the imported merchandise, a certificate of delivery transferring to that party, the imported merchandise, commercially interchangeable merchandise, or any combination thereof.
The Customs and Border Protection (“CBP”) Regulation, 19 C.F.R. § 191.32(c), further provides 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.
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.
In Texport Oil Co. v. United States, the United States Court of Appeals for the Federal Circuit determined that: “[c]ommercial interchangeability 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)).” 185 F.3d 1291, 1295 (Fed. Cir. 1999). Thus, the Federal Circuit set forth an “objective standard—analyzed from the perspective of a hypothetical reasonable competitor.” Id. Therefore, we analyze commercial interchangeability pursuant to 19 C.F.R. § 191.32(c), for a hypothetical reasonable competitor.
Government and Industry Standards
One of the factors CBP considers is whether the imported and exported merchandise adhere to government and recognized industry standards. Governmental and recognized industry standards assist in the determination of commercial interchangeability, because such standards “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 (Mar. 23, 2010).
Boscalid Technical is subject to the standards established by a government agency, the EPA. Pursuant to FIFRA, fungicides must be registered with the EPA. The registered product must meet purity requirements for its ingredients. These limits are proposed by the applicant for the product, and become legally binding limits upon approval of the application. See 40 C.F.R. §158.350. All product shipped under the EPA-approved registration numbers must conform to these requirements. FIFRA requires that production of pesticides and pesticidal devices be conducted in a registered pesticide-producing establishment. EPA issues pesticide-producing establishment numbers for facilities where pesticides or pesticide devices are produced. These facilities include foreign establishments that import pesticides and/or devices to the United States. See 40 C.F.R. Part 167.
Boscalid Technical is registered by BASF under EPA Registration Number 7969-198. All Boscalid Technical imported or exported by BASF must conform to EPA requirements. The certified limit imposed under EPA Registration Number 7969-198 is 99% purity. Further, all Boscalid Technical must be manufactured in a registered EPA pesticide-producing establishment. The certificate of analysis of the import shows a purity of 99% Boscalid Technical. The certificate of analysis for the substituted merchandise shows a purity of 99.2%. Therefore, both the imported and substituted product are in conformance with the EPA requirements set forth for Boscalid Technical under Registration Number 7969-198. Therefore, we find the government standards criteria is satisfied.
Tariff Classification
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”). See, e.g., HQ H074002 (December 2, 2009). You state that both the imported and substituted Boscalid Technical is provided for in subheading 2933.39.21, HTSUS. This information is substantiated by the commercial documents provided to CBP. Because the imported and substituted Boscalid Technical are classified under the same subheading, the tariff classification criterion has been met.
Part Numbers:
In evaluating the critical properties of the merchandise, CBP also considers the part numbers of the merchandise. 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 (Dec. 2, 2009); and HQ H122535 (Feb. 9, 2011). BASF asserts that the identifier used is “Article #58621748.” The import and export invoice both show shipments of product with this article number. Furthermore, this identifier is listed on the product description shown on the CBP Entry Summary. Because the supporting documentation for the imported and substituted merchandise shows the same identifier, we find that the part number criterion is satisfied.
Value
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). In this case, as evidenced by the invoices, the imported and substitued Boscalid Technical were both priced the same. Therefore, the value criterion is satisfied.
HOLDING:
Because the applicant has satisfied the four enumerated criterion, we find that the imported and substituted merchandise is commercially interchangeable for the purposes of 19 U.S.C. §1313(j)(2). Please note that 19 C.F.R. §177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruing letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Sincerely,
Carrie L. Owens, Chief
Entry Process and Duty Refunds Branch