DRA-4
OT:RR:CTF:ER
H246356 RGR
Jennifer Lyman
DHL Drawback Services
211D White Spruce Blvd.
Rochester, NJ 14623
RE: 3M Company: Request for a determination of commercial interchangeability under substitution unused merchandise drawback; 19 U.S.C. § 1313(j)(2), for N95 filtering facepiece respirators (9210/N95 and 9211/N95)
Dear Ms. Lyman:
We are writing in response to your application, dated September 6, 2013, on behalf of 3M Company (“3M”), for a formal ruling on the commercial interchangeability of imported and substitute 9210/N95 filtering facepiece respirators and on the commercial interchangeability of imported and substitute 9211/N95 filtering facepiece respirators, for purposes of substitution unused merchandise drawback pursuant to 19 U.S.C. § 1313(j)(2).
FACTS:
3M is engaged in the manufacture and sale of filtering facepiece respirators. The company produces facepiece respirators both in the United States and abroad. Facepiece respirators manufactured abroad are imported and maintained in inventory with domestic merchandise for distribution and exportation to customers depending on market demand. This commercial interchangeability application applies to the 3M Particulate Respirator model 9210/N95 (“9210/N95 Particulate Respirator”) and the 3M Particulate Respirator model 9211/N95 (“9211/N95 Particulate Respirator”).
According to 3M, facepiece respirators are identified by model number. In the case of 9210/N95 Particulate Respirators, the model number is 9210. In the case of 9211/N95 Particulate Respirators, the model number is 9211. Each model number used by 3M is unique to one product in that the model number corresponds to a single set of product specifications. Therefore, any facepiece respirator identified by the same model number will share the same product specifications. For the 9210/N95 Particulate Respirators, 3M provided the following regarding materials of composition:
Materials of Composition
Noseclip
Aluminum
Nosefoam
Urethane
Filtration Media
Polypropylene
Shell
Polypropylene and Polyester Fibers
Headbands
TPE-Thermoplastic Elastomer
Coverweb
Polyester
For the 9210/N95 Particulate Respirators, 3M provided the following regarding materials of composition:
Materials of Composition
Noseclip
Aluminum
Nosefoam
Urethane
Filtration Media
Polypropylene
Shell
Polypropylene and Polyester Fibers
Headbands
TPE-Thermoplastic Elastomer
Coverweb
Polyester
3M does clarify that facepiece respirators within the same model number may have different SKU numbers. The difference in SKU numbers is used by the company to identify manufacturing location and differences in packaging, such as quantity of respirators per package or the addition of local languages. The respirators within the packaging are uniform and share the same specifications as other respirators assigned the same model number.
Next, the 9210/N95 and 9211/N95 Particulate Respirators must also comply with the National Institute for Occupational Safety and Health (“NIOSH”) standards. NIOSH is the federal agency responsible for conducting research and making recommendations for the prevention of work-related injury and illness. NIOSH is part of the Centers for Disease Control and Prevention (“CDC”) within the U.S. Department of Health and Human Services and is responsible for the testing and certification of respiratory protective devices. The NIOSH website states that respirators are considered “fibrous” in nature and are constructed from flat, nonwoven mats of fine fibers.
The NIOSH criteria for respirators are set forth in Title 42, Code of Federal Regulations, Part 84. The specifications for non-powered, air-purifying particulate respirators such as the ones described in this application are set forth in 42 C.F.R. Part 82, subpart K. Pursuant to 42 C.F.R. Part 84, respiratory protective devices must be approved by NIOSH. As part of the approval process, the manufacturer must submit a quality control plan. NIOSH maintains a list of all approved facepiece respirators in its “Certified Equipment List.” The 9210/N95 Particulate Respirator and was evaluated by NIOSH and approved for the Certified Equipment List under approval number TC-84A-2269. The 9211/N95 Particulate Respirator was also evaluated by NIOSH and approved for the Certified Equipment List under approval number TC-84A-2268. Both of these approvals call for the following requirements:
Minimum Filtration Efficiency: 95 percent
Maximum Inhalation Pressure Drop: 35 mm H20
Maximum Exhalation Pressure Drop: 25 mm H20
All facepiece respirators constructed under these approval numbers, either foreign or domestic, must be constructed to satisfy these requirements.
In support of 3M’s commercial interchangeability application for the 9210/N95 Particulate Respirator, the company provided documents representing a typical import and export transaction. In terms of the import transaction, the company provided a CBP Form 7501 for the importation of “respirators” and entered under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 6307.90.9889. The invoice accompanying the CBP Form 7501 indicates that the shipment included several cases of “9210 N95 Respirator” identified by SKU 70-0708-4339-9. The export transaction documents included a Bill of Lading for a shipment of “Office and Lab Supplies.” The accompanying export invoice lists cases of “9210/37021 (AAD) Particulate Res P (USS)” manufactured in the United States and identified by SKU-70-0715-4474-9. Moreover, the export invoice notes that the respirator masks are identified by “HCS” Number 6307.90. Based on the two invoices, the price increase between the imported value and the exported value of the respirator masks is 21.2 percent. Further, 3M provided internal inventory tracking documents for the imports and the U.S.-manufactured exports, showing that all “9210/37021 (AAD) PARTICULATE RESP[S]” fall under HTSUS subheading 6307.90.9889.
In support of 3M’s commercial interchangeability application for the 9211/N95 Particulate Respirator, the company also provided documents representing a typical import and export transaction. In terms of the import transaction, the company provided a CBP Form 7501 for the importation of “respirators” and entered under HTSUS subheading 6307.90.9889. The invoice accompanying the CBP Form 7501 indicates that the shipment included several cases of “9211 N95 Valved Resp” identified by SKU 70-0708-4340-7. The export transaction documents included a Bill of Lading for a shipment of “Office and Laboratory Supplies.” The accompanying export invoice lists cases of “9211/37022 (AAD) N95 Respirator (US)” manufactured in the United States and identified by SKU-70-0715-6534-8. Moreover, the export invoice notes that the respirator masks are identified by “HCS” Number 6307.90. Based on the two invoices, the price increase between the imported value and the exported value of the respirator masks is 20.6 percent. Further, 3M provided internal inventory tracking documents for the imports and the U.S.-manufactured exports, showing that all “9211/37022 (AAD) N95 RESPIRATOR[S]” fall under HTSUS subheading 6307.90.9889.
ISSUE:
Whether the imported 9210/N95 Particulate Respirators are commercially interchangeable with the substituted 9210/N95 Particulate Respirators, and whether the imported 9211/N95 Particulate Respirators are commercially interchangeable with the substituted 9211/N95 Particulate Respirators, 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 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 are 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 Recognized Industry Standards
One of the factors CBP considers is whether the imported and exported merchandise adhere to specific 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 H074002 (Dec. 2, 2009). In the absence of government or industry-wide criteria, we have previously held that where the technical product specifications sufficiently describe the product, this would also support a determination of commercial interchangeability. See HQ H030097 (Aug. 29, 2008); see also, Pillsbury v. U.S., 293 F. Supp.2d 1351, 1356-57 (Oct. 27, 2003) (explaining that “[i]nstead of relying on [government] standards, the designated and substitute [merchandise] may be traded on contract standards specific to individual labels”).
For the 9210/N95 Particulate Respirators and the 9211/N95 Particulate Respirators at issue, 3M asserts that the respirators are manufactured to NIOSH’s N95 designation, which is applicable to any non-powered, air purifying particulate respirator. NIOSH’s N95 designation is a performance standard that requires a 95% filter efficiency level. See 42 C.F.R. § 84.179(b)(7). When approving respirators for the N95 designation, NIOSH will conduct a model specific review and look at the individual specifications of each model. With regards to the 9210/N95 Particulate Respirators, both the imported and substituted respirators must meet the same specifications set forth in NIOSH approval TC-84A-2269. With regards to the 9211/N95 Particulate Respirators, both the imported and substituted respirators must meet the same specifications set forth in NIOSH approval TC-84A-2268. Both of these approvals require that all model 9210/N95 Particulate Respirators and all model 9211/N95 Particulate Respirators achieve at least 95% filtration efficiency against solid and liquid aerosols that do not contain oil. Both of the approvals also require that all 9210/N95 and 9211/N95 Particulate Respirators must meet the same inhalation and exhalation pressure drops. Based on our research, however, NIOSH approval numbers are not model specific in that several respirator models may be assigned to the same approval number. This indicates that NIOSH approval numbers will only guarantee uniformity of certain performance functions for the respirators sharing the same approval number. Aside from these performance standards, however, the fact that different models of respirators can share the same NIOSH approval number demonstrates that the approval numbers cannot guarantee uniformity in design, including material composition and component specifications. Consequently, we find that NIOSH’s N95 designation is not a standard that is useful to determining commercial interchangeability. Therefore, there are no government or industry standards that sufficiently distinguish respirators.
Moreover, we note that 3M identifies the material composition of the respirator masks for different parts, including the noseclip, nosefoam, filtration media, shell headband, and coverweb. These requirements for materials of composition, however, only identify the materials used without providing any insight as to actual measurements, material quality and so forth. In the absence of more technical details, we find that material composition requirements are not sufficient to describe the product or support a determination of commercial interchangeability. Because there are no applicable standards and insufficient specifications, we determine that the standards criterion is not applicable in this case.
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 catalogs, and in the import and export documents, it would support finding them to be commercially interchangeable. See, e.g., HQ H060221 (Aug. 26, 2009); HQ H074002 (Dec. 2, 2009); and HQ H122535 (Feb. 9, 2011). For 9210/N95 Particulate Respirators, the model number is 9210. For 9211/N95 Respirators, the model number is 9211. Each model number correlates to a specific set of product specifications; therefore, all products sharing the same model number will share the same specifications. The import and export invoices provided for the 9210/N95 Particulate Respirators both describe the merchandise using 9210 as the identifier while the import and export invoices provided for the 9211/N95 Particulate Respirators describe the merchandise using 9211 as the identifier. Thus, the import and export documents support the fact that sales and purchases of the respirators are based on model number. We note that the imported and exported 9210/N95 Particulate Respirators do not share the same SKU, and the imported and exported 9211/N95 Particulate Respirators also do not share the same SKU. However, as explained by the application, the difference in SKU numbers is attributed to the company’s need to identify manufacturing location and differences in packaging, such as quantity of respirators or the addition of local languages. Consequently, because both the imported and substituted 9210/N95 Particulate Respirators share the same model number, and both the imported and substituted 9211/N95 Particulate Respirators share the same model number, we find that the part number criterion supports a finding of commercial interchangeability.
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 HTSUS. See, e.g. HQ H074002 (Dec. 2, 2009). Based on the CBP Form 7501s submitted as a part of the import documentation for the 9210/N95 and 9211/N95 Particulate Respirators, both imported models are classified under HTSUS subheading 6307.90.9889. In terms of the exported 9210/N95 and 9211/N95 Particulate Respirators, the export invoices for both models provided by 3M identify a “HCS” Number for the respirator masks as 6307.90, which matches the first six digits of the HTSUS subheading found on the import documentation. Furthermore, 3M has provided internal inventory documents that illustrate the HTSUS numbers assigned to its products. For both the 9210/N95 and 9211/N95 Particulate Respirators, the assigned HTSUS subheading is 6307.90.9889. Based on these documents, we conclude that the imported and exported 9210/N95 Particulate Respirators and the 9211/N95 Particulate Respirators all share the same HTSUS subheading, 6307.90.9889. Therefore, provided that the imported and exported respirator masks have the same HTSUS subheading, this supports a finding of commercial interchangeability.
Relative Value
Finally, 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). A comparison of the invoices for the imported and substituted 9210/N95 Particulate Respirators shows a price difference of 21.2 percent. A comparison of the invoices for the imported and substituted 9211/N95 Particulate Respirators shows a price difference of 20.6 percent. CBP has held that a variance in price does not preclude a finding of commercial interchangeability when there is sufficient evidence to support the material difference in value. See HQ228580 (Aug. 20, 2002) (holding that a value difference of 27 percent did not preclude a finding of commercial interchangeability when the difference in value is attributable to processing and manufacturing costs). See also, HQ H106515 (Mar. 18, 2011) (holding that although there was a difference in value between the import and export of 70 percent, the difference did not preclude a determination of commercial interchangeability because the value difference was the result of market forces rather than a difference in quality of the merchandise).
For both the 9210/N95 and 9211/N95 Particulate Respirators, 3M states that the difference in price is the result of variable production and supply chain costs. According to 3M, the difference in price between the imported respirators and those manufactured in the United States is related to the volume produced and does not represent any difference in quality between the imported and exported 9210/N95 Particulate Respirators, nor does it represent a difference in quality between the imported and exported 9211/N95 Particulate Respirators. 3M explains that the United States only produced 5.7 million total units of the entire product family of respirators in 2012 while the foreign manufacturer produced 60 million units. Therefore, respirators manufactured in the United States had less volume to spread out fixed costs, such as depreciation and overhead costs, when compared to respirators produced abroad. Consequently, the value differences between the imported and substituted 9210/N95 Particulate Respirators and the value differences between the imported and substituted 9211/N95 Particulate Respirators are due to market factors rather than a difference in the merchandise. Thus, the value difference does not preclude a determination that these are commercially interchangeable.
HOLDING:
Based on the above findings, we determine that the imported and substituted 9210/N95 Particulate Respirators are commercially interchangeable and that the imported and substituted 9211/N95 Particulate Respirators are commercially interchangeable for the purposes of substitution drawback pursuant to 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 ruling 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 & Duty Refunds Branch