DRA-4-CO:R:C:E 222871 PH
Mr. Sidney Leveridge
Duty Drawback Administrator
Ciba-Geigy Corporation
Seven Skyline Drive
Hawthorne, New York 10532-2188
RE: Same Condition Substitution Drawback; Fungibility of Irganox
1035FF and Irganox 1035; 19 U.S.C. 1313(j)(2); 19 CFR
191.2(l)
Dear Mr. Leveridge:
In your letter of December 4, 1990, you requested our
reconsideration of a decision by our field office in New York as
to the fungibility of Irganox 1035FF and Irganox 1035. Our
ruling follows.
FACTS:
Your company received a ruling from Customs in New York that
the products Irganox 1035FF and Irganox 1035 are not fungible for
purposes of same condition substitution drawback. You request
reconsideration of this ruling.
You state that the two products under consideration are
chemically indistinguishable. The difference between the two is
in the particle size. Irganox 1035 is described as a very dusty
powder. A granulation process, known as compaction, is used to
convert some of it to Irganox 1035FF. This process is described
as a physical change only and it is stated that no binding agents
or other additives of any kind are added.
Specifications are provided for Irganox 1035 but not for
Irganox 1035FF. For purposes of this ruling we will assume that
the two products are chemically indistinguishable, as you state,
and that the only difference in them is in there physical state;
one is a very dusty powder and the other is in a granular form.
ISSUE:
Are the two products under consideration in this case
fungible, for purposes of the same condition substitution
drawback law, assuming that they are chemically indistinguishable
but one is in the form of a very dusty powder and the other is in
a granular form?
LAW AND ANALYSIS:
Under section 313(j)(2), Tariff Act of 1930, as amended (19
U.S.C. 1313(j)(2)), upon the exportation or destruction under
Customs supervision of merchandise (whether imported or domestic)
which is fungible with imported merchandise, assuming compliance
with other requirements in the statute and applicable regulations
(19 CFR Part 191), same condition substitution drawback may be
claimed. This provision specifically permits the substitution of
merchandise (whether imported or domestic) for imported
merchandise, provided that they are fungible.
The term "fungible merchandise" is defined in the Customs
Regulations as "merchandise which for commercial purposes is
identical and interchangeable in all situations." (Emphasis
added.) This definition is consistent with the clearly expressed
intent of the Congress when it enacted 19 U.S.C. 1313(j)(2).
(See House Report (Ways and Means Committee) No. 98-1015,
September 12, 1984, reprinted at 1984 U.S.C.C.A.N. 4960, 5023;
see also 129 Cong. Rec. E 5339 (daily ed. November 4, 1983).)
This definition is also consistent with the common meaning of the
term, as defined by the lexicographers (see Webster's Third New
International Dictionary (1986); Webster's New World Dictionary,
Third College Edition (1988); The Random House Dictionary of the
English Language (1973); and Black's Law Dictionary (6th Edition,
1990)).
The Court of International Trade just recently issued an
opinion upholding Customs interpretation of fungibility for same
condition drawback purposes (Guess? Inc. v. United States, Slip
Op. 90-121 (CIT November 26, 1990), Vol. 24 Cust. Bull. & Dec.
No. 51, p. 26). This case involved certain domestic cotton denim
wearing apparel which was identical in all respects to imported
cotton denim wearing apparel except that the labels identifying
the country of manufacture were different. The Court held that
the domestic cotton denim wearing apparel was not fungible with
the imported cotton denim wearing apparel, stating that "...the
choice of the word 'fungible' indicates an intention by Congress
to identify merchandise which stands in the place of the imported
merchandise in all respects." (Emphasis added; Vol. 24 Cust.
Bull. & Dec. No. 51, p. 29.) The Court went on to indicate that
a "commercial preference" for one article or the other "destroys
fungibility" (Vol. 24 Cust. Bull. & Dec. No. 51, p. 29).
In the case under consideration, the merchandise is not
"identical and interchangeable in all situations", nor may it
"[stand] in the place of the imported merchandise in all
respects" (see, respectively, 19 CFR 191.2(l) and the quotation
from Guess?, supra). The merchandise is in different physical
forms. In its review of this matter, the Customs Headquarters
Office of Laboratories & Scientific Services noted that the
suffix "FF" in Irganox 1035FF stands for "free flowing". This
indicates that the two materials have different qualities. We
note that one or the other of the materials could be more
desirable in certain manufacturing processes (e.g., to minimize
dust particles in the air or on manufacturing machinery). We
conclude that Irganox 1035 and Irganox 1035FF are not fungible.
HOLDING:
The two products under consideration in this case, assumed
to be chemically indistinguishable although one is in the form of
a very dusty powder and the other is in a granular form, are not
fungible for purposes of same condition substitution drawback.
(See 19 CFR 191.2(l) and Guess? Inc. v. United States, Slip Op.
90-121 (CIT November 26, 1990), Vol. 24 Cust. Bull. & Dec. No.
51, p. 26.)
Sincerely,
John Durant, Director
Commercial Rulings Division