HQ W230762

February 13, 2007

DRA-4-OT:RR:CTF:EP W230762 LLB

Category: Drawback

Customs and Border Protection

Port of Houston

2350 N. Sam Houston Parkway East, Suite 1000

Houston, Texas 77032-3126

Attn: Ms. Christina D. Brooks

Re: Protest/AFR No. 5301-03-100780; Dow Chemical Company; 19 U.S.C. §§
1313(j)(2) and 1313(p); Crude MDI; HQ 230776(Aug. 10, 2005); 19 C.F.R. §
191.32(1998); [Cargill Citro-America v. United States]{.underline}, 395
F. Supp. 2d 1222(Ct. Int'l Trade 2005).

Dear Ms. Brooks:

The above-referenced protest has been forwarded to this office for
further review. We have considered the arguments raised by the
protestant, Dow Chemical Company, and your office. Our decision follows.

**FACTS**

This timely protest[^1] concerns an October 21, 1997, drawback claim
under 19 U.S.C. § 1313(j)(2) for Crude MDI imported June 28,1997 and
exported October 2, 1997. The drawback claim, filed on October 21, 1997,
included a substitution affidavit and a chronological export summary.

On December 15, 1999, the port requested that the protestant provide a
request for a non-binding predetermination of commercial
interchangeability; documents to support the protestant's claim of
commercial interchangeability; or a copy of a request for a formal
ruling from CBP Headquarters. On December 27, 1999, the protestant
submitted a request for a nonbinding predetermination of commercial
interchangeability which the port rejected on January 26, 2000, because
the request was not supported by sufficient documentation.

On July 19, 2000, the protestant submitted a copy of its July 13, 2000,
ruling request that the protestant sent to this office for a
determination of commercial interchangeability for various
petrochemicals, including Crude MDI. In response to the foregoing ruling
request, this office issued ruling HQ 228898 (Dec. 10, 2001); however,
because the protestant only provided specific import and export
information regarding the petrochemical Dowper®" (Perchloroethylene,
also known as tetrachloroethylene"), and not for the other
petrochemicals listed in the ruling request, our ruling was limited only
to the exportations of Dowper®.

On May 15, 2003, the port requested that the protestant provide
Certificates of Analysis for the imported and exported product, an
export invoice, and documentation supporting possession of the exported
product. According to the port's notes, the port had not received the
requested information as of August 3, 2003, and on August 22, 2003, the
port liquidated the claim without benefit of drawback pursuant to 19
C.F.R. § 191.32.

On November 4, 2003, the protestant filed a protest against the denial
of the subject drawback claim arguing that the claim qualifies for
drawback under 19 U.S.C. § 1313(j)(2). The protestant argues for the
first time in its protest that alternatively, drawback under 19 U.S.C. §
1313(p) and the port's liquidation of the drawback entry without payment
of the Merchandise Processing Fee (MPF) and the Harbor Maintenance Tax
(HMT) was erroneous. The protestant submitted an "amended" drawback
claim including its claims for drawback under § 1313(p), MPF, and HMT.
The following are the import and export documents that were submitted
with the protest:

# Import Documents

-CF-7501 indicating the entry date as June 30, 1997 and the import
classification as 3909.50.5000, HTSUS

-Import Invoice which cross-references the June 30, 1997 entry and
describes the imported merchandise as "Crude MDI-US Polymeric
(Feedstock)" and Crude MDI HOP390

-Certificate of Analysis which cross references the June 30, 1997 entry
and the import invoice

# Export Documents

Unsigned Bill of Lading dated October 2, 1997 which describes the
exported merchandise as "Crude MDI Polymeric-DOWPA" and
"Diphenylmethane-4,4'Diicoyante Mixture"

**ISSUES**

1\. Whether the protestant has established, based on the evidence
presented, drawback eligibility

2\. Whether the protestant's claim for drawback for Harbor Maintenance
Taxes and Merchandise Processing Fees was timely

## LAW and ANALYSIS

## Issue 1

The protestant argues that it has met the requirements for commercial
interchangeability under 19 U.S.C. § 1313(j)(2) and in the alternative,
has met the requirements for drawback under 19 U.S.C. § 1313(p). The
port denied the protestant's claim pursuant to 19 C.F.R. § 191.32[^2]
which is the regulation that was promulgated under the authority of 19
U.S.C. § 1313(j)(2). The protestant's argument pursuant to 19 U.S.C.
§1313(p) is raised for the first time in its protest. We will discuss
both arguments [in]{.underline} [seritiam]{.underline}.

**­­A. 19 U.S.C. § 1313(j)(2)**

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 provided
certain 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 drawback law was substantively amended by § 632, title VI - Customs
Modernization Act, Public Law 103-182, The North American Free Trade
Agreement (\"NAFTA\") Implementation Act (107 Stat. 2057), enacted
December 8, 1993. Before its amendment by Public Law 103-182, the
standard for substitution under § 1313(j)(2) was \"fungibility\". House
Report No. 103-361, 103d Cong., 1st Sess. (1993) contains language
explaining the change from fungibility to commercial interchangeability.
According to the Report (at p. 131), the standard was intended to be
made less restrictive i.e., \"the Committee intends to permit the
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 CFR § 191.2(l)), prior to
their amendment on March 5, 1998. The Report, at p. 131, also states:

The Committee further intends that in determining whether the 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. No. 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 addition, the Senate Report states that Customs
"should evaluate the critical properties of the substituted merchandise,
rather than basing its determination on subjective standards." Senate
Report at page 83.

In order to determine commercial interchangeability, the criteria to be
considered by CBP would include, Governmental and recognized industry
standards, part numbers, tariff classification, and relative values.
Underlying purchase and sales contracts, purchase invoices, purchase
orders, and inventory records show whether a claimant has followed a
particular recognized industry standard or governmental standard, or any
combination of the two, relative values of the imported and exported
merchandise, and whether a claimant uses part numbers to buy, sell, and
inventory the merchandise in issue. [See]{.underline} HQ 227473(March 3,
1998)(determining whether imported and exported merchandise met
government and industry standards and relative values using contracts
and purchase orders); HQ 227106 (September 3, 1997)(determining use of
part numbers, using purchase orders, sales documents and invoices, and
warehouse receipts). [see]{.underline} [also]{.underline}, 19 C.F.R. §
177.2(b)(4)("If the question or questions presented in the ruling
request directly relate to matters set forth in any invoice, contract,
agreement, or other document must be submitted with the request."). The
protestant did not submit any commercial documents with its drawback
claim to support its claim of commercial interchangeability, nor did it
do so in response to the two document requests from the port.

Our review of the documents submitted with the protest reveals that the
protestant has not established commercial interchangeability of the
imported and exported merchandise. Initially we note that it is
questionable whether the exported merchandise is the same as the
imported merchandise because the descriptions are inconsistent insofar
as the import invoice describes the imported merchandise as "Crude MDI
Polymeric (Feedstock)" and the export bill of lading describes the
alleged exported merchandise as "Crude MDI Polymeric-DOWPA" and
"Diphenylmethane-4,4'Diicoyante Mixture".

Further, because the protestant has not provided CBP with any sales
documents, we cannot determine whether the Government or Industry
Standards or Part Numbers criteria are applicable to the exported
merchandise. Without the sales documents, CBP cannot determine the value
of the exported merchandise. In addition, the tariff classification
criterion has not been met. The import entry indicates that the
merchandise was imported under subheading 3909.50.5000, HTSUS (1997).
The bill of lading indicates that no Shipper's Export Declaration (SED)
was required at exportation; therefore, there is no Schedule B number to
which we could compare the HTSUS subheading.[^3] In such instances, CBP
has held that the tariff classification criterion can be met if there is
no dispute as to the identity of the exported merchandise and if the
description of the exported merchandise and the imported merchandise
fall within an [eo]{.underline} [nomine]{.underline} provision of the
HTSUS. [See]{.underline} HQ 230459 (Feb. 27, 2006). In this case, Crude
MDI polymeric does not fall under an ­­[eo]{.underline}
[nomine]{.underline} provision of the HTSUS. Based on the foregoing,
because we cannot determine whether the Government and industry
standards, relative value, and part numbers criteria have been met due
to lack of evidence and we conclude that the tariff classification
criterion has not been met, the protestant has failed to establish that
the imported and exported merchandise are commercially interchangeable.

However, the protestant argues, without citation to authority or
analysis, that the port violated the legal doctrine of [ex]{.underline}
[post]{.underline} [facto]{.underline} when it applied the 1998 drawback
regulations for substitution drawback under 19 C.F.R. § 191.32, which
provides the criterion for commercial interchangeability, by requiring
the protestant to provide certificates of analysis for the import and
the export and a commercial invoice. The [ex]{.underline}
[post]{.underline} [facto]{.underline} clause of the U.S.
Constitution,[^4] "forbids . . .penal legislation which imposes or
increases criminal punishment for conduct lawful previous to its
enactment . . . and has no relation to retrospective legislation of any
other description." [U.S. v. JAC Natori, Co. Ltd.]{.underline}, 821 F.
Supp. 1514 (Ct. Int'l Trade 1993)(internal citations omitted) [reversed
on other grounds]{.underline}, 108 F.3d 295 (Fed. Cir. 1997). To the
extent that drawback is a privilege, enforcement of the drawback laws
would not fall under the rubric of "criminal punishment"; therefore, the
doctrine of [ex]{.underline} [post]{.underline} [facto]{.underline}
would not apply in this instance.

In [Cargill Citro-America v. United States]{.underline}, CBP denied the
plaintiff's drawback claim under § 1313(j)(2) because the plaintiff's
certificate of delivery did not identify the commercially
interchangeable merchandise that had been substituted for imported
merchandise pursuant to 19 C.F.R. § 191.34(1998). 395 F. Supp. 2d 1222,
1225-27(Ct. Int'l Trade 2005). The Court of International Trade(CIT)
found that the 1997 regulations did not require the plaintiff to make
the foregoing identification, rather, the 1997 regulation, § 191.41(b)
required the plaintiff to submit a certificate of delivery recording the
transfer of merchandise between the importer and the plaintiff.
[Id.]{.underline} at 1229. As such, the CIT held that because the
plaintiff filed its drawback claim prior to the effective date of the
1998 regulations and the language of the 1998 regulations did not
indicate that it should be given retroactive effect, CBP's denial of
Cargill's drawback claim under § 1313(j)(2) was improper.
[Id.]{.underline} at 1228-30.

In the present case, the port cited 19 C.F.R. § 191.32 as the basis for
its denial. Insofar as § 191.32 became effective April 6, 1998, the
port's application to the protestant's October 21, 1997 drawback claim
was improper. However, such retroactive application did not result in
the improper denial of the protestant's drawback claim under 19 U.S.C. §
1313(j)(2). Although the requirements to establish commercial
interchangeability were not found in the CBP regulations prior to April
6, 1998, the requirement to establish commercial interchangeability was
well established by the legislative history of 19 U.S.C. § 1313(j) and
OR&R rulings which interpret § 1313(j)(2)[^5] prior to the April 6,
1998, effective date. As such, the requirement to establish commercial
interchangeability found in 19 C.F.R. § 191.32 existed prior to its
April 6, 1998 effective date. Thus, the port's retroactive application
of 19 C.F.R. § 191.32 was harmless error.

The protestant also argues, without citation to authority, that CBP
cannot require the protestant to produce additional records to support
its drawback claim insofar it has been three years since the drawback
claim was paid. Specifically, the protestant argues, "the time for
record retention has expired." With regard to retention of records to
support drawback claims, 19 U.S.C. § 1508(c)(3) provides that "records
for any drawback claim shall be kept until the 3^rd^ anniversary of the
date of payment of the claim." The protestant posits its argument as if
the port did not request records until May 15, 2003, when in fact, the
port first requested records from the protestant on December 15, 1999.
The protestant also confuses the recordkeeping requirement with the
statutory requirement for filing a complete drawback claim. With regard
to filing of drawback claims, 19 U.S.C. § 1313(r) provides, in pertinent
part:

> A drawback entry and *all documents necessary* to complete a drawback
> claim, . . . shall be filed or applied for, as applicable, within 3
> years after the date of exportation . . . of the articles on which
> drawback is claimed, . . . . Claims not completed within the 3-year
> period shall be considered abandoned. . . .

19 U.S.C. § 1313(r)(1)(emphasis added). Thus, pursuant to § 1313(r)(1),
the protestant had until October 2, 2000, three years from the October
2, 1997,exportation date, to provide CBP with the documents necessary to
support its drawback claim. Prior to October 2, 2000, on December
15,1999, the port requested that the protestant submit documents to
support its claim of commercial interchangeability. In response to the
foregoing request, and prior to October 2, 2000, the protestant made two
submissions. The first submission was a request for nonbinding
predetermination of commercial interchangeability, which was rejected
because it was not supported by sufficient documentation. The second
submission was a copy of a ruling request for determination of
commercial interchangeability of, [inter]{.underline}
[alia]{.underline}, Crude MDI, which was sent to this office for a
formal ruling; however, the ruling, as issued, did not cover Crude MDI,
because, again, the protestant had not provided sufficient documentation
to support the commercial interchangeability of Crude MDI.

When this office issued a response to the protestant's formal ruling
request on December 10, 2001, [see]{.underline} HQ 228898, the port
could have considered the protestant's claim abandoned pursuant to 19
U.S.C. § 1313(r)(1) and liquidated the claim; however, the port, sent
out an additional request for documents on May 15, 2003, to which it did
not receive a response. In addition, the protestant has also had the
opportunity to provide the documents necessary to support its commercial
interchangeability claim in the present protest. As explained above, the
documents the protestant provided with its protest are insufficient to
support its claim for commercial interchangeability. Insofar as the
protestant has continually failed to provide sufficient documents to
support its claim for commercial interchangeability, the protestant's
drawback claim is administratively abandoned.[^6]

**B. 19 U.S.C. § 1313(p)**

Alternatively, the protestant asserts that the evidence presented
supports a claim for drawback under 19 U.S.C. § 1313(p).[^7] Under 19
U.S.C. § 1313(p)(1):

Notwithstanding any other provision \[in §1313\], if:

> \(A\) an article (referred to in section 1313(p) as the "exported
> article") of the same kind and quality (as specifically defined in
> section 1313(p)) as a qualified article is exported;

\(B\) the requirements set forth in section 1313(p)(2) are met; and

\(C\) a drawback claim is filed regarding the exported article,

> the amount of the duties paid on, or attributable to the qualified
> article shall be refunded as drawback to the drawback claimant.

For purposes of § 1313(p) a \"qualified article\" means an article
described in heading 3909, HTSUS (among other headings), which is
imported and duty-paid. [See]{.underline} 19 U.S.C. § 1313(p)(3)(A). An
exported article is of the \"same kind and quality\" as the qualified
article for which it is substituted under this subsection if it is a
product that is commercially interchangeable with or merchandise
referred to under the same eight-digit classification of the HTSUS as
the qualified article. [Id.]{.underline} at § 1313(p)(3)(B).

The merchandise in the import entry is classified under subheading
3909.50.5000, HTSUS. In regard to the exported merchandise, as discussed
above in our commercial interchangeability analysis, the Schedule B
commodity number was not provided. Therefore, "same kind & quality" for
purposes of 19 U.S.C. § 1313(p) cannot be established by reference to
the classification of the merchandise in the import entry to the
exported merchandise by the 8-digit classification of the HTSUS. In
addition, as indicated above, the evidence criteria for purposes of
commercial interchangeability has not been established. Therefore, the
evidence is insufficient to show that the merchandise is a "qualified
article" pursuant to 19 U.S.C. § 1313(p)(3)(B) and thus, the
protestant's drawback claim under § 1313(p) fails.

## Issue 2

The protestant submitted with its November 4, 2003, protest, an amended
drawback claim which included drawback claims for MPF and HMT. In HQ
230776(Aug. 10, 2005), CBP held that amended drawback claims for MPF and
HMT are changes to the scope of the claim, i.e. an increased amount of
drawback claimed, and not simply submission of supporting evidence;
therefore, amendments filed more than three years after the date of last
exportation are untimely. Here, insofar as the last exportation for the
protestant's drawback claim was October 2, 1997, the protestant's
November 4, 2003, amendment of its drawback claim that included a claim
for payment of MPF and HMT, 6 years later, was untimely.

**HOLDING**

1\. The protestant has not met the requirements to establish a drawback
claim under 19 U.S.C. § 1313(j)(2) or 1313(p). **The protest should not
be allowed.**

2\. The amended drawback entry filed on November 4, 2003 was an untimely
amendment of the claim because it was filed more than three years after
the date of exportation, i.e. after October 2, 1997. **The protest
should not be allowed**.

In accordance with the Protest/Petition Processing Handbook (CIS HB,
January 2002, pp. 18 and 21), you are to mail this decision, together
with the Customs Form 19, to the protestant no later than 60 days from
the date of this letter. Any reliquidation of the entry in accordance
with the decision must be accomplished prior to mailing of the decision.
Sixty days from the date of the decision the Office of 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 methods of public
distribution.

Sincerely,

Myles B. Harmon, Director

Commercial and Trade Facilitation Division

[^1]: Pursuant to 19 U.S.C. § 1514(c)(3)(A), an importer has 90 days
    from notice of liquidation or reliquidation to file a protest.
    According to the Automated Commercial System, the drawback entry was
    liquidated on August 22, 2003; therefore, the protestant had until
    November 20, 2003, to file its protest. Insofar as the protestant
    filed its protest on November 4, 2003, its protest was timely. The
    Miscellaneous Trade and Technical Corrections Act of 2004, recently
    amended section 1514(c)(3) and allows importers to file protests 180
    days from notice of liquidation or reliquidation. [See]{.underline}
    Pub. L. 108-429, 118 Stat. 2434 (Dec. 4, 2004). Since the drawback
    entry was filed on October 21, 1997, prior to the date of enactment
    of the foregoing Act, the amendment does not apply to this case.
    [See]{.underline} Miscellaneous Trade and Technical Corrections Act
    of 2004 ("The amendments made by this subtitle shall apply to
    merchandise entered, or withdrawn from warehouse consumption, on or
    after the 15th day after the date of the enactment of this act.").

[^2]: 19 C.F.R. § 191.32(c) provides:

    > \(c\) Determination of commercial interchangeability. 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. A party may seek a
    > nonbinding predetermination of commercial interchangeability
    > directly from the appropriate drawback office. A determination of
    > commercial interchangeability can be obtained in one of two ways:
    >
    > \(1\) A formal ruling from the Duty and Refund Determination
    > Branch, Office of Regulations and Rulings; or
    >
    > \(2\) A submission of all the required documentation necessary to
    > make a commercial interchangeability determination with each
    > individual drawback claim filed.

[^3]: The port directs this office to the Schedule B number indicated on
    the protestant's chronological summary of exports, 3824.90.28. This
    Schedule B number does not exist. Further, in determining the export
    classification this office relies upon the classification on
    commercial export documents.

[^4]: U.S. Const. Art. I, § 9, cl. 3.

[^5]: [See]{.underline} House Report 103-361, 103d Cong., 1^st^ Sess.,
    131(1993) and S.Rep. 103-189, 103d Cong. 1^st^. Sess.
    81-85(1993)(stating that criteria to be considered to determine
    commercial interchangeability would include, but would not be
    limited to: Governmental and recognized industry standards, part
    numbers, tariff classification, and relative values); HQ 225290(Nov.
    8, 1996), HQ 226625(July 3, 1996), HQ 226995(June 4, 1997), HQ
    227106(Sept. 3, 1997), HQ 226996 (Oct. 24, 1997)(applying the
    factors stated in the legislative history of 1313(j) to drawback
    claims for substitution unused merchandise drawback);
    [See]{.underline} [also]{.underline}, 32 Cust. B. & Dec. No. 35
    (Feb. 5, 1998) and 63 Fed. Reg. 10970, 10972(Mar. 5, 1998)(stating
    that "\[t\]he criteria employed in determining commercial
    interchangeability is adopted from the legislative history of the
    substitution unused merchandise drawback law.")

[^6]: [See]{.underline} HQ 230762 [citing]{.underline} [ITT Corp. v.
    United States]{.underline}, 24 F.3d 1384, 1389 (Fed. Cir.
    1994)(holding that "evidence that can be considered at \[\]trial de
    novo to prove \[\]assertions made . . . to Customs is not limited to
    merely that which is contained in the administrative record before
    Customs."). As such, although the protestant has foreclosed its
    administrative options to support its commercial interchangeability
    claim, it may still be able to submit documents for review before
    the Court of International Trade.).

[^7]: Initially, we note that the protestant's amended drawback claim
    under 19 U.S.C. § 1313(p) is permissible pursuant to 19 U.S.C. §
    1313(r)(2) which provides:

    > A drawback entry for refund filed pursuant to any subsection of
    > this section shall be deemed filed pursuant to any other
    > subsection of this section should it be determined that drawback
    > is not allowable under the entry as originally filed but is
    > allowable under such other subsection.