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HQ 223533


March 2, 1992

DRA-4-CO:R:C:E 223533 C

CATEGORY: DRAWBACK

Maryanne Carney
Chief, Drawback Branch
New York Region
Suite 716
6 World Trade Center
New York, New York 10048-0945

RE: Your request for internal advice concerning fungibility of steel products; fungibility; substitution same condition drawback; steel products; 19 U.S.C. 1313(j)(2)

Dear Ms. Carney:

This responds to the referenced request for internal advice, dated October 22, 1991 (DRA-4-04-O:C:D BCH). By memorandum of November 26, 1991, we submitted to Headquarters Office of Laboratories and Scientific Services (Lab Services) your request for internal advice and the "Guidelines for Applying to File Claims Using Substitution Same Condition Drawback" for the three companies requesting such drawback. By memorandum of January 28, 1992, that office responded (DRA-1-CO:L:O:T MSC).

Attached, please find a copy of the Lab Services response. To summarize, it concludes that the three "Guidelines," or applications, as they are currently constituted, fail to demonstrate fungibility. The applications for ELG Haniel Trading Corporation and Titan Steel Corporation lack elemental analysis sheets (see Lab Services response), and the elemental analysis sheets for Amstek Metal are either incomplete with respect to items 6 and 7 of exhibit one or fail to establish fungibility for want of Cu and Mo content in the domestic merchandise (see attached note from Lab Services, dated February 19, 1992). Otherwise, the Lab Services response sets forth, as follows, the factors that should be considered when making fungibility determinations for steel, noting that ranges cannot be set but must be considered on a case by case basis (see bottom of p. 1; in this regard, we note that the Lab Services response already set forth factors and standards for determining fungibility, despite what is stated in the last paragraph of page one):

[F]ungibility would be appropriate for steel products that meet the same ASTM specification, form (coil for coil), treatment (oil tempered for oil tempered), type, grade, gauge diameter, width, coating, and any other physical parameter stated in the ASTM specification.

Furthermore, in order to determine if the products are fungible, it will be necessary that their elemental analysis conform to the following two criteria:

1. If an element is listed in the ASTM specification, concentration must conform to allowable levels.

2. All elements that are not listed in the ASTM specification must appear in essentially the same concentration in all fungible lots.

Please review the Lab Services memorandum (and attached note). It is self-explanatory. The criteria provided can be applied to the submitted applications, as well as to applications submitted in the future. Note that the imported and domestic merchandise must exhibit the same ASTM specification, physical form, and elemental composition. Where ranges provided by applicants present problems in determining fungibility, Headquarters can be consulted.

If you have any additional questions, please contact this office.

Sincerely,

John Durant, Director

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