HQ 0224368 - Internal Advice Request; Substitution Same Condition Drawback; Fungibility of Jet Fuel, Diesel Fuel, Heating Fuel, Gas Oil, Automotive Gasoline, Reformate; 19 U.S.C. 1313(j)(2); 19 CFR 191.2(l) - United States International Trade Commision Rulings

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HQ 224368

August 3, 1993

DRA-4-CO:R:C:E 224368 PH

CATEGORY: DRAWBACK

Deputy Regional Director
Commercial Operations
Pacific Region

RE: Internal Advice Request; Substitution Same Condition Drawback; Fungibility of Jet Fuel, Diesel Fuel, Heating Fuel, Gas Oil, Automotive Gasoline, Reformate; 19 U.S.C. 1313(j)(2); 19 CFR 191.2(l)

Dear Sir:

With your memorandum of December 7, 1992 (File: DRA- 1:SF:O:C:T (TDV), you forwarded a request for internal advice submitted on behalf of the drawback claimant in the referenced matter. Our ruling on the internal advice request follows.

FACTS:

As part of an audit of the drawback claimant in this matter, Customs conducted a technical evaluation of the fungibility of petroleum products covered in 26 substitution same condition drawback claims. The technical evaluation resulted in conclusions that there was not fungibility in 10 of the claims (and therefore that drawback should be denied in these claims). The merchandise in the claims in which non-fungibility was found and is contested in the internal advice request is jet fuel (claims 4, 5, 9, 19, and 21); diesel fuel/gas oil (claim 7, 8, and 10); and unleaded gasoline/reformate (claims 3 and 6).

In the case of the jet fuel, non-fungibility was found because the aromatic content of the exported merchandise was greater than 20% in claims 4, 19, and 21. Non-fungibility was found in claims 5 and 9 because the merchandise was commercially distinguished by different names, as indicated on the claimant's records. In regard to claim 5 it was also noted that no information was provided to substantiate or refute the presence of the antistatic additive ASA 3 in the designated imports. In regard to claim 9 it was also noted that there were substantial differences in API gravity and no information on the freezing point for the designated imports. In the case of the diesel fuel/gas oil, non-fungibility was found because the merchandise was commercially distinguished by different names, as indicated on the claimant's records. In the case of the unleaded gasoline/reformate, non-fungibility was found because the merchandise was commercially distinguished by different names, as indicated on the claimant's records. In addition, in regard to claim 3, it was noted that the aromatic content was very high for the exported merchandise.

ISSUE:

As described in this case, is the imported merchandise fungible, for purposes of the substitution same condition drawback law, with the exported merchandise?

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), substitution same condition drawback may be claimed.

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 (CIT) and the Court of Appeals for the Federal Circuit (CAFC) have recently reviewed Customs interpretation of fungibility for substitution same condition drawback purposes (see Guess? Inc. v. United States, 14 CIT 770, 752 F. Supp. 463 (1990); 944 F. 2d 855 (1991)). 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 CIT followed Customs interpretation of the word "fungible" and held that the wearing apparel was not fungible. The CAFC vacated and remanded the decision of the CIT on the basis that the factual determination of whether there was a customer preference for the wearing apparel identified with the United States as the country of manufacture was disputed. On the question of Customs interpretation of fungibility, however, the CAFC stated that Customs interpretation of the term in 19 CFR 191.2(l) is "a reasonable construction of the statute and is consistent with Congress' intent" (944 F.2d at 858). (See also Tandom Corp. v. United States, Slip Op. 92-197 (CIT October 29, 1992), Vol. 26, Cust. Bull. & Dec. No. 47, p. 38, November 18, 1992.)

In Customs Service Decision (C.S.D.) 91-3, Customs held that two shipments of automotive gasolines which meet the ASTM Standard Specifications for Automotive Gasoline, Designation ASTM D 439, on a volatility for volatility class basis, that contain the same octane ratings, that are substituted on the basis of leaded-for- leaded or unleaded-for-unleaded, and contain the same additives (if any) are fungible for purposes of 19 U.S.C. 1313(j)(2). In C.S.D. 91-21, Customs held that two shipments of aviation turbine fuels which meet the ASTM Standard Specifications for Aviation Turbine Fuels, Designation D 1655 (i.e., jet A for jet A, jet A-1 for jet A-1 or jet B for jet B, citing Table 1 of the standards) are fungible for purposes 19 U.S.C. 1313(j)(2).

In general regard to the inquirer's contention that allowance should be made by Customs in applying the ASTM standards to laboratory reports for "precision' variations ("repeatability" or "reproducibility"), we note the statement of the CIT in Guess? that "[w]e are not dealing here [i.e., in regard to the issue of fungibility] with a question of whether a party has satisfied a commercial contract" (14 CIT at 773). In its decision on appeal, the CAFC quoted this statement and continued: "We are dealing instead with an exemption from duty, a statutory privilege due only when enumerated conditions are met. 'Such a claim is within the general principle that exemptions must be strictly construed, and that doubt must be resolved against the one asserting the exemption.'" (944 F. 2d at 858) On this basis, we disagree with this contention by the inquirer.

Some of the laboratory reports for the claims under consideration are partially illegible or may not have been signed or initialed by a responsible party (this may be as a result of the copying of the reports; the originals may not have this deficiency). In this regard, your attention is invited to 19 CFR 151.13(a) and (i)(5)(vi), under which Customs accredited laboratory reports must have the initials or signature of the person accepting technical responsibility for a gauging or analysis report and Customs is not required to accept reports which do not comply with this requirement.

JET FUEL

In regard to the finding of non-fungibility for jet fuel because the aromatic content of the exported merchandise was greater than 20% (claims 4, 19, and 21), it is argued that the ASTM standards permit slight statistical variances, based on a test method's "precision." See our position above in regard to this contention. In any event, we note that such variances are not permitted for this ASTM standard (ASTM D 1655, see note A: "The requirements herein are absolute and are not subject to correction for tolerance of the test methods").

It is also argued that the aromatic content for jet fuel under ASTM D 1655 may be up to 25%, on the basis of footnote C to the table in that ASTM standard. Under that footnote,

Fuels with an aromatic content over 20 volume % but not exceeding 25 volume % are permitted provided the supplier (seller) notifies the purchaser of the volume, distribution and aromatic content within 90 days of date of shipment unless other reporting conditions are agreed to by both parties.

According to the inquirer, all commercial parties in the jet fuel industry routinely ignore this footnote and accept product containing up to 25% aromatics without notice and without prior agreement. The inquirer states that the airline customers of the claimant in this case (a major petroleum refiner) have never requested, and the claimant has never provided, notice that jet fuel contains between 20% and 25% aromatics, nor is there any evidence that any other seller or purchaser provides or requires such notice. The inquirer states that there is no price differential between jet fuel containing 20% or less aromatics and jet fuel containing between 20% and 25% aromatics. The inquirer provides a table of Engine Manufacturer's Requirements for General Electric and Pratt & Whitney engines in which the maximum aromatics for General Electric is listed as 25% and that for General Electric as 20%, with a footnote stating "Waiver currently in effect authorizing up to 25 vol. % Aromatics, as necessary." Therefore, according to the inquirer, "the 'commercial world' unqualifiedly ignores the notice requirement contained in ASTM D 1655 footnote C and treats jet fuel containing up to 25% aromatics as fungible ...."

We are not satisfied that the above arguments establish that jet fuel containing 20% or less aromatics and jet fuel containing 20% to 25% aromatics are identical and interchangeable in all situations. While it is true that one of the United States engine manufacturers may permit aromatics of up to 25% (the other only "currently" waives the 20% maximum), that does not eliminate the possibility of a commercial preference by the customers of the jet fuel (as opposed to the manufacturers of the engines in the airplanes of the customers). We note that higher amounts of aromatics in jet fuel result in a greater likelihood of the fuel smoking (Petroleum, Prehistoric to Petrochemicals, G. A. Purdy (1958), p. 66; see also ASTM D 1655-92c, paragraph X1.4.2.3). We also note that the newly revised ASTM standard for jet fuel (ASTM D 1655-92c) retains a limit on aromatics (now set at 22% instead of 20%) with the footnote provision that aromatics may be up to 25% "provided the supplier (seller) notifies the purchaser of the volume, distribution and aromatic content within 90 days of shipment ...."

Although this modification to the ASTM standard cannot operate to change the limit on aromatics to 22% for the merchandise under consideration (i.e., because fungibility must be determined at the time of substitution and at that time the 20% limit was in effect), it is objective evidence that there is a consciously derived differentiation between high and low aromatic-content jet fuel. In light of the effect of a higher content of aromatics in jet fuel (i.e., resulting in a greater likelihood of the fuel smoking), in this environmentally conscious age we are unable to conclude that the ASTM standard on aromatics in jet fuels, the best evidence available, may be ignored. As for the argument of the inquirer that such a conclusion may create sub-groups of jet fuel (for fungibility purposes), we note that if this is so, the sub-groups are created by recognized industry standards. We conclude that the imported jet fuel and the exported jet fuel in claims 4, 19, and 21 are not fungible.

In regard to claim 19, the inquirer has submitted an alternate amended claim 19 (filed with Customs within 3 years of exportation) based on the theory that if jet fuel with more than 20% aromatics is not fungible with jet fuel with less than 20% aromatics, jet fuel with between 20% and 25% aromatics is fungible with jet fuel with the same range of aromatic content. As to the fact that in the amended claim the imported merchandise is described as "jet A- 1" and the exported merchandise is described as "jet fuel (DERD- 2494)", see the discussion of this issue in regard to claim 9, below. If the condition set forth there is met, a finding of fungibility is not precluded on this basis. However, the laboratory reports for the imported merchandise and the exported merchandise in the amended claim 19 indicate that the imported merchandise has an electrical conductivity additive and the exported merchandise does not (i.e., the specification for the imported merchandise is 53 and that for the export is 1). In view of the inquirer's statement (in regard to claim 5, below) that the claimant does not supply jet fuel containing the antistatic ASA 3 except on special request and that the claimant is aware of no jet fuel producer that routinely manufactures jet fuel containing that antistatic, we believe that this difference precludes fungibility. We conclude that the imported merchandise and the exported merchandise in the amended claim 19 are not fungible.

In regard to the finding of non-fungibility for jet fuel because of the use of different names for the merchandise, the inquirer notes that the specifications for "jet A" and "jet A-1" are the same except that the maximum freezing point for jet A is -40 degrees Centigrade (C) (-40 degrees Fahrenheit (F)) and that for jet A-1 is -47 degrees C (-52.6 degrees F). According to the laboratory report for the imported jet fuel in claim 5, the maximum freezing point ranged between -54 and -67 degrees F and that for the export was -55 degrees C. Thus, the freezing points for both imported and exported jet fuel meet the specifications for jet A- 1, as recognized in the Customs technical evaluation of fungibility.

As for the description of the exported jet fuel in claim 5 as "jet A-1 without ASA 3", the inquirer notes that ASA 3 is an electrical conductivity additive (i.e., an antistatic) which is permitted in certain concentrations in jet fuel, according to the pertinent ASTM standard. The specification in ASTM D 1655 for electrical conductivity is in footnote J to the table in the ASTM standard and states "A limit of 50 to 450 conductivity units (Ps/m) applies only when an electrical conductivity additive is used and under the condition at point of use." There is no indication of electrical conductivity in the laboratory report for the imported jet fuel in claim 5 and the report for the export resulted in a finding of 3 Ps/m. The inquirer states that the claimant does not supply jet fuel containing ASA 3 except on special request and, even then, normally only after shipment of the fuel from the refinery at or near the purchaser's facility. The inquirer states that the claimant is aware of no jet fuel producer that routinely manufactures jet fuel containing ASA 3. In this regard, we note that there are 4 additives (antioxidants, metal deactivators, electrical conductivity additives, and fuel system icing inhibitors) which may be added to each type of jet fuel subject to the standards in ASTM D 1655. We do not believe that a drawback claim must affirmatively establish the presence or absence of these additives to establish fungibility, although, as noted above in regard to the amended claim 19, the presence of an additive in one lot of merchandise and the absence of the additive in the lot of merchandise which is claimed to be fungible may preclude a finding of fungibility.

Although we conclude that the characteristics cited above are not fatal to fungibility in claim 5, we are unable to conclude that the imported merchandise and the exported merchandise in this claim are fungible. This is so because of the absence of significant specifications in the laboratory reports for this claim (e.g., aromatic content for the imports, as well as many other specifications provided for in ASTM D 1655; and distillation temperatures for the exports).

In claim 9, non-fungibility was found because the imported merchandise and the exported merchandise are given different commercial names ("jet fuel DERD 2494" and "jet fuel" or "jet A1" for the imports and "jet A-1" for the exports) and because there are substantial differences in the API gravity and no information on the freezing point for the imports. The inquirer states that "DERD 2494" is a European standard for jet fuel which specifies properties analogous to those of ASTM D 1655 in the United States and that jet fuel meeting the DERD 2494 specifications also satisfies the specifications in ASTM D 1655. Assuming that the inquirer is correct, we conclude that the term "DERD 2494", as it is used in this situation, is a modifier indicating that the jet fuel will meet the specifications in DERD 2494. The use of "DERD 2494" in this case does not preclude a finding of fungibility, provided that the inquirer provides a copy of the specifications in DERD 2494 and that Customs is satisfied that fuel which meets those specifications would also meet the specifications in ASTM D 1655.

Although API gravity was formerly included in the specifications for jet fuel, with a range of 37 - 51 (see, e.g., ASTM D 1655-83), ASTM D 1655 does not now have a specification for API gravity, nor did it at the time of the substitution. In view of this fact, and in view of the fact that the API gravities for the imported and exported jet fuel in this claim meet the former specifications for API gravity, we conclude that a finding of fungibility is not precluded on this ground. Because the inquirer has now provided laboratory reports with freezing points for the imported merchandise and because those freezing points meet the freezing point specification for jet A-1, a finding of fungibility is not precluded on this basis either. However, we note that the laboratory reports for the imported and exported merchandise in claim 9 do not include specifications for all of the criteria provided for in ASTM D 1655. (I.e., in the October 24, 1986, report on imports, there is no specification for acidity and although there is a specification on the smoke point, there is no specification on napthalenes (napthalenes must be less than 3% in volume if the smoke point is between 20 and 25, as is indicated in the report). In the August 15, 1987, report on imports, there is no specification for the net heat of combustion and the figure for density at 15 degrees C is illegible. In the report on exports, there is no specification for the net heat of combustion.)

Accordingly, we are unable to conclude that the imported merchandise and the exported merchandise in claim 9 are fungible. If the above deficiencies in the laboratory reports are corrected to your satisfaction and if the condition with regard to the DERD 2494 specifications is satisfactorily met, fungibility may be found in regard to this claim.

DIESEL FUEL/HEATING FUEL/GAS OIL

Initially, we note, for your information, that, as is true with jet fuel (discussed above), the ASTM standard for diesel fuel (ASTM D 975) has been modified from that which was applicable at the time of the substitution in this case (i.e., ASTM D 975-90 is applicable in this case; the current standard is ASTM D 975-92a).

In claim 7, non-fungibility was found because the imported merchandise was given different commercial names ("high pour diesel", "diesel" and "#2 diesel oil") from those given the exported merchandise ("diesel" and "gas oil"). The term "gas oil" is generally used to describe distillate-type fuel oils (see G. A. Purdy, Petroleum, Prehistoric to Petrochemicals, page 258 (1958)). Diesel fuel meeting the grade 2-D specifications in ASTM D 975 is a distillate-type fuel oil and may properly be called "gas oil" (in this regard, see Appendix X1.2.3 to ASTM D 975, in which grade 2- D diesel fuel is described as including "the class of distillate gas oils of lower volatility" (emphasis added)). "#2 diesel oil" refers to a grade of diesel oil covered in ASTM D 975 (i.e., grade 2-D), the specifications for which the imported and exported merchandise are claimed to meet. We note that the pour point for the imported merchandise called "high pour diesel" does not vary significantly from those of the other merchandise (i.e., -18 degrees C, versus -9 through -15 degrees C; as compared to -24 degrees C for the exported merchandise).

Based on the above, we do not believe that the commercial names referred to above preclude a finding of fungibility for this merchandise. However, the specifications in the laboratory report for the imported merchandise are insufficient to determine whether the imported merchandise meets the specifications for grade 2-D diesel fuel under ASTM D 975 (i.e., there are no specifications for kinematic viscosity, carbon, or sulfur given for any of the imports). Also, the distillation temperature for 90% recovery for the imported merchandise described in the laboratory reports dated May 8 and May 12, 1986 (650 degrees F and 648 degrees F, respectively) exceeds the maximum in the ASTM D 975 specifications and that for the imported merchandise described in the laboratory report dated May 22, 1988, is only for the end point (the ASTM specification is for 90% recovery), but based on a comparison with the other laboratory reports, it appears that it would also exceed the ASTM D 975 specification for the distillation temperature for 90% recovery. The specifications for the exported merchandise in claim 7 also are insufficient because the kinematic viscosity was measured at 30 degrees C (that in ASTM D 975 is measured at 40 degrees C). Furthermore, the flash point (109 degrees F) for the merchandise described in the laboratory report dated December 27, 1988 (tank 952) is lower than the minimum flash point in the ASTM D 975 specifications (125 degrees F). We are unable to make a finding of fungibility as to the imported merchandise described in the September 24, 1988, laboratory report and as to the exported merchandise described in the December 27 (tank 950), 28, and 29, 1988, laboratory reports for claim 7. We conclude that the imported and exported merchandise described in the other laboratory reports for claim 7 is not fungible.

In claim 8, non-fungibility was found because the imported merchandise was described as "Algerian gas oil" and the exported merchandise was described as "gas oil". The inquirer contends that the modifier "Algerian" merely identifies the origin of the gas oil and does not describe its physical or chemical properties. The inquirer provides evidence asserting that the imported merchandise is No. 2 heating oil meeting ASTM D396 grade 2 and the exported merchandise is No. 2 diesel fuel meeting ASTM D-975 grade 2 (actually, this would be grade 2-D). The inquirer contends that the exported merchandise satisfies the criteria for both ASTM standards for grade 2 and "possesses technical specifications which are commercially identical to those of the designated import."

As stated above, the term "gas oil" is generally used to describe distillate-type fuel oils. Both heating oil meeting the grade 2 specifications in ASTM D 396 and diesel fuel meeting the specifications grade 2-D in ASTM D 975 are distillate-type fuels and may properly be called "gas oil." Merchandise which is commercially identical may be fungible when the merchandise originated in different countries unless a customer preference for merchandise originating from one of the countries can be shown (Guess?, supra).

Thus, fungibility is not precluded as a result of the description of the imported merchandise as "Algerian gas oil" and that of the exported merchandise as "gas oil." However, we do not agree with the argument by the inquirer that grade 2 heating oil (under ASTM D 396) is fungible with grade 2-D diesel fuel (under ASTM D 975). As stated in the ASTM, the former "covers grades of fuel oil intended for use in various types of fuel-oil-burning equipment ..." (ASTM D 396 paragraph 1.1) (see also paragraph 1.1.1 "... for use in domestic and small industrial burners" and Appendix X1, paragraph X1.3.2 "... for use in atomizing type burners ..."). The latter "covers [one of] three grades of diesel fuel oils suitable for various types of diesel engines" (ASTM D 975 paragraph 1.1) (see also paragraph 1.1.2 "... for automotive diesel engines, which is also suitable for use in non-automotive applications, especially in conditions of frequently varying speed and load" and Appendix X1, paragraph X1.2.3 "... for use in high-speed engines in services involving relatively high loads and uniform speeds, or in engines not requiring fuels having the higher volatility or other properties [of] Grade No. 1-D"). (See also, G. A. Purdy, supra, pages 352-370.)

In addition to the fact that grade 2 heating oil and grade 2-D diesel fuel are for two very different uses, the specifications in the ASTM vary significantly. ASTM D 396 has general requirements (see paragraphs 3.1 and 3.2) and ASTM D 975 does not. The flash point and the maximum kinematic viscosity are different in the specifications and ASTM D 396 grade 2 includes specifications for API density and pour point while ASTM D 975 grade 2-D does not and ASTM D 975 grade 2-D includes specifications for maximum ash, minimum Cetane number, and (by reference to an ambient temperature map) maximum cloud point.

We conclude that the imported "Algerian gas oil" and the exported "gas oil" in claim 8 are not fungible because the former is acknowledged to be grade 2 heating oil and the latter grade 2- D fuel oil which are not commercially identical. Even if that were not the case, we note that the specifications for the imported merchandise and the exported merchandise differ significantly (i.e., the flash point for the import is 154 degrees F, that for the export is 110, and the minimum under ASTM D 396 is 100 and that under ASTM D 975 is 125; there is no 90% distillation recovery specification for the import, although there is for the export and in each of the ASTM specifications; there is no kinematic viscosity specification for the import, although there is for the export and in each of the ASTM specifications; there is a cloud point specification for the import, but not for the export; and there is a specification for API density for the import, but not for the export).

In claim 10, non-fungibility was found because the imported merchandise was described as "diesel fuel" and the exported merchandise was described as "gas oil". As stated above, the term "gas oil" is generally used to describe distillate-type fuel oils and diesel fuel meeting the grade 2-D specifications in ASTM D 975 is a distillate-type fuel and may properly be called "gas oil." However, we note that the distillation temperature for 90% recovery for the imported merchandise exceeds the maximum specification in ASTM D 975 (the imported merchandise specification is 645 degrees F and the maximum specification in the ASTM is 640 degrees F). We conclude that the imported merchandise and the exported merchandise in claim 10 are not fungible.

UNLEADED GASOLINE/REFORMATE

Initially, we note, for your information, that the ASTM standard for automotive gasoline which was applicable at the time of the substitution in this case (i.e., ASTM D 439-89) was discontinued in 1991 and has been replaced by ASTM D 4814-90a.

In claim 3, non-fungibility was found because the imported merchandise and the exported merchandise were given different commercial names (i.e., "gasoline, unleaded" for the import and "reformate" for the export). The inquirer states that the term "reformate" is often used in the United States to describe a very high quality gasoline precursor with an octane rating of approximately 100 which is "blended down" to produce commercial grade unleaded gasoline, but the term is also used by the international petroleum industry to describe merchandise which meets the ASTM D 439 standard for unleaded gasoline. This latter usage is consistent with our review (i.e., see G. A. Purdy, supra, pages 175, 184, wherein reformate is described as the product of thermal or catalytic reforming which increases octane numbers but does not necessarily result in the very high quality gasoline precursor referred to above).

It was also noted, in regard to claim 3, that the aromatic content of the exported merchandise was very high. In this regard, we note that there is no aromatic specification in ASTM D 439. However, we also note that aromatics are desirable components in gasoline because they can increase the octane number (see G. A. Purdy, supra, page 66). In the case of the laboratory reports for the exported merchandise in claim 3, there is no motor octane number or anti-knock index. In view of the importance of the anti- knock index in determining the quality of gasoline (see Appendix X1, paragraphs X1.1, X1.2, and X1.3 of ASTM D 439 and the same appendix in ASTM D 4814; see also C.S.D. 91-3, which provides, among other requirements, that automotive gasoline must have the same octane ratings), we believe this omission is fatal to a finding of fungibility. This is particularly true when the name given to the merchandise may indicate that it is of a higher grade than the imported merchandise and one of its qualities (i.e., a high aromatic content) may substantiate that indication.

Even if the above were not so, significant specifications necessary to determine fungibility are omitted from the laboratory reports for claim 3 and there is clear evidence to indicate that the imported merchandise and the exported merchandise are not fungible. In addition to the anti-knock rating (octane), volatility is described as defining the general characteristics of gasoline (Appendix X1, paragraph X1.1 of ASTM D 439 and ASTM D 4814). Customs has ruled that gasoline of different volatility classes (i.e., Class B and Class C) is not fungible for substitution same condition drawback purposes (ruling 224003, February 17, 1993; see also C.S.D. 91-3, referred to above). Volatility limits for gasoline are established in terms of vapor- liquid ratio, vapor pressure, and distillation properties (Appendix X1, paragraph X1.5.3 of ASTM D 439, and paragraph X1.7.3 of ASTM D 4814). Vapor/liquid ratios are not given in the laboratory reports for the exported merchandise in claim 3 and the Reid vapor pressure specifications in the laboratory reports indicate that the volatility class of exported merchandise is Class A and that most of the imported merchandise, as conceded by the inquirer, appears to be Class B or Class C in volatility. We conclude that the imported merchandise and the exported merchandise in claim 3 are not fungible.

In claim 6, non-fungibility was found because the imported merchandise and the exported merchandise were given different commercial names (i.e., "gasoline, unleaded regular" for the import and "reformate" for the export). On the basis of the discussion of the uses of the term "reformate" above, we conclude that the use of these different terms is not fatal to a finding of fungibility. However, the laboratory report for the exported merchandise does not have specifications for the vapor/liquid ratio, corrosion, gum, and sulfur. As noted above, volatility and the anti-knock rating (octane) are described as defining the general characteristics of gasoline and the vapor-liquid ratio is used to establish volatility limits. In the absence of a specification for the vapor/liquid ratio for the exported merchandise in claim 6, as well as the other omissions in the specifications, we are unable to conclude that the imported merchandise and the exported merchandise are fungible.

HOLDING:

The imported merchandise is not fungible, for purposes of the substitution same condition drawback law, with the exported merchandise in claims 4, 19, and 21 and amended claim 19 (jet fuel), claims 7 (partial), 8, and 10 (diesel fuel/heating fuel/gas oil), and claim 3 (gasoline/reformate).

Because of insufficient information in the laboratory reports provided by the inquirer, we are unable to determine whether the imported merchandise is fungible, for purposes of the substitution same condition drawback law, with the exported merchandise in claims 5 and 9 (jet fuel), part of claim 7 (diesel fuel/gas oil), and claim 6 (gasoline/reformate).

Sincerely,

John Durant, Director

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