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July 29, 1994

HQ 225193


DRA-4-CO:R:C:E 225193 CB

CATEGORY: DRAWBACK

Mr. Dennis J. Helms
Secretary/Treasurer
Juice Farms Incorporated
P.O. Box 1368
Mount Dora, FL 32757

RE: Request for ruling under 19 U.S.C. ?1313(j)(2); Substitution of frozen concentrated orange juice; commercially interchange- able determination

Dear Mr. Helms:

This is in reply to your letter of February 2, 1994, wherein you requested a determination regarding substitution same condition drawback eligibility of frozen concentrated orange juice. You have not provided sufficient information to enable this office to issue a ruling. Therefore, we are providing you with an information letter.

Juice Farms, Inc. is engaged in the business of importing frozen concentrated orange juice at approximately 65 degree brix. The concentrate is imported from Brazil, Mexico, Costa Rica and other countries. The imported product is concentrated orange juice for manufacture as identified in Section 146.153 of Title 21, Code of Federal Regulations that meets the Grade A standards of the Department of Agriculture for concentrated orange juice for manufacturing, Section 2852.221, Title 7, Code of Federal Regulations. The duty-paid, duty-free, or domestic merchandise is concentrated orange juice for manufacture that meets the Grade A standards.

You state that product may or may not be blended for a multitude of reasons. The most common reason is for consistency. Some customers prefer a consistently higher or lower sugar to acid ratio. Another reason for blending is for color. Brazilian concentrated orange juice has consistently high color score. Domestic concentrated orange juice produced from early and mid season fruit usually has low color scores. Therefore, early and mid season juice is often blended with valencia or Brazilian juice to raise the color scores.

Juice Farms will be the importer of record and will, from time to time, issue a Certificate of Delivery for product sold to a domestic customer. Your letter also indicates that merchandise imported through the port of Wilmington, Delaware is stored at a tankfarm facility. This product is subsequently sold to both domestic and foreign manufacturing companies. From time to time, domestic product is purchased, stored and sold FOT tankfarm in Delaware. This product may or may not be commingled with imported product and subsequently sold to both domestic and foreign manufacturing companies.

Generally, under 19 U.S.C. ?1313(j)(2), as amended, 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 issue is whether the imported merchandise is "commercially interchangeable" with the exported merchandise, for purposes of 19 U.S.C. ?1313(j)(2). The drawback law was substantively amended by section 632, title VI- Customs Modernization, Public Law 103-182, the North American Free Trade Agreement Implementation Act (107 Stat. 2057), enacted December 8, 1993. Before its amendment by Public Law 103-182, the standard for substitution under section 1313(j)(2) was "fungibility". House Report 103-361, 103d Cong., 1st Sess. (1993), contains language explaining the change from fungibility to commercial interchangeability. According to the Report (at page 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(1))). The Report (at page 131) also states:

The Committee further intends that in determining whether two articles were commercially interchangeable, the criteria to be considered would include, but not be limited to: Governmental and recognized industrial standards, part numbers, tariff classification, and relative values.

The Senate Report for the NAFTA Act (S. Rep. 103-189, 103d Cong., 1st Sess. (1993), pp. 81-85) contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability.

Thus, before we are able to make a "commercially interchangeable" determination, you will have to provide the following information: any Governmental and recognized industrial standards, tariff classification, and relative values (of both the imported and substituted concentrates).

Please be aware that this is an "information letter" as defined in section 177.1(d)(2), Customs Regulations (19 CFR 177.1(d)(2)), and not a "ruling" (see 19 CFR 177.1(d)(1)).

Sincerely,

William G. Rosoff, Chief
Entry Rulings Branch

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