HQ 224232: Request for Internal Advice; 19 U.S.C. 1313(j)(2); Ethofumesate; emulsifiable concentrate; your file AUD-1-CO:RA:C MAM

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                               HQ 224232

                        February 26, 1992

DRA-4-CO:R:C:E 224232 CB

CATEGORY:  Drawback

Director
Office of Regulatory Audit
U.S. Customs Service
1301 Constitution Avenue, N.W.
Washington, D.C. 20229

RE:  Request for Internal Advice; 19 U.S.C.  1313(j)(2);
     Ethofumesate; emulsifiable concentrate; your file
     AUD-1-CO:RA:C MAM


Dear Sir:

     The above-referenced internal advice request from the
Northeast Region (their file AUD-1-O:RA JMC) was forwarded to
this office for a response.  We have considered the points raised
and our decision follows.

FACTS:

     Nor-Am Chemical Company (Nor-Am) is the importer and
exporter of Ethofumesate; Schering Agrochemicals Ltd. (Schering)
of Cambridge, England, is a related company of Nor-Am and the
manufacturer of the imported product.  Scherin is also the
foreign purchaser of the domestic Ethofumesate.  Kodak-Eastman
entered into a contractual relationship with Nor-Am and Schering
to manufacture the domestic Ethofumesate which was exported and
claimed for drawback.

     The imported Ethofumesate was a crushed tan colored product
that was mainly powder-like with some irregular lumps.  After
importation, the Ethofumesate was sent by Nor-Am to a licensed
processing plant where it was used to make Nortron EC, a product
sold in the United States.  Nortron EC is used to control weeds
growing around grass and sugar beets.  The exported Ethofumesate
was light tan color of fairly large, flat-sided, irregularly
shaped pieces with a little crushed material.  The reason that
Nor-Am and Schering contracted with Kodak-Eastman was that
Schering experienced a plant shutdown in order to renovate for
increased production capacity.  Kodak-Eastman produced and
delivered 1,000,000 pounds of Ethofumesate to make up for
Schering's lack of production during the renovation.

     In relation to a request from a Drawback Liquidator, Boston,
and the initiation of the drawback audit, Nor-Am submitted two
samples of the import from Schering and two samples of the export
from Kodak-Eastman.  The samples were forwarded to the New York
Laboratory for a determination of fungibility.  Additional
information was requested from Nor-Am which provided the
information.  On August 10, 1992, the New York Laboratory (the
Lab) wrote to Regulatory Audit that in their opinion the material
forms of the import and the export, specifically, crushed-import,
uncrushed-export, were not fungible since for commercial purposes
they are not identical and interchangeable in all situations.

     Based on the above, the subject internal advice request was
submitted to this office.  Through its counsel, Nor-Am has
submitted its comments regarding the Lab's findings.

ISSUE:

     Whether the subject import and export product are fungible
for same condition substitution drawback purposes?

LAW AND ANALYSIS:

     Section 313(j)(2) of the Tariff Act of 1930, as amended (19
U.S.C.  1313(j)(2)), provides that for substitution same
condition drawback purposes, the merchandise substituted for
exportation must be fungible with the duty-paid merchandise and
in the same condition as was the imported merchandise at the time
of its importation.

     Fungibility is defined in the Customs Regulations as
"merchandise which for commercial purposes is identical and
interchangeable in all situations."  19 CFR 191.2(1).  Customs
has interpreted fungibility as not requiring that merchandise be
precisely identical; identical for "commercial purposes" allows
some slight differences.  The key is complete commercial
interchangeability.  As stated in C.S.D. 85-52:  "[t]he
commercial world consists of buyers, sellers, comminglers,
government agencies and others.  If these groups treat articles
or merchandise as fungible or commercially identical, the
articles or merchandise are fungible. . . .  When two or more
units of apparently identical properties are treated differently
by the commercial world for any reason, they are not fungible." 
19 Cust. Bul. 605, 607 (1985).

     In the instant case, the Laboratory stated that the
ethofumesate can be used in two main formulations:  "emulsifiable
concentrate" (EC) or "suspension concentrate" (SC).  The Lab
determined that the crushed and uncrushed product could be used
interchangeably in the EC.  However, that particle size was
important for suspension manufacture.  Thus, the Lab concluded 
that the crushed and uncrushed product were not fungible because
they were not interchangeable in all situations.

     In reading the claimant's submission it was noted that the
subject claims pertain only to the emulsifiable concentrate (EC). 
At page 4 of claimant's submission it states:  ". . . [t]he
ethofumesate which was imported and exported was then utilized to
produce the product Nortron Emulsifiable Concentrate ("Nortron
EC" or "EC") which is the end product sold in the United States. 
. . .This correction further is important as it clarifies that
the imported ethofumesate was exclusively utilized to produce
Nortron EC (as was the exported ethofumesate)."  This statement
was again confirmed by claimant's attorney during a telephone
conversation.  Therefore, any fungibility determination should be
limited to the Nortron EC.  The Lab concluded, and this office
agrees, that the crushed and uncrushed ethofumesate could be used
interchangeably in the EC.  Thus, the imported crushed
ethofumesate and the exported uncrushed ethofumesate are fungible
for drawback purposes.

HOLDING:

     The imported crushed ethofumesate and the exported uncrushed
ethofumesate are fungible for 19 U.S.C.  1313(j)(2) drawback
purposes.  This ruling is limited to the ethofumesate which is
used in the production of Nortron EC.  In the future, if the
claimant desires to submit drawback claims on the Nortron SC, a
fungibility determination will have to be made regarding said
product.

                                   Sincerely,




                                   John A. Durant, Director
                                   Commercial Rulings Division