CBP Finds Nan Ya Chemicals Interchangeable for Drawback Purposes Despite Price Differences

A Nan Ya Plastics chemical that saw a large swing in price from import to export can be considered interchangeable for drawback purchases, said CBP's Entry Process and Duty Refunds Branch in a Dec. 21 decision recently made public. Specifically, CBP found the chemicals met the criteria for being interchangeable under the drawback statute, 19 U.S.C. Section 1313(j)(2).

Nan Ya Plastics, represented by DHL Drawback Services, makes, buys and resells monoethylene glycol, a liquid chemical used in the production of polyester and antifreeze, in various overseas markets. Nan Ya provided sample import and substituted export product documents and certificates of analysis for the imported and substituted products. The sample documents showed the price of import to be about 35.2 percent higher than the price of export.

Interchangeability Criteria

The drawback statute says drawback may be claimed for the export or destruction of imported duty-paid merchandise that is substituted for commercially interchangeable and unused imported merchandise if certain requirements are satisfied. CBP looks at relative values of the imported and substituted merchandise. CBP has previously found that a difference in prices wouldn't affect the commercial interchangeability decision if the difference isn't based on the quality of the product. The sample documents show a nearly five-month span between import and export, said CBP. Nan Ya explains the price difference as due to the volatility in the market, providing industry pricing reports that showed a price decline in Asian monoethylene glycol, said CBP. The evidence show the price fluctuation shouldn't "preclude a determination of commercial interchangeability."

Governmental and recognized industry standards are also among the factors CBP considers in determining interchangeability and while such standards don't exist for monoethylene glycol, the use of product specifications can be use as evidence for interchangeability. CBP's laboratory said the specifications provided by Nan Ya of the imported and exported products sufficiently described the products, which would be identical, and therefore meet the governmental and industry standards criterion, said CBP.

CBP also considers the tariff classifications involved. Both the import invoice and Automated Export System documents show the classification to be 2905.31.00, “acyclic alcohols and their halogenated, sulfonated, nitrated or nitrosated derivatives.” Therefore the classification standard is met, CBP said. The agency also considered part numbers and identifiers. Nan Ya product nomenclature identifies the product as a "Monoethylene glycol " and/or "MEG" and they are used in the import/export documentation. This shows part numbers aren't used in the sale of the product and thus didn't factor into the interchangeability question.