Protest 2002-96-100022; substitution unused merchandise drawback; canola oil; rapeseed oil; commercial interchangeability; 19 U.S.C. 1313(j)(2)

HQ 227581 June 23, 1999 DRA-4-RR:CR:DR 227581 IOR CATEGORY: Drawback Port Director U.S. Customs Service 423 Canal Street New Orleans LA 70130-2341 Attn: Drawback Branch RE: Protest 2002-96-100022; substitution unused merchandise drawback; canola oil; rapeseed oil; commercial interchangeability; 19 U.S.C. 1313(j)(2) Dear Sir: The above-referenced protest was forwarded to this office for further review. Our decision follows. FACTS: The protest is of the liquidation of three drawback claims filed on September 16, 1994 (Claim 1), October 12, 1994 (Claim 2) and October 25, 1994 (Claim 3). The drawback claims were liquidated without benefit of drawback October 20, 1995, on the grounds that the merchandise is not commercially interchangeable, and in reliance on a Customs Laboratory memorandum dated June 28, 1995. In support of the protest, the protestant contends that the claims comply with all drawback requirements. Claim 1 (No.407-xxxx282-7) According to documents in the file and Customs records, the protestant was the importer of the designated imported merchandise in Claim 1 (the entry summary for the November 12, 1991 importation is for 4,009,449kg (4,009.449 MT) of “rape or colza oil&fraction, oth”, imported on the JO ELM, classified under subheading 1514.10.90104, Harmonized Tariff Schedules of the United States (HTSUS), valued at $1,639,865 ($408.00 and $410.00 per metric ton (MT), with $122,989.88 in duty; the entry summary for the February 1, 1992 importation is for 3,000,000kg (3,000 MT) of “rape or colza oil&fraction, oth”, imported on the ROSBORG, classified under subheading 1514.10.90104 HTSUS, valued at $1,222,500 ($407.50/MT) (according to a submission made by letter dated December 8, 1997, the quantity of merchandise designated for drawback is 1,597,842kg), with $91,687.50 in duty; and the entry summary for the December 8, 1991 importation is for 4,000,000kg (4,000 MT) of “rape or colza oil&fraction, oth”, imported on the STOLT OSPREY, classified under subheading 1514.10.90104 HTSUS, valued at $1,674,000 ($418.50/MT), with $125,550.00 in duty). According to the CF 7511, Notice of Exportation of Articles with Benefit of Drawback, for Claim 1, the exported merchandise upon which drawback was claimed was 21,180,234 lbs (9,607,291kg or 9607.291 MT) (the CF7511 has the amount in kilograms as 9,670,291, an apparent typographical error as the correct amount is stated on the attached invoice and the quantity in pounds is the same on the CF 7511 and the invoice) of “CRUDE DEGUMMED CANOLA OIL”, classified under Schedule B No. 1514.100000, with a value of $58,662.00, exported from New Orleans, Louisiana; on the M/T LUNDINA, destined for China. The CF 7511 does not include a date of exportation; however, the certificate of origin dated September 30, 1994 indicates that the entire quantity of merchandise was shipped on board September 30, 1994, and the tanker bill of lading indicates the entire quantity of merchandise was clean on board September 30, 1994. According to the bill of lading, the protestant was the shipper of the merchandise; however the ship was chartered by the purchaser of the exported merchandise. Documents in the file for the November 12, 1991 importation include: four purchase bulletins for the purchase of a total of 7000 MT of crude degummed rapeseed oil at $410.00/MT for 3000MT, $408.00/MT for 2000 MT, $406.00/MT for 1000 MT, and $412.50/MT for 1000 MT; an invoice to the protestant for 4,009MT of Crude W/German EEC Rapeseed oil at $408.00 and $410.00/MT; tanker bills of lading describing the imported merchandise as EEC Crude Degummed Rapeseed oil in Bulk; and certificate of analysis of the merchandise discharged from the JO ELM into storage tanks in New Orleans on November 21-22, 1991. According to a December 19, 1997 letter from protestant’s representative, only a portion of the JO ELM shipment was off-loaded in New Orleans. Documents in the file for the February 1, 1992 importation include: a purchase bulletin for the purchase of 3000 MT of crude degummed rapeseed oil, at $407.50/MT; an invoice to the protestant for 3,000MT of crude degummed rapeseed oil at $407.50/MT; and certificate of analysis of the merchandise discharged from the ROSBORG, and into storage tanks on February 7-8, 1992. Documents in the file for the December 8, 1991 importation include: a purchase bulletin for the purchase of 4000 MT of EC crude degummed rapeseed oil, at $418.50/MT; an invoice to the protestant for 4,000MT of EEC degummed rapeseed oil, for $418.50/MT shipped on the STOLT OSPREY; and certificate of analysis of the merchandise discharged from the STOLT OSPREY in Avondale, and into storage tanks on December 10-11, 1991. With respect to the export, the documentation submitted includes: an invoice from the protestant to a French company, referring to contract No. G-68556-0 for the sale of 9,607.291 MT of U.S. Crude Degummed Canola Oil at $615.20/MT; a sale contract No. G-68556-0 between protestant and the French company, for 10,000 MT of crude degummed canola oil at $615.20/MT C&F “one main China port”; a warehouse receipt indicating the receipt of 10,200 MT of crude degummed canola oil in storage in Avondale for the account of protestant; a September 30, 1994 Certificate of Quality for the exported merchandise; a September 30, 1994 Certificate of Origin for the merchandise indicating that on September 30, 1994, 9,607.291 MT of Crude Degummed Canola Oil were shipped, destined for China; a certificate of quantity and weight of merchandise loaded onto the M/T LUNDINA from the storage tanks indicated on the warehouse receipt, and copies of the Tanker Bill of Lading. Claim 2 (No. 407-xxxx032-3) According to documents in the file and Customs records, the protestant was the importer of the designated imported merchandise in Claim 2 (the entry summary for the January 24, 1992 importation is for 2,000,000kg (2000MT) of “rape or colza oil&fraction, oth”, imported on the STOLT OSPREY, classified under subheading 1514.10.90104, HTSUS, valued at $800,000 (invoice and purchase order price is $430.00/MT, but $60,000.00 was shown as nondutiable charges on CF 7501), with $60,000.00 in duty; the entry summary for the February 1, 1992 importation is for 3,000,000kg (3000MT) of “rape or colza oil&fraction, oth”, imported on the ROSBORG, classified under subheading 1514.10.90104, HTSUS, valued at $1,222,500 ($407.50 per metric ton) (an attachment to the Drawback entry itself, CF 7539, shows the quantity imported on the entry as 1,402,158 kg. valued at $571,379.00 which is the difference between 3,000,000kg and 1,597,842kg (the amount claimed on Claim one for the February 1, 1992 entry according to calculations submitted to Customs by letter dated December 8, 1997), with $91,687.50 in duty; the entry summary for the February 12, 1992 importation is for 2,901,527kg (2901.527MT) of “rape or colza oil&fraction, oth”, imported on the KILCHEM ADRIATIC, classified under subheading 1514.10.90104, HTSUS, valued at $1,146,103 ($395.00 per metric ton), with $85,957.73 in duty; and the entry summary for the March 31, 1992 importation is for 19,350,063kg (19,350.063MT) (3,696,315kg of which was designated for drawback in this claim) of “rape or colza oil&fraction, oth”, imported on the MAGIC LADY, classified under subheading 1514.10.90104, HTSUS, valued at $7,736,555 ($394.00 to $402.00 per metric ton), with $580,241.63 in duty). According to the CF 7511, for Claim 2, the exported merchandise upon which drawback was claimed was 9,504,885 kg (9504.885 MT) of “CRUDE DEGUMMED CANOLA OIL”, classified under Schedule B No. 1514.100000, with a value of $5,931,048, exported from New Orleans, Louisiana, on the MT CHARIOT, destined for China. The exporter is identified as the protestant. The date of exportation on the CF 7511 is October 20, 1994, and the Shipper’s Export Declaration (SED) indicates a date of exportation of October 20, 1994 for the entire quantity, and the Tanker Bills of Lading indicate that 4,752.442 MT and 4,752.443MT was clean on board October 20, 1994. Documents in the file for the January 24, 1992 importation include: an FDA May Proceed Notice for 2000MT of Crude Rapeseed Oil for the entry; an invoice for 2000MT Crude Degummed rapeseed Oil, at $430 MT ($400 FOB and $30.00 freight); a purchase bulletin for 2000 MT of Crude Degummed Rapeseed Oil at $430.00 MT; a tanker bill of lading identifying the merchandise as European Crude Rapeseed Oil; and Certificates of Analysis of the import dated February 7, 1992, for the merchandise discharged from the STOLT OSPREY and discharged into storage tanks, February 5-6, 1992. Documents in the file for the February 1, 1992 importation include: a purchase bulletin for 3000MT of Crude Degummed Rapeseed Oil at $407.50 MT; an invoice for 3000 MT of Crude Degummed Rapeseed Oil at $407.50 MT; Certificates of Analysis for the import dated February 10, 1992 for the merchandise discharged from the ROSBORG into storage tanks on February 7-8, 1992; and a bill of lading describing the merchandise as EEC Crude Degummed Rapeseed Oil. Documents in the file for the February 12, 1992 importation include: a purchase bulletin for 2900 MT of Crude Degummed Rapeseed Oil at $395.00 MT; an invoice for 2898.697 MT of rapeseed oil at $395.00 MT; a bill of lading describing the merchandise as EEC Crude Degummed Rapeseed Oil; and Certificates of Analysis for the import dated February 17, 1992, for the merchandise discharged from the KILCHEM ADRIATIC into storage tanks on February 15, 1992. Documents in the file for the March 31, 1992 importation include: six purchase bulletins for the purchase of a total of 19,500 MT of Crude Degummed Rapeseed Oil at $394.00 MT to $402.00 MT; invoices to the protestant for Crude Rapeseed Oil at $394.00 MT to $402.00 MT; a Bill of Lading identifying the merchandise as EEC Crude Degummed Rapeseed Oil; and Certificates of Analysis for the import dated April 6, 1992, for merchandise in storage tanks after discharge from the MAGIC LADY. With respect to the export, additional documentation submitted includes: a Purchase Bulletin which shows the protestant as the buyer of the merchandise, with FOB terms; a purchase confirmation of the protestant having purchased 10,000MT of U.S. Crude Degummed Canola Oil from a U.S. seller, FOB Avondale, Louisiana; a warehouse receipt indicating the receipt of 9,500MT of crude degummed canola oil in storage in Avondale, for the account of protestant; a Sale Bulletin for protestant’s sale of 10,000MT of U.S. Crude Degummed Canola oil at $565.00 MT to a French company; a Sale Contract No. G-68608-0, between the protestant and the French company for the sale of 10,000MT “U.S. Credie [sic] Degummed Canola Oil” at $565.00 MT, “FOB pumped in Avondale”; an amendment to contract G-68608-0, changing the quantity terms from 10,000MT to 9,504.885MT; an invoice from protestant to the French company for 9,504.885 MT Crude Degummed Canola Oil at $565.00 MT; two Bills of Lading for the shipment of 9,504.885 MT Crude Degummed Canola Oil from New Orleans, Louisiana to Shanghai, China, according to which the vessel is chartered by the French company; a contract for a sale by the French company to an Australian company of “Any Origin Crude Rapeseed Oil or Crude Degummed Canola Oil, with the terms “at $624.00 per MT Cost and Freight one main port China”; and Certificates of Analysis of the exported merchandise loaded onto the vessel from the storage tanks indicated on the warehouse receipt. Claim 3 (No. 407-xxxx039-8) The merchandise designated for drawback in Claim 3 consists of the merchandise imported on the MAGIC LADY, the documentation for which is discussed under Claim 2, above. With regard to the export, according to the CF 7511, for Claim 3, the exported merchandise upon which drawback was claimed was 10,232,292 kg (10,232.293 MT) of “Crude Degummed Canola Oil”, classified under Schedule B No. 1514.100000, with a value of $6,318,440, exported from New Orleans, Louisiana, on the MT PETROBULK RAINBOW, destined for China. The exporter is identified as the protestant. The date of exportation on the CF 7511 is October 31, 1994. The SED indicates the date of exportation is November 1, 1994, and the Tanker Bills of Lading indicate that 9,148.580 MT of merchandise was clean on board on October 31, 1994, and 1,083.713 MT of merchandise was clean on board on November 1, 1994 (the total weight is 10,232.293 MT), and that the vessel was chartered by the protestant. With respect to the export, the additional documentation submitted includes: a warehouse receipt for 10,500 MT of crude degummed canola oil in storage in Avondale, for the account of protestant; a Sale Bulletin for the sale of 10,000 MT U.S. Crude Degummed Canola Oil, at $624.00 MT to a French company; a Sale Contract No. G-68601-0, between the protestant and the French company, for the sale of 10,000 MT of Crude Degummed Canola Oil, at $624.00 MT, C&F, one main China port; an invoice from the protestant to the French company for a total of 10,232.293 MT Crude Degummed Canola Oil at $620.00/MT; and Certificates of quality of the exported merchandise. ISSUE: Is there authority to grant the protest of denial of drawback in this case? LAW AND ANALYSIS: Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. §1514 and 19 CFR Part 174). The drawback entries were liquidated on October 20, 1995, and the protest was filed on January 1, 1996. We note that the refusal to pay a claim for drawback is a protestable issue (see 19 U.S.C. §1514(a)(6)). In regard to the drawback entries, we note that they were all filed with Customs just before the exportations occurred. The drawback statute provides, in 19 U.S.C. §1313(r), that a drawback entry and all applicable documents shall be filed "within 3 years after the date of exportation" of the articles on which drawback is claimed. See also 19 CFR 191.51. Unlike premature protests, Customs has not addressed the premature filing of drawback entries. While a drawback entry may be filed prior to the export date, it is impossible to file a complete entry prior to the date of exportation, as the evidence of exportation set forth in 19 CFR 191.72 would not be available. Under the amended drawback regulations, which were not in effect at the time the subject claims were filed, 19 CFR 191.52(a), Customs should have rejected the entry at the time it was filed, as incomplete, because no evidence of exportation could have been provided, as required in 19 CFR 191.51. However, 19 CFR 191.52(a) and (b), allows the completion and perfection of a claim, which, in any event did occur in this case, in a timely manner. In contrast, the premature filing of a protest is a nullity. A protest is a complaint against an act of Customs. If there is no final act, the complaint is premature. Section 1514(c)(3) provides that protests are to be filed within ninety days after but not before the protestable act. A claim for drawback is not based on any act by Customs and the statute, section 1313(r), does not contain words of limitation, similar to "but not before". Consequently, while Customs can and should reject claims that are incomplete on their face, as here, the premature filing is not a nullity as is a premature protest. Under 19 U.S.C. §1313(j)(2), as amended, drawback may be granted if there is, with respect to imported dutypaid merchandise, any other merchandise that is commercially interchangeable with the imported merchandise and if the following requirements are met. The other merchandise must be exported or destroyed within three 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 either be 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 drawback statute was substantively amended by section 632, title VI  Customs Modernization, Pub. L. No. 103182, the North American Free Trade Agreement Implementation ("NAFTA") Act (107 Stat. 2057), enacted December 8, 1993. The foregoing summary of section 1313(j)(2) is based on the law as amended by Public Law 103182. Title VI of Public Law 103182 took effect on the date of enactment of the Act (section 692 of the Act). The amendments to the drawback law (19 U.S.C. 1313) are applicable to any drawback entry made on or after the date of enactment as well as to any drawback entry made before the date of enactment if the liquidation of the entry is not final on the date of enactment (H. Report 103361, 103d Cong., 1st Sess., 132 (1993); see also provisions in the predecessors to title VI of the Act; H.R. 700, 103d Cong., 1st Sess., section 202(b); S. 106, 103d Cong., 1st Sess., section 202(b); and H.R. 5100, 102d Cong., 2d Sess., section 232(b)). Compliance with the Customs Regulations on drawback is mandatory and a condition of payment of drawback (United States v. Hardesty Co., Inc., 36 CCPA 47, C.A.D. 396 (1949); Lansing Co., Inc. v. United States, 77 Cust. Ct. 92, C.D. 4675; see also, Guess? Inc. v. United States, 944 F.2d 855, 858 (1991) "We are dealing [in discussing drawback] with an exemption from duty, a statutory privilege due only when the enumerated conditions are met" (emphasis added)). Before its amendment by Public Law 103182, the standard for substitution was fungibility. House Report 103361, 103d Cong., 1st Sess., 131 (1993) contains language explaining the change from fungibility to commercial interchangeability. According to the House Ways and Means Committee Report, the standard was intended to be made less restrictive, i.e., "the Committee intends to permit 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, prior to their amendment in 1998 (19 C.F.R. §191.2(l)). 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 industry standards, part numbers, tariff classification, and relative values. The Senate Report for the NAFTA Act (S. Rep. 103189, 103d Cong., 1st Sess., 8185 (1993)) contains similar language and states that the same criteria should be considered by Customs in determining commercial interchangeability. The amended Customs Regulations, 19 CFR 191.32(c), provide that in determining commercial interchangeability: ...Customs shall evaluate the critical properties of the substituted merchandise and in that evaluation factors to be considered include, but are not limited to, Governmental and recognized industrial standards, part numbers, tariff classification and value. In order to determine commercial interchangeability, Customs adheres to the Customs regulations which implement the operational language of the legislative history. The best evidence whether those criteria are used in a particular transaction are the claimant’s transaction documents. Underlying purchase and sales contracts, purchase invoices, purchase orders, and inventory records show whether a claimant has followed a particular recognized industry standard, or a governmental standard, or any combination of the two, and whether a claimant uses part numbers to buy, sell, and inventory the merchandise in issue. The purchase and sale documents also provide the best evidence with which to compare relative values. Also, if another criterion is used by the claimant to sort the merchandise, the claimant’s records would show that fact which will enable Customs to follow the Congressional directions. Claim 1 (No.407-xxxx282-7) The tariff classification for the imports (1514.10.90104, HTSUS) and the export Schedule B number (1514.10) were the same . The classification numbers on the SED are Schedule B numbers. The Schedule B number is a commodity number from Schedule B, a Statistical Classification of Domestic and Foreign Commodities Exported from the United States, published by the U.S. Department of Commerce, Bureau of the Census. The first six digits of the commodity numbers in chapters 1 through 97 of both the HTSUS and the Schedule B are identical with respect to descriptions and codes. Schedule B, Introduction. For most commodities classified in chapters 1 through 97, including the subject commodity, exporters may report either the HTSUS number or the Schedule B number. Id. ; HTSUS General Statistical Note 5. Therefore, for purposes of §1313 (j), in this case Customs will accept the Schedule B number on the SED for the purpose of determining whether the exported merchandise is classified under the same provision as the imported designated article. From the transaction documents provided, such as the purchase orders, contracts and invoices, it does not appear that part numbers are applicable. The value of the imported merchandise in Claim 1 ranges from $407.50 to $418.50/MT, compared to $615.20/MT for the exported merchandise. The value of the export is 47% to 51% greater than the value of the import, which is a material difference in value. Attachment D to the protest is stated to be a chart of the market value per pound of soybean oil from 1986 through 1995. The source and content of the chart is not identified on the chart itself. The chart supports a 51% higher market price in February, 1994, than in February, 1992. The protestant refers to average market values for 1992 and 1994. In each year, particularly, 1994, an average market value is not probative, as the market value fluctuated significantly. In this case, the imports occurred between November 12, 1991 and February 1, 1992, and the export occurred on September 30, 1994. The chart supports, at most a 43% difference between the lowest value during the import period and the highest value for the export. There is a second chart with U.S. prices for soy/sun/cotton/corn oils (again the source is not identified). For soybean oil, the chart supports a 53% higher market price at the time of the export than at the time of the import. The protestant explained the price differences and it’s reliance on the market prices of soybean oils and other oils, as opposed to only canola oil: [T]he value of vegetable oil in the United States is a function of the stock level of oil in the U.S., the stock levels of oil outside the U.S., the total demand for oil, and expectations for future stock levels. Being an agricultural product, weather is also a major determinant in the supply and, therefore, the price of the commodity. As indicated in the submitted material, the price of soybean oil moved substantially from one year to another, as did the prices of other vegetable oils. The prices of the other oils are closely correlated to those of soybean oil in that oil makes up some 65% of all fats and oils used in this country. Along with the other oils, canola/rapeseed oil is a soybean oil substitute in products containing vegetable oil.... Therefore movements in the price of canola/rapeseed oil are closely linked to movements in the price of soybean oil. The protestant included some copies of labels from packaged foods which indicate that the ingredients include "vegetable oil (contains one or more of the following: corn, canola, soybean or sunflower oil)". In the October 14, 1998 submission, the protestant did include a chart reflecting the average prices of canola oil from 1983 through July, 1998. The chart was published by a Canadian organization and the data is expressed in Canadian dollars per metric ton. The chart of Canadian average prices for canola oil supports a 46% higher market price at the time of the export than at the time of the import. As the values of the imports and export are consistent with the market value figures provided, we find that the change in value is due to the time of the transactions. There are recognized industrial standards for rapeseed/canola oil. With regard to any distinction between canola oil and rapeseed oil, in a memorandum dated January 14, 1998, the Customs office of Laboratories and Scientific Services (“LSS”) stated: The term canola is a generally accepted term in commerce to describe low erucic acid rapeseed oil. In fact, the term “low erucic acid rapeseed oil” is not as well known as the term “canola.” The January 14, 1998 and an August 31, 1998 memoranda were prepared for purposes of a Harmonized System Committee proposal to use the term "canola" in the Harmonized System nomenclature. In the August 31, 1998 memorandum, LSS stated that “canola” and “low erucic acid rape” are the same, and: The low erucic acid (LEA) rapeseeds as well as products derived from these seed have acquired great popularity since they are intended for food applications. We note that the high erucic acid (HEA) type has been suspected to lack of nutritional value, and are commonly used in industrial or non-food applications. ...[C]anola is the “label” name given to seed, oil, and meal from rapeseed crops low in erucic acid.... The use of the label name has become so popular that [it] is now used like a generic name for this type of rapeseed. Although we have found several technical references that use the term “canola”, the vast majority uses the phrase “low erucic acid rapeseed”. Based on the foregoing, we conclude that “canola” and “rapeseed” do not describe the same product, and that “canola” and “low erucic acid rapeseed” do describe the same product. With regard to general industry standards used to distinguish between canola oil and rapeseed oil, the January 14, 1998 LSS memorandum stated: ...[T]he world standard for erucic acid content has dropped to almost 1% erucic acid content, therefore, the 2% cutoff point is sufficiently high enough to include any high erucic (1% to 2%) acid canola. In our opinion, products containing 1% to 2% erucic acid may also be considered canola. It is interesting to note that five years ago 5% erucic acid was the world standard. As can be seen, geneticists are shooting for a 0% erucic acid content which we believe should be obtained within the next five years. We have had two sets of standards submitted to us, FEDIOL standards and NIOP standards. FEDIOL standards are European standards set by a federation of European vegetable oil processors, and NIOP are U.S. standards from the National Institute of Oilseed Products. The FEDIOL standards we have are undated, and the NIOP standards are from 1996-1997. The LSS has concluded, in a memorandum dated May 5, 1997, and it is apparent from the standards and the specifications contained in the transaction documents, that both the import and export sales were not made in accordance with either the NIOP or FEDIOL standard. As a reference point the FEDIOL (for crude degummed rapeseed oil) and NIOP (for crude degummed low erucic rapeseed oil (LEAR/Canola)) standards are as follows: FEDIOL NIOP Free fatty acid max 1.75% 1% max Moisture & impurities max 0.4% 0.3% max Flashpoint min 250?F(121?C) 150?C Refined bleached color n/a 15 yellow;1.5 red max Chlorophyll n/a 30 PPM max Sulfur n/a 10 PPM max Phosphorus max 300PPM 200 PPM max Erucic acid max 5.0% 2% max However, because, except in one instance, the transaction documents did not refer to either the FEDIOL or NIOP standards, we are not applying them for purposes of determining commercial interchangeability. Instead, with the exception of the instance where FEDIOL quality was specified, we are comparing the specifications and actual characteristics of the imports and the exports. The standards on two of the four Purchase Bulletins for the merchandise imported on the JO ELM are described as: 1) EC Origin Crude Degummed Rapeseed Oil “FEDIOL Quality Specs”; and 2) CDRS FFA max 2%, max. .50 M&I, Erucic Acid max 2%, and phosphorus max 300 PPM. The standards on the other two of the four Purchase Bulletins for the merchandise imported on the JO ELM are described as: EC Crude Degummed Rape Oil and FOSFA 53 (FOSFA 53 provides for an FOB contract and does not make reference to quality specifications relevant to the issues herein). (In the submission dated October 14, 1998, the protestant explained that FOSFA (Federation of Oils, Seeds and Fats Associations) specifications were developed to establish standards for the shipment of oils and fats, and do not set forth standards for edible oils). The standards on the Purchase Bulletin for the merchandise imported on the ROSBORG are described as: crude degummed RSO-- FFA max 2.0%, M&I max .5%, phos max 300 ppm, and erucic acid max 2.0%. The standards on the Purchase Bulletin for the merchandise imported on the STOLT OSPREY are described as: EC Rapeoil Crude Degummed FFA max 2, M&I max 0.5, erucic acid max 2, lecithin expressed as phos 300 ppm. The standards set forth in the contract for the sale of the exported merchandise are described as: crude degummed canola or rapeseed oil, FFA max 2%, M&I max .5%, erucic acid max 2%, phosphorus max 300 ppm and chlorophyll max 35 ppm. With the exception of the two purchase orders for the JO ELM importation which contained no specifications, and the one purchase order for the JO ELM importation which referred to FEDIOL specifications, all of the specifications for the exports and imports are the same, except for the export chlorophyll specification, for which the imports had no specification. Compared to the other specifications for the imports and export, the FEDIOL specifications are narrower as to FFA, and M&I, and broader as to erucic acid. The U.S. testing of the imports indicates that all of the imports had free fatty acid of less than 2%, M&I of less than .5%, erucic acid of less than 2%, phosphorus of less than 300 ppm and chlorophyll of less than 35 (not all of the tests had results for chlorophyll, although all of the imports were tested for chlorophyll in at least one test). The testing of the export indicates that it had free fatty acid of less than 2%, M&I of less than .5%, erucic acid of less than 2%, phosphorus of less than 300 ppm, and chlorophyll of less than 35 ppm. Therefore, the export and the imports all fell within the specifications set forth in the purchase and sales transaction documents, which were the same (except for the chlorophyll specification which the imports met according to the foreign testing results, and except for the merchandise which was the subject of purchase orders for the JO ELM import which referred to either FEDIOL specifications or no specifications). In addition, based on the test results, the export and all of the imports met the narrower FEDIOL specifications, and all of the merchandise imported on the JO ELM for which there were no specifications met the specifications set forth for the imports and export. Finally, the merchandise imported on the JO ELM, which was purchased based on FEDIOL specifications, also meets the specifications of the other imports and the export. Because the imports and export were purchased and sold on the basis of the same specifications, with the exception of the merchandise imported on the JO ELM which was the subject of purchase orders for which there were no specifications, or for which reference was made to FEDIOL specifications, the imports and export in Claim 1 meet the industrial standard criteria for commercial interchangeability. We find that the industrial standard criteria for commercial interchangeability is also met for the merchandise imported on the JO ELM, which was the subject of the two purchase orders for which there were no specifications, and for which the purchase order set forth FEDIOL specifications, as the test results indicate that the merchandise did meet the same specifications as for the export. In summary, the imported and exported merchandise meet the HTSUS, relative value, and industrial standard criteria for commercial interchangeability, and we find that the merchandise is commercially interchangeable. We also find that the evidence shows that the protestant had possession of the exported merchandise, on the basis that the exported merchandise was obtained from the storage tanks in which the protestant had received the merchandise, and that the documentation submitted supports that the substituted merchandise was exported. Therefore, the protest with respect to Claim 1 should be granted.  Claim 2 (No. 407-xxxx032-3) The tariff classification for the imports (1514.10.90104, HTSUS) and the export Schedule B number (1514.10) were the same. From the transaction documents provided, such as the purchase orders, contracts and invoices, it does not appear that part numbers are applicable. The value of the imported merchandise in Claim 2 ranges from $394.00 to $407.50/MT, compared to $565.00/MT for the exported merchandise. The contract between the protestant and the French company is for a sale of product at $565.00/MT. The value of the export is 39% to 43% greater than the value of the import, which is a material difference in value. The soybean oil chart in attachment D to the protest supports a difference in value, between the first quarter of 1992 and October 20, 1994, of 43%. The second chart with various oils, supports a difference in the value of soybean oil for the same period, of 53%, as in Claim 1. The chart of Canadian average prices for canola oil supports a 23% to 24% higher market price at the time of the export than at the time of the import. The fluctuations in the values of the imports and export are consistent with the market value for other oils, but are greater than those pertaining to canola oil specifically on the Canadian chart. The import and export are not disqualified from meeting the relative value criteria. With regard to the industrial standards, the specifications on the Purchase Bulletin for the merchandise imported on the STOLT OSPREY are: Crude Degummed RSO, FFA 2.0, M&I 0.5 max, and phosphorus 300 PPM. The specifications on the Purchase Bulletin for the merchandise imported on the ROSBORG are: Crude Degummed RSO, FFA max 2.0%, M&I max .5%, phosphorus max 300 ppm and erucic acid max 2.0%. The specifications on the Purchase Bulletin for the merchandise imported on the KILCHEM ADRIATIC are: Crude Degummed RSO and FOSFA 53. The specifications on the six Purchase Bulletins for the merchandise imported on the MAGIC LADY are described in six various ways: 1) Crude Degummed RSO EEC Origin, Lecithin as phosphorus max [illegible because cut off of copy], FFA max 2%, M&I max 0.5% and Erucic Acid max 2%; 2) Crude Degummed RSO European Origin, FFA 2.0 max, M&I 0.5 max, phosphorus 300 ppm max and Erucic Acid 2% max; 3) Crude Degummed RSO, FOSFA quality; 4) Crude Degummed RSO EEC Origin, FFA max 2%, M&I 0.5%, Erucic Acid Max 2%, and Lechitin as phosphorus 300 ppm max; 5) Crude Degummed RSO EEC Origin, FFA max 2%, M&I max 0.5%, erucic acid max 2% and lechitin as phosphorus max 300; and 6) Crude degummed RSO European Origin, Lechitin as phosphorus 300, FFA max 2%, M&I 0.5% and erucic acid max 2%. There are specifications provided for the domestic purchase of the merchandise to be exported. In addition, there are two sets of specifications pertaining to the exported merchandise that are relevant to the industrial standard criteria. The purchase order and confirmation of contract no. G-68608-0, for the sale of the merchandise between the protestant and the French company, provide the following specifications for U.S. crude degummed canola oil: FFA max 1%, M&I max 0.3%, flash point min. 150?, sulfur max 10 ppm, erucic acid max. 2%, phosphorous max. 200 ppm, and chlorophyll basis 30, max. 35 ppm with 1% discount if 31-35 ppm. The contract for the sale of the merchandise, after it was sold by the protestant, between the French company and the Australian company, has the same specifications as those for the imports (except it also has a specification for chlorophyll) (and except for the one purchase bulletin of the MAGIC LADY import that did not set forth specifications). In this instance, one set of specifications for the export is the same as those for the imported merchandise, except that for the export, specifications exist for chlorophyll, and one set of specifications, the sale by the protestant, is narrower than those for the imported merchandise. We note that the summary of the test results prepared by the protestant lists the broader contract specifications for the export merchandise from the second sale as opposed to the narrower specifications upon which the protestant’s sale was based. The U.S. testing of the imports indicates that all of the imports, but one tank on the MAGIC LADY, had free fatty acid of less than 2%, and some of the imports had FFA of less than 1%. The imports all had M&I of less than 0.5%, and all but three tests (two on the MAGIC LADY and the one test for the ROSBORG) showed M&I of 0.3% or less. The imports all tested for erucic acid of less than 2%, and phosphorus of less than 300 ppm (all but three tests of the merchandise on the MAGIC LADY resulted in phosphorous of 200ppm or less). As to the flash point, none of the imports met the flashpoint specification of a minimum of 150?C, as they all tested at 250?F (121.1?C). The foreign testing upon exportation showed that all of the imports, had chlorophyll of less than 30 ppm, except for the STOLT OSPREY, for which there was no chlorophyll test. The testing of the export indicates that it had free fatty acid of less than 1%, M&I of less than .3%, erucic acid of less than 2%, phosphorus of less than 200ppm, and chlorophyll of less than 30. According to the test results, with the exception of the one test result, out of 15, of the MAGIC LADY import (in one tank the FFA was 2.20%) the imports and export all meet the broader specifications for the second sale of the export, but not all of the imports meet the narrower specifications upon which the protestant’s sale of the merchandise was based. However, because the exportation occurred on the basis of the second contract, we find that as the specifications for that export sale were the same as the specifications for the importations, the imports and exports were purchased and sold on the basis of the same specifications. We find that the imports and exports in Claim 2 meet the industrial standard criteria for commercial interchangeability. In summary, the imported and exported merchandise meet the HTSUS and industrial standard criteria for commercial interchangeability, and we find that the merchandise is commercially interchangeable. We find that the protestant did possess the export prior to exportation, as the exported merchandise was obtained from the same storage tanks into which the protestant had received the merchandise, and that the documentation submitted supports that the substituted merchandise was exported. Therefore, the protest with respect to Claim 2 should be granted. Claim 3 (No. 407-xxxx039-8) The tariff classification for the imports (1514.10.90104, HTSUS) and the export Schedule B number (1514.10) were the same. From the transaction documents provided, such as the purchase orders, contracts and invoices, it does not appear that part numbers are applicable. The value of the imported merchandise in Claim 2 ranges from $394.00/MT to $402.00/MT, compared to $617.49/MT. $617.49/MT is the amount paid according to the CF 7511 and the SED, as opposed to the $620.00 and $624.00/MT amounts stated in the contracts and invoices. The value of the export is 53% to 57% greater than the value of the import, which is a material difference in value. The soybean oil chart in attachment D to the protest supports a difference in value, between March 31, 1992 and October 31, 1994, of 47%. The second chart with various oils, supports a difference in the value of soybean oil for the same period, of 49%. The chart of Canadian average prices for canola oil supports a 24% higher market price at the time of the export than at the time of the import. We note that in November, 1994, the average price for canola oil increased drastically, to an amount 72% higher than the value of canola oil in March, 1992. Given that the export occurred on the last day of October, we find that the values of the imports and export are consistent with the market value figures provided. As stated in the analysis of Claim 2, the specifications on the six Purchase Bulletins for the merchandise imported on the MAGIC LADY are described in six various ways: 1) Crude Degummed RSO EEC Origin, Lecithin as phosphorus max [illegible because cut off of copy], FFA max 2%, M&I max 0.5% and Erucic Acid max 2%; 2) Crude Degummed RSO European Origin, FFA 2.0 max, M&I 0.5 max, phosphorus 300 ppm max and Erucic Acid 2% max; 3) Crude Degummed RSO, FOSFA quality; 4) Crude Degummed RSO EEC Origin, FFA max 2%, M&I 0.5%, Erucic Acid Max 2%, and Lecithin as phosphorus 300 ppm max; 5) Crude Degummed RSO EEC Origin, FFA max 2%, M&I max 0.5%, erucic acid max 2% and lecithin as phosphorus max 300; and 6) Crude degummed RSO European Origin, Lecithin as phosphorus 300, FFA max 2%, M&I 0.5% and erucic acid max 2%. The specifications set forth in the contract for the sale of the export are for Crude Degummed Canola Oil with FFA max 2%, M&I max 0.5%, Erucic Acid max 2%, phosphorus max 300ppm and chlorophyll max 35 ppm. With the exception of the one of six purchase bulletins which did not provide for any specifications (3 above), the purchase and sale documents have the same specifications. Testing indicates that the export and all of the imports both fell within those specifications. Because the import and export were purchased and sold on the basis of the same specifications, and if not, testing shows that the specifications were met, we find that the imports and export in Claim 3 meet the industrial standard criteria for commercial interchangeability. In summary, the imported and exported merchandise meet the HTSUS, relative value, and industrial standard criteria for commercial interchangeability, and we find that the merchandise is commercially interchangeable. We also find that the evidence shows that the protestant had possession of the exported merchandise, on the basis that the merchandise was exported on a vessel chartered by the protestant, and that the documentation submitted supports that the substituted merchandise was exported. Therefore, the protest with respect to Claim 3 can be granted. HOLDING: We find that there is authority to grant the protest of the denial of drawback with respect to all three claims, as we find that the imported merchandise which is the subject of those claims is commercially interchangeable with the exported merchandise. The protest is granted. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make this decision available to Customs personnel, and to the public via the Customs Home Page on the World Wide Web, the Freedom of Information Act, and other public distribution channels. Sincerely, John Durant, Director Commercial Rulings Division