Approval for Drawback Successorship under 19 U.S.C. § 1313(s) on behalf of Indorama Ventures Oxide & Glycols LLC Covering Successorship from Old World Industries I, Ltd.

HQ H255105 March 7, 2017 DRA-1 OT:RR:CTF:ER H255105 ECG Matthew Anderson Charter Brokerage 22762 Westheimer Parkway Suite 530 Katy, TX 77450 Re: Approval for Drawback Successorship under 19 U.S.C. § 1313(s) on behalf of Indorama Ventures Oxide & Glycols LLC Covering Successorship from Old World Industries I, Ltd. Dear Mr. Anderson: This is in response to your letter dated June 18, 2014, concerning the approval for drawback successorship under 19 U.S.C. § 1313(s) for Indorama Ventures Oxide & Glycols LLC (“Indorama” or “successor”), and additional correspondence dated March 12, 2015. We note that 19 U.S.C. § 1313(s) applies to drawback claims made under 19 U.S.C. §§ 1313(b) and 1313(j)(2). In your submission, you state that you intend to claim drawback under 19 U.S.C. §§ 1313(b) and 1313(j)(2). We regret the delay in our response. FACTS: Old World Industries I, Ltd. (“OWI” or “predecessor”), a Texas limited partnership, was held by Old World Industries, LLC and Old World Management, Inc. Old World Industries, LLC owned all of OWI’s limited partnership interests, comprising 99.9% limited partnership interests. Old World Management, Inc. owned all of OWI’s general partnership interests, comprising 0.1% general partnership interests. In a Purchase Agreement, dated February 6, 2012, Indorama Ventures Public Company Limited, a company under the laws of Thailand, purchased all of the outstanding partnership interests in OWI from Old World Industries, LLC and Old World Management, Inc. Accordingly, Indorama Ventures Public Company Limited purchased OWI’s 99.9% limited partnership interests and 0.1% general partnership interests. Indorama Ventures Public Company Limited then entered two Assignments of Partnership Interest on April 3, 2012, pursuant to the terms of the Purchase Agreement. The first Assignment of Partnership Interest dictated that Indorama Ventures Public Company Limited direct Old World Management, Inc. to deliver its 0.1% general partnership interest in OWI to Indorama Ventures Investment LLC. The effect of this Assignment of Partnership Interest was that Indorama Ventures Investment LLC: 1) became the general partner of OWI; 2) became the sole and exclusive owner of OWI’s 0.1% general partnership interest; and 3) was assigned, transferred, and conveyed all of Old World Management, Inc.’s “right, title and interest in and to the properties (real and personal), capital, cash flow, distributions, profits and losses, and all other economic benefits” in OWI. The second Assignment of Partnership Interest dictated that Indorama Ventures Public Company Limited direct Old World Industries, LLC to deliver its 99.9% limited partnership interest in OWI to Indorama Ventures Capital LLC. The effect of this Assignment of Partnership Interest was that Indorama Ventures Capital LLC: 1) became the limited partner of OWI; 2) became the sole and exclusive owner of OWI’s 99.9% limited partnership interests; and 3) was assigned, transferred, and conveyed all of Old World Industries, LLC’s “right, title and interest in and to the properties (real and personal), capital, cash flow, distributions, profits and losses, and all other economic benefits” in OWI. After the two Assignments of Partnership Interest, OWI was held by Indorama Ventures Capital LLC as the limited partner with 99.9% limited partnership interests and Indorama Ventures Investments LLC as the general partner holding 0.1% general partnership interests. In a Restated Certificate of Formation, dated May 3, 2012, OWI’s name changed to Indorama Ventures (Oxide & Glycols) Ltd., effected by the Texas Secretary of State and executed by the new sole general partner, Indorama Ventures Investment LLC. Accordingly, Indorama Ventures (Oxide & Glycols) Ltd. was held by Indorama Ventures Capital LLC as the limited partner with 99.9% limited partnership interests and Indorama Ventures Investments LLC as the general partner holding 0.1% general partnership interests. In an Agreement and Plan of Merger, dated July 24, 2012, Indorama Ventures (Oxide & Glycols) Ltd., with Indorama Ventures Investment LLC as the sole general partner (holding 0.1% general partnership interests), merged into Indorama Ventures Capital LLC, the sole general partner (holding 99.9% limited partnership interests) of Indorama Ventures (Oxide & Glycols) Ltd. The surviving entity in the Agreement and Plan of Merger was named Indorama. Indorama also provided the Certificate of Merger, dated July 27, 2012, filled with the Delaware Secretary of State that shows the merger of Indorama Ventures (Oxide & Glycols) Ltd. and Indorama Ventures Capital LLC with Indorama as the surviving entity. Indorama made further certifications in its June 18, 2014, and March 12, 2015, letters, which are discussed below. ISSUE: Whether Indorama has established itself as the drawback successor to OWI pursuant to 19 U.S.C. § 1313(s). LAW AND ANALYSIS: Section 1313(s) of Title 19 sets forth the requirements for successorship. In relevant part, 19 U.S.C. § 1313(s)(1) provides that “[f]or purposes of section 1313(b), a drawback successor may designate imported merchandise used by the predecessor before the date of the succession as the basis for drawback on articles manufactured by the drawback successor after the date of succession.” See also 19 C.F.R. § 191.22(d)(1). Similarly, 19 U.S.C. § 1313(s)(2), provides that for purposes of § 1313(j)(2), a drawback successor may designate: (1) imported merchandise that the predecessor, before the date of succession, imported; or (2) imported merchandise, commercially interchangeable merchandise, or any combination of imported and commercially interchangeable merchandise for which the predecessor received, before the date of succession, from the person who imported and paid any duty due on the imported merchandise a certificate of delivery transferring to the predecessor such merchandise; as the basis for drawback on merchandise possessed by the drawback successor after the date of succession. See also 19 C.F.R. § 191.32(f)(1). A “drawback successor” is an entity to which another entity (referred to as the “predecessor”) has transferred by written agreement, merger, or corporate resolution all or substantially all of the rights, privileges, immunities, powers, duties, and liabilities of the predecessor; or the assets and other business interests of a division, plant, or other business unit of such predecessor, but only if in such transfer the value of the transferred realty, personalty, and intangibles (other than drawback rights, inchoate or otherwise) exceeds the value of all transferred drawback rights, inchoate or otherwise. 19 U.S.C. § 1313(s)(3); see also 19 C.F.R. §§ 191.22(d)(2) and 191.32(f)(2). In the instant case, the documents indicate that all of OWI’s general and limited partnership interests were purchased by Indorama Ventures Public Company Limited from Old World Management, Inc. and Old World Industries, LLC, respectively. After the purchase, the documents show that Indorama Ventures Public Company Limited directed the assignment of general and limited partnership interests, including the “right, title and interest in and to the properties (real and personal), capital, cash flow, distributions, profits and losses, and all other economic benefits,” to Indorama Ventures Investment LLC and Indorama Ventures Capital LLC, respectively. After the assignment, Indorama Ventures Investment LLC and Indorama Ventures Capital LLC became the general and limited partners of OWI, respectively. Furthermore, after the assignment, Indorama Ventures Investment LLC and Indorama Ventures Capital LLC were the sole and exclusive owners of OWI’s general and limited partnership interests, respectively. The documents then demonstrate that OWI’s name changed to Indorama Ventures (Oxide & Glycols) Ltd. with Indorama Ventures Investment LLC as the sole general partner. Furthermore, the documents then provide that Indorama Ventures (Oxide & Glycols) Ltd., whose sole general partner was Indorama Ventures Investment LLC, merged into Indorama Ventures Capital LLC, which already held 99.9% limited partnership interest in Indorama Ventures (Oxide & Glycols) Ltd., and that Indorama was the name of the surviving entity. Based upon an analysis of the provided documents, all of OWI’s interests and properties transferred from a purchase and assignment of interests to Indorama Ventures Investment LLC and Indorama Ventures Capital LLC which then merged to form a single surviving entity, Indorama. Accordingly, this merger combined in Indorama as the surviving entity all of the partnership interests and all “right, title and interest in and to the properties (real and personal), capital, cash flow, distributions, profits and losses, and all other economic benefits” in OWI, which had been renamed Indorama Ventures (Oxide & Glycols) Ltd. Therefore, we find that Indorama is the drawback successor to OWI pursuant to 19 U.S.C. § 1313(s)(3).  Additionally, certain certification and evidence are required to establish claims. Under 19 U.S.C. § 1313(s), either the predecessor or the drawback successor (who shall also certify that it has the predecessor's records) must certify that the transferred merchandise was not and will not be claimed by the predecessor, and the predecessor did not and will not issue any certificate to any other person that would enable that person to claim drawback. The implementing regulations also require that the predecessor or successor must certify in an attachment to the drawback claim that the successor is in possession of the predecessor's records that are necessary to establish the right to drawback under the law and regulations with respect to the imported and/or commercially interchangeable merchandise and the predecessor or successor must certify in an attachment to the drawback claim, that the predecessor has not and will not designate, nor enable any other person to designate, the imported and/or commercially interchangeable merchandise as the basis for drawback. See 19 C.F.R. §§ 191.22(d)(3)(i)-(ii) and 191.32(f)(3)(i)-(ii). In instances in which assets and other business interests of a division, plant, or other business unit of a predecessor are transferred, the predecessor or successor must specify, and maintain supporting records to establish, the value of the drawback rights and the value of all other transferred property. See 19 C.F.R. §§ 191.22(d)(3)(iii) and 191.32(f)(3)(iii). Further, the written agreement, merger, or corporate resolution, and the records and evidence, must be retained by the appropriate entity for three years from the date of payment of the related claim and are subject to review by CBP upon request. See 19 C.F.R. §§ 191.22(d)(3)(iv) and 191.32(f)(3)(iv). In its letter dated June 18, 2014, Indorama certified that it is in possession of the predecessor’s records and that the transferred merchandise was not and will not be claimed by the predecessor and that the predecessor did not and will not issue any certificate to any other person that would enable that person to claim drawback. Accordingly, it has made the required certifications per 19 U.S.C. § 1313(s)(4). Additionally, Indorama certified in its letter dated March 12, 2015, that: 1) it is in possession of the predecessor’s records that are necessary to establish the right to drawback under the law and regulations with respect to the transferred product; 2) the predecessor has not designated and will not designate, nor enable any other person to designate, such merchandise or product as the basis for drawback; 3) it is in possession of the supporting records to establish the value of the drawback rights and other transferred property; and 4) it will retain for a period of three years from the date of payment of any related claims, the written agreement, merger, or corporate resolutions and the records and evidence establishing the transfer of rights to Indorama. Accordingly, Indorama has made the certifications required in 19 C.F.R. §§ 191.22(d)(3) and 191.32(f)(3). Please be aware that this response does not address whether the exported merchandise is commercially interchangeable with the designated imports under 19 U.S.C. § 1313(j)(2) nor whether the merchandise qualifies for substitution drawback under 19 U.S.C. § 1313(b). Those determinations would need to be made before the ultimate approval of any drawback claim under 19 U.S.C. §§ 1313(b) or 1313(j)(2). Additionally, please note that Indorama must attach the certifications contained in 19 C.F.R. §§ 191.22(d)(3)(i)-(ii) and 191.32(f)(3)(i)-(ii) to each drawback claim filed involving the subject merchandise. HOLDING: Based on the above, Indorama is the successor of OWI for purposes of 19 U.S.C. § 1313(s). However, before drawback will be paid under 19 U.S.C. §§ 1313(b) or 1313(j)(2), Indorama will need to prove that all of the other requirements under these provisions have been met. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” Sincerely, Monika R. Brenner, Acting Chief Entry Process and Duty Refunds Branch