June 3, 2005
DRA-4 RR:CR:DR 230890RDC
Edwin W. Van Ek, President,
C.J. Holt & Co., Inc.
466 Kinderkamack Road
Oradell, NJ 07649-1529
RE: E. I. du Pont de Nemours & Co.; Unused merchandise drawback; Commercial
interchangeability; 19 C.F.R. ?191.32(c); 19 U.S.C. ?1313(j)(2); spandex ? elastane yarn. monofilament coalesced yarn; Lycra
Dear Mr. Van Ek:
This is in response to your 2/25/2005 ruling request, on behalf of your client, E. I. du Pont de Nemours & Co. (Dupont), regarding the commercial interchangeability of imported and domestic spandex monofilament coalesced elastane yarn type 902C 100 ?decitex (dtex) or 90 denier, (trademark name “Lycra ”), for purposes of substitution,
unused merchandise drawback under 19 U.S.C. ? 1313(j)(2). We received the additional information requested on May 2, 2005.
This analysis should serve as a guideline and model for future determinations of ?commercial interchangeability for the other types of Lycra elastane yarn. Other ?domestic and imported types of Lycra elastane yarn meeting the same criteria
discussed below, that is, having the same product specifications, the same unique type number, the same denier or dtex, the same tariff classification and relative values, when substituted on a type for type and denier for denier or dtex for dtex basis, should also be deemed "commercially interchangeable" for purposes of substitution, unused merchandise drawback per ? 1313(j)(2). Accordingly, a separate ruling on each type ?and denier of Lycra elastane yarn is unnecessary.
Dupont states that it “imports and produces domestically to the same ?specification several types of Lycra elastane yarn which is a spandex monofilament
coalesced yarn. Each polymer type has a specific chemical composition.” Our ?research reflects that Lycra” is the trademarked name for the spandex (elastane) fiber
that Dupont developed and manufactures. Spandex or elastane is a long-chain synthetic polymeric fiber and referred to as a non-cellulosic, i.e., an entirely chemically based fiber. Strands of continuous filament fibers are twisted together to form a continuous filament yarn and coalesced yarn consists of filaments stuck together. ? is a thin, long, continuous strand of two-way stretch spandex fiber. Lycra
Specifically, Dupont requests a ruling as to the commercial interchangeability of ?“domestically produced Lycra spandex monofilament yarn type 902C 100 [d]tex ([or] ?90 [d]enier) and imported Lycra elastane monofilament yarn type 902C 100 [d]tex (90 [d]enier). The “C” in type 902C stands for “clear.” Type 902C 100 dtex (90 denier) ??Lycra will only be substituted for 902C 100 dtex (90 denier) Lycra. According to
Dupont, “the type refers to a specific chemistry.” Decitex or dtex represents the weight
in grams of 10,000 meters of yarn. Denier indicates the weight in grams of 9,000 ?meters of yarn. Dupont states that “[g]lobal production [of Lycra type 902C] conforms ?to” the specifications provided and that the buyers of Lycra type 902C will accept ?either the Lycra made in the U.S. or Lycra made outside the U.S. to fulfill an order for ?Lycra type 902C.
IMPORT ? As evidence of imported Lycra yarn type 902C, 90 denier, you have supplied the
; A printout of an entry summary filed via ABI (Automated Broker Interface), entry date 3/6/2000. This entry summary references “INV#A9200430” and reflects that 6,823 kilograms of “M/Filamnt,Syn.Elastomeric Yarn” was classified under subheading 5404.10.8005, HTSUS, and entered. The consignee is Dupont, Delaware. The exporting country is Switzerland and the country of origin is Great Britain. The value is declared.
; An invoice dated 2/4/2000, reflects Dupont order number “A92-00430” and
“Customer Order Reference CRL3026, R-0110.” The sale was made by Dupont
International S.A. (Dupont International), Switzerland, to Dupont, Delaware. The invoice is for 6,822.8 kilograms of “Lycra elastane yarn, type 902C 100 dtex Clear” which was shipped from The Netherlands to the U. S. The unit price and total price in U.S. dollars is stated.
; A packing list from Dupont International dated 2/3/2000, references “Dupont Order Number A9200430” and “Customer Order Number CRL3026” and “R-0110.” The list
states that 6,822.8 kilograms of “Lycra elastane yarn, type 902C 100 dtex Clear” from The Netherlands was destined for Dupont in Virginia.
EXPORT ?As evidence of exported Lycra yarn type 902C, 100 dtex or 90 denier, you have
; Invoice number “XT15-01083,” dated 1/15/2001, that shows 4,953.6 kilograms of
“Lycra type 902C, spandex monofil coalesced 100 dtex 90 Den” was sold by Dupont to Dupont International and shipped to Dupont Nederland B.V. in The Netherlands. The price charged in U.S. dollars is stated and the invoice states, “goods are of USA origin.”
The invoice reflects the supplier order number “LX-2989 Final P 01.”
; The export packing list from Dupont states “supplier order partial number: LX2989 001.” This list references 4,953.6 kilograms of “Lycra type 902C, spandex monofil
coalesced 100 dtex 90 Den.”
Also provided is a document titled “Lycra spandex yarn product specification” which references “yarn type 902C.” This document lists 10 ingredients and their ? . For six of the ingredients the respective weights for the imported and exported Lycra?weights stated are identical for the imported and exported Lycra. For the fourth ?ingredient listed, there is a difference in the exported and imported Lycra of 7/1000.
For the seventh and ninth ingredient, there is a difference of 2/1000.
? Whether the imported and domestic Lycra elastane yarn, type 902C is
commercially interchangeable for purposes of 19 U.S.C. ? 1313(j)(2) when substituted on a denier for denier or dtex for dtex basis?
LAW AND ANALYSIS:
Substitution, unused merchandise drawback is provided by 19 U.S.C. ?1313(j)(2), but the statute does not define “commercially interchangeable.” The CBP Regulations reflect the legislative history that explained the change from fungibility to commercial interchangeability as the standard for substitution. Section 191.32 provides:
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
(19 C.F.R. ? 191.32(c)). In Texport Oil Co. v. United States, (185 F.3d 1291 (Fed. Cir.
1999)) the Federal Circuit Court of Appeals (CAFC) discussed the meaning of “commercially interchangeable.” The CAFC concluded that commercially interchangeable is “an objective, market-based consideration of the primary purpose of
the goods in question.” (Id.) The CAFC explained:
Therefore, “commercially interchangeable” must be determined objectively
from the perspective of a hypothetical reasonable competitor; if a
reasonable competitor would accept either the imported or the exported
good for its primary commercial purpose, then the goods are
“commercially interchangeable” according to 19 U.S.C. ? 1313(j)(2).
(Id. at 1295). Thus, per the CAFC in Texport commercial interchangeability is
determined using an “objective standard.” Accordingly, an exported good is commercially interchangeable with an imported good if a buyer, in an arms’-length
transaction, would accept either good at the specified price for the purpose intended. In
order to determine if either good at the specified price for the purpose intended the relevant characteristics of the imported good with those characteristics of the specific exported good. Those pertinent characteristics include any governmental or industry standards applicable to the good, the tariff classification, part numbers if any, value, and any other important characteristics, for both the imported and exported good.
Governmental and Recognized Industry Standards
Industry consensus standards ensure that all products meeting a standard are used in the same manner, regardless of manufacturer. Under normal circumstances, materials that meet the same industry accepted standard can be used to produce the same products or utilized for the same purposes. These uses are normally stated in the standard. There is a governmental standard established by the Federal Trade Commission (FTC) that a fiber must meet in order to be traded as generic “spandex.” According to the FTC regulations, spandex is “A manufactured fiber in which the fiber-
forming substance is a long chain synthetic polymer comprised of at least 85 percent of ? is Dupont’s a segmented polyurethane.” (16 C.F.R. ? 303.7(k)). However, since Lycratrademarked name for its specific and proprietary formulations of spandex, there are no ?government or industry standards for Lycra.
With respect to the tariff classification, according to the entry summary the ?imported type 902C Lycra yarn of 100 dtex or 90 denier is classified under subheading 5404.10.8005, HTSUS, which provides for “Synthetic monofilament of 67 decitex or
more and of which no cross-sectional dimension exceeds 1mm; strip and the like (for example, artificial straw) of synthetic textile materials of an apparent width not exceeding 5 mm: monofilament: elastometric yarn.” According to the description of ?goods sold on the export invoice, “Lycra type 902C, spandex monofil coalesced 100
dtex 90 Den,” such goods also would be classified under subheading 5404.10.8005, HTSUS. The tariff classification criterion, therefore, has been met.
Based on the provided documents, Dupont does not use part numbers when ??buying and selling Lycra. Lycra yarn is a bulk commodity and is not assigned a part
number. It is used by textile manufacturers in combination with other fibers to produce ?yarns or fabrics. However, the evidence reflects that Lycra yarn is traded by specific
types, e.g., 902C, and specific deniers. The import invoice and packing list refer to “Lycra elastane yarn, type 902C 100 dtex Clear” and the export invoice and packing list refer to “Lycra type 902C, spandex monofil coalesced 100 dtex 90 Den.” Consequently, ?there is evidence that Lycra is bought and sold according to type and dtex.
Goods that are commercially interchangeable will have generally very similar values when sold at the same place, at the same time, to like buyers from like sellers. When the time or place of the sale or the buyers or sellers vary, goods that are commercially interchangeable may be traded for different prices. Accordingly, when
price paid and charged for purportedly commercially interchangeable goods are significantly different, it must be demonstrated that the difference is attributable to market forces or some circumstance other than a material difference between the imported and exported goods.
?, the import invoice is dated 2/7/2000 With regard to the instant type 902C Lycra
and is for the sale of 6,823 kilograms. The export invoice is dated 1/15/2001 and is for ?4,953.6 kilograms. The exported type 902C Lycra was sold for 89 percent of the cost ?of the imported type 902C Lycra. Dupont explains the difference in price as a product of the region where the material was made and the time difference between the ?transactions. The imported Lycra was made in Great Britain; the exported was of U.S. origin. This explanation is plausible given that there are eleven months between the transactions and the countries of origin are different.
Product Specifications ? Dupont states that the imported and domestically produced Lycra are made to ?the same specifications and that each Lycra type “has a specific chemical ?composition.” Dupont also states that “[g]lobal production [of Lycra type 902C]
conforms to” the chemical composition provided. Dupont provided the chemical ?compositions for the imported and exported Lycra spandex yarn type 902C. The ten
ingredients and their respective weights for the imported and domestically produced ?Lycra type 902C are given. The weights for six of the ingredients are identical for the ?imported and exported Lycra. There are minimal differences between the imported ?and domestically produced Lycra in the remaining four ingredients. The CBP
Laboratory and Scientific Services reviewed the specifications for type 902C and concluded that imported and domestic fibers meeting these specifications and of the same denier or dtex are the same commercial product.
Additional Relevant Factors
The spandex monofilament yarn at issue is identified using a unique trademarked ?name, i.e., Lycra, that defines a specific kind of spandex monofilament yarn. Only ?Dupont manufactures Lycra. The use of this unique trade name to identify this specific kind of spandex monofilament yarn when coupled with a “type,” e.g., 902C, and a ?specific dtex or denier, indicates that material identified as “Lycra” of a specific type
and denier, whether produced domestically or outside the U.S. is the same material.
After evaluating all the relevant criteria suggested by the legislative history and ?the additional relevant factors, we find that commercial interchangeability of Lycra ?902C 90 denier has been established because both the imported and domestic Lycra
902C 90 denier (1) are classifiable under subheading 5404.10.8005, HTSUS, which provides for “Synthetic monofilament of 67 decitex or more and of which no cross-
sectional dimension exceeds 1mm; strip and the like (for example, artificial straw) of synthetic textile materials of an apparent width not exceeding 5 mm: monofilament: elastometric yarn;” (2) have the same relative value; (3) have the same unique trade ?name, i.e., Lycra 902C 90 denier; (and 4) have essentially the same chemical composition.
? Based on the above determinations, we conclude that the imported and domestic Lycraspandex monofilament yarn type 902C 90 denier or 100 dtex are commercially interchangeable for purposes of the substitution, unused merchandise drawback law of 19 U.S.C. ?1313(j)(2).
This decision is limited to the specific facts set forth herein. If the terms of the import or export contracts vary from the facts stipulated to herein, this decision shall not be binding on the Customs Service as provided in 19 C.F.R. ?177.2(b)(1), (2) and (4) and 177.9(b)(1) and (2).
Myles B. Harmon, Director
Commercial Rulings Division