[Code of Federal Regulations]
[Title 19, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 19CFR191.32]

[Page 539-541]
 
                        TITLE 19--CUSTOMS DUTIES
 
  CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY
 
PART 191--DRAWBACK--Table of Contents
 
                 Subpart C--Unused Merchandise Drawback
 
Sec. 191.32  Substitution drawback.

    (a) General. Section 313(j)(2) of the Act, as amended (19 U.S.C. 
1313(j)(2)), provides for drawback on merchandise which is commercially 
interchangeable with imported merchandise if the commercially 
interchangeable merchandise is exported, or destroyed under Customs 
supervision, before the close of the 3-year period beginning on the date 
of importation of the imported merchandise, and before such exportation 
or destruction, the commercially interchangeable merchandise is not used 
in the United States (see paragraph (e) of this section) and is in the 
possession of the party claiming drawback.
    (b) Requirements. (1) The claimant must have possessed the 
substituted merchandise that was exported or destroyed, as provided in 
paragraph (d)(1) of this section;

[[Page 540]]

    (2) The substituted merchandise must be commercially interchangeable 
with the imported merchandise that is designated for drawback; and
    (3) The substituted merchandise exported or destroyed must not have 
been used in the United States before its exportation or destruction 
(see paragraph (e) of this section).
    (c) Determination of commercial interchangeability. 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. A party may seek a nonbinding predetermination of commercial 
interchangeability directly from the appropriate drawback office. A 
determination of commercial interchangeability can be obtained in one of 
two ways:
    (1) A formal ruling from the Duty and Refund Determination Branch, 
Office of Regulations and Rulings; or
    (2) A submission of all the required documentation necessary to make 
a commercial interchangeability determination with each individual 
drawback claim filed.
    (d) Time limitations. For substitution unused merchandise drawback:
    (1) The claimant must have had possession of the exported or 
destroyed merchandise at some time during the 3-year period following 
the date of importation of the imported designated merchandise; and
    (2) The merchandise to be exported or destroyed to qualify for 
drawback must be exported, or destroyed under Customs supervision, 
before the close of the 3-year period beginning on the date of 
importation of the imported designated merchandise.
    (e) Operations performed on substituted merchandise. In cases in 
which an operation or operations is or are performed on the substituted 
merchandise, the performing of any operation or combination of 
operations, not amounting to manufacture or production under the 
provisions of the manufacturing drawback law, on the commercially 
interchangeable substituted merchandise is not a use of that merchandise 
for purposes of this section.
    (f) Designation by successor; 19 U.S.C. 1313(s). (1) General rule. 
Upon compliance with the requirements of this section and under 19 
U.S.C. 1313(s), a drawback successor as defined in paragraph (f)(2) of 
this section may designate either of the following as the basis for 
drawback on merchandise possessed by the successor after the date of 
succession:
    (i) Imported merchandise which the predecessor, before the date of 
succession, imported; or
    (ii) Imported and/or commercially interchangeable merchandise which 
was transferred to the predecessor and for which the predecessor 
received, before the date of succession, a certificate of delivery from 
the person who imported and paid duty on the imported merchandise.
    (2) Drawback successor. A ``drawback successor'' is an entity to 
which another entity (predecessor) has transferred, by written 
agreement, merger, or corporate resolution:
    (i) All or substantially all of the rights, privileges, immunities, 
powers, duties, and liabilities of the predecessor; or
    (ii) The assets and other business interests of a division, plant, 
or other business unit of such predecessor, provided that the value of 
the transferred assets and interests (realty, personality, and 
intangibles, exclusive of the drawback rights) exceeds the value of such 
drawback rights, whether vested or contingent.
    (3) Certifications and required evidence. (i) Records of 
predecessor. The predecessor or successor must certify in an attachment 
to the drawback claim that the successor is in possession of the 
predecessor's records which are necessary to establish the right to 
drawback under the law and regulations with respect to the imported and/
or commercially interchangeable merchandise.
    (ii) Merchandise not otherwise designated. 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

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imported and/or commercially interchangeable merchandise as the basis 
for drawback.
    (iii) Value of transferred property. 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.
    (iv) Review by Customs. The written agreement, merger, or corporate 
resolution, provided for in paragraph (f)(2) of this section, and the 
records and evidence provided for in paragraph (f)(3)(i) through (iii) 
of this section, must be retained by the appropriate party(ies) for 3 
years from the date of payment of the related claim and are subject to 
review by Customs upon request.

[T.D. 98-16, 63 FR 11006, Mar. 5, 1998; 63 FR 15288, Mar. 31, 1998]