Trade court - Substitution for imported merchandise in drawback claim 

April 29: The U.S. Court of International Trade today held that an oil importer had failed to produce evidence in support of its claim for drawback, finding a lack of evidence supporting a substitution of other types of oil as being commercially interchangeable with the imported merchandise. BP Oil Supply Co. v. United States, Slip op. 14-48 (CIT April 29, 2014)

Read the trade court’s 19-page decision [PDF 539 KB]


Between 1994 and 1996, the plaintiff imported almost 42 million barrels of crude petroleum oil of various types. Customs (the predecessor to CBP) liquidated the entries under HTSUS for “Petroleum oils, crude, Testing 25 degrees API[2] or more” in subheading 2709.00.20, HTSUS.

During the following two years, the plaintiff exported identical quantities of Alaskan North Slope (ANS) crude petroleum—in this case, the “substitute merchandise.” Then, in 1998 and 1999, the plaintiff filed 27 substitution unused merchandise drawback requests with Customs, seeking drawback on the duties, environmental taxes, and merchandise processing fees that it had paid on the imported merchandise.

Customs denied the claims for drawback on each entry, citing the plaintiff’s failure to establish that the substitute merchandise was commercially interchangeable with the imported merchandise.

Before the trade court, the plaintiff argued that API gravity category alone sufficed as a matter of law to demonstrate commercial interchangeability between different crude oil types. The trade court disagreed and entered judgment for the government.

The trade court concluded that the plaintiff did not produce evidence demonstrating that the imports in question (except for the three types) were commercially interchangeable with the substitute merchandise and did not produce evidence demonstrating that the substitute merchandise is not used.

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich

(312) 665-1022

Andrew Siciliano

(631) 425-6057

John L. McLoughlin

(267) 256-2614

Todd R. Smith

(949) 885-5617

Luis A. Abad

(212) 954-3094

Amie Ahanchian

(202) 533-3247

Or your local KPMG Trade & Customs professional.

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