## Facts

- Texport Oil Company imported petroleum products and later exported petroleum products (including heating oil and jet fuel).
- Texport filed eight “unused merchandise” substitution drawback claims under 19 U.S.C. § 1313(j)(2), asserting the exported products were commercially interchangeable with the duty-paid imports.
- U.S. Customs denied drawback, concluding the imports and exports were not commercially interchangeable and disputing whether certain non-duty charges could be refunded.
- The Court of International Trade (CIT) granted drawback on seven shipments and denied one shipment, applying a standard that emphasized commercial acceptance and consistency between product descriptions and transactional documents.
- The CIT also held the Merchandise Processing Fee (MPF) and Harbor Maintenance Tax (HMT) were imposed “because of” importation and thus eligible for drawback.
- The United States appealed the grants of drawback and the MPF/HMT rulings; Texport cross-appealed the denial on the eighth shipment.

## Issues

1. What legal standard governs whether merchandise is “commercially interchangeable” under 19 U.S.C. § 1313(j)(2), and did the CIT apply the correct standard to Texport’s shipments?
2. Is the MPF a “duty, tax, or fee imposed under Federal law because of … importation” eligible for drawback under § 1313(j)(2)?
3. Is the HMT a “duty, tax, or fee imposed under Federal law because of … importation” eligible for drawback under § 1313(j)(2)?

## Decision

- The Federal Circuit held the CIT’s construction of “commercially interchangeable” was legally erroneous, vacated the interchangeability determinations, and remanded for reconsideration under the correct standard.
- The court affirmed that MPF is imposed because of importation and is eligible for drawback under § 1313(j)(2).
- The court reversed the ruling that HMT is eligible for drawback, holding HMT is not imposed because of importation.
- Disposition: vacated in part, affirmed in part, reversed in part, and remanded.

## Legal Principles

- Under 19 U.S.C. § 1313(j)(2), drawback may be allowed for unused merchandise exports when the exported merchandise is “commercially interchangeable” with the imported merchandise.
- “Commercially interchangeable” requires a market-substitutability inquiry focused on whether commercial actors would treat one product as a substitute for the other in commerce; it is not limited to marketplace acceptance or document-description matching alone.
- Technical evidence is not categorically required, but relevant proof may include product specifications, tariff classification, standards, price, and usage, as they bear on commercial substitutability.
- MPF is a fee imposed because of importation and is eligible for drawback under § 1313(j)(2).
- HMT is tied to port use rather than importation as such and is not eligible for drawback under § 1313(j)(2).

## Conclusion

The Federal Circuit required a broader, market-based standard for “commercial interchangeability” in substitution drawback claims, remanding for shipment-by-shipment reconsideration, while separately holding that MPF qualifies for drawback because it is imposed due to importation, but HMT does not because it is imposed based on port use.


Texport Oil Co. v. United States, 185 F.3d 1291 (Fed. Cir. 1999)