[Federal Register Volume 62, Number 13 (Tuesday, January 21, 1997)]
[Proposed Rules]
[Pages 3082-3149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1048]
[[Page 3081]]
_______________________________________________________________________
Part II
Department of the Treasury
_______________________________________________________________________
Customs Service
_______________________________________________________________________
19 CFR Parts 7, 10, et al.
Drawback; Proposed Rule
Federal Register / Vol. 62, No. 13 / Tuesday, January 21, 1997 /
Proposed Rules
[[Page 3082]]
DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 7, 10, 145, 173, 174, 181, 191
RIN 1515-AB95
Drawback
AGENCY: Customs Service, Department of the Treasury.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This document proposes to revise the Customs Regulations
regarding drawback. The document proposes to revise the regulations to
implement the extensive and significant changes to the drawback law
contained in the Customs modernization portion of the North American
Free Trade Agreement Implementation Act; to change some administrative
procedures involving manufacturing and unused merchandise drawback, for
the purpose of expediting the filing and processing of drawback claims
thereunder, while maintaining effective Customs enforcement and control
over the drawback program; and to generally simplify and improve the
editorial clarity of the regulations.
DATE: Comments must be received on or before March 24, 1997.
ADDRESS: Comments (preferably in triplicate) must be submitted to U.S.
Customs Service, ATTN: Regulations Branch, Franklin Court, 1301
Constitution Avenue, NW., Washington, DC 20229, and may be inspected at
the Regulations Branch, 1099 14th Street, NW., Suite 4000, Washington,
DC.
FOR FURTHER INFORMATION CONTACT:
Operational aspects: Maryanne Carney, Chief, Drawback and Records
Branch, New York, (212-466-4575)
Legal aspects: Paul Hegland, Office of Regulations and Rulings, (202-
482-7040)
SUPPLEMENTARY INFORMATION:
Background
Drawback is a refund or remission, in whole or in part, of a
Customs duty, internal revenue tax, or fee. There are a number of
different kinds of drawback authorized under law, including
manufacturing and unused merchandise drawback. The statute providing
for specific types of drawback is 19 U.S.C. 1313, the implementing
regulations for which are contained in part 191, Customs Regulations
(19 CFR part 191).
The North American Free Trade Agreement Implementation Act, Pub. L.
103-182 (December 8, 1993), specifically Title VI thereof, popularly
known as the Customs Modernization Act, significantly amended certain
Customs laws. In particular, section 632 of Title VI effected extensive
and major amendments to the drawback law, 19 U.S.C. 1313. Also, section
622 of Title VI authorized the establishment of a ``Drawback Compliance
Program'' as well as specific civil monetary penalties for false
drawback claims.
Public Law 103-182 also approved and implemented the North American
Free Trade Agreement (NAFTA). Section 203 of the Public Law provides
special drawback provisions for exports to NAFTA countries. NAFTA
drawback is separately provided for in part 181 of the Customs
Regulations (19 CFR part 181). Drawback and other duty-deferral
programs are addressed in subpart E of part 181. General drawback
provisions under part 191 and the NAFTA drawback regulations in part
181 contain substantial differences (e.g., the ``lesser of''
calculation versus full drawback, same condition versus unused
merchandise drawback, etc.) Separate claims are required for drawback
claims governed by NAFTA (see 19 CFR 181.46 and 191.0a).
Accordingly, this document proposes regulatory revisions
principally to part 191 in implementation of the statutory changes. In
addition, this document proposes to generally rearrange and revise part
191 largely in an effort to further simplify and improve the editorial
clarity of those regulatory procedures primarily dealing with the
manufacturing and unused merchandise provisions, these being the most
commonly used types of drawback. Several administrative changes are
being proposed as well with respect to the regulatory procedures
governing these provisions, for the purpose of expediting the filing
and processing of drawback claims thereunder, while ensuring that
Customs has the necessary enforcement information to maintain effective
administrative oversight over the drawback program. Also, minor
conforming changes occasioned by the general reorganization of part 191
are made with respect to other parts of the Customs Regulations (19 CFR
parts 7, 10, 145, 173, 174 and 181).
Specifically, with regard to part 173, a minor change is proposed
whereby a party requesting the reliquidation of a consumption entry
pursuant to 19 U.S.C. 1520(c)(1) would be required to state whether to
the best of such party's knowledge, the entry is the subject of a
drawback claim, or whether such entry was referenced on a certificate
of delivery or a certificate of manufacture and delivery and thus could
be made the subject of drawback. Likewise, a change is proposed to part
174 whereby a party filing a protest must state whether, to the best of
such party's knowledge, the consumption entry whose liquidation is
protested is the subject of a drawback claim, or whether it was
referenced on a certificate of delivery or a certificate of manufacture
and delivery and thus could be the subject of a drawback claim. A
corresponding change is also proposed in part 191, whereby a drawback
claimant would be required to state whether, to the best of such
claimant's knowledge, any consumption entry identified or designated as
a basis for drawback is either under protest or the subject of a
request for reliquidation (19 U.S.C. 1520(c)(1)). In this regard, when
accelerated payment of drawback has been paid to a claimant on the
basis of an entry of imported merchandise which has not been finally
liquidated, and the duties on the import entry are increased or
decreased in such final liquidation, drawback must be increased or
reduced accordingly on liquidation of the drawback entry.
Proposed changes to part 191 other than the major changes described
below include the addition of new definitions for purposes of part 191
in the section listing such definitions. New definitions for the
following terms are set forth in the proposed regulations: Certificate
of delivery; Certificate of manufacture and delivery; Act; Commercially
interchangeable merchandise; Designated merchandise; Destruction;
Exported article; Exportation; General manufacturing drawback ruling;
Manufacture or production; Possession; Relative value; Specific
manufacturing drawback ruling; and Substituted merchandise. Most of
these definitions incorporate into the regulations terms which are used
for drawback. The definition of commercially interchangeable
merchandise is necessary because of the change (described elsewhere in
this background) from fungibility as the standard for substitution to
commercial interchangeability in the former same condition substitution
drawback law (now unused substitution drawback law, in 19 U.S.C.
1313(j)(2)). Similarly, the definition of possession is added because
possession of the exported merchandise is a requirement for drawback
under section 1313(j)(2) and because the statute includes defining
language. The definition of exportation is based on the definition of
that term currently in 19 CFR 101.1(k), but notice is also given that
an exportation may be deemed to have occurred: (1) Under the
[[Page 3083]]
Foreign Trade Zones Act (see 19 U.S.C. 81c(a)) when zone-restricted
status is taken; (2) or under 19 U.S.C. 1309, if goods subject to
drawback are used for certain aircraft or vessel supplies. The
definition of manufacture or production is based on court cases and
administrative rulings interpreting that phrase (see Anheuser-Busch
Brewing Association v. The United States, 207 U.S. 556 (1908); United
States v. International Paint Co., Inc., 35 CCPA 87 (1948); et al.). In
regard to the latter case, it is noted that a manufacture or
production, for drawback purposes, occurs even if the processing
operation does not change the general use for which the merchandise may
be used (e.g., as paint) but does change the particular use for which
the merchandise may be used (e.g., as anti-fouling paint designed for
preventing marine growth on the bottom of ships).
In addition, two current definitions, those of fungible merchandise
and substitution drawback, are modified. In the case of the former, the
modification makes it clear that the definition applies to both
merchandise and articles, but does not change the definition of
fungibility. In the case of the latter, instead of defining
substitution drawback (referring only to substitution manufacturing
drawback), as is currently true, the definition defines substituted
merchandise, and does so for purposes of each of the subsections of 19
U.S.C. 1313 authorizing such substitution.
In regard to the definition of fungibility, for drawback purposes
``merchandise'' is that which is imported, or substituted when
substitution is permitted, and an ``article'' is that which is
manufactured or produced, as provided for in the drawback law, from
merchandise. Also in regard to the definition of fungibility, although
the standard for substitution under unused (formerly same condition)
drawback (19 U.S.C. 1313(j)(2)) is no longer fungibility (it is now
commercial interchangeability, as discussed below), the definition of
fungibility is retained in the proposed regulations because fungibility
continues to be a significant concept in the proposed regulations
(i.e., when merchandise or articles are identified by accounting
method; see proposed Sec. 191.14). The definition of fungibility was
first added to the Customs drawback regulations for this purpose and
before enactment of the substitution provision for 19 U.S.C. 1313(j)(2)
(see T.D. 83-212, 19 CFR 191.2(l)).
Also related to definitions for drawback purposes, the current
regulations (Sec. 191.3) provide that duties subject to drawback
include all ordinary Customs duties and marking duties assessed under
19 U.S.C. 1304(c). It is proposed to define ``ordinary Customs
duties'', as used in this provision, to include finally liquidated
duties paid on an entry, or withdrawal from warehouse, for consumption
and estimated duties paid on such an entry or warehouse, provided that
the application and waiver currently provided for in Sec. 191.71 are
filed. Also defined as such ``ordinary Customs duties'' would be
voluntary tenders of the unpaid amount of lawful ordinary Customs
duties and any other payment of duties related to an entry, or
withdrawal from warehouse, for consumption, such as payment of a demand
for duties under 19 U.S.C. 1592(d), under certain enumerated
conditions. This latter proposed addition to the definition of
``ordinary Customs duties'' is consistent with Customs current
administrative practice (see Customs Service Decision 85-50 (1985)).
The enumerated conditions referred to are that liquidation of the
import entry or withdrawal must have become final prior to the payment
to Customs, that the payment must be specifically identified as being
of duties for a specific entry or withdrawal, and that the drawback
entry in which the import entry or withdrawal is designated may not
itself have been finally liquidated. In the case of voluntary tenders
and other payments of duty, procedures are proposed for a written
request and waiver by the drawback claimant and any other party
responsible for the other payments of duties similar to the current
procedures for the payment of drawback on estimated duties.
Other minor proposed changes are that a named officer or any other
individual legally authorized to bind a corporation may sign drawback
documents, instead of only those named officers. This is consistent
with current regulations regarding Customs business (see 19 CFR 111.3;
see also 19 U.S.C. 1641(b)(1)). Correspondingly, the regulations on so-
called (in the current regulations) general or specific ``contracts''
are proposed to be changed so that only the names of the persons who
are authorized by regulation to sign drawback documents and who will
sign such documents are listed.
(In regard to the above-referenced general or specific drawback
``contracts'', as discussed in detail below, it is proposed to change
the terminology for these procedures, from ``specific drawback
contracts'' to ``specific manufacturing drawback rulings'' and from
``general drawback contracts'' to ``general manufacturing drawback
rulings'' and to set out the formats for applying for the specific
manufacturing drawback rulings, and the general manufacturing drawback
rulings, in Appendices to part 191 of the Customs Regulations. The
remainder of the background to this document uses the proposed new
terms (i.e., ``specific manufacturing drawback ruling'' is used instead
of ``specific drawback contract'' and ``general manufacturing drawback
ruling'' is used instead of ``general drawback contract'').)
Also in regard to general manufacturing drawback rulings, it is
proposed to require that a description of the merchandise and articles
covered by the ruling be submitted with the information required for
letters of notification of intent to operate under a general ruling,
unless such information is specifically provided in the particular
general manufacturing drawback ruling. It is proposed to modify the
regulations for both general and specific rulings for manufacturing
drawback so that, consistent with Customs treatment of corporations for
drawback purposes (see Moberly v. United States, 4 Cust. Ct. 91, C.D.
294 (1940), and C.S.D. 89-12 (1989)), when a separately-incorporated
subsidiary of a parent corporation is engaged in manufacture or
production for drawback, the subsidiary is the proper party to give
notice of its intent to operate under, or apply for, the general or
specific ruling and cannot operate under any ruling issued in favor of
the parent corporation. Finally, in regard to general and specific
rulings for manufacturing drawback, it is proposed to provide that they
will remain in effect indefinitely, unless no drawback claim or
certificate of manufacture and delivery is filed under the ruling for a
period of 5 years. If no such drawback claim or certificate is filed
for 5 years, the ruling would automatically terminate following the
publication of a notice to that effect in the Customs Bulletin.
Currently, a drawback ``contract'' may remain in effect for 15 years
unless a written request is filed to renew the ``contract''. This
change would reduce unnecessary paperwork for drawback claimants and
Customs.
Also among changes to part 191 not listed below are proposed
modifications to the subpart of part 191 regarding drawback on supplies
for certain vessels and aircraft (current subpart I; proposed subpart
K). It is proposed to add to the regulation regarding a composite
(monthly) notice of lading of fuel laden on vessels or aircraft as
supplies that the fuel included in such a notice includes fuel laden
for flights or voyages between the contiguous U.S. and Hawaii, Alaska,
[[Page 3084]]
or any U.S. possessions, consistent with the applicability of the
underlying statute (19 U.S.C. 1309). Also, consistent with the changes
to the Exporter's Summary Procedure (ESP) (i.e., to make that procedure
an alternative, instead of a privilege; see below) and an April 17,
1978, administrative ruling, it is proposed to modify these regulations
to make it clear that the ESP may be used for drawback under this
subpart and that if the ESP is used, the applicable requirements must
be complied with.
The major changes to part 191 necessitated by statute are addressed
below, following which the major administrative changes made to part
191 are outlined.
Manufacturing Drawback
Under the direct identification manufacturing drawback law, 19
U.S.C. 1313(a), upon the exportation of articles manufactured or
produced with the use of imported, duty-paid merchandise, 99% of the
duty so paid may be refunded as drawback. Under substitution
manufacturing drawback, 19 U.S.C. 1313(b), if imported, duty-paid
merchandise and any other merchandise (whether imported or domestic) of
the same kind and quality are used in the manufacture or production of
articles, then upon the exportation of such articles, 99% of the duty
so paid on the imported merchandise may be refunded as drawback,
notwithstanding that none of the exported articles was manufactured
with the imported merchandise.
Section 632 of the Customs Modernization Act (hereinafter section
632) amended section 1313 (a) and (b) to permit drawback on articles
destroyed under Customs supervision, in lieu of being exported. In
addition, it is made clear that for drawback to accrue, the articles
manufactured or produced cannot be used in the United States prior to
their exportation or destruction.
The proposed regulations provide for a contract between the
principal and agent when such a relationship is claimed to exist for
purposes of substitution manufacturing drawback. The person who asserts
that it is the manufacturer or producer by virtue of a principal-agency
agreement under this section must establish that there was a contract
between the principal and agent specifying the items in
Sec. 191.9(c)(1) (i) through (vi). The person asserting this
relationship has the burden of providing satisfactory evidence to
establish the above. The question of the existence of such a contract
is an evidentiary question. Of course, the terms of a written contract
are always easier to establish than those of an oral contract.
Principal-agency principles, in the drawback context, are used for
drawback purposes to meet the ``one manufacturer'' requirement in 19
U.S.C. 1313(b) (i.e., the requirement that the imported merchandise and
the substituted merchandise must be used in a manufacture or production
by the same person). With the use of principal-agency principles for
drawback, the principal in such a relationship is treated as the
manufacturer or producer when the agent performs that function as agent
of the principal. The principal does not complete a certificate of
delivery for merchandise transferred to the agent (because the
principal, in effect, would be treated as transferring the merchandise
to itself). The agent would be required to furnish a certificate of
manufacture and delivery for the manufactured articles, relating to the
designated or substituted merchandise and identifying the owner for
whom the processing was conducted (i.e., to document the manufacturing
or processing operation). However, such a certificate of manufacture
and delivery would not assign the potential drawback rights to the
principal (because, by virtue of the relationship, the agent would not
have those rights to transfer; the rights would have remained in the
principal).
Rejected Merchandise Drawback
Section 632 also amended the rejected merchandise drawback law, 19
U.S.C. 1313(c). Under section 1313(c), drawback is allowable upon the
exportation of merchandise which is found not to conform to sample or
specifications, or which is shipped without the consent of the
consignee. Such merchandise previously had to be returned to Customs
custody prior to exportation, generally within 90 days after its
release from Government custody unless Customs extended this period.
As amended by section 632, section 1313(c) extends the period for
the return of merchandise to Customs custody to 3 years, permits
destruction of the merchandise under Customs supervision in lieu of
exportation, and allows drawback if the merchandise is determined to
have been defective at the time of its importation without reference to
purchase specifications or samples.
Unused Merchandise Drawback
Formerly, under 19 U.S.C. 1313(j)(1), drawback was allowable on the
exportation, or destruction under Customs supervision, of imported
merchandise which was not used in the United States before exportation
or destruction, and which was in the same condition at the time of
exportation or destruction as it was when imported. Under the
substitution provision, 19 U.S.C. 1313(j)(2), a similar drawback was
allowable if other (fungible) merchandise was instead exported, or
destroyed under Customs supervision, provided that before exportation
or destruction, the fungible merchandise was not used in the United
States, was in the possession of the party claiming drawback, and was
in the same condition at the time of exportation or destruction as was
the imported merchandise when imported.
Section 632 liberalized these provisions in a number of ways.
First, the requirement has been eliminated that the exported or
destroyed merchandise be in the same condition as the imported
merchandise when imported. Now it only must have been unused. For
example, chemicals which deteriorated after importation are not in the
same condition as the imported merchandise when imported and were not
eligible for ``same condition'' drawback. Now such goods would be
eligible for drawback under section 1313(j) as ``unused''. Second, the
provision interpreting the restriction on ``use'' has been changed.
Formerly, this provision provided that the performing of certain
incidental operations on imported or substituted merchandise which did
not amount to a manufacture or production for drawback purposes was not
a ``use''. The new provision provides that the performing of any
operations or combination of operations not amounting to a manufacture
or production for drawback purposes on the imported or substituted
merchandise is not a ``use''. The list of examples of the operations
involved was expanded to include, but is not limited to: testing,
cleaning, repacking, inspecting, sorting, refurbishing, freezing,
blending, repairing, reworking, cutting, slitting, adjusting, replacing
components, relabeling, disassembling, and unpacking, provided that
they do not amount to manufacture or production for drawback purposes.
In addition to the foregoing, a number of additional statutory
changes were made by section 632 with respect to the substitution
provision, 19 U.S.C. 1313(j)(2). The substituted merchandise exported
or destroyed for drawback need no longer be fungible (commercially
identical) with the imported merchandise. Instead the imported and
substituted merchandise must be commercially interchangeable. The
legislative history of section 632
[[Page 3085]]
states that in determining whether merchandise is ``commercially
interchangeable'', Customs should consider, but not be limited to, such
factors as Governmental and recognized industrial standards, part
numbers, tariff classification and values. Such merchandise, to be
commercially interchangeable, need not be interchangeable in all
situations.
The proposed regulations would require a determination of
``commercial interchangeability'' for all claims filed under 19 U.S.C.
1313(j)(2). This determination can be obtained in one of three ways:
(1) A formal binding ruling from the Entry and Carrier Rulings Branch,
Office of Regulations and Rulings, (2) a nonbinding predetermination
request sent directly to the appropriate drawback office, or (3)
submission of all the required documentation necessary to make a
commercial interchangeability determination with each individual
drawback claim filed. The details for the documentation needed are
outlined in the regulations. In the interest of administrative
efficiency and because commercial interchangeability is no more
restrictive than fungibility, all prior unrevoked rulings finding
merchandise to be fungible may continue to be relied upon to establish
commercial interchangeability and reapplication is unnecessary for the
same merchandise.
Moreover, the party entitled to claim drawback under section
1313(j)(2), as amended by section 632, has now been more precisely
defined. Such party must either be the importer of the imported
merchandise, or must have received, directly or indirectly, from the
importer the imported merchandise, commercially interchangeable
merchandise, or any combination thereof. Thus, the proposed regulations
allow for multiple transfers of imported or substituted merchandise,
but do not permit multiple substitutions (see 19 U.S.C.
1313(j)(2)(C)(ii)). Such transfers must be documented by a certificate
of delivery. For example, it would be permissible for party A to import
merchandise, transfer to party B commercially interchangeable
merchandise documented by a Certificate of Delivery, and for party B to
transfer the commercially interchangeable merchandise to party C
documented by a Certificate of Delivery. If party C exports the
merchandise, then party C is entitled to claim drawback, or to assign
the right to claim drawback back through the chain of possession. To be
entitled to claim drawback, the claimant must have been in possession
of the specific substituted merchandise which is exported or destroyed
with drawback. In this latter respect, the concept of possession under
section 1313(j)(2), as amended by section 632, is further elucidated,
to expressly include ownership while in bailment, in leased facilities,
in transit to, or in any manner under the operational control of, the
party claiming drawback.
Substitution of Finished Petroleum Derivatives
As amended by section 632, drawback is payable under section
1313(p) (19 U.S.C. 1313(p)), upon the timely exportation of an article
which is of the same kind and quality as a qualified article. A
qualified article is essentially either an imported, duty-paid article,
or a manufactured article that would be eligible for drawback under 19
U.S.C. 1313 (a) or (b), should such qualified article itself be
exported; furthermore, the qualified article, to be such, must be
described in headings 2707, 2708, 2710-2715, 2901, and 2902, or in
headings 3901-3914 (to the extent that these latter headings apply to
liquids, pastes, powders, granules and flakes), of the Harmonized
Tariff Schedule of the United States (HTSUS).
Also, for drawback to accrue under section 1313(p), the exporter of
the exported article must have imported the qualified article or have
manufactured it under section 1313 (a) or (b); or have purchased or
exchanged, directly or indirectly, the qualified article from an
importer, or from a refinery or facility which produced the article
under section 1313 (a) or (b). In any event, the qualified article must
have been manufactured, imported, or acquired by the exporter in the
aforementioned manner, in a quantity at least as great as the quantity
of the exported article. In addition, the exported article must be
exported during the period in which the qualified article is
manufactured or produced under section 1313 (a) or (b), or within 180
days after the close of such period; or within 180 days after the date
of entry of a qualified imported article.
To be of the same kind and quality as the qualified article (solely
for the purpose of section 1313(p)), the exported article must fall
within the same 8-digit HTSUS tariff classification as, or be
commercially interchangeable with, the qualified article. The drawback
payable pursuant to section 1313(p) is 99% of the duty attributable to
the qualified article when the qualified article is a manufactured
article that would be eligible for drawback under 19 U.S.C. 1313 (a) or
(b) and 100% of the duty attributable to the qualified article when the
qualified article is an imported, duty-paid article and no such
manufacture or production under section 1313 (a) or (b) is involved (19
U.S.C. 1313(p)(4)).
Packaging Material
Section 632 also amended 19 U.S.C. 1313(j)(4), recodifying this
provision as 19 U.S.C. 1313(q), to allow drawback on imported material
used to package or repackage goods that are exported or destroyed under
Customs supervision and are eligible for drawback under the
manufacturing, rejected or unused merchandise drawback provisions (19
U.S.C. 1313 (a), (b), (c), or (j)). Drawback is payable under the
particular provision to which the packaged goods themselves are
subject. The duty refund on the packaging material is, of course, based
on the particular tariff provision under which the packaging material
itself was entered.
Filing Under Wrong Subsection
Section 632 also amended the drawback law to provide that if a
claimant files for drawback under one provision of section 1313, and
Customs believes that drawback is more properly allowable under another
provision thereof, the claim may simply be deemed filed under such
other provision and processed with drawback accordingly.
The legislative history to this provision makes it clear that this
provision is not intended to require Customs to investigate all
alternatives in addition to the claimed basis before liquidating a
drawback claim as presented. That is, the burden of bringing to Customs
attention the possible applicability of the alternative subsection is
on the claimant, not Customs. Claimants who are denied drawback under
the provision claimed may raise alternative claims under another
provision by protest under section 514 of the Tariff Act of 1930, as
amended (19 U.S.C. 1514) (see 19 CFR part 174).
Since section 1313(r)(2) specifically requires that the claim be
allowable under such other subsection (i.e., not the subsection under
which the claim was originally filed), the requirements in the law for
drawback under the other subsection must be met. For example, if the
original claim is under subsection (a) or (b) and the other provision
is subsection (j), exportation or destruction would have to be within 3
years of importation, not 5 years; if the original claim was under
subsection (j) and the other provision was subsection (c), the
merchandise would have to be timely returned to Customs custody for
exportation or destruction. These are
[[Page 3086]]
statutory requirements, and cannot be waived.
Successorship Under 19 U.S.C. 1313 (b) and (j)(2)
Under substitution manufacturing drawback, 19 U.S.C. 1313(b), the
party manufacturing the articles on which drawback is claimed also must
have used in manufacture the imported, duty-paid merchandise which
forms the basis for the claim. Similarly, under the substitution unused
merchandise provision, 19 U.S.C. 1313(j)(2), in pertinent part, the
drawback claimant must have either imported the duty-paid merchandise,
or received from the importer the imported merchandise, commercially
interchangeable merchandise, or any combination thereof (in addition to
possessing the exported or destroyed merchandise on which drawback is
claimed).
Section 632 adds a new provision, codified as 19 U.S.C. 1313(s),
which, under certain conditions, authorizes a business entity (the
successor) to obtain the pre-existing drawback rights, whether vested
or contingent, of another party (the predecessor) in the course of
either acquiring all or substantially all of the rights and liabilities
of such party, or acquiring the assets and business interests of a
single plant, division or other business unit of such party, provided,
in the case of the latter, that the value of the transferred property
(real and personal) as well as intangibles, exceeds the value of the
drawback rights.
As a result, in manufacturing drawback, section 1313(b), this
enables a company to satisfy the ``one manufacturer'' requirement.
Duty-paid merchandise used in manufacture by the predecessor before the
date of acquisition (the succession) may thus form a basis for drawback
on articles manufactured by the successor after the date of succession.
The use of the duty-paid merchandise by the predecessor is imputed to
the successor.
Likewise, in substitution unused merchandise drawback, section
1313(j)(2), under the general circumstances outlined above, duty-paid
merchandise imported by the predecessor before the date of succession
may form a basis for drawback on exported or destroyed merchandise
possessed by the successor after the date of succession. The
importation of the duty-paid merchandise is implicitly ascribed to the
successor.
Similarly, commercially interchangeable merchandise received by a
predecessor before the date of succession (19 U.S.C. 1313(s)(2)(B))
could become the basis for drawback on substituted merchandise received
by the successor after the date of succession.
Agricultural Products Subject to Drawback
Section 404(e)(5) of the Uruguay Round Agreements Act (URAA) (Pub.
L. 103-465), codified as 19 U.S.C. 1313(w)(1), states that no drawback
shall be available with respect to an agricultural product subject to
an over-quota rate of duty established under a tariff-rate quota,
except pursuant to 19 U.S.C. 1313(j)(1) (direct identification unused
merchandise drawback). In addition, section 422(d) of the URAA,
codified as 19 U.S.C. 1313(w)(2), provides that drawback shall be
available under 19 U.S.C. 1313(a) (direct identification manufacturing)
on any tobacco recognized as an agricultural product that is subject to
an over-quota rate of duty established under a tariff-rate quota.
Because this statute precludes the availability of drawback ``with
respect'' to a described agricultural product, the proposed regulations
provide that no drawback will be available when either the designated
imported merchandise or the substituted merchandise, if substitution
drawback is claimed, is such an agricultural product. Additionally,
based on the legislative history to this provision of the URAA, which
makes it clear that the limitation on drawback applies only to
merchandise for which the over-quota tariff must be paid (i.e., only
that exceeding the quantity provided for in the tariff rate quota), the
proposed regulations make clear that the restriction applies to
merchandise or articles to which the over-quota tariff rate is
applicable.
Major Administrative Changes
The proposed revision of part 191 also presents several
administrative changes and additions to the regulatory procedures
principally governing the manufacturing and unused merchandise
provisions (19 U.S.C. 1313 (a), (b), and (j)).
Manufacturing Drawback ``Contracts''
Under the current regulations, Customs requires manufacturers or
producers of articles intended for exportation with drawback to apply
for a so-called ``specific drawback contract'' (see subpart B of part
191) or a so-called ``general drawback contract'' (see subpart D of
part 191).
In the case of the former, manufacturers or producers are currently
required to file with the appropriate Customs office a proposal
describing the manufacturing operation fully and the method of
compliance with all requirements of the drawback law and regulations,
to make a statement as to the records which will be maintained, and to
agree to follow the methods and keep records concerning drawback
procedures. Currently, Customs makes available sample proposals to
prospective drawback applicants who request them. Customs reviews
proposals submitted by manufacturers or producers and, if the proposals
comply with the law and regulations, approves the proposals by means of
a letter of approval to the applicant and publication in the Customs
Bulletin of a synopsis of the approved proposal.
In the case of the latter, Customs currently publishes in the
Customs Bulletin an offer for a ``general drawback contract'' in
situations where numerous manufacturers or producers have similar
operations and wish to claim drawback. Any manufacturer or producer who
can comply with the terms and conditions of the published offer may
adhere to it by simply notifying a drawback office in writing of its
acceptance and providing certain identifying information, after which
the appropriate drawback office acknowledges, in writing, the letter of
adherence.
After thorough review and consideration of these procedures,
changes to the current terminology for these procedures are proposed.
In the case of ``specific drawback contracts'', what actually is
involved is the request, by a prospective drawback claimant, for a
ruling, in a special format described by Customs in the ``sample
proposals'' referred to in the current regulations. Customs reviews the
request and, if it complies with the law and regulations (e.g., if the
specifications proposed for same-kind-and-quality substitution under 19
U.S.C. 1313(b) meet the requirements for such substitution), Customs
grants approval of the proposal. This is basically the procedure under
which administrative rulings are obtained under part 177 of the Customs
Regulations, with the addition for drawback of the special format
described in the ``sample proposals''. Accordingly, it is proposed to
substitute for the ``specific drawback contracts'' provided for in the
current regulations the term ``specific manufacturing drawback
rulings''.
As is true in the current regulations, it is proposed that unless
operating under a general manufacturing drawback ruling (currently, a
``general drawback contract''; see discussion below), each manufacturer
or producer
[[Page 3087]]
of articles intended to be claimed for drawback will be required to
apply for a specific manufacturing drawback ruling. Sample formats for
applications (combined application under 19 U.S.C. 1313(a) and (b);
application under 19 U.S.C. 1313(b); application under 19 U.S.C.
1313(b) for petroleum drawback (T.D. 84-49); application under 19
U.S.C. 1313(d); and application under 19 U.S.C. 1313(g)) are contained
in Appendix B of proposed part 191. Except for the described changes to
the terminology and conforming changes necessitated by the proposed
changes to the regulations, as described in this document, the sample
formats for applications for specific manufacturing drawback rulings
contained in appendix B are the same as the corresponding sample
``specific drawback contracts'' currently made available by Customs to
persons requesting them.
Also as is currently true in regard to ``specific drawback
contracts'', it is proposed that an application for a specific
manufacturing drawback ruling be submitted to Customs Headquarters
which will review it for consistency with the law and regulations and,
based upon such review, approve or disapprove the application. If
approved, a letter of approval will be issued to the applicant and a
synopsis of the ruling will be published in the Customs Bulletin. If
disapproved, the applicant will be promptly notified, with notification
of the specific reason(s) for disapproval. A disapproved application
may be resubmitted with modifications and/or explanations addressing
the reasons given for disapproval, or the disapproval may be appealed
to another office in Customs Headquarters.
In the case of ``general drawback contracts'', what actually is
involved is the publication by Customs, as a Treasury Decision, of the
requirements and specific interpretations for a particular kind of
operation (for example, certain manufactures involving orange juice
(T.D. 85-110) or steel (T.D. 81-74)). The operation is one used by
numerous manufacturers or producers. A manufacturer or producer using
one of these operations may, basically merely by giving Customs notice,
claim drawback using the procedures in a ``general drawback contract''.
Thus, these procedures are basically a publication of a general ruling.
It is proposed to substitute for the ``general drawback contracts''
provided for in the current regulations the term ``general
manufacturing drawback rulings''.
As is true in the current regulations, it is proposed that a
manufacturer or producer engaged in an operation that falls within a
published general manufacturing drawback ruling may submit a letter of
notification to give Customs notice of the manufacturer's or producer's
intent to operate under the general ruling. The current general rulings
(for manufacturing under 19 U.S.C. 1313(a) (T.D.s 81-234 and 83-123);
manufacturing under 19 U.S.C. 1313(b) for agents (T.D. 81-181);
manufacturing under 19 U.S.C. 1313(b) for orange juice (T.D. 85-110);
manufacturing under 19 U.S.C. 1313(b) for steel (T.D. 81-74);
manufacturing under 19 U.S.C. 1313(b) for refined sugar (T.D. 81-92);
and manufacturing under 19 U.S.C. 1313(b) for raw sugar (T.D. 83-59))
are contained in Appendix A of proposed part 191. Customs proposes to
update this Appendix whenever new general manufacturing drawback
rulings are issued or any such existing T.D.s are revised. Except for
the described changes to the terminology and conforming changes
necessitated by the proposed changes to the regulations, as described
in this document, the general manufacturing drawback rulings contained
in Appendix A are the same as the corresponding ``general drawback
contracts'' published in the existing referenced Treasury Decisions.
Also as is currently true in regard to ``general drawback
contracts'', the letter of notification of intent to operate under a
general ruling will be submitted to the drawback office where drawback
claims are intended to be filed, and will contain certain identifying
information. The drawback office is required to acknowledge, in
writing, this letter of notification, after which no further action is
required before drawback claims may be filed on the basis of the
general manufacturing drawback ruling.
These required procedures (i.e., notification and acknowledgement)
are intended to facilitate Customs administrative processing of
manufacturing drawback claims to be filed.
Completion of Drawback Claims
In order to better ensure consistency and uniformity of practice,
the section of the regulations dealing with the completion of drawback
claims has been rewritten to clarify what documents constitute a
complete drawback claim. The claim will be considered to be complete if
all the required documentation is present with all the basic
information provided.
In regard to certificates of manufacture and delivery, which are a
required part of a complete claim when the claim is based on such a
certificate, it is recognized that a certificate of manufacture and
delivery may relate to articles which are the subject of more than one
drawback claim. In such an instance, only one certificate of
manufacture and delivery is required and the proposed regulations
specifically provide that certificates of manufacture and delivery
applicable to a claim must be filed with the claim, unless previously
filed with Customs (if previously filed, the certificates must be
referenced in the claim).
In cases in which there is some minor change or addition needed,
such as a missing signature, numbers added incorrectly, information
placed in the wrong part of the form, etc., the claim will be accepted
and the 3-year time period to file a complete drawback claim after the
date of exportation will be met although the claim must be corrected.
However, if documentation is missing or the claim contains major
inaccuracies and inconsistencies, the claim will be rejected and
returned to the claimant for correction. The claim will not be
considered to have been ac-cepted by Customs and the 3-year time period
will not be consid-ered to have been met by the filing of such an
incomplete claim. Proposed rules have also been included to allow
Customs to require claimants to restructure drawback claims in order to
improve administrative efficiency, as long as the restructuring is not
shown to be impossible or impractical for the claimant.
The regulations also differentiate between ``perfecting'' and
``amending'' a claim which has been accepted. The claim is
``perfected'' when the claimant, in response to a request from Customs,
makes minor changes to the claim or provides documentation in support
of the claim. The claim is ``amended'' when a major change must be made
to the claim such as the designation of a different import entry or the
claiming of a different export.
Privileges
The proposed regulation establishes Waiver of Prior Notice to
Export or Destroy Unused Merchandise (WPN) (Sec. 191.91) and
Accelerated Payment (AP) (Sec. 191.92) as special privileges that may
be requested by formal application. The Exporters' Summary Procedure
(ESP) is no longer a special privilege because of the changes in the
filing requirements. ESP is now available to all claimants as an option
for establishing exportation. The application requirements for
privileges are designed to address key internal controls identified by
the Treasury Inspector General by providing Customs: (1) Reasonable
assurance of the accuracy of drawback claims; and (2) a sufficient
basis to appropriately
[[Page 3088]]
verify the validity of drawback claims. These key internal controls are
applicable when the issue is whether to grant a privilege. Claim
sufficiency would be determined on an assessment of past facts.
Customs will allow claimants or exporters who hold existing
privileges to continue utilizing these privileges for a period of one
year after the effective date of the new drawback regulations. Those
who want to continue these privileges must reapply prior to the
conclusion of the one-year period under the requirements of the new
regulations. Privileges will be revoked unless the claimant reapplies.
This revocation would apply to all exportations subsequent to the
revocation.
Claimants may continue with their privileges once the new
application has been submitted and received by Customs, unless Customs
denies the new application. The one-year period provides a reasonable
opportunity for applicants to assemble and submit the required
material.
Customs will act on the application within 90 days of submission or
notify the applicant in writing regarding the reasons for requiring a
longer time for acting on the application. Customs objective is to use
the application process as an opportunity to promote informed
compliance in the drawback process.
If applications for privileges are received by Customs prior to the
date of publication (not effective date) of the final rule in the
Federal Register, Customs will process these applications based on the
current drawback procedures and regulations in place. Claimants must
understand that even though the applications will be processed under
the drawback regulations and procedures in place at the time of receipt
of the applications, they will still be required to reapply for these
privileges within one year from the effective date of the new drawback
regulations. Therefore, Customs would encourage new applicants to
prepare their applications under the guidelines of the new regulations.
Notice of Intent to Export or Destroy
Claimants filing a claim under 19 U.S.C. 1313 (j) or (c) must
notify Customs prior to exportation or destruction (notice of
destruction procedures also are applicable to drawback under 19 U.S.C.
1313 (a) and (b)). This notice should be filed at the port of intended
examination or destruction. It must provide the information needed by
Customs to determine if the merchandise should be examined. Under
section 1313(c), the merchandise must always be returned to Customs
custody. Customs intends to make this determination in an expedited
manner and it will notify the party designated on the Notice of Intent
to Export or Destroy of its decision. It is the responsibility of the
filer to deliver the goods in a prompt manner once the filer receives
notice of Customs decision to examine the merchandise. Customs will
work with the claimant if a problem arises on how promptly the
merchandise should be presented to Customs, but it should be done as
promptly as is reasonably possible.
The terms ``present'', ``presented'', and ``presentation'', as used
in proposed Sec. 191.35 (c) and (d) and in proposed
Sec. 191.91(c)(1)(iv), mean the actual transporting of the merchandise
to a location where Customs can examine it. Such transporting of the
merchandise, however, is to take place only after Customs has notified
the exporter or claimant of Customs decision to examine the
merchandise.
There are two different situations which are envisioned here. The
first is a situation in which examination takes place at the premises
of the claimant or exporter. The second is a situation in which the
exporter or claimant transports the merchandise to a Customs designated
location. In either of these situations, arrangements must be made
mutually between Customs and the exporter or claimant.
For exports that occur on or after the effective date of the
regulations, a Notice of Intent to Export or Destroy must be filed with
Customs, unless the exportation is covered by an existing waiver of
prior notice. For destructions, a Notice of Intent to Export or Destroy
must continue to be filed with Customs in all cases.
In addition, the notice of exportation form (Customs Form 7511)
would be eliminated, and the drawback entry forms would be consolidated
into one form (Customs Form 331). Furthermore, a new form would be
devised on which a party would give advance notice of intent to export
or destroy merchandise or articles for drawback purposes.
In recognition of the realities of the marketplace, it is further
proposed to reduce the time frame from the current period of 5 working
days to 2 working days from the date of intended exportation, within
which prior notice of intent to export, unless waived, must be given to
Customs for unused merchandise drawback, 19 U.S.C. 1313(j). A new
Customs form (not a drawback entry form) will be devised on which prior
notice would be given. Unless the claimant should be advised by Customs
to the contrary during this 2-day period, the subject merchandise could
thereafter be exported without delay. A drawback entry would later be
filed with Customs.
The proposed regulations allow a drawback claim to be filed for
qualifying merchandise which has been destroyed under Customs
supervision. However, if a drawback claimant has not filed the Notice
of Intent to Export/Destroy at least 7 working days prior to the
intended destruction of the merchandise, the Customs Service must
reject the drawback claim.
Once the Notice of Intent to Export or Destroy has been filed, the
Customs Service has four working days to advise the party filing the
notice as to whether Customs will witness the destruction. If the party
is not so notified within four working days, the merchandise may be
destroyed without delay and the destruction will be deemed to have
occurred under Customs supervision.
Evidence of destruction must be included with the drawback claim.
For multiple or continuous drawback destructions other prearranged
procedures may be developed with the applicable drawback office to
foster administrative efficiency.
Retroactive Waiver of Notice of Intent to Export
The proposed regulations eliminate the retroactive waiver practice
which was reported as a significant internal control weakness by the
Treasury Inspector General. However, the proposed regulations allow a
one-time opportunity for drawback claims under 19 U.S.C. 1313(j) on
merchandise which a party exported or destroyed without having provided
Customs with prior notice. This was included to: (1) Provide a
reasonable method for first time claimants or exporters who were not
aware of the requirement for prior notice of intent to export to obtain
such drawback; and (2) make potential claimants aware of the waiver
privilege and how to apply for it.
More than one claim may be included in this one-time opportunity,
subject to the time requirements for filing complete claims (three
years from the date of export). This would enable claimants to file for
unused merchandise drawback on exportations which occur before the
claimant may have known of the requirement for prior notice of intent
to export.
Waiver of Notice of Intent to Export
Claimants and exporters may apply for a waiver of the requirement
(under proposed Sec. 191.35) to notify Customs of intent to export
unused merchandise. The proposed regulations require that
[[Page 3089]]
applications include sufficient information about merchandise, export
activities and recordkeeping to provide Customs reasonable assurance
that merchandise subject to drawback claims will be unused and
exported. The information will also give Customs a sufficient basis for
verifying unused merchandise drawback claims.
When applying for the waiver or the one-time application to file
drawback claims on past exports, as provided for in proposed
Sec. 191.36 of the regulations, a certification by the claimant is
required. The claimant must certify the ability to support with
business, laboratory or inventory records (prepared in the ordinary
course of business) that the imported and exported or substituted
merchandise (as applicable) was not used in the United States and, if
substituted, was commercially interchangeable with the imported
merchandise. The certification must also state that documentary
evidence establishing compliance with all other applicable drawback
requirements is likewise available. What is generally referred to is
evidence (when applicable):
1. Of possession of the substituted merchandise within statutory
time periods.
2. That the export and import transactions upon which the claim is
based are within statutory time periods.
3. That the exportation is bonafide.
4. That Certificates of Delivery, when necessary, are in the
possession of the claimant.
5. That any waivers or assignments from one party to another, when
necessary, are in the possession of the claimant.
6. That any facts or conditions to complete the claim can be
supported, such as those for successorship.
It is proposed that Customs approval of an application for the
waiver of prior notice privilege would be conditioned from the outset
on the agency's right to immediately stay the privilege holder's
operation under the privilege, for a specified reasonable period,
should the agency desire for any reason to examine the merchandise
being exported with drawback for purposes of verification. This key
proposed limitation on the grant of approval of the privilege would not
be an adverse action, suspension, or other form of sanction against the
privilege or privilege holder. Rather, it is a proposed restriction on
the grant of the privilege itself. See, e.g., Atlantic Richfield Co. v.
United States, 774 F.2d 1193, 1201 (D.C. Cir. 1985). The Customs
Service believes this limited privilege structure would best protect
the revenue and the public interest in sound administration of the
drawback program. Accordingly, the agency proposes to provide the
privilege holder a letter notifying it of any stay, specifying the
reason(s) therefor, and the period in which the stay will remain in
effect. The stay would expire at the end of the period specified in the
agency's letter, or such earlier date as the agency notifies the
privilege holder in writing that the reason for the stay has been
satisfied. After the stay is lifted, operation under the privilege
could resume. The mere lifting of a stay is not tantamount to a
certification of compliance; it simply reactivates the agency's
predictive judgment in granting the privilege in the first place.
Accelerated Payment of Drawback
As is true under the current regulations, accelerated (i.e., before
liquidation) payment of drawback claims is available for drawback
claims under the manufacturing, rejected, or unused merchandise law, as
well as claims under the law for substitution of finished petroleum
derivatives. The proposed regulations require that applications for
this privilege include sufficient information about the applicant and
its drawback program, including specific information about the bond
coverage that the applicant intends to use to cover accelerated payment
of drawback, to provide Customs reasonable assurance against losses to
the revenue when accelerated payments of drawback are made. The
proposed regulations also require a certification by the applicant that
all applicable statutory and regulatory requirements for drawback will
be met and a description (with sample documents) of how the applicant
will ensure compliance with these requirements. The detail required in
this description will vary, depending on the size and complexity of the
applicant's accelerated drawback program. To assist applicants, Customs
will make available a sample format for requests for accelerated
payment of drawback.
It is proposed that Customs would review and verify the information
submitted in and with the application and, based on that information
(and any additional information relating to the application requested
by Customs), and the applicant's record of transactions with Customs,
Customs would approve or deny the application. Criteria for Customs
action, including the presence or absence of unresolved Customs
charges, the accuracy of the claimant's past claims, and whether any
previously approved drawback privilege was revoked or suspended, are
specifically set forth in the proposed regulation.
If an applicant is approved for accelerated payment of drawback,
the applicant would be required to furnish a properly executed bond in
an amount sufficient to cover the estimated amount of drawback to be
claimed during the term of the bond, subject to increase if the amount
of the bond is exceeded. Drawback claims for which accelerated payment
of drawback was requested and approved would be certified for payment
within 3 weeks after filing, if a component for electronic filing of
drawback claims, records, or entries which has been implemented under
the National Customs Automation Program (NCAP) (19 U.S.C. 1411-1414) is
used, and within 3 months after filing otherwise. In regard to
electronic filing of drawback claims, currently procedures exist for
electronic filing of certain ``coding sheet'' data as a part of
drawback claims. The agency is working on the development of the
drawback components under NCAP, in accordance with its responsibilities
under the cited statutory provisions. It is anticipated that by the
effective date of a Final Rule, a component for electronic filing under
NCAP will have been properly implemented so that participants will be
able to take advantage of the 3-week time period in the proposed
regulations.
As is true of waiver of prior notice (see above), approval of the
accelerated payment drawback privilege would be conditioned from the
outset on the agency's right to immediately stay operation of that
privilege, for a specified reasonable period, should the agency desire
for any reason to examine compliance with the drawback law and
regulations for purposes of verification. Claims filed in the absence
of a privilege, or during the effect of a stay, would be paid in the
normal manner--upon liquidation of the associated drawback entry(ies).
However, if an accelerated payment privilege is granted, or reactivated
after a stay, payment could proceed according to such privilege
notwithstanding that the claim was filed in absence of such privilege
or during a stay.
Harmonized Tariff Schedule or Schedule B Numbers
A fundamental requirement for drawback is that there be a duty-paid
importation and an exportation and that the claimant have evidence to
prove each. Under the laws and regulations governing dutiable entries
for consumption (see 19 U.S.C. 1484, 1498 and 19 CFR parts 141, 142,
and 143), the tariff classification is required from the importer of
record of the merchandise. Such tariff classification is required to be
shown on the entry summary and
[[Page 3090]]
other documentation, including the invoice for the merchandise (19 CFR
141.61(e), 19 CFR 141.90(b)). Under 19 CFR 141.61(e), the statistical
reporting number required by the General Statistical Notes (GSN's) of
the Harmonized Tariff Schedule of the United States (HTSUS) (10-digit
number, see GSN 3), is required to be shown on the entry summary and
other entry documentation. These documents (i.e., entry summaries and
other entry documentation, such as invoices) comprise evidence which is
used to establish duty-paid importation of imported merchandise for
drawback purposes.
The correct commodity number from Schedule B, Statistical
Classification of Domestic and Foreign Commodities Exported from the
United States, is required by the Census Bureau to be provided for
exported merchandise. This Schedule B commodity number is required to
be entered in the space provided on the Shipper's Export Declaration
(SED) form (15 CFR 30.7(l)) (for most exports to Canada, no SED is
required (see 15 CFR 30.58; see also Department of Commerce Final Rule
published in the Federal Rgister on November 30, 1990 (55 FR 49613))).
Under GSN 5 of the HTSUS, as well as in the ``Notice to Exporters''
following GSN 5 of the HTSUS, the HTSUS statistical reporting numbers
referred to in the preceding paragraph may, with certain exceptions, be
substituted on the SED in place of comparable Schedule B numbers. The
SED, with other documentation, comprises evidence which is used to
establish exportation for drawback purposes.
In regard to imports, the proposed regulations would require
claimants to provide on all drawback claims they submit the HTSUS
number, to the six-digit level, for the designated imported
merchandise. When such claimants are importers of record, the HTSUS
number would be provided from the entry summary(s) and other entry
documentation under which the merchandise originally entered the
country. When such claimants are not importers of record (and thus
would have received a Certificate of Delivery or a Certificate of
Manufacture and Delivery for the imported merchandise (or substituted
merchandise in certain cases; see below)), the HTSUS number would be
provided from such Certificate (see below).
Also in regard to imports, the proposed regulations would require
importers of record and any other party(ies) preparing Certificates of
Delivery and Certificates of Manufacture and Delivery to provide the
HTSUS number for the imported merchandise, to the six-digit level, on
such Certificates. Any intermediate party(ies) receiving merchandise on
a Certificate of Delivery would be required to transfer it to another
party using such a Certificate. If the party preparing the Certificates
is the importer of record, the HTSUS number would be from the entry
summary(s) and other entry documentation under which the merchandise
originally entered the country. If the party preparing the Certificates
is another party (e.g., an intermediate party), the HTSUS number would
be from the Certificate on which that party received the merchandise,
and thus ultimately be derived from the entry summary(s) and other
entry documentation.
The requirement for the HTSUS number on the Certificates of
Delivery and Certificates of Manufacture and Delivery is necessary
because, under the proposed regulations, these Certificates would no
longer be part of the drawback entry form, as is currently true. In the
case of Certificates of Delivery, those Certificates will not be filed
with a claim; they will be required to be in the possession of the
claimant at the time that a claim is filed. Therefore, for Certificates
of Delivery, the HTSUS number must be on both the Certificates and the
claim (so that the claim preparer can derive the HTSUS number,
ultimately, from the entry summary(s) and other entry documentation and
so that that HTSUS number is on the drawback claim filed with Customs).
In the case of Certificates of Manufacture and Delivery, such
Certificates are required to be filed with a claim or to have been
previously filed with Customs and are necessary parts of a complete
claim. Therefore, providing the HTSUS number on the Certificates, if a
claim is based on such certificates, satisfies the requirement for
providing the HTSUS number on the claim (i.e., if a claim is based on
Certificate(s) of Manufacture and Delivery filed with the claim or
previously filed with Customs, the HTSUS number need only be on the
Certificate(s) and not the drawback entry form).
In addition, in the case of the transfer of merchandise substituted
for the imported merchandise under 19 U.S.C. 1313(j)(2) or 19 U.S.C.
1313(p), the proposed regulations would require the claim and any
Certificate of Delivery or Certificate of Manufacture and Delivery (see
above) to bear the tariff numbers, to the six-digit level, for the
substituted merchandise. This additional information proposed to be
required for substituted merchandise is necessary to establish
compliance with the drawback statute (i.e., either as one of the
criteria to establish commercial interchangeability for purposes of
section 1313(j)(2), see House Report No. 103-361, supra, page 131, and
Senate Report No. 103-189, supra, page 83, or to establish same kind
and quality for purposes of section 1313(p), per the explicit language
in that subsection itself).
In regard to exports, the proposed regulations would require all
drawback claimants to provide on all drawback claims they submit the
Schedule B numbers, or HTSUS numbers substituted therefor, for the
exported merchandise or articles upon which the claims are based. These
numbers would be provided from the SED(s) for such exported merchandise
or articles, when an SED is required. If no SED is required (e.g., for
certain exports to Canada (15 CFR 30.58)), the claimant is required to
provide the Schedule B commodity number(s) or HTSUS number(s), to the
6-digit level, that the exporter would have set forth on the SED, but
for the exemption from the requirement for an SED.
Consistent with the stated intent of both the House Committee on
Ways and Means and the Senate Committee on Finance, although the
amended drawback law will allow claimants to make greater use of
drawback, Customs will be able to ensure greater compliance through the
use of enhanced penalty and automated drawback selectively programs
authorized elsewhere in the NAFTA Implementation Act (see 19 U.S.C.
1593a, and its legislative history in House Report No. 103-361, supra,
page 130, and Senate Report No. 103-189, supra, page 81). Customs
intends the above-described proposed requirements, incorporating
already required HTSUS and Schedule B commodity numbers into the
drawback claim itself, to directly serve those specified means for
achieving greater compliance. More generally, the above-described
proposed requirements also serve the basic automation goals behind
Title VI (Customs Modernization) of the NAFTA Implementation Act. These
proposed requirements will result in numerical descriptions of
merchandise or articles instead of narrative descriptions, which are
far more amenable to electronic processing and automation. That is,
since HTSUS and commodity numbers are the basic terms of reference for
imports and exports of merchandise, inclusion of this information in
drawback claims is necessary for Customs to be able to offer the
enhanced electronic processing, uniformity, and automation Congress
intended (see,
[[Page 3091]]
House Report No. 103-361, supra, pages 106-107; Senate Report No. 103-
189, supra, pages 63-64).
For imports, the proposed requirement will go into effect for
merchandise entered, or withdrawn from warehouse, for consumption on or
after the effective date of the regulations. For exports, the proposed
requirement will go into effect for exported merchandise or articles
exported one year after the effective date of the regulations.
Procedures to Evidence Exportation
It is the obligation of the claimant to have adequate evidence of
export to support his drawback claim. There may be cases where the
consignee shown on the bill of lading is not the ultimate consignee, or
where, to retain commercial confidentiality, the identity of the
ultimate consignee is not known to the claimant. The current practice
in such a situation is for the exporter to either cut out or blank out
the name of the ultimate consignee from the proof of export submitted
to the claimant.
As noted above in this background, under ``Privileges'', the
Exporter's Summary Procedure (ESP) would no longer be a special
privilege, but would be available to all claimants as an option for
establishing exportation. It is proposed to revise the current subpart
regarding evidence of exportation (subpart E) accordingly. That is, the
proposed regulations would list the alternative procedures for
establishing exportation (actual evidence of exportation, export
summary, certified export invoice for mail shipments, notice of lading
for supplies for certain vessels or aircraft, and notice of transfer
for articles manufactured or produced in the United States which are
transferred to a foreign trade zone). The actual evidence of
exportation alternative is modified to make it clear that the
documentary evidence listed therein consists of originals of the listed
documents, or certified copies thereof (the current regulations omit
the word ``original''). In addition, the ``Chronological Summary of
Exports'', provided for in the ESP regulations, is proposed to be
simplified to list only necessary information (date of export, unique
export identifier (explained in a footnote) description, net quantity,
Schedule B number or HTSUS number (see discussion of Harmonized Tariff
Schedule or Schedule B Numbers in this background), and destination).
Selectivity
The U.S. Customs Service has had an electronic selectivity program
in operation for its National Drawback Program since 1994. The present
system is a random statistical sampling whose methodology is based on
the drawback claimant's overall history with Customs. This selectivity
system will be further expanded in late 1996 to become a two-tier
system whereby rules and criteria elements such as tariff
classification numbers of the subject merchandise and articles, import
and export locations, etc., would be used to evaluate risk and
designate the level of Customs review of the claim. After this initial
review, a random statistical targeting based on the claimant and the
claimant's overall history with Customs would also be run (see Item 4
under discussion of liquidation, below).
Drawback Compliance Program
The drawback compliance program is designed to allow Customs to
review claims in a post audit mode on an account basis rather than
transaction by transaction. Any person, corporation or business may be
certified as a participant in the drawback compliance program. Under 19
U.S.C. 1593a(e), claimants and other parties in interest may
participate. A ``party'' is considered to include any person or company
who is involved in providing data on which a drawback claim may be
based or who is the drawback claimant. This would include importers,
intermediary parties and drawback claimants. Therefore, any party that
provides information or documentation to one who intends to file a
drawback claim is encouraged to participate in the drawback compliance
program.
Customs will be publishing another regulatory package in the
Federal Register concerning penalties. That package, which will be
subject to public comment, will set forth mitigation guidelines.
In evaluating a drawback compliance application package, Customs
will consider the following factors:
--Size of the company;
--Nature of the business;
--Type of drawback claims being filed;
--Number of claims being filed.
In addition, depending on the complexity of the applicant's actual
drawback program, Customs may request additional information or details
before making its decision.
It is anticipated that the initial number of requests will make it
difficult to approve applicants within a specified time period.
For corporations that have various business units and divisions,
are decentralized or use several brokers to administer all or part of
their drawback program, each entity may apply separately for the
drawback compliance program.
Identification By Accounting Methods
For those situations in which the statute does not allow
substitution of merchandise or articles (see above), and in which a
company is not able to specifically identify merchandise or articles
(e.g., by serial number), accounting methods may be used to determine
the identity thereof. Such identification may be made on the basis of a
company's records, rather than on the basis of the actual physical
movement of the inventory. Previous regulations and rulings required
that merchandise or articles be commingled in the same inventory
location in order for a company to use an accounting method to identify
the merchandise or articles. The proposed regulations clarify that such
commingling is allowed, but not mandated, and that a company's records
will be the determining factor in the employment of an accounting
method.
Four accounting methods are approved for use in the proposed
revision of part 191: first-in, first-out (FIFO), last-in, first-out
(LIFO), low-to-high, and weighted average. Provision is also made for
Customs to approve either a modification of one of these methods, or a
different method. These proposed regulations reflect Customs position
that a properly established turn-over period may be used to establish
timely use in manufacture or production of the imported designated and
other (substituted) merchandise under 19 U.S.C. 1313(b), and the
manufacture or production of the finished articles under 19 U.S.C. 1313
(a) and (b). These proposed regulations also incorporate the criteria
set forth in T.D. 95-61, 60 FR 40995 (August 11, 1995), and are
designed to provide a greater degree of predictability in the
accounting methods that may be approved for drawback purposes.
Recordkeeping
Records are required to be kept to establish compliance with the
requirements in the drawback law and the regulations issued under that
law. Individual records are identified and described in the proposed
revision of part 191 at the point where the requirements underlying
those records are found.
Records supporting the information contained in any document
required for filing a drawback claim would have to be maintained by the
claimant or by the responsible party (e.g., importer, exporter,
possessor). If deficiencies are revealed in the underlying records on
[[Page 3092]]
which a drawback claim is based, the payment of the claim would, of
course, to this extent be adversely affected, notwithstanding that such
records were generated and maintained by persons other than the
claimant. Regarding the retention period for records kept by parties
other than the claimant, it is the responsibility of such parties to
communicate with the claimant to determine when a related claim for
drawback has been filed and paid by Customs. The retention period for
certificates of delivery begins upon their issuance (19 U.S.C.
1313(t)). In addition, the retention period for records generally,
including that for certificates of delivery, ends 3 years after the
date of payment of the related claim. Notwithstanding the recordkeeping
retention requirements, claimants are urged to maintain records that
support the claim until the liquidation of the drawback entry becomes
final. Moreover, records not specifically subject to recordkeeping
retention which are maintained by a claimant, and support a claim,
ought to be maintained until the liquidation of the drawback entry
becomes final.
Redistribution of Drawback Workload
Customs may transfer drawback claims to a location other than where
they were originally filed to ensure the timely and efficient
processing of the claims. This would occur primarily to evenly
distribute the drawback claims or because an office has a particular
expertise with a specific account or product. Customs believes that
this is an internal Customs work management issue which does not
require regulatory action. Therefore, the proposed regulations do not
address this issue. However, Customs recognizes the public's concerns
over the possibility of lost documentation or delays in processing.
Customs will develop procedures to safeguard documents that are mailed
and to monitor the time to process them. Customs believes that, until a
fully-developed selectivity system and compliance program are
operating, quicker, more efficient and more accurate processing of
drawback claims will be the result of transferring claims among
offices. If a claim is transferred for processing, the notice of
liquidation of the associated drawback entry will remain the bulletin
notice of liquidation posted at the port where the drawback claim was
originally filed.
Liquidation of Drawback Entries
The committee reports of both the Senate and House commented on
their expectation that Customs drawback regulations will take into
account the various time frames for recordkeeping, filing claims,
amendments, and clarifications, and for auditing and liquidating
drawback entries. Customs believes that these proposed regulations have
addressed many of the Committees' concerns, specifically in proposed
Secs. 191.25, 191.26, 191.37, 191.51, 191.52, 191.53, 191.61, and
191.62. These proposed regulations do not, however, specify a time
frame for liquidating drawback entries. This is because Customs
believes that, absent statutory language such as the ``deemed
liquidated'' language of 19 U.S.C. 1504, it lacks the authority to
specify a deadline after which the drawback entry is ``deemed
liquidated'' as entered.
Customs is aware of the Congressional and trade interest in
shortening the time between the filing of a drawback entry and the
liquidation of that entry. Customs is pursuing the following actions in
order to reduce the time in which to liquidate drawback entries:
1. Customs has established 11 new positions and filled vacancies in
all 8 drawback offices in order to bring them up to their designated
staffing levels;
2. Customs has developed and delivered standardized, national
training to all drawback specialists (not just the new specialists) in
FYs '95 and '96;
3. Customs has developed automated tools (initially, diskette
filings and ABI transmission of drawback claims) to more quickly
identify, reject and return to filers claims that do not meet minimum
filing standards.
4. Customs has developed and is improving a selectivity system in
ACS which already has reduced the number of designated import entries
that must be physically retrieved by the drawback office, prior to
liquidation of related drawback entries. Enhancements to this system
will eventually lead to virtual ``instant liquidation'' of those
drawback entries not selected by the system for pre-liquidation
scrutiny by the drawback specialists.
5. Through the Drawback Compliance Program, and increased use of
claimant interviews and visits for claimants not in the Drawback
Compliance Program, Customs expects to inform drawback claimants of
their responsibilities with respect to filing and supporting their
claims as well as to learn about claimants' drawback programs,
recordkeeping, and internal controls. In the past, when drawback
specialists questioned the claims, or sought evidence to support the
claim, they often relied upon Regulatory Audit. With better staffing
and training, as well as use of interviews with claimants, Customs
expects that the number of referrals to Regulatory Audit will
significantly decrease.
6. In partnership with trade groups, Customs plans to use meetings,
conferences, publications, satellite meetings and other forums, to
educate and to learn from claimants.
7. The largest single reason for the delays in liquidating drawback
entries is that the designated import entry has not been liquidated.
Approximately 75% of entries withheld from liquidation are because of
suspensions under the antidumping or countervailing duty laws; however,
antidumping and countervailing duties are not subject to drawback. In
recognition of this, Customs announced in the Federal Register on May
17, 1996, a pilot of the reconciliation process provided for in 19
U.S.C. 1484(b) (as amended by section section 637 of the NAFTA
Implementation Act) for entry summaries suspended under the antidumping
or countervailing duty laws. The use of the reconciliation entry
process will allow for the liquidation of the ordinary duty on these
entry summaries, thereby expediting the liquidation of the drawback
entries referencing those import entries.
Customs believes that these actions, taken together, will bring
about faster liquidation of drawback entries, thereby addressing the
Congress's concerns.
Comments
Customs has consulted extensively with the drawback community/trade
in formulating these proposed regulations. Three drafts of the proposed
regulations were made available to the public through Customs Automated
Broker Interface (ABI) and the Customs Electronic Bulletin Board.
Copies were also sent out to interested persons upon request.
Additionally, since January 1992, Customs met 42 times with various
groups representing drawback claimants, exporters, brokers, attorneys,
and consultants to explain and discuss its proposals. In the summer of
1995, the trade expressed its continuing dissatisfaction with the
modifications Customs had made based upon comments to those earlier
drafts.
At the request of the American Association of Exporters and
Importers, Customs agreed to continue these informal rulemaking
consultations with trade groups in a series of meetings. These meetings
were a continuation of the previous informal consultations with the
trade. They were not a negotiation, mediation or a formal rulemaking
procedure as provided for in the Negotiated Rulemaking Act of 1990
(Pub. L. 101-648, codified at 5 U.S.C. 561 et seq.). Other groups that
[[Page 3093]]
participated in these meetings were the National Council on
International Trade Development, the National Customs Brokers and
Forwarders Association of America, and the American Petroleum
Institute. The Customs participants represented the Trade Compliance
program managers at Headquarters, the Office of Regulations and
Rulings, field drawback offices, and Regulatory Audit. In view of
concerns regarding Customs obligations under the Chief Financial
Officer Act of 1990 (Pub. L. 101-576), representatives of the Treasury
Inspector General and the Customs Office of Financial Management also
participated. In addition, comments and recommendations from the
public, the trade and Customs drawback offices were considered in this
process.
These proposed regulations are subject to the requirements of the
Administrative Procedures Act (5 U.S.C. 553), which requires Customs to
give notice and afford interested persons the opportunity to comment on
the proposed rules. Therefore, before adopting this proposal, full
consideration will be given to any written comments (preferably in
triplicate) that are timely submitted to Customs. The comments
submitted will receive full consideration and only Customs staff will
prepare the analysis of the comments submitted in response to this
notice of proposed rulemaking.
In view of Customs extensive consultation with groups of interested
persons, Customs believes that a 60-day comment period is adequate for
review and comment by all interested parties. Interested persons are
encouraged to file their comments within the 60-day period.
All such comments received from the public pursuant to this notice
of proposed rulemaking will be available for public inspection in
accordance with the Freedom of Information Act (5 U.S.C. 552),
Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and
Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), during regular
business days between the hours of 9:00 a.m. and 4:30 p.m. at the
Regulations Branch, 1099 14th Street, NW., Suite 4000, Washington, DC.
Regulatory Flexibility Act and Executive Order 12866
The proposed rule would amend the Customs drawback regulations
principally to reflect changes to the law occasioned by the Customs
modernization portion of the NAFTA Implementation Act. The proposed
rule also makes certain administrative changes to the existing
regulations which are essentially intended to simplify and expedite the
filing and processing of claims for the payment of drawback, and it
generally revises and rearranges these regulations to improve their
editorial clarity. As such, under the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), it is certified that the proposed rule would not
have a significant economic impact on a substantial number of small
entities. Thus, it is not subject to the requirements of 5 U.S.C. 603
or 604, nor would it result in a ``significant regulatory action''
under E.O. 12866.
Paperwork Reduction Act
The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507).
An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless the collection of
information displays a valid control number.
The collection of information in this document is in Secs. 191.0-
191.195. This information is necessary and will be used to enforce the
requirements of the drawback law and protect the revenue. The likely
respondents and/or recordkeepers are business and other for-profit
institutions.
Estimated annual reporting and/or recordkeeping burden: 216,650
hours.
Estimated average annual burden per respondent/recordkeeper: one
hour for providing Harmonized Tariff System numbers; 60 hours for
drawback compliance program participation.
Estimated number of respondents and/or recordkeepers: 7000.
Estimated annual frequency of responses: on occasion.
Comments on the collection of information should be sent to the
Office of Management and Budget, Attention: Desk Officer of the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503. A copy should also be sent to the
Regulations Branch, Office of Regulations and Rulings, U.S. Customs
Service, 1301 Constitution Avenue, NW., Washington, DC 20229. Comments
should be submitted within the time frame that comments are due
regarding the substance of the proposal.
Comments are invited on: (a) Whether the collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information shall have practical utility; (b) the
accuracy of the agency's estimate of the burden of the collection of
the information; (c) ways to enhance the quality, utility, and clarity
of the information to be collected; and (d) ways to minimize the burden
of the collection of information on respondents, including through the
use of automated collection techniques or other forms of information
technology.
Parallel Reference Table
[This table shows the relation of sections in the proposed revision
of part 191 to existing part 191.]
------------------------------------------------------------------------
Revised section Old section
------------------------------------------------------------------------
191.0..................................... 191.0.
191.0a.................................... New.
191.1..................................... 191.1.
191.2(a).................................. 191.2(p).
191.2(b).................................. New.
191.2(c).................................. New.
191.2(d).................................. New.
191.2(e).................................. New.
191.2(f).................................. 191.2(b).
191.2(g).................................. New.
191.2(h).................................. 191.2(j).
191.2(i).................................. 191.2(a).
191.2(j).................................. 191.2(i).
191.2(k).................................. 191.2(h).
191.2(l).................................. 191.2(g).
191.2(m).................................. New.
191.2(n).................................. 191.2(l).
191.2(o).................................. 191.2(f).
191.2(p).................................. New.
191.2(q).................................. New.
191.2(r).................................. New.
191.2(s).................................. 191.2(m).
191.2(t).................................. 191.2(n).
191.2(u).................................. 191.2(e).
191.2(v).................................. 191.2(o).
191.3..................................... 191.3.
191.4..................................... 191.11.
191.5..................................... 191.13.
191.6..................................... 191.6.
191.7(a).................................. 191.41.
191.7(b)(1)............................... 191.42(a).
191.7(b)(2)............................... 191.42(b).
191.7(c).................................. 191.43.
191.7(d).................................. 191.44
191.8(a).................................. 191.21(a).
191.8(b).................................. 191.21(c).
191.8(c).................................. 191.21(b).
191.8(d).................................. 191.21(d); 191.23(a).
191.8(e).................................. 191.23(b).
191.8(f).................................. 191.24.
191.8(g)(1)............................... 191.25 (a)&(b)(1).
191.8(g)(2)............................... 191.25(b)(2).
191.8(g)(3)............................... 191.25(c).
191.8(h).................................. 191.26.
191.9..................................... 191.21(a)(2); 191.34; 191.66
(b), (f).
191.9(a), first sentence.................. New.
191.10(a)................................. 191.65(a).
191.10(b)................................. 191.22(e).
191.10(c)(1).............................. 191.65(b).
191.10(c)(2).............................. 191.66(d).
191.10(d)................................. 191.5; 191.22(e).
191.10(e)................................. New.
191.10(f)................................. 191.65(d).
191.11.................................... 191.27.
191.12.................................... New.
191.13.................................... 191.4(a)(11).
191.14.................................... 191.22(c).
191.21.................................... 191.4(a)(1).
[[Page 3094]]
191.22(a)................................. 191.4(a)(2).
191.22(b)................................. 191.32(c).
191.22(c)................................. 191.32(d).
191.22(d)................................. New.
191.22(e)................................. 191.22(a)(5) & 191.33.
191.23(a)-(c)............................. New.
191.23(d)(1).............................. 191.22(a)(2) & 191.32(b).
191.23(d)(2).............................. 191.22(a)(1)(iv).
191.24(a)................................. 191.66(a).
191.24(b)................................. New.
191.24(c)................................. 191.22(a)(4);
191.62(a)(2)(i).
191.24(d)................................. New.
191.25(a)(1).............................. 191.22(a)(1).
191.25(a)(1)(iii)......................... 191.22(a)(3).
191.25(a)(2).............................. 191.22(b).
191.25(a)(3).............................. 191.22(c).
191.25(b)................................. 191.32(a).
191.25(c)................................. 191.22(a)(2) & 191.32(b).
191.25(d)................................. 191.62(a)(2)(ii).
191.25(e)................................. 191.65(a)&(b).
191.25(f)................................. 191.62(c).
191.25(g)................................. 191.5.
191.26(a)................................. 191.8(a); 191.22(a)(1)(v).
191.26(b)................................. 191.32(a).
191.26(c)................................. 191.23(c).
191.27.................................... New.
191.31(a)................................. 191.4(a)(9); 191.141(a)(1).
191.31(b)................................. 191.8(b); 191.141(a)(2).
191.31(c)................................. 191.141(a)(3).
191.32(a)................................. 191.141(a)(10).
191.32(b)................................. 191.141(h).
191.32(c)................................. New.
191.32(d)................................. 191.141(h).
191.32(e)&(f)............................. New.
191.33.................................... New.
191.34(a)................................. 191.65(a); 191.141 (b) &
(e).
191.34(b)................................. New.
191.34(c)................................. 191.65(d).
191.35.................................... 191.141(b).
191.36.................................... New.
191.37(a)................................. 191.5
191.37(b)................................. 191.22(b).
191.41.................................... 191.142(a)(1).
191.42.................................... 191.142(b).
191.43.................................... 191.142(a)(2).
191.44.................................... New.
191.51(a)................................. 191.62 (a)&(b).
191.51(b), (c) & (d)...................... New.
191.52(a)................................. 191.61.
191.52(b) & (c)........................... 191.64.
191.61.................................... 191.10.
191.62(a)................................. 191.9.
191.62(b)................................. New.
191.71.................................... 191.141(f).
191.72.................................... 191.51.
191.73.................................... 191.53.
191.74.................................... 191.54.
191.75.................................... 191.55.
191.76.................................... 191.67.
191.81.................................... 191.71.
191.82.................................... 191.73(a).
191.83.................................... 191.73(b).
191.84.................................... 191.7.
191.91.................................... 191.141(b)(2)(ii).
191.92.................................... 191.72.
191.93.................................... New.
191.101................................... 191.81.
191.102................................... 191.82.
191.103................................... 191.83.
191.104................................... 191.84.
191.105................................... 191.85.
191.106................................... 191.86.
191.111................................... 191.91.
191.112................................... 191.92; 191.93.
191.121................................... 191.101.
191.122................................... 191.102.
191.123................................... 191.103.
191.131................................... 191.111.
191.132................................... 191.112.
191.133................................... 191.113.
191.141................................... 191.121.
191.142................................... 191.122.
191.143................................... 191.123.
191.144................................... 191.124.
191.151................................... 191.131.
191.151(a)(1)............................. 191.8(c).
191.152................................... 191.132.
191.153................................... 191.133.
191.154................................... 191.134.
191.155................................... 191.135.
191.156................................... 191.136.
191.157................................... 191.137.
191.158................................... 191.138.
191.159................................... 191.139.
191.161................................... 191.151.
191.162................................... 191.152.
191.163................................... 191.153.
191.164................................... 191.154.
191.165................................... 191.155.
191.166................................... 191.156.
191.167................................... 191.157.
191.168................................... 191.158.
191.171................................... New.
191.172................................... New.
191.173................................... New.
191.174................................... New.
191.175................................... New.
191.176................................... New.
191.181................................... 191.161.
191.182................................... 191.162.
191.183................................... 191.163.
191.184................................... 191.164.
191.185................................... 191.165.
191.186................................... 191.166.
191.191................................... New.
191.192................................... New.
191.193................................... New.
191.194................................... New.
191.195................................... New.
------------------------------------------------------------------------
Parallel Reference Table
[This table shows the relation between the sections in existing
part 191 to those in the proposed revision of part 191.]
------------------------------------------------------------------------
Old section Revised section
------------------------------------------------------------------------
191.0..................................... 191.0.
191.1..................................... 191.1.
191.2(a).................................. 191.2(i).
191.2(b).................................. 191.2(f).
191.2(c).................................. Deleted.
191.2(d).................................. Deleted.
191.2(e).................................. 191.2(u).
191.2(f).................................. 191.2(o).
191.2(g).................................. 191.2(l).
191.2(h).................................. 191.2(k).
191.2(i).................................. 191.2(j).
191.2(j).................................. 191.2(h).
191.2(k).................................. Deleted.
191.2(l).................................. 191.2(n).
191.2(m).................................. 191.2(s).
191.2(n).................................. 191.2(t).
191.2(o).................................. 191.2(v).
191.2(p).................................. 191.2(a).
191.3..................................... 191.3
191.4(a)(1)............................... 191.21.
191.4(a)(2)............................... 191.22(a).
191.4(a) (3)-(8).......................... Deleted.
191.4(a)(9)............................... 191.31(a).
191.4(a)(10).............................. 191.32(a).
191.4(a)(11).............................. 191.13.
191.4(a) (12)-(14)........................ Deleted.
191.4(b).................................. Deleted.
191.5..................................... 191.10(d); 191.25(g);
191.37(a).
191.6..................................... 191.6.
191.7..................................... 191.84.
191.8(a).................................. 191.26(a).
191.8(b).................................. 191.31(b).
191.8(c).................................. 191.151(a)(1).
191.9..................................... 191.62(a).
191.10.................................... 191.61.
191.11.................................... 191.4.
191.12.................................... Deleted.
191.13.................................... 191.5.
191.21(a)................................. 191.8(a).
191.21(a)(1).............................. Deleted.
191.21(a)(2).............................. 191.9.
191.21(b)................................. 191.8(c).
191.21(c)................................. 191.8(b).
191.21(d)................................. 191.8(d).
191.21(e)................................. Deleted.
191.22(a)(1).............................. 191.25(a)(1).
191.22(a)(1)(iv).......................... 191.23(d)(2).
191.22(a)(1)(v)........................... 191.26(a).
191.22(a)(2).............................. 191.23(d)(1); 191.25(c).
191.22(a)(3).............................. 191.25(a)(1)(iii).
191.22(a)(4).............................. 191.24(c).
191.22(a)(5).............................. 191.22(e).
191.22(b)................................. 191.25(a)(2).
191.22(c)................................. 191.14.
191.22(d)................................. Deleted.
191.22(e)................................. 191.10 (b) & (d).
191.23(a)................................. 191.8(d).
191.23(b)................................. 191.8(e).
191.23(c)................................. 191.26(c).
191.23(d)................................. Deleted.
191.24.................................... 191.8(f).
191.25(a)................................. 191.8(g)(1).
191.25(b)(1).............................. 191.8(g)(1).
191.25(b)(2).............................. 191.8(g)(2).
191.25(c)................................. 191.8(g)(3).
191.26.................................... 191.8(h).
191.27.................................... 191.11.
191.31.................................... Deleted.
191.32(a)................................. 191.25(b).
191.32(b)................................. 191.25(c).
191.32(c)................................. 191.22(b).
191.32(d)................................. 191.22(c).
191.33.................................... 191.22(e).
191.34.................................... 191.9.
191.41.................................... 191.7(a).
191.42(a)................................. 191.7(b)(1).
191.42(b)................................. 191.7(b)(2).
191.43.................................... 191.7(c).
[[Page 3095]]
191.44.................................... 191.7(d).
191.45.................................... Deleted.
191.51.................................... 191.72.
191.52.................................... Deleted.
191.53.................................... 191.73.
191.54.................................... 191.74.
191.55.................................... 191.75.
191.56.................................... Deleted.
191.57.................................... Deleted.
191.61.................................... 191.52(a).
191.62(a)................................. 191.51(a).
191.62(a)(2)(ii).......................... 191.25(d).
191.62(b)................................. 191.51(a).
191.62(c)................................. 191.25(f).
191.62(d)................................. Deleted.
191.63.................................... Deleted.
191.64.................................... 191.52 (b) & (c).
191.65(a)................................. 191.10(a); 191.25(e).
191.65(b)................................. 191.10(c)(1); 191.25(e).
191.65(c)................................. Deleted.
191.65(d)................................. 191.10(f); 191.34(c).
191.66(a)................................. 191.24(a).
191.66(b)................................. 191.9.
191.66(c)................................. Deleted.
191.66(d)................................. 191.10(c)(2).
191.66(e)................................. Deleted.
191.66(f)................................. 191.9.
191.67.................................... 191.76.
191.71.................................... 191.81.
191.72.................................... 191.92.
191.73(a)................................. 191.82.
191.73(b)................................. 191.83.
191.81.................................... 191.101.
191.82.................................... 191.102.
191.83.................................... 191.103.
191.84.................................... 191.104.
191.85.................................... 191.105.
191.86.................................... 191.106.
191.91.................................... 191.111.
191.92, 191.93............................ 191.112.
191.101................................... 191.121.
191.102................................... 191.122.
191.103................................... 191.123.
191.111................................... 191.131.
191.112................................... 191.132.
191.113................................... 191.133.
191.121................................... 191.141.
191.122................................... 191.142.
191.123................................... 191.143.
191.124................................... 191.144.
191.131................................... 191.151.
191.132................................... 191.152.
191.133................................... 191.153.
191.134................................... 191.154.
191.135................................... 191.155.
191.136................................... 191.156.
191.137................................... 191.157.
191.138................................... 191.158.
191.139................................... 191.159.
191.141(a)(1)............................. 191.31(a).
191.141(a)(2)............................. 191.31(b).
191.141(a)(3)............................. 191.31(c).
191.141(b)................................ 191.34(a); 191.35.
191.141(b)(2)(ii)......................... 191.91.
191.141(c)................................ 191.51.
191.141(d)................................ 191.73.
191.141(e)................................ Deleted.
191.141(f)................................ 191.71.
191.141(g)................................ 191.51; 191.52.
191.141(h)................................ 191.32 (b) & (d).
191.142(a)(1)............................. 191.41.
191.142(a)(2)............................. 191.43.
191.142(b)................................ 191.42.
191.151................................... 191.161.
191.152................................... 191.162.
191.153................................... 191.163.
191.154................................... 191.164.
191.155................................... 191.165.
191.156................................... 191.166.
191.157................................... 191.167.
191.158................................... 191.168.
191.161................................... 191.181.
191.162................................... 191.182.
191.163................................... 191.183.
191.164................................... 191.184.
191.165................................... 191.185.
191.166................................... 191.186.
------------------------------------------------------------------------
List of Subjects
19 CFR Part 7
Customs duties and inspection, Exports, Imports.
19 CFR Part 10
Alterations, Bonds, Customs duties and inspection, Exports,
Imports, Preference programs, Repairs, Reporting and recordkeeping
requirements, Trade agreements.
19 CFR Part 145
Customs duties and inspection, Imports, Postal Service.
19 CFR Part 173
Administrative practice and procedure, Customs duties and
inspection.
19 CFR Part 174
Administrative practice and procedure, Customs duties and
inspection, Reporting and recordkeeping requirements, Trade agreements.
19 CFR Part 181
Administrative practice and procedure, Canada, Customs duties and
inspection, Exports, Imports, Mexico, Reporting and recordkeeping
requirements, Trade agreements (North American Free Trade Agreement).
19 CFR Part 191
Canada, Commerce, Customs duties and inspection, Drawback, Mexico,
Reporting and recordkeeping requirements, Trade agreements.
Proposed Amendments
It is proposed to amend chapter I of title 19, Code of Federal
Regulations (19 CFR chapter I), by amending parts 7, 10, 145, 173, 174,
181 and 191 as set forth below.
PART 7--CUSTOMS RELATIONS WITH INSULAR POSSESSIONS AND GUANTANAMO
BAY NAVAL STATION
1. The general authority for part 7 would be revised to read as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1623, 1624; 48 U.S.C. 1406i.
Sec. 7.1 [Amended]
2. It is proposed to amend Sec. 7.1(a) by removing the reference to
``Secs. 191.85 and 191.86'' where appearing therein, and by adding in
place thereof, ``Secs. 191.105 and 191.106''.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
1. The general authority citation for part 10 would continue to
read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314;
* * * * *
Sec. 10.38 [Amended]
2. It is proposed to amend Sec. 10.38(f) by removing the reference
to ``Sec. 191.10'' where appearing therein, and by adding in place
thereof, ``Sec. 191.61''.
PART 145--MAIL IMPORTATIONS
1. The general authority citation for part 145 would be revised to
read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1624;
* * * * *
Sec. 145.72 [Amended]
2. It is proposed to amend Sec. 145.72(e) by removing the reference
to ``Sec. 191.142'' where appearing therein, and by adding in place
thereof, ``Sec. 191.42''.
PART 173--ADMINISTRATIVE REVIEW IN GENERAL
1. The general authority citation for part 173 would continue to
read as follows:
Authority: 19 U.S.C. 66, 1501, 1520, 1624.
2. It is proposed to amend Sec. 173.4 by adding a sentence at the
end of paragraph (c) to read as follows:
[[Page 3096]]
Sec. 173.4 Correction of clerical error, mistake of fact, or
inadvertence.
* * * * *
(c) * * * The party requesting reliquidation under section
520(c)(1), Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1)) shall
state, to the best of his knowledge, whether the entry for which
correction is requested is the subject of a drawback claim, or whether
the entry has been referenced on a certificate of delivery or
certificate of manufacture and delivery so as to enable a party to make
such entry the subject of drawback (see Secs. 181.50(b) and 191.81(b)
of this chapter).
* * * * *
PART 174--PROTESTS
1. The general authority citation for part 174 would continue to
read as follows:
Authority: 19 U.S.C. 66, 1514, 1515, 1624.
2. It is proposed to amend Sec. 174.13 by adding a new paragraph
(a)(9) to read as follows:
Sec. 174.13 Contents of protest.
(a) Contents, in general. * * *
(9) A declaration, to the best of the protestant's knowledge, as to
whether the entry is the subject of drawback, or whether the entry has
been referenced on a certificate of delivery or certificate of
manufacture and delivery so as to enable a party to make such entry the
subject of drawback (see Secs. 181.50(b) and Sec. 191.81(b) of this
chapter).
* * * * *
PART 181--NORTH AMERICAN FREE TRADE AGREEMENT
1. The general authority citation for part 181 would continue to
read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1624, 3314.
Sec. 181.44 [Amended]
2. It is proposed to amend Sec. 181.44(d) by removing the reference
to ``Sec. 191.2(m)'' where appearing therein, and by adding in place
thereof, ``Sec. 191.2(s)''.
3. It is proposed to amend the ``Example'' in Sec. 181.44(f) by
removing the reference to ``Customs Form 7575-A'' where appearing
therein, and by adding in its place, ``Customs Form 331''.
Sec. 181.45 [Amended]
4. It is proposed to amend Sec. 181.45(b)(2)(i) by removing the
reference to ``Sec. 191.141(e)'' where appearing therein, and by adding
in place thereof, ``Sec. 191.14''.
Sec. 181.46 [Amended]
5. It is proposed to amend Sec. 181.46(b) by removing the term
``port(s)'' and where appearing in the first sentence, and adding in
place thereof, ``drawback office(s)''.
Sec. 181.47 [Amended]
6. It is proposed to amend Sec. 181.47(b)(2)(i)(C) by removing the
words ``Exporter's'' and ``exporter's'' where appearing therein, and by
adding in place thereof, ``Export'' and ``export'', respectively.
7. It is proposed to amend Sec. 181.47(b)(2)(ii)(A) by removing
``Customs Form 7539J'', and adding in place thereof, ``Customs Form
331''.
8. It is proposed to amend Sec. 181.47(b)(2)(ii)(D) by removing the
phrase ``The certificate of delivery portion of Customs Form 331''
where appearing therein, and adding in place thereof, ``A certificate
of delivery''.
9. It is proposed to amend Sec. 181.47(b)(2)(ii)(G) by revising the
first two sentences to read:
* * * * *
(b) * * *
(2) * * *
(ii) * * *
(G) Evidence of exportation. Acceptable documentary evidence of
exportation to Canada or Mexico shall include a bill of lading, air
waybill, freight waybill, export ocean bill of lading, Canadian customs
manifest, cargo manifest, or certified copies thereof, issued by the
exporting carrier''. * * *
10. It is proposed to amend Sec. 181.47(b)(2)(iii)(A) by removing
``Customs Form 7539C'' where appearing therein, and by adding in place
thereof, ``Customs Form 331''.
Sec. 181.48 [Amended]
11. It is proposed to amend Sec. 181.47(b)(2)(v) by removing the
reference to ``subpart L'' where appearing therein, and by adding in
place thereof, ``subpart N''.
Sec. 181.49 [Amended]
12. It is proposed to amend Sec. 181.49 by removing the reference
to ``Sec. 191.5'' where appearing therein, and by adding in place
thereof, ``Sec. 191.25(d)''.
Sec. 181.50 [Amended]
13. It is proposed to amend Sec. 181.50(c) by removing the
reference to ``Sec. 191.72'' where appearing therein, and by adding in
place thereof, ``191.92''.
PART 191--DRAWBACK
1. It is proposed to revise part 191 to read as follows:
Sec.
191.0 Scope.
191.0a Claims filed under NAFTA.
Subpart A--General Provisions
191.1 Authority of the Commissioner of Customs.
191.2 Definitions.
191.3 Duties and fees subject or not subject to drawback.
191.4 Merchandise in which a U.S. Government interest exists.
191.5 Guantanamo Bay, insular possessions, trust territories.
191.6 Authority to sign drawback documents.
191.7 General manufacturing drawback ruling.
191.8 Specific manufacturing drawback ruling.
191.9 Agency.
191.10 Certificate of delivery.
191.11 Tradeoff.
191.12 Claim filed under incorrect provision.
191.13 Packaging materials.
191.14 Identification of merchandise or articles by accounting.
Subpart B--Manufacturing drawback
191.21 Direct identification drawback.
191.22 Substitution drawback.
191.23 Methods of claiming drawback.
191.24 Certificate of manufacture and delivery.
191.25 Recordkeeping for manufacturing drawback.
191.26 Time limitations.
191.27 Person entitled to claim drawback.
Subpart C--Unused Merchandise Drawback
191.31 Direct identification.
191.32 Substitution drawback.
191.33 Person entitled to drawback.
191.34 Certificate of delivery required.
191.35 Notice of intent to export; examination of merchandise.
191.36 Failure to file notice of intent to export or destroy
merchandise.
191.37 Records.
Subpart D--Rejected Merchandise
191.41 Rejected merchandise drawback.
191.42 Procedure.
191.43 Unused merchandise claim.
191.44 Destruction under Customs supervision.
Subpart E--Completion of Drawback Claims
191.51 Completion of drawback claims.
191.52 Completing, perfecting or amending claims.
191.53 Restructuring of claims.
Subpart F--Verification of Claims
191.61 Verification of drawback claims.
191.62 Falsification of drawback claims.
[[Page 3097]]
Subpart G--Evidence of Exportation and Destruction
191.71 Drawback on articles destroyed under Customs supervision.
191.72 Alternative procedures for establishing exportation.
191.73 Export summary procedure.
191.74 Certification of exportation by mail.
191.75 Exportation by the Government.
191.76 Landing certificate.
Subpart H--Liquidation and Protest of Drawback Entries
191.81 Liquidation.
191.82 Person entitled to claim drawback.
191.83 Person entitled to receive payment.
191.84 Protests.
Subpart I--Privileges
191.91 Waiver of notice of intent to export.
191.92 Accelerated payment.
191.93 Combined applications.
Subpart J--Internal Revenue Tax on Flavoring Extracts and Medicinal or
Toilet Preparations (Including Perfumery) Manufactured from Domestic
Tax-Paid Alcohol
191.101 Drawback allowance.
191.102 Procedure.
191.103 Additional requirements.
191.104 Alcohol, Tobacco and Firearms certificates.
191.105 Liquidation.
191.106 Amount of drawback.
Subpart K--Supplies for Certain Vessels and Aircraft
191.111 Drawback allowance.
191.112 Procedure.
Subpart L--Meats Cured with Imported Salt
191.121 Drawback allowance.
191.122 Procedure.
191.123 Refund of duties.
Subpart M--Materials for Construction and Equipment of Vessels and
Aircraft Built for Foreign Ownership and Account
191.131 Drawback allowance.
191.132 Procedure.
191.133 Explanation of terms.
Subpart N--Foreign-Built Jet Aircraft Engines Processed in the United
States
191.141 Drawback allowance.
191.142 Procedure.
191.143 Drawback entry.
191.144 Refund of duties.
Subpart O--Merchandise Exported from Continuous Customs Custody
191.151 Drawback allowance.
191.152 Merchandise released from Customs custody.
191.153 Continuous Customs custody.
191.154 Filing the entry.
191.155 Merchandise withdrawn from warehouse for exportation.
191.156 Bill of lading.
191.157 Landing certificates.
191.158 Procedures.
191.159 Amount of drawback.
Subpart P--Distilled Spirits, Wines, or Beer Which Are Unmerchantable
or Do Not Conform to Sample or Specifications
191.161 Refund of taxes.
191.162 Procedure.
191.163 Documentation.
191.164 Return to Customs custody.
191.165 No exportation by mail.
191.166 Destruction of merchandise.
191.167 Liquidation.
191.168 Time limit for exportation or destruction.
Subpart Q--Substitution of Finished Petroleum Derivatives
191.171 General; Drawback allowance.
191.172 Definitions.
191.173 Imported duty-paid derivatives (no manufacture).
191.174 Derivatives manufactured under 19 U.S.C. 1313 (a) or (b).
191.175 Drawback claimant; maintenance of records.
191.176 Procedures for claims filed under 19 U.S.C. 1313(p).
Subpart R--Merchandise Transferred to a Foreign Trade Zone from Customs
Custody
191.181 Drawback allowance.
191.182 Zone-restricted merchandise.
191.183 Articles manufactured or produced in the United States.
191.184 Merchandise transferred from continuous Customs custody.
191.185 Unused merchandise drawback and merchandise not conforming
to sample or specification, shipped without consent of the
consignee, or found to be defective as of the time of importation.
191.186 Person entitled to claim drawback.
Subpart S--Drawback Compliance Program
191.191 Purpose.
191.192 Certification for compliance program.
191.193 Application procedure for compliance program.
191.194 Action on application to participate in compliance program.
191.195 Combined application for Certification in Drawback
Compliance Program and Drawback Privileges.
Appendix A to Part 191--General Manufacturing Drawback Rulings
Appendix B to Part 191--Sample Formats for Applications for Specific
Manufacturing Drawback Ruling Applications
Authority: 5 U.S.C. 301, 19 U.S.C. 66, 1202 (General Note 20,
Harmonized Tariff Schedule of the United States), 1313, 1624.
Sec. 191.62 also issued under 18 U.S.C. 550, 19 U.S.C. 1593a;
Sec. 191.84 also issued under 19 U.S.C. 1514;
Secs. 191.111, 191.112 also issued under 19 U.S.C. 1309;
Secs. 191.151(a)(1), 191.153, 191.157, 191.159 also issued under
19 U.S.C. 1557;
Sec. 191.182-191.186 also issued under 19 U.S.C. 81c;
Secs. 191.191-191.195 also issued under 19 U.S.C. 1593a.
Sec. 191.0 Scope.
This part sets forth general provisions applicable to all drawback
claims and specialized provisions applicable to specific types of
drawback claims. Additional drawback provisions relating to the North
American Free Trade Agreement (NAFTA) are contained in subpart E of
part 181 of this chapter.
Sec. 191.0a Claims filed under NAFTA.
Claims for drawback filed under the provisions of part 181 of this
chapter shall be filed separately from claims filed under the
provisions of this part.
Subpart A--General Provisions
Sec. 191.1 Authority of the Commissioner of Customs.
Pursuant to Treasury Department Order No. 165, Revised (T.D. 53654,
19 FR 7241), as amended, the Commissioner of Customs, with the approval
of the Secretary of the Treasury, shall prescribe rules and regulations
regarding drawback.
Sec. 191.2 Definitions.
For the purposes of this part:
(a) Abstract. ``Abstract'' means the summary of the actual
production records of the manufacturer.
(b) Certificate of delivery. ``Certificate of delivery'' means
Customs Form xxx summarizing information contained in original
documents, establishing:
(1) The delivery of imported merchandise, substituted merchandise
under 19 U.S.C. 1313(j)(2), or drawback product, from one party
(transferor) to another (transferee); and
(2) The assignment of drawback rights for the merchandise
transferred from the transferor to the transferee.
(c) Certificate of manufacture and delivery. ``Certificate of
manufacture and delivery'' means Customs Form xxx summarizing
information contained in original documents, establishing the
manufacture or production of articles under 19 U.S.C. 1313 (a) or (b).
A certificate of manufacture and delivery must contain the information,
and has the effect, set forth in Sec. 191.24 of this part.
(d) Act. ``Act'', unless indicated otherwise, means the Tariff Act
of 1930, as amended.
(e) Commercially interchangeable merchandise. ``Commercially
interchangeable merchandise'' means merchandise which may be
substituted under the substitution unused merchandise drawback law,
section 313(j)(2) of the Act, as amended (19 U.S.C. 1313(j)(2)) (see
Sec. 191.32(b)(2) of this part), or under the provision for the
substitution of finished petroleum derivatives, section 313(p), as
amended (19 U.S.C. 1313(p)).
(f) Designated merchandise. ``Designated merchandise'' means either
[[Page 3098]]
eligible imported duty-paid merchandise or drawback products selected
by the drawback claimant as the basis for a drawback claim under 19
U.S.C. 1313 (b) or (j)(2), as applicable, or qualified articles
selected by the claimant as the basis for drawback under 19 U.S.C.
1313(p).
(g) Destruction. ``Destruction'' means the complete destruction of
articles or merchandise to the extent that they have no commercial
value.
(h) Direct identification drawback. ``Direct identification
drawback'' means drawback authorized either under section 313(a) of the
Act, as amended (19 U.S.C. 1313(a)), on imported merchandise used to
manufacture or produce an article which is either exported or
destroyed, or under section 313(j)(1) of the Act, as amended (19 U.S.C.
1313(j)(1)), on imported merchandise exported, or destroyed under
Customs supervision, without having been used in the United States (see
also sections 313 (c), (e), (f), (g), (h), and (q)).
(i) Drawback. ``Drawback'' means the refund or remission, in whole
or in part, of a customs duty, fee or internal revenue tax which was
imposed on imported merchandise under Federal law because of its
importation, and the refund of internal revenue taxes paid on domestic
alcohol as prescribed in 19 U.S.C. 1313(d).
(j) Drawback claim. ``Drawback claim'' means the drawback entry and
related documents required by regulation which together constitute the
request for drawback payment.
(k) Drawback entry. ``Drawback entry'' means the document
containing a description of, and other required information concerning,
the exported or destroyed article on which drawback is claimed.
Drawback entries are filed on Customs Form 331.
(l) Drawback product. A ``drawback product'' means a product which
is finished, partially finished or wholly manufactured in the United
States under the procedures in this part for manufacturing drawback. A
drawback product may be exported, or destroyed under Customs
supervision with a claim for drawback, or it may be used in the further
manufacture of other drawback products by manufacturers or producers
operating under the procedures in this part for manufacturing drawback,
in which case drawback would be claimed upon exportation or destruction
of the ultimate product. Products manufactured or produced from
substituted merchandise (imported or domestic) also become ``drawback
products'' when applicable substitution provisions of the Act are met.
For purposes of section 313(b) of the Act, as amended (19 U.S.C.
1313(b)), drawback products may be designated as the basis for drawback
or deemed to be substituted merchandise (see section 1313(b)). For a
drawback product to be designated as the basis for drawback, the
product must be associated with a certificate of manufacture and
delivery (see section 191.24 of this part).
(m) Exportation. ``Exportation'' means the severance of goods from
the mass of goods belonging to this country, with the intention of
uniting them with the mass of goods belonging to some foreign country.
An exportation may be deemed to have occurred when goods subject to
drawback are admitted into a foreign trade zone in zone-restricted
status, or are used as aircraft or vessel supplies in accordance with
section 309(b) of the Act, as amended (19 U.S.C. 1309(b)).
(n) Fungible merchandise or articles. ``Fungible merchandise or
articles'' means merchandise or articles which for commercial purposes
are identical and interchangeable in all situations.
(o) General manufacturing drawback ruling. A ``general
manufacturing drawback ruling'' means a description of a manufacturing
or production operation for drawback and the regulatory requirements
and interpretations applicable to that operation which is published in
appendix A of this part. A manufacturer or producer whose operation is
within this description may operate under a particular ``general
manufacturing drawback ruling'' by submitting to the appropriate
drawback office a letter of notification of intent to operate under the
general ruling, in accordance with Sec. 191.7, after which Customs
issues a letter of acknowledgment.
(p) Manufacture or production. ``Manufacture or production'' means:
(1) A process, including, but not limited to, an assembly, by which
merchandise is made into a new and different article having a
distinctive ``name, character or use''; or
(2) A process, including, but not limited to, an assembly, by which
merchandise is made fit for a particular use even though it does not
meet the requirements of paragraph (p)(1) of this section.
(q) Possession. ``Possession'', for purposes of substitution unused
merchandise drawback (19 U.S.C. 1313(j)(2)), means physical or
operational control of the merchandise, including ownership while in
bailment, in leased facilities, in transit to, or in any other manner
under the operational control of, the party claiming drawback.
(r) Relative value. ``Relative value'' means the value of a product
divided by the total value of all products which are necessarily
manufactured or produced concurrently in the same operation. Relative
value is based on the market value, or other value approved by Customs,
of each such product or by-product determined as of the time it is
first separated in the manufacturing or production process. Market
value is generally measured by the selling price, not including any
packaging, transportation, or other identifiable costs, which accrue
after the product itself is processed. Drawback law requires the
apportionment of drawback to each such product or by-product based on
its relative value at the time of separation.
(s) Substituted merchandise. ``Substituted merchandise'' means same
kind and quality merchandise that may be substituted under the
substitution drawback provisions, either section 313(b) or 313(p) of
the Act, as amended (19 U.S.C. 1313 (b) or (p)). Under section 313(b),
substituted merchandise is of the same kind and quality if it is
capable of being used interchangeably in manufacture or production of
exported or destroyed articles with no substantial change in the
manufacturing or production process. Under section 313(p), as amended,
an exported article and a qualified article are of the same kind and
quality if they fall under the same 8-digit Harmonized Tariff Schedule
of the United States (HTSUS) tariff classification as enumerated in
section 313(p)(3)(A)(i) (I) or (II), as amended, or are commercially
interchangeable (see Sec. 191.2(e)). Under section 313(j)(2),
substituted merchandise means merchandise which is commercially
interchangeable with the imported designated merchandise.
(t) Schedule. A ``schedule'' means a document filed by a drawback
claimant, under section 313 (a) or (b), as amended (19 U.S.C. 1313 (a)
or (b)), showing the quantity of imported or substituted merchandise
used in or appearing in each article exported or destroyed for
drawback.
(u) Specific manufacturing drawback ruling. A ``specific
manufacturing drawback ruling'' means an application, in one of the
formats published in appendix B of this part, by a manufacturer or
producer for a ruling on a specific manufacturing or production
operation for drawback, as described in the format used, together with
a letter of approval issued by Customs Headquarters to the applicant in
response to the application in accordance with Sec. 191.8. Synopses of
approved specific manufacturing drawback rulings are published in the
Customs Bulletin with each synopsis
[[Page 3099]]
being published under an identifying Treasury Decision. Specific
manufacturing drawback rulings are subject to the provisions in part
177 of this chapter.
(v) Verification. ``Verification'' means the examination of any and
all records, maintained by the claimant, or any party involved in the
drawback process, which are required by the appropriate Customs officer
to render a meaningful recommendation concerning the drawback
claimant's conformity to the law and regulations and the determination
of supportability, correctness, and validity of the specific claim or
groups of claims being verified.
Sec. 191.3 Duties and fees subject or not subject to drawback.
(a) Duties subject to drawback include:
(1) All ordinary Customs duties, including:
(i) Duties paid on an entry, or withdrawal from warehouse, for
consumption for which liquidation has become final;
(ii) Estimated duties paid on an entry, or withdrawal from
warehouse, for consumption, for which liquidation has not become final
and for which the drawback claimant and any other party responsible for
the payment of liquidated import duties have filed a written request
and waiver under Sec. 191.82(b) of this part;
(iii) Voluntary tenders of the unpaid amount of lawful duties on an
entry, or withdrawal from warehouse, for consumption, provided that the
import entry, or withdrawal from warehouse, for consumption for which
the voluntary tender was made is specifically identified in the
voluntary tender and provided that liquidation of the drawback entry in
which that specifically identified import entry, or withdrawal from
warehouse, for consumption is designated has not become final and that
the drawback claimant and any other party responsible for the payment
of the voluntary tender have filed a written request and waiver under
Sec. 191.82(c) of this part; or
(iv) Any payment of duty for an import entry, or withdrawal from
warehouse, for consumption, such as payment of a demand for duties
under 19 U.S.C. 1592(d), provided that the payment is specifically
identified as duty on a specifically identified import entry, or
withdrawal from warehouse, for consumption the liquidation of which
became final prior to such payment, and provided that liquidation of
the drawback entry in which that specifically identified entry, or
withdrawal from warehouse, for consumption is designated has not become
final and that the drawback claimant and any other party responsible
for the other payments of duties have filed a written request and
waiver under Sec. 191.82(c) of this part;
(2) Marking duties assessed under section 304(c), Tariff Act of
1930, as amended (19 U.S.C. 1304(c)); and,
(3) Internal revenue taxes which attach upon importation (see
Sec. 101.1(i) of this chapter).
(b) Duties and fees not subject to drawback include:
(1) Harbor maintenance fee (see Sec. 24.24 of this chapter);
(2) Merchandise processing fee (see Sec. 24.23 of this chapter);
and
(3) Antidumping and countervailing duties on merchandise entered,
or withdrawn from warehouse, for consumption on or after August 23,
1988.
(c) No drawback shall be allowed when the designated imported
merchandise, or the substituted other merchandise (when applicable),
consists of an agricultural product to which an over-quota rate of duty
established under a tariff-rate quota is applicable, except that:
(1) Agricultural products as described in paragraph (c) of this
section may be eligible for drawback under section 313(j)(1) of the
Act, as amended (19 U.S.C. 1313(j)(1)); and
(2) Tobacco otherwise meeting the description of agricultural
products in paragraph (c) of this section may also be eligible for
drawback under section 313(a) of the Act, as amended (19 U.S.C.
1313(a)).
Sec. 191.4 Merchandise in which a U.S. Government interest exists.
(a) Restricted meaning of Government. A U.S. Government
instrumentality operating with nonappropriated funds is considered a
Government entity within the meaning of this section. Surety on any
drawback bond undertaken by these instrumentalities will not be
required.
(b) Allowance of drawback. If the merchandise was sold to the U.S.
Government, drawback shall be available only to the:
(1) Department, branch, agency, or instrumentality of the U.S.
Government which purchased it; or
(2) Supplier, or any of the parties specified in Sec. 191.82 of
this part, provided the claim is supported by documentation signed by a
proper officer of the department, branch, agency, or instrumentality
concerned certifying that the right to drawback was reserved by the
supplier or other parties with the knowledge and consent of the
department, branch, agency, or instrumentality.
Sec. 191.5 Guantanamo Bay, insular possessions, trust territories.
Guantanamo Bay Naval Station shall be considered foreign territory
for drawback purposes and, accordingly, drawback may be permitted on
articles shipped there. Under 19 U.S.C. 1313, drawback of Customs duty
is not allowed on articles shipped to Puerto Rico, the U.S. Virgin
Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef,
Guam, Canton Island, Enderbury Island, Johnston Island, or Palmyra
Island.
Sec. 191.6 Authority to sign drawback documents.
(a) Documents listed in paragraph (b) of this section shall be
signed only by one of the following:
(1) The president, a vice-president, secretary, treasurer, or any
other individual legally authorized to bind the corporation;
(2) A full partner of a partnership;
(3) The owner of a sole proprietorship;
(4) Any employee of a business entity with a power of attorney;
(5) An individual acting on his or her own behalf; or
(6) A licensed Customs broker with a power of attorney.
(b) The following documents require execution in accordance with
paragraph (a) of this section:
(1) Drawback entries;
(2) Certificates of delivery;
(3) Certificates of manufacture and delivery;
(4) Applications of manufacturers or producers for approval of
specific manufacturing drawback rulings, schedules, and supplemental
schedules;
(5) Letters of notification for general manufacturing drawback
rulings;
(6) Endorsements of exporters on bills of lading or evidence of
exportation; and
(7) Abstracts, schedules and extracts from monthly abstracts if not
included as part of a drawback claim.
Sec. 191.7 General manufacturing drawback ruling.
(a) Purpose; eligibility. General manufacturing drawback rulings
are designed to simplify drawback for certain common manufacturing
operations but do not preclude or limit the use of applications for
specific manufacturing drawback rulings (see Sec. 191.8). A
manufacturer or producer engaged in an operation that falls within a
published general manufacturing drawback ruling may submit a letter of
notification of intent to operate under that general ruling. Where a
separately-
[[Page 3100]]
incorporated subsidiary of a parent corporation is engaged in
manufacture or production for drawback, the subsidiary is the proper
party to submit the letter of notification, and cannot operate under a
letter of notification submitted by the parent corporation.
(b) Procedures--(1) Publication. General manufacturing drawback
rulings are contained in Appendix A to this part. The Appendix will be
updated when new general drawback rulings are issued (as Treasury
Decisions) or existing general drawback rulings are revised.
(2) Submission. Letters of notification of intent to operate under
a general manufacturing drawback ruling shall be submitted in duplicate
to any drawback office where drawback entries will be filed and
liquidated. If claims are to be filed at more than one drawback office,
two additional copies of the letter of notification shall be filed for
each additional office and the drawback office with which the letter of
notification is submitted shall forward the additional copies to such
additional office(s).
(3) Information required. Each manufacturer or producer submitting
a letter of notification of intent to operate under a general
manufacturing drawback ruling under this section must provide the
following specific detailed information:
(i) Name and address of producer or manufacturer (if the
manufacturer or producer is a separately-incorporated subsidiary of a
corporation, the subsidiary corporation must submit a letter of
notification in its own name);
(ii) In the case of a business entity, the names of the persons
listed in Sec. 191.6(a)(1) through (5) who will sign drawback
documents;
(iii) Locations of the factories which will operate under the
letter of notification;
(iv) Description of the merchandise and articles, unless
specifically described in the letter of notification;
(v) Basis of claim used for calculating drawback; and
(vi) IRS (Internal Revenue Service) number of the manufacturer or
producer.
(c) Acknowledgment. The appropriate drawback office shall
acknowledge in writing the receipt of the letter of notification of
intent to operate under the general manufacturing drawback ruling.
(d) Duration. Acknowledged letters of notification under this
section shall remain in effect under the same terms as provided for in
Sec. 191.8(h) for specific manufacturing drawback rulings.
Sec. 191.8 Specific manufacturing drawback ruling.
(a) Proper applicant. Unless operating under a general
manufacturing drawback ruling (see Sec. 191.7), each manufacturer or
producer of articles intended to be claimed for drawback shall apply
for a specific manufacturing drawback ruling. Where a separately-
incorporated subsidiary of a parent corporation is engaged in
manufacture or production for drawback, the subsidiary is the proper
party to apply for a specific manufacturing drawback ruling, and cannot
operate under any specific manufacturing drawback ruling approved in
favor of the parent corporation.
(b) Sample application. Sample formats for applications for
specific manufacturing drawback rulings are contained in Appendix B to
this part.
(c) Content of application. The application of each manufacturer or
producer shall include the following information as applicable:
(1) Name and address of the applicant;
(2) Internal Revenue Service (IRS) number of the applicant;
(3) Description of the type of business in which engaged;
(4) Description of the manufacturing or production process, which
shows how the designated and substituted merchandise are used to make
the article that is to be exported or destroyed;
(5) In the case of a business entity, the names of persons listed
in Sec. 191.6(a)(1) through (5) who will sign drawback documents;
(6) Description of the imported merchandise including
specifications;
(7) Description of the exported article;
(8) Basis of claim for calculating manufacturing drawback;
(9) Summary of the records kept to support claims for drawback; and
(10) Identity and address of the recordkeeper if other than the
claimant.
(d) Submission. An application for a specific manufacturing
drawback ruling shall be submitted, in triplicate, to Customs
Headquarters (Attention: Entry and Carrier Rulings Branch, Office of
Regulations and Rulings). If drawback claims are to be filed under the
ruling at more than one drawback office, two additional copies of the
application shall be filed for each additional office.
(e) Review and action by Customs. Customs Headquarters shall review
the application for a specific manufacturing drawback ruling.
(1) Approval. If consistent with the drawback law and regulations,
Customs Headquarters shall issue a letter of approval to the applicant
and shall forward 2 copies of the application for the specific
manufacturing drawback ruling to the appropriate drawback office(s)
with a copy of the letter of approval. Synopses of approved specific
manufacturing drawback rulings shall be published in the weekly Customs
Bulletin with each synopsis being published under an identifying
Treasury Decision (T.D.). Each approved specific manufacturing drawback
ruling shall be assigned a unique computer-generated manufacturing
contract number which appears in the published synopsis and must be
used when filing manufacturing drawback claims with Customs.
(2) Disapproval. If not consistent with the drawback law and
regulations, Customs Headquarters shall promptly inform the applicant
that the application cannot be approved and shall specifically advise
the applicant why this is so. A disapproved application may be
resubmitted with modifications and/or explanations addressing the
reasons given for disapproval, or the disapproval may be appealed to
Customs Headquarters (Attention: Director, International Trade
Compliance Division).
(f) Schedules and supplemental schedules. When an application for a
specific manufacturing drawback ruling states that drawback is to be
based upon a schedule filed by the manufacturer or producer, the
schedule will be reviewed by Customs Headquarters. The application may
include a request for authorization for the filing of supplemental
schedules with the drawback office where claims are filed.
(g) Procedure to modify a specific manufacturing drawback ruling.--
(1) Supplemental application. Except as provided for limited
modifications in paragraph (g)(2) of this section, a manufacturer or
producer desiring to modify an existing specific manufacturing drawback
ruling shall submit a supplemental application for such a ruling in the
form of the original application to Customs Headquarters (Attention:
Entry and Carrier Rulings Branch, Office of Regulations and Rulings).
Except as specifically provided in this section, such modifications
(not including those provided for in paragraph (g)(2) of this section)
shall be subject to the procedures provided for in part 177 of this
chapter.
(2) Limited modifications. (i) A supplemental application for a
specific manufacturing drawback ruling shall be submitted to the
drawback office(s) where claims are filed if the modifications are
limited to:
(A) The location of a factory, or the addition of one or more
factories where
[[Page 3101]]
the methods followed and records maintained are the same as those at
another factory operating under the existing specific manufacturing
drawback ruling of the manufacturer or producer;
(B) The succession of a sole proprietorship, partnership or
corporation to the operations of a manufacturer or producer;
(C) A change in name of the manufacturer or producer;
(D) A change in the persons who will sign drawback documents in the
case of a business entity; or
(E) Any combination of the foregoing changes.
(ii) A limited modification, as provided for in this paragraph,
shall contain only the modifications to be made, in addition to
identifying the specific manufacturing drawback ruling and being signed
by an authorized person (that is, such a modification need not be in
the form of an original application, as under paragraph (g)(1) of this
section).
(h) Duration. Subject to part 177 of this chapter, an approval of a
specific manufacturing drawback ruling under this section shall remain
in effect indefinitely unless:
(1) No drawback claim or certificate of manufacture and delivery is
filed under the ruling for a period of 5 years and notice of
termination is published in the Customs Bulletin; or
(2) The manufacturer or producer to whom approval of the ruling was
issued files a request to terminate the ruling, in writing, with
Customs Headquarters.
Sec. 191.9 Agency.
(a) Applicability. The principal-agent procedures described in
paragraphs (b) through (e) of this section are applicable only in
substitution manufacturing drawback under 19 U.S.C. 1313(b).
(b) General. An owner of the designated and substituted merchandise
that is used to produce the exported articles may employ another person
to do part, or all, of the work that transforms either the designated
or substituted merchandise into articles for the purpose of 19 U.S.C.
1313(b), or which accomplishes any of the other manufacture or
production processes stated in Sec. 191.2(p). The person who asserts
that it is the manufacturer or producer under 19 U.S.C. 1313(b) must
establish by its manufacturing records, the manufacturing records of
its agent, or the manufacturing records of both parties, that the
designated and substituted merchandise were used in the manufacture or
production of articles.
(c) Requirements.--(1) Contract. The manufacturer must establish
that it is the principal in a contract between it and its agent who
actually does the work on either the designated or substituted
merchandise for the principal. The contract must specify:
(i) Terms of compensation to show that the relationship is an
agency rather than a sale;
(ii) How transfers of merchandise and articles will be recorded by
the principal and its agent;
(iii) The work to be performed on the merchandise by the agent for
the principal;
(iv) The degree of control that is to be exercised by the principal
over the agent's performance of work;
(v) The party who is to bear the risk of loss on the merchandise
while it is in the agent's custody; and
(vi) The period that the contract is in effect.
(2) Ownership of the merchandise by the principal. The records of
the principal and/or the agent must establish that the principal had
legal and equitable title to the merchandise before receipt by the
agent. The right of the agent to assert a lien on the merchandise for
work performed does not derogate the principal's ownership interest for
the purpose of 19 U.S.C. 1313(b).
(3) Sales prohibited. The relationship between the principal and
agent must not be that of a seller and buyer. If the parties' records
show that, with respect to the merchandise that is the subject of the
principal-agent contract, the merchandise is sold to the agent by the
principal, or the articles manufactured by the agent are sold to the
principal by the agent, those records are inadequate to show compliance
with the requirement in 19 U.S.C. 1313(b) that the principal was the
manufacturer or producer of the articles.
(d) Specific manufacturing drawback rulings; general manufacturing
drawback rulings.--(1) Owner. An owner who intends to show that it is
the manufacturer or producer of articles under 19 U.S.C. 1313(b)
through the work of an agent must state that intent in any application
for a specific manufacturing drawback ruling filed under Sec. 191.8.
(2) Agent. Each agent operating under this section must have filed
a letter of notification for the general manufacturing drawback ruling
(see Sec. 191.7), for an agent, covering the articles manufactured or
produced, or have obtained a specific manufacturing drawback ruling
(see Sec. 191.8), as appropriate.
(e) Certificate of manufacture and delivery; drawback entry.--(1)
Agent. Each agent manufacturer conducting operations under this section
shall furnish the principal for whom such agent processed merchandise a
certificate of manufacture and delivery applicable to the operation so
conducted, relating to the substituted or designated merchandise, and
identifying the owner of the articles for whom processing was
conducted. Certificates of Manufacture and Delivery issued to document
the transfer of articles under this section do not assign the potential
right to drawback to the person to whom such certificates are issued.
(2) Principal. The principal for whom processing was conducted
under this section shall complete and file a drawback entry on Customs
Form 331 and attach to it the forms from its agents or agent, if
necessary (see Secs. 191.10(e) and 191.24(c) of this part). The
principal shall not complete a certificate of delivery for merchandise
which it transfers to its agent(s) under the procedures in this
section.
Sec. 191.10 Certificate of delivery.
(a) Purpose; when required. A party who: imports and pays duty on
imported merchandise; receives imported merchandise; in the case of 19
U.S.C. 1313(j)(2), receives imported merchandise, commercially
interchangeable merchandise, or any combination of imported and
commercially interchangeable merchandise; or receives an article
manufactured or produced under 19 U.S.C. 1313 (a) and/or (b): May
transfer such merchandise or manufactured article to another party. The
party shall record this transfer by preparing and issuing in favor of
such other party a certificate of delivery, certified by the importer
or other party through whose possession the merchandise or manufactured
article passed (see paragraph (c) of this section). A certificate of
delivery issued with respect to the delivered merchandise or article:
(1) Documents the transfer of that merchandise or article;
(2) Identifies such merchandise or article as being that to which a
potential right to drawback has attached; and
(3) Assigns such right to the transferee (see Sec. 191.82 of this
part).
(b) Required information. The certificate of delivery must include
the following information:
(1) The party to whom the merchandise or articles are delivered;
(2) Date of delivery;
(3) Import entry number;
[[Page 3102]]
(4) Quantity delivered;
(5) Total duty paid on, or attributable to, the delivered
merchandise;
(6) Date certificate was issued;
(7) Date of importation;
(8) Port where import entry filed;
(9) Person from whom received; and
(10) Description of the merchandise delivered, and if such
merchandise is the designated imported merchandise or merchandise
substituted therefor under 19 U.S.C. 1313(j)(2) or 1313(p), the HTSUS
number with a minimum of 6 digits. (For designated imported
merchandise, such HTSUS number shall be from the entry summary and
other entry documentation for the merchandise unless the issuer of the
certificate of delivery received the merchandise under another
certificate of delivery, in which case such HTSUS number shall be from
the other certificate of delivery.)
(c) Intermediate transfer.--(1) Imported merchandise. If the
imported merchandise was not delivered directly from the importer to
the manufacturer, or from the importer to the exporter (or destroyer),
each intermediate transfer of the imported merchandise shall be
documented by means of a certificate of delivery issued in favor of the
receiving party, and certified by the person through whose possession
the merchandise passed.
(2) Manufactured article. If the article manufactured or produced
under 19 U.S.C. 1313 (a) or (b) is not delivered directly from the
manufacturer to the exporter (or destroyer), each intermediate transfer
of the article shall be documented by means of a certificate of
delivery, issued in favor of the receiving party, and certified by the
person through whose possession the article passed.
(d) Retention period; supporting records. Records supporting the
information required on the certificate(s) of delivery, as listed in
paragraph (b) of this section, must be retained by the issuing party
for 3 years from the date of payment of the related claim.
(e) Submission to Customs; certification. The certificate of
delivery shall be retained by the drawback claimant and, if requested,
submitted to Customs as part of the claim. If the certificate is
requested by Customs, but is not submitted as part of the claim, the
drawback claim dependent on that certificate will be rejected (see
Sec. 191.52 of this part).
(f) Warehouse transfer and withdrawals. The person in whose name
merchandise is withdrawn from a bonded warehouse shall be considered
the importer for drawback purposes. No certificate of delivery is
required covering prior transfers of merchandise while in a bonded
warehouse.
Sec. 191.11 Tradeoff.
(a) Exchanged merchandise. To comply with Secs. 191.21 and 191.22
of this part, the use of domestic merchandise taken in exchange for
imported merchandise of the same kind and quality (as defined in
Sec. 191.2(s) of this part for purposes of 19 U.S.C. 1313(b)) shall be
treated as use of the imported merchandise if no certificate of
delivery is issued covering the transfer of the imported merchandise.
This provision shall be known as tradeoff and is authorized by section
313(k) of the Act, as amended (19 U.S.C. 1313(k)).
(b) Requirements. Tradeoff must occur between two separate legal
entities but it is not necessary that the entity exchanging the
imported merchandise be the importer thereof. In addition, tradeoff
must consist of a straight tradeoff of same kind and quality
merchandise, with no additional payments of any type, including
additional payment in kind.
(c) Application. Each would-be user of tradeoff, except those
operating under an approved specific manufacturing drawback ruling
covering substitution, must apply to the Entry and Carrier Rulings
Branch, Office of Regulations and Rulings, Customs Headquarters, for a
determination of whether the imported and domestic merchandise are of
the same kind and quality. For those users manufacturing under
substitution drawback, this request should be contained in the drawback
application. For those users manufacturing under direct identification
drawback, the request should be made by a separate letter.
Sec. 191.12 Claim filed under incorrect provision.
A drawback claim filed pursuant to any provision of section 313 of
the Act, as amended (19 U.S.C. 1313) may be deemed filed pursuant to
any other provision thereof should the drawback office determine that
drawback is not allowable under the provision as originally filed, but
that it is allowable under such other provision. To be allowable under
such other provision, the claim must meet each of the requirements of
such other provision.
Sec. 191.13 Packaging materials.
Drawback of duties is provided for in section 313(q) of the Act, as
amended (19 U.S.C. 1313(q)), on imported packaging material when used
to package or repackage merchandise or articles exported or destroyed
pursuant to section 313 (a), (b), (c), or (j) of the Act, as amended
(19 U.S.C. 1313 (a), (b), (c), or (j)). Drawback is payable on the
packaging material pursuant to the particular drawback provision to
which the packaged goods themselves are subject. The drawback will be
based on the duty, tax or fee paid on the importation of the packaging
material. The packaging material must be separately identified on the
claim.
Sec. 191.14 Identification of merchandise or articles by accounting
method.
(a) General. This section provides for the identification of
merchandise or articles for drawback purposes by the use of accounting
methods. This section applies to identification of merchandise or
articles in inventory or storage, as well as identification of
merchandise used in manufacture. This section is not applicable to
situations in which the drawback law authorizes substitution (see 19
U.S.C. 1313(b), 1313(j)(2), 1313(k), and 1313(p)). When substitution is
authorized, merchandise or articles may be substituted without
reference to this section, under the criteria and conditions
specifically authorized in the statutory and regulatory provisions
providing for the substitution. This section is not applicable to the
identification of merchandise by accounting procedures for drawback
under 19 U.S.C. 1313(j)(1) for exportations to Canada or Mexico under
the NAFTA (see Sec. 181.45(b)(2)).
(b) Conditions and criteria for identification by accounting
method. Manufacturers, producers, claimants, or other appropriate
persons may identify for drawback purposes lots of merchandise or
articles under this section, subject to each of the following
conditions and criteria:
(1) The lots of merchandise or articles to be so identified must be
fungible (see Sec. 191.2(n) of this part);
(2) The person using the identification method must establish that
inventory records (for example, material control records), prepared and
used in the ordinary course of business, account for the lots of
merchandise or articles to be identified as being received into and
withdrawn from the same inventory. Even if merchandise or articles are
received or withdrawn at different geographical locations, if such
inventory records treat receipts or withdrawals as being from the same
inventory, those inventory records may be used to identify the
merchandise or articles under this section, subject to the conditions
of this section. If any such inventory records (that is, inventory
records prepared and used in the
[[Page 3103]]
ordinary course of business) treat receipts and withdrawals as being
from different inventories, those inventory records must be used and
receipts into or withdrawals from the different inventories may not be
accounted for together. If units of merchandise or articles can be
specifically identified (for example, by serial number), the
merchandise or articles must be specifically identified and may not be
identified by accounting method, unless it is established that
inventory records, prepared and used in the ordinary course of
business, treat the merchandise or articles to be identified as being
received into and withdrawn from the same inventory (subject to the
above conditions);
(3) Unless otherwise provided in this section (see, for example,
paragraph (c)(5) of this section) or specifically approved by Customs
(by a binding ruling under part 177 of this chapter), all receipts (or
inputs) into and all withdrawals from the inventory must be recorded in
the accounting record;
(4) The records which support any identification method under this
section are subject to verification by Customs (see Sec. 191.61 of this
part). If Customs requests such verification, the person using the
identification method must be able to demonstrate how, under generally
accepted accounting procedures, the records which support the
identification method used account for all merchandise or articles in,
and all receipts into and withdrawals from, the inventory, and the
drawback per unit for each receipt and withdrawal; and
(5) Any accounting method which is used by a person for drawback
purposes under this section must be used without variation with other
methods for a period of at least one year, unless approval is given by
Customs for a shorter period.
(c) Approved accounting methods. The following accounting methods
are approved for use in the identification of merchandise or articles
for drawback purposes under this section.
(1) First-in, first-out (FIFO). The FIFO method is the method by
which fungible merchandise or articles are identified on the basis of
the first merchandise or articles received into the inventory. Under
this method, withdrawals are from the oldest (first-in) merchandise or
articles in the inventory at the time of withdrawal.
(2) Last-in, first out (LIFO). The LIFO method is the method by
which fungible merchandise or articles are identified on the basis of
the last merchandise or articles received into the inventory. Under
this method, withdrawals are from the newest (last-in) merchandise or
articles in the inventory at the time of withdrawal.
(3) Low-to-high.--(i) General. The low-to-high method is the method
by which fungible merchandise or articles are identified on the basis
of the lowest drawback amount per unit of the merchandise or articles
received into the inventory. Merchandise or articles with no drawback
attributable to them (for example, domestic merchandise or duty-free
merchandise) must be accounted for and are treated as having the lowest
drawback attributable to them. Under this method, withdrawals are from
the merchandise or articles with the least amount of drawback
attributable to them, then that with the next higher amount, and so
forth. If the same amount of drawback is attributable to more than one
lot of merchandise or articles, withdrawals are from the oldest (first-
in) merchandise or articles among those lots with the same amount of
drawback attributable. This method may be used without accounting for
domestic withdrawals. Drawback requirements are applicable to withdrawn
merchandise or articles as identified (for example, if the merchandise
or articles identified were attributable to an import more than 5 years
(more than 3 years for unused merchandise drawback) before the claimed
export, no drawback could be granted).
(ii) Use with inventory turn-over period. The low-to-high method
may be used with an established inventory turn-over period, provided
that:
(A) Merchandise or articles identified for drawback purposes under
this method are the merchandise or articles with the least amount of
drawback attributable to them among the lots of merchandise or articles
received into the inventory during the inventory turn-over period
preceding the month in which the merchandise or articles identified
were withdrawn; and
(B) The person establishes the average turnover period, as
described in this paragraph. For purposes of this section, average
inventory turn-over period is based on the rate of withdrawal from
inventory and represents the time in which all of the merchandise or
articles in the inventory at a given time must have been withdrawn. To
establish an average of this time, at least 1 year, or three (3) turn-
over periods (if inventory turns over less than 3 times per year), must
be averaged. The inventory turn-over period must be that for the
merchandise or articles to be identified, except that if the person
using the method has more than one kind of merchandise or articles with
different inventory turn-over periods, the longest average turn-over
period established under this section may be used. This method may be
used without accounting for domestic withdrawals.
(iii) Examples. (A) If the inventory contained 100 units with no
drawback attributable to them, 100 units with $1 drawback attributable
per unit, 100 units with $2 drawback attributable per unit, and the
inventory turn-over method is not to be used, withdrawals would be
identified as follows: The first 100 units withdrawn would have no
drawback attributable to them, the next 100 units withdrawn would have
a drawback attribution of $1 per unit, and the third 100 units
withdrawn would have a drawback attribution of $2 per unit. If 50 units
were first withdrawn for non-drawback purposes and the next 250 units
were withdrawn for drawback purposes, the 250-unit withdrawal would
consist of 100 units with no drawback attributable, 100 units with $1
drawback attributable per unit, and 50 units with $2 drawback
attributable per unit.
(B) If the average turn-over period for the merchandise or articles
identified is 3 months, the inventory turn-over method is used, and the
withdrawal is any date in September, the merchandise or articles with
the lowest drawback attribution received into inventory in June, July,
and August would be that identified.
(C) If the average turn-over period for the merchandise or articles
identified is 3 months, the inventory turn-over method is used, the
person using the identification method has more than one kind of
merchandise or articles with different inventory turn-over periods the
longest of which is 6 months, and the withdrawal is any date in
September, the merchandise or articles with the lowest drawback
attribution received into inventory in March, April, May, June, July,
and August would be that identified.
(4) Average. The average method is the method by which fungible
merchandise or articles are identified on the basis of the calculation
(by weighted averaging) of the amount of drawback that may be
attributed to each unit of merchandise or articles in the inventory. A
person proposing to use this method should obtain a ruling from Customs
(see 19 CFR part 177).
(5) Inventory turn-over for limited purposes. A properly
established average inventory turn-over period, as provided for in
paragraph (c)(3)(ii)(B) of this section, may be used to determine:
(i) The fact and date(s) of use in manufacture or production of the
imported designated merchandise and
[[Page 3104]]
other (substituted) merchandise (see 19 U.S.C. 1313(b)); or
(ii) The fact and date(s) of manufacture or production of the
finished articles (see 19 U.S.C. 1313(a) and (b)).
(d) Approval of other accounting methods. (1) Persons proposing to
use an accounting method for identification of merchandise or articles
for drawback purposes which has not been previously approved for such
use (see paragraph (c) of this section), or which includes
modifications from the methods listed in paragraph (c) of this section,
may seek approval by Customs of the proposed accounting method under
the provisions for obtaining an administrative ruling (see part 177 of
this chapter). The conditions applied and the criteria used by Customs
in approving such an alternative accounting method, or a modification
of one of the approved accounting methods, will be the criteria in
paragraph (b) of this section, as well as those in paragraph (d)(2) of
this section.
(2) In order for a proposed accounting method to be approved by
Customs for purposes of this section, it shall meet the following
criteria:
(i) For purposes of calculations of drawback, the proposed
accounting method must be either revenue neutral or favorable to the
Government; and
(ii) The proposed accounting method should be:
(A) Generally consistent with commercial accounting procedures, as
applicable for purposes of drawback;
(B) Consistent with inventory or material control records used in
the ordinary course of business by the person proposing the method; and
(C) Easily administered by both Customs and the person proposing
the method.
Subpart B--Manufacturing Drawback
Sec. 191.21 Direct identification drawback.
Section 313(a) of the Act, as amended (19 U.S.C. 1313(a)), provides
for drawback upon the exportation, or destruction under Customs
supervision, of articles which are not used in the United States prior
to their exportation or destruction, and which are manufactured or
produced in the United States wholly or in part with the use of
particular imported, duty-paid merchandise. Where two or more products
result, drawback shall be distributed among the products in accordance
with their relative value (see Sec. 191.2(r)) at the time of
separation. Merchandise may be identified for drawback purposes under
19 U.S.C. 1313(a) in the manner provided for and prescribed in
Sec. 191.14 of this part.
Sec. 191.22 Substitution drawback.
(a) General. If imported, duty-paid, merchandise and any other
merchandise (whether imported or domestic) of the same kind and quality
are used in the manufacture or production of articles within a period
not to exceed 3 years from the receipt of the imported merchandise by
the manufacturer or producer of the articles, then upon the
exportation, or destruction under Customs supervision, of any such
articles, without their having been used in the United States prior to
such exportation or destruction, drawback is provided for in section
313(b) of the Act, as amended (19 U.S.C. 1313(b)), even though none of
the imported, duty-paid merchandise may have been used in the
manufacture or production of the exported or destroyed articles. The
amount of drawback allowable cannot exceed that which would have been
allowable had the merchandise used therein been the imported, duty-paid
merchandise.
(b) Use by same manufacturer or producer at different factory.
Duty-paid merchandise or drawback products used at one factory of a
manufacturer or producer within 3 years after the date on which the
material was received by the manufacturer or producer may be designated
as the basis for drawback on articles manufactured or produced in
accordance with these regulations at other factories of the same
manufacturer or producer.
(c) Designation. A manufacturer or producer may designate any
eligible imported merchandise or drawback product which it has used in
manufacture or production.
(d) Designation by successor.--(1) General rule. Upon compliance
with the requirements in this section, a drawback successor as defined
in paragraph (d)(2) of this section may designate merchandise or
drawback product used by a predecessor before the date of succession as
the basis for drawback on articles manufactured or produced by the
successor after the date of succession.
(2) Drawback successor. A ``drawback successor'' is a manufacturer
or producer to whom 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 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 merchandise or drawback product.
(ii) Merchandise not otherwise designated. The predecessor or
successor must certify in an attachment to the claim, that 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.
(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 (d)(2) of this section, and the
records and evidence provided for in paragraph (d)(3) (i) through (iii)
of this section, must be retained by the appropriate party(s) for 3
years from the date of payment of the related claim and are subject to
review by Customs upon request.
(e) By-products--(1) General. Where two or more products are
produced concurrently in a substitution manufacturing operation,
drawback shall be distributed to each product in accordance with its
relative value (see Sec. 191.2(r)) at the time of separation.
(2) Claims covering a manufacturing period. Where the claim covers
a manufacturing period rather than a manufacturing lot, the entire
period covered by the claim is the time of separation of the products
and the value per unit of product is the market value for the period
(see Sec. 191.2(r) of this part). Manufacturing periods in excess of
one month may not be used without specific approval of Customs.
(3) Recordkeeping. Records shall be maintained showing the relative
value of each product at the time of separation.
Sec. 191.23 Methods of claiming drawback.
(a) Used in. Drawback may be paid based on the amount of the
imported or
[[Page 3105]]
substituted merchandise used in the manufacture of the exported
article, where there is no waste or the waste is valueless or
unrecoverable. This method must be used when byproducts also
necessarily and concurrently result from the manufacturing process, and
there is no valuable waste (see paragraph (c) of this section).
(b) Appearing in. Drawback is allowable under this method based
only on the amount of imported or substituted merchandise that appears
in (is contained in) the exported articles. This method may not be used
if there are byproducts also necessarily and concurrently resulting
from the manufacturing process.
(c) Used in less valuable waste. Drawback is allowable under this
method based on the quantity of merchandise or drawback products used
to manufacture the exported or destroyed article, reduced by an amount
equal to the quantity of this merchandise that the value of the waste
would replace. This method must be used when byproducts also
necessarily and concurrently result from the manufacturing process, and
there is valuable waste.
(d) Recordkeeping.--(1) Valuable waste. When the waste has a value
and the drawback claim is not limited to the quantity of imported or
substituted merchandise or drawback products appearing in the exported
or destroyed articles claimed for drawback, the manufacturer or
producer shall keep records to show the market value of the merchandise
or drawback products used in manufacture or production, as well as the
market value of the resulting waste (see Sec. 191.2(r) of this part).
(2) If claim for waste is waived. If claim for waste is waived,
only the ``appearing in'' basis may be used (see paragraph (b) of this
section). Waste records need not be kept unless required to establish
the quantity of imported duty-paid merchandise or drawback products
appearing in the exported or destroyed articles claimed for drawback.
Sec. 191.24 Certificate of manufacture and delivery.
(a) When required. When the imported merchandise or drawback
product undergoes some process of manufacture under a general
manufacturing drawback ruling or a specific manufacturing drawback
ruling, a certificate of manufacture and delivery shall be prepared and
certified by the manufacturer. To assign drawback rights, see
Sec. 191.82 of this part.
(b) Information required on certificate. The following information
shall be required on the certificate of manufacture and delivery
executed by the manufacturer or producer:
(1) The quantity, kind and quality of imported, duty-paid
merchandise or drawback product designated;
(2) Import entry numbers, HTSUS number to at least the 6th digit
(such HTSUS number shall be from the entry summary and other entry
documentation for the imported, duty-paid merchandise unless the issuer
of the certificate of manufacture and delivery received the merchandise
under another certificate (either of delivery or of manufacture and
delivery), in which case such HTSUS number shall be from the other
certificate), and applicable duty amounts, if applicable;
(3) Date received at factory, if applicable;
(4) Date used in manufacture, if applicable;
(5) Value at factory, if applicable;
(6) Quantity of waste, if any, if applicable;
(7) Market value of any waste, if applicable;
(8) Total quantity and description of merchandise appearing in or
used;
(9) Total quantity and description of articles produced;
(10) Date of manufacture or production of the articles; and
(11) The quantity of articles transferred.
(c) Filing of certificate. The certificate of manufacture and
delivery shall be filed with the drawback claim it supports (unless
previously filed) (see Sec. 191.51 of this part).
(d) Effect of certificate. A certificate of manufacture and
delivery is used to document the physical delivery of articles from the
manufacturer or producer to another party. A certificate of manufacture
and delivery issued with respect to articles identifies such articles
as being those to which a potential right to drawback has attached.
Unless it is explicitly provided on the certificate of manufacture and
delivery that potential drawback rights are not transferred by such
certificate (for example, in the case of a principal-agency
relationship under this part (see Sec. 191.9)), a certificate of
manufacture and delivery assigns such potential rights to the
transferee (see Sec. 191.82 of this part).
Sec. 191.25 Recordkeeping for manufacturing drawback.
(a) Direct identification manufacturing.--(1) Records required.
Each manufacturer or producer under 19 U.S.C. 1313(a) shall keep
records to allow the verifying Customs official to trace all articles
manufactured or produced for exportation or destruction with drawback,
from importation, through production, to exportation or destruction. To
this end, these records shall specifically establish:
(i) The date or inclusive dates of manufacture or production;
(ii) The quantity and identity of the imported duty-paid
merchandise or drawback products used in or appearing in (see
Sec. 191.23) the articles manufactured or produced;
(iii) The quantity, if any, of the nondrawback merchandise used,
when these records are necessary to determine the quantity of imported
duty-paid merchandise or drawback product used in the manufacture or
production of the exported or destroyed articles or appearing in them;
(iv) The quantity and description of the articles manufactured or
produced;
(v) The quantity of waste incurred, if applicable; and
(vi) That the finished articles on which drawback is claimed were
exported or destroyed within 5 years after the importation of the duty-
paid merchandise, without having been used in the United States prior
to such exportation or destruction. (If the completed articles were
commingled after manufacture, their identity may be maintained in the
manner prescribed in Sec. 191.14 of this part.)
(2) Accounting. The merchandise and articles to be exported or
destroyed shall be accounted for in a manner which will enable the
manufacturer, producer, or claimant:
(i) To determine, and the Customs official to verify, the
applicable import entry, certificate of delivery, and/or certificate of
manufacture and delivery associated with the claim; and
(ii) To identify with respect to that import entry, certificate of
delivery, or certificate of manufacture and delivery, the imported
duty-paid merchandise or drawback products used in manufacture or
production.
(b) Substitution manufacturing. The records of the manufacturer or
producer of articles manufactured or produced in accordance with 19
U.S.C. 1313(b) shall establish the facts in paragraph (a)(1) (i)-(vi)
of this section, and:
(1) The quantity, identity, and specifications of the merchandise
designated (imported duty-paid, or drawback product);
(2) The quantity, identity, and specifications of merchandise of
the same kind and quality as the designated merchandise before its use
to manufacture or produce (or appearance in) the exported articles; and
(3) That, within 3 years after receiving the designated merchandise
at its plant,
[[Page 3106]]
the manufacturer or producer used it in manufacturing or production and
that during the same 3-year period it manufactured or produced the
exported or destroyed articles.
(c) Valuable waste records. When waste has a value and the
manufacturer, producer, or claimant, has not limited the claims based
on the quantity of imported or substituted merchandise appearing in the
articles exported or destroyed, the manufacturer or producer shall keep
records to show the market value of the merchandise used, as well as
the quantity and market value of the waste incurred (see Sec. 191.2(r)
of this part). In such records, the quantity of merchandise identified
or designated for drawback, under 19 U.S.C. 1313(a) or 1313(b),
respectively, shall be based on the quantity of merchandise actually
used to manufacture or produce the exported or destroyed articles,
reduced by the amount of merchandise which the value of the waste would
replace.
(d) Purchase of manufactured articles for exportation. Where the
claimant purchases articles from the manufacturer and exports them, the
claimant shall file the related certificate of manufacture and delivery
as part of the claim (see Sec. 191.51(a)(1) of this part).
(e) Delivery of imported merchandise to manufacturer. The claimant
shall retain the certificate of delivery for any identified or
designated import entry covering merchandise that was not imported by
the manufacturer.
(f) Multiple claimants.--(1) General. Multiple claimants may file
for drawback with respect to the same export (for example, a chemical
is exported in a container, where the chemical and the container have
been produced by different manufacturers under drawback conditions).
(2) Procedures.--(i) Submission of letter. Each drawback claimant
shall file a separate letter, as part of the claim, describing the
component article on the export bill of lading to which each claim will
relate. Each letter shall show the name of the claimant and bear a
statement that the claim shall be limited to its respective component
article. The exporter shall endorse the letters, as required, to show
the respective interests of the claimants.
(ii) Blanket waivers and assignments of drawback rights. Exporters
may waive and assign their drawback rights for all, or any portion, of
their exportations with respect to a particular commodity for a given
period to a drawback claimant.
(iii) Use of export summary procedure. If the parties elect to use
the export summary procedure, each drawback claimant shall complete a
chronological summary of exports for the respective component product
to which each claim will relate. Each claimant shall identify in the
chronological summary the name of the other claimant(s) and the
component product for which each will independently claim drawback. The
exporter shall endorse the summaries, as required, to show the
respective interests of the claimants. The claimant shall have on file
and make available to Customs upon request, the endorsement from the
exporter assigning the right to claim drawback.
(g) Retention of records. All records required to be kept by the
manufacturer, producer, or claimant with respect to drawback claims,
and records kept by others to complement the records of the
manufacturer, producer, or claimant shall be retained for 3 years after
the date of payment of the related claims.
Sec. 191.26 Time limitations.
(a) Direct identification manufacturing. Drawback shall be allowed
on imported merchandise used to manufacture or produce articles that
are exported or destroyed under Customs supervision within 5 years
after importation of the merchandise identified to support the claim.
(b) Substitution manufacturing. Drawback shall be allowed on the
imported merchandise if the following conditions are met:
(1) The designated merchandise is used in manufacture or production
within 3 years after receipt by the manufacturer or producer at its
factory;
(2) Within the 3-year period described in paragraph (b)(1) of this
section, the exported or destroyed articles, or drawback products, were
manufactured or produced; and
(3) The completed articles must be exported or destroyed under
Customs supervision within 5 years of the date of importation of the
designated merchandise.
(c) Drawback claims filed before specific or general manufacturing
drawback ruling approved or acknowledged. Drawback claims may be filed
before the letter of notification of intent to operate under a general
manufacturing drawback ruling covering the claims is acknowledged
(Sec. 191.7), or before the specific manufacturing drawback ruling
covering the claims is approved (Sec. 191.8), but no drawback shall be
paid until such acknowledgment or approval, as appropriate.
Sec. 191.27 Person entitled to claim drawback.
The exporter (or destroyer) shall be entitled to claim drawback,
unless the exporter (or destroyer), by means of a certification,
assigns the right to claim drawback to the manufacturer, producer,
importer, or intermediate party. Such certification shall also affirm
that the exporter (or destroyer) has not and will not itself claim
drawback or assign the right to claim drawback on the particular
exportation or destruction to any other party. Drawback is paid to the
claimant, who may be the manufacturer, producer, intermediate party,
importer, or exporter (destroyer).
Subpart C--Unused Merchandise Drawback
Sec. 191.31 Direct identification.
(a) General. Section 1313(j)(1) of the Act, as amended (19 U.S.C.
1313(j)(1)), provides for drawback upon the exportation or destruction
under Customs supervision of imported merchandise upon which was paid
any duty, tax, or fee imposed under Federal law because of its
importation, if the merchandise has not been used within the United
States before such exportation or destruction.
(b) Time of exportation or destruction. Drawback shall be allowed
on imported merchandise if, before the close of the 3-year period
beginning on the date of importation, the merchandise is exported from
the United States or destroyed under Customs supervision.
(c) Use. In general, for purposes of this section, merchandise is
``used'' when it is employed to perform the function for which it was
intended (for example, shoes worn as footwear have been ``used''). 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 imported merchandise is not a use of that
merchandise for purposes of this section.
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, within 3 years after the importation of the imported
merchandise, and before such exportation or destruction, the
commercially interchangeable merchandise is not used in the United
[[Page 3107]]
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;
(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, factors to be considered include, but
are not limited to, Governmental and recognized industrial standards,
part numbers, tariff classification and value. This determination can
be obtained in one of three ways:
(1) A formal ruling from the Entry and Carrier Rulings Branch,
Office of Regulations and Rulings;
(2) A nonbinding predetermination request sent directly to the
appropriate drawback office; or
(3) 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) Use. In general, for purposes of this section, merchandise is
``used'' when it is employed to perform the function for which it was
intended (for example, shoes worn as footwear have been ``used''). 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--(1) General rule. Upon compliance
with the requirements of this section, 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, personalty, 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 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.
Sec. 191.33 Person entitled to claim drawback.
(a) Direct identification. (1) Under 19 U.S.C. 1313(j)(1), the
exporter (or destroyer) shall be entitled to claim drawback.
(2) The exporter or destroyer may waive the right to claim drawback
and assign such right to the importer or any intermediate party. A
drawback claimant under 19 U.S.C. 1313(j)(1) other than the exporter or
destroyer shall secure and retain a certification signed by the
exporter or destroyer that such party waived the right to claim
drawback, and did not and will not authorize any other party to claim
the exportation or destruction for drawback (see Sec. 191.82 of this
part). The claimant shall file such certification as part of the
drawback claim.
(b) Substitution. (1) Under 19 U.S.C. 1313(j)(2), the following
parties may claim drawback:
(i) In situations where the exporter or destroyer of the
substituted merchandise is also the importer of the imported
merchandise, that party shall be entitled to claim drawback.
(ii) In situations where the exporter or destroyer receives from
the person who imported and paid the duty on the imported merchandise a
certificate of delivery documenting the transfer of imported
merchandise, commercially interchangeable merchandise, or any
combination of imported and commercially interchangeable merchandise,
and exports such transferred merchandise, that exporter shall be
entitled to claim drawback. (Any such transferred merchandise,
regardless of its origin, will be treated as imported merchandise for
purposes of drawback under Sec. 1313(j)(2), and any retained
merchandise will be treated as domestic merchandise.)
(iii) In situations where the transferred merchandise described in
paragraph (b)(1)(ii) of this section is the subject of further
transfer(s), such transfer(s) shall be documented by certificate(s) of
delivery, and the exporter or destroyer shall be entitled to claim
drawback.
(2) The exporter or destroyer may waive the right to claim drawback
and assign such right to the importer or to any intermediate party,
provided that the claimant had possession of the substituted
merchandise prior to its exportation or destruction. A drawback
claimant under 19 U.S.C. 1313(j)(2) other than the exporter or
destroyer
[[Page 3108]]
shall secure and retain a certification signed by the exporter or
destroyer that such party waived the right to claim drawback, and did
not and will not authorize any other party to claim the exportation or
destruction for drawback (see Sec. 191.82 of this part). The claimant
shall file such certification as part of the drawback claim.
Sec. 191.34 Certificate of delivery required.
(a) Direct identification; purpose; when required. If the exported
or destroyed merchandise claimed for drawback under 19 U.S.C.
1313(j)(1) was not imported by the exporter or destroyer, the drawback
claimant must have a properly executed certificate of delivery prepared
by the importer and each intermediate party. Each such transfer of the
merchandise must be documented by its own certificate of delivery.
(1) Completion. The certificate of delivery shall be completed as
provided in Sec. 191.10 of this part. Each party must also certify on
the certificate of delivery that the party did not use the exported or
destroyed merchandise (see Sec. 191.31(c) of this part).
(2) Retention. The drawback claimant shall retain the certificate
for submission to Customs as part of the claim, if requested (see
Sec. 191.51(a)(2) of this part).
(b) Substitution. For purposes of substitution unused merchandise
drawback, 19 U.S.C. 1313(j)(2), if the importer transfers to another
party imported, duty-paid merchandise, commercially interchangeable
merchandise, or any combination thereof, the importer shall prepare and
issue in favor of such party a certificate of delivery covering the
transferred merchandise. The certificate of delivery must expressly
state that it is prepared pursuant to 19 U.S.C. 1313(j)(2). Merchandise
so transferred for which drawback is allowed under 19 U.S.C. 1313(j)(2)
may not be designated as imported merchandise for the purpose of
manufacturing drawback. Certificates of delivery under this paragraph
are subject to the provisions for completion and retention of
certificates of delivery in paragraphs (a)(1) and (a)(2) of this
section.
(c) Warehouse transfer and withdrawals. The person in whose name
merchandise is withdrawn from a bonded warehouse shall be considered
the importer for drawback purposes. No certificate of delivery need be
prepared covering prior transfers of merchandise while in a bonded
warehouse, because such transfers will be recorded in the warehouse
entry (see Sec. 144.22 of this chapter).
Sec. 191.35 Notice of intent to export; examination of merchandise.
(a) Notice. A notice of intent to export merchandise which may be
the subject of an unused merchandise drawback claim (19 U.S.C. 1313(j))
must be provided to the Customs Service to give Customs the opportunity
to examine the merchandise. The claimant, or the exporter, must file at
the port of intended examination a Notice of Intent to Export/Destroy
on Customs Form xxx at least 2 working days prior to the date of
intended exportation unless Customs approves another filing period or
the claimant has been granted a waiver of prior notice (see Sec. 191.91
of this part).
(b) Required information. The notice shall certify that the
merchandise has not been used in the United States before exportation.
In addition, the notice shall provide the bill of lading number, if
known, the name and telephone number of a contact person, and the
location of the merchandise should Customs decide to examine the
merchandise.
(c) Decision to examine or to waive examination. Within two (2)
working days after receipt of the Notice of Intent to Export/Destroy
(see paragraph (a) of this section), Customs will notify the party
designated on the Notice of Customs decision to either examine the
merchandise to be exported, or to waive examination. If Customs timely
notifies the designated party, in writing, of its decision to examine
the merchandise (see paragraph (d) of this section), but the
merchandise is exported without having been presented to Customs for
examination, any drawback claim, or part thereof, based on the Notice
of Intent to Export/Destroy, shall be denied. If Customs notifies the
designated party, in writing, of its decision to waive examination of
the merchandise, or, if timely notification of a decision by Customs to
examine or to waive examination is absent, the merchandise may be
exported without delay.
(d) Time and place of examination. If Customs gives timely notice
of its decision to examine the export merchandise, the merchandise to
be examined shall be promptly presented to Customs. Customs shall
examine the merchandise within five (5) working days after presentation
of the merchandise. The merchandise may be exported without examination
if Customs fails to timely examine the merchandise after presentation
to Customs. If the examination is completed at a port other than the
port of actual exportation, the merchandise shall be transported in-
bond to the port of exportation.
(e) Extent of examination. The appropriate Customs office may
permit release of merchandise without examination, or may examine
routinely (to the extent determined to be necessary) the items
exported.
Sec. 191.36 Failure to file Notice of Intent to Export or Destroy
merchandise.
(a) General; application. Merchandise which has been exported
without complying with the requirements of Sec. 191.35(a) or
Sec. 191.91 of this part may be eligible for unused merchandise
drawback under 19 U.S.C. 1313(j) subject to the following conditions:
(1) Application. The claimant must file a written application with
the drawback office where the drawback claims will be filed. Such
application shall include the following:
(i) Required information.
(A) Name, address, and identification number of applicant;
(B) Name, address, and identification number of exporter(s), if
applicant is not the exporter;
(C) Export period covered by this application;
(D) Commodity/product lines of imported and exported merchandise
covered in this application;
(E) The origin of the above merchandise;
(F) Estimated number of export transactions covered in this
application;
(G) The port(s) of exportation;
(H) Estimated dollar value of potential drawback to be covered in
this application; and
(I) The relationship between the parties involved in the import and
export transactions;
(ii) Written declarations regarding:
(A) The reason(s) that Customs was not notified of the intent to
export; and
(B) Whether the applicant, to the best of its knowledge, will have
future exportations on which unused merchandise drawback might be
claimed; and
(iii) A certification that the following documentary evidence will
be made available for Customs review upon request:
(A) For the purpose of establishing that the imported merchandise
was not used in the United States (for purposes of drawback under 19
U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the
United States and was commercially interchangeable with the imported
merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)):
(1) Business records prepared in the ordinary course of business;
(2) Laboratory records prepared in the ordinary course of business;
and
(3) Inventory records prepared in the ordinary course of business
tracing all
[[Page 3109]]
relevant movements and storage of the imported merchandise, substituted
merchandise, and/or exported merchandise; and
(B) Evidence establishing compliance with all other applicable
drawback requirements.
(2) One-time use. The procedure provided for in this section may be
used by a claimant only once, unless good cause is shown (for example,
successorship).
(3) Claims filed pending disposition of application. Drawback
claims may be filed under this section pending disposition of the
application. However, those drawback claims will not be processed or
paid until the application is approved by Customs.
(b) Customs action. In order for Customs to evaluate the
application under this section, Customs may request, and the applicant
shall provide, any of the information listed in paragraph
(a)(1)(iii)(A) (1) through (3) of this section. In making its decision
to approve or deny the application under this section, Customs will
consider factors such as, but not limited to, the following:
(1) Information provided by the claimant in the written
application;
(2) Any of the information listed in paragraph (a)(1)(iii)(A) (1)
through (3) of this section and requested by Customs under this
paragraph; and
(3) The applicant's prior record with Customs.
(c) Time for Customs action. Customs will notify the applicant in
writing within 90 days of its decision to approve or deny the
application, or of Customs inability to approve, deny or act on the
application.
(d) Appeal of denial of application. If Customs denies the
application, the applicant may file a written appeal with the drawback
office which issued the denial, provided that the applicant files this
appeal within 30 days of the denial date of the application. If Customs
denies this initial appeal, the applicant may file a further written
appeal with Customs Headquarters, provided that the applicant files
this further appeal within 30 days of the denial date of the initial
appeal. Customs may extend the 30 day period for appeal to the drawback
office or to Customs Headquarters, for good cause, if the applicant
applies in writing for such extension within the appropriate 30 day
period above.
(e) Future intent to export unused merchandise. If an applicant
states it will have future exportations on which unused merchandise
drawback may be claimed (see paragraph (a)(1)(ii)(B) of this section),
the applicant will be informed of the procedures for waiver of prior
notice (see Sec. 191.91 of this part). If the applicant seeks waiver of
prior notice under Sec. 191.91, any documentation submitted to Customs
to comply with this section will be included in the request under
Sec. 191.91. An applicant which states that it will have future
exportations on which unused merchandise drawback may be claimed (see
paragraph (a)(1)(ii)(B) of this section) and which does not obtain
waiver of prior notice shall notify Customs of its intent to export
prior to each such exportation, in accordance with Sec. 191.35.
Sec. 191.37 Records.
(a) Maintained by claimant; by others. All records which are
necessary to be maintained by the claimant under this part with respect
to drawback claims, and records kept by others to complement the
records of the claimant, which are essential to establish compliance
with the legal requirements of 19 U.S.C. 1313 (j)(1) or (j)(2), as
applicable, and this part, shall be retained for 3 years after payment
of such claims.
(b) Accounting for the merchandise. Merchandise subject to drawback
under 19 U.S.C. 1313 (j)(1) and (j)(2) shall be accounted for in a
manner which will enable the claimant:
(1) To determine, and Customs to verify, the applicable import
entry or certificate of delivery;
(2) To determine, and Customs to verify, the applicable
exportation; and
(3) To identify with respect to the import entry or certificate of
delivery, the imported duty-paid merchandise.
Subpart D--Rejected Merchandise
Sec. 191.41 Rejected merchandise drawback.
Section 313(c) of the Act, as amended (19 U.S.C. 1313(c)), provides
for drawback upon the exportation or destruction under Customs
supervision of imported merchandise which has been entered, or
withdrawn from warehouse, for consumption, duty-paid; and which does
not conform to sample or specifications; has been shipped without the
consent of the consignee; or has been determined to be defective as of
the time of importation. The claimant must show by evidence
satisfactory to Customs that the exported or destroyed merchandise was
defective at the time of importation, or was not in accordance with
sample or specifications, or was shipped without the consent of the
consignee.
Sec. 191.42 Procedure.
(a) Return to Customs custody. The claimant must return the
merchandise to Customs custody within 3 years after the date the
merchandise was originally released from Customs custody. Drawback will
be denied on merchandise returned to Customs custody after the
statutory 3-year time period or exported without return to Customs
custody.
(b) Required documentation. The claimant shall submit documentation
to the drawback office as part of the drawback claim to establish that
the merchandise did not conform to sample or specification, was shipped
without the consent of the consignee, or was defective as of the time
of importation. If the claimant was not the importer, the claimant
must:
(1) Submit a statement signed by the importer and every other
person, other than the ultimate purchaser, that owned the goods that no
other claim for drawback was made on the goods by any other person; and
(2) Certify that records are available to support the statement
required in paragraph (b)(1) of this section.
(c) Notice. A notice of intent to export or destroy merchandise
which may be the subject of a rejected merchandise drawback claim (19
U.S.C. 1313(c)) must be provided to the Customs Service to give Customs
the opportunity to examine the merchandise. The claimant, or the
exporter, must file at the port of intended redelivery to Customs
custody a Notice of Intent to Export/Destroy on Customs Form xxx at
least 5 working days prior to the date of intended return to Customs
custody. Waiver of prior notice for exportations under 19 U.S.C.
1313(j) (see Sec. 191.91 of this part) is inapplicable to exportations
under 19 U.S.C. 1313(c).
(d) Required information. The notice shall provide the bill of
lading number, if known, the name and telephone number of a contact
person, and the location of the merchandise.
(e) Decision to waive examination. Within two (2) working days
after receipt of the Notice of Intent to Export/Destroy (see paragraph
(c) of this section), Customs will notify the party designated on the
Notice of Customs decision to either examine the merchandise to be
exported, or to waive examination. If Customs timely notifies the
designated party, in writing, of its decision to examine the
merchandise (see paragraph (f) of this section), but the merchandise is
exported without having been presented to Customs for such examination,
any drawback claim, or part thereof, based on the Notice of Intent to
Export/Destroy, shall be denied. If Customs notifies the designated
party, in writing, of its decision to waive examination of the
[[Page 3110]]
merchandise, or, if timely notification of a decision by Customs to
examine or to waive examination is absent, the merchandise may be
exported without delay and shall be deemed to have been returned to
Customs custody.
(f) Time and place of examination. If Customs gives timely notice
of its decision to examine the export merchandise, the merchandise to
be examined shall be promptly presented to Customs. Customs shall
examine the merchandise within five (5) working days after presentation
of the merchandise. The merchandise may be exported without examination
if Customs fails to timely examine the merchandise after presentation
to Customs, and in such case the merchandise shall be deemed to have
been returned to Customs custody. If the examination is completed at a
port other than the port of actual exportation, the merchandise shall
be transported in-bond to the port of exportation.
(g) Extent of examination. The appropriate Customs office may
permit release of merchandise without examination, or may examine, to
the extent determined to be necessary, the items exported.
(h) Drawback claim. When filing the drawback claim, the drawback
claimant must correctly calculate the amount of drawback due (see
Sec. 191.51(b) of this part). The procedures for restructuring a claim
(see Sec. 191.53 of this part) shall apply to rejected merchandise
drawback if the claimant has an ongoing export program which qualifies
for this type of drawback.
(i) Exportation. The claimant shall export the merchandise under
Customs supervision and shall provide documentary evidence of
exportation. The claimant may establish exportation by mail as set out
in Sec. 191.74 of this part.
Sec. 191.43 Unused merchandise claim.
Rejected merchandise may be the subject of an unused merchandise
drawback claim under 19 U.S.C. 1313(j)(1), in accordance with subpart C
of this part, to the extent that the merchandise qualifies therefor.
Sec. 191.44 Destruction under Customs supervision.
A claimant may destroy merchandise and obtain rejected merchandise
drawback by complying with the procedures set forth in Sec. 191.71(a)
of this part relating to destruction.
Subpart E--Completion of Drawback Claims
Sec. 191.51 Completion of drawback claims.
(a) General.--(1) Complete claim. Unless otherwise specified, a
complete drawback claim under this part shall consist of the drawback
entry on Customs Form 331, applicable certificate(s) of manufacture and
delivery, applicable Notice(s) of Intent to Export or Destroy,
applicable import entry number(s), coding sheet unless the data is
filed electronically, and evidence of exportation or destruction under
subpart G of this part.
(2) Certificates. Additionally, the associated certificate(s) of
delivery must be in the possession of the claimant at the time of the
filing of the claim. Any required certificate(s) of manufacture and
delivery, if not previously filed with Customs, must be filed with the
claim. Previously filed certificates of manufacture and delivery, if
required, shall be referenced in the claim.
(b) Drawback due. Drawback claimants are required to correctly
calculate the amount of drawback due. The amount of drawback requested
on the drawback entry is generally to be 99 percent of the import
duties eligible for drawback. (For example, if $1,000 in import duties
are eligible for drawback less 1 percent ($10), the amount claimed on
the drawback entry should be for $990. Claims exceeding 99 percent will
not be paid until the calculations have been corrected by the
claimant.) Claims for less than 99 percent will be paid as filed,
unless the claimant amends the claim in accordance with Sec. 191.52(c).
(c) HTSUS number(s) or Schedule B commodity number(s) of imports
and exports. Drawback claimants are required to provide, on all
drawback claims they submit, the Harmonized Tariff Schedule of the
United States (HTSUS) number(s) for the designated imported merchandise
and the HTSUS number(s) or the Schedule B commodity number(s) for the
exported article or articles. For imports, HTSUS numbers shall be
provided from the entry summary(s) and other entry documentation, when
the claimant is the importer of record, or from the certificate of
delivery and/or the certificate of manufacture and delivery, otherwise.
For exports, the HTSUS number(s) or Schedule B commodity number(s)
shall be from the Shipper's Export Declaration(s) (SEDs), when
required. If no SED is required (see, e.g., 15 CFR 30.58), the claimant
shall provide the Schedule B commodity number(s) or HTSUS number(s)
that the exporter would have set forth on the SED, but for the
exemption from the requirement for an SED. Manufacturing drawback
claimants filing drawback claims based on certificate(s) of manufacture
and delivery filed with the claims or previously filed with Customs
(see paragraph (a) of this section), may meet this requirement with the
HTSUS number(s) on such certificate(s). The HTSUS number will be stated
to at least 6 digits.
(d) Place of filing. For manufacturing drawback, the claimant
shall file the drawback claim with the drawback office listed, as
appropriate, in the general manufacturing drawback ruling or the
specific manufacturing drawback ruling (see Secs. 191.7 and 191.8 of
this part). For other kinds of drawback, the claimant shall file the
claim with any drawback office.
Sec. 191.52 Completing, perfecting or amending claims.
(a) Completing the claim. (1) Upon review of a drawback claim, if
the claim is determined to be incomplete (see Sec. 191.51(a)(1)), the
claim will be rejected and Customs will notify the filer. The filer
shall then have the opportunity to complete the claim subject to the
requirement for filing a complete claim within 3 years (see paragraph
(a)(2) of this section).
(2) A completed drawback claim, with all required documents, shall
be filed within 3 years after the date of exportation or destruction of
the articles which are the subject of the claim. No extension will be
granted unless the claimant establishes that the Customs Service was
responsible for the untimely filing (see 19 U.S.C. 1313(r)(1)). The
only exception is for landing certificates under Sec. 191.76 of this
part.
(b) Perfecting the claim; additional evidence required. If Customs
determines that the claim is complete according to the requirements of
Sec. 191.51(a)(1), but that additional evidence or information is
required, Customs will notify the filer. The claimant shall furnish, or
have the appropriate party furnish, the evidence or information
requested within 30 days of the date of notification by Customs.
Customs may extend this 30 day period for good cause if the claimant
files a written request for such extension within the 30 day period.
The evidence or information required under this paragraph may be filed
more than 3 years after the date of exportation or destruction of the
articles which are the subject of the claim. Such additional evidence
or information may include, but is not limited to:
(1) A copy of the export bill of lading which shall show that the
articles were shipped by the person filing the drawback entry, or a
letter of endorsement from the party in whose name the articles were
shipped which shall be attached to such bill of lading, showing that
the party filing the entry
[[Page 3111]]
is authorized to claim drawback and receive payment (the claimant shall
have on file and make available to Customs upon request, the
endorsement from the exporter assigning the right to claim drawback);
(2) A copy of the import entry and invoice annotated for the
merchandise identified or designated; and
(3) A copy of the export invoice annotated to indicate the items on
which drawback is being claimed.
(c) Amending the claim; supplemental filing. Amendments to claims
for which the drawback entries have not been liquidated must be made
within three (3) years after the date of exportation or destruction of
the articles which are the subject of the drawback claim. Liquidated
drawback entries may not be amended; however, they may be protested as
provided for in Sec. 191.84 of this part and part 174 of this chapter.
Sec. 191.53 Restructuring of claims.
(a) General. Customs may require claimants to restructure their
drawback claims in such a manner as to foster Customs administrative
efficiency. In making this determination, Customs will consider the
following factors:
(1) The number of transactions of the claimant (imports and
exports);
(2) The value of the claims;
(3) The frequency of claims;
(4) The product or products being claimed; and
(5) For 19 U.S.C. 1313(a) and 1313(b) claims, the provisions, as
applicable, of the general manufacturing drawback ruling or the
specific manufacturing drawback ruling.
(b) Exemption from restructuring; criteria. In order to be exempt
from a restructuring, a claimant must demonstrate an inability or
impracticability in restructuring its claims as required by Customs and
must provide a mutually acceptable alternative. Criteria used in such
determination will include a demonstration by the claimant of one or
more of the following:
(1) Complexities caused by multiple commodities or the applicable
general manufacturing drawback ruling or the specific manufacturing
drawback ruling;
(2) Variable and conflicting manufacturing and inventory periods
(for example, financial, accounting and manufacturing records
maintained are significantly different);
(3) Complexities caused by multiple manufacturing locations;
(4) Complexities caused by difficulty in adjusting accounting and
inventory records (for example, records maintained--financial or
accounting--are significantly different); and/or
(5) Complexities caused by significantly different methods of
operation.
Subpart F--Verification of Claims
Sec. 191.61 Verification of drawback claims.
(a) Authority--(1) Drawback office. All claims shall be subject to
verification by the port director where the claim is filed.
(2) Two or more locations. The port director selecting the claim
for verification may forward copies of the claim and, as applicable,
letters of notification and acknowledgement for the general
manufacturing drawback ruling or application for, and letter of
approval of, a specific manufacturing drawback ruling, and request for
verification, to other drawback offices when deemed necessary.
(b) Method. The verifying office shall verify the accuracy of the
related general manufacturing drawback ruling or specific manufacturing
drawback ruling and the selected drawback claims. Verification may
include an examination of all records relating to the transaction(s).
(c) Liquidation. When a claim has been selected for verification,
liquidation will be postponed only on the drawback entries for those
claims selected for verification. Postponement will continue in effect
until the verification has been completed and the appropriate port
director issues a report. In the event that a substantial error is
revealed during the verification, Customs may postpone liquidation of
all related product line claims, or, in Customs discretion, all claims
for that claimant.
Sec. 191.62 Falsification of drawback claims.
(a) Criminal penalty. Any person who knowingly and willfully files
any false or fraudulent entry or claim for the payment of drawback upon
the exportation of merchandise or knowingly or willfully makes or files
any false document for the purpose of securing the payment to himself
or others of any drawback on the exportation of merchandise greater
than that legally due, shall be subject to the criminal provisions of
18 U.S.C. 550, 1001 or any other appropriate criminal sanctions.
(b) Civil penalty. Any person who seeks, induces or affects the
payment of drawback, by fraud or negligence, or attempts to do so, is
subject to civil penalties, as provided under 19 U.S.C. 1593a. A
fraudulent violation is subject to a maximum administrative penalty of
3 times the total actual or potential loss of revenue. Repetitive
negligent violations are subject to a maximum penalty equal to the
actual or potential loss of revenue.
Subpart G--Evidence of Exportation and Destruction
Sec. 191.71 Drawback on articles destroyed under Customs supervision.
(a) Procedure. At least 7 working days before the intended date of
destruction of merchandise or articles upon which drawback is intended
to be claimed, a Notice of Intent to Export/Destroy on Customs Form xxx
shall be filed by the claimant with the Customs port where the
destruction is to take place, giving notification of the date and
specific location where the destruction is to occur. Within 4 working
days, Customs shall advise the filer of its determination to witness or
not to witness the destruction. If the filer of the notice is not so
notified within 4 working days, the merchandise may be destroyed
without delay and will be deemed to have been destroyed under Customs
supervision. Unless Customs determines to witness the destruction, the
destruction of the articles following timely notification on Customs
Form xxx shall be deemed to have occurred under Customs supervision. If
Customs attends the destruction, it must certify the Notice of Intent
to Export/Destroy.
(b) Evidence of destruction. When Customs declines the opportunity
to attend the destruction, the claimant must submit evidence that
destruction took place in accordance with the approved Notice of Intent
to Export/Destroy. The evidence must be issued by a disinterested third
party (for example, a landfill operator). The type of evidence depends
on the method and place of destruction, but must establish that the
merchandise was, in fact, destroyed within the meaning of
``destruction'' in Sec. 191.2(g) (i.e., that no articles of commercial
value remained after destruction).
(c) Completion of drawback entry. After destruction, the claimant
and, if applicable, the Customs official witnessing the destruction
shall certify on an attachment to Customs Form 331 the time and place
of destruction.
Sec. 191.72 Alternative procedures for establishing exportation.
Exportation of articles for drawback purposes shall be established
by complying with one of the procedures provided for in this section
(in addition to providing prior notice of intent to export (see
Secs. 191.35, 191.36, 191.42, and 191.91 of this part)). Supporting
documentary evidence shall establish fully the time and fact of
exportation
[[Page 3112]]
and the identity of the exporter. The alternative procedures for
establishing exportation outlined by this section are:
(a) Actual evidence of exportation consisting of documentary
evidence, such as the original bill of lading, air waybill, freight
waybill, Canadian Customs manifest, and/or cargo manifest, or certified
copies thereof, issued by the exporting carrier;
(b) Export summary (Sec. 191.73);
(c) Certified export invoice for mail shipments (Sec. 191.74);
(d) Notice of lading for supplies on certain vessels or aircraft
(Sec. 191.112); or
(e) Notice of transfer for articles manufactured or produced in the
U.S. which are transferred to a foreign trade zone (Sec. 191.183).
Sec. 191.73 Export summary procedure.
(a) General. The export summary procedure consists of a
chronological summary of exports used to support a drawback claim. It
may be submitted as part of the claim in lieu of actual documentary
evidence of exportation. It may be used by any claimant for
manufacturing drawback, and for unused or rejected merchandise
drawback, as well as for drawback involving the substitution of
finished petroleum derivatives (19 U.S.C. 1313 (a), (b), (c), (j), or
(p)). It is intended to improve administrative efficiency.
(b) Format of chronological export summary. The chronological
summary of the exports shall contain the data provided for in the
following sample:
CHRONOLOGICAL SUMMARY OF EXPORTS
Drawback entry No. ________.-------------------------------------------
Claimant ________; Exporter ________ (if different from claimant)
Period from ________ to ________.
Unique export Sched. B com. # or
Date of export identifier 1 Description Net quantity HTSUS # Destination #
(1) (2)................... (3)................... (4).................. (5).................. (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 This number is to be used to associate the export transaction presented on the Chronological Export Summary to the appropriate documentary evidence of
exportation (for example, Bill of Lading, Manifest no., invoice, etc.).
(c) Documentary evidence--(1) Records. The claimant, whether or not
the exporter, shall maintain the chronological summary of the exports
and such additional evidence of exportation required by Customs to
establish fully the identity of the exported articles and the fact of
exportation. The bill of lading issued by the exporting carrier is the
primary proof of export for drawback purposes.
(2) Maintenance of records. The claimant shall submit as part of
the claim the chronological export summary (see Sec. 191.51). The
claimant shall retain records supporting the Chronological Export
Summary for 3 years after payment of the related claim. Customs may at
any time request to review the underlying documentation supporting the
Chronological Export Summary.
Sec. 191.74 Certification of exportation by mail.
If the merchandise on which drawback is to be claimed is exported
by mail or parcel post, the official postal records which describe the
mail shipment shall be sufficient to prove exportation. The postal
record shall be identified on the drawback entry, and shall be retained
by the claimant and submitted as part of the drawback claim (see
Sec. 191.10(e) of this part).
Sec. 191.75 Exportation by the Government.
(a) Claim by U.S. Government. When a department, branch, agency, or
instrumentality of the United States Government exports products with
the intention of claiming drawback, it may establish the exportation in
the manner provided in Sec. 191.73. No bond shall be required when the
United States Government claims drawback.
(b) Claim by supplier. When a supplier of merchandise to the
Government or any of the parties specified in Sec. 191.82 of this part
claims drawback, exportation shall be established under Sec. 191.73.
Sec. 191.76 Landing certificate.
(a) Requirement. Prior to the liquidation of the drawback entry,
Customs may require a landing certificate for every aircraft departing
from the United States under its own power if drawback is claimed on
the aircraft or a part thereof, except for the exportation of supplies
under section 309 of the Act, as amended (19 U.S.C. 1309). The
certificate shall show the exact time of landing in the foreign
destination and describe the aircraft or parts subject to drawback in
sufficient detail to enable Customs officers to identify them with the
documentation of exportation.
(b) Written notice of requirement and time for filing. A landing
certificate shall be filed within one year from the written Customs
request, unless Customs Headquarters grants an extension.
(c) Signature. A landing certificate shall be signed by a revenue
officer of the foreign country of the export's destination, unless the
embassy of that country certifies in writing that there is no Customs
administration in that country, in which case the landing certificate
may be signed by the consignee or the carrier's agent at the place of
unlading.
(d) Inability to produce landing certificates. A landing
certificate shall be waived by the requiring Customs authority if the
claimant demonstrates inability to obtain a certificate and offers
other satisfactory evidence of export.
Subpart H--Liquidation and Protest of Drawback Entries
Sec. 191.81 Liquidation.
(a) Time of liquidation. Drawback entries may be liquidated after:
(1) Liquidation of the import entry becomes final; or
(2) Deposit of estimated duties on the imported merchandise and
before liquidation of the import entry.
(b) Claims based on estimated duties. (1) Drawback may be paid on
estimated duties if the import entry has not been liquidated, or the
liquidation has not become final (because of a protest being filed)
(see also Sec. 173.4(c) of this chapter), and the drawback claimant and
any other party responsible for the payment of liquidated import duties
each file a written request for payment of each drawback claim, waiving
any right to payment or refund under other provisions of law. The
drawback claimant shall, to the best of its knowledge, identify each
import entry that has been protested or that is the subject of a
request for reliquidation (19 U.S.C. 1520(c)(1)) and that is included
in the drawback claim. A drawback entry, once finally liquidated on the
basis of estimated duties, shall not be adjusted by reason of a
subsequent final liquidation of the import entry.
(2) However, if final liquidation of the import entry discloses
that the total amount of import duty is different from the total
estimated duties deposited, the party responsible for the payment of
liquidated duties, as applicable, shall:
(i) Be liable for 1 percent of all increased duties found to be due
on that
[[Page 3113]]
portion of merchandise recorded on the drawback entry; or
(ii) Be entitled to a refund of 1 percent of all excess duties
found to be paid on that portion of the merchandise recorded on the
drawback entry.
(c) Claims based on voluntary tenders or other payments of duties--
(1) Voluntary tenders. Drawback may be paid on voluntary tenders of the
unpaid amount of lawful ordinary Customs duties on an entry, or
withdrawal from warehouse, for consumption provided that:
(i) The entry, or withdrawal from warehouse, for consumption for
which the voluntary tender was made is specifically identified in the
voluntary tender; and
(ii) Liquidation of the drawback entry in which that specifically
identified import entry, or withdrawal from warehouse, for consumption
is designated has not become final.
(2) Other payments of duty. Drawback may be paid on any other
payment of lawful ordinary Customs duties for an entry, or withdrawal
from warehouse, for consumption, such as payment of a demand for duties
under 19 U.S.C. 1592(d), provided that:
(i) The payment is specifically identified as duty on a
specifically identified entry, or withdrawal from warehouse, for
consumption;
(ii) Liquidation of the specifically identified entry, or
withdrawal from warehouse, for consumption became final prior to such
payment; and
(iii) Liquidation of the drawback entry in which that specifically
identified import entry, or withdrawal from warehouse, for consumption
is designated has not become final.
(3) Written request and waiver. Drawback may be paid on claims
based on voluntary tenders or other payments of duties under this
subsection only if the drawback claimant and any other party
responsible for the payment of the voluntary tenders or other payments
of duties each file a written request for payment of each drawback
claim based on such voluntary tenders or other payments of duties,
waiving any right to payment or refund under other provisions of law.
(d) Claims based on liquidated duties. Drawback shall be based on
the final liquidated duties paid that have been made final by operation
of law (except in the case of the written request for payment of
drawback on the basis of estimated duties, voluntary tender of duties,
and other payments of duty, and waiver, provided for in paragraphs (b)
and (c) of this section).
(e) Liquidation procedure. When the drawback claim has been
completed by the filing of the entry and other required documents, and
exportation (or destruction) of the articles has been established, the
drawback office shall determine drawback due on the basis of the
complete drawback claim, the applicable general manufacturing drawback
ruling or specific manufacturing drawback ruling, and any other
relevant evidence or information.
(f) Distribution and value of multiple products--(1) Distribution.
Where two or more products result from the manufacture or production of
merchandise, drawback shall be distributed to the several products in
accordance with their relative value at the time of separation.
(2) Value. The value to be used in computing the distribution of
drawback where two or more products result from the manufacture or
production of merchandise under drawback conditions shall be the market
value (see Sec. 191.2(r) of this part), unless another value is
approved by Customs.
(g) Payment. The drawback office shall authorize the amount of the
refund due as drawback to the claimant.
Sec. 191.82 Person entitled to claim drawback.
Unless otherwise provided in this part (see Secs. 191.42(b),
191.162, 191.175(a), 191.186), the exporter (or destroyer) shall be
entitled to claim drawback, unless the exporter (or destroyer), by
means of a certification, waives the right to claim drawback and
assigns such right to the manufacturer, producer, importer, or
intermediate party (in the case of drawback under 19 U.S.C. 1313(j)(1),
see Sec. 191.33(a)). Such certification shall also affirm that the
exporter (or destroyer) has not and will not assign the right to claim
drawback on the particular exportation or destruction to any other
party.
Sec. 191.83 Person entitled to receive payment.
Drawback is paid to the claimant (see Sec. 191.82).
Sec. 191.84 Protests.
Procedures to protest the denial, in whole or in part, of a
drawback entry shall be in accordance with part 174 of this chapter (19
CFR part 174).
Subpart I--Privileges
Sec. 191.91 Waiver of prior notice of intent to export.
(a) General. The requirement in Sec. 191.35 of this part for prior
notice of intent to export merchandise which may be the subject of an
unused merchandise drawback claim under section 313(j) of the Act, as
amended (19 U.S.C. 1313(j)), may be waived under the provisions of this
section.
(b) Application--(1) Who may apply. A claimant for unused
merchandise drawback under 19 U.S.C. 1313(j) may apply for a waiver of
prior notice of intent to export merchandise under this section.
(2) Contents of application. An applicant for a waiver of prior
notice under this section must file a written application with the
drawback office where the claims will be filed. Such application shall
include the following:
(i) Required information:
(A) Name, address, and identification number of applicant;
(B) Name, address, and identification number of current
exporter(s), if applicant is not the exporter;
(C) Export period covered by this application;
(D) Commodity/product lines of imported and exported merchandise
covered by this application;
(E) Origin of merchandise covered by this application;
(F) Estimated number of export transactions during the next 12-
month period covered by this application;
(G) Port(s) of exportation to be used during the next 12-month
period covered by this application;
(H) Estimated dollar value of potential drawback during the next
12-month period covered by this application; and
(I) The relationship between the parties involved in the import and
export transactions;
(ii) A written declaration whether or not the applicant has
previously been denied a waiver request, or had an approval of a waiver
revoked, by any other drawback office; and
(iii) A certification that the following documentary evidence will
be made available for Customs review upon request:
(A) For the purpose of establishing that the imported merchandise
was not used in the United States (for purposes of drawback under 19
U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the
United States and was commercially interchangeable with the imported
merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)):
(1) Business records prepared in the ordinary course of business;
(2) Laboratory records prepared in the ordinary course of business;
and
(3) Inventory records prepared in the ordinary course of business
tracing all relevant movements and storage of the imported merchandise,
substituted merchandise, and/or exported merchandise; and
(B) Evidence establishing compliance with other applicable drawback
[[Page 3114]]
requirements, upon Customs request under paragraph (b)(2)(iii) of this
section.
(3) Samples of records to accompany application. To expedite the
processing of applications under this section, the application should
contain at least one sample of each of the records to be used to
establish compliance with the applicable requirements (that is, sample
of import document (for example, Customs Form 7501), sample of export
document (for example, bill of lading), and samples of business,
laboratory, and inventory records certified, under paragraph
(b)(2)(iii)(A) (1) through (3) of this section, to be available to
Customs upon request).
(c) Action on application--(1) Customs review. The drawback office
shall review and verify the information submitted on and with the
application. Customs will notify the applicant in writing within 90
days of receipt of the application of its decision to approve or deny
the application, or of Customs inability to approve, deny, or act on
the application. In order for Customs to evaluate the application,
Customs may request any of the information listed in paragraph
(b)(2)(iii)(A)(1) through (3) of this section. Based on the information
submitted on and with the application and any information so requested,
and based on the applicant's record of transactions with Customs, the
drawback office will approve or deny the application. The criteria to
be considered in reviewing the applicant's record with Customs include
(as applicable):
(i) The presence or absence of unresolved Customs charges (duties,
taxes, or other debts owed Customs);
(ii) The accuracy of the claimant's past drawback claims;
(iii) Whether waiver of prior notice was previously revoked or
suspended; and
(iv) The presence or absence of any failure to present merchandise
to Customs for examination after Customs had timely notified the party
filing a Notice of Intent to Export/Destroy of Customs intent to
examine the merchandise (see Sec. 191.35 of this part).
(2) Approval. The approval of an application for waiver of prior
notice of intent to export, under this section, shall operate
prospectively, applying only to those export shipments occurring after
the date of the waiver. It shall be subject to a stay, as provided in
paragraph (d) of this section.
(3) Denial. If an application for waiver of prior notice of intent
to export, under this section, is denied, the applicant shall be given
written notice, specifying the grounds therefor, together with what
corrective action may be taken, and informing the applicant that the
denial may be appealed in the manner prescribed in paragraph (g) of
this section. The applicant may not reapply for a waiver until the
reason for the denial is resolved.
(d) Stay. A privilege holder's privilege may be stayed, for a
specified reasonable period, should the agency desire for any reason to
examine the merchandise being exported with drawback prior to its
exportation for purposes of verification. A stay of this privilege
shall take effect on the date of the agency's letter notifying the
privilege holder of the stay and shall remain in effect for the period
specified in that letter, or such earlier date as the agency notifies
the privilege holder in writing that the reason for the stay has been
satisfied. After the stay is lifted, operation under the privilege may
resume.
(e) Proposed revocation. Customs may propose to revoke the approval
of an application for waiver of prior notice of intent to export, under
this section, for good cause (that is, noncompliance with the drawback
law and/or regulations). Customs shall give written notice of the
proposed revocation of a waiver of prior notice of intent to export.
The notice shall specify the reasons for Customs proposed action and
provide information regarding the procedures for challenging Customs
proposed revocation action as prescribed in paragraph (g) of this
section.
(f) Action by drawback office controlling. Action by the
appropriate drawback office to approve, deny, stay, or revoke waiver of
prior notice of intent to export, unless reversed by Customs
Headquarters, will govern the applicant's eligibility for this
procedure in all Customs drawback offices. If the application for
waiver of prior notice of intent to export is approved, the claimant
shall submit a copy of the approval letter with the first drawback
claim filed in any drawback office other than the approving office,
when the export upon which the claim is based was without prior notice,
under this section.
(g) Appeal of denial or challenge to proposed revocation. An appeal
of a denial of an application under this section, or challenge to the
proposed revocation of an approved application under this section, may
be made by letter to the drawback office issuing the denial or proposed
revocation and must be filed within 30 days of the date of denial or
proposed revocation. A denial of an appeal or challenge made to the
drawback office may itself be appealed to Customs Headquarters and must
be filed within 30 days of the denial date of the initial appeal or
challenge. The 30-day period for appeal or challenge to the drawback
office or to Customs Headquarters may be extended for good cause, upon
written request by the applicant or privilege holder for such extension
filed with the appropriate office within the 30-day period.
Sec. 191.92 Accelerated payment.
(a) Scope. Accelerated payment of drawback is available on claims
covering exportations (or destructions, if applicable) under the
manufacturing, rejected or unused merchandise drawback provisions, as
well as claims for the substitution of finished petroleum derivatives
(19 U.S.C. 1313 (a), (b), (c), (j), or (p)). Accelerated payment of a
drawback claim does not constitute liquidation of the drawback entry.
(b) Application for approval; contents. A person who wishes to
apply for accelerated payment of drawback must file a written
application with the drawback office where claims will be filed.
(1) Required information. The application must contain:
(i) Company name and address;
(ii) Identification number (including suffixes);
(iii) Identity (by name and title) of the person in claimant's
organization who will be responsible for the drawback program;
(iv) Description of the bond coverage the applicant intends to use
to cover accelerated payments of drawback (see paragraph (d) of this
section), including:
(A) Identity of the surety to be used;
(B) Dollar amount of bond coverage for the first year under the
accelerated payment procedure; and
(C) Procedures to ensure that bond coverage remains adequate (that
is, procedures to alert the applicant when and if its accelerated
payment potential liability exceeds its bond coverage);
(v) Description of merchandise and/or articles covered by the
application;
(vi) Type(s) of drawback covered by the application; and
(vii) Estimated dollar value of potential drawback during the next
12-month period covered by the application.
(2) Previous applications. In the application, the applicant must
state whether or not the applicant has previously been denied an
application for accelerated payment of drawback, or had an approval of
such an application revoked by any drawback office.
(3) Certification of compliance. In or with the application, the
applicant must also submit a certification, signed by the
[[Page 3115]]
applicant, that all applicable statutory and regulatory requirements
for drawback will be met.
(4) Description of claimant's drawback program. With the
application, the applicant must submit a description (with sample
documents) of how the applicant will ensure compliance with its
certification that the statutory and regulatory drawback requirements
will be met. This description may be in the form of a booklet. The
detail contained in this description should vary depending on the size
and complexity of the applicant's accelerated drawback program (for
example, if the dollar amount is great and there are several kinds of
drawback involved, with differing inventory, manufacturing, and
shipping methods, greater detail in the description will be required).
The description must include at least:
(i) The name of the official in the claimant's organization who is
responsible for oversight of the claimant's drawback program;
(ii) The procedures and controls demonstrating compliance with the
statutory and regulatory drawback requirements;
(iii) The parameters of claimant's drawback record-keeping program,
including the retention period and method (for example, paper,
electronic, etc.);
(iv) A list of the records that will be maintained, including at
least sample import documents, sample export documents, sample
inventory and transportation documents (if applicable), sample
laboratory or other documents establishing the qualification of
merchandise or articles for substitution under the drawback law (if
applicable), and sample manufacturing documents (if applicable);
(v) The procedures that will be used to notify Customs of changes
to the claimant's drawback program, variances from the procedures
described in this application, and violations of the statutory and
regulatory drawback requirements; and
(vi) The procedures for an annual review by the claimant to ensure
that its drawback program complies with the statutory and regulatory
drawback requirements and that Customs is notified of any modifications
from the procedures described in this application.
(c) Sample application. The drawback office, upon request, shall
provide applicants for accelerated payment with a sample letter format
to assist them in preparing their submissions.
(d) Bond required. If approved for accelerated payment, the
claimant must furnish a properly executed bond in an amount sufficient
to cover the estimated amount of drawback to be claimed during the term
of the bond. If outstanding accelerated drawback claims exceed the
amount of the bond, the drawback office will require additional bond
coverage as necessary before additional accelerated payments are made.
(e) Action on application. (1) Customs review. The drawback office
shall review and verify the information submitted in and with the
application. In order for Customs to evaluate the application, Customs
may request additional information (including additional sample
documents) and/or explanations of any of the information provided for
in paragraph (b)(4) of this section. Based on the information submitted
on and with the application and any information so requested, and based
on the applicant's record of transactions with Customs, the drawback
office will approve or deny the application. The criteria to be
considered in reviewing the applicant's record with Customs include (as
applicable):
(i) The presence or absence of unresolved Customs charges (duties,
taxes, or other debts owed Customs);
(ii) The accuracy of the claimant's past drawback claims; and
(iii) Whether accelerated payment of drawback or any other drawback
privilege was previously revoked or suspended.
(2) Notification to applicant. Customs will notify the applicant in
writing within 90 days of receipt of the application of its decision to
approve or deny the application, or of Customs inability to approve,
deny, or act on the application.
(3) Approval. The approval of an application for accelerated
payment, under this section, shall operate prospectively, applying to
those claims filed after the date of approval. It shall be subject to a
stay, as provided in paragraph (f) of this section.
(4) Denial. If an application for accelerated payment of drawback
under this section is denied, the applicant shall be given written
notice, specifying the grounds therefor, together with what corrective
action may be taken, and informing the applicant that the denial may be
appealed in the manner prescribed in paragraph (i) of this section. The
applicant may not reapply for accelerated payment of drawback until the
reason for the denial is resolved.
(f) Stay. A privilege holder's privilege may be stayed, for a
specified reasonable period, should the agency desire for any reason to
examine compliance with the drawback law and regulations for purposes
of verification. A stay of this privilege shall take effect on the date
of the agency's letter notifying the privilege holder of the stay and
shall remain in effect for the period specified in the agency's letter,
or such earlier date as the agency notifies the privilege holder in
writing that the reason for the stay has been satisfied. After the stay
is lifted, operation under the privilege may resume.
(g) Proposed revocation. Customs may propose to revoke the approval
of an application for accelerated payment of drawback under this
section, for good cause (that is, noncompliance with the drawback law
and/or regulations). In case of such proposed revocation, Customs shall
give written notice of the proposed revocation of the accelerated
payment privilege. The notice shall specify the reasons for Customs
proposed action and the procedures for challenging Customs proposed
revocation action as prescribed in paragraph (i) of this section.
(h) Action by drawback office controlling. Action by the
appropriate drawback office to approve, deny, stay, or revoke the
privilege of accelerated payment of drawback will govern the
applicant's eligibility for this procedure in all Customs drawback
offices. If the application for accelerated payment of drawback is
approved and the claimant desires accelerated payment of drawback in a
drawback claim filed in a drawback office other than the approving
drawback office, the claimant shall submit a copy of the approval
letter with the first drawback claim filed in the drawback office other
than the approving office.
(i) Appeal of denial or challenge to proposed revocation. An appeal
of a denial of an application under this section, or challenge to the
proposed revocation of an approved application under this section, may
be made in writing to the drawback office issuing the denial or
proposed revocation and must be filed within 30 days of the date of
denial or proposed revocation. A denial of an appeal or challenge made
to the drawback office may itself be appealed to Customs Headquarters
and must be filed within 30 days. The 30-day period for appeal or
challenge to the drawback office or to Customs Headquarters may be
extended for good cause, upon written request by the applicant or
privilege holder for such extension filed with the appropriate office
within the 30-day period.
(j) Payment. The drawback office approving a drawback claim in
which accelerated payment of drawback was
[[Page 3116]]
requested (and in which the claimant has been approved for accelerated
payment of drawback under this section) shall certify the drawback
claim for payment within 3 weeks after filing, if a component for
electronic filing of drawback claims, records, or entries which has
been implemented under the National Customs Automation Program (NCAP)
(19 U.S.C. 1411-1414) is used, and within 3 months after filing, if the
claim is filed manually. After liquidation, the drawback office shall
certify payment of any amount due or demand a refund of any excess
amount paid. Any excess amount of duty the subject of accelerated
payment that is not refunded within 30 days after the date of
liquidation of the related drawback entry shall be considered
delinquent (see Secs. 24.3a and 113.65(b) of this chapter.)
Sec. 191.93 Combined applications.
An applicant for the privileges provided for in Secs. 191.91 and
191.92 of this subpart may apply for only one privilege, both
privileges separately, or both privileges in one application package.
In the latter instance, the intent to apply for both privileges must be
clearly stated. In all instances, all of the requirements for the
privilege(s) applied for must be met (for example, in a combined
application for both privileges, all of the information required for
each privilege, all required sample documents for each privilege, and
all required certifications must be included in and with the
application).
Subpart J--Internal Revenue Tax on Flavoring Extracts and Medicinal
or Toilet Preparations (Including Perfumery) Manufactured from
Domestic Tax-Paid Alcohol
Sec. 191.101 Drawback allowance.
(a) Drawback. Section 313(d) of the Act, as amended (19 U.S.C.
1313(d)), provides for drawback of internal revenue tax upon the
exportation of flavoring extracts and medicinal or toilet preparations
(including perfumery) manufactured or produced in the United States in
part from the domestic tax-paid alcohol.
(b) Shipment to Puerto Rico, the Virgin Islands, Guam, and American
Samoa. Drawback of internal revenue tax on articles manufactured or
produced under this subpart and shipped to Puerto Rico, the Virgin
Islands, Guam, or American Samoa shall be allowed in accordance with
section 7653(c) of the Internal Revenue Code (26 U.S.C. 7653(c)).
However, there is no authority of law for the allowance of drawback of
internal-revenue tax on flavoring extracts or medicinal or toilet
preparations (including perfumery) manufactured or produced in the
United States and shipped to Wake Island, Midway Islands, Kingman Reef,
Canton Island, Enderbury Island, Johnston Island, or Palmyra Island.
Sec. 191.102 Procedure.
(a) General. Other provisions of this part relating to direct
identification drawback (see subpart B of this part) shall apply to
claims for drawback filed under this subpart insofar as applicable to
and not inconsistent with the provisions of this subpart.
(b) Manufacturing record. The manufacturer of flavoring extracts or
medicinal or toilet preparations on which drawback is claimed shall
record the products manufactured, the quantity of waste, if any, and a
full description of the alcohol. These records shall be available at
all times for inspection by Customs officers.
(c) Additional information required on the manufacturer's
application for a specific manufacturing drawback ruling. The
manufacturer's application for a specific manufacturing drawback
ruling, under Sec. 191.8 of this part, shall state the quantity of
domestic tax-paid alcohol contained in each product on which drawback
is claimed.
(d) Variance in alcohol content--(1) Variance of more than 5
percent. If the percentage of alcohol contained in a medicinal
preparation, flavoring extract or toilet preparation varies by more
than 5 percent from the percentage of alcohol in the total volume of
the exported product as stated in a previously approved application for
a specific manufacturing drawback ruling, the manufacturer shall apply
for a new specific manufacturing drawback ruling pursuant to Sec. 191.8
of this part. If the variation differs from a previously filed
schedule, the manufacturer shall file a new schedule incorporating the
change.
(2) Variance of 5 percent or less. Variances of 5 percent or less
of the volume of the product shall be reported to the appropriate
drawback office where the drawback entries are liquidated. In such
cases, the drawback office may allow drawback without specific
authorization from Customs Headquarters.
(e) Time period for completing claims. The 3-year period for the
completion of drawback claims prescribed in 19 U.S.C. 1313(r)(1) shall
be applicable to claims for drawback under this subpart.
(f) Filing of drawback entries on duty-paid imported merchandise
and tax-paid alcohol. When the drawback claim covers duty-paid imported
merchandise in addition to tax-paid alcohol, the claimant shall file
one set of entries for drawback of Customs duty and another set for
drawback of internal revenue tax.
(g) Description of the alcohol. The description of the alcohol
stated in the drawback entry may be obtained from the description on
the package containing the tax-paid alcohol.
Sec. 191.103 Additional requirements.
(a) Manufacturer claims domestic drawback. In the case of medicinal
preparations and flavoring extracts, the claimant shall file with the
drawback entry, a declaration of the manufacturer showing whether a
claim has been or will be filed by the manufacturer with the regional
regulatory administrator of the Bureau of Alcohol, Tobacco and Firearms
for domestic drawback on alcohol under section 5131, 5132, 5133 and
5134, Internal Revenue Code, as amended (26 U.S.C. 5131, 5132, 5133 and
5134).
(b) Manufacturer does not claim domestic drawback--(1) Submission
of statement. If no claim has been or will be filed with the Bureau of
Alcohol, Tobacco and Firearms for domestic drawback on medicinal
preparations or flavoring extracts, the manufacturer shall submit a
statement, in duplicate, setting forth that fact to the appropriate
regional regulatory administrator of the Bureau of Alcohol, Tobacco and
Firearms for the region in which the manufacturer's factory is located.
(2) Contents of the statement. The statement shall show the:
(i) Quantity and description of the exported products;
(ii) Identity of the alcohol used by serial number of package or
tank car;
(iii) Name and registry number of the warehouse from which the
alcohol was withdrawn;
(iv) Date of withdrawal;
(v) Serial number of the tax-paid stamp or certificate, if any; and
(vi) Drawback office where the claim will be filed.
(3) Verification of the statement. The regional regulatory
administrator, Bureau of Alcohol, Tobacco and Firearms, shall verify
receipt of this statement, forward the original of the document to the
drawback office designated, and retain the copy.
Sec. 191.104 Alcohol, Tobacco and Firearms certificates.
(a) Request. The drawback claimant or manufacturer shall file a
written request with the regional regulatory administrator, Bureau of
Alcohol, Tobacco and Firearms, in whose region the alcohol used in the
manufacture was withdrawn requesting him to provide the Customs
drawback office where the
[[Page 3117]]
drawback claim will be processed, a tax-paid certificate on Alcohol,
Tobacco and Firearms Form 5100.4 (Certificate of Tax-Paid Alcohol).
(b) Contents. The request shall state the:
(1) Quantity of alcohol in taxable gallons;
(2) Serial number of each package;
(3) Serial number of the stamp, if any;
(4) Amount of tax paid on the alcohol;
(5) Name, registry number, and location of the warehouse;
(6) Date of withdrawal;
(7) Name of the manufacturer using the alcohol in producing the
exported articles;
(8) Address of the manufacturer and his manufacturing plant; and
(9) Customs drawback office where the drawback claim will be
processed.
(c) Extracts of Alcohol, Tobacco and Firearms certificates. If a
certification of any portion of the alcohol described in the Bureau of
Alcohol, Tobacco and Firearms Form 5100.4 is required for liquidation
of drawback entries processed in another drawback office, the drawback
office, on written application of the person who requested its
issuance, shall transmit a copy of the extract from the certificate for
use at that drawback office. The drawback office shall note that the
copy of the extract was prepared and transmitted.
Sec. 191.105 Liquidation.
The drawback office shall ascertain the final amount of drawback
due by reference to the certificate of manufacture and delivery and the
specific manufacturing drawback ruling under which the drawback claimed
is allowable.
Sec. 191.106 Amount of drawback.
(a) Claim filed with Bureau of Alcohol, Tobacco and Firearms. If
the declaration required by Sec. 191.103 of this subpart shows that a
claim has been or will be filed with the Bureau of Alcohol, Tobacco and
Firearms for domestic drawback, drawback under section 313(d) of the
Act, as amended (19 U.S.C. 1313(d)), shall be limited to the difference
between the amount of tax paid and the amount of domestic drawback
claimed.
(b) Claim not filed with Bureau of Alcohol, Tobacco and Firearms.
If the declaration and verified statement required by Sec. 191.103 show
that no claim has been or will be filed by the manufacturer with the
Bureau of Alcohol, Tobacco and Firearms for domestic drawback, the
drawback shall be the full amount of the tax on the alcohol used.
(c) No deduction of 1 percent. No deduction of 1 percent shall be
made in drawback claims under section 313(d) of the Act, as amended (19
U.S.C. 1313(d)).
(d) Payment. The drawback due shall be paid in accordance with
Sec. 191.81(f) of this part.
Subpart K--Supplies for Certain Vessels and Aircraft
Sec. 191.111 Drawback allowance.
Section 309 of the Act, as amended (19 U.S.C. 1309), provides for
drawback on articles laden as supplies on certain vessels or aircraft
of the United States or as supplies including equipment upon, or used
in the maintenance or repair of, certain foreign vessels or aircraft.
Sec. 191.112 Procedure.
(a) General. The provisions of this subpart shall override other
conflicting provisions of this part.
(b) Customs forms. The drawback claimant shall file with the
drawback office the drawback entry on Customs Form 331 annotated for 19
U.S.C. 1309, and attach thereto a notice of lading on Customs Form
7514, in quadruplicate, unless the export summary procedure, provided
for in Sec. 191.73, is used. If the export summary procedure is used,
the requirements in Sec. 191.73 shall be complied with, as applicable.
(c) Time of filing notice of lading. In the case of drawback in
connection with 19 U.S.C. 1309(b), the drawback notice of lading on
Customs Form 7514 may be filed either before or after the lading of the
articles. If filed after lading, the notice shall be filed within 3
years after exportation of the articles.
(d) Contents of notice. The notice of lading shall show:
(1) The name of the vessel or identity of the aircraft on which
articles were or are to be laden;
(2) The number and kind of packages and their marks and numbers;
(3) A description of the articles and their weight (net), gauge,
measure, or number; and
(4) The name of the exporter.
(e) Assignment of numbers and return of one copy. The drawback
office shall assign a number to each notice of lading and return one
copy to the exporter for delivery to the master or authorized officer
of the vessel or aircraft.
(f) Declaration--(1) Requirement. The master or an authorized
representative of the vessel or aircraft having knowledge of the facts
shall complete the section of the notice entitled ``Declaration of
Master or Other Officer''.
(2) Procedure if notice filed before lading. If the notice is filed
before lading of the articles, the declaration must be completed on the
copy of the numbered drawback notice that was filed with the drawback
office and returned to the exporter for this purpose.
(3) Procedure if notice filed after lading. If the drawback notice
is filed after lading of the articles, the drawback claimant may file a
separate document containing the declaration required on the Drawback
Notice, Customs Form 7514.
(4) Filing. The drawback claimant shall file with the drawback
office both the drawback entry and the drawback notice or separate
document containing the declaration of the master or other officer or
representative.
(g) Information concerning class or trade. Information about the
class of business or trade of a vessel or aircraft is required to be
furnished in support of the drawback entry if the vessel or aircraft is
American.
(h) Vessel or aircraft required to clear or obtain a permit to
proceed. After the vessel or aircraft has cleared or obtained a permit
to proceed, the drawback office shall complete the section entitled
``Customs Certification'' on one of the copies of the notice of lading.
The drawback office shall return the completed copy and one other copy
to the exporter or the person designated by the exporter for subsequent
filing with the drawback claim.
(i) Vessel or aircraft not required to clear or obtain a permit to
proceed. If the vessel or aircraft is not required to clear or obtain a
permit to proceed to another port, the drawback office shall return to
the exporter or the person designated by the exporter two copies of the
notice, noting the absence of a requirement for clearance or permit to
proceed, for subsequent filing with the drawback claim. The claimant
shall file with the claim an itinerary of the vessel or aircraft for
the immediate voyage or flight showing that the vessel or aircraft is
engaged in a class of business or trade which makes it eligible for
drawback.
(j) Articles laden or installed on aircraft as equipment or used in
the maintenance or repair of aircraft. The drawback office where the
drawback claim is filed shall require a declaration or other evidence
showing to its satisfaction that articles have been laden or installed
on aircraft as equipment or used in the maintenance or repair of
aircraft.
(k) Fuel laden on vessels or aircraft as supplies.--(1) Composite
notice of lading. In the case of fuel laden on vessels or aircraft as
supplies, the drawback claimant may file with the drawback office a
composite notice of lading on the reverse side of Customs Form 7514,
for each calendar month. The composite notice of lading shall
[[Page 3118]]
describe all of the drawback claimant's deliveries of fuel supplies
during the one calendar month at a single port or airport to all
vessels or airplanes of one vessel owner or operator or airline. This
includes fuel laden for flights or voyages between the contiguous U.S.
and Hawaii, Alaska, or any U.S. possessions (see Sec. 10.59 of this
chapter).
(2) Contents of composite notice. The composite notice shall show
for each voyage or flight, either on the reverse side of Customs Form
7514 or on a continuation sheet:
(i) The identity of the vessel or aircraft;
(ii) A description of the fuel supplies laden;
(iii) The quantity laden; and
(iv) The date of lading.
(3) Declaration of owner or operator. An authorized vessel or
airline representative having knowledge of the facts shall complete the
section ``Declaration of Master or Other Officer'' on Customs Form
7514.
(l) Desire to land articles covered by notice of lading. The master
of the vessel or commander of the aircraft desiring to land in the
United States articles covered by a notice of lading shall apply for a
permit to land those articles under Customs supervision. All articles
landed, except those transferred under the original notice of lading to
another vessel or aircraft entitled to drawback, shall be considered
imported merchandise for the purpose of section 309(c) of the Act, as
amended (19 U.S.C. 1309(c)).
Subpart L--Meats Cured with Imported Salt
Sec. 191.121 Drawback allowance.
Section 313(f) of the Act, as amended (19 U.S.C. 1313(f)), provides
for the allowance of drawback upon the exportation of meats cured with
imported salt.
Sec. 191.122 Procedure.
(a) General. Other provisions of this part relating to direct
identification manufacturing drawback shall apply to claims for
drawback under this subpart insofar as applicable to and not
inconsistent with the provisions of this subpart.
(b) Customs form. The forms used for other drawback claims shall be
used and modified to show that the claim is being made for refund of
duties paid on salt used in curing meats.
Sec. 191.123 Refund of duties.
Drawback shall be refunded in aggregate amounts of not less than
$100 and shall not be subject to the retention of 1 percent of duties
paid.
Subpart M--Materials for Construction and Equipment of Vessels and
Aircraft Built for Foreign Ownership and Account
Sec. 191.131 Drawback allowance.
Section 313(g) of the Act, as amended (19 U.S.C. 1313(g)), provides
for drawback on imported materials used in the construction and
equipment of vessels and aircraft built for foreign account and
ownership, or for the government of any foreign country,
notwithstanding that these vessels or aircraft may not be exported
within the strict meaning of the term.
Sec. 191.132 Procedure.
Other provisions of this part relating to direct identification
manufacturing drawback shall apply to claims for drawback filed under
this subpart insofar as applicable to and not inconsistent with the
provisions of this subpart.
Sec. 191.133 Explanation of terms.
(a) Materials. Section 313(g) of the Act, as amended (19 U.S.C.
1313(g)), applies only to materials used in the original construction
and equipment of vessels and aircraft and not to materials used for
alteration or repair, or to materials not required for safe operation
of the vessel or aircraft.
(b) Foreign account and ownership. Foreign account and ownership,
as used in section 313(g) of the Act, as amended (19 U.S.C. 1313(g)),
means only vessels or aircraft built or equipped for the account of an
owner or owners residing in a foreign country and having a bona fide
intention that the vessel or aircraft, when completed, shall be owned
and operated under the flag of a foreign country.
Subpart N--Foreign-Built Jet Aircraft Engines Processed in the
United States
Sec. 191.141 Drawback allowance.
Section 313(h) of the Act, as amended (19 U.S.C. 1313(h)), provides
for drawback on the exportation of jet aircraft engines manufactured or
produced abroad that have been overhauled, repaired, rebuilt, or
reconditioned in the United States with the use of imported
merchandise, including parts.
Sec. 191.142 Procedure.
Other provisions of this part shall apply to claims for drawback
filed under this subpart insofar as applicable to and not inconsistent
with the provisions of this subpart.
Sec. 191.143 Drawback entry.
(a) Filing of entry. Drawback entries covering these foreign-built
jet aircraft engines shall be filed on Customs Form 331, modified to
show that the entry covers jet aircraft engines processed under section
313(h) of the Act, as amended (19 U.S.C. 1313(h)).
(b) Contents of entry. The entry shall show the country in which
each engine was manufactured and describe the processing performed
thereon in the United States.
Sec. 191.144 Refund of duties.
Drawback shall be refunded in aggregate amounts of not less than
$100, and shall not be subject to the deduction of 1 percent of duties
paid.
Subpart O--Merchandise Exported from Continuous Customs Custody
Sec. 191.151 Drawback allowance.
(a) Eligibility of entered or withdrawn merchandise.--(1) Under 19
U.S.C. 1557(a). Section 557(a) of the Act, as amended (19 U.S.C.
1557(a)), provides for drawback on the exportation to a foreign
country, or the shipment to the Virgin Islands, American Samoa, Wake
Island, Midway Islands, Kingman Reef, Johnston Island, or Guam, of
merchandise upon which duties have been paid which has remained
continuously in bonded warehouse or otherwise in Customs custody for a
period not to exceed 5 years from the date of importation.
(2) Under 19 U.S.C. 1313. Imported merchandise that has not been
regularly entered or withdrawn for consumption, shall not satisfy any
requirement for use, importation, exportation or destruction, and shall
not be available for drawback, under section 313 of the Act, as amended
(19 U.S.C. 1313) (see 19 U.S.C. 1313(u)).
(b) Guantanamo Bay. Guantanamo Bay Naval Station shall be
considered foreign territory for drawback purposes under this subpart
and merchandise shipped there is eligible for drawback. Imported
merchandise which has remained continuously in bonded warehouse or
otherwise in Customs custody since importation is not entitled to
drawback of duty when shipped to Puerto Rico, Canton Island, Enderbury
Island, or Palmyra Island.
Sec. 191.152 Merchandise released from Customs custody.
No remission, refund, abatement, or drawback of duty shall be
allowed under this subpart because of the exportation or destruction of
any merchandise after its release from Government custody, except in
the following cases:
[[Page 3119]]
(a) When articles are exported or destroyed on which drawback is
expressly provided for by law;
(b) When prohibited articles have been regularly entered in good
faith and are subsequently exported or destroyed pursuant to statute
and regulations prescribed by the Secretary of the Treasury; or
(c) When articles entered under bond are destroyed within the
bonded period, as provided in section 557(c) of the Act, as amended (19
U.S.C. 1557(c)), or destroyed within the bonded period by death,
accidental fire, or other casualty, and proof of destruction is
furnished to the satisfaction of the Secretary of the Treasury, in
which case any accrued duties shall be remitted or refunded and any
condition in the bond that the articles shall be exported shall be
deemed to have been satisfied (see 19 U.S.C. 1558).
Sec. 191.153 Continuous Customs custody.
(a) Merchandise released under an importer's bond and returned.
Merchandise released to an importer under a bond prescribed by
Sec. 142.4 of this chapter and later returned to the public stores upon
requisition of the appropriate Customs office shall not be deemed to be
in the continuous custody of Customs officers.
(b) Merchandise released under Chapter 98, Subchapter XIII,
Harmonized Tariff Schedule of the United States (HTSUS). Merchandise
released as provided for in Chapter 98, Subchapter XIII, HTSUS (19
U.S.C. 1202), shall not be deemed to be in the continuous custody of
Customs officers.
(c) Merchandise released from warehouse. For the purpose of this
subpart, in the case of merchandise entered for warehouse, Customs
custody shall be deemed to cease when estimated duty has been deposited
and the appropriate Customs office has authorized the withdrawal of the
merchandise.
(d) Merchandise not warehoused, examined elsewhere than in public
stores.--(1) General rule. Except as stated in paragraph (d)(2) of this
section, merchandise examined elsewhere than at the public stores, in
accordance with the provisions of Sec. 151.7 of this chapter, shall be
considered released from Customs custody upon completion of final
examination for appraisement.
(2) Merchandise upon the wharf. Merchandise which remains on the
wharf by permission of the appropriate Customs office shall be
considered to be in Customs custody, but this custody shall be deemed
to cease when the Customs officer in charge accepts the permit and has
no other duties to perform relating to the merchandise, such as
measuring, weighing, or gauging.
Sec. 191.154 Filing the entry.
(a) Direct export. At least 6 working hours before lading the
merchandise on which drawback is claimed under this subpart, the
importer or the agent designated by him in writing shall file with the
drawback office a direct export drawback entry on Customs Form 331 in
duplicate.
(b) Merchandise transported to another port for exportation. The
importer of merchandise to be transported to another port for
exportation shall file in triplicate with the drawback office an entry
naming the transporting conveyance, route, and port of exit. The
drawback office shall certify one copy and forward it to the Customs
office at the port of exit. A bonded carrier shall transport the
merchandise in accordance with the applicable regulations. Manifests
shall be prepared and filed in the manner prescribed in Sec. 144.37 of
this chapter.
Sec. 191.155 Merchandise withdrawn from warehouse for exportation.
The regulations in part 18 of this chapter concerning the
supervision of lading and certification of exportation of merchandise
withdrawn from warehouse for exportation without payment of duty shall
be followed to the extent applicable.
Sec. 191.156 Bill of lading.
(a) Filing. In order to complete the claim for drawback under this
subpart, a bill of lading covering the merchandise described in the
drawback entry (Customs Form 331) shall be filed within 2 years after
the merchandise is exported.
(b) Contents. The bill of lading shall either show that the
merchandise was shipped by the person making the claim or bear an
endorsement of the person in whose name the merchandise was shipped
showing that the person making the claim is authorized to do so.
(c) Limitation of the bill of lading. The terms of the bill of
lading may limit and define its use by stating that it is for Customs
purposes only and not negotiable.
(d) Inability to produce bill of lading. When a required bill of
lading cannot be produced, the person making the drawback entry may
request the drawback office, within the time required for the filing of
the bill of lading, to accept a statement setting forth the cause of
failure to produce the bill of lading and such evidence of exportation
and of his right to make the drawback entry as may be available. The
request shall be granted if the drawback office is satisfied by the
evidence submitted that the failure to produce the bill of lading is
justified, that the merchandise has been exported, and that the person
making the drawback entry has the right to do so. If the drawback
office is not so satisfied, such office shall transmit the request and
its accompanying evidence to the Office of Field Operations, Customs
Headquarters, for final determination.
(e) Extracts of bills of lading. Drawback offices may issue
extracts of bills of lading filed with drawback claims.
Sec. 191.157 Landing certificates.
When required, a landing certificate shall be filed within the time
prescribed in Sec. 191.76 of this part.
Sec. 191.158 Procedures.
When the drawback claim has been completed and the bill of lading
filed, together with the landing certificate, if required, the reports
of inspection and lading made, and the clearance of the exporting
conveyance established by the record of clearance in the case of direct
exportation or by certificate in the case of transportation and
exportation, the drawback office shall verify the importation by
referring to the import records to ascertain the amount of duty paid on
the merchandise exported. To the extent appropriate and not
inconsistent with the provisions of this subpart, drawback entries
shall be liquidated in accordance with the provisions of Sec. 191.81 of
this part.
Sec. 191.159 Amount of drawback.
Drawback due under this subpart shall not be subject to the
deduction of 1 percent.
Subpart P--Distilled Spirits, Wines, or Beer Which Are
Unmerchantable or Do Not Conform to Sample or Specifications
Sec. 191.161 Refund of taxes.
Section 5062(c), Internal Revenue Code, as amended (26 U.S.C.
5062(c)), provides for the refund, remission, abatement or credit to
the importer of internal-revenue taxes paid or determined incident to
importation, upon the exportation, or destruction under Customs
supervision, of imported distilled spirits, wines, or beer found after
entry to be unmerchantable or not to conform to sample or
specifications and which are returned to Customs custody.
[[Page 3120]]
Sec. 191.162 Procedure.
The export procedure shall be the same as that provided in
Sec. 191.42 except that the claimant must be the importer and as
otherwise provided in this subpart.
Sec. 191.163 Documentation.
(a) Entry. Customs Form 331 shall be used to claim drawback under
this subpart.
(b) Documentation. The drawback entry for unmerchantable
merchandise shall be accompanied by a certificate of the importer
setting forth in detail the facts which cause the merchandise to be
unmerchantable and any additional proof that the drawback office
requires to establish that the merchandise is unmerchantable.
Sec. 191.164 Return to Customs custody.
There is no time limit for the return to Customs custody of
distilled spirits, wine, or beer subject to refund of taxes under the
provisions of this subpart.
Sec. 191.165 No exportation by mail.
Merchandise covered by this subpart shall not be exported by mail.
Sec. 191.166 Destruction of merchandise.
(a) Action by the importer. A drawback claimant who proposes to
destroy rather than export the distilled spirits, wine, or beer shall
state that fact on Customs Form 331.
(b) Action by Customs. Distilled spirits, wine, or beer returned to
Customs custody at the place approved by the drawback office where the
drawback entry was filed shall be destroyed under the supervision of
the Customs officer who shall certify the destruction on Customs Form
3499.
Sec. 191.167 Liquidation.
No deduction of 1 percent of the internal revenue taxes paid or
determined shall be made in allowing entries under Section 5062(c),
Internal Revenue Code, as amended (26 U.S.C. 5062(c)).
Sec. 191.168 Time limit for exportation or destruction.
Merchandise not exported or destroyed within 90 days from the date
of notification of acceptance of the drawback entry shall be considered
unclaimed, unless upon written request by the importer, prior to the
expiration of the 90-day period, the drawback office grants an
extension of not more than 90 days.
Subpart Q--Substitution of Finished Petroleum Derivatives
Sec. 191.171 General; Drawback allowance.
(a) General. Section 313(p), of the Act, as amended (19 U.S.C.
1313(p)), provides for drawback on the basis of qualified articles
which consist of either imported duty-paid petroleum derivatives, or
petroleum derivatives manufactured or produced in the United States and
qualified for drawback under the manufacturing drawback law (19 U.S.C.
1313 (a) or (b)).
(b) Allowance of drawback. Drawback may be granted under 19 U.S.C.
1313(p):
(1) In cases where there is no manufacture, upon exportation of the
imported article, an article of the same kind and quality, or any
combination thereof; or
(2) In cases where there is a manufacture or production, upon
exportation of the manufactured or produced article, an article of the
same kind and quality, or any combination thereof.
Sec. 191.172 Definitions.
The following are definitions for purposes of this subpart only:
(a) Qualified article. ``Qualified article'' means an article
described in headings 2707, 2708, 2710 through 2715, 2901, 2902, or
3901 through 3914 of the Harmonized Tariff Schedule of the United
States (HTSUS). In the case of headings 3901 through 3914, the
definition is limited as those headings apply to liquids, pastes,
powders, granules and flakes.
(b) Same kind and quality article. ``Same kind and quality
article'' means an article which is commercially interchangeable with,
or which is referred to under the same 8-digit classification of the
HTSUS as, the article to which it is compared. (For example, unleaded
gasoline and jet fuel (naphtha or kerosene-type), both falling under
the same HTSUS classification (2710.00.15) would be considered same
kind and quality articles because they fall under the same 8 digit
HTSUS classification, even though they are not ``commercially
interchangeable''.)
(c) Exported article. ``Exported article'' means an article which
has been exported and is the qualified article, an article of the same
kind and quality as the qualified article, or any combination thereof.
Sec. 191.173 Imported duty-paid derivatives (no manufacture).
When the basis for drawback under 19 U.S.C. 1313(p) is imported
duty-paid petroleum derivatives (that is, not articles manufactured
under 19 U.S.C. 1313 (a) or (b)), the requirements for drawback are as
follows:
(a) Imported duty-paid merchandise. The imported duty-paid
merchandise designated for drawback must be a ``qualified article'' as
defined in Sec. 191.172(a) of this subpart;
(b) Exported article. The exported article on which drawback is
claimed must be an ``exported article'' as defined in Sec. 191.172(c)
of this subpart;
(c) Exporter. The exporter of the exported article must have
either:
(1) Imported the qualified article in at least the quantity of the
exported article; or
(2) Purchased or exchanged (directly or indirectly) from an
importer an imported qualified article in at least the quantity of the
exported article;
(d) Time of export. The exported article must be exported within
180 days after the date of entry of the designated imported duty-paid
merchandise; and
(e) Amount of drawback. The amount of drawback payable may not
exceed the amount of drawback which would be attributable to the
imported qualified article which serves as the basis for drawback.
Sec. 191.174 Derivatives manufactured under 19 U.S.C. 1313 (a) or (b).
When the basis for drawback under 19 U.S.C. 1313(p) is petroleum
derivatives which were manufactured or produced in the United States
and qualify for drawback under the manufacturing drawback law (19
U.S.C. 1313 (a) or (b)), the requirements for drawback are as follows:
(a) Merchandise. The merchandise which is the basis for drawback
under 19 U.S.C. 1313(p) must:
(1) Have been manufactured or produced as described in 19 U.S.C.
1313 (a) or (b) from crude petroleum or a petroleum derivative; and
(2) Be a ``qualified article'' as defined in Sec. 191.172(a) of
this subpart;
(b) Exported article. The exported article on which drawback is
claimed must be an ``exported article'' as defined in Sec. 191.172(c)
of this subpart;
(c) Exporter. The exporter of the exported article must have
either:
(1) Manufactured or produced the qualified article in at least the
quantity of the exported article; or
(2) Purchased or exchanged (directly or indirectly) from a
manufacturer or producer described in 19 U.S.C. 1313 (a) or (b) the
qualified article in at least the quantity of the exported article;
(d) Manufacture in specific facility. The qualified article must
have been manufactured or produced in a specific petroleum refinery or
production facility which must be identified;
[[Page 3121]]
(e) Time of export. The exported article must be exported either:
(1) During the period provided for in the manufacturer's or
producer's specific manufacturing drawback ruling (see Sec. 191.8 of
this part) in which the qualified article is manufactured or produced;
or
(2) Within 180 days after the close of the period in which the
qualified article is manufactured or produced; and
(f) Amount of drawback. The amount of drawback payable may not
exceed the amount of drawback which would be attributable to the
article manufactured or produced under 19 U.S.C. 1313 (a) or (b) which
serves as the basis for drawback.
Sec. 191.175 Drawback claimant; maintenance of records.
(a) Drawback claimant. A drawback claimant under 19 U.S.C. 1313(p)
must be the exporter of the exported article, or the refiner, producer,
or importer of that article. Any of these persons may designate another
person to file the drawback claim.
(b) Certificate of manufacture and delivery or delivery. A drawback
claimant under 19 U.S.C. 1313(p) must provide a certificate of
manufacture and delivery or a certificate of delivery, as applicable,
establishing the drawback eligibility of the articles for which
drawback is claimed.
(c) Maintenance of records. The manufacturer, producer, importer,
exporter and drawback claimant of the qualified article and the
exported article must all maintain their appropriate records required
by this part.
Sec. 191.176 Procedures for claims filed under 19 U.S.C. 1313(p).
(a) Applicability. The general procedures for filing drawback
claims shall be applicable to claims filed under 19 U.S.C. 1313(p)
unless otherwise specifically provided for in this section.
(b) Administrative efficiency, frequency of claims, and
restructuring of claims. The procedures regarding administrative
efficiency, frequency of claims, and restructuring of claims (as
applicable, see Sec. 191.53 of this part) shall apply to claims filed
under this subpart.
(c) Imported duty-paid derivatives (no manufacture). When the basis
for drawback under 19 U.S.C. 1313(p) is imported duty-paid petroleum
(not articles manufactured under 19 U.S.C. 1313 (a) or (b)), claims
under this subpart may be paid and liquidated if:
(1) The claim is filed on Customs Form 331 and the letter ``P'' is
marked thereon; and
(2) The claimant provides a certification stating the basis (such
as company records, or customer's written certification), for the
information contained therein and certifying that:
(i) The exported merchandise was exported within 180 days of entry
of the designated, imported merchandise;
(ii) The qualified article and the exported article are
commercially interchangeable or both articles are subject to the same
8-digit HTSUS tariff classification;
(iii) To the best of the claimant's knowledge, the designated
imported merchandise, the qualified article and the exported article
have not and will not serve as the basis of any other drawback claim;
(iv) Evidence in support of the certification will be retained by
the person providing the certification for 3 years after payment of the
claim; and
(v) Such evidence will be available for verification by Customs.
(d) Derivatives manufactured under 19 U.S.C. 1313 (a) or (b). When
the basis for drawback under 19 U.S.C. 1313(p) is articles manufactured
under 19 U.S.C. 1313 (a) or (b), claims under this section may be paid
and liquidated if:
(1) The claim is filed on Customs Form 331 and the letter ``P'' is
marked in block 15 thereof;
(2) All documents required to be filed with a manufacturing claim
under 19 U.S.C. 1313 (a) or (b) are filed with the claim;
(3) The claim identifies the specific refinery or production
facility at which the derivatives were manufactured or produced;
(4) The claim states the period of manufacture for the derivatives;
and
(5) The claimant provides a certification stating the basis (such
as company records or a customer's written certification), for the
information contained therein and certifying that:
(i) The exported merchandise was exported during the manufacturing
period for the qualified article or within 180 days after the close of
that period;
(ii) The 8-digit HTSUS tariff classification of the qualified
article and the exported article is the same;
(iii) To the best of the claimant's knowledge, the designated
imported merchandise, the qualified article and the exported article
have not and will not serve as the basis of any other drawback claim;
(iv) Evidence in support of the certification will be retained by
the person providing the certification for 3 years after payment of the
claim; and
(v) Such evidence will be available for verification by Customs.
Subpart R--Merchandise Transferred to a Foreign Trade Zone From
Customs Territory
Sec. 191.181 Drawback allowance.
The fourth proviso of section 3 of the Foreign Trade Zones Act of
June 18, 1934, as amended (19 U.S.C. 81c), provides for drawback on
merchandise transferred to a foreign trade zone from Customs territory
for the sole purpose of exportation, storage or destruction (except
destruction of distilled spirits, wines, and fermented malt liquors),
provided there is compliance with the regulations of this subpart.
Sec. 191.182 Zone-restricted merchandise.
Merchandise in a foreign trade zone for the purposes specified in
Sec. 191.181 shall be given status as zone-restricted merchandise on
proper application (see Sec. 146.44 of this chapter).
Sec. 191.183 Articles manufactured or produced in the United States.
(a) Procedure for filing documents. Except for the evidence of
exportation procedure, the drawback procedures prescribed in this part
shall be followed as applicable to drawback under this subpart on
articles manufactured or produced in the United States with the use of
imported or substituted merchandise, and on flavoring extracts or
medicinal or toilet preparations (including perfumery) manufactured or
produced with the use of domestic tax-paid alcohol.
(b) Notice of transfer--(1) Proof of export. The notice of zone
transfer on Customs Form 7514 shall be in place of the documents under
subpart G of this part to establish the exportation.
(2) Filing procedures. The notice of transfer, in triplicate, shall
be filed with the drawback office where the foreign trade zone is
located prior to the transfer of the articles to the zone, or within 3
years after the transfer of the articles to the zone. A notice filed
after the transfer shall state the foreign trade zone lot number.
(3) Contents of notice. Each notice of transfer shall show the:
(i) Number and location of the foreign trade zone;
(ii) Number and kind of packages and their marks and numbers;
(iii) Description of the articles, including weight (gross and
net), gauge, measure, or number; and
(iv) Name of the transferor.
(c) Action of drawback office on the notice of transfer. The
drawback office shall assign a number to each notice of transfer,
return one copy to the transferor and forward another copy to the zone
operator at the foreign trade zone.
[[Page 3122]]
(d) Action of foreign trade zone operator. After articles have
been received in the zone, the zone operator shall certify on a copy of
the notice of transfer the receipt of the articles (see
Sec. 191.184(d)(2)) and forward the notice to the transferor or the
person designated by the transferor. The transferor shall verify that
the notice has been certified before filing it with the drawback claim.
(e) Drawback entries. Drawback entries shall be filed on Customs
Form 331 to indicate that the merchandise was transferred to a foreign
trade zone. The ``Declaration of Exportation'' shall be modified as
follows:
DECLARATION OF TRANSFER TO A FOREIGN TRADE ZONE
I, __________ (member of firm, officer representing corporation,
agent, or attorney), of __________, declare that, to the best of my
knowledge and belief, the particulars of transfer stated in this
entry, the notices of transfer, and receipts are correct, and that
the merchandise was transferred to a foreign trade zone for the sole
purpose of exportation, destruction, or storage, not to be returned
to the customs territory of the United States for domestic
consumption.
Dated------------------------------------------------------------------
----------------------------------------------------------------------
Transferor or agent.
Sec. 191.184 Merchandise transferred from continuous Customs custody.
(a) Procedure for filing claims. The procedure described in subpart
O of this part shall be followed as applicable, for drawback on
merchandise transferred to a foreign trade zone from continuous Customs
custody.
(b) Drawback entry. Before the transfer of merchandise from
continuous Customs custody to a foreign trade zone, the importer or a
person designated in writing by the importer for that purpose shall
file with the drawback office a direct export drawback entry on Customs
Form 331 in duplicate. The drawback office shall forward one copy of
Customs Form 331 to the zone operator at the zone.
(c) Certification by zone operator. After the merchandise has been
received in the zone, the zone operator shall certify on the copy of
Customs Form 331 the receipt of the merchandise (see paragraph (d)(2)
of this section) and forward the form to the transferor or the person
designated by the transferor. After executing the certifications
provided for in paragraph (d)(3) of this section, the transferor shall
resubmit Customs Form 331 to the drawback office in place of the bill
of lading required by Sec. 191.156.
(d) Modification of drawback entry--(1) Indication of transfer.
Customs Form 331 shall indicate that the merchandise is to be
transferred to a foreign trade zone.
(2) Endorsement. The transferor or person designated by the
transferor shall endorse Customs Form 331 as follows, for execution by
the foreign trade zone operator:
CERTIFICATION OF FOREIGN TRADE ZONE OPERATOR
The merchandise described in the entry was received from
__________ on __________, 19 ______ ; in Foreign Trade Zone No.
__________, (City and State) Exceptions: __________.
__________ (Name and title)
By __________ (Name of operator)
(3) Transferor's declaration. The transferor shall declare on
Customs Form 331 as follows:
TRANSFEROR'S DECLARATION
I, __________ of the firm of __________, declare that the
merchandise described in this entry was duly entered at the
customhouse on arrival at this port; that the duties thereon have
been paid as specified in this entry; and that it was transferred to
Foreign Trade Zone No.______, located at __________, (City and
State) for the sole purpose of exportation, destruction, or storage,
not to be returned to the customs territory of the United States for
domestic consumption. I further declare that to the best of my
knowledge and belief, this merchandise is in the same quantity,
quality, value, and package, unavoidable wastage and damage
excepted, as it was at the time of importation; that no allowance
nor reduction of duties has been made for damage or other cause
except as specified in this entry; and that no part of the duties
paid has been refunded by drawback or otherwise.
Dated------------------------------------------------------------------
(Transferor)
Sec. 191.185 Unused merchandise drawback and merchandise not
conforming to sample or specification, shipped without consent of the
consignee, or found to be defective as of the time of importation.
(a) Procedure for filing claims. The procedures described in
subpart C of this part relating to unused merchandise drawback, and in
subpart D of this part relating to rejected merchandise, shall be
followed as applicable to drawback under this subpart for unused
merchandise drawback and merchandise that does not conform to sample or
specification, is shipped without consent of the consignee, or is found
to be defective as of the time of importation.
(b) Drawback entry. Before transfer of the merchandise to a foreign
trade zone, the importer or a person designated in writing by the
importer for that purpose shall file with the drawback office an entry
on Customs Form 331 in duplicate. The drawback office shall forward one
copy of Customs Form 331 to the zone operator at the zone.
(c) Certification by zone operator. After the merchandise has been
received in the zone, the zone operator at the zone shall certify on
the copy of Customs Form 331 the receipt of the merchandise and forward
the form to the transferor or the person designated by the transferor.
After executing the declarations provided for in paragraph (d)(3) of
this section, the transferor shall resubmit Customs Form 331 to the
drawback office in place of the bill of lading required by
Sec. 191.156.
(d) Modification of drawback entry.--(1) Indication of transfer.
Customs Form 331 shall indicate that the merchandise is to be
transferred to a foreign trade zone.
(2) Endorsement. The transferor or person designated by the
transferor shall endorse Customs Form 331 as follows, for execution by
the foreign trade zone operator:
CERTIFICATION OF FOREIGN TRADE ZONE OPERATOR
The merchandise described in this entry was received from
____________ on __________, 19 __________, in Foreign Trade Zone No.
__________, __________ (City and State). Exceptions: __________.
__________ (Name of operator)
By __________ (Name and title)
(3) Transferor's declaration. The transferor shall declare on
Customs Form 331 as follows:
TRANSFEROR'S DECLARATION
I, __________, of the firm of __________, declare that the
merchandise described in the within entry was duly entered at the
customhouse on arrival at this port; that the duties thereon have
been paid as specified in this entry; and that it was transferred to
Foreign Trade Zone No. ________, located at __________, __________
(City and State) for the sole purpose of exportation, destruction,
or storage, not to be returned to the customs territory of the
United States for domestic consumption. I further declare that to
the best of my knowledge and belief, said merchandise is the same in
quantity, quality, value, and package as specified in this entry;
that no allowance nor reduction in duties has been made; and that no
part of the duties paid has been refunded by drawback or otherwise.
Dated------------------------------------------------------------------
Transferor
Sec. 191.186 Person entitled to claim drawback.
The person named in the foreign trade zone operator's certification
on the notice of transfer or the drawback entry, as applicable, shall
be considered to be the transferor. Drawback may be claimed by, and
paid to, the transferor.
[[Page 3123]]
Subpart S--Drawback Compliance Program
Sec. 191.191 Purpose.
This subpart sets forth the requirements for the Customs drawback
compliance program in which claimants and other parties in interest,
including Customs brokers, may participate after being certified by
Customs. Participation in the program is voluntary. Under the program,
Customs is required to inform potential drawback claimants and related
parties clearly about their rights and obligations under the drawback
law and regulations. Reduced penalties and/or warning letters may be
issued once a party has been certified for the program, and is in
general compliance with the appropriate procedures and requirements
thereof.
Sec. 191.192 Certification for compliance program.
(a) General. A party may be certified as a participant in the
drawback compliance program after meeting the core requirements
established under the program, or after negotiating an alternative
drawback compliance program suited to the needs of both the party and
Customs. Certification requirements shall take into account the size
and nature of the party's drawback program, the type of drawback claims
filed, and the volume of claims filed. Whether the party is a drawback
claimant, a broker, or one that provides data and documentation on
which a drawback claim is based, will also be considered.
(b) Core requirements of program. In order to be certified as a
participant in the drawback compliance program or negotiated
alternative drawback compliance program, the party must be able to
demonstrate that it:
(1) Understands the legal requirements for filing claims, including
the nature of the records that are required to be maintained and
produced and the time periods involved;
(2) Has in place procedures that explain the Customs requirements
to those employees involved in the preparation of claims, and the
maintenance and production of required records;
(3) Has in place procedures regarding the preparation of claims and
maintenance of required records, and the production of such records to
Customs;
(4) Has designated a dependable individual or individuals who will
be responsible for compliance under the program, and maintenance and
production of required records;
(5) Has in place a record maintenance program approved by Customs
regarding original records, or if approved by Customs, alternative
records or recordkeeping formats for other than the original records;
and
(6) Has procedures for notifying Customs of variances in, or
violations of, the drawback compliance or other alternative negotiated
drawback compliance program, and for taking corrective action when
notified by Customs of violations and problems regarding such program.
(c) Broker certification. A Customs broker may be certified as a
participant in the drawback compliance program only on behalf of a
given claimant (see Sec. 191.194(b)). To do so, a Customs broker who is
employed to assist a claimant in filing for drawback must be able to
demonstrate, for and on behalf of such claimant, conformity with the
core requirements of the drawback compliance program as set forth in
paragraph (b) of this section. The broker shall ensure that the
claimant has the necessary documentation and records to support the
drawback compliance program established on its behalf, and that claims
to be filed under the program are reviewed by the broker for accuracy
and completeness.
Sec. 191.193 Application procedure for compliance program.
(a) Who may apply. Claimants and other parties in interest may
apply for participation in the drawback compliance program. This
includes any person, corporation or business entity that provides
supporting information or documentation to one who files drawback
claims, as well as Customs brokers who assist claimants in filing for
drawback. Program participants may further consist of importers,
manufacturers or producers, agent-manufacturers, complementary
recordkeepers, subcontractors, intermediate parties, and exporters.
(b) Place of filing. An application in letter format containing the
information as prescribed in paragraphs (c) and (d) of this section
shall be submitted to any drawback office. However, in the event the
applicant is a claimant for drawback, the application shall be
submitted to the drawback office where the claims will be filed.
(c) Letter of application; contents. A party requesting
certification to become a participant in the drawback compliance
program shall file with the applicable drawback office a written
application in letter format, signed by an individual authorized to
sign drawback documents (see Sec. 191.6 of this part). The detail
required in the application shall take into account the size and nature
of the applicant's drawback program, the type of drawback claims filed,
and the dollar value and volume of claims filed. However, the
application shall contain at least the following information:
(1) Name of applicant, address, IRS identification number, and the
type of business in which engaged, as well as the name(s) of the
individual(s) designated by the applicant to be responsible for
compliance under the program;
(2) A description of the nature of the applicant's drawback
program, including the type of drawback in which involved (such as,
manufacturing, or unused or rejected merchandise), and the applicant's
particular role(s) in the drawback claims process (such as claimant
and/or importer, manufacturer or producer, agent-manufacturer,
complementary recordkeeper, subcontractor, intermediate party
(possessor or purchaser), or exporter (destroyer)); and
(3) Size of applicant's drawback program. (For example, if the
applicant is a claimant, the number of claims filed over the previous
12-month period should be included, along with the number estimated to
be filed over the next 12-month period, and the estimated amount of
drawback to be claimed annually. Other parties should describe the
extent to which they are involved in drawback activity, based upon
their particular role(s) in the drawback process; for example,
manufacturers should explain how much manufacturing they are engaged in
for drawback, such as the quantity of drawback product produced on an
annual basis, as established by the certificates of manufacture and
delivery they have executed.)
(d) Application package. Along with the letter of application as
prescribed in paragraph (c) of this section, the application package
must include a description of how the applicant will ensure compliance
with statutory and regulatory drawback requirements. This description
may be in the form of a booklet or set forth otherwise. The description
must include at least the following:
(1) The name and title of the official in the claimant's
organization who is responsible for oversight of the claimant's
drawback program;
(2) If the applicant is a manufacturer and the drawback involved is
manufacturing drawback, a copy of the letter of notification of intent
to operate under a general manufacturing drawback ruling or the
application for a specific manufacturing drawback ruling
[[Page 3124]]
(see Secs. 191.7 and 191.8 of this part), as appropriate, if such
letter of notification has not yet been acknowledged or application has
not yet been approved;
(3) A description of the applicant's drawback record-keeping
program, including the retention period and method (for example, paper,
electronic, etc.);
(4) A list of the records that will be maintained, including at
least sample import documents, sample export documents, sample
inventory and transportation documents (if applicable), sample
laboratory or other documents establishing the qualification of
merchandise or articles for substitution under the drawback law (if
applicable), and sample manufacturing documents (if applicable);
(5) A description of the applicant's specific procedures for:
(i) How drawback claims are prepared (if the applicant is a
claimant); and
(ii) How the applicant will fulfill any requirements under the
drawback law and regulations applicable to its role in the drawback
program;
(6) A description of the applicant's procedures for notifying
Customs of variances in, or violations of, its drawback compliance
program or negotiated alternative drawback compliance program, and
procedures for taking corrective action when notified by Customs of
violations or other problems in such program; and
(7) A description of the applicant's procedures for annual review
to ensure that its drawback compliance program meets the statutory and
regulatory drawback requirements and that Customs is notified of any
modifications from the procedures described in this application.
Sec. 191.194 Action on application to participate in compliance
program.
(a) Review by applicable drawback office.--(1) General. It is the
responsibility of the drawback office where the drawback compliance
application package is filed to coordinate its decision making on the
package both with Customs Headquarters and with the other field
drawback offices as appropriate. Customs processing of the package will
consist of the review of the information contained therein as well as
any additional information requested (see paragraph (a)(2) of this
section).
(2) Criteria for Customs review. The drawback office shall review
and verify the information submitted in and with the application. In
order for Customs to evaluate the application, Customs may request
additional information (including additional sample documents) and/or
explanations of any of the information provided for in Sec. 191.193 (c)
and (d) of this subpart. Based on the information submitted on and with
the application and any information so requested, and based on the
applicant's record of transactions with Customs, the drawback office
will approve or deny the application. The criteria to be considered in
reviewing the applicant's record with Customs shall include (as
applicable):
(i) The presence or absence of unresolved Customs charges (duties,
taxes, or other debts owed Customs);
(ii) The accuracy of the claimant's past drawback claims; and
(iii) Whether accelerated payment of drawback or any other drawback
privilege was previously revoked or suspended.
(b) Approval. Certification as a participant in the drawback
compliance program will be given to applicants whose applications are
approved under the criteria in paragraph (a)(2) of this section. The
applicable drawback office will give written notification to an
applicant of its certification as a participant in the drawback
compliance program. A Customs broker obtaining certification for a
drawback claimant will be sent written notification on behalf of such
claimant, with a copy of the notification also being sent to the
claimant.
(c) Benefits of participation in program.--(1) Alternative to
penalties; written notice. When a party that has been certified as a
participant in the drawback compliance program and is generally in
compliance with the appropriate procedures and requirements of the
program commits a violation of 19 U.S.C. 1593a(a) (see Sec. 191.62(b)
of this part), Customs shall, in the absence of fraud or repeated
violations, and in lieu of a monetary penalty as otherwise provided
under section 1593a, issue a written notice of the violation to the
party. Repeated violations by a participant, including a Customs
broker, may result in the issuance of penalties and the removal of
certification under the program until corrective action, satisfactory
to Customs, is taken.
(d) Denial. If certification as a participant in the drawback
compliance program is denied to an applicant, the applicant shall be
given written notice by the applicable drawback office, specifying the
grounds for such denial, together with any action that may be taken to
correct the perceived deficiencies, and informing the applicant that
such denial may be appealed to the appropriate drawback office and then
appealed to Customs Headquarters.
(e) Proposed revocation. If the participant commits repeated
violations of its drawback compliance program or negotiated alternative
program, the applicable drawback office, by written notice, may propose
to revoke certification from the participant, until corrective action,
satisfactory to Customs, is taken to prevent such violations. The
written notice will describe the cause for the proposed revocation and
the corrective actions required for re-certification.
(f) Appeal of denial or challenge to proposed revocation. A party
may appeal a denial or challenge a proposed revocation of certification
as a participant in the drawback compliance program by filing a written
appeal, within 30 days of the date of such denial or proposed
revocation, with the applicable drawback office. A denial of an appeal
or challenge to a proposed revocation may itself be appealed to Customs
Headquarters within 30 days of receipt of the applicable drawback
office's decision. The 30-day period for appeal or challenge with the
applicable drawback office and/or with Customs Headquarters may be
extended for good cause, upon written request by the applicant for such
extension filed with the applicable drawback office or with Customs
Headquarters, as the case may be, within the 30-day period.
Sec. 191.195 Combined application for certification in drawback
compliance program and drawback privileges.
An applicant for certification in the drawback compliance program
may also, in the same application, apply for the drawback privileges
provided for in subpart I of this part (waiver of prior notice of
intent to export and accelerated payment of drawback). Alternatively,
an applicant may separately apply for certification in the drawback
compliance and one or both privilege(s). In the former instance, the
intent to apply for certification and one or both privileges must be
clearly stated. In all instances, all of the requirements for
certification and the privilege(s) applied for must be met (for
example, in a combined application for certification in the drawback
compliance program and both privileges, all of the information required
for certification and each privilege, all required sample documents for
certification and each privilege, and all required certifications must
be included in and with the application).
[[Page 3125]]
Appendix A to Part 191--General Manufacturing Drawback Rulings
I. General Instructions
A. There follow various general manufacturing drawback rulings
which have been designed to simplify drawback procedures. Any person
who can comply with the conditions of any one of these rulings may
notify a Customs drawback office in writing of its intention to
operate under the ruling. Such a letter of notification shall
include the following information:
1. Name and address of operator;
2. Factories which will operate under the general ruling;
3. If a business entity, the names of officers or other persons
legally authorized to bind the corporation who will sign drawback
documents on behalf of operator;
4. Description of the merchandise and articles, unless
specifically described in the general ruling;
5. For the general ruling for manufacturing drawback under
section 1313(a) and the general ruling for manufacturing drawback
(agents under section 1313(b)), if the drawback office has doubts as
to whether the conversion of the imported merchandise into the
exported articles is a manufacturing or production operation, the
operator will be asked to give details of the operation.
B. These general manufacturing drawback rulings supersede
general ``contracts'' previously published under the following
Treasury Decisions (T.D.'s): 81-74, 81-92, 81-181, 81-234, 81-300,
83-59, 83-73, 83-123, 85-110.
Anyone currently operating under any of the above-listed
Treasury Decisions will automatically be covered by the superseding
general ruling, including all privileges of the previous
``contract''.
II. General Drawback Manufacturing Ruling Under 19 U.S.C. 1313(a)
A. Imported Merchandise or Drawback Products 1 Used
Imported merchandise or drawback products are used in the
manufacture of the exported articles upon which drawback claims will
be based.
---------------------------------------------------------------------------
\1\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations.
---------------------------------------------------------------------------
B. Exported Articles on Which Drawback Will Be Claimed
Exported articles on which drawback will be claimed will be
manufactured in the United States using imported merchandise or
drawback products.
C. Process of Manufacture or Production
The imported merchandise or drawback products will be used to
manufacture new and different articles (see 19 CFR 191.2(p)).
D. By-Products
1. Relative values. Drawback law mandates the assignment of
relative values when two or more products necessarily are produced
concurrently in the same operation. If by-products are produced
records will be maintained of the market value of each product or
by-product at the time it is first separated in the manufacturing
process.
2. Appearing-in method. The appearing in basis may not be used
if by-products are produced unless all products are valued
identically.
E. Loss or Gain
Records will be maintained showing the extent of any loss or
gain in net weight or measurement of the imported merchandise,
caused by atmospheric conditions, chemical reactions, or other
factors.
F. Tradeoff
The use of any domestic merchandise acquired in exchange for
imported merchandise that is of the same kind and quality as the
imported merchandise, meeting specifications set forth in the
application by the operator for a determination of same kind and
quality (see Sec. 191.11(c)), shall be treated as use of the
imported merchandise if no certificate of delivery is issued
covering the imported merchandise (19 U.S.C. 1313(k)) upon
compliance with the applicable regulations and rulings (see 19 CFR
191.11).
G. Stock in Process
Stock in process does not result; or if it does result, details
will be given in claims as filed, and it will not be included in the
computation of the merchandise used to manufacture the finished
articles on which drawback is claimed.
H. Waste
No drawback is payable on any waste which results from the
manufacturing operation. Unless the claim for drawback is based on
the quantity of merchandise appearing in the exported articles,
records will be maintained to establish the value, the quantity, and
the disposition of any waste that results from manufacturing the
exported articles. If no waste results, records will be maintained
to establish that fact.
I. Procedures and Records Maintained
Records will be maintained to establish:
1. That the exported articles on which drawback is claimed were
produced with the use of the imported merchandise, and
2. The quantity of imported merchandise \2\ used in producing
the exported articles. To obtain drawback the claimant must
establish that the completed articles were exported within 5 years
after importation of the imported merchandise.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of the sentence should read ``appearing in the exported
articles.''
---------------------------------------------------------------------------
J. Inventory Procedures
The operator's inventory records will show how the drawback
recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part
191 of the Customs Regulations will be met, as discussed under the
heading ``Procedures And Records Maintained''. If those records do
not establish satisfaction of those legal requirements, drawback
cannot be paid.
K. Basis of Claim for Drawback
Drawback will be claimed on the quantity of merchandise used in
producing the exported articles only if there is no waste or
valueless or unrecovered waste in the manufacturing operation.
Drawback may be claimed on the quantity of eligible merchandise that
appears in the exported articles, regardless of whether there is
waste, and no records of waste need be maintained. If there is
valuable waste recovered from the manufacturing operation and
records are kept which show the quantity and value of the waste,
drawback may be claimed on the quantity of eligible material used to
produce the exported articles less the amount of that merchandise
which the value of the waste would replace.
L. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under
this general ruling current by reporting promptly to the drawback
office which liquidates its claims any changes in the number or
locations of its offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(a), part 191 of the Customs
Regulations and this general ruling.
III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Agents
Operators under this general ruling must comply with T.D.s
55027(2) and 55207(1), 19 U.S.C. 1313(b), and 19 CFR part 191 (see
particularly, Sec. 191.9).
A. Name and Address of Principal
B. Imported Merchandise or Drawback Products, or Other (Substituted)
Merchandise, Used in Manufacture or Production
C. Articles Manufactured or Produced From the Imported Merchandise or
Drawback Products or Other (Substituted) Merchandise Used in
Manufacture or Production.
D. Process of Manufacture or Production.
The imported merchandise or drawback products or other
substituted merchandise will be used to manufacture new and
different articles (see 19 CFR 191.2(p)).
E. Procedures and Records Maintained
Records will be maintained to establish:
1. The identity and specifications of the merchandise received
from the principal;
2. The date such merchandise was received from the principal;
3. The date the merchandise received from the principal was used
in manufacture or production, and the identity and
[[Page 3126]]
specifications of the articles produced thereby; and
4. The date the articles produced were returned to the
principal.
F. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
manufacturing or producing articles for account of principal under
the principal's general manufacturing drawback ruling or specific
manufacturing drawback ruling, as appropriate;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its notification of intent to operate under this general
ruling current by reporting promptly to the drawback office which
liquidates the claims any changes in the number or locations of the
operator's offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
IV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Component Parts
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Products Duty-Paid, Duty-Free or
\1\ to be Designated as the Basis for Domestic Merchandise of the
Drawback on the Exported Products. Same Kind and Quality as
that Designated which will
be Used in the Production
of the Exported Products.
Component parts identified by individual Component parts identified
part numbers. with the same individual
part numbers as those in
the column immediately to
the left hereof.
\1\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.
The designated components will have been manufactured in
accordance with the same specifications and from the same materials,
and identified by the same part number as the substituted
components. Further, the designated and substituted components are
used interchangeably in the manufacture of the exported articles
upon which drawback will be claimed. Specifications or drawings will
be maintained and made available for Customs officers. The imported
merchandise designated on drawback claims will be so similar to the
merchandise used in producing the exported articles on which
drawback is claimed that the merchandise used would, if imported, be
subject to the same rate of duty as the imported designated
merchandise. Fluctuations in market value resulting from factors
other than quality will not affect the drawback.
B. Exported Articles on Which Drawback Will Be Claimed
The exported articles will have been manufactured in the United
States using components described in the parallel columns above.
C. General Statement
The operator manufactures for its own account. The operator may
produce articles for the account of another or another manufacturer
may produce for the operator's account under contract within the
principal and agency relationship outlined in T.D.'s 55027(2) and
55207(1).
D. Process of Manufacture or Production
The components described in the parallel columns will be used to
manufacture new and different articles (see 19 CFR 191.2(p)).
E. By-Products
Not applicable.
F. Waste
No drawback is payable on any waste which results from the
manufacturing operation. Unless the claim for drawback is based on
the quantity of components appearing in the exported articles,
records will be maintained to establish the value (or the lack of
value), the quantity, and the disposition of any waste that results
from manufacturing the exported articles. If no waste results,
records will be maintained to establish that fact.
G. Tradeoff
The use of any domestic merchandise acquired in exchange for
imported merchandise that meets the same kind and quality
specifications contained in the parallel columns of this general
ruling shall be treated as use of the imported merchandise if no
certificate of delivery is issued covering the imported merchandise
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations
and rulings.
H. Procedures and Records Maintained
Records will be maintained to establish:
1. The identity and specifications of the designated
merchandise;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise \2\ used to produce the exported
articles;
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles produced.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving the designated
merchandise at its factory, the operator used the merchandise to
produce articles. During the same 3-year period, the operator
produced \3\ the exported articles.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.)
---------------------------------------------------------------------------
To obtain drawback the claimant must establish that the
completed articles were exported within 5 years after the
importation of the imported merchandise. The operator's records
establishing its compliance with these requirements will be
available for audit by Customs during business hours. Drawback is
not payable without proof of compliance.
I. Inventory Procedures
The operator's inventory records will show how the drawback
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part
191 of the Customs Regulations will be met, as discussed under the
heading ``Procedures And Records Maintained''. If those records do
not establish satisfaction of those legal requirements, drawback
cannot be paid.
J. Basis of Claim for Drawback
Drawback will be claimed on the quantity of eligible components
used in producing the exported articles only if there is no waste or
valueless or unrecovered waste in the manufacturing operation.
Drawback may be claimed on the quantity of eligible components that
appears in the exported articles, regardless of whether there is
waste, and no records of waste need be maintained. If there is
valuable waste recovered from the manufacturing operation and
records are kept which show the quantity and value of the waste,
drawback may be claimed on the quantity of eligible components used
to produce the exported articles less the amount of those components
which the value of the waste would replace.
K. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under
this general ruling current by reporting promptly to the drawback
office which liquidates its claims any changes in the number or
locations of its offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
[[Page 3127]]
V. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Orange Juice
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products\1\ to be Designated as the Basis Domestic Merchandise of the
for Drawback on the Exported Products. Same Kind and Quality as
that Designated which Will
be Used in the Production
of Exported Products.
Concentrated orange juice for Concentrated orange juice
manufacturing (of not less than 55 deg. for manufacturing as
Brix) as defined in the standard of described in the left-hand
identity of the Food and Drug parallel column.
Administration (21 CFR 146.53) which
meets the Grade A standard of the U.S.
Dept. of Agriculture (7 CFR 52.1557,
Table IV).
\1\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.)
The imported merchandise designated on drawback claims will be
so similar in quality to the merchandise used in producing the
exported articles on which drawback is claimed that the merchandise
used would, if imported, be subject to the same rate of duty as the
imported designated merchandise. Fluctuations in the market value
resulting from factors other than quality will not affect the
drawback.
B. Exported Articles on Which Drawback Will Be Claimed
1. Orange juice from concentrate (reconstituted juice).
2. Frozen concentrated orange juice.
3. Bulk concentrated orange juice.
C. General Statement
The operator manufactures for its own account. The operator may
produce articles for the account of another or another manufacturer
may produce for the operator's account under contract within the
principal and agency relationship outlined in T.D.'s 55027(2) and
55207(1).
D. Process of Manufacture or Production
1. Orange juice from concentrate (reconstituted juice).
Concentrated orange juice for manufacturing is reduced to a desired
11.8 deg. Brix by a blending process to produce orange juice from
concentrate. The following optional blending processes may be used:
i. The concentrate is blended with fresh orange juice (single
strength juice); or
ii. The concentrate is blended with essential oils, flavoring
components, and water; or
iii. The concentrate is blended with water and is heat treated
to reduce the enzymatic activity and the number of viable
microorganisms.
2. Frozen concentrated orange juice. Concentrated orange juice
for manufacturing is reduced to a desired degree Brix of not less
than 41.8 deg. Brix by the following optional blending processes:
i. The concentrate is blended with fresh orange juice (single
strength juice); or
ii. The concentrate is blended with essential oils and flavoring
components and water.
3. Bulk concentrated orange juice. Concentrated orange juice for
manufacturing is blended with essential oils and flavoring
components which would enable another processor such as a dairy to
prepare finished frozen concentrated orange juice or orange juice
from concentrate by merely adding water to the (intermediate) bulk
concentrated orange juice.
E. By-Products, Waste, Loss or Gain
Not applicable
F. Tradeoff
The use of any domestic merchandise acquired in exchange for
imported merchandise that meets the same kind and quality
specifications contained in the parallel columns of this general
ruling shall be treated as use of the imported merchandise if no
certificate of delivery is issued covering the imported merchandise
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations
and rulings.
G. Procedures and Records Maintained
Records will be maintained to establish:
1. The identity and specifications of the designated
merchandise;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise \2\ used to produce the exported
articles;
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles produced.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving the designated
merchandise at its factory, the operator used the designated
merchandise to produce articles. During the same 3-year period, the
operator produced \3\ the exported articles.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
To obtain drawback it must be established that the completed
articles were exported within 5 years after the importation of the
imported merchandise. Records establishing compliance with these
requirements will be available for audit by Customs during business
hours. No drawback is payable without proof of compliance.
H. Inventory Procedures
The operator's inventory records will show how the drawback
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part
191 of the Customs Regulations will be met, as discussed under the
heading ``Procedures And Records Maintained''. If those records do
not establish satisfaction of those legal requirements, drawback
cannot be paid.
I. Basis of Claim for Drawback
The basis of claim for drawback will be the quantity of
concentrated orange juice for manufacturing used in the production
of the exported articles. It is understood that when fresh orange
juice is used as cutback, it will not be included in the pound
solids when computing the drawback due.
J. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under
this general ruling current by reporting promptly to the drawback
office which liquidates its claims any changes in the number or
locations of its offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
VI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Piece Goods
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Products Duty-Paid, Duty-Free or
\1\ to be Designated as the Basis for Domestic Merchandise of the
Drawback on the Exported Products. Same Kind and Quality as
that Designated which will
be Used in the Production
of the Exported Products.
Piece goods. Piece goods.
\1\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under 19 U.S.C. 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.
The piece goods used in manufacture will be the same kind and
quality as the piece goods designated as the basis of claim for
drawback, and are used interchangeably without change in
manufacturing processes or resultant products, by-products, or
wastes. Some tolerances between imported-designated piece goods and
the used-exported piece goods will be permitted to accommodate
variations which are normally found in piece goods. These tolerances
are no greater than the tolerances generally allowed in the industry
for piece goods of the same kind and quality as follows:
1. A 4% weight tolerance so that the piece goods used in
manufacture will be not more
[[Page 3128]]
than 4% lighter or heavier than the imported piece goods which will
be designated;
2. A tolerance of 4% in the aggregate thread count per square
inch so that the piece goods used in manufacture will have an
aggregate thread count within 4%, more or less of the aggregate
thread count of the imported piece goods which will be designated.
In each case, the average yarn number of the domestic piece goods
will be the same or greater than the average yarn number of the
imported piece goods designated, and in each case, the substitution
and tolerance will be employed only within the same family of
fabrics, i.e., print cloth for print cloth, gingham for gingham,
greige for greige, dyed for dyed, bleached for bleached, etc. The
piece goods used in manufacture of the exported articles will be
designated as containing the identical percentage of identical
fibers as the piece goods designated as the basis for allowance of
drawback; for example, piece goods containing 65% cotton and 35%
dacron will be designated against the use of piece goods shown to
contain 65% cotton and 35% dacron. The actual fiber composition may
vary slightly from that described on the invoice or other acceptance
of the fabric as having the composition described on documents in
accordance with trade practices. The substituted piece goods used in
the manufacture of articles for exportation with drawback will be so
similar in quality to the imported piece goods designated for the
basis of allowance of drawback, that the piece goods used, if
imported, would have been subject to the same or greater amount of
duty as was paid on the imported designated piece goods. Differences
in value resulting from factors other than quality, as for example,
price fluctuations, will not preclude an allowance of drawback.
B. Exported Articles on Which Drawback Will Be Claimed
Finished piece goods.
C. General Statement
The operator manufactures for its own account. The operator may
produce articles for the account of another or another manufacturer
may produce for the operator's account under contract within the
principal and agency relationship outlined in T.D.s. 55027(2) and
55207(1).
D. Process of Manufacture or Production
Piece goods are subject to any one of the following finishing
productions:
1. Bleaching,
2. Mercerizing,
3. Dyeing,
4. Printing,
5. A combination of the above, or
6. Any additional finishing processes.
E. By-Products
Not applicable.
F. Waste
Rag waste may be incurred. The operator's records shall show the
quantity of rag waste, if any, and its value. In instances where rag
waste occurs and it is impractical to account for the actual
quantity of rag waste incurred, it shall be assumed in liquidation
that such rag waste constituted 2% of the piece goods put into the
finishing processes.
G. Shrinkage, Gain, and Spoilage
The operator's records shall show the yardage lost by shrinkage
or gained by stretching during manufacture, and the quantity of
remnants resulting and of spoilage incurred, if any.
H. Tradeoff
The use of any domestic merchandise acquired in exchange for
imported merchandise that meets the same kind and quality
specifications contained in the parallel columns of this general
ruling shall be treated as use of the imported merchandise if no
certificate of delivery is issued covering the imported merchandise
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations
and rulings.
I. Procedures and Records Maintained
Records will be maintained to establish:
1. The identity and specifications of the designated
merchandise;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise 2 used to produce the exported
articles;
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles produced.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving the designated
merchandise at its factory, the operator used the merchandise to
produce articles. During the same 3-year period, the operator
produced 3 the exported articles.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
To obtain drawback the claimant must establish that the
completed articles were exported within 5 years after the
importation of the imported merchandise. The operator's records
establishing its compliance with these requirements will be
available for audit by Customs during business hours. Drawback is
not payable without proof of compliance.
J. Inventory Procedures
The operator's inventory records will show how the drawback
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part
191 of the Customs Regulations will be met, as discussed under the
heading ``Procedures And Records Maintained''. If those records do
not establish satisfaction of those legal requirements, drawback
cannot be paid.
K. Basis of Claim for Drawback
Drawback will be claimed on the quantity of eligible piece goods
used in producing the exported articles only if there is no waste or
valueless or unrecovered waste in the manufacturing operation.
Drawback may be claimed on the quantity of eligible piece goods that
appears in the exported articles, regardless of whether there is
waste, and no records of waste need be maintained. If there is
valuable waste recovered from the manufacturing operation and
records are kept which show the quantity and value of the waste from
each lot of piece goods, drawback may be claimed on the quantity of
eligible piece goods used to produce the exported articles less the
amount of piece goods which the value of the waste would replace.
L. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under
this general ruling current by reporting promptly to the drawback
office which liquidates its claims any changes in the number or
locations of its offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
VII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Steel
A. Same kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Products Duty-Paid, Duty-Free or
1 to be Designated as the Basis for Domestic Merchandise of the
Drawback on the Exported Products. Same Kind and Quality as
that Designated which will
be Used in the Production
of the Exported Products.
Steel of one general class, e.g., an Steel of the same general
ingot, falling within one SAE, AISI, or class, specification and
ASTM 2 specification, and if the grade as the steel in the
specification contains one or more grades column immediately to the
falling within one grade of the left hereof.
specification.
1 Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.
2 Standards set by the Society of Automotive Engineers (SAE), the
American Iron and Steel Institute (AISI), or the American Society for
Testing and Materials (ASTM).
1. The duty-free or domestic steel used instead of the duty-paid
steel will be interchangeable for manufacturing purposes with the
duty-paid steel. To be
[[Page 3129]]
interchangeable a steel must be able to be used in place of the
substituted steel without any additional processing step in the
manufacture of the article on which drawback is to be claimed.
2. Because the duty-paid steel that is to be designated as the
basis for drawback is dutiable according to its value, the amount of
duty can vary with its size (gauge, width, or length) or composition
(e.g., chrome content). If such variances occur, designation will be
by ``price extra'', and in no case will drawback be claimed in a
greater amount than that which would have accrued to that steel used
in manufacture of or appearing in the exported articles. Price extra
is not available for coated or plated steel, covered in paragraph 5,
infra, insofar as the coating or plating is concerned.
3. The duty-paid steel will be so similar in quality to the
steel used to manufacture the articles on which drawback will be
claimed that the steel so used, if imported, would be classifiable
in the same tariff subheading number and at the same rate of duty as
the duty-paid imported steel.
4. Any fluctuation in market value caused by a factor other than
quality does not affect drawback.
5. If the steel is coated or plated with a base metal, in
addition to meeting the requirements for uncoated or unplated steel
set forth in the parallel columns, the base-metal coating or plating
on the duty-free or domestic steel used in place of the duty-paid
steel will have the same composition and thickness as the coating or
plating on the duty-paid steel. If the coated or plated duty-paid
steel is within a SAE, AISI, ASTM specification, any duty-free or
domestic coated or plated steel covered by the same specification
and grade (if two or more grades are in the specification) is
considered to meet this criterion for same kind and quality.
B. Exported Articles on Which Drawback Will Be Claimed
The exported articles will have been manufactured in the United
States using steels described in the parallel columns above.
C. General Statement
The operator manufactures for its own account. The operator may
produce articles for the account of another or another manufacturer
may produce for the operator's account under contract within the
principal and agency relationship outlined in T.D.'s 55027(2) and
55207(1).
D. Process of Manufacture or Production
The steel described in the parallel columns will be used to
manufacture new and different articles (see 19 CFR 191.2(p)).
E. By-Products
Not applicable.
F. Waste
No drawback is payable on any waste which results from the
manufacturing operation. Unless the claim for drawback is based on
the quantity of steel appearing in the exported articles, records
will be maintained to establish the value (or the lack of value),
the quantity, and the disposition of any waste that results from
manufacturing the exported articles. If no waste results, records to
establish that fact will be maintained.
G. Loss or Gain
The operator will maintain records showing the extent of any
loss or gain in net weight or measurement of the steel caused by
atmospheric conditions, chemical reactions, or other factors.
H. Tradeoff
The use of any domestic merchandise acquired in exchange for
imported merchandise that meets the same kind and quality
specifications contained in the parallel columns of this general
ruling shall be treated as use of the imported merchandise if no
certificate of delivery is issued covering the imported merchandise
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations
and rulings.
I. Procedures and Records Maintained
Records will be maintained to establish:
1. The identity and specifications of the designated
merchandise;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise 3 used to produce the exported
articles;
---------------------------------------------------------------------------
\3\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles produced.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving the designated
merchandise at its factory, the operator used the merchandise to
produce articles. During the same 3-year period, the operator
produced 4 the exported articles.
---------------------------------------------------------------------------
\4\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
To obtain drawback the claimant must establish that the
completed articles were exported within 5 years after the
importation of the imported merchandise. The operator's records
establishing its compliance with these requirements will be
available for audit by Customs during business hours. Drawback is
not payable without proof of compliance.
J. Inventory Procedures
The operator's inventory records will show how the drawback
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part
191 of the Customs Regulations will be met, as discussed under the
heading ``Procedures And Records Maintained''. If those records do
not establish satisfaction of those legal requirements, drawback
cannot be paid.
K. Basis of Claim for Drawback
Drawback will be claimed on the quantity of steel used in
producing the exported articles only if there is no waste or
valueless or unrecovered waste in the manufacturing operation.
Drawback may be claimed on the quantity of eligible steel that
appears in the exported articles, regardless of whether there is
waste, and no records of waste need be maintained. If there is
valuable waste recovered from the manufacturing operation and
records are kept which show the quantity and value of the waste from
each lot of steel, drawback may be claimed on the quantity of
eligible steel used to produce the exported articles less the amount
of that steel which the value of the waste would replace.
L. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification to operate under this general
ruling current by reporting promptly to the drawback office which
liquidates its claims any changes in the number or locations of its
offices or factories, the corporate name, corporate officers, or the
corporate organization by succession or reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
VIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Sugar
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Products Duty-Paid, Duty-Free or
\1\ to be Designated as the Basis for Domestic Merchandise of the
Drawback on the Exported Products Same Kind and Quality as
that Designated which will
be Used in the Production
of the Exported Products.
1. Granulated or liquid sugar for 1. Granulated or liquid
manufacturing, containing sugar solids of sugar for manufacturing,
not less than 99.5 sugar degrees containing sugar solids of
not less than 99.5 sugar
degrees.
2. Granulated or liquid sugar for 2. Granulated or liquid
manufacturing, containing sugar solids of sugar for manufacturing,
less than 99.5 sugar degrees containing sugar solids of
less than 99.5 sugar
degrees.
\1\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.
The sugars listed above test within three-tenths of a degree on
the polariscope. Sugars in each column are completely
interchangeable with the sugars directly opposite and designation
will be made on this basis only. The designated sugar on which
claims for drawback will be based will be so similar in quality to
the sugar used in manufacture of the products exported with drawback
that the sugar used in manufacture would, if imported, be subject to
the same amount of duty paid on a like quantity of designated sugar.
Differences in value resulting from factors other than quality,
[[Page 3130]]
such as market fluctuation, will not affect the allowance of
drawback.
B. Exported Articles on Which Drawback Will Be Claimed
Edible substances (including confectionery) and/or beverages
and/or ingredients therefor.
C. General Statement
The operator manufactures for its own account. The operator may
produce articles for the account of another or another manufacturer
may produce for the operator's account under contract within the
principal and agency relationship outlined in T.D.'s 55027(2) and
55207(1).
D. Process of Manufacture or Production
The sugars are subjected to one or more of the following
operations to form the desired product(s):
1. Mixing with other substances,
2. Cooking with other substances,
3. Boiling with other substances,
4. Baking with other substances,
5. Additional similar processes
E. By-Products
Not applicable.
F. Waste
No drawback is payable on any waste which results from the
manufacturing operation. Unless the claim for drawback is based on
the quantity of sugar appearing in the exported articles, records
will be maintained to establish the value (or the lack of value),
the quantity, and the disposition of any waste that results from
manufacturing the exported articles. If no waste results, records to
establish that fact will be maintained.
G. Loss or Gain
The operator will maintain records showing the extent of any
loss or gain in net weight or measurement of the sugar caused by
atmospheric conditions, chemical reactions, or other factors.
H. Tradeoff
The use of any domestic merchandise acquired in exchange for
imported merchandise that meets the same kind and quality
specifications contained in the parallel columns of this general
ruling shall be treated as use of the imported merchandise if no
certificate of delivery is issued covering the imported merchandise
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations
and rulings.
I. Procedures And Records Maintained
Records will be maintained to establish:
1. The identity and specifications of the designated
merchandise;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise \2\ used to produce the exported
articles.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles produced.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving the designated
merchandise at its factory, the operator used the merchandise to
produce
articles. During the same 3-year period, the operator produced \3\ the
exported articles.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
To obtain drawback the claimant must establish that the
completed articles were exported within 5 years after the
importation of the imported merchandise. The operator's records
establishing its compliance with these requirements will be
available for audit by Customs during business hours. Drawback is
not payable without proof of compliance.
J. Inventory Procedures
The operator's inventory records will show how the drawback
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part
191 of the Customs Regulations will be met, as discussed under the
heading ``Procedures And Records Maintained''. If those records do
not establish satisfaction of those legal requirements, drawback
cannot be paid.
K. Basis of Claim for Drawback
Drawback will be claimed on the quantity of sugar used in
producing the exported articles only if there is no waste or
valueless or unrecovered waste in the manufacturing operation.
Drawback may be claimed on the quantity of eligible sugar that
appears in the exported articles regardless of whether there is
waste, and no records of waste need be maintained. If there is
valuable waste recovered from the manufacturing operation and
records are kept which show the quantity and value of the waste,
drawback may be claimed on the quantity of eligible material used to
produce the exported articles less the amount of that sugar which
the value of the waste would replace.
L. General Requirements
The operator will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under
this general ruling current by reporting promptly to the drawback
office which liquidates its claims any changes in the number or
locations of its offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
IX. General Drawback Ruling under 19 U.S.C. 1313(b) for Raw Sugar.
Drawback may be allowed under 19 U.S.C. 1313(b) upon the
exportation of hard or soft refined sugars and sirups manufactured
from raw sugar, subject to the following special requirements:
A. The drawback allowance shall not exceed 99 percent of the
duty paid on a quantity of raw sugar designated by the refiner which
contains a quantity of sucrose not in excess of the quantity
required to manufacture the exported sugar or sirup, ascertained as
provided in this general rule.
B. The refined sugars and sirups shall have been manufactured
with the use of duty-paid, duty-free, or domestic sugar, or
combinations thereof, within 3 years after the date on which
designated sugar was received by the refiner, and shall have been
exported within 5 years from the date of importation of the
designated sugar.
C. All granulated sugar testing by the polariscope 99.5 deg. and
over shall be deemed hard refined sugar. All refined sugar testing
by the polariscope less than 99.5 deg. shall be deemed soft refined
sugar. All ``blackstrap,'' ``unfiltered sirup,'' and ``final
molasses'' shall be deemed sirup.
D. The imported duty-paid sugar selected by the refiner as the
basis for the drawback claim (designated sugar) shall be of the same
kind and quality as that used in the manufacture of the exported
refined sugar or sirup and shall have been used within 3 years after
the date on which it was received by the refiner. Duty-paid sugar
which has been used at a plant of a refiner within 3 years after the
date on which it was received by such refiner may be designated as
the basis for the allowance of drawback on refined sugars or sirups
manufactured at another plant of the same refiner.
E. For the purpose of distributing the drawback, relative values
shall be established between hard refined (granulated) sugar, soft
refined (various grades) sugar, and sirups at the time of
separation. The entire period covered by an abstract shall be deemed
the time of separation of the sugars and sirups covered by such
abstract.
F. The sucrose allowance per pound on hard refined (granulated)
sugar established by an abstract, as provided for in this general
ruling, shall be applied to hard refined sugar commercially known as
loaf, cut loaf, cube, pressed, crushed, or powdered sugar
manufactured from the granulated sugar covered by such abstract.
G. The sucrose allowance per gallon on sirup established by an
abstract, as provided for in this general ruling, shall be applied
to sirup further advanced in value by filtration or otherwise,
unless such sirup is the subject of a special manufacturing drawback
ruling.
H. As to each lot of imported or domestic sugar used in the
manufacture of refined sugar or sirup on which drawback is to be
claimed, the raw stock records shall show the refiner's raw lot
number, the number and character of the packages, the settlement
weight in pounds, and the settlement polarization. Such records
covering imported sugar shall show, in addition to the foregoing,
the import entry number, date of importation, name of importing
carrier, country of origin, the Government weight, and the
Government polarization.
I. The melt records shall show the date of melting, the number
of pounds of each lot of
[[Page 3131]]
raw sugar melted, and the full analysis at melting.
J. There shall be kept a daily record of final products boiled
showing the date of the melt, the date of boiling, the magma filling
serial number, the number of the vacuum pan or crystallizer filling,
the date worked off, and the sirup filling serial number.
K. The sirup manufacture records shall show the date of boiling,
the period of the melt, the sirup filling serial number, the number
of barrels in the filling, the magma filling serial number, the
quantity of sirup, its disposition in tanks or barrels and the
refinery serial manufacture number.
L. The refined sugar stock records shall show the refinery
serial manufacture number, the period of the melt, the date of
manufacture, the grade of sugar produced, its polarization, the
number and kind of packages, and the net weight. When soft sugars
are manufactured, the commercial grade number and quantity of each
shall be shown.
M. Each lot of hard or soft refined sugar and each lot of sirup
manufactured, regardless of the character of the containers or
vessels in which it is packed or stored, shall be marked immediately
with the date of manufacture and the refinery manufacture number
applied to it in the refinery records provided for and shown in the
abstract, as provided for in this general ruling, from such records.
If all the sugar or sirup contained in any lot manufactured is not
intended for exportation, only such of the packages as are intended
for exportation need be marked as prescribed above, provided there
is filed with the drawback office immediately after such marking a
statement showing the date of manufacture, the refinery manufacture
number, the number of packages marked, and the quantity of sugar or
sirup contained therein. No drawback shall be allowed in such case
on any sugar or sirup in excess of the quantity shown on the
statement as having been marked. If any packages of sugar or sirup
so marked are repacked into other containers, the new containers
shall be marked with the marks which appeared on the original
containers and a revised statement covering such repacking and
remarking shall be filed with the drawback office. If sirups from
more than one lot are stored in the same tank, the refinery records
shall show the refinery manufacture number and the quantity of sirup
from each lot contained in such tank.
N. An abstract from the foregoing records covering manufacturing
periods of not less than 1 month nor more than 3 months, unless a
different period shall have been authorized, shall be filed when
drawback is to be claimed on any part of the refined sugar or sirup
manufactured during such period. Such abstract shall be filed by
each refiner with the drawback office where drawback claims are
filed on the basis of this general ruling. Such abstract shall be in
the form described in Treasury Decision 83-59.
O. The refiner shall file with each abstract a statement, in the
form described in Treasury Decision 83-59.
P. At the end of each calendar month the refiner shall furnish
to the drawback office a statement showing the actual sales of sirup
and the average market values of refined sugars for the calendar
month.
Q. The sucrose allowance to be applied to the various products
based on the abstract and statement provided for in this general
ruling shall be in accordance with the example set forth in Treasury
Decision 83-59.
R. Certificates of delivery under this general ruling shall be
in the form described in Treasury Decision 83-59.
S. Drawback claims under this general ruling shall be in the
form described in Treasury Decision 83-59.
T. General Statement. The refiner manufactures for its own
account. The refiner may produce articles for the account of another
or another manufacturer may produce for the refiner's account under
contract within the principal and agency relationship outlined in
T.D.'s 55027(2) and 55207(1).
U. Waste. No drawback is payable on any waste which results from
the manufacturing operation. Unless drawback claims are based on the
``appearing in'' method, records will be maintained to establish the
value (or the lack of value), the quantity, and the disposition of
any waste that results from manufacturing the exported articles. If
no waste results, records to establish that fact will be maintained.
V. Loss or Gain. The refiner will maintain records showing the
extent of any loss or gain in net weight or measurement of the sugar
caused by atmospheric conditions, chemical reactions, or other
factors.
W. Tradeoff. The use of any domestic merchandise acquired in
exchange for imported merchandise that meets the same kind and
quality requirements provided for in this general ruling shall be
treated as use of the imported merchandise if no certificate of
delivery is issued covering the imported merchandise (19 U.S.C.
1313(k)) upon compliance with the applicable regulations and
rulings.
X. Procedures And Records Maintained. Records will be maintained
to establish:
1. The identity and specifications of the designated
merchandise;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise \2\ used to produce the exported
articles; and
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles produced.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving the designated
merchandise at its factory, the refiner used the designated
merchandise to produce articles. During the same 3-year period, the
refiner produced \3\ the exported articles.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
To obtain drawback the claimant must establish that the
completed articles were exported within 5 years after the
importation of the imported merchandise. The refiner's records
establishing its compliance with these requirements will be
available for audit by Customs during business hours. Drawback is
not payable without proof of compliance.
Y. General requirements. The refiner will:
1. Comply fully with the terms of this general ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
4. Keep its letter of notification of intent to operate under
this general ruling current by reporting promptly to the drawback
office which liquidates its claims any changes in the number or
locations of its offices or factories, the corporate name, corporate
officers, or the corporate organization by succession or
reincorporation;
5. Keep a copy of this general ruling on file for ready
reference by employees and require all officials and employees
concerned to familiarize themselves with the provisions of this
general ruling; and
6. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this general ruling.
Appendix B to Part 191--Sample Formats for Applications for Specific
Manufacturing Drawback Rulings
These sample formats for applications for specific manufacturing
drawback rulings are not rulings until reviewed and approved by
Customs Headquarters. A specific manufacturing drawback ruling
consists of the application plus the letter of acceptance, as
provided in 19 CFR 191.8. In these application formats, remarks in
parentheses and footnotes are for explanatory purposes only and
should not be copied. Other material should be quoted directly in
the applications.
Format for Sample 1313 (a) and (b) Application Company Letterhead
(Optional)
U.S. Customs Service, Entry and Carrier Rulings Branch, 1301
Constitution Avenue, N.W., Washington, D.C. 20229
Dear Sir: We, (Applicant's Name), a (State, e.g., Delaware)
corporation (or other described entity) submit this application for
a specific manufacturing drawback ruling that our manufacturing
operations qualify for drawback under title 19, United States Code,
Secs. 1313 (a) and (b), and part 191 of the Customs Regulations. We
request that the Customs Service authorize drawback on the basis of
this application.
Name and Address and IRS Number of Applicant
(Section 191.8(a) of the Customs Regulations provides that each
manufacturer or producer of articles intended for exportation with
the benefit of drawback shall apply for a specific manufacturing
drawback ruling, unless operating under a general manufacturing
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs
will not approve an application which shows an unincorporated
division or company as the applicant (see Sec. 191.8(a)).)
Location of Factory
(Give the address of the factory(s) where the process of
manufacture or production
[[Page 3132]]
will take place. If the factory is a different legal entity from the
applicant, so state and indicate if operating under an Agent's
general manufacturing drawback ruling.)
Corporate Officers
(List officers and other persons legally authorized to bind the
corporation who will sign drawback documents. Section 191.6 of the
Customs Regulations permits only the president, vice-president,
secretary, treasurer, or any other individual legally authorized to
bind the corporation to sign for a corporation. In addition, a
person within a business entity with a Customs power of attorney for
the company may sign. A Customs power of attorney may also be given
to a licensed Customs broker. This heading should be changed to
NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole
proprietorship, respectively.)
Customs Office Where Drawback Claims Will Be Filed
(The 8 offices where drawback claims can be filed are located
at: Boston, MA; New York, NY; Miami, FL; New Orleans, LA; Houston,
TX; Long Beach, CA; Chicago, IL; San Francisco, CA)
(An original application and two copies must be filed. If the
applicant intends to file drawback claims at more than one drawback
office, two additional copies of the application must be furnished
for each additional office indicated.)
General Statement
(The following questions must be answered:
1. Who will be the importer of the designated merchandise? (If
the applicant will not always be the importer of the designated
merchandise, does the applicant understand its obligations to obtain
the appropriate certificates of delivery (19 CFR 191.10),
certificates of manufacture and delivery (19 CFR 191.24), or both?)
2. Will an agent be used to process the designated or the
substituted merchandise into articles? (If an agent is to be used,
the applicant must state it will comply with T.D.'s 55027(2) and
55207(1), and that its agent will submit a letter of notification of
intent to operate under the general manufacturing drawback ruling
for agents (see Sec. 191.7 and appendix A) or an application for a
specific manufacturing drawback ruling (see Sec. 191.8 and this
appendix B).)
3. Will the applicant be the exporter? (If the applicant will
not be the exporter in every case but will be the claimant, the
manufacturer must state that it will reserve the right to claim
drawback with the knowledge and written consent of the exporter (19
CFR 191.82).)) (Since the permission to grant use of the accelerated
payment procedure rests with the Customs office with which claims
will be filed, do not include any reference to that procedure in
this application.)
Procedures Under Section 1313(b)
Parallel Columns--``Same Kind and Quality''
Imported merchandise or drawback products Duty-paid, duty-free or
\2\ to be designated as the basis for domestic merchandise of the
drawback on the exported products. same kind and quality as
that designated which will
be used in the production
of the exported products.
1. 1.
2. 2.
3. 3.
\2\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.)
(Following the items listed in the parallel columns, a statement
will be made, by the applicant, that affirms the ``same kind and
quality'' of the merchandise. This statement should be included in
the application exactly as it is stated below:)
The imported merchandise which we will designate on our claims
will be so similar in quality to the merchandise used in producing
the exported articles on which we claim drawback that the
merchandise used would, if imported, be subject to the same rate of
duty as the imported designated merchandise.
Fluctuations in the market value resulting from factors other
than quality will not affect the drawback.
(In order to successfully claim drawback it is necessary to
prove that the duty-paid, duty-free or domestic merchandise which is
to be substituted for the imported merchandise is the ``same kind
and quality''. ``Same kind and quality'' does not necessarily mean
that the merchandise is identical. It does mean that the merchandise
is of the same nature or character (``same kind'') and that the
merchandise to be substituted is interchangeable with the imported
merchandise with little or no change in the manufacturing process to
produce the same exported article (``same quality''). In order to
enable Customs to rule on ``same kind and quality'', the application
must include a detailed description of the designated imported
merchandise and of the substituted duty-paid, duty-free or domestic
merchandise to be used to produce the exported articles.)
(It is essential that all the characteristics which determine
the quality of the merchandise are provided in the application in
order to substantiate that the merchandise meets the ``same kind and
quality'' statutory requirement. These characteristics should
clearly distinguish merchandise of different qualities. For example,
USDA standards; FDA standards; industry standards, e.g., ASTM;
concentration; specific gravity; purity; luster; melting point,
boiling point; odor; color; grade; type; hardness; brittleness; etc.
Note that these are only a few examples of characteristics and that
each kind of merchandise has its own set of specifications that
characterizes its quality. If specifications are given with a
minimum value, be sure to include a maximum value. The converse is
also true. Often characteristics are given to Customs on attached
specification sheets. These specifications should not include
Material Safety Data sheets or other descriptions of the merchandise
that do not contribute to the ``same kind and quality''
determination. When the merchandise is a chemical, state the
chemical's generic name as well as its trade name plus any generally
recognized identifying number, e.g. CAS number; Color Index Number,
etc.)
(In order to expedite the specific manufacturing drawback ruling
process, it will be helpful if you provide copies of technical
standards/specifications (particularly industry standards such as
ASTM standards) referred to in your application.)
(The descriptions of the ``same kind and quality'' merchandise
should be formatted in the parallel columns. The left-hand column
will consist of the name and specifications of the designated
imported merchandise under the heading set forth above. The right-
hand column will consist of the name and specifications for the
duty-paid, duty-free or domestic merchandise under the heading set
forth above.)
Exported Articles on Which Drawback Will Be Claimed
(Name each article to be exported. When the identity of the
product is not clearly evident by its name state what the product
is, e.g., a herbicide. There must be a match between each article
described under the PROCESS OF MANUFACTURE AND PRODUCTION section
below and each article listed here.)
Process of Manufacture or Production
(Drawback under section 1313(b) is not allowable except where a
manufacture or production exists. A manufacture or production exists
when a ``new and different article emerges having a distinctive
name, character, or use'', or when an article is made fit for a
particular use (see 19 CFR 191.2(p); see also Anheuser-Busch Brewing
Assoc. v. United States, 207 U.S. 556 (1907); United States v.
International Paint Co., 35 CCPA 87 (1948), et al.). In order to
obtain drawback under section 1313(b), it is essential for the
applicant to show use in manufacture or production by giving a
thorough description of the manufacturing process. This description
should include the name and exact condition of the merchandise
listed in the Parallel Columns, a complete explanation of the
processes to which it is subjected in this country, the effect of
such processes, the name and exact description of the finished
article, and the use for which the finished article is intended.
When applicable, give equations of the chemical reactions. The
attachment of a flow chart in addition to the description showing
the manufacturing process is an excellent means of illustrating
whether or not a ``new and different article'' has been formed. Flow
charts can clearly illustrate if and at what point during the
manufacturing process by-products and wastes are generated.)
(This section should contain a description of the process by
which each item of
[[Page 3133]]
merchandise listed in the parallel columns above is used to make or
produce every article that is to be exported.)
By-Products
1. Relative Values
(Some processes result in the separation of the merchandise used
in the same operation into two or more products. List all of the
products. State that you will record the market value of each
product or by-product at the time it is first separated in the
manufacturing process. If this section is not applicable to you,
then state so.)
(Drawback law mandates the assignment of relative values when
two or more products necessarily are produced concurrently in the
same operation. For instance, the refining of flaxseed necessarily
produces linseed oil and linseed husks (animal feed), and drawback
must be distributed to each product in accordance with its relative
value. However, the voluntary election of a steel fabricator, for
instance, to use part of a lot of imported steel to produce
automobile doors and part of the lot to produce automobile fenders
does not call for relative value distribution.)
(The relative value of a product is its value divided by the
total value of all products, whether or not exported. For example,
100 gallons of drawback merchandise are used to produce 100 gallons
of products, including 60 gallons of product A, 20 gallons of
product B, and 20 gallons of product C. At the time of separation,
the unit values of products A, B, and C are $5, $10, and $50
respectively. The relative value of product A is $300 divided by
$1500 or \1/5\. The relative value of B is \2/15\ and of product C
is \2/3\, calculated in the same manner. This means that \1/5\ of
the drawback product payments will be distributed to product A, \2/
15\ to product B, and \2/3\ to product C.)
(Drawback is allowable on exports of by-products, but is not
allowable on exports of valuable waste. In making this distinction
between by-product or valuable waste, the applicant should address
the following significant elements: (1) The nature of the material
of which the residue is composed; (2) the value of the residue as
compared to the value of the principal manufactured product and the
raw material; (3) the use to which it is put; (4) its status under
the tariff laws, if imported; (5) whether it is a commodity
recognized in commerce; (6) whether it must be subjected to some
process to make it saleable.)
2. Producibility
(Some processes result in the separation of fixed proportions of
each product, while other processes afford the opportunity to
increase or decrease the proportion of each product. An example of
the latter is petroleum refining, where the refiner has the option
to increase or decrease the production of one or more products
relative to the others. State under this heading whether you can or
cannot vary the proportionate quantity of each product.)
(The BY-PRODUCT section consists of two sub-sections: Relative
Values and Producibility. If no by-products result from your
operation state ``Not Applicable'' for the entire section. If by-
products do result from your operation Relative Values will always
apply. However, Producibility may or may not apply. If Producibility
does not apply to your by-product operation state ``Not Applicable''
for this sub-section.)
Waste
(Many processes result in residue materials which, for drawback
purposes, are treated as wastes. Describe any residue materials
which you believe should be so treated. If no waste results, include
a positive statement to that effect under this heading.) (If waste
occurs, state: (1) Whether or not it is recovered, (2) whether or
not it is valueless, and (3) what you do with it. This information
is required whether claims are made on a ``used in'' or ``appearing
in'' basis and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which
are lost in the process. Valueless wastes are those which may be
recovered but have no value. These irrecoverable and valueless
wastes do not reduce the drawback claim provided the claim is based
on the quantity of imported material used in manufacturing. If the
claim is based upon the quantity of imported merchandise appearing
in the exported article, irrecoverable and valueless waste will
cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value
either for sale or for use in a different manufacturing process.
However, it should be noted that this standard applies to the entire
industry and is not a selection on your part. An option by you not
to choose to sell or use the waste in some different operation does
not make it valueless if another manufacturer can use the waste.
State what you do with the waste. If you have to pay someone to get
rid of it, or if you have buyers for the waste, you must state so in
your application regardless of what ``Basis'' you are using.)
(If you recover valuable waste and if you choose to claim on the
basis of the quantity of imported or substituted merchandise used in
producing the exported articles (less valuable waste), state that
you will keep records to establish the quantity and value of the
waste recovered. See ``Basis of Claim for Drawback'' section below.)
Stock in Process
(Some processes result in another type of residual material,
namely, stock in process, which affects the allowance of drawback.
Stock in process necessarily reduces the quantity of imported
material used in manufacture in a current lot or period, in that the
amount manufactured in any given batch does not include the recycled
merchandise going into the next batch. Therefore the amount of
imported merchandise used in manufacture of exported articles is
decreased.)
(If stock in process occurs, the application must include a
statement that merchandise is considered to be used in manufacture
at the time it was originally processed so that the stock in process
will not be included twice in the computation of the merchandise
used to manufacture the finished articles on which drawback is
claimed.)
Tradeoff
(If an applicant proposes to use tradeoff (19 CFR 191.11), the
applicant should so state and the applicant should describe the
contractual arrangement between the applicant and its partner for
tradeoff. The person claiming drawback under the tradeoff provision
has the burden of establishing compliance with the law and
regulations. In this regard, the terms of a written contract are
always easier to establish than those of an oral contract.)
Loss or Gain (Separate and Distinct From WASTE)
(Some manufacturing processes result in an intangible loss or
gain of the net weight or measurement of the merchandise used. This
loss or gain is caused by atmospheric conditions, chemical
reactions, or other factors. State the approximate usual percentage
or quantity of such loss or gain. Note that percentage values will
be considered to be measured ``by weight'' unless otherwise
specified. Loss or gain does not occur during all manufacturing
processes. If loss or gain does not apply to your manufacturing
process, state ``Not Applicable.'')
Procedures and Records Maintained
We will maintain records to establish:
1. The identity and specifications of the merchandise we
designate;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise \3\ we used to produce the exported
articles.
---------------------------------------------------------------------------
\3\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles we produce.'');
---------------------------------------------------------------------------
3. That, within 3 years after receiving it at our factory, we
used the designated merchandise to produce articles. During the same
3-year period, we produced \4\ the exported articles.
---------------------------------------------------------------------------
\4\ (The date of production is the date an article is
completed.)
---------------------------------------------------------------------------
We realize that to obtain drawback the claimant must establish
that the completed articles were exported within 5 years after the
importation of the imported merchandise.
1Our records establishing our compliance with these requirements
will be available for audit by Customs during business hours. We
understand that drawback is not payable without proof of compliance.
Inventory Procedures
(Describe your inventory records and state how those records
will meet the drawback recordkeeping requirements set forth in 19
U.S.C. 1313(b) and part 191 of the Customs Regulations as discussed
under the heading PROCEDURES AND RECORDS MAINTAINED. To insure
compliance the following areas should be included in your
discussion:)
RECEIPT AND STORAGE OF DESIGNATED MERCHANDISE
RECORDS OF USE OF DESIGNATED MERCHANDISE
BILLS OF MATERIALS
MANUFACTURING RECORDS
WASTE RECORDS
[[Page 3134]]
RECORDS OF USE OF DUTY-PAID, DUTY-FREE OR DOMESTIC MERCHANDISE OF
THE REQUIRED SAME KIND AND QUALITY WITHIN 3 YEARS AFTER THE RECEIPT
OF THE DESIGNATED MERCHANDISE
FINISHED STOCK STORAGE RECORDS
SHIPPING RECORDS
(Proof of time frames may be specific or inclusive, e.g. within
120 days, but specific proof is preferable. Separate storage and
identification of each article or lot of merchandise usually will
permit specific proof of exact dates. Proof of inclusive dates of
use, production or export may be acceptable, but in such cases it is
well to describe very specifically the data you intend to use to
establish each legal requirement, thereby avoiding misunderstandings
at the time of audit.)
(If you do not describe the inventory records that you will use,
a statement that the legal requirements will be met by your
inventory procedures is acceptable. However, it should be noted that
without a detailed description of the inventory procedures set forth
in the application a judgement as to the adequacy of such a
statement cannot be made until a drawback claim is verified.
Approval of this application for a specific manufacturing drawback
ruling merely constitutes approval of the ruling application as
submitted; it does not constitute approval of the applicant's record
keeping procedures if, for example, those procedures are merely
described as meeting the legal requirements, without specifically
stating how the requirements will be met. Failure to describe how
the specific records will show receipt, use and export may be a
ground to deny use of the accelerated payment procedure until
completion of a satisfactory audit. Drawback is not payable without
proof of compliance.)
Basis of Claim for Drawback
(There are three different bases that may be used to claim
drawback: (1) Used in; (2) Appearing In; and (3) Used Less Valuable
Waste.)
(The ``Used In'' basis may be employed only if there is either
no waste or valueless or unrecovered waste in the operation.
Irrecoverable or valueless waste does not reduce the amount of
drawback when claims are based on the ``Used In'' basis. Drawback is
payable in the amount of 99 percent of the duty paid on the quantity
of imported material designated as the basis for the allowance of
drawback on the exported articles. The designated quantity may not
exceed the quantity of material actually used in the manufacture of
the exported articles.)
(For example, if 100 pounds of material, valued at $1.00 per
pound, were used in manufacture resulting in 10 pounds of
irrecoverable or valueless waste, the 10 pounds of irrecoverable or
valueless waste would not reduce the drawback. In this case drawback
would be payable on 99% of the duty paid on the 100 pounds of
designated material used to produce the exported articles.)
(The ``Appearing In'' basis may be used regardless of whether
there is waste. If the ``Appearing In'' basis is used, the claimant
does not need to keep records of waste and its value. However, the
manufacturer must establish the identity and quantity of the
merchandise appearing in the exported product and provide this
information. Waste reduces the amount of drawback when claims are
made on the ``Appearing In'' basis. Drawback is payable on 99
percent of the duty paid on the quantity of material designated,
which may not exceed the quantity of eligible material that appears
in the exported articles. ``Appearing In'' may not be used if by-
products are involved unless the applicant agrees to value all
products identically.)
(Based on the previous example, drawback would be payable on the
90 pounds of merchandise which actually went into the exported
product (appearing in) rather than the 100 pounds used in as set
forth previously.)
(The ``Used Less Valuable Waste'' basis may be employed when the
manufacturer recovers valuable waste, and keeps records of the
quantity and value of waste from each lot of merchandise. The value
of the waste reduces the amount of drawback when claims are based on
the ``Used Less Valuable Waste'' basis. When valuable waste is
incurred, the drawback allowance on the exported article may be
based on the duty paid on the quantity of merchandise used in the
manufacture, reduced by the quantity of such merchandise which the
value of the waste will replace. Thus in this case, drawback is
claimed on the quantity of eligible material actually used to
produce the exported product, less the amount of such material which
the value of the waste would replace. Note section 191.25(c) of the
Customs Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a
value of $.50 per pound, then the 10 pounds of waste, having a total
value of $5.00, would be equivalent in value to 5 pounds of the
designated material. Thus the value of the waste would replace 5
pounds of the merchandise used, and drawback is payable on 99
percent of the duty paid on the 95 pounds of imported material
designated as the basis for the allowance of drawback on the
exported article rather than on the 100 pounds ``Used In'' or the 90
pounds ``Appearing In'' as set forth in the above examples.)
(Two methods exist for the manufacturer to show the quantity of
material used or appearing in the exported article: (1) Schedule or
(2) Abstract.)
(A ``schedule'' shows the quantity of material used in producing
each unit of product. The schedule method is usually employed when a
standard line of merchandise is being produced according to fixed
formulas. Some schedules will show the quantity of merchandise used
to manufacture or produce each article and others will show the
quantity appearing in each finished article. Schedules may be
prepared to show the quantity of merchandise either on the basis of
percentages or by actual weights and measurements. A schedule
determines the amount that will be needed to produce a unit of
product before the material is actually used in production;)
(An ``abstract'' is the summary of the records (which may be set
forth on Customs Form 331) which shows the total quantity used in
producing all products during the period covered by the abstract.
The abstract looks at a duration of time, for instance 3 months, in
which the quantity of material has been used. An abstract looks back
on how much material was actually used after a production period has
been completed.)
(An applicant who fails to indicate the ``schedule'' choice must
base his claims on the ``abstract'' method. State which Basis and
Method you will use. An example of Used In by Schedule follows:)
We shall claim drawback on the quantity of (specify material)
used in manufacturing (exported article) according to the schedule
set forth below.
(Section 191.8(f) of the Customs Regulations requires submission
of the schedule with the application for a specific manufacturing
drawback ruling. An applicant who desires to file supplemental
schedules with the drawback office whenever there is a change in the
quantity or material used should state:)
We request permission to file supplemental schedules with the
drawback office covering changes in the quantities of material used
to produce the exported articles, or different styles or capacities
of containers of such exported merchandise.
(Except as noted above in the explanation of the ``Appearing
In'' basis, neither the ``Appearing In'' basis nor the ``schedule''
method for claiming drawback may be used where the relative value
procedure is required.)
Procedures Under Section 1313(a) Imported Merchandise or Drawback
Products Used Under 1313(a)
(List the imported merchandise or drawback products)
Exported Articles on Which Drawback Will be Claimed
(Name each article to be exported. When the identity of the
product is not clearly evident by its name state what the product
is, e.g., a herbicide. There must be a match between each article
described under the PROCESS OF MANUFACTURE AND PRODUCTION section
below and each article listed here.)
(If the merchandise used under section 1313(a) is not also used
under section 1313(b), the sections entitled PROCESS OF MANUFACTURE
OR PRODUCTION, BY-PRODUCTS, LOSS OR GAIN, and STOCK IN PROCESS
should be included here to cover merchandise used under section
1313(a). However, if the merchandise used under section 1313(a) is
also used under section 1313(b) these sections need not be repeated
unless they differ in some way from the section 1313(b)
descriptions.)
Procedures and Records Maintained
We will maintain records to establish:
1. That the exported articles on which drawback is claimed were
produced with the use of the imported merchandise, and
[[Page 3135]]
2. The quantity of imported merchandise \5\ we used in producing
the exported articles.
---------------------------------------------------------------------------
\5\ If claims are to be made on an ``Appearing In'' basis, the
remainder of the sentence should read ``appearing in the exported
articles we produce.''
---------------------------------------------------------------------------
We realize that to obtain drawback the claimant must establish
that the completed articles were exported within 5 years after
importation of the imported merchandise.
Inventory Procedures
(This section must be completed separately from that set forth
under the section 1313(b) portion of your application. The legal
requirements under section 1313(a) differ from those under section
1313(b).)
(Describe your inventory procedures and state how you will
identify the imported merchandise from the time it is received at
your factory until it is incorporated in the articles to be
exported. Also describe how you will identify the finished articles
from the time of manufacture until shipment.)
Basis of Claim for Drawback
(See section with this title for procedures under section
1313(b). Either repeat the same basis of claim or use a different
basis of claim, as described above, specifically for drawback
claimed under section 1313(a).)
Agreements
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this
application for a specific manufacturing drawback ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the
drawback office which liquidates its claims any changes in the
number or locations of its offices or factories, the corporate name,
corporate officers, or the corporate organization by succession or
reincorporation;
5. Keep this application current by reporting promptly to the
Headquarters, U.S. Customs Service all other changes affecting
information contained in this application;
6. Keep a copy of this application and the letter of approval by
Customs Headquarters on file for ready reference by employees and
require all officials and employees concerned to familiarize
themselves with the provisions of this application and that letter
of approval; and
7. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(a) & (b), part 191 of the Customs
Regulations and this application and letter of approval.
Declaration of Official
I declare that I have read this application for a specific
manufacturing drawback ruling; that I know the averments and
agreements contained herein are true and correct; and that my
signature on this ____________ day of ________________ 19______,
makes this application binding on
----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)
By \6\-----------------------------------------------------------------
---------------------------------------------------------------------------
\6\ Section 191.6(a) of the Customs Regulations requires that
applications for specific manufacturing drawback rulings be signed
by the owner of a sole proprietorship, a partner in a partnership,
or the president, vice president, secretary, treasurer or other
individual legally authorized to bind the corporation. In addition,
any employee of a business entity with a customs power of attorney
filed with the Customs port for the drawback office which will
liquidate your drawback claims may sign such an application, as may
a licensed Customs broker with a Customs power of attorney. You
should state in which Customs port your Customs power(s) of attorney
is/are filed.
---------------------------------------------------------------------------
(Signature and Title)
----------------------------------------------------------------------
(Print Name)
Format for 1313(b) Application Company Letterhead (Optional)
U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W.,
Washington, D.C. 20229
Dear Sir: We, (Applicant's Name), a (State, e.g. Delaware)
corporation (or other described entity) submit this application for
a specific manufacturing drawback ruling that our manufacturing
operations qualify for drawback under title 19, United States Code,
section 1313(b), and part 191 of the Customs Regulations. We request
that the Customs Service authorize drawback on the basis of this
application.
Name and Address and IRS Number of Applicant
(Section 191.8(a) of the Customs Regulations provides that each
manufacturer or producer of articles intended for exportation with
the benefit of drawback shall apply for a specific manufacturing
drawback ruling, unless operating under a general manufacturing
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs
will not approve an application which shows an unincorporated
division or company as the applicant (see Sec. 191.8(a)).)
Location of Factory
(Give the address of the factory(ies) where the process of
manufacture or production will take place. If the factory is a
different legal entity from the applicant, so state and indicate if
operating under an Agent's general manufacturing drawback ruling.)
Corporate Officers
(List officers and other persons legally authorized to bind the
corporation who will sign drawback documents. Section 191.6 of the
Customs Regulations permits only the president, vice-president,
secretary, treasurer, or any other individual legally authorized to
bind the corporation to sign for a corporation. In addition, a
person within a business entity with a Customs power of attorney for
the company may sign. A Customs power of attorney may also be given
to a licensed Customs broker. This heading should be changed to
NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole
proprietorship, respectively.)
Customs Office Where Drawback Claims Will be Filed
(The 8 offices where drawback claims can be filed are located
at:
Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)
(An original application and two copies must be filed. If the
applicant intends to file drawback claims at more than one drawback
office, two additional copies of the application must be furnished
for each additional office indicated.)
General Statement
(The following questions must be answered:
1. Who will be the importer of the designated merchandise?
(If the applicant will not always be the importer of the
designated merchandise, does the applicant understand its
obligations to obtain the appropriate certificates of delivery (19
CFR 191.10), certificates of manufacture and delivery (19 CFR
191.24), or both?)
2. Will an agent be used to process the designated or the
substituted merchandise into articles?
(If an agent is to be used, the applicant must state it will
comply with T.D.'s 55027(2), 55207(1), and that its agent will
submit a letter of notification of intent to operate under the
general manufacturing drawback ruling for agents (see Sec. 191.7 and
Appendix A), or an application for a specific manufacturing drawback
ruling (see Sec. 191.8 and this appendix B).)
3. Will the applicant be the exporter?
(If the applicant will not be the exporter in every case but
will be the claimant, the manufacturer must state that it will
reserve the right to claim drawback with the knowledge and written
consent of the exporter (19 CFR 191.82).)
(Since the permission to grant use of the accelerated payment
procedure rests with the Drawback office with which claims will be
filed, do not include any reference to that procedure in this
application.)
(Parallel Columns--``Same Kind and Quality'')
------------------------------------------------------------------------
------------------------------------------------------------------------
IMPORTED MERCHANDISE OR DRAWBACK PRODUCTS DUTY-PAID, DUTY-FREE OR
\2\ TO BE DESIGNATED AS THE BASIS FOR DOMESTIC MERCHANDISE OF THE
DRAWBACK ON THE EXPORTED PRODUCTS. SAME KIND AND QUALITY AS
THAT DESIGNATED WHICH WILL
BE USED IN THE PRODUCTION
OF THE EXPORTED PRODUCTS.
[[Page 3136]]
1. 1.
2. 2.
3. 3.
------------------------------------------------------------------------
\2\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.
(Following the items listed in the parallel columns, a statement
will be made, by the applicant, that affirms the ``same kind and
quality'' of the merchandise. This statement should be included in
the application exactly as it is stated below:)
The imported merchandise which we will designate on our claims
will be so similar in quality to the merchandise used in producing
the exported articles on which we claim drawback that the
merchandise used would, if imported, be subject to the same rate of
duty as the imported designated merchandise.
Fluctuations in the market value resulting from factors other
than quality will not affect the drawback.
(In order to successfully claim drawback it is necessary to
prove that the duty-paid, duty-free or domestic merchandise which is
to be substituted for the imported merchandise is the ``same kind
and quality''. ``Same kind and quality'' does not necessarily mean
that the merchandise is identical. It does mean that the merchandise
is of the same nature or character (``same kind'') and that the
merchandise to be substituted is interchangeable with the imported
merchandise with little or no change in the manufacturing process to
produce the same exported article (``same quality''). In order to
enable Customs to rule on ``same kind and quality'', the application
must include a detailed description of the designated imported
merchandise and of the substituted duty-paid, duty-free or domestic
merchandise to be used to produce the exported articles.)
(It is essential that all the characteristics which determine
the quality of the merchandise are provided in the application in
order to substantiate that the merchandise meets the ``same kind and
quality'' statutory requirement. These characteristics should
clearly distinguish merchandise of different qualities. For example,
USDA standards; FDA standards; industry standards, e.g., ASTM;
concentration; specific gravity; purity; luster; melting point,
boiling point; odor; color; grade; type; hardness; brittleness; etc.
Note that these are only a few examples of characteristics and that
each kind of merchandise has its own set of specifications that
characterizes its quality. If specifications are given with a
minimum value, be sure to include a maximum value. The converse is
also true. Often characteristics are given to Customs on attached
specification sheets. These specifications should not include
Material Safety Data sheets or other descriptions of the merchandise
that do not contribute to the ``same kind and quality''
determination. When the merchandise is a chemical, state the
chemical's generic name as well as its trade name plus any generally
recognized identifying number, e.g. CAS number; Color Index Number,
etc.)
(In order to expedite the specific manufacturing drawback ruling
review process, it will be helpful if you provide copies of
technical standards/specifications (particularly industry standards
such as ASTM standards) referred to in your application.)
(The descriptions of the ``same kind and quality'' merchandise
should be formatted in the parallel columns. The left-hand column
will consist of the name and specifications of the designated
imported merchandise under the heading set forth above. The right-
hand column will consist of the name and specifications for the
duty-paid, duty-free or domestic merchandise under the heading set
forth above.)
Exported Articles on Which Drawback Will be Claimed
(Name each article to be exported. When the identity of the
product is not clearly evident by its name state what the product
is, e.g., a herbicide. There must be a match between each article
described under the PROCESS OF MANUFACTURE AND PRODUCTION section
below and each article listed here.)
Process of Manufacture or Production
(Drawback under section 1313(b) is not allowable except where a
manufacture or production exists. A manufacture or production exists
when a ``new and different article emerges having a distinctive
name, character, or use'', or when an article is made fit for a
particular use (see 19 CFR 191.2(p); see also Anheuser-Busch Brewing
Assoc. v. United States, 207 U.S. 556 (1907); United States v.
International Paint Co., 35 CCPA 87 (1948), et al.). In order to
obtain drawback under section 1313(b), it is essential for the
applicant to show use in manufacture or production by giving a
thorough description of the manufacturing process. This description
should include the name and exact condition of the merchandise
listed in the Parallel Columns, a complete explanation of the
processes to which it is subjected in this country, the effect of
such processes, the name and exact description of the finished
article, and the use for which the finished article is intended.
When applicable, give equations of the chemical reactions. The
attachment of a flow chart in addition to the description showing
the manufacturing process is an excellent means of illustrating
whether or not a ``new and different article'' has been formed. Flow
charts can clearly illustrate if and at what point during the
manufacturing process by-products and wastes are generated.)
(This section should contain a description of the process by
which each item of merchandise listed in the parallel columns above
is used to make or produce every article that is to be exported.)
By-Products
1. Relative Values
(Some processes result in the separation of the merchandise used
in the same operation into two or more products. List all of the
products. State that you will record the market value of each
product or by-product at the time it is first separated in the
manufacturing process. If this section is not applicable to you,
then state so.)
(Drawback law mandates the assignment of relative values when
two or more products necessarily are produced concurrently in the
same operation. For instance, the refining of flaxseed necessarily
produces linseed oil and linseed husks (animal feed), and drawback
must be distributed to each product in accordance with its relative
value. However, the voluntary election of a steel fabricator, for
instance, to use part of a lot of imported steel to produce
automobile doors and part of the lot to produce automobile fenders
does not call for relative value distribution.)
(The relative value of a product is its value divided by the
total value of all products, whether or not exported. For example,
100 gallons of drawback merchandise are used to produce 100 gallons
of products, including 60 gallons of product A, 20 gallons of
product B, and 20 gallons of product C. At the time of separation,
the unit values of products A, B, and C are $5, $10, and $50
respectively. The relative value of product A is $300 divided by
$1500 or \1/5\. The relative value of B is \2/15\ and of product C
is \2/3\, calculated in the same manner. This means that \1/5\ of
the drawback product payments will be distributed to product A, \2/
15\ to product B, and \2/3\ to product C.)
(Drawback is allowable on exports of by-products, but is not
allowable on exports of valuable waste. In making this distinction
between by-product or valuable waste, the applicant should address
the following significant elements: (1) The nature of the material
of which the residue is composed; (2) the value of the residue as
compared to the value of the principal manufactured product and the
raw material; (3) the use to which it is put; (4) its status under
the tariff laws, if imported; (5) whether it is a commodity
recognized in commerce; (6) whether it must be subjected to some
process to make it saleable.)
2. Producibility
(Some processes result in the separation of fixed proportions of
each product, while other processes afford the opportunity to
increase or decrease the proportion of each product. An example of
the latter is petroleum refining, where the refiner has the option
to increase or decrease the production of one or more products
relative to the others. State under this heading whether you can or
cannot vary the proportionate quantity of each product.)
(The BY-PRODUCT section consists of two sub-sections: Relative
Values and Producibility. If no by-products result from your
operation state ``Not Applicable'' for the entire section. If by-
products do result from your operation Relative Values will always
apply. However, Producibility may or may not apply. If Producibility
does not apply to your by-product operation state ``Not Applicable''
for this sub-section.)
Waste
(Many processes result in residue materials which, for drawback
purposes, are treated as
[[Page 3137]]
wastes. Describe any residue materials which you believe should be
so treated. If no waste results, include a positive statement to
that effect under this heading.)
(If waste occurs, state: (1) Whether or not it is recovered, (2)
whether or not it is valueless, and (3) what you do with it. This
information is required whether claims are made on a ``used in'' or
``appearing in'' basis and regardless of the amount of waste
incurred.)
(Irrecoverable wastes are those consisting of materials which
are lost in the process. Valueless wastes are those which may be
recovered but have no value. These irrecoverable and valueless
wastes do not reduce the drawback claim provided the claim is based
on the quantity of imported material used in manufacturing. If the
claim is based upon the quantity of imported merchandise appearing
in the exported article, irrecoverable and valueless waste will
cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value
either for sale or for use in a different manufacturing process.
However, it should be noted that this standard applies to the entire
industry and is not a selection on your part. An option by you not
to choose to sell or use the waste in some different operation does
not make it valueless if another manufacturer can use the waste.
State what you do with the waste. If you have to pay someone to get
rid of it, or if you have buyers for the waste, you must state so in
your application regardless of what ``Basis'' you are using.)
(If you recover valuable waste and if you choose to claim on the
basis of the quantity of imported or substituted merchandise used in
producing the exported articles less valuable waste, state that you
will keep records to establish the quantity and value of the waste
recovered. See ``Basis of Claim for Drawback'' section below.)
Stock in Process
(Some processes result in another type of residual material,
namely, stock in process, which affects the allowance of drawback.
Stock in process necessarily reduces the quantity of imported
material used in manufacture in a current lot or period, in that the
amount manufactured in any given batch does not include the recycled
merchandise going into the next batch. Therefore the amount of
imported merchandise used in manufacture of exported articles is
decreased.)
(If stock in process occurs, the application must include a
statement that merchandise is considered to be used in manufacture
at the time it was originally processed so that the stock in process
will not be included twice in the computation of the merchandise
used to manufacture the finished articles on which drawback is
claimed.)
Tradeoff
(If an applicant proposes to use tradeoff (19 CFR 191.11), the
applicant should so state and the applicant should describe the
contractual arrangement between the applicant and its partner for
tradeoff. The person claiming drawback under the tradeoff provisions
has the burden of establishing compliance with the law and
regulations. In this regard, the terms of a written contract are
always easier to establish than those of an oral contract.)
Loss or Gain (Separate and Distinct From WASTE)
(Some manufacturing processes result in an intangible loss or
gain of the net weight or measurement of the merchandise used. This
loss or gain is caused by atmospheric conditions, chemical
reactions, or other factors. State the approximate usual percentage
or quantity of such loss or gain. Note that percentage values will
be considered to be measured ``by weight'' unless otherwise
specified. Loss or gain does not occur during all manufacturing
processes. If loss or gain does not apply to your manufacturing
process, state ``Not Applicable.'')
Procedures and Records Maintained
We will maintain records to establish:
1. The identity and specifications of the merchandise we
designate;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise \3\ we used to produce the exported
articles.
---------------------------------------------------------------------------
\3\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles we produce.''
---------------------------------------------------------------------------
3. That, within 3 years after receiving it at our factory, we
used the designated merchandise to produce articles. During the same
3-year period, we produced \4\ the exported articles.
---------------------------------------------------------------------------
\4\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
We realize that to obtain drawback the claimant must establish
that the completed articles were exported within 5 years after the
importation of the imported merchandise.
Our records establishing our compliance with these requirements
will be available for audit by Customs during business hours. We
understand that drawback is not payable without proof of compliance.
Inventory Procedures
(Describe your inventory records and state how those records
will meet the drawback recordkeeping requirements set forth in 19
U.S.C. 1313(b) and part 191 of the Customs Regulations as discussed
under the heading PROCEDURES AND RECORDS MAINTAINED.To insure
compliance the following areas should be included in your
discussion:)
RECEIPT AND STORAGE OF DESIGNATED MERCHANDISE
RECORDS OF USE OF DESIGNATED MERCHANDISE
BILLS OF MATERIALS
MANUFACTURING RECORDS
WASTE RECORDS
RECORDS OF USE OF DUTY-PAID, DUTY-FREE OR DOMESTIC MERCHANDISE OF
THE REQUIRED SAME KIND AND QUALITY WITHIN 3 YEARS AFTER THE RECEIPT
OF THE DESIGNATED MERCHANDISE
FINISHED STOCK STORAGE RECORDS
SHIPPING RECORDS
(Proof of time frames may be specific or inclusive, e.g., within
120 days, but specific proof is preferable. Separate storage and
identification of each article or lot of merchandise usually will
permit specific proof of exact dates. Proof of inclusive dates of
use, production or export may be acceptable, but in such cases it is
well to describe very specifically the data you intend to use to
establish each legal requirement, thereby avoiding misunderstandings
at the time of audit.)
(If you do not describe the inventory records that you will use,
a statement that the legal requirements will be met by your
inventory procedures is acceptable. However, it should be noted that
without a detailed description of the inventory procedures set forth
in the application a judgement as to the adequacy of such a
statement cannot be made until a drawback claim is verified.
Approval of this application for a specific manufacturing drawback
ruling merely constitutes approval of the ruling application as
submitted; it does not constitute approval of the applicant's record
keeping procedures if, for example, those procedures are merely
described as meeting the legal requirements, without specifically
stating how the requirements will be met. Failure to describe how
the specific records will show receipt, use and export may be a
ground to deny use of the accelerated payment procedure until
completion of a satisfactory audit. Drawback is not payable without
proof of compliance.)
Basis of Claim for Drawback
(There are three different bases that may be used to claim
drawback: (1) Used in; (2) Appearing In; and (3) Used less Valuable
Waste.)
(The ``Used In'' basis may be employed only if there is either
no waste or valueless or unrecovered waste in the operation.
Irrecoverable or valueless waste does not reduce the amount of
drawback when claims are based on the ``Used In'' basis. Drawback is
payable in the amount of 99 percent of the duty paid on the quantity
of imported material designated as the basis for the allowance of
drawback on the exported articles. The designated quantity may not
exceed the quantity of material actually used in the manufacture of
the exported articles.)
(For example, if 100 pounds of material, valued at $1.00 per
pound, were used in manufacture resulting in 10 pounds of
irrecoverable or valueless waste, the 10 pounds of irrecoverable or
valueless waste would not reduce the drawback. In this case drawback
would be payable on 99% of the duty paid on the 100 pounds of
designated material used to produce the exported articles.)
(The ``Appearing In'' basis may be used regardless of whether
there is waste. If the ``Appearing In'' basis is used, the claimant
does not need to keep records of waste and its value. However, the
manufacturer must establish the identity and quantity of the
merchandise appearing in the exported product and provide this
information. Waste reduces the amount of drawback when claims are
made on the ``Appearing In'' basis. Drawback is payable on 99
percent of the duty paid on the quantity of material
[[Page 3138]]
designated, which may not exceed the quantity of eligible material
that appears in the exported articles. ``Appearing In'' may not be
used if by-products are involved unless the applicant agrees to
value all products identically.)
(Based on the previous example, drawback would be payable on the
90 pounds of merchandise which actually went into the exported
product (appearing in) rather than the 100 pounds used in as set
forth previously.)
(The ``Used Less Valuable Waste'' basis may be employed when the
manufacturer recovers valuable waste, and keeps records of the
quantity and value of waste from each lot of merchandise. The value
of the waste reduces the amount of drawback when claims are based on
the ``Used Less Valuable Waste'' basis. When valuable waste is
incurred, the drawback allowance on the exported article may be
based on the duty paid on the quantity of merchandise used in the
manufacture, reduced by the quantity of such merchandise which the
value of the waste will replace. Thus in this case, drawback is
claimed on the quantity of eligible material actually used to
produce the exported product, less the amount of such material which
the value of the waste would replace. Note section 191.25(c) of the
Customs Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a
value of $.50 per pound, then the 10 pounds of waste, having a total
value of $5.00, would be equivalent in value to 5 pounds of the
designated material. Thus the value of the waste would replace 5
pounds of the merchandise used, and drawback is payable on 99
percent of the duty paid on the 95 pounds of imported material
designated as the basis for the allowance of drawback on the
exported article rather than on the 100 pounds ``Used In'' or the 90
pounds ``Appearing In'' as set forth in the above examples.)
(Two methods exist for the manufacturer to show the quantity of
material used or appearing in the exported article: (1) Schedule or
(2) Abstract.)
(A ``schedule'' shows the quantity of material used in producing
each unit of product. The schedule method is usually employed when a
standard line of merchandise is being produced according to fixed
formulas. Some schedules will show the quantity of merchandise used
to manufacture or produce each article and others will show the
quantity appearing in each finished article. Schedules may be
prepared to show the quantity of merchandise either on the basis of
percentages or by actual weights and measurements. A schedule
determines the amount that will be needed to produce a unit of
product before the material is actually used in production;)
(An ``abstract'' is the summary of the records (which may be set
forth on Customs Form 331) which shows the total quantity used in
producing all products during the period covered by the abstract.
The abstract looks at a duration of time, for instance 3 months, in
which the quantity of material has been used. An abstract looks back
on how much material was actually used after a production period has
been completed.)
(An applicant who fails to indicate the ``schedule'' choice must
base his claims on the ``abstract'' method. State which Basis and
Method you will use. An example of Used In by Schedule would read:)
We shall claim drawback on the quantity of (specify material)
used in manufacturing (exported article) according to the schedule
set forth below.
(Section 191.8(f) of the Customs Regulations requires submission
of the schedule with the application for a specific manufacturing
drawback ruling. An applicant who desires to file supplemental
schedules with the drawback office whenever there is a change in the
quantity or material used should state:)
We request permission to file supplemental schedules with the
drawback office covering changes in the quantities of material used
to produce the exported articles, or different styles or capacities
of containers of such exported merchandise.
(Except as noted above in the explanation of the ``Appearing
In'' basis, neither the ``Appearing In'' basis nor the ``schedule''
method for claiming drawback may be used where the relative value
procedure is required.)
Agreements
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this
application for a specific manufacturing drawback ruling when
claiming drawback;
2.Open its factory and records for examination at all reasonable
hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the
drawback office which liquidates its claims any changes in the
number or locations of its offices or factories, the corporate name,
corporate officers, or the corporate organization by succession or
reincorporation;
5. Keep this application current by reporting promptly to the
Headquarters, U.S. Customs Service, all other changes affecting
information contained in this application;
6. Keep a copy of this application and the letter of approval by
Customs Headquarters on file for ready reference by employees and
require all officials and employees concerned to familiarize
themselves with the provisions of this application and that letter
of approval; and
7. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this application and letter of approval.
Declaration of Official
I declare that I have read this application for a specific
manufacturing drawback ruling; that I know the averments and
agreements contained herein are true and correct; and that my
signature on this ____________ day of ________________ 19______,
makes this application binding on
----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)
By \5\-----------------------------------------------------------------
---------------------------------------------------------------------------
\5\ Section 191.6(a) of the Customs Regulations requires that
applications for specific manufacturing drawback rulings be signed
by the owner of a sole proprietorship, a partner in a partnership,
or the president, vice president, secretary, treasurer or other
individual legally authorized to bind the corporation. In addition,
any employee of a business entity with a Customs power of attorney
filed with the Customs port for the drawback office which will
liquidate your drawback claims may sign such an application, as may
a licensed Customs broker with a Customs power of attorney. You
should state in which Customs port Customs power(s) of attorney is/
are filed.
---------------------------------------------------------------------------
(Signature and Title)
----------------------------------------------------------------------
(Print Name)
Format for 1313(b) Petroleum Drawback Application Company Letterhead
(Optional)
U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W.,
Washington, D.C. 20229
Dear Sir: We (Applicant's Name), a (State, e.g. Delaware)
corporation (or other described entity), submit this application for
a specific manufacturing drawback ruling that our manufacturing
operations qualify for drawback under title 19, United States Code,
section 1313(b), and part 191 of the Customs Regulations. We request
that the Customs Service authorize drawback on the basis of this
application.
Name and Address and IRS Number of Applicant
(Section 191.8(a) of the Customs Regulations provides that each
manufacturer or producer of articles intended for exportation with
the benefit of drawback shall apply for a specific manufacturing
drawback ruling, unless operating under a general manufacturing
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs
will not approve an application which shows an unincorporated
division or company as the applicant (see Sec. 191.8(a).)
Location of Refinery
(Give the address of the refinery(s) where the process of
manufacture or production will take place. If the refinery is a
different legal entity from the applicant, so state and indicate if
operating under an Agent's general manufacturing drawback ruling.)
Corporate Officers
(List officers and other persons legally authorized to bind the
corporation who will sign drawback documents. Section 191.6 of the
Customs Regulations permits only the president, vice-president,
secretary, treasurer, or any other individual legally authorized to
bind the corporation to sign for a corporation. In addition, a
person within a business entity with a Customs power of attorney for
the company may sign. A Customs power of attorney may also be given
to a licensed Customs broker. This heading should be
[[Page 3139]]
changed to NAMES OF PARTNERS or PROPRIETOR in the case of a
partnership or sole proprietorship, respectively.)
Customs Office Where Drawback Claims Will Be Filed
(The 8 offices where drawback claims can be filed are located
at:
Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)
(An original application and two copies must be filed. If the
applicant intends to file drawback claims at more than one drawback
office, two additional copies of the application must be furnished
for each additional office indicated.)
General Statement
(The following questions must be answered:
1. Who will be the importer of the designated merchandise?
(If the applicant will not always be the importer of the
designated merchandise, does the applicant understand its
obligations to obtain the appropriate certificates of delivery (19
CFR 191.10), certificates of manufacture and delivery (19 CFR
191.24), or both?)
2. Will an agent be used to process the designated or the
substituted merchandise into articles?
(If an agent is to be used, the applicant must state it will
comply with T.D.'s 55027(2) and 55207(1), and that its agent will
submit a letter of notification of intent to operate under the
general manufacturing drawback ruling for agents (see Sec. 191.7 and
Appendix A), or an application for a specific manufacturing drawback
ruling (see Sec. 191.8 and this appendix B).)
3. Will the applicant be the exporter?
(If the applicant will not be the exporter in every case but
will be the claimant, the manufacturer must state that it will
reserve the right to claim drawback with the knowledge and written
consent of the exporter (19 CFR 191.82).)
(Since the permission to grant use of the accelerated payment
procedure rests with the Drawback office with which claims will be
filed, do not include any reference to that procedure in this
application.)
(Parallel Columns--``Same Kind and Quality'')
------------------------------------------------------------------------
------------------------------------------------------------------------
IMPORTED MERCHANDISE OR DRAWBACK PRODUCTS DUTY-PAID, DUTY-FREE OR
\2\ TO BE DESIGNATED AS THE BASIS FOR DOMESTIC MERCHANDISE OF THE
DRAWBACK ON THE EXPORTED PRODUCTS SAME KIND AND QUALITY AS
THAT DESIGNATED WHICH WILL
BE USED IN THE PRODUCTION
OF THE EXPORTED PRODUCTS.
------------------------------------------------------------------------
\2\ (Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under section 1313(b). They may be designated as the
basis for drawback and also may be deemed to be domestic merchandise.)
We will substitute crude petroleum for crude petroleum and a
petroleum derivative for the same petroleum derivative on a class-
for-class basis only.
Class Designations:
Class I--API Gravity 0-11.9
Class II--API Gravity 12.0-24.9
Class III--API Gravity 25.0-44.9
Class IV--API Gravity 45-up
The imported merchandise which we will designate on our claims
will be so similar in quality to the merchandise used in producing
the exported articles on which we claim drawback that the
merchandise used would, if imported, be subject to the same rate of
duty as the imported designated merchandise.
Exported Articles Produced From Fractionation
1. Motor Gasoline
2. Aviation Gasoline
3. Special Naphthas
4. Jet Fuel
5. Kerosene & Range Oils
6. Distillate Oils
7. Residual Oils
8. Lubricating Oils
9. Paraffin Wax
10. Petroleum Coke
11. Asphalt
12. Road Oil
13. Still Gas
14. Liquified Petroleum Gas
15. Petrochemical Synthetic Rubber
16. Petrochemical Plastics & Resins
17. All Other Petrochemical Products
Exported Articles on Which Drawback Will Be Claimed
(Name each article to be exported. When the identity of the
product is not clearly evident by its name, state what the product
is, e.g., a herbicide. There must be a match between each article
described under the PROCESS OF MANUFACTURE AND PRODUCTION section
below and each article listed here.)
Process of Manufacture or Production
Heated crude oil is charged to an atmospheric distillation tower
where it is subjected to fractionation. The charge to the
distillation tower consists of a single crude oil, or of commingled
crudes which are fed to the tower simultaneously or after blending
in a tank. During fractionation, components of different boiling
ranges are separated.
By-Products
1. Relative Values
Fractionation results in 17 products. In order to insure proper
distribution of drawback to each of these products, we agree to
record the relative values at the time of separation. The entire
period covered by an abstract is to be treated as the time of
separation. The value per unit of each product shall be the average
market value for the abstract period.
2. Producibility
We can vary the proportionate quantity of each product. We
understand that drawback is payable on exported products only to the
extent that these products could have been produced from the
designated merchandise. Our records will show that all of the
products exported for which drawback will be claimed under this
specific manufacturing drawback ruling could have been produced
concurrently on a practical operating basis from the designated
merchandise.
We agree to establish the amount to be designated by reference
to the Industry Standards of Potential Production published in T.D.
66-16.\3\
---------------------------------------------------------------------------
\3\ A manufacturer who proposes to use standards other than
those in T.D. 66-16 must state the proposed standards and provide
sufficient information to the Customs Service in order for those
proposed standards to be verified in accordance with T.D. 84-49.
---------------------------------------------------------------------------
There are no valuable wastes as a result of the processing.
Records will be kept in accordance with T.D. 84-49, as amended by
T.D. 95-61.
Loss or Gain
Because we keep records on a volume basis rather than a weight
basis, it is anticipated that the material balance will show a
volume gain. For the same reason, it is possible that occasionally
the material balance will show a volume loss. Fluctuations in type
of crude used, together with the type of finished product desired
make an estimate of an average volume gain meaningless. However,
records will be kept to show the amount of loss or gain with respect
to the production of export products.
Tradeoff
(If an applicant proposes to use tradeoff (19 CFR 191.11), the
applicant should so state and the applicant should describe the
contractual arrangement between the applicant and its partner for
tradeoff. The person claiming drawback under the tradeoff provision
has the burden of establishing compliance with the law and
regulations. In this regard, the terms of a written contract are
always easier to establish than those of an oral contract.)
Procedures and Records Maintained
We will maintain records to establish:
1. The identity and specifications of the merchandise we
designate;
2. The quantity of merchandise of the same kind and quality as
the designated
[[Page 3140]]
merchandise we used to produce the exported articles.
3. That, within 3 years after receiving it at our refinery, we
used the designated merchandise to produce articles. During the same
3-year period, we produced the exported articles.
4(a). We agree to use a 28-31 day period (monthly) abstract
period for each refinery covered by this application for a specific
manufacturing drawback ruling.
(b). We propose to use an abstract period ____________ (not to
exceed 1 year) for each refinery covered by this application for a
specific manufacturing drawback ruling. We certify that if we were
to file abstracts covering each manufacturing period of not less
than 28 days and not more than 31 days (monthly) within the longer
period, in no such monthly abstract would the quantity of designated
merchandise exceed, for the same class of designated merchandise,
the material introduced into the manufacturing process during that
monthly period. (Select (a) or (b))
5. On each abstract of production we agree to show the value per
barrel to five decimal places.
6. We agree to file claims in the format set forth in exhibits A
through F which are attached to this application for a specific
manufacturing drawback ruling. We realize that to obtain drawback
the claimant must establish that the completed articles were
exported within 5 years after importation of the imported
merchandise. Our records establishing our compliance with these
requirements will be available for audit by Customs during business
hours. We understand that drawback is not payable without proof of
compliance.
Residual Rights
It is understood that the refiner can reserve as the basis for
future payment the right to drawback only on the number of barrels
of raw material computed by subtracting from Line E the larger of
Lines A or B, of a given Exhibit E. It is further understood that
this right to future payment can be claimed only against products
concurrently producible with the products listed in Column 21, in
the quantities shown in Column 22 of such Exhibit E. Such residual
right can be transferred to another refinery of the same refiner
only when Line B of Exhibit E is larger than Line A. Unless the
number of residual barrels is specifically computed and rights
thereto are expressly reserved on Exhibit E, such residual rights
shall be deemed waived. The procedure we shall follow in preparing
drawback entries claiming this residual right is illustrated in the
attached sample Exhibit E-1. It is understood that claims involving
residual rights shall be filed only at the port where the Exhibit E
reserving such right was filed.
Inventory Procedures
We realize that inventory control is of major importance. In
accordance with our normal accounting procedures, each refinery
prepares a monthly stock and yield report, which accounts for
inventories, production and disposals from time of receipt to time
of disposition. This provides an audit trail of all products.
The above-noted records will provide the required audit trail
from the initial source documents to our drawback claims and will
support adherence with the requirements discussed under the heading
PROCEDURES AND RECORDS MAINTAINED.
Basis of Claim for Drawback
The amount of raw material on which drawback may be based shall
be computed by multiplying the quantity of each product exported by
the drawback factor for that product. The amount of any one type and
class of raw material which may be designated as the basis for
drawback on the exported products produced at a given refinery and
covered by a drawback entry shall not exceed the quantity of such
raw material used at the refinery during the abstract period or
periods from which the exported products were produced. The quantity
of raw material to be designated as the basis for drawback on
exported products must be at least as great as the quantity of raw
material of the same type and class which would be required to
produce the exported products in the quantities exported.
Agreements
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this
application for a specific manufacturing drawback ruling when
claiming drawback;
2. Open its refinery and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the
drawback office which liquidates its claims any changes in the
number or locations of its offices or factories, the corporate name,
corporate officers, or the corporate organization by succession or
reincorporation;
5. Keep this application current by reporting promptly to the
Headquarters, U.S. Customs Service, all other changes affecting
information contained in this application;
6. Keep a copy of this application and the letter of approval by
Customs Headquarters on file for ready reference by employees and
require all officials and employees concerned to familiarize
themselves with the provisions of this application and that letter
of approval; and
7. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(b), part 191 of the Customs
Regulations and this application and letter of approval.
Declaration of Official
I declare that I have read this application for a specific
manufacturing drawback ruling; that I know the averments and
agreements contained herein are true and correct; and that my
signature on this ____________ day of ________________ 19______ ,
makes this application binding on
----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)
By \4\-----------------------------------------------------------------
---------------------------------------------------------------------------
\4\ Section 191.6(a) of the Customs Regulations requires that
applications for specific manufacturing drawback rulings be signed
by the owner of a sole proprietorship, a partner in a partnership,
or the president, vice president, secretary, treasurer or other
individual legally authorized to bind the corporation. In addition,
any employee of a business entity with a Customs power of attorney
filed with the Customs port for the drawback office which will
liquidate your drawback claims may sign such an application, as may
a licensed Customs broker with a Customs power of attorney. You
should state in which Customs port Customs power(s) of attorney is/
are filed.
---------------------------------------------------------------------------
(Signature and Title)
----------------------------------------------------------------------
(Print Name)
(Exhibits A-F of the Petroleum Drawback Proposal follow)
Exhibit A.--Abstract of Manufacturing Records, ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to January 31, 1995
[Material Used (in Bbls. at 60 deg.)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Crudes Derivatives
--------------------------------------------------------------------------------
Totals Unfinished
Class I Class II Class III Class IV Crude tops naphtha
class IV class IV
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Opening Inventory.................................. 4,007,438 ........... ........... .............. ........... ........... ...........
(2) Material Introduced*............................... 7,450,732 0 619,473 6,367,991 0 101,224 362,044
(3) Closing Inventory.................................. 3,671,005 ........... ........... .............. ........... ........... ...........
[[Page 3141]]
(4) Total Consumption.................................. 7,787,165 ........... ........... .............. ........... ........... ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line (1)--Stock in process at beginning of manufacturing period.
Line (2)--Raw material introduced into manufacturing process during the period. The amount, by type and class, shown hereon, shall be the maximum that
may be designated under T.D. 84-49.
Line (3)--Stock in process at end of period.
Line (4)--Total Consumed, namely, line 1 plus line 2 less line 3.
* All raw materials of a type and class not to be designated may be shown as a total.
Exhibit B.--Abstract of Production ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to
January 31, 1995
Drawback
Product Quantity in Value per Value of factor per
bbls. bbl. product bbl.
(5) (6) (7) (8) (9)
================================================================================================================
1. Motor Gasoline................................... 2,699,934 $ 6.14333 $16,586,586 1.06678
2. Aviation Gasoline................................ 108,269 5.83363 631,601 1.01300
3. Special Naphthas................................. 372,676 8.06356 3,005,095 1.40023
4. Jet Fuel......................................... 249,386 3.95698 986,815 .68712
5. Kerosene and Range Oil........................... 321,263 4.69857 1,509,477 .81590
6. Distillate Oils.................................. 2,567,975 4.45713 11,445,798 .77398
7. Residual Oils.................................... 308,002 2.51322 774,077 .43642
8. Lubricating Oils................................. 292,492 26.72296 7,816,252 4.64041
9. Paraffin Wax..................................... 19,063 10.49642 200,093 1.82269
10. Petroleum Coke.................................. 122,353 1.24291 152,074 .21583
11. Asphalt......................................... 75,231 3.59105 270,158 .62358
12. Road Oil........................................ 0 0 0 0
13. Still Gas....................................... 245,784 1.00530 247,087 .17457
14. Liquified Refinery Gas.......................... 524,423 2.23013 1,169,531 .38726
15. Petrochemical Synthetic Rubber.................. 0 0 0 0
16. Petrochemical Plastics & Resins................. 0 0 0 0
17. All Other Petrochemical Products................ 7,996 6.21343 49,683 1.07895
-----------------------------------------------------------
Loss (or Gain)................................ (127,682) ............ .............. ............
===========================================================
Total......................................... 7,787,165 ............ 44,844,327 ............
----------------------------------------------------------------------------------------------------------------
Col. (6) Products are shown in the net quantities realized in the refining process and do not include non-
petroleum additives.
Col. (7) Weighted average realization for the period covered.
Col. (8) Column 6 multiplied by column 7.
Col. (9) Quantity of raw materials allowable per barrel of product. (Formula for obtaining drawback factors:
$44,844,327 7,787,165 bbls. = $5.75875 divided into product values per barrel equals drawback
factor.)
[[Page 3142]]
Exhibit C.--Inventory Control Sheet ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to January 31, 1995
[All quantities exclude non-petroleum additives]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aviation gasoline Residual oils Lubricating oils Petrochemicals all other
-------------------------------------------------------------------------------------------------------
Drawback Drawback Drawback Drawback
factor Bbls. factor Bbls. factor Bbls. factor Bbls.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(10) Opening Inventory.......................... 11,218 1.00126 21,221 .45962 9,242 4.52178 891 1.00244
(11) Production................................. 108,269 1.01300 308,002 .43642 292,492 4.64041 7,996 1.07895
(11-A) Receipts.................................
(12) Exports.................................... 11,218 1.00126 21,221 .45962 8,774 4.52178 195 1.00244
176 1.01300 104,397 .43642
(13) Drawback Deliveries........................ 696 1.00244
319 1.07895
(14) Domestic Shipments......................... 97,863 1.01300 180,957 .43642 468 4.52178 6,867 1.07895
278,286 4.64041
(15) Closing Inventory.......................... 10,230 1.01300 22,648 .43642 14,206 4.64041 810 1.07895
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line (10)--Opening inventory from previous period's closing inventory.
Line (11)--From production period under consideration.
Line (11-A)--Product received from other sources.
Line (12)--From earliest on hand (inventory or production). Totals from drawback entry or entries recapitulated (see column 18).
Line (13)--Deliveries for export or for designation against further manufacture--earliest on hand after exports are deducted.
Line (14)--From earliest on hand after lines (12) and (13) are deducted.
Line (15)--Balance on hand.
[[Page 3143]]
Exhibit D.--Recapitulation of Drawback Entry ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1,
1995 to January 31, 1995
Quantity in Crude to be
Quantity in bbls. in Drawback Crude allowed for
Product bbls. the terms factor per allowed for drawback
exported of the bbl. drawback in deliveries
Abstract bbls. in bbls.
(16) (17) (18) (19) (20) (20a)
----------------------------------------------------------------------------------------------------------------
Aviation Gasoline.............................. 11,410 11,218 1.00126 11,232
176 1.01300 178
Residual Oils.................................. 125,618 21,221 .45962 9,754
104,397 .43642 45,561
Lubricating Oils............................... 8,875 8,774 4.52178 39,674
Petrochemicals--............................... 696 1.00244 698
Other...................................... 319 1.07895 344
195 195 1.00244 195
----------------------------------------------------------------
Total.................................... 146,098 146,996 106,594 1,042
----------------------------------------------------------------------------------------------------------------
Duty paid on raw material selected for designation--$.1050
per bbl. (class III crude):
Amount of drawback claim--gross--106,594 x .1050 =... $11,192
Less 1%................................................ -112
------------
Amount of drawback claim--net.......................... 11,080
------------------------------------------------------------------------
Col. (16) Lists only products exported.
Col. (17) Quantities in condition as shown on the notices of exportation
and notices of lading.
Col. (18) Quantities in condition as shown on the abstract (i.e., less
additives if any). These quantities will appear in line 12.
Col. (19) The drawback factor(s) shown on line 12.
Col. (20) Raw materials (crude or derivatives) allowable, determined by
multiplying column 18 by column 19.
Col. (20a) Raw materials (crude or derivatives) allowable, for drawback
deliveries determined by multiplying column 18 by column 19.
Exhibit E.--Producibility Test for Products Exported (Including Drawback
Deliveries) ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From
January 1, 1995 to January 31, 1995
[Type and Class of Raw Material Designated--Crude, Class III]
Quantity of
raw material
of type and
Quantity in Industry class
Product barrels standard designated
(percent) needed to
produce
product
(21) (22) (23) (24)
------------------------------------------------------------------------
Aviation Gasoline............... 11,394 40 28,485
Residual Oils................... 125,618 83 151,347
Lubricating Oils................ 8,774 50 17,548
Petrochemicals, other........... (195) ........... ............
Petrochemicals, other (Drawback
Deliveries).................... (1,015) ........... ............
Petrochemicals--Total........... 1,210 29 4,172
-------------
Total..................... 146,996 ........... ............
------------------------------------------------------------------------
A--Crude allowed (column 20: 106,594 plus column 20a: 1,042; 107,636
bbls.
B--Total quantity exported (including drawback deliveries) (column 22):
146,996; 107,636 bbls.
C--Largest quantity of raw material needed to produce an individual
exported product (see column 24): 151,347; 107,636 bbls.
D--The excess of raw material over the largest of lines A, B, or C,
required to produce concurrently on a practical operating basis, using
the most efficient processing equipment existing within the domestic
industry, the exported articles (including drawback deliveries) in the
quantities exported (or delivered): None.
E--Minimum quantity of raw material required to be designated (which is
A, B, or C, whichever is largest, plus D, if applicable): 151,347,
None.
I hereby certify that all the above drawback deliveries and products
exported by the Beaumont Refinery of ABC Oil Co., Inc. during the
period from January 1, 1995 to January 31, 1995 could have been
produced concurrently on a practical operating basis from 151,347
barrels of imported Class III crude against which drawback is claimed.
Signature
[[Page 3144]]
Exhibit E-1.--Producibility Test for Products on Which Residual Right to Drawback is Now Claimed and Products Covered by Abstracts on Which Raw
Materials Covered Were Previously Designated ABC Oil Co., Inc.--Tulsa, Oklahoma Refinery Period From January 1, 1995 to January 31, 1995
[Type and Class of Raw Material Designated--Crude, Class III]
Quantity of raw
material of type and
Industry class designated Drawback Crude
Product Quantity standard needed to produce Covered by: 1. period 2. factor per allowed for
in barrels (percent) product refinery barrel drawback
----------------------
Separate Combined
(21) (22) (23)
(1)(24) (19) (20)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aviation Gasoline........................... 11,394 40 28,485 29,125 ................................ 1.00126 11, 232
.......... ......... ......... ......... ................................ 1.01300 178
Residual Oils............................... 125,618 83 151,347 151,347 1. Jan. 1995.................... .45962 9,754
.......... ......... ......... ......... ................................ .43642 45,561
Lubricating Oils............................ 8,774 50 17,548 17,932 2. Beaumont..................... 4.52178 39,674
Petrochemicals, Other....................... (195) ......... ......... ......... ................................ 1.00244 195
Petrochemicals, Other (Drawback Deliveries). (1,015) ......... ......... ......... ................................ .............. ...........
1,210 29 4,172 4,503 ................................ .............. ...........
[Residual Rights]:
Aviation Gasoline....................... 256 40 640 29,125 ................................ 1.01265259 259
Lubricating Oils........................ 192 50 384 17,932 1. Jan. 1995.................... 4.59006881 881
Petrochemicals, Other................... 96 29 331 4,503 2. Tulsa........................ 1.12412108 108
Distillate Oils......................... 3807 89 4,278 4,278 ................................ .76624 2,917
-----------------------------------------------------------------------------------------------------------
Subtotal.............................. .......... ......... ......... ......... ................................ .............. 4,165
===========================================================================================================
Total................................. 151,347 ......... ......... ......... ................................ .............. 110,759
--------------------------------------------------------------------------------------------------------------------------------------------------------
A--Crude allowed (column 20: 110,759; plus crude allowed for drawback deliveries: 1,042); 111,801 bbls.
B--Total quantity exported (including drawback deliveries) (column 22): 151,347 bbls.
C--Largest quantity of raw material needed to produce an individual exported product (see col. 24): 151,347.
D--The excess of raw material over the largest of line A, B, or C, required to produce concurrently on a practical operating basis, using the most
efficient processing equipment existing within the domestic industry, the exported articles (including drawback deliveries) in the quantities exported
(or delivered): None.
E--Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus D, if applicable): 151,347.
Drawback Computation
4,165*bbls. @10\1/2\ = $437.33
Less 1% 4.37
Amount of Drawback Claim--Net $432.96
See subtotal, col. 20, for Residual Rights above.
Certificate
I hereby certify that all the above drawback deliveries and products exported by the Tulsa, Oklahoma refinery of ABC Oil Co., Inc., during the period
from January 1, 1995 to January 31, 1995, could have been produced concurrently on a practical operating basis together with all drawback deliveries
and products exported covered by Exhibit E of the abstract for the period January 1, 1995 to January 31, 1995, filed by the Beaumont, Texas refinery
of the company from 151,347 barrels of imported Class III crude against which drawback is claimed.
Signature
The attached sample, EXHIBIT E (COMBINATION), illustrates the procedures to be followed when two classes or types of raw material are designated on a
given abstract. For purposes of illustration it is assumed that the refiner has only 100,000 barrels of Class III crude to designate, but adequate
supplies of Class II to designate.
In addition, please note that the computation of drawback on EXHIBIT D will be as follows:
Duty paid on raw material selected for designation:
$.1050 per barrel (Class III crude)
$.0525 per barrel (Class II crude)
Amount of drawback claim--gross: 81,638 x .1050=...... $8,571.99
24,956 x .0525=................................... 1,310.19
---------------
9,882.18
(Rounded Off)....................................... 9,882
Less 1%......................................... -99
---------------
Amount of drawback claim--net:.......................... 9,783
[[Page 3145]]
Exhibit E (Combination).--Producibility Test for Products Exported (Including Drawback Deliveries) ABC Oil Co.,
Inc.--Beaumont, Texas Refinery Period from January 1, 1995 to January 31, 1995
[Type and Class of Raw Material Designated--Crude, Class III]
Quantity of
raw
material of
Industry type and Drawback Crude
Product Quantity in standard class factor per allowed for
barrels (percent) designated barrel drawback
needed to
produce
product
(21) (22) (23) (24) (19) (20)
----------------------------------------------------------------------------------------------------------------
Aviation Gasoline.............................. 11,218 40 28,485 1.00126 11,232
176 ........... ........... 1.01300 178
Residual Oils.................................. 21,221 83 25,567 .45962 9,754
47,214 83 56,884 .43642 20,605
Lubricating Oils............................... 8,774 50 17,548 4.52178 39,674
Petrochemicals, Other.......................... 195 ........... ........... 1.00244 195
Petrochemicals, Other.......................... 696 ........... ........... 1.00244 ...........
(Drawback Deliveries)...................... 319 ........... ........... 1.07895 ...........
1,210 29 4,172 ........... ...........
Total.................................... 89,813 ........... ........... ........... 81,638
----------------------------------------------------------------------------------------------------------------
A--Crude allowed (column 20: 81,638; plus crude allowed for drawback deliveries: 1,042): 82,680 bbls.
B--Total quantity exported (including drawback deliveries) (column 22): 89,813 bbls.
C--Largest quantity of raw material needed to produce an individual exported product (see column 24): 82,451
bbls.
D--The excess of raw material over the largest of lines A, B, or C, required to produce concurrently on a
practical operating basis, using the most efficient processing equipment existing within the domestic
industry, the exported articles (including drawback deliveries) in the quantities exported (or delivered):
10,187.
E--Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus
D, if applicable): 100,000 bbls.
I hereby certify that all the above drawback deliveries and products exported by the Beaumont refinery of ABC
Oil Co., Inc. during the period from January 1, 1995 to January 31, 1995, could have been produced
concurrently on a practical operating basis from 100,000 barrel of imported Class III crude against which
drawback is claimed.
Signature
Exhibit F.--Designations for Drawback Claim ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to January 31, 1995
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quantity of
Certificate of delivery number Entry No. Date of Kind of materials materials Date Date consumed Rate of
importation in barrels received duty
--------------------------------------------------------------------------------------------------------------------------------------------------------
26192 04/13/93 Class III Crude.............. 75,125 04/13/93 May 1993............... $.1050
23990 08/04/94 Class III Crude.............. 37,240 08/04/94 Oct. 1994.............. .1050
3155........................... 22517 10/05/94 Class III Crude.............. 38,982 10/05/94 Nov. 1994.............. .1050
--------------------------------------------------------------------------------------------------------------------------------------------------------
Format for 1313(d) Application Company Letterhead (Optional)
U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W.,
Washington, D.C. 20229
Dear Sir: We, (Applicant's Name), a (State, e.g., Delaware)
corporation (or other described entity) submit this application for
a specific manufacturing drawback ruling that our manufacturing
operations qualify for drawback under title 19, United States Code,
section 1313(d), and part 191 of the Customs Regulations. We request
that the Customs Service authorize drawback on the basis of this
application.
Name and Address and IRS Number of Applicant
(Section 191.8(a) of the Customs Regulations provides that each
manufacturer or producer of articles intended for exportation with
the benefit of drawback shall apply for a specific manufacturing
drawback ruling, unless operating under a general manufacturing
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs
will not approve an application which shows an unincorporated
division or company as the applicant (see Sec. 191.8(a)).)
Location of Factory
(Give the address of the factory(s) where the process of
manufacture or production will take place. If the factory is a
different legal entity from the applicant, so state and indicate if
operating under an Agent's general manufacturing drawback ruling.)
Corporate Officers
(List officers and other persons legally authorized to bind the
corporation who will sign drawback documents. Section 191.6 of the
Customs Regulations permits only the president, vice-president,
secretary, treasurer, or any other individual legally authorized to
bind the corporation to sign for a corporation. In addition, a
person within a business entity with a Customs power of attorney for
the company may sign. A Customs power of attorney may also be given
to a licensed Customs broker. This heading should be changed to
NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole
proprietorship, respectively.)
Customs Office Where Drawback Claims Will Be Filed
(The 8 offices where drawback claims can be filed are located
at:
Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)
(An original application and two copies must be filed. If the
applicant intends to file drawback claims at more than one drawback
office, two additional copies of the application must be furnished
for each additional office indicated.)
General Statement
(The exact material placed under this heading in individual
cases will vary, but it
[[Page 3146]]
should include such information as the type of business in which the
manufacturer is engaged, whether the manufacturer is manufacturing
for his own account or is performing the operation on a toll basis
(including commission or conversion basis) for the account of
others, whether the manufacturer is a direct exporter of his
products or sells or delivers them to others for export, and whether
drawback will be claimed by the manufacturer or by others.)
(Regarding drawback operations conducted under section 1313(d),
the data may describe the flavoring extracts, medicinal, or toilet
preparations (including perfumery) manufactured with the use of
domestic tax-paid alcohol; and where such alcohol is obtained or
purchased.)
(Since the permission to grant use of the accelerated payment
procedure rests with the Drawback office with which claims will be
filed, do not include any reference to that procedure in this
application.)
Tax-Paid Material Used Under Section 1313(d)
(Describe or list the tax-paid material)
Exported Articles on Which Drawback Will Be Claimed
(Name each article to be exported)
Process of Manufacture or Production
(Drawback under section 1313(d) is not allowable except where a
manufacture or production exists. A manufacture or production exists
when a ``new and different article emerges having a distinctive
name, character, or use'', or when an article is made fit for a
particular use (see 19 CFR 191.2(p); see also (Anheuser-Busch
Brewing Assoc. v. United States, 207 U.S. 556 (1907); United States
v. International Paint Co., 35 CCPA 87 (1948), et al.). In order to
obtain drawback under section 1313(d), it is essential for the
applicant to show use in manufacture or production by giving a
thorough description of the manufacturing process. Describe how the
tax-paid material is processed into the export article.)
Waste
(Many processes result in residue materials which, for drawback
purposes, are treated as wastes. Describe any residue materials
which you believe should be so treated. If no waste results, include
a positive statement to that effect under this heading.)
(If waste occurs, state: (1) Whether or not it is recovered, (2)
whether or not it is valueless, and (3) what you do with it. This
information is required whether claims are made on a ``used in'' or
``appearing in'' basis and regardless of the amount of waste
incurred.)
(Irrecoverable wastes are those consisting of materials which
are lost in the process. Valueless wastes are those which may be
recovered but have no value. These irrecoverable and valueless
wastes do not reduce the drawback claim provided the claim is based
on the quantity of domestic tax-paid alcohol used in manufacturing.
If the claim is based upon the quantity of domestic tax-paid alcohol
appearing in the exported article, irrecoverable and valueless waste
will cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value
either for sale or for use in a different manufacturing process.
However, it should be noted that this standard applies to the entire
industry and is not a selection on your part. An option by you not
to choose to sell or use the waste in some different operation, does
not make it valueless if another manufacturer can use the waste.
State what you do with the waste. If you have to pay someone to get
rid of it, or if you have buyers for the waste, you must state so in
your application regardless of what ``Basis'' you are using.)
(If you recover valuable waste and if you choose to claim on the
basis of the quantity of domestic tax-paid alcohol used in producing
the exported articles (less valuable waste), state that you will
keep records to establish the quantity and value of the waste
recovered. See ``Basis of Claim for Drawback'' section below.)
Stock in Process
(Some processes result in another type of residual material,
namely, stock in process, which affects the allowance of drawback.
Stock in process necessarily reduces the quantity of domestic tax-
paid alcohol used in manufacture in a current lot or period, in that
the amount manufactured in any given batch does not include the
recycled merchandise going into the next batch. Therefore, the
amount of domestic tax-paid alcohol used in manufacture of exported
articles is decreased.)
(If stock in process occurs, the application must include a
statement that the domestic tax-paid alcohol is considered to be
used in manufacture at the time it was originally processed so that
the stock in process will not be included twice in the computation
of the domestic tax-paid alcohol used to manufacture the finished
articles on which drawback is claimed.)
Loss or Gain (Separate and Distinct From WASTE)
(Some manufacturing processes result in an intangible loss or
gain of the net weight or measurement of the merchandise used. This
loss or gain is caused by atmospheric conditions, chemical
reactions, or other factors. State the approximate usual percentage
or quantity of such loss or gain. Note that percentage values will
be considered to be measured ``by weight'' unless otherwise
specified. Loss or gain does not occur during all manufacturing
processes. If loss or gain does not apply to your manufacturing
process, state ``Not Applicable.'')
Procedures and Records Maintained
We will maintain records to establish:
1. That the exported articles on which drawback is claimed were
produced with the use of a particular lot (or lots) of domestic tax-
paid alcohol, and
2. The quantity of domestic tax-paid alcohol \2\ we used in
producing the exported articles.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of this sentence should read ``appearing in the exported
articles we produce.''
---------------------------------------------------------------------------
We realize that to obtain drawback the claimant must establish
that the completed articles were exported within 5 years after the
tax has been paid on the domestic alcohol.
Our records establishing our compliance with these requirements
will be available for audit by Customs during business hours. We
understand that drawback is not payable without proof of compliance.
Inventory Procedures
(Describe your inventory records and state how those records
will meet the drawback recordkeeping requirements set forth in 19
U.S.C. 1313(d) and part 191 of the Customs Regulations as discussed
under the heading PROCEDURES AND RECORDS MAINTAINED. To insure
compliance the following areas should be included in your
discussion:)
RECEIPT AND RAW STOCK STORAGE RECORDS
MANUFACTURING RECORDS
FINISHED STOCK STORAGE RECORDS
Basis of Claim for Drawback
(There are three different bases that may be used to claim
drawback: (1) Used in; (2) Appearing In; and (3) Used less Valuable
Waste.)
(The ``Used In'' basis may be employed only if there is either
no waste or valueless or unrecovered waste in the operation.
Irrecoverable or valueless waste does not reduce the amount of
drawback when claims are based on the ``Used In'' basis. Drawback is
payable in the amount of 100% of the tax paid on the quantity of
domestic alcohol used in the manufacture of flavoring extracts and
medicinal or toilet preparation (including perfumery).) (For
example, if 100 gallons of alcohol, valued at $1.00 per gallon, were
used in manufacture resulting in 10 gallons of irrecoverable or
valueless waste, the 10 gallons of irrecoverable or valueless waste
would not reduce the drawback. In this case drawback would be
payable on 100% of the tax paid on the 100 gallons of domestic
alcohol used to produce the exported articles.)
The ``Appearing In'' basis may be used regardless of whether
there is waste. If the ``Appearing In'' basis is used, the claimant
does not need to keep records of waste and its value. However, the
manufacturer must establish the identity and quantity of the
merchandise appearing in the exported product and provide this
information. Waste reduces the amount of drawback when claims are
made on the ``Appearing In'' basis. Drawback is payable on 100% of
the tax paid on the quantity of domestic alcohol which appears in
the exported articles.
(Based on the previous example, drawback would be payable on the
90 gallons of domestic alcohol which actually went into the exported
product (appearing in) rather than the 100 gallons used in as set
forth previously.)
[[Page 3147]]
(The ``Used Less Valuable Waste'' basis may be employed when the
manufacturer recovers valuable waste, and keeps records of the
quantity and value of waste from each lot of domestic tax-paid
alcohol. The value of the waste reduces the amount of drawback when
claims are based on the ``Used Less Valuable Waste'' basis. When
valuable waste is incurred, the drawback allowance on the exported
article is based on the quantity of tax-paid alcohol used to
manufacture the exported articles, reduced by the quantity of such
alcohol which the value of the waste will replace.)
(Based on the previous examples, if the 10 gallons of waste had
a value of $.50 per gallon, then the 10 gallons of waste, having a
total value of $5.00, would be equivalent in value to 5 gallons of
the tax-paid alcohol. Thus the value of the waste would replace 5
gallons of the alcohol used, and drawback is payable on 100% of the
tax paid on 95 gallons of alcohol rather than on the 100 gallons
``Used In'' or the 90 gallons ``Appearing In'' as set forth in the
above examples.)
(Two methods exist for the manufacturer to show the quantity of
material used or appearing in the exported article: (1) Schedule or
(2) Abstract.)
(A ``schedule'' shows the quantity of material used in producing
each unit of product. The schedule method is usually employed when a
standard line of merchandise is being produced according to fixed
formulas. Some schedules will show the quantity of merchandise used
to manufacture or produce each article and others will show the
quantity appearing in each finished article. Schedules may be
prepared to show the quantity of merchandise either on the basis of
percentages or by actual weights and measurements. A schedule
determines the amount that will be needed to produce a unit of
product before the material is actually used in production;)
(An ``abstract'' is the summary of the records (which may be set
forth on Customs Form 331) which shows the total quantity used in
producing all products during the period covered by the abstract.
The abstract looks at a duration of time, for instance 3 months, in
which the quantity of material has been used. An abstract looks back
on how much material was actually used after a production period has
been completed.)
(An applicant who fails to indicate the ``schedule'' choice must
base his claims on the ``abstract'' method. State which Basis and
Method you will use. An example of Used In by schedule follows:)
We shall claim drawback on the quantity of (specify material)
used in manufacturing (exported article) according to the schedule
set forth below.
(Section 191.8(f) of the Customs Regulations requires submission
of the schedule with the application for a specific manufacturing
drawback ruling. An applicant who desires to file supplemental
schedules with the drawback office whenever there is a change in the
quantity or material used should state:)
We request permission to file supplemental schedules with the
drawback office covering changes in the quantities of material used
to produce the exported articles, or different styles or capacities
of containers of such exported merchandise.
(Except as noted above in the explanation of the ``Appearing
In'' basis, neither the ``Appearing In'' basis nor the ``schedule''
method for claiming drawback may be used where the relative value
procedure is required.)
Agreements
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this
application for a specific manufacturing drawback ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the
drawback office which liquidates its claims any changes in the
number or locations of its offices or factories, the corporate name,
corporate officers, or the corporate organization by succession or
reincorporation;
5. Keep this application current by reporting promptly to the
Headquarters, U.S. Customs Service all other changes affecting
information contained in this application;
6. Keep a copy of this application and the letter of approval by
Customs Headquarters on file for ready reference by employees and
require all officials and employees concerned to familiarize
themselves with the provisions of this application and that letter
of approval; and
7. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(d), part 191 of the Customs
Regulations and this application and letter of approval.
Declaration of Official
I declare that I have read this application for a specific
manufacturing drawback ruling; that I know the averments and
agreements contained herein are true and correct; and that my
signature on this ____________ day of ______________ 19______ ,
makes this application binding on
----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)
By \3\__________________________---------------------------------------
---------------------------------------------------------------------------
\3\ Section 191.6(a) of the Customs Regulations requires that
applications for specific manufacturing drawback rulings be signed
by the owner of a sole proprietorship, a partner in a partnership,
or the president, vice president, secretary, treasurer or other
individual legally authorized to bind the corporation. In addition,
any employee of a business entity with a customs power of attorney
filed with the Customs port for the drawback office which will
liquidate your drawback claims may sign such an application, as may
a licensed Customs broker with a Customs power of attorney. You
should state in which Customs port Customs power(s) of attorney is/
are filed.
---------------------------------------------------------------------------
(Signature and Title)
----------------------------------------------------------------------
(Print Name)
Format for 1313(g) Application Company Letterhead (Optional)
U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W.,
Washington, D.C. 20229
Dear Sir: We, (Applicant's Name), a (State, e.g., Delaware)
corporation (or other described entity) submit this application for
a specific manufacturing drawback ruling that our manufacturing
operations qualify for drawback under title 19, United States Code,
section 1313(g), and part 191 of the Customs Regulations. We request
that the Customs Service authorize drawback on the basis of this
application.
Name and Address and IRS Number of Applicant
(Section 191.8(a) of the Customs Regulations provides that each
manufacturer or producer of articles intended for exportation with
the benefit of drawback shall apply for a specific manufacturing
drawback ruling, unless operating under a general manufacturing
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs
will not approve an application which shows an unincorporated
division or company as the applicant (see Sec. 191.8(a)).)
Location of Factory or Shipyard
(Give the address of the factory(s) or shipyard(s) at which the
construction and equipment will take place. If the factory or
shipyard is a different legal entity from the applicant, so state
and indicate if operating under an Agent's general manufacturing
drawback ruling.)
Corporate Officers
(List officers and other persons legally authorized to bind the
corporation who will sign drawback documents. Section 191.6 of the
Customs Regulations permits only the president, vice-president,
secretary, treasurer, or any other individual legally authorized to
bind corporation to sign for a corporation. In addition, a person
within a business entity with a Customs power of attorney for the
company may sign. A Customs power of attorney may also be given to a
licensed Customs broker. This heading should be changed to NAMES OF
PARTNERS or PROPRIETOR in the case of a partnership or sole
proprietorship, respectively.)
Customs Office Where Drawback Claims Will be Filed
(The 8 offices where drawback claims can be filed are located
at:
Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)
(An original application and two copies must be filed. If the
applicant intends to file drawback claims at more than one drawback
[[Page 3148]]
office, two additional copies of the application must be furnished
for each additional office indicated.)
General Statement
(The following questions must be answered:
1. Who will be the importer of the merchandise?
(If the applicant will not always be the importer, does the
applicant understand its obligations to obtain the appropriate
certificates of delivery (19 CFR 191.10), certificates of
manufacture and delivery (19 CFR 191.24), or both?)
2. Who is the manufacturer?
(Is the applicant constructing and equipping for his own account
or merely performing the operation on a toll basis for others?)
3. Will the applicant be the drawback claimant?
(State how the vessel will qualify for drawback under 19 U.S.C.
1313(g). Who is the foreign person or government for whom the vessel
is being made or equipped?)
(There shall be included under this heading the following
statement:
We are particularly aware of the terms of Sec. 191.76(a)(1) of
and subpart M of part 191 of the Customs Regulations, and shall
comply with these sections where appropriate.)
(Since the permission to grant use of the accelerated payment
procedure rests with the Drawback office with which claims will be
filed, do not include any reference to that procedure in this
application.)
Imported Merchandise or Drawback Products Used
(Describe the imported merchandise or drawback products)
Articles Constructed and Equipped for Export
(Name the vessel or vessels to be made with imported merchandise
or drawback products)
Process of Construction and Equipment
(What is required here is a clear, concise description of the
process of construction and equipment involved. The description
should also trace the flow of materials through the manufacturing
process for the purpose of establishing physical identification of
the imported or drawback merchandise and of the articles resulting
from the processing.)
Waste
(Many processes result in residue materials which, for drawback
purposes, are treated as wastes. Describe any residue materials
which you believe should be so treated. If no waste results, include
a positive statement to that effect under this heading.) (If waste
occurs, state: (1) Whether or not it is recovered, (2) whether or
not it is valueless, and (3) what you do with it. This information
is required whether claims are made on a ``used in'' or ``appearing
in'' basis and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which
are lost in the process. Valueless wastes are those which may be
recovered but have no value. These irrecoverable and valueless
wastes do not reduce the drawback claim provided the claim is based
on the quantity of imported material used in manufacturing. If the
claim is based upon the quantity of imported merchandise appearing
in the exported article, irrecoverable and valueless waste will
cause a reduction in the amount of drawback.)
(Valuable wastes are those recovered wastes which have a value
either for sale or for use in a different manufacturing process.
However, it should be noted that this standard applies to the entire
industry and is not a selection on your part. An option by you not
to choose to sell or use the waste in some different operation does
not make it valueless if another manufacturer can use the waste.
State what you do with the waste. If you have to pay someone to get
rid of it, or if you have buyers for the waste, you must state so in
your application regardless of what ``Basis'' you are using.)
(If you recover valuable waste and if you choose to claim on the
basis of the quantity of imported or substituted merchandise used in
producing the exported articles (less valuable waste), state that
you will keep records to establish the quantity and value of the
waste recovered. See ``Basis of Claim for Drawback'' section below.)
Loss or Gain (Separate and Distinct From WASTE)
(Some manufacturing processes result in an intangible loss or
gain of the net weight or measurement of the merchandise used. This
loss or gain is caused by atmospheric conditions, chemical
reactions, or other factors. State the approximate usual percentage
or quantity of such loss or gain. Note that percentage values will
be considered to be measured ``by weight'' unless otherwise
specified. Loss or gain does not occur during all manufacturing
processes. If loss or gain does not apply to your manufacturing
process, state ``Not Applicable.'')
Procedures and Records Maintained
We will maintain records to establish:
1. That an exported article on which drawback is claimed was
constructed and equipped with the use of a particular lot (or lots)
of imported material; and
2. The quantity of imported merchandise \2\ we used in producing
the exported article. ( \2\ If claims are to be made on an
``appearing in'' basis, the remainder of this sentence should read
``appearing in the exported articles we produce.'')
We realize that to obtain drawback the claimant must establish
that the completed articles were exported within 5 years after the
importation of the imported merchandise.
Our records establishing our compliance with these requirements
will be available for audit by Customs during business hours. We
understand that drawback is not payable without proof of compliance.
Inventory Procedures
(Describe your inventory records and state how those records
will meet the drawback recordkeeping requirements set forth in 19
U.S.C. 1313 and part 191 of the Customs Regulations as discussed
under the heading PROCEDURES AND RECORDS MAINTAINED. To insure
compliance the following should be included in your discussion:)
RECEIPT AND RAW STOCK STORAGE RECORDS
CONSTRUCTION AND EQUIPMENT RECORDS
FINISHED STOCK STORAGE RECORDS
SHIPPING RECORDS
Basis of Claim for Drawback
(There are three different bases that may be used to claim
drawback: (1) Used in; (2) Appearing In; and (3) Used less Valuable
Waste.)
(The ``Used In'' basis may be employed only if there is either
no waste or valueless or unrecovered waste in the operation.
Irrecoverable or valueless waste does not reduce the amount of
drawback when claims are based on the ``Used In'' basis. Drawback is
payable in the amount of 99 percent of the duty paid on the quantity
of imported material used to construct and equip the exported
article.)
(For example, if 100 pounds of material, valued at $1.00 per
pound, were used in manufacture resulting in 10 pounds of
irrecoverable or valueless waste, the 10 pounds of irrecoverable or
valueless waste would not reduce the drawback. In this case drawback
would be payable on 99% of the duty paid on the 100 pounds of
imported material used in constructing and equipping the exported
articles.)
(The ``Appearing In'' basis may be used regardless of whether
there is waste. If the ``Appearing In'' basis is used, the claimant
does not need to keep records of waste and its value. However, the
manufacturer must establish the identity and quantity of the
merchandise appearing in the exported product and provide this
information. Waste reduces the amount of drawback when claims are
made on the ``Appearing In'' basis. Drawback is payable on 99
percent of the duty paid on the quantity of imported material which
appears in the exported articles. ``Appearing In'' may not be used
if by-products are involved unless the applicant agrees to value all
products identically.)
(Based on the previous example, drawback would be payable on the
90 pounds of imported material which actually went into the exported
product (appearing in) rather than the 100 pounds used in as set
forth previously.)
(The ``Used Less Valuable Waste'' basis may be employed when the
manufacturer recovers valuable waste, and keeps records of the
quantity and value of waste from each lot of merchandise. The value
of the waste reduces the amount of drawback when claims are based on
the ``Used Less Valuable Waste'' basis. When valuable waste is
incurred, the drawback allowance on the exported article may be
based on the duty paid on the quantity of imported material used to
construct and equip the exported product, reduced by the quantity of
such material which the value of the waste will replace. Thus in
this case, drawback is claimed on the quantity of eligible material
actually used to produce the exported
[[Page 3149]]
product, less the amount of such material which the value of the
waste would replace. Note section 191.25(c) of the Customs
Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a
value of $.50 per pound, then the 10 pounds of waste, having a total
value of $5.00, would be equivalent in value to 5 pounds of the
imported material. Thus the value of the waste would replace 5
pounds of the merchandise used, and drawback is payable on 99
percent of the duty paid on the 95 pounds of imported material
rather than on the 100 pounds ``Used In'' or the 90 pounds
``Appearing In'' as set forth in the above examples.)
(Two methods exist for the manufacturer to show the quantity of
material used or appearing in the exported article: (1) Schedule or
(2) Abstract.)
(A ``schedule'' shows the quantity of material used in producing
each unit of product. The schedule method is usually employed when a
standard line of merchandise is being produced according to fixed
formulas. Some schedules will show the quantity of merchandise used
to manufacture or produce each article and others will show the
quantity appearing in each finished article. Schedules may be
prepared to show the quantity of merchandise either on the basis of
percentages or by actual weights and measurements. A schedule
determines the amount that will be needed to produce a unit of
product before the material is actually used in production;)
(An ``abstract'' is the summary of the records (which may be set
forth on Customs Form 331) which shows the total quantity used in
producing all products during the period covered by the abstract.
The abstract looks at a duration of time, for instance 3 months, in
which the quantity of material has been used. An abstract looks back
on how much material was actually used after a production period has
been completed.)
(An applicant who fails to indicate the ``schedule'' choice must
base his claims on the ``abstract'' method. State which Basis and
Method you will use. An example of Used In by Schedule would read:)
We shall claim drawback on the quantity of (specify material)
used in manufacturing (exported article) according to the schedule
set forth below.
(Section 191.8(f) of the Customs Regulations requires submission
of the schedule with the application for a specific manufacturing
drawback ruling. An applicant who desires to file supplemental
schedules with the drawback office whenever there is a change in the
quantity or material used should state:)
We request permission to file supplemental schedules with the
drawback office covering changes in the quantities of material used
to produce the exported articles, or different styles or capacities
of containers of such exported merchandise.
(Except as noted above in the explanation of the ``Appearing
In'' basis, neither the ``Appearing In'' basis nor the ``schedule''
method for claiming drawback may be used where the relative value
procedure is required.)
Agreements
The Applicant specifically agrees that it will:
1. Operate in full conformance with the terms of this
application for a specific manufacturing drawback ruling when
claiming drawback;
2. Open its factory and records for examination at all
reasonable hours by authorized Government officers;
3. Keep its drawback related records and supporting data for at
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this application;
4. Keep this application current by reporting promptly to the
drawback office which liquidates its claims any changes in the
number or locations of its offices or factories, the corporate name,
corporate officers, or the corporate organization by succession or
reincorporation;
5. Keep this application current by reporting promptly to the
Headquarters, U.S. Customs Service all other changes affecting
information contained in this application;
6. Keep a copy of this application and the letter of approval by
Customs Headquarters on file for ready reference by employees and
require all officials and employees concerned to familiarize
themselves with the provisions of this application and that letter
of approval; and
7. Issue instructions to insure proper compliance with title 19,
United States Code, section 1313(g), part 191 of the Customs
Regulations and this application and letter of approval.
Declaration of Official
I declare that I have read this application for a specific
manufacturing drawback ruling; that I know the averments and
agreements contained herein are true and correct; and that my
signature on this ____________ day of ________________19 ______,
makes this application binding on
----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)
By \3\-----------------------------------------------------------------
---------------------------------------------------------------------------
\3\ Section 191.6(a) of the Customs Regulations requires that
applications for specific manufacturing drawback rulings be signed
by the owner of a sole proprietorship, a partner in a partnership,
or the president, vice president, secretary, treasurer or other
individual legally authorized to bind the corporation. In addition,
any employee of a business entity with a Customs power of attorney
with the Customs port for the drawback office which will liquidate
your drawback claims may sign such an application, as may a licensed
Customs broker with a Customs power of attorney. You should state in
which Customs port Customs power(s) of attorney is/are filed.
---------------------------------------------------------------------------
(Signature and Title)
----------------------------------------------------------------------
(Print Name)
Samuel H. Banks,
Acting Commissioner of Customs.
Approved: December 10, 1996.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 97-1048 Filed 1-17-97; 8:45 am]
BILLING CODE 4820-02-P
