[Federal Register Volume 63, Number 43 (Thursday, March 5, 1998)]
[Rules and Regulations]
[Pages 10970-11072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5045]
[[Page 10969]]
_______________________________________________________________________
Part II
Department of the Treasury
_______________________________________________________________________
Customs Service
_______________________________________________________________________
19 CFR Part 7, et al.
Drawback; Final Rule
Federal Register / Vol. 63, No. 43 / Thursday, March 5, 1998 / Rules
and Regulations
[[Page 10970]]
DEPARTMENT OF THE TREASURY
Customs Service
19 CFR PARTS 7, 10, 145, 173, 174, 178, 181, 191
[T.D. 98-16]
RIN 1515-AB95
Drawback
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document revises the Customs Regulations regarding
drawback. The document revises 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.
EFFECTIVE DATE: April 6, 1998.
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,
(202-927-1172).
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, Public
Law 103-182 (December 8, 1993), specifically Title VI thereof,
popularly known as the Customs Modernization Act, significantly amended
certain Customs laws. In particular, Sec. 632 of Title VI effected
extensive and major amendments to the drawback law, 19 U.S.C. 1313.
Also, Sec. 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).
By a document published in the Federal Register on January 21, 1997
(62 FR 3082), Customs proposed regulatory revisions principally to part
191 in implementation of the statutory changes. In addition, the
document proposed 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 were 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 were proposed with respect to
other parts of the Customs Regulations (19 CFR parts 7, 10, 145, 173,
174 and 181).
In formulating the notice of proposed rulemaking, as noted therein,
Customs consulted extensively with the drawback trade community. In
particular, in the summer of 1995, Customs initiated informal
rulemaking consultations in a series of meetings with various trade
groups.
Numerous comments from the public were received in response to the
publication of the notice of proposed rulemaking. A description,
together with Customs analysis, of the comments that were submitted is
set forth below.
Discussion of Comments
General
Comment: Many views were expressed about the process of informal
consultations that were effected through a series of meetings initiated
by Customs with various trade groups, most of these commenters
variously observing that this process was instrumental and effective in
assisting Customs in the preparation of a notice of proposed rulemaking
which would fairly and accurately implement the drawback and related
laws, and their underlying Congressional intent, as well as better
reflect current industry practices and expectations.
Customs Response: Customs agrees that this final rule, based on the
notice of proposed rulemaking which was developed through the
innovative process described, correctly reflects the intent of the
drawback law, as well as current industry concerns, and will improve
drawback processing efficiency.
Comment: It was stated that the paperwork burden which would be
generated by the proposed regulations was underestimated, due in part
to the need to obtain certification in the drawback compliance program,
and to provide Harmonized Tariff Schedule numbers in certain instances.
Customs Response: It should be noted that the information
collection and recordkeeping burden in question contained in the
proposed rule represents an estimated average annual burden. Customs,
in accordance with the Paperwork Reduction Act of 1995, periodically
reviews the accuracy of the information collection estimates required
for compliance with its regulatory provisions. In the course of such
review, changes to an estimated information collection burden will be
made as appropriate.
Comment: The concern was expressed about the new Customs Forms that
would be issued for drawback; it was asked that Customs work closely
with the trade in the development of such forms, with one comment
suggesting that the forms be finalized and included in the final
drawback regulations herein.
Customs Response: Customs has worked closely with the public in
developing new Customs Forms for drawback. The new drawback forms are:
``Drawback Entry'' (Customs Form 7551), ``Delivery Certificate for
Purposes of Drawback'' (Customs Form 7552), and ``Notice of Intent to
Export, Destroy, or Return Merchandise for Purposes of Drawback''
(Customs Form 7553). The titles and numbers of the new forms are
inserted where appropriate in the regulations.
Comment: Questions were raised about the nature and intent
underlying the information contained in the
[[Page 10971]]
``BACKGROUND'' section of the proposed rule.
Customs Response: The ``BACKGROUND'' section of a rulemaking
document presents its regulatory history. The information in this
section is intended to give the specific detail necessary to explain
the basis and purpose of the subject regulatory provisions and to
furnish adequate notice of the issues to be commented on, as required
by the Administrative Procedure Act. This enables a reviewing body,
such as a court of law, to be aware of the legal and factual framework
underlying an agency's action (see, e.g., American Standard, Inc., v.
United States, 602 F. 2d 256, 269 (Ct. Cl. 1979)).
Comment: A comment noted that some general drawback contracts were
not included in Appendix A to part 191 in the proposed rule, along with
the other general contracts.
Customs Response: The comment has merit. Four of the general
manufacturing drawback rulings, as they are now considered,
specifically T.D.s 83-53, 83-77, 83-80, and 83-84, were inadvertently
omitted from Appendix A. They are now included therein. Also, T.D. 84-
49, which required Customs Headquarters approval to obtain petroleum
drawback under 19 U.S.C. 1313(b), was thus included in Appendix B as
``Format for 1313(b) Petroleum Drawback Application''. However, T.D.
84-49 is now included among the general manufacturing drawback rulings
for which a letter of notification of intent to operate must be
submitted to a drawback field office.
Comment: A statement was desired in the ``BACKGROUND'' section of
the final rule that certain existing rulings concerning what
constituted a manufacture or production for drawback purposes would
remain in effect.
Customs Response: No change as to what constitutes a manufacture or
production is intended by these regulations. As to non-revoked rulings
generally, to the extend that such rulings do not materially conflict
with the statute and these regulations, they remain in effect and may
be relied upon to the extent provided in 19 U.S.C. 1625 and 19 CFR part
177.
It is also pointed out that any changes made to the rulings
published in the Appendix to part 191 in this final rule are merely
conforming to these regulations and do not adversely affect the public.
Comment: An objection was made about the planned transfer of
drawback claims from the Customs field office where filed to another
such office having more expertise in the handling of the particular
claims, as was mentioned in the ``BACKGROUND'' section of the proposed
rule.
Customs Response: Customs believes that the planned redistribution
of drawback workload, as described, which, as observed in the proposed
rule, is an internal work management issue not requiring regulatory
action, will result in quicker, more efficient, and more accurate
processing of drawback claims.
Comment: Changes were requested in the drawback and duty-deferral
provisions, related primarily to inventory management procedures and
accounting, that were promulgated in part 181, Customs Regulations (19
CFR part 181) pursuant to the North American Free Trade Agreement
(NAFTA).
Customs Response: The provision in part 181 for accounting for
fungible goods in inventory which are to be exported to Canada or
Mexico in the same condition as imported and for which drawback is
claimed under 19 U.S.C 1313(j)(1) is modified consistent with the
changes to accounting methods for drawback in part 191 (see
Sec. 191.14). Under the amended provision, if all of the goods in a
particular inventory are non-originating goods, the identification of
the goods for purposes of designation for drawback shall be on the
basis of one of the accounting methods authorized in 19 CFR 191.14, as
authorized therein, including first-in first-out (FIFO), last-in, first
out (LIFO), low-to-high (ordinary, with established average inventory
turn-over period, and blanket methods), and average. Fungible
originating and non-originating goods still may be commingled in
inventory. When such originating and non-originating goods are
commingled, the origin of the goods would continue to be determined
according to the inventory methods provided for in the appendix to part
181, see 19 U.S.C. 3333(a)(2)(B). In this situation (i.e., when
originating and non-originating fungible goods are commingled in
inventory), the identification of the goods for purposes of designation
for drawback must also be on the basis of the inventory method from the
appendix to part 181. The reason that one of the accounting methods
authorized in Sec. 191.14 may not be used in the latter instance is
that to do so would make so complicated area that verification by
Customs would be an extreme administrative burden.
Subpart A, Part 191
Comment: It was asked that definitions for ``merchandise'',
``articles'', ``perfecting'', ``restructuring'', and ``stay'' be added
to proposed Sec. 191.2. It was requested that a definition be included
for the term ``operator'' as used in Appendix A, while another comment
suggested adding a definition for the term ``records''.
Customs Response: Customs concludes that definitions for
``merchandise'' and ``articles'' are unnecessary and could prove
confusing, inasmuch as these general terms have different meanings
depending on the particular type of drawback involved. Also, Customs
finds that the terms ``perfecting'', restructuring'', and ``stay'' are
already adequately explained in the specific regulatory sections in
which they appear. Furthermore, no definition of ``operator'' is added,
but any confusion caused by the use of this term in the general
manufacturing drawback rulings in Appendix A is removed by substituting
``Manufacturer or Producer'' therefor.
Customs has, however, determined to include a definition in
Sec. 191.2 for the term ``records'' based on the definition of this
term appearing in 19 U.S.C. 1508. In addition, a definition of
``filing'', based in part on the definition of that term in 19 CFR
141.0a for purposes of the entry of merchandise, is included in
Sec. 191.2 to implement 19 U.S.C. 1313(l), which authorizes regulations
which may include, but need not be limited to, the electronic
submission of drawback entries. These definitions are added to
Sec. 191.2 in appropriate alphabetical order.
Comment: It was suggested that proposed Sec. 191.2(a) defining the
term ``abstract'' be clarified by stating that a certificate of
manufacture and delivery when properly completed may serve as an
abstract.
Customs Response: Customs finds that this is unnecessary. No
reference is made in these regulations to an ``abstract of
manufacturing records'', which is how the term ``abstract'' was
apparently viewed. As used herein, an abstract is simply one of two
methods (the other being the schedule method) by which a manufacturer
may show the amount of merchandise used or appearing in the exported
article. To make this clear, a paragraph (d) is included in
Sec. 191.23.
Comment: The definition for a certificate of delivery in proposed
Sec. 191.2(b) was addressed, with the suggestion being made that the
definition provide for the delivery of the qualified or substituted
article under 19 U.S.C. 1313(p) dealing with the substitution of
finished petroleum products. It was further recommended that the
definition be made consistent with proposed Sec. 191.10, in particular
by
[[Page 10972]]
providing that a certificate of delivery was also used to document
intermediate transfers of merchandise or product.
Customs Response: These comments have merit. The transfer of a
qualified article from a manufacturer, producer or importer, under 19
U.S.C. 1313(p), is added to the definition of a certificate of delivery
in Sec. 191.2(c), as redesignated, and this definition is made
consistent with the meaning and purpose of a certificate of delivery as
set forth in Sec. 191.10.
In the case of certificates of delivery for transfers under 19
U.S.C. 1313(p), a certificate of delivery would be required for a
transfer of the qualified article from the importer to the exporter and
for all intermediate transfers of the qualified article from the
importer to the exporter (Secs. 1313(p)(2)(A)(iv), 1313(p)(2)(F)).
Similarly, a certificate of manufacture and delivery would be required
for a transfer of the qualified article from the manufacturer or
producer to the exporter (intermediate transfers of the qualified
article would require a certificate of delivery)
(Secs. 1313(p)(2)(A)(ii), 1313(p)(2)(F)). Because the exporter of the
exported (substituted) article must itself either have manufactured or
produced or imported the qualified article or have purchased or
exchanged, directly or indirectly, the qualified article from the
manufacturer or producer or the importer (Sec. 1313(p)(2)(A)(i), (ii),
(iii), and (iv)), no certificate or delivery would be used for the
substituted exported article under 19 U.S.C. 1313(p), (i.e., because
the exporter would not transfer the exported article and issue a
certificate of delivery to itself).
Also, proposed Sec. 191.2(d) defining the term ``Act'' is
redesignated as Sec. 191.2(b).
Comment: It was requested that the definition for a certificate of
manufacture and delivery in proposed Sec. 191.2(c) be changed to make
it consistent with proposed Sec. 191.24.
Customs Response: Customs agrees and has modified the definition of
a certificate of manufacture and delivery in Sec. 191.2(d), as
redesignated, to be consistent with the information for this
certificate as set forth in Sec. 191.24. Also, Sec. 191.2(d) adds a
cross-reference to Sec. 191.24.
Comment: The recommendation was made that the definition for
commercially interchangeable merchandise in proposed Sec. 191.2(e)
include a reference to proposed Sec. 191.32(c) dealing with
determinations of commercial interchangeability under the substitution
unused merchandise drawback law. A comment urged that proposed
Sec. 191.32(c) be changed to declare that commercial interchangeability
existed if the governing criteria in this regard were substantially
rather than completely met.
Customs Response: A cross reference to Sec. 191.32(c) is added to
Sec. 191.2(e). However, Customs cannot change Sec. 191.32(c) as
requested. The criteria employed in determining commercial
interchangeability is adopted from the legislative history of the
substitution unused merchandise drawback law. However, to better
implement legislative intent in this regard, Sec. 191.32(c) is changed
to provide that in determining commercial interchangeability, Customs
will evaluate the critical properties of the substituted merchandise.
It is noted that procedures for contesting specific rulings on
commercial interchangeability are found in 19 U.S.C. 1625 and 19 CFR
part 177.
Comment: It was observed that the definition of designated
merchandise appearing in proposed Sec. 191.2(f) to include drawback
products could be misleading in relation to proposed Sec. 191.26(b)(3)
which provided for exportation or destruction ``within 5 years of the
importation of the designated merchandise'', the concern apparently
being that drawback products would not be imported.
Customs Response: Customs agrees, and has appropriately modified
Sec. 191.27(b)(3) as redesignated. No change to the definition of
designated merchandise in Sec. 191.2(f) is warranted.
Comment: It was variously contended that the definition of
destruction in proposed Sec. 191.2(g) should provide for the allowance
of drawback when merchandise was not completely destroyed, had value,
and was partially recovered or recycled.
Customs Response: It is Customs position that the proposal to allow
drawback when complete destruction does not occur (and the resulting
scrap has value) is not within Customs authority to implement by
regulations.
Comment: A suggestion was made that the definition for direct
identification drawback reflect that such identification could be
effected using an approved accounting method provided for in proposed
Sec. 191.14.
Customs Response: Customs agrees. Section 191.2(h) is modified
accordingly.
Comment: A request was made that the definition of drawback in
proposed Sec. 191.2(i) state the amount of the drawback refund and
include a cross reference to proposed Sec. 191.3 concerning the types
of duty which could be the subject of drawback recovery.
Customs Response: A reference to Sec. 191.3 is added to
Sec. 191.2(i). However, the measure of the drawback refund is not
warranted. Customs has reviewed each kind of drawback to ensure that in
situations in which the amount of drawback recovery is 100%, the
applicable regulation specifically so states.
Comment: It was remarked, with respect to the definition for
drawback product in proposed Sec. 191.2(l), that such a product need
not be ``wholly'' manufactured in the United States.
Customs Response: This comment has merit. The reference to a
drawback product as being wholly manufactured in the United States is
deleted.
Comment: The suggestion was put forth that the definition of
exportation in proposed Sec. 191.2(m) be revised to make provision for
the lading of goods on qualifying vessels and aircraft under 19 U.S.C.
1309.
Customs Response: Customs agrees. Section 191.2(m) is revised
consistent with 19 U.S.C. 1309 and reference to 19 CFR 10.59 through
10.65 is added. Also, as already noted, a definition of ``exporter'' is
added to this provision, consistent with the definition of this term in
the regulations of the Bureau of Export Administration, Department of
Commerce (15 CFR part 772).
Consistent with the definition of ``exportation'', the definition
of ``exporter'' provides that for ``deemed exportations'' the exporter
is the person who as the principal party in interest in the transaction
deemed to be an exportation has the power and responsibility for
determining and controlling the transaction (e.g., in the case of
aircraft or vessel supplies under 19 U.S.C. 1309(b), the party who has
the power and responsibility for lading the supplies on the qualifying
aircraft or vessel). Thus, if an aircraft or vessel operator has such
power and responsibility, that aircraft or vessel operator is the
exporter and is entitled to claim drawback or to waive and assign the
right to claim drawback to another authorized party (see Sec. 191.82).
If another party (e.g., a fuel supply company) has such power and
responsibility, that party is the exporter and is entitled to claim
drawback or to waive and assign the right to claim drawback to another
authorized party. This will enable the public, and Customs, to identify
with greater certainty the party responsible for keeping records of
exportation and the party who may claim drawback.
Comment: It was recommended that the term ``general manufacturing
drawback ruling'' in proposed Sec. 191.2(o) be changed to ``general
drawback
[[Page 10973]]
statement''. It was asked that any new general rulings be published
first as Treasury Decisions (T.D.s) and thereafter included in Appendix
A to part 191.
Customs Response: Customs hereby affirms the change from drawback
``contracts'' to ``rulings'', which was occasioned only after thorough
review and consideration, as noted in the proposed rule (see 62 FR
3086). The reasons for this change were thoroughly described in the
proposed rule (see 62 FR 3083 and 3096-3087).
The comment suggesting that new general rulings should first be
published as T.D.s and subsequently added to the Appendix has merit and
is adopted. To this end, the definition for general manufacturing
drawback rulings now appearing in Sec. 191.2(p), as redesignated, is
changed to note that such rulings will be published as T.D.s and in
Appendix A of part 191. This change is also effected in greater detail
in Sec. 191.7 dealing with the procedures for general manufacturing
drawback rulings.
Additionally, the explanation in the definition stating when a
manufacturer or producer may operate under a general manufacturing
drawback ruling and describing the procedures for such rulings is
removed as unnecessary and not a part of the definition. The removed
material is instead provided for in Sec. 191.7.
Comment: The question was asked as to whether the definition of
manufacture or production in proposed Sec. 191.2(p) was intended in any
way to undermine existing precedential rulings or decisions in this
connection.
Customs Response: There is no intent to change the existing
definition of manufacture or production for drawback purposes (now
redesignated as Sec. 191.2(q)). This was made clear in the proposed
rule.
Comment: It was asked that the term ``possession'' in proposed
Sec. 191.2(q) be further defined and explained.
Customs Response: Customs believes that the definition of
possession (now redesignated as Sec. 191.2(s)), which is based on the
language of the statute (19 U.S.C. 1313(j)(2)), is sufficiently clear
as is.
Comment: With respect to proposed Sec. 191.2(r) defining relative
value in situations where multiple products concurrently result in
manufacture, it was suggested that a definition be included in proposed
Sec. 191.2 for multiple products.
Customs Response: Customs agrees. A definition for multiple
products as ``two or more products produced concurrently by a
manufacture or production operation or operations'' is added in
appropriate alphabetical order to Sec. 191.2. The definition for
relative value is redesignated as Sec. 191.2(u), and the reference to
by-product appearing therein is removed.
Comment: Changes were suggested to the definition for substituted
merchandise in proposed Sec. 191.2(s) to provide, respectively, for
substitution under 19 U.S.C. 1313(b), 1313(j)(2), and 1313(p). Also, it
was suggested that this definition be placed in alphabetical order in
proposed Sec. 191.2.
Another comment requested that Customs provide guidance to the
trade as to what constituted a substantial change in manufacture or
production, which would preclude merchandise from being of the ``same
kind and quality'' under 19 U.S.C. 1313(b), the criterion for
permitting substitution for drawback purposes thereunder. This comment
asked that merchandise falling under the same 8-digit harmonized tariff
schedule (HTS) number be accepted as being of the same kind and
quality.
Customs Response: Customs has revised the definition for
substituted merchandise under Sec. 191.2(x), as redesignated, so as to
simplify it. Also, the definitions in Sec. 191.2 have been placed in
alphabetical order.
However, the comment suggesting the inclusion of an explanation as
to what constitutes a substantial change in manufacture or production
which would preclude a finding of same kind and quality under 19 U.S.C.
1313(b) is not adopted, inasmuch as Customs believes that such
determinations are better made on a case-by-case basis. While the use
of the HTS number is expressly recognized for this purpose under 19
U.S.C. 1313(p), no such provision to this effect exists in
Sec. 1313(b).
Comment: Various concerns were expressed over the definition of a
specific manufacturing drawback ruling under proposed Sec. 191.2(u); it
was generally desired that the term ``ruling'' be changed to
``statement'', which would occasion the removal of the reference to the
applicability of 19 CFR part 177 to such rulings. Since a ruling under
part 177 applied to prospective transactions, it was principally asked
whether drawback claims could still be filed prior to issuance of a
general or specific manufacturing drawback ruling, and what type of
confidential treatment would be accorded the manufacturing drawback
ruling request.
Customs Response: As already noted, Customs has determined to
retain the term ``ruling'' in Sec. 191.2(w), as redesignated, rather
than the term ``contract'' or ``statement'', for the reasons amply
explained in the proposed rule. In any event, Sec. 191.27(c) as
redesignated makes it clear that drawback claims may continue to be
filed before a letter of notification of intent to operate under a
general manufacturing drawback ruling is acknowledged or a specific
manufacturing drawback ruling is approved.
Also, the applicability of 19 U.S.C. 1625 and 19 CFR part 177 to a
drawback ruling hereunder will not affect the confidentiality otherwise
accorded under the Freedom of Information Act either to an application
for a specific manufacturing drawback ruling, or to a letter of intent
to operate under a general manufacturing drawback ruling. That is, the
general ``ruling'' is the published T.D. appearing in Appendix A to
part 191. In the case of a specific manufacturing drawback ruling, the
``ruling'' is the letter of approval issued by Customs, which would be
published as a synopsis in the Customs Bulletin. Section 191.2(w) as
redesignated is changed to clarify this.
Comment: With respect to proposed Sec. 191.3(a), clarity was
requested regarding the payment of drawback on voluntary tenders made
in connection with notices of prior disclosure pursuant to 19 U.S.C.
1592(c). Also, it was advocated that proposed Sec. 191.3(a)(1)(iii) set
forth a definition of what comprised voluntary tenders subject to
drawback, in order to avoid confusion.
It was suggested that proposed Sec. 191.3(a)(1) (ii), (iii) and
(iv) be changed to simply reference proposed Sec. 191.81 which would
contain the substantive requirement pertaining to the provisions that a
written request be submitted for the payment of drawback, along with a
waiver of payment under any other provision of law. It was also
suggested that proposed Sec. 191.3(a)(1)(iii) be changed to indicate
that any waiver be conditioned on the refund being received as drawback
and not subject to repayment. A comment asked with reference to
proposed Sec. 191.3(a) (and proposed Sec. 191.81) that the filing of
the written request waiver be allowed at any time prior to final
liquidation of the drawback entry.
In addition, in proposed Sec. 191.3(a)(1) (iii) and (iv), a
question was presented as to the need for a waiver of payment in the
case of warehouse withdrawals whose liquidation had become final.
It was also noted that the references in proposed Sec. 191.3(a)(1)
(ii), (iii), and (iv) to Sec. 191.82 (b) and (c) should be instead to
proposed Sec. 191.81 (b) and (c).
Customs Response: The erroneous citations are duly corrected.
[[Page 10974]]
The comment suggesting a clear definition of ``voluntary tenders''
has merit and is adopted. ``Voluntary tenders'' are thus defined in
Sec. 191.3(a)(1)(iii) for purposes of Sec. 191.3, as a payment of
duties on imported merchandise in excess of the amount of duties
included in the liquidation of the entry, or withdrawal from warehouse,
for consumption, provided that the liquidation has become final and
that the other conditions in the provision and Sec. 191.81 are met.
In response to the comment about what must be waived, it is any
claim to payment or refund limited to the drawback granted. However,
this is provided for in Sec. 191.81(c), not in Sec. 191.3. Also in this
regard, the comment that the written request and waiver may be filed at
any time prior to final liquidation of the drawback entry requires no
change to Sec. 191.81(c) because there is no time limit provided
therein.
The comment suggesting inclusion of tenders made in connection with
a notice of prior disclosure pursuant to 19 U.S.C. 1592 has merit and
is adopted. The adoption of this suggestion is implemented by combining
Sec. 191.3(a)(1) (iii) and (iv), and adding to it tenders of duty made
in connection with notices of prior disclosure under 19 U.S.C.
1592(c)(4), so that there is now one provision (Sec. 191.3(a)(1)(iii))
providing that duties subject to drawback include tenders of duties
after liquidation has become final, such tenders to include voluntary
tenders, including tenders of duty in connection with notices of prior
disclosure under 19 U.S.C. 1592(c)(4), and duties restored under 19
U.S.C. 1592(d).
Insofar as the comment suggesting the removal to Sec. 191.81 of the
requirement for filing a written request and waiver is concerned, this
comment has merit. The provision is being changed to refer to
Sec. 191.81, which will contain the substantive requirement for a
written request and waiver. In answer to the question of why a waiver
would be needed for warehouse withdrawals, the reason such a waiver
would be needed is that the warehouse withdrawal for consumption would
have been liquidated, and liquidation would have become final, after
which the tender upon which drawback is claimed would have been made,
so that a waiver would be desirable to ensure that Customs would not
pay both drawback and a refund of the tender under some other provision
of law.
Comment: The assertion was made, with respect to proposed
Sec. 191.3(b), that harbor maintenance fees should be subject to
drawback. Also, a comment wanted drawback payable on interest paid
pursuant to post-entry assessments.
Customs Response: Customs disagrees that harbor maintenance fees
should be subject to drawback, inasmuch as such fees are imposed in
connection with part use, not importation of merchandise (within the
legal meanings of 19 U.S.C. 1313 and 26 U.S.C. 4462). Likewise,
drawback is not payable on interest.
Comment: A comment asserted that proposed Sec. 191.3(c) needed to
be revised specifically to make clear that products falling within the
tariff-rate quota (but not payable at the over-quota rate of duty) were
eligible for all types of drawback, while products assessed the over-
quota rates of duty were eligible only under 19 U.S.C. 1313(j)(1), with
tobacco being eligible under both 19 U.S.C. 1313(j)(1) and 1313(a).
Customs Response: This comment has merit and is adopted. The
provision is re-drafted accordingly.
Comment: One comment suggested that, in proposed Sec. 191.4(b), the
word ``was'' be changed to ``is''.
Customs Response: The comment has merit and is adopted.
Comment: It was contended that proposed Sec. 191.6 concerning who
may sign drawback documents was in contradiction to proposed Sec. 191.8
dealing with specific manufacturing drawback rulings, as well as 19 CFR
part 177 regarding the submission of requests for rulings. One such
comment noted that the list of persons did not include attorneys who
should have signing authority for their clients at least with respect
to applications for drawback rulings.
Customs Response: These comments have merit, insofar as they raise
questions regarding the applicability of the limitations on who may
conduct ``Customs business'' under 19 U.S.C. 1641 and 19 CFR part 111.
The comments are adopted, and Sec. 191.6 is appropriately redrafted to
add a new paragraph (c), so that the persons listed in paragraph (a)
are the only persons who may sign any of the documents listed in
paragraph (b).
Under new paragraph (c), letters of notification of intent to
operate under a general manufacturing drawback ruling (Sec. 191.7(b))
and applications for a specific manufacturing drawback ruling
(Sec. 191.8), as well as requests for nonbinding predeterminations of
commercial interchangeability (Sec. 191.32(c)(2)), applications for
waiver of prior notice (Sec. 191.91), applications for accelerated
payment (Sec. 191.92), and applications for participation in the
drawback compliance program (subpart S) may be signed by any of the
persons listed in paragraph (a), or any other individual legally
authorized to bind the person (or entity).
Comment: Referring to proposed Sec. 191.6(a)(1), a question was
raised as to who specifically would be ``any other individual legally
authorized to bind the corporation''.
Customs Response: The comment has merit. The word ``individual''
therein is changed to ``employee''.
Comment: With respect to proposed Sec. 191.6(a)(4), it was
suggested that any employee of ``a'' business entity be changed to
``the'' business entity.
Customs Response: The comment has merit and is adopted.
Comment: One comment expressed concern that the authority of an
individual acting on his or her own behalf, as set forth in proposed
Sec. 191.6(a)(5), implied that an unlicensed person might be permitted
to conduct Customs business.
Customs Response: This provision is intended to provide for a
situation in which an individual (e.g., an individual drawback claimant
or exporter) signs documents in his or her own capacity. Since the
provision contains the modifier ``acting on his or her own behalf'',
Customs does not believe that this provision could be interpreted to
allow an unlicensed person to conduct Customs business on behalf of
another (see 19 U.S.C. 1641(a)(2)).
Comment: A question was presented as to whether proposed
Sec. 191.6(b) should include a Notice of Intent to Export, Destroy, or
Return Merchandise for Purposes of Drawback.
Customs Response: The suggestion that Notices of Intent to Export,
Destroy or Return Merchandise for Purposes of Drawback should be listed
as one of the documents that can be signed by the persons in
Sec. 191.6(a) has merit and is adopted.
Comment: A concern was raised about ``endorsements'' of exporters
on bills of lading or evidence of exportation in proposed
Sec. 191.6(b)(6).
Customs Response: The comment appears to be concerned that the
practice of permitting blanket letters of endorsement (which should be
blanket certifications) be provided for in the regulations. This
comment has merit and is adopted; the reference to ``Endorsements'' is
changed to ``Certifications'', and citations to Secs. 191.28 (as
redesignated from proposed Sec. 191.27) and 191.82 are added in
Sec. 191.6(b)(5), as redesignated (proposed Sec. 191.6(b)(7) is also
redesignated as Sec. 191.6(b)(6)). It is noted that Secs. 191.28 as
redesignated and 191.82 are modified to provide for ``blanket''
certifications.
[[Page 10975]]
Comment: As to proposed Sec. 191.7 dealing with general
manufacturing drawback rulings, the recommendation was made in
connection with proposed Sec. 191.2(o) that the term ``rulings'' be
changed to ``statements''.
It was asked that general drawback rulings be published first as
T.D.s, and then subsequently be included in Appendix A to part 191.
Another comment asked how the general rulings in Appendix A would be
identified.
A comment wanted Customs to acknowledge requests for general
rulings within 30 days.
It was stated that approved letters of intent should receive a
unique computer-generated ruling number.
The question was asked as to how modifications of letters of intent
to operate under a general ruling would be handled; a comment wanted
provisions included in proposed Sec. 191.7 concerning the use of
accounting procedures and tradeoff; another comment stated that there
was no provision for transferring a general ruling to another drawback
office.
Customs Response: In regard to the comment suggesting that new
general rulings should first be published as T.D.s and subsequently
added to the Appendix, this comment has merit and is adopted in
Sec. 191.7(b)(1). Furthermore, the general manufacturing drawback
rulings in Appendix A are being identified by their T.D. numbers.
In regard to the change in nomenclature (from ``rulings''), these
comments are not adopted, as previously discussed in reference to
proposed Sec. 191.2(o).
In regard to the suggestion that there should be a time limitation
on acknowledgments by drawback offices of applications and that the
time should be 30 days, Customs is not adopting this suggestion, as
such, but is adding in Sec. 191.7(c) that Customs is required to act
``promptly'' on applications. Because drawback claims may be filed
pending acknowledgment of a letter of notification of intent to operate
under a general drawback ruling or before approval of a specific
manufacturing drawback ruling (see Sec. 191.27(c) as redesignated), it
is Customs' position that a time limit for action is not necessary.
In regard to the comment suggesting a unique electronic ruling
number for each general manufacturing drawback ruling, this comment has
merit and is also added in Sec. 191.7(c).
In regard to the comment asking how modifications to letters of
intent are to be made, because letters of notification of intent are
relatively short and simple, no provision like that appearing in
Sec. 191.8(g) is provided. When the information included in a letter of
notification of intent changes, a new letter of notification of intent
must be filed.
The suggestion relating to a statement regarding the use of a
particular accounting method and the use of tradeoff under the general
manufacturing drawback ruling is not adopted (because application of
those provisions is provided for in the applicable regulations).
In regard to the comment that the regulation does not address how a
change in the drawback office where claims will be filed may be made,
no provision such as that added to Sec. 191.8 is being provided for in
this section (because, as is true of modifications, letters of intent
are relatively short and simple). When the person who submitted the
letter of intent wishes to add a different drawback office, a new
letter of intent (to that drawback office) must be filed.
Comment: The observation was made that the identification of the
general manufacturing drawback rulings was potentially confusing. It
was suggested that the precise general manufacturing drawback ruling
under which the manufacturer proposed to operate should be listed as
one of the requirements in proposed Sec. 191.7(b)(3) and that the
general manufacturing drawback rulings in Appendix A should be
identified by their Treasury Decision numbers (or some other Customs-
assigned number).
Customs Response: This comment has merit and is adopted. Section
191.7 is revised to include a paragraph (b)(3)(iv) to this effect, with
redesignation accordingly. As already noted, the T.D. numbers of the
respective general manufacturing drawback rulings have been included in
Appendix A.
Comment: A comment, with respect to proposed Sec. 191.7(b)(2),
stated that the number of copies of letters of intent required to be
submitted should be limited to only one copy per drawback office.
Customs Response: This comment has merit and is adopted.
Comment: Concerning proposed Sec. 191.7(b)(3)(iv), one comment
asked that a description of the merchandise and articles be included in
the letter of intent under a general ruling, while another comment
wanted to require a description of the manufacturing process. A third
comment asked about the processing of a letter of intent under proposed
Sec. 191.7(c).
Customs Response: Section 191.7(b)(3)(v), as redesignated from
proposed Sec. 191.7(b)(3)(iv), requires that merchandise and articles
be described unless specifically described in the letter of
notification (instead of ``letter of notification'', this should have
read ``general manufacturing drawback ruling'' and is changed
accordingly). There are instances in which the merchandise and articles
are specifically so described (e.g., orange juice (T.D. 85-110, raw
sugar (T.D. 83-59)) and it is in these situations that the merchandise
and articles do not have to be described (because they are already
described in the general manufacturing drawback ruling).
As for the second comment, Sec. 191.7 is changed by adding a
paragraph (b)(3)(vi) (with redesignation accordingly), to provide that
a letter of notification of intent to operate under a general
manufacturing drawback ruling must include a description of the
manufacture, if such a description is not already described in the
general manufacturing drawback ruling.
Additionally, Sec. 191.7(c) is changed to provide that the drawback
office will acknowledge the letter of intent if: (1) the letter of
notification of intent is complete; (2) the general manufacturing
drawback ruling identified by the manufacturer or producer is
applicable to the manufacturing or production process described; (3)
the general manufacturing drawback ruling is followed without
variation; and (4) the manufacturing or production process described
meets the definition of a manufacture or production under Sec. 191.2(q)
(as redesignated).
In this latter regard, as further provided in Sec. 191.7(c), the
letter of acknowledgment from the drawback office will contain specific
authorization to operate under the general manufacturing drawback
ruling, subject to the requirements and conditions of that general
manufacturing drawback ruling and the law and regulations.
In addition, Sec. 191.7(c) is revised to require that the
manufacturer or producer be advised, in writing, if the letter of
intent cannot be acknowledged. To this end, if the letter of
notification of intent to operate under a general manufacturing
drawback ruling includes conditions or terms varying from the general
manufacturing drawback ruling published as a T.D. or in Appendix A, the
drawback office may not acknowledge the letter and will return it to
the manufacturer or producer for modification and resubmission or for
submission to Customs Headquarters as a specific manufacturing drawback
ruling.
Comment: It was commented, with respect to proposed
Sec. 191.7(b)(3)(vi),
[[Page 10976]]
that the requirement of a suffix to the IRS number should be included.
Customs Response: The comment that a suffix to the IRS number
should be stated has merit and is adopted. This provision is
redesignated as Sec. 191.7(b)(3)(viii).
Comment: A comment requested that, rather than terminating a ruling
automatically after 5 years of non-use, proposed Sec. 191.7(d) be
changed to permit a manufacturer a period of time, such as 60 days,
within which to request Customs not to revoke the ruling.
Customs Response: This request is not adopted. This suggestion
would add unnecessarily to the administrative burden of processing
drawback. If a claimant is inactive for 5 years and notice of
termination is published, the claimant may, under the very simple
procedures provided in Sec. 191.7, submit a new notification of intent
to operate under the general manufacturing drawback ruling.
Comment: The statement was made, in relation to proposed Sec. 191.8
addressing the procedures for specific manufacturing drawback rulings,
that the term be changed from ``rulings'' to ``statements'', and that
requests for manufacturing contracts under 19 U.S.C. 1313(a) should
continue to be approvable by local drawback offices.
Customs Response: As already averred, Customs has determined to
retain the change from drawback ``contracts'' or ``statements'' to
``rulings''. Drawback offices would, as proposed and as in this final
rule, acknowledge receipt of letters of notification of intent to
operate under a general manufacturing drawback ruling under 19 U.S.C.
1313(a) (unless the proposal varied from the general manufacturing
drawback ruling, in which case Headquarters approval would be
necessary.) An application for a specific manufacturing drawback ruling
under Sec. 191.8(d) must be submitted to Customs Headquarters.
Comment: A comment suggested that the IRS number required in the
application for a specific ruling in proposed Sec. 191.8(c)(2), include
the suffix.
Customs Response: This comment has merit and is adopted.
Comment: A comment with respect to proposed Sec. 191.8(e)(1)
questioned the use of T.D.s under which to publish approved drawback
rulings. It was noted that the term ``contract'' was inadvertently used
in this provision. Another comment suggested that the Headquarters
approval letter should include the computer-generated ruling number.
Customs Response: Customs is not prepared at this time to eliminate
the use of T.D.s for this purpose. The comment noting the misuse of the
term ``contract'' in this provision is correct; the provision is
changed. The comment that the Headquarters approval letters should
include the computer-generated number has merit and is adopted.
In addition, consistent with the comment and response for
Sec. 191.7(b)(2), only 1 copy of the approved application for the
specific manufacturing drawback ruling is forwarded to the appropriate
drawback office(s). A change to this same effect is made in
Sec. 191.8(d).
Comment: A comment on proposed Sec. 191.8(e)(2) stated that, for
consistency, the notification to an applicant that the application
could not be approved should be in writing. Another comment suggested
that the term ``promptly'' (within which to notify the applicant that
the application could not be approved) should be specifically defined.
Customs Response: The comment suggestion that the notice of
disapproval be in writing has merit and is adopted. However, the
suggestion that ``promptly'' be specifically defined is not adopted.
Comment: Concerning the modification of specific manufacturing
drawback rulings in proposed Sec. 191.8(g), it was variously asked if
changes in corporate officers, changes in factory locations, changes in
the basis of claim, changes in filing location, and changes in brokers
could also be handled by the limited modification procedure, set forth
in proposed Sec. 191.8(g)(2), or were they intended to be made through
Headquarters, as provided in proposed Sec. 191.8(g)(1) which required
the filing of a supplemental application in the form of the original
application.
Another comment asked for which limited modification should the
drawback office notify Headquarters, for which limited modification
should the drawback office notify the claimant in writing of receipt,
and for which limited modification should the ACS (Automated Commercial
Systems) drawback database ruling be revoked and reissued, and when
would an amendment be appropriate.
Customs Response: These comments have some merit and, to the extent
necessary, are adopted in Sec. 191.8(g)(2). It is noted that changes in
factory locations are already covered in Sec. 191.8(g)(2)(i)(A), and
changes in corporate officers and brokers are covered by the provision
for those persons who will sign drawback documents in
Sec. 191.8(g)(2)(i)(D) (corporate officers are no longer required).
Changes in the basis of claim are added in Sec. 191.8(g)(2)(i), as
are changes in the filing location. In addition, changes in the
decision to use or not to use an agent for drawback purposes, and the
identity of an agent if one is used, are made subject to the limited
modification procedures.
In the case of changes in the filing location, Customs is adding to
the regulation a provision (Sec. 191.8(g)(2)(iii)), based on current
practice as shown by a letter of October 19, 1960 (published as Customs
Information Exchange letter (CIE) 1454/60), which permits the change of
the drawback office where claims will be filed.
Under the foregoing provision in Sec. 191.8(g)(2)(iii), the
claimant files, with the new drawback office, a written application to
file claims at that office, with a copy of the application and approval
letter from the drawback office where claims are currently filed. The
claimant is required to provide a copy to the latter drawback office of
the written application to the new drawback office.
Also, Sec. 191.8(g)(2)(ii) is revised to specifically provide
detailed procedures for handling limited modifications (the drawback
office is given notice by the manufacturer or producer operating under
a specific manufacturing drawback ruling, with a copy to Customs
Headquarters, and the drawback office acknowledges acceptance of the
limited modification in writing to the manufacturer or producer (with a
copy to Customs Headquarters) and makes corresponding changes to the
ACS drawback database, as necessary (the latter (changes to the ACS
drawback database) is not provided for in the regulations, as this is
an internal administrative procedure). No revocation in the ACS
drawback database is necessary.
Furthermore, to simplify the process and limit the administrative
burden, the provision for supplemental application procedures in
Sec. 191.8(g)(1) is changed to provide that, at the discretion of the
manufacturer or producer, a supplemental application may be in the form
of an original application or it may include only the provisions in the
specific manufacturing drawback ruling application that are sought to
be modified, and the unchanged provisions, in an existing approved
specific manufacturing drawback ruling, may be incorporated by
reference to the approved ruling.
Comment: It was desired that a successorship under 19 U.S.C.
1313(s) be handled under the limited
[[Page 10977]]
modification procedure of proposed Sec. 191.8(g)(2).
Customs Response: This comment is not adopted. Successorships under
Sec. 1313(s) are subject to the supplemental application procedures.
However, it is noted here that the supplemental application procedures
of Sec. 191.8(g)(1) have been simplified.
Comment: A change was requested in the duration of the approval of
a specific drawback ruling in proposed Sec. 191.8(h). A comment asked
about the effect of these final regulations on existing drawback
contracts.
Customs Response: The comment suggesting a change to the duration
of the approval of a drawback ruling is not adopted. Customs believes
that this suggestion would add unnecessarily to the administrative
burden of processing drawback.
As for the comment questioning the effect of these regulations on
existing drawback ``contracts'' under the prior subparts B and D of
part 191, such existing drawback ``contracts'' may continue to be
relied upon by the manufacturer or producer who applied for or adhered
to the ``contract'', provided that such existing drawback ``contracts''
do not materially conflict with the statute or these regulations.
Existing drawback ``contracts'' which materially conflict with the
statute or these regulations are superseded by the statute or these
regulations effective as follows. A drawback entry based upon existing
drawback ``contract'' which materially conflicts with these regulations
and for which exportation is before the effective date of these
regulations is governed by the existing drawback ``contract'', unless
there is also a necessary material conflict with the amendments to the
statute (19 U.S.C. 1313) made by the NAFTA Implementation Act (Public
Law 103-182, Sec. 632), in which case the effective date of Sec. 632 of
that Act controls.
It is further noted, with respect to Sec. 191.8(h), that the
reference to part 177 in this provision is modified to include a
reference as well to 19 U.S.C. 1625.
Comment: With reference to proposed Sec. 191.9 dealing with the
principal-agent procedure in drawback, one comment opposed limiting the
principal-agent procedure exclusively to substitution manufacturing
drawback under 19 U.S.C. 1313(b), stating that the procedure should be
available as well under 19 U.S.C. 1313(a).
It was said that the terms ``owner'', ``principal'', ``agent'',
``use'' and ``manufacture'', as employed therein, should be more
clearly defined. It was also remarked that the specific provisions
required in the contract between the principal and agent in proposed
Sec. 191.9(c) should be deleted, particularly if such a contract was
required to be in force before there was any transfer of merchandise.
The provision, if retained, should allow for oral contracts. It was
also contended here that legal or equitable title, but not both, to the
merchandise in question should be enough to establish principal status
under the contract.
It was contended that the requirement that the agent provide a
certificate of manufacture and delivery to the principal should be
eliminated or be allowed to be waived in appropriate circumstances.
Customs Response: The intent was to limit this provision to
drawback under 19 U.S.C. 1313(b) where the imported merchandise was
used in manufacture or production by the principal or an agent and the
exported article or drawback product was respectively manufactured or
produced by an agent or the principal, or the imported merchandise was
used in manufacture or production and the exported article or drawback
product was manufactured or produced by different agents.
After further consideration and consistent with Customs current
practice, Customs is now taking the position that the application of
drawback principal-agent principles need not be so limited. The
provision applies to drawback under 19 U.S.C. 1313(b) and 1313(a) and
may be used regardless of whether different parties (agent-principal,
principal-agent, or two agents) are involved. To this end,
Sec. 191.9(a) as proposed is deleted, with the succeeding paragraphs
redesignated accordingly Section 191.9(a), as thus redesignated from
proposed Sec. 191.9(b), is revised as described.
As much as possible, the terms questioned (owner, principal, agent,
and use in manufacture or production) are clarified in Sec. 191.9(a)
and (c) as thus redesignated.
The provision in Sec. 191.9(b), as redesignated from proposed
Sec. 191.9(c), for what the contract (between principal and agent) must
provide, is retained, to provide notice to persons using this provision
of what is required, but rather than mandating that the requirements be
``specified'', the requirements are to be ``included'' in the contract.
As for the comment that a contract should not be required to have
been in force before there was a transfer of merchandise, Sec. 191.6(b)
as redesignated provides the requirements for a principal-agent
drawback relationship. To use the principal-agent procedures in
drawback, these requirements must be met (i.e., for the principal to be
deemed the manufacturer or producer when the agent does the physical
manufacturing or production, the requirements (including those for a
contract) must be met, although there is no requirement that the
contract be in writing).
Regarding the comment that the provision should specifically
authorize oral contracts, redesignated Sec. 191.9(b) does not require
the form that the contract must take; it requires that there be a
contract and what the contract must contain.
As for the comment referring to legal and/or equitable title, the
basic requirement in redesignated Sec. 191.9(b) for assertion of the
principal-agent relationship under the provision is that the principal
be ``[a]n owner'' of the merchandise. It is Customs position here that
the requirement for both legal and equitable title is consistent with
the requirements for assertion of the principal-agent relationship for
drawback purposes.
Consistent with the purpose of a certificate of manufacture and
delivery and with the treatment of the owner-principal as the
manufacturer or producer when an agent performs the manufacturing or
production operations for the principal, no certificate of manufacture
and delivery is required from the agent to the principal. Hence,
Sec. 191.9(d) as redesignated from proposed Sec. 191.9(e) is revised as
described. As such, the comment regarding waiver of the requirement for
certificate of manufacture and delivery from the agent to the principal
is moot.
However, to ensure compliance with the drawback law, while
simplifying drawback procedures where possible, a principal using the
principal-agent procedures for drawback is required to attach to its
drawback entries, or certificates of manufacture and delivery, a
certificate certifying that it can establish certain specific facts,
upon request by Customs. The principal must certify that it can
establish the information that would have otherwise been required in a
certificate of manufacture and delivery. The certificate and
information are specifically provided to be subject to the
recordkeeping requirements in Sec. 191.26 as redesignated (including
the requirement for maintenance of records 3 years from the date of
payment of a drawback claim). Provision is also made for the
certificate to be in ``blanket'' form, covering a particular kind and
quality of merchandise for a stated period.
Comment: In proposed Sec. 191.10, it was asked that transfers under
19 U.S.C. 1313(p) included among the purposes
[[Page 10978]]
for which a certificate of delivery may be used.
It was also suggested that the word ``exists'' instead of ``has
attached'' be used in proposed Sec. 191.10(a)(2). In addition, it was
stated that the term ``if applicable'' should be used for the
information required in proposed Sec. 191.10(b)(3), (7), and (8). It
was also said that it was unclear when the HTSUS would be required for
merchandise under proposed Sec. 191.10(b)(10).
The requirement in proposed Sec. 191.10(b)(5) that the total duty
paid be shown on the certificate of delivery was opposed. It was
advocated that Customs, with its computer access, should itself be able
to identify the duties paid on the imported merchandise on which
drawback was claimed.
It was also contended that certificates of manufacture and delivery
(as opposed to certificates of delivery) should be used in all cases
where the transferred article was manufactured under drawback
conditions, and, as such, that proposed Sec. 191.10(c)(2) be
eliminated. It was suggested that there be a clarification as to the
requirement for a certificate of delivery to transfer articles received
by an intermediate party from a drawback manufacturer or producer.
One comment asked that the recordkeeping requirement in proposed
Sec. 191.10(d) be eliminated. Another comment suggested that a citation
to 19 U.S.C. 1508(c) be added to this provision, indicating the
statutory basis for the record retention requirement here.
With regard to proposed Sec. 191.10(e) relating to the submission
of a certificate of delivery to Customs, concerns were raised about the
language of this provision. In particular, it was stated that the
certificate was not ``part'' of a drawback claim, but that it
``supported'' the claim; and that the claim submitted without the
certificate should not be ``rejected'', but would be ``denied''.
Customs Response: The comment relating to inclusion of transfers
under 19 U.S.C. 1313(p) among the purposes for which a certificate of
delivery may be used is adopted, to the extent provided therein (see
CUSTOMS RESPONSE to the comment on the definition of certificate of
delivery, in proposed Sec. 191.2(b) redesignated as Sec. 191.2(c),
above).
In regard to the comment that the three effects of certificates of
delivery should be included in the regulation, this has been provided
for in Sec. 191.2(c) as redesignated.
The suggestion that the term ``exists'' be used in place of ``has
attached'' in Sec. 191.10(a)(2) is adopted.
As for the requirement in Sec. 191.10(b)(5) that total duty paid be
stated on a certificate of delivery, Customs believes this information
is no more sensitive than other information required on the certificate
(e.g., the HTSUS number and entry number with the person from whom the
merchandise was received (usually the importer)). The procedure
suggested by the comment would be effective in the verification stage,
but would create an untenable administrative burden in Customs
processing of drawback claims and of accelerated payment claims.
The comment that ``if applicable'' should be included for
Sec. 191.10(b)(3), (7), and (8) (information required on a certificate
of delivery includes import entry number, date of importation, and port
where import entry filed), is also not adopted. The requirement for
this information is applicable for all certificates of delivery (there
is always an import number, date of importation, and port of import
entry filing for a drawback claim).
The comment questioning when HTSUS numbers are required for
certificates of delivery has merit, in that it points out a lack of
clarity in the regulation. The provision is modified, by adding
Sec. 191.10(b)(11) and (12), to make it clear that the HTSUS number (to
at least 6 digits) is always required for the designated imported
merchandise on a certificate of delivery and, additionally, when the
certificate of delivery transfers merchandise substituted under 19
U.S.C. 1313(j)(2) for the designated imported merchandise, the HTSUS
number or Schedule B commodity number (to at least 6 digits) is
likewise required for the substituted merchandise. Otherwise (e.g., if
what is transferred is an article manufactured under 19 U.S.C. 1313(a)
or (b) from a party who received the article from the manufacturer or
producer), no such number is required for the article transferred.
In any event, although only the 6-digit HTSUS or Schedule B
commodity number is required on the certificate of delivery for the
transfer of substituted merchandise under 19 U.S.C. 1313(j)(2), full
tariff classification is required to establish commercial
interchangeability under 19 U.S.C. 1313(j)(2) (see Sec. 191.32(c)).
The comment that certificates of manufacture and delivery should be
used in all cases where a manufactured article is being delivered is
inconsistent with the purposes of the two kinds of certificates (of
delivery and of manufacture and delivery). The former is used when the
deliverer did not manufacture or produce the merchandise or article
transferred and the latter is used when the deliverer did manufacture
or produce the article transferred. It is Customs position that this
provision is the most simple for the public to follow and the most
simple for Customs to administer. This comment is not adopted.
The comment suggesting clarification of the requirement for a
certificate of delivery to transfer articles received by an
intermediate party from a manufacturer or producer (under 19 U.S.C.
1313(a) or (b)) has some merit. Section 191.10(c)(2) is changed to make
it clear that the manufacturer or producer transfers the manufactured
or produced article on a certificate of manufacture and delivery and
subsequent non-manufacturers or producers who are intermediate parties
transfer the article on a certificate of delivery (as already stated,
the certificate of delivery for such a transfer would not require the
6-digit HTSUS number for the transferred article).
The requirement for retention of records supporting the information
on certificates of delivery for 3 years after payment of a drawback
claim is statutorily required (see 19 U.S.C. 1508(c)(3)). The comment
suggesting inclusion in the regulation of a citation to 19 U.S.C.
1508(c)(3) has merit and is adopted. In addition, to alert the public
to the general applicability to drawback of the statutory recordkeeping
requirements in 19 U.S.C. 1508, a new Sec. 191.15, based on Sec. 1508,
is added stating those general requirements.
The comment concerning the particular language used in
Sec. 191.10(e) has merit and is adopted. Consistent with Sec. 191.51,
certificates of delivery are not ``part'' of claims but support claims,
so that if Customs requests a certificate of delivery upon which a
drawback claim is dependent and the certificate is not provided, the
claim is not rejected but, instead, is denied.
Since a certificate of delivery is not ``part'' of a complete claim
(as the regulation is modified), providing a certificate of delivery
upon Customs request is in the nature of ``perfecting'' a claim (see
Sec. 191.52 (note the addition of this as one of the instances of
perfection provided in Sec. 191.52(b))) and may be done outside the 3-
year time for filing a complete claim. Denial of a drawback claim for
failure to supply, in response to Customs request, a certificate of
delivery upon which a portion of the claim is dependent is limited to
denial of that portion of the claim dependent on the certificate of
[[Page 10979]]
delivery which is not supplied. The provision is changed to make this
clear.
Also, pursuant to changes to other sections (see Secs. 191.51(a)
and 191.52(b)), certificates of delivery are required to be in the
possession of the party to whom the merchandise covered in the
certificate was delivered, and if that party is not the claimant, the
claimant is required to obtain the certificate and provide it to
Customs, if Customs requests the certificate under the procedures for
``perfecting'' a claim.
Comment: With respect to proposed Sec. 191.11(a), it was requested
that the words ``or drawback product'' be included in the tradeoff
provision. A Customs ruling was cited in support of this request. With
respect to proposed Sec. 191.11(b), it was asserted that additional
payments, including payments in kind, in relation to the exchanged
merchandise, should be permitted. In regard to the problem of how much
drawback should be allowed (when additional payments in kind are made),
it was suggested that language could be inserted to limit drawback to
the amount of duty paid on the imported barrels.
Customs Response: The statute involved (19 U.S.C. 1313(k))
expressly provides only for the use of any domestic merchandise
acquired in exchange for imported merchandise of the same kind and
quality. The Customs ruling cited by the comments held that a drawback
claimant may identify a commercial lot of imported duty-paid
merchandise as domestic merchandise for purposes of substitution
drawback, 19 U.S.C. 1313(b), which is the provision interpreted in the
ruling. This was adopted by Public Law 103-182, for purposes of
Sec. 1313(j) (by providing for the substitution of any other
merchandise (whether imported or domestic) instead of duty-free or
domestic merchandise). No similar change was made to Sec. 1313(k),
however. Accordingly, Customs concludes that no such interpretation was
intended.
The comment relating to Sec. 191.11(b) has merit and is adopted, in
part. Customs must ensure that no more drawback than that attributable
to the imported merchandise may be allowed. Also, the merchandise which
is to be treated as the imported merchandise must be identified.
Accordingly, the second sentence of Sec. 191.11(b) is changed to
provide that the quantity of imported merchandise and domestic
merchandise exchanged under this provision need not be the same, but
that if the quantities are different, the lesser quantity shall be the
quantity available for drawback. If a greater quantity of domestic
merchandise than that of imported merchandise is received, the quantity
identified for drawback shall be the quantity first received.
The restriction on payments other than payments in kind under
Sec. 191.11(b), however, is retained. Section 1313(k) provides for the
use of any domestic merchandise acquired in exchange for imported
merchandise of the same kind and quality, not for the use of domestic
merchandise acquired for imported merchandise and a payment of
something other than domestic merchandise of the same kind and quality.
Further, the use of the term ``exchange'' indicates an intent to
provide for exchange of merchandise only (if the statutory provision
was intended to provide for the ``purchase or exchange'' of the
imported merchandise of the same kind and quality, Congress could have
explicitly so provided (see, e.g., 19 U.S.C. 1313(p)(2)(A)(ii) and
(iv))).
Comment: With reference to proposed Sec. 191.12 dealing with a
claim filed under the wrong subsection of the drawback statute, it was
advocated that this provision be rewritten to require Customs to notify
the claimant as expeditiously as possible that the claim was filed
under the wrong provision; it was also remarked that proposed
Sec. 191.12 was wrong in requiring a drawback claim to have to meet all
the legal requirements of an alternative subsection of the drawback
statute.
It was also pointed out that Sec. 7 of Public Law 104-295, adding
19 U.S.C. 1313(r)(3) to the drawback law, allowing an extension of time
for filing a drawback claim in the case of a major disaster, was not
provided for in the proposed drawback regulations.
Customs Response: The legislative history to the statutory
provision (19 U.S.C. 1313(r)(2)) is that the provision does not impose
a requirement on Customs to investigate all alternatives in addition to
the claimed basis before liquidating a drawback claim as presented (see
H. Rep. 103-361, 103d Cong., 1st Sess. (1993), part I, at 131; Sen.
Rep. 103-189, 103d Cong., 1st Sess. (1993), at 84). Accordingly to the
Senate Report, Sec. 1313(r)(2) was intended to allow a claimant to
raise the alternative subsections by protest under 19 U.S.C. 1514. If
an alternative provision of the drawback law is applicable, and the
claimed provision is not applicable, it is clearly within the
claimant's self-interest to bring to the attention of Customs the
alternative provision (i.e., so that the claimant may be paid
drawback). Therefore, and consistent with the legislative intent stated
in the Senate Report (see above) for Sec. 1313(f)(2), Sec. 191.12 is
modified by the addition of a statement that the claimant may raise
alternative provisions prior to liquidation or by protest. (It is in
the interest of Customs and the public to provide that a claimant may
raise alternative provisions prior to liquidation, as well as by
protest, because this simplifies administration of the provision (by
not requiring the filing and processing of a protest when the
alternative provisions can be raised prior to liquidation).)
As the background to the proposed rule clearly stated, a claimant
seeking to take advantage of this provision must qualify under the
alternative subsection (see the example given in the background to the
proposed rule). Customs may not waive the statutory requirement that a
complete claim be filed within 3 years of export. Compliance with the
alternative subsection is a statutory requirement (see 19 U.S.C.
1313(r)(2)).
It is recommended that claimants who are unsure of the correct
subsection under which to claim drawback should ensure that their
claims are filed promptly to allow compliance with the possible
alternatives, and they should ensure that their claims comply with the
possible alternatives.
Additionally, the comment pointing out that Sec. 7 of Public Law
104-295, adding 19 U.S.C. 1313(r)(3) to the drawback law, is not
implemented in the regulations has merit and is adopted, although in
Sec. 191.51(e)(2), and not in Sec. 191.12.
Comment: It was suggested that proposed Sec. 191.13 relating to
packaging material be revised to make clear that all information
required by the particular drawback provision under which the packaging
material was being claimed had to be furnished for such material.
Customs Response: This suggestion has merit and is adopted, with
the last sentence in Sec. 191.13 being changed with the addition of the
following at the end thereof: ``and all other information and documents
required for the particular drawback provision under which the claim is
made shall be provided for the packaging material''.
Comment: Regarding proposed Sec. 191.14(a), the issue was variously
raised about the applicability of the accounting procedures included in
this section to merchandise exported to Canada or Mexico under the
North American Free Trade Agreement (NAFTA), when the merchandise was
exported in the same condition as imported. It was also requested that
proposed Sec. 191.14(a) make clear that the accounting procedures of
this section
[[Page 10980]]
were not applicable in cases where the drawback law specifically
authorized substitution. It was further asked that a cross reference to
proposed Sec. 191.2(h) defining direct identification drawback be
included in proposed Sec. 191.14(a).
Customs Response: The concerns presented regarding Sec. 191.14(a)
raise questions on the applicability of the accounting procedures
provided for in Sec. 191.14 to exportations to Canada or Mexico, given
the enactment and implementation of NAFTA. In order to avoid confusion
in this matter, the last sentence of Sec. 191.14(a) as proposed,
regarding the applicability of Sec. 191.14 to exportations to Canada or
Mexico under the NAFTA, is deleted. Applicability to such exportations
will be governed by the law (see 19 U.S.C. 3333) and regulations
promulgated thereunder.
The comment that the statement as to when this section is
applicable (not in cases where substitution is permitted, citing
specific subsections of 19 U.S.C. 1313) may be misinterpreted has merit
and is adopted. The third sentence of Sec. 191.14(a) is modified to
make clear that Sec. 191.14 is inapplicable in those situations in the
cited subsections where substitution is allowed, but that the section
does apply to situations in those subsections in which substitution is
not allowed.
As for the comment suggesting a cross-reference to Sec. 191.2(h),
this comment has merit and is adopted. The second sentence of
Sec. 191.14(a) is modified accordingly. Additionally, a cross-reference
to Sec. 191.14 is added to Sec. 191.2(h).
Comment: One comment asked that the words ``is established''
appearing in the last sentence of proposed Sec. 191.14(b)(2) be
modified to read ``can be established''. Otherwise, according to the
comment, the provision might be read that each claimant had to seek a
ruling establishing the inventory requirements contained therein.
Customs Response: The comment requesting the change of language in
Sec. 191.14(b)(2) has merit. However, instead of making the
modification to the last sentence, the first sentence is modified to
provide that ``[t]he person using the identification method must be
able to establish * * *''. The language in the provision following this
first sentence is interpretive and the described change to the first
sentence resolves the problem raised by the comment.
Comment: It was recommended that the parenthetical language
appearing in proposed Sec. 191.14(b)(3) be revised or removed.
Customs Response: Customs agrees. The parenthetical appearing in
Sec. 191.14(b)(3) is deleted as unnecessary.
Comment: As to proposed Sec. 191.14(b)(4), it was asserted that if
the verification of inventory records supporting a drawback
identification method required the ability of the inventory system to
include drawback per unit, this requirement should be removed from the
regulation. It was further declared that this provision presumed that
all acceptable identification methods required accounting for all
inputs and withdrawals from inventory, which was not true.
Customs Response: Regarding the requirement in Sec. 191.14(b)(4)
that the records supporting any identification method employed are
subject to Customs verification, the intent of this requirement is to
provide that the person using the identification method must be able to
demonstrate how the records account for the drawback per unit of each
receipt and withdrawal (in addition to the other things the records
must account for). It is not required that the records themselves
account for, or state, drawback per unit; rather that the person using
the records must be able to demonstrate how drawback per unit can be
established from the records.
It is correct that the low-to-high method with inventory turnover
and the low-to-high blanket method may be used without accounting for
domestic withdrawals; however if the method is subject to verification
by Customs, the person using the method must be able to demonstrate,
under generally accepted accounting procedures, how the records account
for the required elements (including all withdrawals). That is, the
integrity of the accounting method, as used by the person involved, is
subject to verification. It is Customs position that no change to this
provision is necessary.
Comment: Concerning proposed Sec. 191.14(c) (1) and (2) addressing
the first-in, first-out (FIFO), and last-in, first out (LIFO)
accounting methods, it was recommended that after the word
``identified'' in each paragraph, the words ``by recordkeeping'' be
added.
Customs Response: The recommendation that the words ``by
recordkeeping'' be added after ``identified'' is adopted for
Sec. 191.14(c) (1) and (2), and in Sec. 191.14(c) (3) and (4) as well.
Additionally, examples are provided for each of the methods set forth
therein.
Comment: With reference to proposed Sec. 191.14(c)(3), it was
declared that other accounting methods approved under other Customs
rulings could be used if applicable.
One comment believed that direct identification under the unused
merchandise drawback law, 19 U.S.C. 1313(j)(1), was a fiction; that the
law did not require the type of accounting methods that were provided
in this proposed section; and that, at the very least, high-to-low
accounting as allowed in C.S.D. 84-82 should be reinstated.
Another comment suggested that Customs permit industries to submit
proposals for acceptable accounting methods.
It was further asked that accounting methods in addition to low-to-
high with inventory turnover (LIFO and FIFO) permit the claimant to
omit accounting for domestic withdrawals when all receipts into
inventory were of foreign origin.
Customs Response: Section 191.14 is intended to establish the
accounting methods which may be used to identify merchandise or
articles for drawback purposes, and is intended to be consistent with
T.D. 95-61. Rulings issued prior to the effective date of these
regulations may not be resorted to unless consistent with Sec. 191.14
and T.D. 95-61. However, in order to make available to the public as
many options for identification by recordkeeping as possible, while
adhering to the principles of T.D. 95-61, Sec. 191.14(c)(3) is modified
by the addition of the so-called ``blanket'' low-to-high accounting
method.
Under this long-established and used method (see, e.g., 19 CFR
22.4(f) (1982 Customs Regulations) and C.S.D. 80-132), commingled
merchandise or articles are identified first from the lot or lots of
merchandise or articles with the lowest drawback attributable, then
from the lot or lots with the next higher drawback attributable, and so
on from lower to higher until all lots have been accounted for. The
period from which withdrawals for export are identified is the
statutory period for export under the kind of drawback involved (e.g.,
180 days under 19 U.S.C. 1313(p), 3 years under 19 U.S.C. 1313(c) and
1313(j), and 5 years otherwise under 19 U.S.C. 1313(i)). Thus, this
method is similar to the low-to-high method with inventory turn-over
method, except that instead of identifying the merchandise or articles
with the lowest drawback attributable in the established average
inventory period, merchandise or articles with the lowest drawback
attributable in the statutory period for export are identified.
Members of the public should be aware that drawback requirements
are applicable to withdrawn merchandise or
[[Page 10981]]
articles as identified (for example, if the merchandise or articles
identified were attributable to merchandise which had been imported 2
years, 11 months prior to withdrawal and export or destruction did not
occur until 2 months later, drawback under 19 U.S.C. 1313(j) would be
denied (because that provision requires export or destruction within 3
years of import)).
Additionally, language is added to make it clear that, once a
withdrawal for export is made and accounted for under the low-to-high
method with established average inventory turn-over period, or under
the ``blanket'' method, the merchandise or articles so withdrawn are no
longer available for identification under the method.
Also, new examples, more clearly illustrative of the low-to-high
methods (ordinary, with average inventory turn-over period, and
blanket), and comparing the results of those methods, are added to
Sec. 191.14(c)(3).
Customs does have procedures under which industries may obtain from
Customs a ruling, or an approved manufacturing drawback ruling, upon
which it may rely (see 19 CFR part 177, for rulings, and the sample
formats for specific manufacturing drawback rulings in Appendix B).
Regarding the suggestion that the ``high-to-low'' accounting method
should be reinstated as a drawback accounting method, that would be
inconsistent with T.D. 95-61, which revoked the published Customs
ruling (C.S.D 84-82) permitting use of that method.
The requirement in certain of the drawback identification
procedures for accounting for domestic withdrawals (with the exceptions
described) is consistent with T.D. 95-61, in which Customs and Treasury
stated the criteria for accounting methods used for identification of
merchandise or articles for drawback purposes, and it is consistent
with generally accepted accounting procedures.
As for the comment that the description of drawback under 19 U.S.C.
1313(j)(1) as direct identification drawback is a fiction, Customs
disagrees. Under the plain language of this law, the imported
merchandise must be exported or destroyed and drawback is payable on
the amount of duty specifically paid thereon.
Comment: With specific regard to proposed Sec. 191.14(c)(3)(i)
describing the low-to-high inventory accounting method, it was
reiterated that domestic (or nondrawback) input and domestic sales from
inventory should not have to be taken into consideration.
Customs Response: As made clear in the modified regulation, all
receipts and all withdrawals (including domestic withdrawals) must be
accounted for when using the ``ordinary'' low-to-high method (low-to-
high without an established average inventory turn-over period and not
under the ``blanket'' method). Under the low-to-high method with
average inventory turn-over period and the low-to-high blanket method
all receipts into and all withdrawals for export are recorded in the
accounting record and accounted for and domestic withdrawals
(withdrawals for domestic shipment) are not accounted for and do not
affect the available (under the methods) units of merchandise or
articles.
Comment: With specific regard to proposed Sec. 191.14(c)(3)(ii)(B)
concerning the use of low-to-high accounting with an inventory turn-
over period, it was stated that rather than providing that ``the
longest average turn-over period * * * may be used'', this should
provide instead that it ``must'' be used, and asked in this connection
whether users of this method would have an option to choose periods.
Customs Response: This comment has merit and is adopted (although
instead of the change proposed, the provision as redesignated
(Sec. 191.14(c)(3)(iii)(C)) is modified by the addition of a
parenthetical statement to make it clear that users of this method will
have the option of using either the properly established average turn-
over period for the merchandise or articles to be identified, or, if
the person using the method has more than one kind of merchandise or
articles with different inventory turn-over periods, the properly
established average turn-over period which is longest).
Comment: With respect to proposed Sec. 191.14(c)(4) concerning the
average inventory method, a question was raised about the requirement
that claimants wishing to use this inventory method obtain a ruling
under 19 CFR part 177. In particular, it was remarked in this regard
that the use of a weighted average as set forth therein was an
officially recognized method of inventory management. Another comment
asked that a practical example of how this inventory method would work
be included under this provision.
Customs Response: The comment questioning why a ruling is needed
for use of the average method and/or asking that an illustration of the
average method be included in the regulations has merit and is adopted
in Sec. 191.14(c)(4). An example of an average method and provision for
use of the average method, if in compliance with the applicable
requirements of Sec. 191.14 and the example, are included in the
section.
When the average method is used the ratio of each receipt in
inventory to all merchandise in the inventory at the time of the
withdrawal is applied to the withdrawal, so that the withdrawal is
comprised of proportionate quantities of each receipt and each receipt
is correspondingly decremented. The reference to ``weighted averaging''
is removed, because weighting is unnecessary in this method.
As with other methods, when a person proposes a method which
diverts from the methods as provided for in the regulations, a ruling
must be obtained from Headquarters, or approval may be obtained in a
specific manufacturing drawback ruling (see Sec. 191.8 and Appendix B).
Comment: One comment asserted that the requirement in proposed
Sec. 191.14(d)(2)(i) that any accounting system approved by Customs be
``either revenue neutral or favorable to the Government'' was
imprecise, and recommended the addition of the words, ``when compared
to the method of separate storage and specific identification''
following the word ``Government'' in this provision.
Customs Response: Customs disagrees. The phrase, ``either revenue
neutral or favorable to the Government'', was approved after notice and
comment procedures pursuant to T.D. 95-61. The intent here is that the
accounting methods for the identification of merchandise or articles
for drawback purposes must meet the requirements in Sec. 191.14(d)(2),
as demonstrated by the methods provided for in Sec. 191.14 (which now
includes much more illustrative examples).
Subpart B
Comment: It was asked that a reference to drawback products be
included in proposed Sec. 191.21 concerning direct identification
drawback, 19 U.S.C. 1313(a).
Customs Response: This request has merit and is adopted.
Comment: It was stated that proposed Sec. 191.22(d) fell under the
heading of substitution drawback and discussed designation by a
successor; it was stated that this gave the impression that
designations by successors were restricted to substitution claims.
Customs Response: This provision deals with successorship under 19
U.S.C. 1313(s), which concerns only substitution drawback under 19
U.S.C. 1313(b) and 19 U.S.C. 1313(j)(2). The concern raised here is
addressed by making reference in this provision to
[[Page 10982]]
successorship under Sec. 1313(s). Notably, the same change is also made
with respect to Sec. 191.32(f).
Comment: With respect to proposed Sec. 191.22(e), concerning
multiple products, it was advocated that Customs approval should not be
required for manufacturing periods longer than a month. It was also
stated that the use of an alternative to market value in determining
the relative value of multiple products was unnecessary.
Customs Response: These comments are not adopted. As to the length
of the manufacturing period, the provision follows current practice and
provides for ``specific approval of Customs'' for a longer period.
With respect to the determination of relative value, it is provided
in Sec. 191.2(u) (as redesignated) that relative value is based on the
market value of the products, or an alternative value approved by
Customs. In other words, the default value is market value and if
another value is to be used, Customs is to be advised (and such advice
to Customs would be in the specific manufacturing drawback ruling of
the company involved). Otherwise, a claimant would have to establish by
its records that the value used is proper.
It is noted that consistent with the comments and response for
proposed Sec. 191.2(r), the heading for this paragraph is changed from
``By-products'' to ``Multiple products''.
Comment: As to proposed Sec. 191.23(d)(1), it was asserted that the
reference to the ``market value of the merchandise or products used in
manufacture'' was not clear. A clarification of this language was
requested.
Customs Response: The provision is modified to require records to
show the market value of the merchandise or drawback products used to
manufacture the exported or destroyed article, consistent with
Sec. 191.23(c).
It is also noted that a new Sec. 191.23(d) is added providing for
use of the ``abstract'' or ``schedule'' method of showing the quantity
of material used or appearing in the exported or destroyed article.
Thus, Sec. 191.23(d) as proposed is renumbered as Sec. 191.23(e).
Comment: It was requested that proposed Sec. 191.24(a) concerning
the certificate of manufacture and delivery be revised to make clear
that such a certificate was required for each delivery of an article
which had been manufactured or produced.
Customs Response: A certificate of manufacture and delivery is
required for each delivery of an article which has been manufactured or
produced (as defined in Sec. 191.2(q), as redesignated) (this would be
so whether the article has been subject to one or more than one
manufacturing or production operations). The section is modified to
make this clear.
Comment: It was believed that paragraphs (a) and (d) of proposed
Sec. 191.24 were in conflict (one required physical delivery, the other
did not). It was suggested the provisions be reworded for consistency.
Customs Response: This comment has merit and is adopted. Section
191.24 (a) and (d) are revised accordingly.
Comment: Concerning the information required on a certificate of
manufacture and delivery in proposed Sec. 191.24(b), it was asked that
the identity of the transferee and transferor, IRS number, and unique
electronic number assigned to the manufacturing ruling be added.
Customs Response: The identity of the transferee and transferor is
added, consistent with Sec. 191.10, as Sec. 191.24 (b)(1) and (b)(14),
respectively. The comment as to the unique electronic number assigned
to the manufacturing drawback ruling is also adopted in
Sec. 191.24(b)(2), although either the unique electronic number or the
T.D. number may be provided (the latter, if the manufacturer or
producer is operating under a specific manufacturing drawback ruling).
The paragraphs of Sec. 191.24(b) are renumbered accordingly.
Comment: It was stated, with respect to proposed Sec. 191.24(b)(2),
that the section inferred that the HTSUS numbers for designated
merchandise from one certificate of manufacture and delivery should be
transferred to a second certificate of manufacture and delivery. It was
further stated here that, even if known, it would be a useless gesture
to repeat import HTSUS numbers on the second certificate of manufacture
and delivery, as they would not relate to the merchandise designated on
the second certificate. It was asked that the provision clearly state
that HTSUS numbers were not required on a second certificate of
manufacture and delivery.
It was also noted that the language therein to the effect, ``* * *
and applicable duty amounts, if applicable'' appeared redundant.
Customs Response: The reference to the redundancy of ``if
applicable'' has merit. The second ``if applicable'' is deleted from
this provision.
The concerns expressed in relation to HTSUS numbers have merit (in
that the section does not make it clear that the HTSUS numbers required
are those for the imported merchandise, and not for the manufactured or
produced merchandise).
Insofar as the comment suggesting that import HTSUS numbers should
not be repeated on a second certificate of manufacture and delivery,
this comment is not adopted because in many cases involving more than
one certificate of manufacture and delivery for sequential
manufacturing or production operations, the merchandise and/or drawback
products covered by one certificate may not be completely covered by
the other certificate(s).
Comment: It was observed that, in proposed Sec. 191.24(b) (3) and
(4), the words ``if applicable'' did not pertain to this information;
the dates received and used in manufacture should always be supplied.
Customs Response: This comment has merit and is adopted. Customs is
aware of no situation in which the information provided for in the
subsections would not be applicable (particularly in view of the
changes made to the requirement for a certificate of manufacture and
delivery in the principal-agent situation).
Comment: It was stated that proposed Sec. 191.24(c) was unclear
insofar as it required the filing of a certificate of delivery with the
drawback claim unless such certificate was ``previously filed''. The
phrase ``previously filed'' was found to be vague. The previous filing
may be at a different port. It was recommended that information as to
the port and date of filing along with a copy of the certificate be
submitted therewith, if the original certificate was not filed with the
claim.
Customs Response: This comment has merit and is adopted (although
it is adopted in Sec. 191.51(a)(2), and not in this provision).
Comment: With respect to proposed Sec. 191.24(d) concerning the
effect of a certificate of manufacture and delivery, it was asked
whether there would be a place on the certificate of manufacture and
delivery to indicate whether drawback rights were being transferred
and, if not, how an issuer would so indicate on the certificate. It was
also stated that this section should address the ``effect'' of internal
certificates of manufacture and delivery in order to document multiple
manufacturing processes performed by one manufacturer.
Customs Response: The comment regarding the effect of certificates
of manufacture and delivery is addressed by the changes made to the
requirements for a certificate of manufacture and delivery (i.e., such
a certificate is only used when drawback rights are transferred and is
not used in
[[Page 10983]]
a transfer from an agent to the principal).
Therefore, the provision is modified accordingly (i.e., a
certificate of manufacture and delivery establishes the transfer of an
article manufactured or produced under 19 U.S.C. 1313 (a) or (b),
identifies that article as an article to which a potential right to
drawback exists, and assigns the drawback rights for the article from
the transferor to the transferee). For the same reason, the example
referring to principal-agency is removed.
The comment stating that the provision should address the
``effect'' of internal certificates of manufacture and delivery
(internal to the company involved) is not adopted; since certificates
of manufacture and delivery always transfer drawback rights, a
certificate of manufacture and delivery would not be appropriate in
such a situation (because the same legal person transfers and receives
the merchandise).
Comment: With respect to proposed Sec. 191.25(a), it was asked what
would happen if the manufacturer did not want to divulge the abstract
details to the claimant. It was recommended here that the current
practice be followed--i.e., the manufacturer would file the certificate
of manufacture and delivery and advise the claimant of the certificate
number and the port where filed and the claimant could designate
against the certificate.
Customs Response: This comment is not adopted. The procedure
suggested by the comment would create an untenable administrative
burden in Customs processing of drawback claims and of accelerated
payment claims.
(It is noted that Sec. 191.25 as proposed is now redesignated as
Sec. 191.26, due to the addition of a new Sec. 191.25 covering the
destruction of articles manufactured or produced for drawback; and, as
such, Secs. 191.26 and 191.27 as proposed are redesignated as
Secs. 191.27 and 191.28, respectively.)
Comment: Regarding proposed Sec. 191.25(b) addressing recordkeeping
requirements for substitution manufacturing drawback, it was stated
that the requirement that a manufacturer claiming drawback under 19
U.S.C. 1313(b) establish the facts in proposed Sec. 191.25(a)(1) (ii)
and (iii) was incorrect, since under substitution, the manufacturer
only had to provide the quantity and kind of merchandise used or
appearing in the manufactured articles. It was observed that proposed
Sec. 191.25(a)(1) (ii) and (iii) related specifically to drawback under
19 U.S.C. 1313(a), and should be removed from the reference in proposed
Sec. 191.25(b).
Customs Response: This request has merit and is adopted.
Comment: It was observed that the words ``or destroyed'' should be
inserted between the words ``exported'' and ``articles'' in proposed
Sec. 191.25(b)(2). Also, it was noted therein that the term ``(or
appearance in)'' should be ``or appearing in''.
Customs Response: This comment has merit and is adopted.
Comment: Regarding proposed Sec. 191.25(c) dealing with valuable
waste, it was asserted that the statement that ``the quantity of
merchandise identified or designated * * * shall be based on the
quantity of merchandise actually used * * * reduced by the amount of
merchandise which the value of the waste would replace'' was incorrect
and misleading, in that a claimant might think that it need only
designate the reduced quantity (after the waste replacement). It was
recommended that this language be revised.
It was also suggested that it be clarified as to which merchandise
value was subject to reporting and recordkeeping with regard to 19
U.S.C. 1313(a) versus 19 U.S.C. 1313(b).
Customs Response: These comments have merit and are adopted.
Section 191.26(c) as redesignated is revised accordingly.
Comment: Concerning the requirement in proposed Sec. 191.25(e) that
the claimant retain the certificate of delivery if the related
merchandise was not imported by the manufacturer, it was asserted that
this provision would be impossible for the claimant to comply with if
the claimant was a party other than the manufacturer and the
manufacturer was a party other than the importer because the claimant
would never have received the certificate of delivery (the certificate
would be from the importer to the manufacturer). An objection was also
raised here as to the use of the word ``designated'' in the phrase
``designated on a certificate of delivery for manufacturing drawback''
because designation inferred substitution. It was advocated that
proposed Sec. 191.25(e) either be deleted or revised.
Customs Response: The assertion that this provision would be
impossible to comply with when the claimant is a party other than the
manufacturer, and the manufacturer a party other than the importer,
raises a valid concern. The provision is deleted, consistent with the
changes to Secs. 191.10 (c) and (e), 191.51(a), and 191.52(b).
Under the previously cited provisions, certificates of delivery are
required to be in the possession of the party to whom the merchandise
covered in the certificate is delivered, and if that party is not the
claimant, the claimant is required to obtain the certificate and
provide it to Customs, if Customs requests the certificate under the
procedures for ``perfecting'' a claim.
With the deletion of paragraph (e) of Sec. 191.26 as redesignated,
paragraphs (f) and (g) thereof are themselves redesignated as
paragraphs (e) and (f), respectively. Also, the example in
Sec. 191.26(e)(1), as redesignated, is modified, consistent with the
restriction in 19 U.S.C. 1313 (a) and (b) on the use in the United
States after manufacture of articles manufactured or produced under
those provisions.
Comment: In regard to proposed Sec. 191.25(f)(2)(iii) dealing with
the export summary procedure, it was recommended that the clause ``if
known at the time of entry'' be added at the end of the requirement
that ``[e]ach 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''. It was observed here that one
claimant might be unaware of other claimants and to which component
part they could claim.
Customs Response: The request has merit and is adopted.
Comment: With reference to proposed Sec. 191.25(g) dealing with
recordkeeping requirements for manufacturing drawback, it was observed
that this section provided a reasonable reflection of the various
records required to establish entitlement to the kinds of drawback
involved.
However, the concern was expressed about the possible confusion
resulting from the 3-year (from date of payment) record-retention
period for drawback and the general 5-year record retention period for
other Customs purposes. It was suggested that greater clarity was
needed here, because a drawback claimant could think it could dispose
of records after the 3-year period and be subject to penalties for
disposing of them before the termination of the 5-year general period
(if the records were also subject to the 5-year record retention
period).
It was further recommended that the final rule here should
expressly state whether all drawback-related records had to be retained
for a minimum of 5 years from the date of entry of the imported
merchandise, or 3 years from the date of payment of the related
drawback claim, or, alternatively, a detailed, comprehensive list of
records and the time periods for retaining each one should be provided.
It was also noted that in the background of the proposed rule,
[[Page 10984]]
Customs had stated that drawback records ought to be maintained until
the liquidation of the drawback entry became final. It was asserted in
this regard that if more than 3 years had passed since payment, but the
subject drawback claim was still not finally liquidated, and a question
regarding documents arose, Customs should presume that the claimant
satisfied the drawback documentation requirements as long as the
claimant had been approved under the drawback compliance program.
Furthermore, it was suggested that, in the case of an audit
commenced more than 3 years after payment of a drawback claim, Customs
should not be able to recover any drawback paid, if a relevant
supporting record was no longer in existence.
It was additionally asked that a claimant be permitted to maintain
the required documentation in paper or electronic form, either of which
could be used to satisfy the recordkeeping requirements, and where a
party was unable to produce necessary documentation, including records
that were in the possession of another party or an original signature
from a carrier, Customs should allow that party to present alternative
documentation.
It was stated that a reference to 19 U.S.C. 1508(c)(3) should be
included in proposed Sec. 191.25(g) concerning the time period for the
retention of records.
Customs Response: The comment suggesting more clarity as to the
time period for keeping drawback records (3 years from payment) versus
other records provided for in 19 U.S.C. 1508, which are generally
required to be retained for 5 years from the date of entry, filing of a
reconciliation, or exportation, as appropriate, is adopted. Paragraph
(g) of Sec. 191.25, as proposed (now redesignated as Sec. 191.26(f)),
is modified to clarify that the 3-year time period provided for therein
is for drawback purposes, and that the same records may be required,
for other purposes (with a citation to 19 U.S.C. 1508), to be retained
for a different time period.
In reference to the statement in the background that drawback
records ought to be maintained until liquidation of the drawback entry
becomes final, the comment is correct that the applicable statutory
provision (as well as the regulations based thereon) require retention
for 3 years from the date of payment.
It is Customs position that the effect of a claimant not having
records prior to final liquidation but after termination of the 3-year
period, as well as the effect of an audit commenced after termination
of this period, must be determined on a case-by-case basis.
In regard to the comment that a claimant be permitted to maintain
the required documentation in paper or electronic form, a definition of
``records'' has been added to Sec. 191.2, to the effect that records
include electronically generated or machine readable data normally kept
in the ordinary course of business.
A reference to 19 U.S.C. 1508(c)(3) is added to Sec. 191.26(f) as
thus redesignated.
Comment: It was believed that a conflict was apparent in proposed
Sec. 191.26(b)(3) regarding the phrase ``importation of the designated
merchandise''. It was remarked that there was no date of importation
for a drawback product, which could also be designated for drawback.
Customs Response: The comment has merit. The following phrase is
added at the end of paragraph (b)(3) of this section (Sec. 191.27 as
redesignated): ``, or within 5 years of the earliest date of
importation associated with a drawback product''.
Comment: It was asked if the exporter could waive its right to
drawback in proposed Sec. 191.27 by means of a blanket letter covering
extended time frames.
Customs Response: The comment referring to a ``blanket'' letter for
certification by the exporter (or destroyer) assigning drawback rights
has merit. Section 191.28 as thus redesignated is revised accordingly.
Subpart C
Comment: In proposed Sec. 191.31(c), relating to when merchandise
would be considered to be used for purposes of the unused merchandise
drawback law (19 U.S.C. 1313(j)(1)), it was variously recommended that
the words ``In general'' be deleted from the beginning of the first
sentence thereof, and that the sentence be revised to be more specific,
or be deleted entirely.
Customs Response: The comment concerning the use of the phrase ``In
general'' at the beginning of the first sentence of Sec. 191.31(c) is
addressed by changing the heading of the provision to read ``Operations
performed on imported merchandise.'', by deleting the first sentence,
and by adding to the second sentence as proposed the phrase, ``In cases
in which an operation or operations is or are performed on the imported
merchandise,''. Notably, the same changes are also made with respect to
Sec. 191.32(e).
Further definition of the restriction on ``use'' in 19 U.S.C.
1313(j) will be addressed on a case-by-case basis by ruling.
Comment: In proposed Sec. 191.32(c), concerns were raised
essentially as to how Customs would interpret and apply the four
criteria listed therein in making commercial interchangeability
determinations.
It was stated that by listing the four factors to be used in making
such determinations, Customs was creating a ``bright line'' test in
contravention of the legislative intent underlying the statute.
Customs Response: The criteria used by Customs in making commercial
interchangeability determinations are adopted from the legislative
history of 19 U.S.C. 1313(j)(2). In order to better implement
legislative intent, Sec. 191.32(c) is modified to provide that in
determining commercial interchangeability, Customs shall evaluate the
critical properties of the substituted merchandise, and, pursuant to
that evaluation, Customs consideration will include, but not be limited
to, the factors listed in the legislative history.
Further definition of commercial interchangeability will be on a
case-by-case basis, by obtaining a determination as provided in
Sec. 191.32(c). Procedures for contesting specific rulings are found in
19 U.S.C. 1625 and 19 CFR part 177.
Section 191.32(c) is modified to make it clear that the
determination of commercial interchangeability may be obtained by a
formal ruling or submission of all required documentation with each
individual claim, while the nonbinding predetermination is just that,
nonbinding and a pre-determination, and, therefore, is not sufficient
to obtain a determination of commercial interchangeability. Required
documentation for commercial interchangeability determinations includes
competent evidence of the basis on which the merchandise is claimed to
be exchanged.
For example, if merchandise meeting a range of criteria is claimed
to be exchanged in the industry, contracts evidencing that fact should
be provided.
Comment: As concerns the person entitled to claim drawback set
forth in proposed Sec. 191.33(a), it was suggested that the waiver of
drawback by the exporter be permitted by a blanket letter.
Customs Response: The suggestion regarding a blanket certification
by the exporter (or destroyer) assigning drawback rights is adopted.
Section 191.33(a)(2) is revised accordingly. In addition,
Sec. 191.33(a)(2) is changed to provide that the certification must be
filed at the time of, or prior to, filing of the claim(s) covered by
the certification.
[[Page 10985]]
Comment: It was requested, under proposed Sec. 191.33(b)(2), that
blanket waiver letters also be authorized.
Customs Response: Customs agrees. Section 191.33(b)(2) is revised
accordingly. Furthermore, Sec. 191.33(a)(2) is changed to provide that
the certification must be filed at the time of, or prior to, filing of
the claim(s) covered by the certification.
Comment: In the context of proposed Sec. 191.33(b), it was
extensively argued, citing the statute, its legislative history, as
well as case law, that multiple substitutions of merchandise were
permissible under the substitution unused merchandise drawback
provision, 19 U.S.C. 1313(j)(2). It was contended that, by permitting
an intermediate party to claim drawback in proposed Sec. 191.33(b),
Customs itself provided for multiple substitutions. It was asserted
that multiple substitutions were allowable under Sec. 1313(j)(2), in
the case of a successorship thereunder, pursuant to 19 U.S.C. 1313(s).
One comment said that the matter of multiple substitutions under
Sec. 1313(j)(2) should be specifically addressed in the regulations.
Customs Response: Customs is bound by the current statutory
language in 19 U.S.C. 1313(j)(2). Under the current statute (19 U.S.C.
1313(j)(2)), the other (substituted merchandise) must be commercially
interchangeable with the imported merchandise, exported or destroyed
within 3 years after import of the imported merchandise, and before
exportation or destruction, not be used in the United States and be in
the possession of the drawback claimant.
The drawback claimant (under Sec. 1313(j)(2)(C)(ii)) must be the
importer of the imported merchandise or have received from the importer
(and person who paid any duty) a certificate of delivery transferring
to the claimant the imported merchandise, commercially interchangeable
merchandise, or any combination thereof (and the transferred
merchandise will be treated as the imported merchandise and any
retained merchandise will be treated as domestic merchandise), and upon
exportation or destruction of the other merchandise, drawback shall be
refunded.
In the first case (when the claimant is the importer of the
imported merchandise), no multiple substitutions are authorized by the
statute, since the other merchandise must be in the possession of the
claimant, and it (the other merchandise) must be exported (i.e., no
matter how many transfers or substitutions of the merchandise which
becomes the ``other'' merchandise occur prior to receipt by the
claimant of the merchandise, what is required to be exported is the
``other'' merchandise which the claimant must have possessed).
In the second case (when the claimant receives from the importer
and duty payer a certificate of delivery), no multiple substitutions
are authorized by the statute since the other merchandise must be in
the possession of the claimant and it (the other merchandise) must be
exported (i.e., if the ``other'' merchandise is treated as the imported
merchandise, so that it, or commercially interchangeable merchandise,
could be transferred to another party, the transferror would not be the
importer and duty payer, as required by the statute).
Customs position in this regard is consistent with the legislative
history of the statute (see also Senate Report 103-189, page 182,
declaring that Sec. 1313(j)(2) would allow exporters to claim drawback
on imported merchandise, or other domestic or imported merchandise that
is substituted for the imported merchandise).
As for the contention that Customs, in the proposed provision, by
permitting an intermediate party to claim drawback under
Sec. 1313(j)(2), provides for multiple substitutions, Customs
disagrees. Customs proposed interpretation of the statute, authorizing
multiple transfers and claims by intermediate parties (under the waiver
and assignment, and certification procedures) is based on the provision
in Sec. 1313(j)(1) as to who may claim drawback (the exporter (or
destroyer) or, with endorsement, the importer or any intermediate
party), and the legislative history (H. Rep. 103-361, 103d Cong., 1st
Sess. (1993), part I, at 129; Sen. Rep. 103-189, 103d Cong., 1st Sess.
(1993), at 82, noting that, due to a recent court decision, the
provision also permitted an exporter or destroyer to endorse the right
to claim drawback to the importer or any intermediate party).
Section 1313(j)(2) does not specifically authorize the delivery
``directly or indirectly'' of the certificate of delivery for the
imported merchandise, commercially interchangeable merchandise, or any
combination thereof, so the proposed construction of the statute, based
on the allowance in the regulations for an intermediate party to claim
drawback (with the required waiver and assignment, and certification)
must fail.
As for the comment that 19 U.S.C. 1313(s) permits multiple
substitutions under Sec. 1313(j)(2), Customs disagrees. Under
Sec. 1313(s), in pertinent part, a drawback successor (meeting the
requirements of that section) may designate as the basis for drawback
on merchandise possessed by the drawback successor after the date of
succession imported merchandise, commercially interchangeable
merchandise, or any combination thereof for which the predecessor
received, before the date of succession, from the importer and duty
payer a certificate of delivery transferring to the predecessor such
merchandise.
In other words, under Sec. 1313(s), the predecessor receives a
certificate of delivery for the ``other'' merchandise and the successor
possesses the merchandise. Section 1313(j)(2) requires the party
claiming drawback to both possess the ``other'' merchandise and to have
received from the importer and duty payer a certificate of delivery for
the imported merchandise, commercially interchangeable merchandise, or
any combination thereof. Thus, Sec. 1313(s) allows drawback when these
parties are different and a permitted succession occurs, it does not
allow a further substitution, nor does the legislative history have any
indication of an intent to add such substantive rights in the
successorship situation.
The comment that the restriction on multiple substitutions should
be provided for in the regulations themselves has merit and is adopted.
Section 191.33(b)(1)(iii) is revised accordingly.
Comment: It was suggested, with respect to proposed
Sec. 191.33(b)(1)(ii), that the words ``or destroys'' should be
inserted following the phrase, ``commercially interchangeable
merchandise, and exports'' and before the phrase, ``such transferred
merchandise'', and the words ``or destroyer'' should be inserted
following the phrase, ``that exporter'', and before the phrase, ``shall
be entitled to claim drawback''.
Customs Response: The comment has merit and is adopted.
Comment: It was recommended, in proposed Sec. 191.34(a)(1), that
instead of certifying on the certificate of delivery that the party did
not use ``the exported or destroyed merchandise'', the requirement
should be for a certificate that the party did not use ``the
transferred merchandise''. It was noted that the merchandise, at the
time of the certification, would not yet be exported or destroyed.
Customs Response: The comment has merit and is adopted.
Comment: With respect to proposed Sec. 191.34(a)(2), it was stated
that instead of requiring the drawback claimant to ``retain the
certificate for submission to Customs as part of the claim, if
requested'', the requirement should be
[[Page 10986]]
to ``retain the certificate for submission to Customs when requested''.
Customs Response: Consistent with Sec. 191.51, certificates of
delivery are not ``part'' of claims but support claims, so that if
Customs requests a certificate of delivery upon which a drawback claim
is dependent and the certificate is not provided, the claim is not
rejected but, instead, is denied. Since a certificate of delivery is
not ``part'' of a complete claim (as the regulation is modified),
providing a certificate of delivery upon Customs request is in the
nature of ``perfecting'' a claim. Notably, this is added as one of the
instances of perfection provided in Sec. 191.52(b), and may be done
outside the 3-year time for filing a complete claim.
The denial of a drawback claim for failure to supply, in response
to Customs request, a certificate of delivery upon which part of the
claim is dependent is limited to denial of that portion of the claim
dependent on the certificate of delivery which is not supplied. The
provision is changed to make this clear.
Also, pursuant to changes to other sections (see Secs. 191.51(a)
and 191.52(b)), certificates of delivery are required to be in the
possession of the party to whom the merchandise covered in the
certificate was delivered, and if that party is not the claimant, the
claimant is required to obtain the certificate and provide it to
Customs, if Customs requests the certificate under the procedures for
``perfecting'' a claim. The provision is changed to make this clear.
Comment: With respect to proposed Sec. 191.34 (a) and (b)
generally, it was contended that these provisions imply that a
certificate of delivery which directly identified imported merchandise
could not be used to transfer merchandise to a party who claimed
drawback under 19 U.S.C. 1313(j)(2). It was asserted that the opposite
was true, and that proposed Sec. 191.34(a) should specifically state
that a directly identified certificate of delivery to a party may be
subject to a Sec. 1313(j)(1) or 1313(j)(2) claim by that party.
Customs Response: The intent of these provisions is to make clear
the requirements for and effect of certificates of delivery. Section
191.34(a) does not preclude the use of a certificate of delivery for
the imported merchandise (and not substituted merchandise) which then
may be the subject of a further delivery (under substitution procedures
under 19 U.S.C. 1313(j)(2)), nor does Sec. 191.34(b) preclude transfers
(but not substitutions) before and/or after the substitution-transfer.
The provisions are changed to make this clearer.
Further, the provisions are changed to reflect that the certificate
of delivery is required to be retained by the person to whom the
merchandise was delivered (and is not a ``part'' of a drawback claim),
and must be provided to Customs by the claimant upon a request to
``perfect'' the claim.
Comment: It was observed that proposed Sec. 191.34(b) did not
contain a provision dealing with intermediate transfers.
Customs Response: The comment has merit and is adopted. A sentence
similar to the last sentence of Sec. 191.34(a) is added to
Sec. 191.34(b).
Further, in the penultimate sentence of Sec. 191.34(b) as proposed,
the words ``as imported merchandise for the purpose of manufacturing
drawback'' are deleted and replaced with ``for any other drawback
purposes''.
Comment: It was requested that the procedures for the waiver of
prior notice set forth in proposed Sec. 191.35 for purposes of 19
U.S.C. 1313(j) also be employed for purposes of drawback under 19
U.S.C. 1313(c). It was further suggested that the form referred to here
and in other sections as ``Notice of Intent to Export'' or ``Notice of
Intent to Export or Destroy'' be renamed as the ``Notice of Intent to
Export, Destroy or Return Merchandise to Customs Custody''.
Customs Response: The comment, suggesting that the provision for
waiver of prior notice should be extended to drawback under 19 U.S.C.
1313(c), is not adopted. The statutory provisions are different. Under
Sec. 1313(c) the merchandise is required to be returned to Customs
custody for exportation or destruction under Customs supervision; there
is no such requirement in 19 U.S.C. 1313(j) for the return to Customs
custody. The form for export or destruction or return to Customs
custody, however, is renamed, as stated above.
Comment: It was recommended that the information required on the
notice of intent in proposed Sec. 191.35(b) include, in addition to the
name and telephone number of a contact person, the mailing address, fax
number and, if available, the e-mail address.
Also, it was stated that the phrase, ``* * * the bill of lading
number, if known'', as set forth therein, was unnecessary, since the
bill of lading number would not be known prior to export of the
merchandise (the bill of lading is numbered upon preparation of the
Outward Manifest).
Customs Response: The recommendation that other information
regarding the contact person should be stated has merit and is adopted.
The comment suggesting deletion of the requirement for the bill of
lading number, if known, is not adopted (i.e., the requirement is
subject to the caveat ``if known'').
Comment: It was stated, with respect to proposed Sec. 191.35(c)
that the regulations on the process of filing the notice of intent to
export should provide the ability to file notice to Customs
electronically. Furthermore, it was contended that Customs should be
required to notify the party named in proposed Sec. 191.35(b) by
telephone, within 2 working days, and that a telephone contact should
be required as well.
Customs Response: The comment that the regulations should provide
for electronic filing of the ``Notice of Intent to Export, Destroy, or
Return Merchandise for Purposes of Drawback'' has merit and is adopted.
This is accomplished by the addition of a definition of ``filing'' in
Sec. 191.2. The comment (that the party should be notified by
telephone) is not adopted. Customs believes that the existing
requirements in Sec. 191.35(c) are adequate as regards the examination
of merchandise to be exported or destroyed.
Comment: Referring to the time and place of examination in proposed
Sec. 191.35(d), it was mentioned that, for consistency, the notice of
the decision to examine provided for in this provision should be ``in
writing''.
Customs Response: The suggestion that notice of the decision to
examine should be in writing has merit, although the requirement for
notice in this regard is in Sec. 191.35(c), not (d). Thus, the
requested modification is made to Sec. 191.35(c).
Comment: It was observed that inclusion of a requirement in
proposed Sec. 191.36(a)(1)(i) for the estimated number of claims to be
filed under this procedure, and when they would be filed, would assist
Customs in maintaining control over the filing of the claims under this
provision.
Customs Response: A requirement to this effect is included in
Sec. 191.36(a)(1)(i).
Comment: It was stated that the IRS number (9-digit number plus two
character suffix) was needed in proposed Sec. 191.36(a)(1)(i) (A) and
(B).
Customs Response: The comment has merit and is adopted.
Comment: A question was presented as to the meaning of the phrase,
``Export period covered by this application'' appearing in proposed
Sec. 191.36(a)(1)(i)(C). It was asked
[[Page 10987]]
whether the term ``export period'' included past as well as future
export activity.
Customs Response: ``Export period covered by this application'', as
used in Sec. 191.36(a)(1)(i)(C), means the time beginning with the
first export for which prior notice was not given and ending with the
time of the last export for which such notice was not given. Section
191.36 deals with merchandise which has been exported without the
filing of a notice of intent to do so. This provision, therefore,
covers past transactions.
Comment: There was a recommendation that the words ``and/or'' be
added to proposed Sec. 191.36(a)(1)(iii)(A) (1) and (2), on the basis
that a claimant might not have ``laboratory records'' as such.
Customs Response: The comment has merit and is adopted, with the
additional statement that the requirements for the records are ``as
applicable''.
Comment: It was contended that the restriction, in proposed
Sec. 191.36(a)(2), of retroactivity for waivers of prior notice to a
``one-time'' use by the claimant was unfair and might not be legal.
It was also stated that the one-time restriction should be on a
product basis, because, with the diversification of business today, a
firm could have several business areas that operated independently and
could discover retroactive unused merchandise drawback scenarios at
different times. It was further observed that the phrase ``unless good
cause is shown'' afforded Customs too much discretion and could lead to
capricious judgments.
Customs Response: The one-time restriction is retained in
Sec. 191.36(a)(2). Because this provision may be used for all exports
occurring prior to approval by Customs of the application, a reasonably
prudent drawback claimant should not be harmed (i.e., once aware of the
requirement for prior notice of intent to export or destroy, such
notice should be given, and under this procedure past exports may
qualify for drawback).
It is Customs position that the phrase ``unless good cause is
shown'' as used in Sec. 191.36(a)(2) gives proper discretion to the
Customs officers responsible for administering the provision.
Comment: In relation to proposed Sec. 191.36(c), the suggestion was
made that the words ``receipt of the application of'' should be
inserted immediately after the words ``within 90 days of'', so that the
provision did not require Customs to make its decision to approve or
deny and then inform the applicant within 90 days of that decision. It
was further stated in this regard that Customs should have to justify
and state its reasons for the ``inability to approve, deny or act on
the application''. It was observed that this could be accomplished by
the addition of ``and the reason thereof'' at the end of this section.
Customs Response: The comments have merit and are adopted.
Comment: It was asserted that the second sentence in proposed
Sec. 191.36(e) should be: ``If the applicant seeks waiver of prior
notice under 191.91, reference should be included that application was
submitted under this section and whether or not it was approved.''.
Customs Response: The comment has merit and is adopted (but by a
change to Sec. 191.91(b)(2)(ii) stating that the statement as to action
on previous waiver requests includes one-time waivers under
Sec. 191.36).
Comment: It was believed that proposed Sec. 191.37 provided no
guidance as to the specific document type and format that the claimant
or other recordkeeper had to maintain.
Concern was also expressed here that possible confusion could
result from the 3-year (from date of payment) record-retention period
for drawback, and the general 5-year record retention period for other
Customs purposes. More clarity was requested.
It was further stated that if more than 3 years had passed since
payment but a drawback claim was not finally liquidated and a question
regarding documents arose, Customs should presume that the claimant had
satisfied the drawback documentation requirements as long as the
claimant was approved under the drawback compliance program.
It was additionally suggested that a claimant should be permitted
to maintain the required documentation in paper or electronic form.
Customs Response: Customs plans to make available to the public,
from the field drawback offices, descriptions, with examples, of the
documents referred to in this section (now redesignated as Sec. 191.38,
due to the addition of a Sec. 191.37 regarding destruction).
Section 191.38(a) as redesignated is also modified to make it clear
that the 3-year time period provided for therein is for drawback
purposes, and that the same records may be required, for other
purposes, to be retained for a different time period. To this end, a
citation to 19 U.S.C. 1508 is also added to redesignated
Sec. 191.38(a).
While records must be retained for 3 years from the date of payment
of a drawback claim, it is Customs position, as previously stated, that
the effect of a claimant no longer having records following this period
must be determined on a case-by-case basis, when the related drawback
claim has not yet been finally liquidated.
Concerning the particular format in which records may be kept, as
also previously noted, Customs has determined to include a definition
in Sec. 191.2 for the term ``records'' based on the definition of this
term appearing in 19 U.S.C. 1508.
Comment: It was observed that a reference to the destruction of
merchandise should be included in proposed Sec. 191.37(b)(2), and that
a section should be added to subpart C addressing the destruction of
merchandise.
Customs Response: The comment that Sec. 191.38(b)(2) as
redesignated should also include a reference to destruction has merit
and is adopted. Also, as already noted, a new Sec. 191.37 is added to
subpart C addressing the destruction of unused merchandise under
Customs supervision. A similar section regarding destruction for
manufacturing drawback has likewise been included in subpart B.
Subpart D
Comment: It was asked, with reference to proposed Sec. 191.41,
whether taxes or fees are eligible for drawback on rejected merchandise
under 19 U.S.C. 1313(c).
Customs Response: Section 1313(c)) authorizes drawback on
``duties''. However, this comment indirectly raises the question of the
applicability of 26 U.S.C. 5062(c) (drawback on distilled spirits,
wines, or beer, which are unmerchantable or do not conform to sample or
specifications). To alert the public to the possible application of
that provision, a parenthetical reference to subpart P dealing with
that type of drawback is added to Sec. 191.41.
Comment: It was observed that a close reading of proposed
Sec. 191.42(c), (e), and (f) revealed that the ``Notice of Intent to
Export/Destroy'' form was to be used not only as a notice of intent to
export or destroy merchandise, but also as a notice of intent to return
merchandise to Customs custody. As such, it was suggested that the form
be appropriately renamed.
It was further stated that, by providing, in proposed
Sec. 191.42(e) and (f), certain situations in which merchandise would
``be deemed'' to have been returned to Customs custody, these
provisions indicated that the merchandise might not actually have been
returned to Customs custody. It was advocated that this should be
[[Page 10988]]
reconciled with the wording in proposed Sec. 191.42(a) providing that
the claimant had to return the merchandise to Customs custody.
In addition, for consistency, it was requested here that each time
the terms ``exported'' or ``exportations'' were used in proposed
Sec. 191.42, the terms ``destroyed'' and ``destructions'' should be
added.
Customs Response: The request regarding the use of ``destroyed'' or
``destruction'' with the corresponding exportation terms has merit and
is adopted, and, as previously noted, the form is re-named.
Customs, however, sees no need for any change to Sec. 191.42(a).
Since Sec. 191.42(e) and (f) provide that merchandise is ``deemed'' to
have been returned to Customs custody in the situations provided for,
the requirement for return to Customs custody in Sec. 191.42(a) is met.
Comment: It was requested that the waiver of prior notice and the
one-time retroactive claim procedures provided for unused merchandise
in proposed Sec. 191.36 be made available for drawback under 19 U.S.C.
1313(c) and for destroyed merchandise, and that if this were done,
merchandise exported or destroyed under these procedures should be
``deemed'' to be ``returned to Customs custody'' or destroyed ``under
Customs supervision''.
Customs Response: The comment suggesting that waiver of prior
notice and the one-time waiver procedures be made available for
drawback under 19 U.S.C. 1313(c) is not adopted. In particular, as
previously pointed out, 19 U.S.C. 1313(c) and 1313(j) are different
statutory provisions. Under Sec. 1313(c), there must be a return to
Customs custody for exportation. There is no such requirement in
Sec. 1313(j).
Comment: It was recommended that the information required in the
notice under proposed Sec. 191.42(d) should include, in addition to the
name and telephone number of a contact person, the mailing address, fax
number and, if available, the e-mail address.
Customs Response: Customs agrees, and Sec. 191.42(d) is changed to
provide for this additional information.
Comment: It was asked that the notification given by Customs to
examine merchandise under the first sentence in proposed Sec. 191.42(e)
be in writing.
Customs Response: This comment has merit and is adopted.
Comment: A concern was expressed in relation to proposed
Sec. 191.42(i), in that the provision appeared to require the
exportation of rejected merchandise under Customs supervision.
Customs Response: The comment raises a valid concern. The statute
does not require exportation to be under Customs supervision. The
phrase, ``under Customs supervision'', is thus deleted from this
section. Also, a parenthetical reference to subpart G is added to
Sec. 191.42(i).
Comment: In proposed Sec. 191.44, it was suggested that the
reference to ``Sec. 191.71(a)'' be changed to ``191.71''.
Customs Response: This comment has merit and is adopted.
Subpart E
Comment: It was asserted that, in proposed Sec. 191.51, a complete
claim should contain a calculation sheet.
Customs Response: The provision in Sec. 191.51(b) does require the
correct calculation of drawback due, under which claims exceeding 99%
of the duties will not be paid until corrected, and claims for less
than 99% will be paid as filed, unless the claimant amends the claim.
This provision is modified to provide for those situations when
drawback is 100% of duties.
In addition, it is noted that the provision on the time for filing
a complete claim (in proposed Sec. 191.52(a)(2)) is moved to
Sec. 191.51, as paragraph (e), and titled ``Time of filing''. The
provision in 19 U.S.C. 1313(r)(3), providing for an extension to the
time for filing a drawback claim when a claimant establishes that it
was unable to file the drawback claim because of a major disaster is
also included in Sec. 191.51(e).
Comment: A question was posed, in connection with proposed
Sec. 191.51(a)(1), as to why drawback offices still required a coding
sheet for disk/electronic filings, and would those offices be informed
to eliminate this requirement.
Customs Response: As set forth in Sec. 191.51(a)(1), a coding sheet
is required, unless the data is filed electronically.
Comment: Concern was expressed about the requirement in proposed
Sec. 191.51(a)(2) that certificates of delivery be in the possession of
the claimant at the time of filing the claim.
Customs Response: Certificates of delivery must be in possession of
the party to whom the merchandise is delivered. Section 191.51(a)(2) is
changed to so state.
Comment: A question was presented regarding the statement in
proposed Sec. 191.51(b) that claims for less than 99 percent would be
paid as filed, unless the claimant amended the claim. It was advocated
that Customs make an additional refund in such cases on its own.
Customs Response: Customs recognizes the interest of a claimant in
being able to exercise caution by under-claiming. Also, adoption of the
procedure suggested by the comment would create an untenable
administrative burden for Customs in its processing of drawback claims.
Comment: With respect to proposed Sec. 191.51(c), it was suggested
that the effective dates for providing HTSUS numbers on drawback claims
be included in the regulations themselves. It was also contended that
if a certificate of manufacture and delivery was identified or
designated, the claimant should be exempt from providing the HTSUS
numbers on the related claim. As such, it was requested that the
phrase, ``and/or the certificate of manufacture and delivery'', be
deleted from proposed Sec. 191.51(c).
A concern was also expressed that proposed Sec. 191.51(c) might
imply that for exports, if Schedule B commodity numbers were used, the
entire ten-digit number would be required. It was advocated that it
should be specified here that the Schedule B number was limited to 6-
digits.
A question was raised as to what the effect of incorrect HTSUS
numbers or Schedule B commodity numbers would be when those numbers
were incorrect on the entry documentation or Shipper's Export
Declarations (SEDs) from which they were derived. It was suggested that
``good faith effort'' language, as discussed in prior consultations,
should be incorporated within proposed Sec. 191.51. It was further
suggested that if drawback claims were required to provide the SED
tariff number to the 6-digit level for exports, they should also be
permitted to provide a statement as to any discrepancy between that
number and the actual number that would be reported to Customs at entry
if the merchandise had been imported.
In addition, with reference to the provision in proposed
Sec. 191.51(c) that claimants using certificates of manufacture and
delivery could meet the requirement with the HTSUS number on such a
certificate, it was asked if this meant the HTSUS number of the
imported designated merchandise, or the manufactured article, since the
claimant might be using the previously manufactured article to make a
second product for export.
Customs Response: The comment that the effective dates for when
HTSUS numbers or Schedule B commodity numbers are required should be
included in the regulations has merit and is adopted. Section 191.51(c)
adds a provision in this regard.
[[Page 10989]]
As for the second comment suggesting deletion of the reference to a
certificate of manufacture and delivery, this comment points out a lack
of clarity in the regulation. The provision is modified to make it
clear that the 6-digit HTSUS number is always required for the
designated imported merchandise, and that this number shall be provided
from the entry documentation when the claimant is the importer of
record and from the certificate of delivery and/or certificate of
manufacture and delivery when the claimant is not the importer of
record. Because the certificate of manufacture and delivery is part of
a drawback claim, manufacturing drawback claimants filing claims for
which such a certificate or certificates is or are parts may meet the
requirement for providing the HTSUS number for the imported merchandise
with the HTSUS number(s) on such certificate(s).
In the case of exports, the HTSUS number(s) or Schedule B commodity
number(s) (to the 6-digit level in each instance) are also always
required, and they shall be from the Shipper's Export Declaration(s)
when required, or if not required, the numbers shall be the numbers
that the exporter would have set forth on the SED(s), but for the
exemption from the requirement for an SED.
As provided in Secs. 191.10(b)(12) and 191.24(b), HTSUS numbers
and/or Schedule B commodity number(s) are not required to be included
for the transferred merchandise on certificates of delivery or
certificates of manufacture and delivery unless the transferred
merchandise is the designated imported merchandise or merchandise
substituted therefor under 19 U.S.C. 1313(j)(2).
The comment regarding the possible implication that the 10-digit
HTSUS number is required for Schedule B numbers from an SED is
addressed by making clear in Sec. 191.51(c) that the 6-digit limitation
applies to both HTSUS numbers and/or Schedule B numbers.
As for the comment regarding the effect on drawback of the use of
incorrect HTSUS numbers or Schedule B commodity numbers, when those
numbers were incorrect on the entry documentation and/or SEDs from
which they were derived, the requirement is that the HTSUS numbers for
the designated imported merchandise be from the entry summary and other
entry documentation (Secs. 191.51(c), 191.10(b)(11), 191.24(b)(4)) and
that the HTSUS numbers or Schedule B commodity numbers for the exported
merchandise or articles be from the SED or, if no SED is required, the
numbers that would have been on an SED if required. Thus, in each
instance (except in the case of substituted merchandise under 19 U.S.C.
1313(j)(2), in which, according to the legislative history (see above),
classification is one of the criteria on which commercial
interchangeability is based), the HTSUS or Schedule B commodity numbers
are derived from other documents. That is, no independent
classification is required.
It is true that earlier consultations discussed a ``good faith
effort'' in the HTSUS or Schedule B commodity numbers to be used on
drawback entries and certificates. As stated in the background to the
proposed regulations, the intent of the requirement for HTSUS or
Schedule B commodity numbers was to enable Customs to ensure greater
compliance through the use of enhanced penalty and automated drawback
selectivity programs (62 FR 3090). The change from earlier discussions
under which, instead of requiring independent classification for
drawback, the HTSUS or Schedule B commodity numbers to be provided on
drawback entries and certificates are those already required (except in
the case of substitution under 19 U.S.C. 1313(j)(2), see above),
simplifies drawback procedures in this regard. As stated above, all
that is required is that the HTSUS numbers or Schedule B commodity
numbers from the entry summary and other entry documentation or the SED
be provided.
In view of these changes, Customs sees no need, benefit, or purpose
to be served by some sort of ``good faith effort'' requirement.
However, the current requirement, which merely provides for the source
of the classification number for exports, does not preclude a claimant
from explaining any discrepancy in this number for other drawback
purposes (e.g., commercial interchangeability under 19 U.S.C.
1313(j)(2) or same kind and quality under 19 U.S.C. 1313(p)).
The comment questioning whether the HTSUS number on a certificate
of manufacture and delivery is that for the imported designated
merchandise or the manufactured article raises a valid concern and is
addressed by further clarifying Sec. 191.51(c) in this respect.
Comment: A definition of the term ``perfecting'' was requested in
proposed Sec. 191.52. It was also requested that Customs develop a
formal procedure for tolling or suspending the 3-year claim completion
period during an audit, internal advice request, or other action
initiated by Customs regarding a drawback claim.
It was observed that copies of export bills of lading were
requested in proposed Sec. 191.52(b)(1), but that in proposed
Sec. 191.72(a), the original was required.
It was also asked whether protesting a drawback claim gave the
right to amend the claim even though the 3-year period may have passed.
Customs Response: Customs believes that a specific definition of
the term ``perfecting'' in Sec. 191.52 is unnecessary. The comment that
procedures should be provided for tolling or suspending the 3-year
period for completion of a claim is also not adopted. It is the
claimant's responsibility to file a complete claim; a prudent claimant
would ensure timely filing of a complete claim for all possible
applicable provisions.
The comment regarding copies or originals of bills of lading, in
Sec. 191.52(b)(1), raises a valid concern. Modifications, consistent
Sec. 191.72(a), are made here.
In response to the question of whether protesting a claim may allow
a claimant to amend a claim outside the 3-year time period, the 3-year
time period is statutory, and may not be extended unless specifically
provided for in the statute. As part of protest procedures, a claim may
be perfected, but it may not be amended (insofar as amendment would
result in a complete claim not being filed within the 3-year time
limit).
It is noted that the heading of Sec. 191.52 is changed to
``Rejecting, perfecting or amending claims'', and the heading of
paragraph (a) thereof is changed to ``Rejecting the claim''.
Comment: It was believed that, for consistency, the notification to
the applicant provided for in proposed Sec. 191.52(a)(1) should be ``in
writing.''
Customs Response: This comment has merit and is adopted.
Comment: It was asserted that proposed Sec. 191.52(a)(2) failed to
recognize the retroactive application of 19 U.S.C. 1313(p), in that the
restriction in 19 U.S.C. 1313(r)(1) did not apply to claims under
Sec. 1313(p).
Customs Response: As for the retroactive application of 19 U.S.C.
1313(p), it is Customs position that resolution of the applicability of
Sec. 1313(p) to past drawback claims will be resolved on a case-by-case
basis.
In addition, a reference to 19 U.S.C. 1313(r)(3) is included in
Sec. 191.51(a)(2) as proposed, which, as noted, is redesignated as
Sec. 191.51(e). Additionally, Sec. 191.51(e), as thus redesignated,
which provides the time for filing a completed claim, is further
modified by the addition of the statutory provision that claims not
completed within the 3-year period (unless specifically exempted) shall
be considered abandoned.
[[Page 10990]]
Comment: With reference to proposed Sec. 191.52(b), it was thought
that a new paragraph should be added to include certificates of
delivery requested by Customs among the additional evidence or
information that could be filed more than 3 years after the date of
exportation. It was also suggested that a new paragraph be added to
provide for the submission of other alternative information as approved
by the drawback office, in lieu of that set forth in proposed
Sec. 191.52(b)(1)-(3). In addition, it was mentioned that provision
should be made for a situation when the drawback office decides after
receipt of the claim that the claimant should have its own filer code.
Furthermore, it was recommended that, for consistency, the notification
to the applicant provided for in this provision should be in writing.
Customs Response: The comment suggesting the inclusion of requested
certificates of delivery to perfect a drawback claim has merit and is
adopted. The comment regarding the addition of a paragraph providing
for other alternative information is not adopted, as not necessary.
Section Sec. 191.52(b) already provides that the information described
therein may include, but not be limited to, the information set forth
in paragraphs (b)(1)-(3) thereof, as modified. The comment regarding a
claimant's filer code is not adopted, as unnecessary. The comment that,
for consistency, the notification to the filer should be ``in writing''
has merit and is adopted.
Comment: It was observed, with respect to proposed
Sec. 191.52(b)(2), that if the drawback claimant was not also the
importer, the requirement that the import entry and invoice be
submitted would be difficult to meet. The comment suggests that
providing the entry number and a full description of the imported
merchandise (but not the total duty paid or total value and volume of
the import) should be sufficient for Customs.
Customs Response: Customs believes that the total duty paid is no
more sensitive than the other information required under
Sec. 191.52(b). This comment is not adopted.
Comment: It was suggested that it be specifically set forth in
proposed Sec. 191.52(b)(2) and (3) that other types of data, in lieu of
invoices, would be acceptable.
Customs Response: Customs believes that this is unnecessary. As
previously noted, Sec. 191.52(b) already provides that the information
required may include, but is not limited to, that specifically set
forth thereunder.
Comment: Regarding proposed Sec. 191.52(c), the request was made
that the word ``original'' be added before ``drawback claim'' to avoid
confusion.
Customs Response: The comment that ``original'' should be added
before ``drawback claim'' has merit and is adopted.
Comment: A question was raised about the need for proposed
Sec. 191.53, concerning the ``restructuring'' of claims; it was asked
that this term be defined. The concern was also expressed that drawback
offices might not fairly exercise the discretionary authority given to
them in this section.
Customs Response: The procedures in Sec. 191.53 permit Customs to
require claimants to restructure their drawback claims so as to foster
Customs administrative efficiency, subject to consideration by Customs
of relevant factors (as listed in the provision). To protect the
interests of claimants, a claimant may demonstrate an inability or
impracticability in restructuring, with the criteria for so
demonstrating specifically provided, and may propose a mutually
acceptable alternative. Customs plans to provide training on the
restructuring procedures to the field drawback offices.
Subpart F
Comment: A recommendation was made that a provision be added to
proposed Sec. 191.61 for the amendment of a claimant's specific or
general manufacturing drawback ruling, if verification revealed errors
or deficiencies with respect thereto. Current Sec. 191.10(e) was
referred to here.
Customs Response: Regarding amendments to correct errors or
deficiencies found in verification, Customs agrees that Sec. 191.61
should be appropriately changed to deal with this matter, although not
with inclusion of all of the material currently in Sec. 191.10(e). In
this connection, with the change in terminology from drawback
``contracts'' to specific and general manufacturing drawback rulings,
modification of the rulings and the effect thereof are governed by 19
U.S.C. 1625 and 19 CFR part 177.
As changed, Sec. 191.61 adds a new paragraph (d), to provide that
Customs Headquarters shall be promptly informed of any errors or
deficiencies in a specific manufacturing drawback ruling or a general
manufacturing drawback ruling, the letter of notification of intent to
operate under a general manufacturing drawback ruling, or the
acknowledgment of the letter of notification of intent, and that
Customs Headquarters shall take appropriate action (with a citation to
19 U.S.C. 1625 and 19 CFR part 177).
Comment: It was stated that proposed Sec. 191.61(b) appeared to be
limited to manufacturing claims, and recommended that the language be
expanded to cover the verification of all types of claims.
Customs Response: Customs agrees. Section 191.61 is modified
accordingly.
Comment: With reference to proposed Sec. 191.61(c), even though
firm deadlines were not able to be established in the absence of
``deemed liquidated'' language, it was asked that Customs indicate the
maximum time period it planned to use to liquidate a drawback entry.
Customs Response: This comment is not adopted. It is Customs
position that, as previously set forth, no such time period must be
specified, but claimants can avail themselves of accelerated drawback
provisions to obtain early payment secured by a bond.
Comment: The suggestion was made that if the technical definition
of ``falsification'', as used in proposed Sec. 191.62, meant or implied
fraudulent activity to the exclusion of negligent activity, then, in
order to clarify the subject matter thereof (which included both fraud
and negligence), the title of proposed Sec. 191.62 should be changed.
It was also observed here that a negligent violation was not
necessarily a falsification.
Customs Response: The heading of Sec. 191.62 is changed to
``Penalties''.
Comment: The question was raised in relation to proposed
Sec. 191.62(a) as to why criminal penalties were included therein. It
was believed that Customs had agreed to eliminate the criminal
provisions if civil penalties were included in the Customs
Modernization Act.
Customs Response: Neither the statute nor the legislative history
thereto contains any such provision.
Subpart G
Comment: It was believed that the phrase, ``after receipt'', should
be added after ``4 working days'' in proposed Sec. 191.71(a).
Customs Response: Customs agrees. The provision is changed
accordingly.
Comment: For consistency, it was recommended that advising the
filer, as provided in proposed Sec. 191.71(a), be ``in writing''. It
was also stated that the 7-day period for notice before the intended
date of destruction was too long and that the same 2-day period used
for notice of export should be used.
Customs Response: Customs agrees that advising the filer should be
in
[[Page 10991]]
writing, and this provision is changed accordingly. However, Customs
disagrees that a change in the applicable time period is needed.
Customs does not anticipate undue confusion resulting from the
different time frames for different purposes.
Comment: The view was expressed that proposed Sec. 191.71(b) failed
to provide for the evidence required when the merchandise was
destroyed, in those cases where Customs did not notify the filer within
the time in proposed Sec. 191.71(a). It was believed that the wording
of this provision should be changed from, ``When Customs declines the
opportunity to attend'', to: ``When Customs does not attend (or
witness) the destruction''.
Customs Response: This comment has merit and is adopted, although
the modification of the wording, by the addition of ``(or witness)'' is
not made, as unnecessary. Evidence of destruction must be provided
whether or not Customs declines the opportunity to attend the
destruction, or Customs decides to witness the destruction but does not
do so.
Comment: A rewording of proposed Sec. 191.71(c) was recommended,
concerning the submission of evidence of destruction.
Customs Response: Customs agrees. After destruction the claimant
must provide either the Notice of Intent to Export, Destroy, or Return
Merchandise for Purposes of Drawback, certified by the Customs officer
attending the destruction, or, if Customs has not witnessed the
destruction, the evidence that destruction took place in accordance
with the approved Notice of Intent to Export, Destroy, or Return
Merchandise for Purposes of Drawback. The provision is changed
accordingly.
In addition, the heading of subpart G is changed from ``Evidence of
Exportation and Destruction'' to ``Exportation and Destruction''
because the subpart contains export and destruction provisions on
procedures as well as evidence.
Comment: It was stated that the list of documentation for
establishing exportation in proposed Sec. 191.72(a) through (e) is not
all inclusive. A suggestion was put forth here that the introductory
text of proposed Sec. 191.72 preceding paragraphs (a) through (e)
should be revised to read: ``The procedures for establishing
exportation outlined by this section include, but are not limited
to:''. It was further recommended that the word ``Alternative'' should
be removed from the heading and introductory text. It was also
suggested that the word ``time'' of exportation in the introductory
text be replaced with ``date'' of exportation.
Customs Response: The comment that ``include, but are not limited
to'' should be inserted is adopted. The use of the word ``alternative''
in the heading and introductory text of Sec. 191.72 is superfluous, as
this section contains the exportation procedures in question. The
heading is changed to ``Exportation procedures''. Also, the word
``time'' appearing in the introductory text is changed to ``date''.
Comment: The requirement in proposed Sec. 191.72(a) for an original
bill of lading was said to be inconsistent with industry practice. The
elimination of this requirement was requested.
Customs Response: Customs agrees that the requirement for ``the
original'' bill of lading or other document is inconsistent with actual
practice. The provision is thus changed to provide for ``an originally
signed bill of lading, air waybill, freight waybill, Canadian Customs
manifest, and/or cargo manifest, or copies thereof certified by the
exporting carrier or holder of the original, issued by the exporting
carrier''. This is consistent with C.S.D. 82-59.
Comment: The recommendation was made that a separate column be
added in the sample format for the export summary procedure in proposed
Sec. 191.73, to indicate the exporter's name, if different from the
claimant. Additionally, it was asked if this procedure could be used
for transfers to a foreign trade zone.
It was also noted that the capitalization of Chronological Export
Summary was inconsistent in this provision.
Customs Response: A column is added to the sample format in
Sec. 191.73 to indicate the exporter's name if different from the
claimant. In addition, a change is made to subpart R to include
language making the export summary procedure applicable to transfers to
foreign trade zones of merchandise placed in zone-restricted status
(see 19 CFR 146.44). Also, Sec. 191.73 is changed to consistently
capitalize ``Chronological Summary of Exports'' throughout. Also,
export identification is provided for ``deemed'' exports under subpart
K.
Comment: In proposed Sec. 191.73(b), it was said that the number
sign (``#'') after the word ``destination'' appeared to be a ``typo''
Customs Response: Customs agrees, and the number sign ``#'' is
deleted.
Comment: It was asked that a requirement be added to proposed
Sec. 191.73(c), specifying that the claimant, if not the exporter,
would have to have an endorsement from the exporter to order to claim
drawback.
Customs Response: The comment is correct. However, this is now
provided for in Sec. 191.82.
Comment: A recommendation was made that the word ``proof''
appearing in proposed Sec. 191.73(c)(1) be changed to ``evidence''. It
was also suggested that the last sentence thereof should be amended
consistent with proposed Sec. 191.72(a), which would prevent a filer
from claiming that a copy or unsigned duplicate original was
satisfactory.
Customs Response: These proposals have merit and are adopted. In
Sec. 191.73(c)(1), the word ``proof'' is changed to ``evidence'', and a
reference is made to the actual evidence provided for in
Sec. 191.72(a).
Comment: The deletion of the last sentence in proposed
Sec. 191.73(c)(2) was requested.
Customs Response: Customs agrees. The last sentence in
Sec. 191.73(c)(2) is removed, and the second sentence is modified by
the addition, at the end thereof, of the phrase ``, and such records
are subject to review by Customs''.
Comment: It was asked whether the reference in proposed
Sec. 191.75(a) and (b) to ``Sec. 191.73'' should instead be to
``191.72''.
Customs Response: The comment has merit. However, reference to both
Secs. 191.72 and 191.73 is intended. The provision is changed
accordingly.
Comment: A question was raised as to the meaning of the statement
in proposed Sec. 191.75(a) that no bond would be required when the U.S.
Government claimed drawback.
Customs Response: This comment raises a valid concern. The quoted
statement, in Sec. 191.75(a) as proposed, is of general application and
is incorporated, as a separate paragraph, in Sec. 191.4, which is
revised accordingly.
Comment: In proposed Sec. 191.75(b), it was believed that a
reference to Sec. 191.4(b) was needed.
Customs Responses: The comment has merit and is adopted.
Subpart H
Comment: With reference to proposed Sec. 191.81, the comment was
made that nowhere did Customs discuss the actual determination of
drawback due.
It was also suggested that the regulations include a provision
encouraging the timely and expeditious payment and liquidation of
drawback claims.
Customs Response: Section 191.51(b) addresses the determination of
drawback due. Also, the suggested inclusion of a provision encouraging
[[Page 10992]]
timely and expeditious payment of drawback and liquidation of drawback
entries is not adopted. The accelerated payment procedure provides for
expeditious payment of drawback. As previously noted, Customs takes the
position that a categorical time limit regarding liquidation of
drawback entries will not be set out, but claimants can avail
themselves of accelerated drawback provisiosn to obtain early payment
secured by a bond.
Comment: A comment suggested that the following be added at the end
of the first sentence of proposed Sec. 191.81(b)(1): ``only to the
extent the merchandise in the quantities identified or designated is
subject to a drawback claim''.
Customs Response: Customs agrees. To this end, the phrase, ``, to
the extent that the estimated duties on the unliquidated import entry
are included in the drawback claim for which drawback on estimated
duties is requested under this paragraph.'', is added at the end of the
first sentence of Sec. 191.81(b)(1).
It is also pointed out here that in identifying, to the best of its
knowledge, each import entry on a drawback claim that has been
protested or that is the subject of a request for reliquidation, as
required under Sec. 191.81(b), the drawback claimant must use
reasonable care (see 19 U.S.C. 1593a).
Comment: A clear definition of what constituted a voluntary tender
was recommended in relation to proposed Sec. 191.81(c), as well as a
corresponding change to the waiver language in proposed
Sec. 191.81(c)(3). In this latter regard, it was asked what exactly was
meant by the phrase in proposed Sec. 191.81(c)(3), ``waiving any right
to payment or refund under other provisions of law''.
Customs Response: A definition of voluntary tenders is added in
Sec. 191.3(a)(1)(iii). In addition, for purposes of clarification,
proposed Sec. 191.81(c)(3) is modified in the same manner as
Sec. 191.81(b)(1). It is also noted that proposed Sec. 191.81(c)(1) and
(2) are combined and redesignated as Sec. 191.81(c)(1), and proposed
Sec. 191.81(c)(3) is redesignated as Sec. 191.81(c)(2).
Comment: It was suggested that the heading in proposed
Sec. 191.81(f) be changed to ``By-products''. It was further suggested
that the term ``Relative values'' be added there as well.
Customs Response: In view of the changes made in Sec. 191.2(u) as
redesignated, the heading of Sec. 191.81(f) is changed to read
``Relative value; multiple products''.
Comment: Noting that specific reference was made in proposed
Sec. 191.82 as to the party who could claim drawback under 19 U.S.C.
1313(j)(1), it was suggested that specific reference also be provided
in this section for Sec. 1313(j)(2). Also, based on the second sentence
of proposed Sec. 191.175(a), Customs was urged to adopt a similar
provision to apply to claims for all other types of drawback.
It was further asked whether the ``certification'' referred to in
this section had to be executed on a new Customs Form or whether it
could be done on company letterhead; whether it had to be submitted as
part of the claim; and whether the manufacturer would have to issue a
certificate of manufacture and delivery to the exporter who would then
issue a certification back to the manufacturer allowing the
manufacturer to file and claim drawback.
Customs Response: A reference to Sec. 191.33(b) is included in
Sec. 191.82, for parties who may claim under 19 U.S.C. 1313(j)(2).
The comment that a provision such as in Sec. 191.175(a) be added to
Sec. 191.82 is not adopted. The authority for the provision in
Sec. 191.175(a) is specifically provided in 19 U.S.C. 1313(p)(3)(C),
but such a provision is not specifically provided for other subsections
of the drawback law.
The certification may be executed on company letterhead as in
current practice; it need not be submitted as part of a claim (although
it must be filed at the time of, or prior to, the filing of the claim).
Furthermore, in the situation covered by this provision, a certificate
of manufacture and delivery is not required from the manufacturer to
the exporter, nor is a certificate required from the exporter back to
the manufacturer (see Sec. 191.25). Also, provision is made for the
filing of a ``blanket'' certification for a specified period, under
this provision, consistent with similar provisions elsewhere in the
regulations (see Secs. 191.28, 191.33(a), 191.33(b)).
Subpart I
Comment: In proposed Secs. 191.91 and 191.92, it was advocated that
a successor be allowed to assume a predecessor's approvals for waiver
of prior notice and accelerated payment, on the basis of the language
in 19 U.S.C. 1313(s)(3)(A) providing for drawback successorship when an
entity had transferred to another entity all or substantially all of
the rights, privileges, immunities, powers, duties, and liabilities of
the predecessor.
It was suggested in this regard that such an assumption would be
effective for one year from the date of succession. Within that year,
the successor corporation would have to re-apply for the privilege. If
the successor company applied within one year, then the privilege would
remain in force until the new application was acted upon by Customs.
The suggestion was also put forth that the effect of existing
waiver of prior notice and accelerated payment approvals, and
requirements for reapplication, be included in the regulations
themselves.
Customs Response: The assumption of waiver of prior notice and
accelerated payment approvals by a successor has some merit, although
Customs must ensure the protection of the revenue. Therefore, the
provisions (Secs. 191.91 and 191.92) are modified to provide for the
limited, temporary assumption by a successor of waiver of prior notice
of intent to export and accelerated payment approvals in a
successorship such as that described in 19 U.S.C. 1313(s)(3)(A).
Unlimited assumption by the successor, however, is not provided for
in a successorship such as that described in 19 U.S.C. 1313(s)(3)(B)
(transfer of the assets and other business interests of a division,
plant, or other business unit of the predecessor, under certain
conditions).
The assumption by the successor of waiver of prior notice and
accelerated payment approvals provided for will be effective for 1 year
from the date of succession. Within that year, the successor must re-
apply following the application procedures in Sec. 191.91 and/or
191.92, as appropriate, and if the successor applies within 1 year, the
approval of waiver of prior notice or accelerated payment remains in
force until the new application is acted upon by Customs.
Furthermore, the request that provision for existing waiver of
prior notice and accelerated payment approvals and requirements for re-
applications be included in the regulations themselves has merit and is
adopted.
In addition, all references to ``privileges'' are eliminated from
subpart I and throughout part 191, and the references are replaced by
reference to the particular procedure involved (either waiver of prior
notice of intent to export or accelerated payment).
Comment: It was observed in relation to proposed Sec. 191.91(b)(1)
that the procedures for waiver of prior notice should also be extended
to applicants who might wish to apply under 19 U.S.C. 1313(c).
Customs Response: This comment is not adopted. The waiver of the
notice of intent to export applies under 19 U.S.C.
[[Page 10993]]
1313(j), which is a different statutory provision than 19 U.S.C.
1313(c). Under 19 U.S.C. 1313(c), the merchandise is required to be
returned to Customs custody for exportation. No such requirement exists
with respect to 19 U.S.C. 1313(j).
Comment: The observation was made that the nine-digit suffix, plus
two-character suffix, should be required in proposed
Sec. 191.91(b)(2)(i)(A) and (B). Also, with reference to proposed
Sec. 191.91(b)(2)(i)(B), it was noted that the name, address, and
identification number of current exporters, if the applicant was not
the exporter, would be of minimal value, since it would be an extensive
list and the exporters would be constantly changing.
Customs Response: Paragraphs (b)(2)(i)(A) and (B) of Sec. 191.91
are modified to require the suffix in question; and paragraph
(b)(2)(i)(B) thereof is further modified to require only the 3 most
frequently used exporters, if there are multiple exporters, to appear
in the application.
Comment: The question was asked as to what was meant by the term
``export period'', in proposed Sec. 191.91(b)(2)(i)(C). It was further
asserted in this connection that it was unnecessary to require
applicants to provide the ``export period covered'', except in cases
where the application was intended to cover other than prospective
transactions.
Customs Response: The export period covered by the application
means the period during which exports are made for which waiver of
prior notice is requested (the period may be indefinite beginning with
a stated date; or it may be a period with specified beginning and
ending dates); it is Customs position that this information is
necessary.
Comment: In proposed Sec. 191.91(b)(2)(i)(F), (G), and (H), it was
recommended that the reference to the ``next 12-month period'' be
changed to refer to the next calendar year; it was asked what other
requirements were referred to in proposed Sec. 191.91(b)(2)(iii)(B);
and it was suggested that a statement be required in proposed
Sec. 191.91(b)(2)(ii) as to whether an applicant was previously denied
or had been approved for the one-time waiver procedure.
Customs Response: The ``12-month period'' referred to in
Sec. 191.91(b)(2)(F), (G), and (H) is changed to make it clear that the
period covered is the next calendar year; Sec. 191.91(b)(2)(ii) is
changed to include a statement of whether the applicant was previously
denied or had approved a 1-time waiver of prior notice under
Sec. 191.36; and the evidence referred to in Sec. 191.91(b)(2)(iii)(B)
is ``any other'' evidence, and the provision is changed by the addition
of this modifier.
Comment: The suggestion was made that the words ``and/or'' be added
for proposed Sec. 191.91(b)(2)(iii)(A)(1) and (2), on the ground that a
claimant may not have laboratory records as such.
Customs Response: This comment has merit and is adopted, with the
additional statement that the requirements for the records are ``as
applicable''.
Comment: It was remarked that Customs should justify and state its
reason for the ``inability to* * *act on the application'', as set
forth in proposed Sec. 191.91(c)(1). It was further observed in this
connection that the last sentence should add the language, ``but are
not limited to''. It was stated here that the proposal was too
restrictive, and that it would require granting of a waiver if the
applicant had a history of bad exams.
Customs Response: The comment that Customs must justify and state
its reason for the inability to act on the application has merit and is
adopted. Customs will endeavor to meet a directory 90-day time limit in
this regard. The comment requesting the addition of ``but are not
limited to'' is also adopted, for the reason given.
Comment: In proposed Sec. 191.91(c)(2), it was contended that
Customs did not have the right to limit future filings for waiver of
prior notice (and it was contended that Customs could not limit
retroactive waivers of prior notice). It was asked that if the waiver
could only be ``prospective'' as used in proposed Sec. 191.91(c)(2), it
be from the date of the application for waiver, not the waiver
approval. In this regard, it was noted that proposed Sec. 191.36
provided for claims that were filed pending disposition of application.
The question was put as to what an applicant was supposed to do between
filing its request for waiver of notice of intent to export and
receiving approval of the request.
Customs Response: These comments are not adopted. The elimination
of unlimited retroactive waivers of prior notice meets the interest of
eliminating a significant internal control weakness reported by the
Treasury Inspector General; while the provision for a one-time
opportunity for drawback claims under 19 U.S.C. 1313(j), without having
provided Customs with prior notice, meets the interest of claimants who
may not have known of the requirement for prior notice of intent to
export before the exports occurred.
Approvals of waiver of prior notice are effective for exportations
occurring after the date of approval. Between the time of filing a
request for waiver of prior notice and approval of the waiver,
applicants should provide prior notice of export as provided in
Sec. 191.35.
Comment: With reference to proposed Sec. 191.91(d), it was
contended that a ``stay'' without cause could become too burdensome to
the drawback community. It was urged that the provision be eliminated
entirely or changed to allow Customs to inspect a few export
transactions during a specified period of time. If Customs wanted to
``stay'' waiver of prior notice altogether, then there should be a
``good cause'' requirement for staying waiver of prior notice, for any
duration of time. In this latter connection, it was asked that a stay
be specifically limited, such as for 30 days.
It was also observed that under proposed Sec. 191.91(d), a ``stay''
would take effect on the date of the agency's letter of notification,
even though such a letter would be received after the date thereon. It
was requested here that a privilege holder be afforded a reasonable
period after the date of Customs letter of notification of a ``stay''.
In addition, a suggestion was made that the last sentence of
proposed Sec. 191.91(d) make clear that, upon reinstatement, the waiver
of prior notice would apply to exports occurring on or after the date
of such reinstatement. Also, an editorial comment recommended that the
word ``agency'' appearing several times in the provision be replaced
with other terminology.
Customs Response: The stay procedure for waiver of prior notice is
retained in Sec. 191.91(d). The waiver of prior notice procedure has
been identified as a significant weakness in Customs administration of
drawback. As explained in the BACKGROUND'' section of the proposed
rule, the stay procedure would not be an adverse action, suspension, or
other form of sanction against the person for whom the privilege is
approved; rather it is a limitation on what is being granted in the
approval itself, there being no statutory entitlement to this
procedure. Customs continues to believe that this limitation would best
protect the revenue and the public interest in sound administration of
the drawback program.
However, the time within which a stay goes into effect, that is,
before the person received notice of the stay, raises concerns. The
provision is accordingly changed to provide that written notice of a
stay be given to the person for
[[Page 10994]]
whom waiver of prior notice was approved, and that such written notice
shall be by registered or certified mail. The stay will take effect two
working days after the date the person signs the return post office
receipt for the registered mail. The delay of two business days is
required by 19 CFR Sec. 191.35(a) (i.e., notice of intent to export at
least 2 working days prior to the date of intended export).
The comment stating that ``good cause'' or similar language be
added in proposed Sec. 191.91(d) governing the implementation of a stay
is not adopted. Once Customs has waived the requirement for prior
notice of intent to export, Customs has no way of ensuring, before the
fact, that the exported merchandise is the merchandise claimed and
meets the requirements of the drawback law. Thus, it continues to be
Customs position that an approval of waiver of prior notice may be
stayed, should Customs for any reason desire to examine the subject
merchandise prior to its exportation, for purposes of verification.
However, the provision is modified to provide that in its letter
notifying the person to whom approval of waiver of prior notice has
been granted Customs must specify the reason(s) for the stay.
In regard to the comment asking that the period for a stay be
limited to a specific period, such as 30 days, this comment is also not
adopted. The period for a stay remains ``a specified reasonable
period''. The reason that the time-period may not be specified is that
the time will vary from case to case (e.g., one person for whom waiver
of prior notice has been approved may have many exports within a month
and another may have only a few exports in a year; thus it could be
that sufficient exports for Customs to verify compliance with the
drawback laws occur in less than a month or no exports occur within
several months).
The editorial comment (noting the frequency of use of the term
``agency'') is addressed. Also, Sec. 191.91(d) is further modified by
the addition of the phrase, ``, for exports occurring on or after the
date of reinstitution'' after the word ``resume'' in the last sentence
of this section.
Comment: A question was raised as to the meaning of the phrase
``proposed revocation'' as used in proposed Sec. 191.91(e).
Clarification was also urged here as to when such a revocation would
take effect.
Customs Response: To address the commenter's inquiry, a proposed
revocation does not immediately deprive the person of waiver of prior
notice procedures, unless it is accompanied by a notice of stay under
Sec. 191.91(d), under which the stay is effective two working days
after the date the person signs the return post office receipt for the
registered mail. The provision is changed to make that clear.
Otherwise, proposed revocation will become effective 30 days after
written notice thereof, unless the proposed revocation is timely
challenged under Sec. 191.91(g). If challenged, the procedures in
Sec. 191.91(g) apply to the proposed revocation.
In addition, because it is anticipated that many claimants will
have approval of waiver of prior notice, approval of accelerated
payment of drawback (under Sec. 191.92), and certification in the
drawback compliance program (under subpart S), in the interest of
administrative efficiency, therefore, the same delay procedures (except
for the stay, which is only potentially applicable to waiver of prior
notice) are provided for revocation of accelerated payment and
certification in the drawback compliance program.
As a result, claimants with approval for more than one of these
procedures and/or certification (see Secs. 191.93 and 191.195) could be
notified in one written notice of the proposed revocation of the
procedure[s] and/or certification, if applicable.
Comment: It was stated that, in proposed Sec. 191.91(f), the claim
should also be flagged to indicate that it was the first claim filed
with waiver of prior notice, to reduce the possibility of the drawback
office's failure to record that the claimant had waiver of prior
notice.
Customs Response: This comment has merit and is adopted, the last
sentence in the section being changed to provide that in addition to
submitting a copy of the approval letter with the first drawback claim
filed in any drawback office other than the approving office, reference
shall be made to the approval of waiver of prior notice in the first
drawback claim filed after approval in the approving drawback office.
Comment: The contention was made that the requirements for
accelerated payment of drawback in proposed Sec. 191.92 were virtually
identical to the requirements for participation in the drawback
compliance program. The accelerated payment requirements were said to
be quite onerous, and would be time consuming and costly.
Customs Response: Customs disagrees. It is Customs position that
the criteria for approval for accelerated payment and certification for
participation in the drawback compliance program are not identical. The
criteria for each were developed with specific regard for each of the
programs and criteria.
Comment: It was advocated that accelerated payment of drawback
should be available under 19 U.S.C. 1313(d).
Customs Response: This comment has merit and is adopted (consistent
with current practice). Section 191.92(a) is modified to provide that
accelerated payment of drawback is available for all kinds of drawback
claims, unless specifically excepted.
Additionally, accelerated payment of drawback is defined as the
payment of estimated drawback before liquidation of the drawback entry.
Also, this provision is modified to make it clear that, consistent with
current practice, accelerated payment of drawback is only available
when Customs review of the request for accelerated payment of drawback
does not find omissions from, or inconsistencies with, the requirements
of the drawback law and part 191. A reference to subpart E is also
added to this provision, to make it clear to the public that, at a
minimum, a complete drawback claim meeting the requirements in that
subpart is required for accelerated drawback.
Comment: It was believed that the IRS number (9 digits, plus 2
character suffix) was needed in proposed Sec. 191.92(b)(1)(ii).
Customs Response: This comment has merit and is adopted.
Comment: A requirement should be added to proposed
Sec. 191.92(e)(2) that Customs justify its reasons for being unable to
act on the application within 90 days.
Customs Response: This request has merit and is adopted.
Comment: Opposition was expressed to the requirement in proposed
Sec. 191.92(e) that approval of accelerated payment operated only
prospectively. This was said to be counter to past administrative
practices. Past drawback claims could be bonded by single transaction
bonds.
Customs Response: Customs agrees. Consistent with current practice,
accelerated payment, following its approval, will be available for
claims filed prior thereto, but such claims must be covered by a single
transaction bond. Section 191.92(e) is so modified.
Comment: The need for a stay of the privilege of accelerated
payment was questioned, in proposed Sec. 191.92(f).
Customs Response: The provision for a ``stay'' is removed for
approvals of accelerated payment because, in the case of that
procedure, there are procedures protecting the revenue (the requirement
for a bond in an amount sufficient to cover the estimated amount
[[Page 10995]]
of drawback to be claimed during the term of the bond
(Secs. 191.92(b)(1)(iv)(A) through (C) and 191.92(d)), and Customs may
determine whether to grant accelerated payment for a claim before the
fact (distinguished from waiver of prior notice, in which case the
exportation has occurred and Customs has no before-the-fact opportunity
for review). Section 191.92 is changed accordingly; paragraph (f)
thereof is removed, and the succeeding paragraphs duly redesignated.
Comment: The meaning of ``proposed revocation'' in proposed
Sec. 191.92(g) was questioned, as well as when the notice thereof would
take effect.
Customs Response: Section 191.92(f) as thus redesignated from
proposed Sec. 191.92(g) is revised, consistent with the changes made in
Sec. 191.91(e).
Comment: With reference to proposed Sec. 191.92(h), it was advised
that the first claim should be flagged to reduce the possibility of the
drawback office's failure to record that the claimant had approval of
accelerated payment.
Customs Response: Customs agrees. Section 191.92(g) as redesignated
from proposed Sec. 191.92(h) is revised, consistent with the changes
made in Sec. 191.91(f).
Comment: In proposed Sec. 191.92(j), it was requested that Customs
address the circumstance when accelerated payment was less than the
actual refund entitlement.
A request was also made here that the requirement for certifying
the drawback claim for payment within 3 weeks after filing should be
changed to 3 weeks after filing a complete and accurate claim or,
alternatively, the term ``filing'' should be clearly defined as
requiring filing a complete and accurate claim, not simple
presentation. Furthermore, it was asserted that the parenthetical in
proposed Sec. 191.92(j) appeared to contradict proposed paragraph (h)
thereof, by restricting accelerated payment to the office where the
privilege was approved.
Customs Response: Customs disagrees that it should address the
situation where a party claims less drawback than entitled. Customs
recognizes the interest of a claimant in exercising caution by under-
claiming, as well as its own interest in not assuming the
administrative burden of correcting such claims.
Also, Sec. 191.92(a) has been modified to make it clear that,
consistent with current practice, accelerated payment of drawback under
Sec. 191.92 is only available when Customs review of the request for
accelerated payment does not find omissions from, or inconsistencies
with, the requirements of the drawback law and part 191. In this
regard, a parenthetical reference to subpart E is added to
Sec. 191.92(a).
The comment that this provision may be inconsistent with proposed
Sec. 191.92(h) (now redesignated as Sec. 191.92(g)), permitting
accelerated payment to be applied for at a drawback office other than
the approving office, has merit. The first sentence of Sec. 191.92(i)
as redesignated from proposed Sec. 191.92(j) is modified, by deleting
the parenthetical therefrom, in order to make it clear that the
drawback office where the request for accelerated payment is made is
responsible for certifying the claim for payment.
Comment: It was suggested that proposed Sec. 191.93, relating to
combined applications, be revised to more closely parallel
Sec. 191.195, concerning the drawback compliance program.
Customs Response: This comment has merit in that it raises the
concern that Sec. 191.93 does not refer to the drawback compliance
program, which may also be applied for in a combined application for
waiver of prior notice and approval of accelerated payment of drawback.
The provision is modified by the addition of a parenthetical citation
to Sec. 191.195.
Subpart K
Comment: The requirement in proposed Sec. 191.112(h) that the
drawback office certify the Customs Form 7514 after the vessel or
aircraft had cleared from the port of entry, and return a copy to the
exporter, was said to be unnecessary. The deletion of this requirement
was advised.
Customs Response: Customs agrees. The certification is deleted
therefrom. Also, if the export summary procedure is used under this
subpart, the requirements for a notice of lading in Sec. 191.112(d)(1)
and declaration in Sec. 191.112(f)(1) must be met.
Subpart M
Comment: A question was raised as to the requirement in proposed
Sec. 191.133(a) that 19 U.S.C. 1313(g) applied only to materials used
in the ``original'' construction and equipment of vessels or aircraft.
An objection was also raised about the reference therein to
Sec. 1313(g) not applying to material not required for the safe
operation of a vessel or aircraft.
Customs Response: A similar comment was made when the same
provision was added to the current regulations (see T.D. 83-212).
Customs position at that time was that this restriction followed the
intent of Congress. If an article is not attached to, or made a part
of, a vessel, or is merely placed aboard the vessel and not required
for safe operation of the vessel or safety of the crew, Congress did
not intend that it be the subject of drawback. Customs position here
has not changed.
However, the comment does raise a valid concern. The statute (19
U.S.C. 1313(g)) provides for drawback on materials imported and used in
the construction and equipment of the covered vessels. The statute does
not directly address the precise question of whether the materials have
to be imported and used in original construction and equipment of
vessels and aircraft.
Accordingly, Sec. 191.133(a) is modified to provide that 19 U.S.C.
1313(g) applies only to materials used in the original construction and
equipment of vessels and aircraft, or to materials used in a ``major
conversion'' of a vessel or aircraft. ``Major conversion'' has the same
meaning as in 46 U.S.C. 2101(14a) (a conversion that substantially
changes the dimensions or carrying capacity of the vessel or aircraft,
changes the type of the vessel or aircraft, substantially prolongs the
life of the vessel or aircraft, or otherwise so changes the vessel or
aircraft that it is essentially a new vessel or aircraft, as determined
by Customs).
In either instance, the restriction against materials used for
alteration or repair, or against materials not required for safe
operation of the vessel or aircraft, continues in effect (except to the
extent that a qualifying ``major conversion'' could be considered an
alteration).
Subpart O
Comment: A comment with reference to proposed Sec. 191.152(c)
suggested the use of ``evidence of destruction'' instead of ``proof of
destruction''.
Customs Response: This comment has merit and is adopted.
Subpart P
Comment: The comment was made that the phrase ``any additional
proof'' in proposed Sec. 191.163(b) be changed to ``any additional
evidence''.
Customs Response: This comment has merit and is adopted.
Subpart Q
Comment: It was requested that Customs implement in proposed
Sec. 191.175(b) certain interim procedures relating to certificates of
manufacture and delivery and certificates of delivery, as set forth in
a Customs issuance dated September 2, 1994 (although referred to in the
comment as being dated September 14, 1994).
[[Page 10996]]
Customs Response: The provision implements the statutory language
(see Secs. 191.173(c)(1) and (2), and 191.174(c)(1) and (2)). Further,
it is not inconsistent with the cited interim procedures which, in any
case, are superseded by these regulations.
Comment: It was requested, in connection with proposed
Sec. 191.176, that Customs allow drawback claimants a certain period of
time in which to file new drawback claims, or amend previously filed
claims, that satisfy the requirements of 19 U.S.C. 1313(p), without
regard to the requirement that drawback claims would have to be
completed within 3 years after the date of exportation.
Customs Response: As previously stated, it is Customs position that
the applicability of 19 U.S.C. 1313(p) to past drawback claims will be
resolved on a case-by-case basis.
Subpart R
Comment: It was suggested that the phrase, ``Proof of export'', in
proposed Sec. 191.183(b)(1), be changed to ``Evidence of export''.
Customs Response: This comment has merit and is adopted.
Comment: A comment suggested adoption of Customs Form 214 for
drawback in proposed Sec. 191.183(b), and that the functions that
proposed Sec. 191.183(c) required to be performed by drawback offices
should be removed.
Customs Response: Customs agrees. The Customs Form for transfers to
a foreign trade zone of zone restricted merchandise (Customs Form 214)
is used for notice of transfer instead of Customs Form 7514. Section
191.183(b) is revised accordingly, and Sec. 191.183(c) is deleted, as
unnecessary.
Subpart S
Comment: It was asked how Customs intended to inform the public of
its obligations to drawback, pursuant to proposed Sec. 191.191.
Customs Response: The statute and the regulations inform the public
of its obligations and responsibilities for drawback purposes. As a
matter of outreach and to enhance understanding thereof, Customs is
developing and will make available, from field drawback offices,
materials to help inform the public of its obligations and
responsibilities for drawback purposes. This material will be available
to the public in paper form and electronically.
Comment: Regarding the individuals authorized to sign an
application for the drawback compliance program, in proposed
Sec. 191.193(c), it was suggested that this matter be reviewed in
connection with parts 111, 177, and 191 of the Customs Regulations.
Customs Response: The concerns expressed in this comment have
already been addressed by the changes made to Sec. 191.6.
Comment: It was recommended that proposed Sec. 191.193(c)(1)
include the 9-digit IRS number, plus two character suffix, as being
required to be used on drawback claims.
Customs Response: This comment has merit and is adopted.
Comment: It was requested that the term ``subcontractor'' in
proposed Sec. 191.193(c)(2) be defined. It was noted that ``agent'' in
proposed Sec. 191.9(d)(2) was defined, but not ``subcontractor''.
Customs Response: The concerns raised here are addressed by changes
made in Secs. 191.9, 191.10, and 191.26 (Sec. 191.25 as proposed).
Comment: The recommendation was made that the oversight
responsibilities of the official described in proposed
Sec. 191.193(d)(1) be specifically shown, and that proposed
Sec. 191.193(d)(1) be further amended to require the name, title, and
telephone number of the individual(s) responsible for the actual
maintenance of the drawback program.
Customs Response: This comment has merit and is adopted in part;
provision is made for the inclusion of the individual(s) responsible
for the actual maintenance of the drawback program (as opposed to
supervisory responsiblity), if different from the person responsible
for oversight of the drawback program. Additionally, the reference
therein to ``claimant's'' is changed to ``applicant's'' because
applicants for participation in the drawback compliance program may be
other than claimants.
Comment: It was recommended, with respect to proposed
Sec. 191.193(d)(2), that if a drawback manufacturing ruling or
acknowledgment had been previously issued under Sec. 191.8 or 191.7, a
copy or statement of that fact with the date and place of issue be
submitted.
Customs Response: This comment has merit and is adopted.
Comment: It was stated that proposed Sec. 191.194 had a paragraph
(c)(1) but no paragraph (c)(2).
Customs Response: Section 191.194(c) is revised accordingly.
Comment: A question arose as to the meaning of ``proposed
revocation'' in proposed Sec. 191.194(e), and it was further asked when
such a revocation would take effect. It was also suggested that the
words ``drawback compliance'' be inserted after the word ``negotiated''
and before the words ``alternative program'' therein.
Customs Response: Section 191.194(e) is changed, consistent with
the changes made in Secs. 191.91(e) and 191.92(g). Also, the editorial
comment that ``drawback compliance'' should be inserted between
``negotiated alternative'' and ``program'' has merit and is adopted.
Appendix A
Comment: It was asked why a detailed format for the drawback
compliance program was not included as an appendix to proposed part
191.
Customs Response: The material referred to by the comment was
determined to be appropriate for publication as part of the regulations
or an appendix thereto. The material, and other similar material, will,
when satisfactorily developed, be made available to the public both in
paper form (from the field drawback offices) and electronically.
Comment: A comment was made that the general manufacturing drawback
rulings in Appendix A should be identified by their Treasury Decision
(T.D.) numbers (or some other Customs-assigned number).
Customs Response: The comment has merit and is adopted; the general
manufacturing drawback rulings are identified by their T.D. numbers.
Additionally, to provide easier access to the public and to simplify
use of the appendices, a table of contents is added to each Appendix
listing each of the general and specific manufacturing drawback
rulings, the general manufacturing drawback rulings are set forth in
alphabetical order in Appendix A, and the specific manufacturing
drawback rulings are set forth in numerical order in Appendix B.
Comment: It was observed with respect to Appendix A that ``I.A.''
(General Instructions) did not include the basis of claim for drawback
as one of the items; that ``operator'' was used instead of
``claimant''; that ``I.A.3.'' should be explained better and reference
made to proposed Sec. 191.6; that ``I.B.'' indicated old general T.D.
numbers were superseded, but did not include T.D.s 83-53, 83-8, 83-77,
and 83-80; that the meaning of ``privileges'' in the last sentence of
``I.B.'' was unclear; that Ruling ``III.'' needed an explanatory
paragraph as to when this Ruling would apply (it was also asked if the
reference therein to T.D.s 55027(2) and 55207(1) could be removed).
Customs Response: The basis of claim is added to the information
that the applicant must provide in ``I.A.'' (General Instructions) in
Appendix A; the word ``operator'' therein is changed to ``manufacturer
or producer'';
[[Page 10997]]
reference is added to Sec. 191.6; the T.D.s not included in the
proposed rule are added; to avoid confusion the phrase, ``including all
privileges of the previous `contract' '', is deleted from the last
sentence of ``I.B.'' of the General Instructions in Appendix A.
The comment on Ruling ``III.'' (agent's general ruling) is
addressed by changes to Sec. 191.9, making clear that principal-agency
drawback principles may be used for both 19 U.S.C. 1313(a) and 1313(b),
and are not limited to situations with multiple manufacturers or
producers The introductory sentence for ``III.'' is changed to read:
``Manufacturers or producers operating under this general manufacturing
drawback ruling must comply with T.D.s 55027(2), 55207(1), and 19
U.S.C. 1313(b), if applicable, as well as 19 CFR part 191 (see
particularly, Sec. 191.9).''). Also, a new paragraph ``C.'' (General
Statement) concerning principal-agency is added to Ruling ``II.'', and
the succeeding paragraphs are redesignated accordingly.
Comment: The following was also stated with respect to ``I.A.'' and
``I.B.'' of the General Instructions to proposed Appendix A: the IRS
number with suffix should be included; the General Instructions should
not omit any information, or applicants should be directed to
Sec. 191.7 for complete information; and in ``I.B.'', the list of
general Treasury Decisions appeared to omit T.D. 84-49, and T.D. 83-123
for Relative Values was not described in full, even though listed.
Customs Response: The IRS number with suffix is added in ``I.A.'';
the general requirements are changed to require all necessary
information, and reference to Sec. 191.7 is added.
T.D. 83-123 is combined with T.D. 81-234 to cover manufacturing or
producing under 19 U.S.C. 1313(a), with or without multiple products.
It is Customs position that all necessary components from these T.D.s
were included (except for the sentences in the Procedures and Records
Maintained section that ``The records of the manufacturer or producer
establishing compliance with these requirements will be available for
audit by Customs during business hours.'', and ``Drawback is not
payable without proof of compliance.'', both of which are now added to
that section, consistent with the other general manufacturing drawback
rulings).
Although included in the specific rulings in proposed Appendix B
(consistent with current practice), T.D. 84-49 is now added to Appendix
A as a general manufacturing drawback ruling.
Comment: It was suggested that the passage under ``II.C.'' of
Appendix A should instead read: ``The imported merchandise or drawback
products will be used to manufacture or produce articles in accordance
with 19 CFR 191.2(p)''. Similar changes in all of the general rulings.
Customs Response: This comment has merit and is adopted, although
proposed ``II.C'' is redesignated as ``II.D.'', and proposed
Sec. 191.2(p) is redesignated as Sec. 191.2(q). Similar changes as
requested by the comment are made throughout the Appendices.
Comment: The suggestion was made that ``II.D.1.'' and ``II.D.2.''
should use the term ``multiple products'' instead of ``by products'',
and that similar changes should be made to all of the general rulings.
Customs Response: This comment has merit and is adopted. Similar
changes are made throughout the Appendices. It is noted that ``II.D.''
is redesignated as ``II.E.''.
Comment: It is asserted, with respect to ``II.F.'', that the term
``operator'' should be replaced by ``manufacturer or producer'', and
that similar changes should be made to all of the general and specific
rulings.
Customs Response: This comment has merit and is adopted. Similar
changes are made throughout the Appendices. It is noted that ``II.F.''
is redesignated as ``II.G.''.
Comment: A comment was made that, in ``II.L.4.'', the phrase, ``or
other persons legally authorized to bind the corporation'', should be
added after ``corporate officers'' to be consistent with ``I.A.3.''
(General Instructions).
Customs Response: This comment has merit; the provision is changed
to be consistent with the cited reference and Secs. 191.6 and 191.7;
further, in the interest of simplicity, the provision is changed to
require the reporting of any changes in the information required in the
letter of notification, as well as any changes in the corporate name or
corporate organization by succession or reincorporation. It is also
noted that proposed ``II.L.'' is redesignated as ``II.M.''.
Comment: The general ruling for agents in ``III.'', it was noted,
did not include provision for ``Waste'' or ``Stock in Process''. It was
further noted that proposed paragraph ``D.'' thereof appeared to imply
that only agents performing operations under proposed Sec. 191.2(p)(1)
could use the general agents' ruling (and not those performing
operations under proposed Sec. 191.2(p)(2)). With reference to proposed
paragraph ``E.'' thereof providing that records would be maintained to
establish certain dates, it was believed that the ``month'' was
sufficient for this purpose, but that this was not clear from this
general ruling.
Customs Response: ``Waste'' and ``Stock in Process'' sections are
not required in this general manufacturing drawback ruling; if
applicable, such sections would be included in the principal's
manufacturing drawback ruling.
The change to manufacturing or production (referring to proposed
Sec. 191.2(p), now redesignated as Sec. 191.2(q)), addresses this
issue; actual dates of receipt of merchandise, dates of use in
manufacture or production, and dates of return to the principal are
required (except that manufacturing or production periods (for a period
of a month unless Customs specifically approves a different period) may
be used). If a manufacturing period is used, receipt of all of the
merchandise must be before the beginning of the month and the date of
return to the principal must be after the end of the month.
It is also noted that proposed paragraphs ``B.'' and ``C.'' of
``III.'' (general ruling for agents) are deleted, with the succeeding
paragraphs thereof redesignated accordingly. To this end, paragraphs
``D.'' and ``E.'' thereof, as proposed, are redesignated as paragraphs
``B.'' and ``C.'', respectively. In addition, the section on procedures
and records maintained of this general ruling for agents (paragraph
``E.'', now redesignated as paragraph ``C.'', as indicated) is modified
to be consistent with Sec. 191.10(e), in requiring the same information
provided for in that section.
Comment: An editorial point was raised in the proposed component
parts general ruling, ``IV.'', paragraph ``J.'', that ``Eligible
components that appears in'' should be ``Eligible components that
appear in''.
Customs Response: This comment has merit and is adopted. It is also
noted that this general ruling is redesignated as ``V.'' in Appendix
A., due to the addition of the other general rulings, and the
repositioning thereof in alphabetical order, as already mentioned.
Comment: In proposed ``V.'', the general ruling for orange juice,
it was stated that proposed paragraph ``G.'' appeared twice, once for
``Procedures and Records Maintained'' and again for ``Inventory''.
Customs Response: This comment is incorrect, due probably to an
error in the electronic version not occurring in the Federal Register
version. It is also noted that this general ruling is redesignated as
``VIII.''.
[[Page 10998]]
Comment: It was also advised that the general ruling for orange
juice in proposed paragraph ``H.'' should not, as it did, omit the
wording ``and will show what components were blended with concentrated
orange juice for manufacturing'', which was important for liquidation
and compliance purposes (to know what components were utilized).
Customs Response: This comment has merit and is adopted.
Comment: It was observed that the general ruling for piece goods in
proposed ``VI.'' deviated from T.D. 83-73 in that ``appearing in'' and
``used in'' were permitted as a basis of claim. The ``appearing in''
basis, it was said, appeared to conflict with the paragraphs on Waste
and Shrinkage, Gain and Spoilage, in terms of recordkeeping.
Customs Response: This comment raises a valid concern. The
paragraphs on Waste and Shrinkage, and Gain and Spoilage in this
general ruling, now redesignated as ``X.'', are modified to provide
that records thereof need not be kept if the appearing in method is
used (if necessary to establish the quantity of merchandise eligible
piece goods appearing in the exported articles, of course, such records
would have to be kept).
Comment: The paragraphs ``N.'', ``O.'', ``R.'', and ``S.'' in the
proposed general ruling for raw sugar (``IX.'') referred specifically
to the forms in the previous T.D. 83-59; it was recommended that these
forms should be reproduced and made part of the Appendix.
Customs Response: The comment suggesting inclusion in the general
ruling of the forms in T.D. 83-59 is adopted (by, as appropriate, a
description of the forms or a sample form). This general ruling is
redesignated as ``XIII.''.
Appendix B
Comment: In Appendix B, it was suggested that provision be made for
review of proposals for specific manufacturing drawback rulings by the
appropriate regulatory audit office of Customs, if requested by a
claimant.
Customs Response: Customs disagrees. The matter commented on is a
matter for Customs internal administration of the drawback program.
Comment: It was recommended, with respect to the sample formats for
the specific rulings under 19 U.S.C. 1313(a) and (b) (combination), and
for 19 U.S.C. 1313(b), that, under the respective sections on Process
of Manufacture or Production, the reference to the court cases was
unnecessary, that the ``new and different article'' language should be
removed, and a reference to the definition of manufacture or production
in proposed Sec. 191.2(p) should be added.
Customs Response: This recommendation is adopted, except the ``new
and different article'' language is not removed, as it is part of the
definition in Sec. 191.2(q), as thus redesignated, which reflects long-
standing administration of manufacturing drawback.
Comment: Under the format for the specific ruling for 19 U.S.C.
1313(b), in the Waste section, it was disagreed that the determination
of whether waste was valuable should be based on industry practice.
Customs Response: The treatment of waste described is consistent
with Customs current practice.
Comment: It was suggested that the Inventory Procedures section for
the formats for specific rulings under 19 U.S.C. 1313(a) and (b)
(combination), and 19 U.S.C. 1313(b), be modified as concerns the
maintenance of waste records thereunder.
Customs Response: The second sentence under Inventory Procedures is
modified by the insertion after the words ``following areas'' of the
phrase ``, as applicable,''.
Comment: The Stock In Process sections in the formats for specific
rulings under 19 U.S.C. 1313(a) and (b) (combination), and 19 U.S.C.
1313(b), were said to need clarification.
Customs Response: Customs finds that the Stock In Process sections
in both Appendices A and B are confusing. The Stock In Process
paragraphs are modified.
Comment: It was advocated that the petroleum general ruling be
treated like all other general rulings, in that applications for
general rulings for petroleum drawback should be filed with a local
drawback office and moved from Appendix B to Appendix A. In Exhibit C,
the labels for the columns were said to be transposed. It was suggested
that Exhibits D and E be changed to reflect that all petroleum claims
were now filed preliminarily in the form of certificates of manufacture
(CM) (i.e., instead of ``amount of drawback claim'' in Exhibit D, the
reference should be to ``amount of CM''; Exhibit E was always a
combination of drawback deliveries and exported quantities; the
quantities indicated on Exhibit E combination did not reflect the
numbers within Exhibit C, as it related to exports (i.e., residual oils
category)--these Exhibits should be changed to reflect this practice)).
Customs Response: The comment that the petroleum general ruling
should be treated like all other general manufacturing drawback rulings
and should be acknowledged by field drawback offices has merit and is
adopted. The petroleum general manufacturing drawback ruling (T.D. 84-
49) is added to Appendix A. As already noted, language is added to
Sec. 191.7 and the General Instructions for Appendix A making clear
that applications to operate under one of the general manufacturing
drawback rulings in Appendix A are to be made to the field drawback
offices and be acknowledged by those offices, provided that the letter
of notification of intent to operate under the general manufacturing
drawback ruling is complete, the general manufacturing drawback ruling
is applicable, the general manufacturing drawback ruling is followed
without variation, and the manufacturing or production process
described meets the definition of a manufacture or production.
If there is any deviation from the general manufacturing drawback
ruling, the procedures for specific manufacturing drawback rulings are
applicable. Regarding the Exhibits for this general ruling, the comment
about the transposition of columns in Exhibit C is correct; the columns
are re-transposed; Exhibits D and E are modified to state the ``amount
of drawback claimed'' instead of ``amount of drawback claim''; and the
comments are correct that the numbers in Exhibit E (Combination) for
the quantity in barrels of Residual Oils, and reflected therefrom in
other calculations, are inconsistent with the other Exhibits.
As such, Exhibit E and Exhibit E (Combination) are modified to be
consistent with the other exhibits, and the descriptions of the
products in the exhibits are modified to specify whether the product is
an export or a drawback delivery.
Comment: In the Inventory Procedures sections of the formats under
both 19 U.S.C. 1313(a) and (b) (combination), and 19 U.S.C. 1313(b), a
question was raised about the statement that accelerated payment would
be denied, pending an audit, if records failed to establish drawback
requirements. The deletion of this statement was recommended.
Customs Response: The described sentence is deleted, as not
appropriate where stated. Accelerated payment of drawback is governed
by the regulation applicable thereto (19 CFR 191.92).
Conclusion
In view of the foregoing, and following careful consideration of
the comments received and further review of the matter, Customs has
concluded
[[Page 10999]]
that the proposed amendments with the modifications above should be
adopted.
Furthermore, in Appendix B, the format for a 19 U.S.C. 1313(d)
specific ruling is modified by the addition of the material on
principal-agent operations, as done in the formats for 19 U.S.C.
1313(a) and (b) (combination), and 19 U.S.C. 1313(b).
Regulatory Flexibility Act and Executive Order 12866
This final rule document amends the Customs drawback regulations
principally to reflect changes to the law occasioned by the Customs
modernization portion of the NAFTA Implementation Act. The final 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 this rule does 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 final rule has been
reviewed and approved by the Office of Management and Budget (OMB) for
review in accordance with the Paperwork Reduction Act (44 U.S.C.
3507(d)) under control number 1505-0213. 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 assigned by OMB.
The collection of information in this final rule 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.
The estimated average burden associated with the collection of
information in this final rule per respondent/recordkeeper is 2 hours
for filing drawback-related entry documents, and 60 hours for Drawback
Compliance Program participation.
Customs has submitted a copy of the revised information collection
contained in 19 CFR part 191, and previously approved under OMB control
number 1515-0213, and requested approval for the revision.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be directed to the
Regulations Branch, Office of Regulations and Rulings, U.S. Customs
Service, 1300 Pennsylvania Avenue, N.W., Washington, D.C. 20229 and to
OMB, Attention: Desk Officer for the Department of the Treasury, Office
of Information and Regulatory Affairs, Washington, D.C. 20503.
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).................................... New.
191.2(o).................................... 191.2(l).
191.2(p).................................... 191.2(f).
191.2(q).................................... New.
191.2(r).................................... New.
191.2(s).................................... New.
191.2(t).................................... New.
191.2(u).................................... New.
191.2(v).................................... 191.2(n).
191.2(w).................................... 191.2(e).
191.2(x), (x)(2), (x)(3).................... New.
191.2(x)(1)................................. 191.2(m).
191.2(y).................................... 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).
[[Page 11000]]
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).
191.10(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).
191.15...................................... 191.5.
191.21...................................... 191.4(a)(1).
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)-(d)............................... New.
191.23(e)(1)................................ 191.22(a)(2) & 191.32(b).
191.23(e)(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...................................... New.
191.26(a)(1)................................ 191.22(a)(1).
191.26(a)(1)(iii)........................... 191.22(a)(3).
191.26(a)(2)................................ 191.22(b).
191.26(b)................................... 191.32(a).
191.26(c)................................... 191.22(a)(2) & 191.32(b).
191.26(d)................................... 191.62(a)(2)(ii).
191.26(e)................................... 191.62(c).
191.26(f)................................... 191.5.
191.27(a)................................... 191.8(a); 191.22(a)(1)(v).
191.27(b)................................... 191.32(a).
191.27(c)................................... 191.23(c).
191.28...................................... 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...................................... New.
191.38(a)................................... 191.5
191.38(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.
[[Page 11001]]
191.52(b) & (c)............................. 191.64.
191.53...................................... New.
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.
[[Page 11002]]
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(w).
191.2(f)..................... 191.2(p).
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(o).
191.2(m)..................... 191.2(x)(1).
191.2(n)..................... 191.2(v).
191.2(o)..................... 191.2(y).
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); 191.15; 191.26(f); 191.38(a).
191.6........................ 191.6.
191.7........................ 191.84.
191.8(a)..................... 191.27(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)................. 191.26(a)(1).
191.22(a)(1)(iv)............. 191.23(e)(2).
191.22(a)(1)(v).............. 191.27(a).
191.22(a)(2)................. 191.23(e)(1); 191.26(c).
191.22(a)(3)................. 191.26(a)(1)(iii).
191.22(a)(4)................. 191.24(c).
191.22(a)(5)................. 191.22(e).
191.22(b).................... 191.26(a)(2); 191.38(b).
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).................... 191.27(c).
191.23(d).................... Deleted.
191.24....................... 191.8(f).
[[Page 11003]]
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).................... 191.26(b); 191.27(b).
191.32(b).................... 191.26(c); 191.23(e)(1).
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).
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)............. 191.26(d).
191.62(b).................... 191.51(a).
191.62(c).................... 191.26(e).
191.62(d).................... Deleted.
191.63....................... Deleted.
191.64....................... 191.52(b) & (c).
191.65(a).................... 191.10(a).
191.65(b).................... 191.10(c)(1).
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.
[[Page 11004]]
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 178
Administrative practice and procedure, Exports, Imports, Reporting
and recordkeeping requirements.
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.
Amendments to the Regulations
Parts 7, 10, 145, 173, 174, 181 and 191, Customs Regulations (19
CFR parts 7, 10, 145, 173, 174, 181 and 191) are amended as set forth
below.
PART 7--CUSTOMS RELATIONS WITH INSULAR POSSESSIONS AND GUANTANAMO
BAY NAVAL STATION
1. The general authority citation for part 7 is 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. Section 7.1(a) is amended 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 continues to read as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484,
1498, 1508, 1623, 1624, 3314;
* * * * *
Sec. 10.38 [Amended]
2. Section 10.38(f) is amended 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 continues to read as
follows:
[[Page 11005]]
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1624;
* * * * *
Sec. 145.72 [Amended]
2. Section 145.72(e) is amended by removing the reference to
``Section 191.142'' where appearing therein, and by adding in place
thereof, ``Section 191.42''.
PART 173--ADMINISTRATIVE REVIEW IN GENERAL
1. The general authority citation for part 173 continues to read as
follows:
Authority: 19 U.S.C. 66, 1501, 1520, 1624.
2. Section 173.4 is amended by adding a sentence at the end of
paragraph (c) to read as follows:
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 continues to read as
follows:
Authority: 19 U.S.C. 66, 1514, 1515, 1624.
2. Section 174.13 is amended 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 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
1. The authority citation for part 178 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
2. Section 178.2 is amended by removing the listings, respectively,
for ``Secs. 191.0-191.166'' and for ``Sec. 191.53'' together with the
corresponding descriptions and OMB control numbers therefor; and by
adding, in place thereof, a new listing to the table in numerical order
to read as follows:
Sec. 178.2 Listing of OMB Control Numbers.
----------------------------------------------------------------------------------------------------------------
OMB control
19 CFR section Description No.
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
Secs. 191.0-191.195..................... Recordkeeping and reporting requirements relating to 1515-0213
drawback.
* * * * * *
*
----------------------------------------------------------------------------------------------------------------
PART 181--NORTH AMERICAN FREE TRADE AGREEMENT
1. The general authority citation for part 181 continues 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. Section 181.44(d) is amended by removing the reference to
``Sec. 191.2(m)'' where appearing therein, and by adding in place
thereof, ``Sec. 191.2(x)(1)''.
3. The ``Example'' in Sec. 181.44(f) is amended by removing the
reference to ``Customs Form 7575-A'' where appearing therein, and by
adding in its place, ``Customs Form 7551''.
Sec. 181.45 [Amended]
Sec. 181.45 Goods eligible for full drawback.
4. Section 181.45 is amended by revising paragraph (b)(2)(i) to
read:
* * * * *
(b) * * *
(2) * * *
(i) General. (A) Inventory of other than all non-originating goods.
Commingling of fungible originating and non-originating goods in
inventory is permissible provided that the origin of the goods and the
identification of entries for designation for same condition drawback
are on the basis of an approved inventory method set forth in the
appendix to this part.
(B) Inventory of the non-originating goods. If all goods in a
particular inventory are non-originating goods, identification of
entries for designation for same condition drawback shall be on the
basis of one of the accounting methods in Sec. 191.14 of this chapter,
as provided therein.
Sec. 181.46 [Amended]
5. Section 181.46(b) is amended by removing the term ``port(s)''
where appearing in the first sentence, and adding in place thereof,
``drawback office(s)''.
Sec. 181.47 [Amended]
6. Section 181.47(b)(2)(i)(C) is amended by removing the words
``Exporter's'' and ``exporter's'' where appearing therein, and by
adding in place thereof, ``Export'' and ``export'', respectively.
7. Section 181.47(b)(2)(ii)(A) is amended by removing ``Customs
Form 7539J'', and adding in place thereof, ``Customs Form 7551''.
8. Section 181.47(b)(2)(ii)(D) is amended 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 on Customs Form 7552''.
9. Section 181.47(b)(2)(ii)(G) is amended by revising the first two
sentences to read:
Sec. 181.47 Completion of claim for drawback.
* * * * *
(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. Section 181.47(b)(2)(iii)(A) is amended by removing ``Customs
Form 7539C'' where appearing therein, and by
[[Page 11006]]
adding in place thereof, ``Customs Form 7551''.
11. Section 181.47(b)(2)(v) is amended by removing the reference to
``subpart L'' where appearing therein, and by adding in place thereof,
``subpart N''.
Sec. 181.49 [Amended]
12. Section 181.49 is amended by removing the reference to
``Sec. 191.5'' where appearing therein, and by adding in place thereof,
``Sec. 191.15 (see also Secs. 191.26(f), 191.38, 191.175(c))''.
Sec. 181.50 [Amended]
13. Section 181.50(c) is amended by removing the reference to
``Sec. 191.72'' where appearing therein, and by adding in place
thereof, ``191.92''.
1. Part 191 is revised to read as follows:
PART 191--DRAWBACK
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
method.
191.15 Recordkeeping.
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 Destruction under Customs supervision.
191.26 Recordkeeping for manufacturing drawback.
191.27 Time limitations.
191.28 Person entitled to claim drawback.
Subpart C--Unused Merchandise Drawback
191.31 Direct identification.
191.32 Substitution drawback.
191.33 Person entitled to claim 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, Destroy or
Return Merchandise for Purposes of Drawback.
191.37 Destruction under Customs supervision.
191.38 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 Rejecting, perfecting or amending claims.
191.53 Restructuring of claims.
Subpart F--Verification of Claims
191.61 Verification of drawback claims.
191.62 Penalties.
Subpart G--Exportation and Destruction
191.71 Drawback on articles destroyed under Customs supervision.
191.72 Exportation procedures.
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--Waiver of Prior Notice of Intent to Export; Accelerated
Payment of Drawback
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 waiver of prior notice and/or approval of
accelerated payment of drawback.
Appendix A to Part 191--General Manufacturing Drawback Rulings
[[Page 11007]]
Appendix B to Part 191--Sample Formats for Applications for Specific
Manufacturing Drawback Rulings
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) Act. Act, unless indicated otherwise, means the Tariff Act of
1930, as amended.
(c) Certificate of delivery. Certificate of delivery (see
Sec. 191.10 of this part) means Customs Form 7552, Delivery Certificate
for Purposes of Drawback, summarizing information contained in original
documents, establishing:
(1) The transfer from one party (transferor) to another
(transferee) of:
(i) Imported merchandise;
(ii) Substituted merchandise under 19 U.S.C. 1313(j)(2);
(iii) A qualified article under 19 U.S.C. 1313(p)(2)(A)(ii) from
the manufacturer or producer to the exporter or under 1313(p)(2)(A)(iv)
from the importer to the exporter; or
(iv) Drawback product;
(2) The identity of such merchandise or article as being that to
which a potential right to drawback exists; and
(3) The assignment of drawback rights for the merchandise or
article transferred from the transferor to the transferee.
(d) Certificate of manufacture and delivery. Certificate of
manufacture and delivery (see Sec. 191.24 of this part) means Customs
Form 7552, Delivery Certificate for Purposes of Drawback, summarizing
information contained in original documents, establishing:
(1) The transfer of an article manufactured or processed under 19
U.S.C. 1313(a) or 1313(b) from one party (transferor) to another
(transferee);
(2) The identity of such article as being that to which a potential
right to drawback exists; and
(3) The assignment of drawback rights for the article transferred
from the transferor to the transferee.
(e) Commercially interchangeable merchandise. Commercially
interchangeable merchandise means merchandise which may be substituted
under the substitution unused merchandise drawback law, Sec. 313(j)(2)
of the Act, as amended (19 U.S.C. 1313(j)(2)) (see Sec. 191.32(b)(2)
and (c) of this part), or under the provision for the substitution of
finished petroleum derivatives, Sec. 313(p), as amended (19 U.S.C.
1313(p)).
(f) Designated merchandise. Designated merchandise means either
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 Sec. 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 Sec. 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 Secs. 313(c), (e), (f), (g), (h), and (q)). Merchandise or
articles may be identified for purposes of direct identification
drawback by use of the accounting methods provided for in Sec. 191.14
of this subpart.
(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) (see also Sec. 191.3 of this
subpart).
(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 7551.
(l) Drawback product. A drawback product means a finished or
partially finished product 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 Sec. 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 Sec. 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
Sec. 191.24 of this part).
(m) Exportation; exporter. (1) 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 laden upon qualifying aircraft or
vessels as aircraft or vessel supplies in accordance with Sec. 309(b)
of the Act, as amended (19 U.S.C. 1309(b)) (see Secs. 10.59 through
10.65 of this chapter).
[[Page 11008]]
(2) Exporter. Exporter means that person who, as the principal
party in interest in the export transaction, has the power and
responsibility for determining and controlling the sending of the items
out of the United States. In the case of ``deemed exportations'' (see
paragraph (m)(1) of this section), the exporter means that person who,
as the principal party in interest in the transaction deemed to be an
exportation, has the power and responsibility for determining and
controlling the transaction (in the case of aircraft or vessel supplies
under 19 U.S.C. 1309(b), the party who has the power and responsibility
for lading the vessel supplies on the qualifying aircraft or vessel).
(n) Filing. Filing means the delivery to Customs of any document or
documentation, as provided for in this part, and includes electronic
delivery of any such document or documentation.
(o) Fungible merchandise or articles. Fungible merchandise or
articles means merchandise or articles which for commercial purposes
are identical and interchangeable in all situations.
(p) 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 (see Sec. 191.7 of this
subpart).
(q) 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.
(r) Multiple products. Multiple products mean two or more products
produced concurrently by a manufacture or production operation or
operations.
(s) 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.
(t) Records. Records include, but are not limited to, statements,
declarations, documents and electronically generated or machine
readable data) which pertain to the filing of a drawback claim or to
the information contained in the records required by Chapter 4 of Title
19, United States Code, in connection with the filing of a drawback
claim and which are normally kept in the ordinary course of business
(see 19 U.S.C. 1508).
(u) 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 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 based on its relative value at the time
of separation.
(v) Schedule. A schedule means a document filed by a drawback
claimant, under Sec. 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.
(w) Specific manufacturing drawback ruling. A specific
manufacturing drawback ruling means a letter of approval issued by
Customs Headquarters in response to an application, by a manufacturer
or producer for a ruling on a specific manufacturing or production
operation for drawback, as described in the format used. Synopses of
approved specific manufacturing drawback rulings are published in the
Customs Bulletin with each synopsis being published under an
identifying Treasury Decision. Specific manufacturing drawback rulings
are subject to the provisions in part 177 of this chapter.
(x) Substituted merchandise or articles. Substituted merchandise or
articles means merchandise or articles that may be substituted under 19
U.S.C. 1313(b), 1313(j)(2), or 1313(p) as follows:
(1) Under Sec. 1313(b), substituted merchandise must be of the same
kind and quality as the imported designated merchandise or drawback
product, that is, the imported designated merchandise or drawback
products and the substituted merchandise must be capable of being used
interchangeably in the manufacture or production of the exported or
destroyed articles with no substantial change in the manufacturing or
production process;
(2) Under Sec. 1313(j)(2), substituted merchandise must be
commercially interchangeable with the imported designated merchandise;
and
(3) Under Sec. 1313(p), a substituted article must be of the same
kind and quality as the qualified article for which it is substituted,
that is, the articles must be commercially interchangeable or described
in the same 8-digit HTSUS tariff classification.
(y) 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,
subject to the conditions and requirements of Sec. 191.81(b) of this
subpart;
(iii) Tenders of duties after liquidation of the entry, or
withdrawal from warehouse, for consumption for which the duties are
paid, subject to the conditions and requirements of Sec. 191.81(c) of
this part, including:
(A) Voluntary tenders (for purposes of this section, a ``voluntary
tender'' is a payment of duties on imported merchandise in excess of
duties included in the liquidation of the entry, or withdrawal from
warehouse, for consumption, provided that the liquidation has become
final and that the other conditions of this section and Sec. 191.81 of
this part are met);
(B) Tenders of duties in connection with notices of prior
disclosure under 19 U.S.C. 1592(c)(4); and
(C) Duties restored under 19 U.S.C. 1592(d).
(2) Marking duties assessed under Sec. 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:
[[Page 11009]]
(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 identified merchandise,
the designated imported merchandise, or the substituted other
merchandise (when applicable), consists of an agricultural product
which is duty-paid at the over-quota rate of duty established under a
tariff-rate quota, except that:
(1) Agricultural products as described in this paragraph are
eligible for drawback under 19 U.S.C. 1313(j)(1); and
(2) Tobacco otherwise meeting the description of agricultural
products in this paragraph is eligible for drawback under 19 U.S.C.
1313(j)(1) or 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.
(b) Allowance of drawback. If the merchandise is 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.
(c) Bond. No bond shall be required when a United States Government
entity claims drawback.
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 employee legally authorized to bind the corporation;
(2) A full partner of a partnership;
(3) The owner of a sole proprietorship;
(4) Any employee of the 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) Notices of Intent to Export, Destroy, or Return Merchandise for
Purposes of Drawback;
(5) Certifications of exporters on bills of lading or evidence of
exportation (see Secs. 191.28 and 191.82 of this part); and
(6) Abstracts, schedules and extracts from monthly abstracts if not
included as part of a drawback claim.
(c) The following documents (see also part 177 of this chapter) may
be executed by one of the persons described in paragraph (a) of this
section or by any other individual legally authorized to bind the
person (or entity) for whom the document is executed:
(1) A letter of notification of intent to operate under a general
manufacturing drawback ruling under Sec. 191.7 of this part;
(2) An application for a specific manufacturing drawback ruling
under Sec. 191.8 of this part;
(3) A request for a nonbinding predetermination of commercial
interchangeability under Sec. 191.32(c)(2) of this part;
(4) An application for waiver of prior notice under Sec. 191.91 of
this part;
(5) An application for approval of accelerated payment of drawback
under Sec. 191.92 of this part; and
(6) An application for certification in the Drawback Compliance
Program under Sec. 191.93 of this part.
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-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. As deemed necessary
by Customs, new general manufacturing drawback rulings will be issued
as Treasury Decisions and added to the appendix thereafter.
(2) Submission. (i) Where filed. Letters of notification of intent
to operate under a general manufacturing drawback ruling shall be
submitted to any drawback office where drawback entries will be filed
and liquidated, provided that the general manufacturing drawback ruling
will be followed without variation. If there is any variation in the
general manufacturing drawback ruling, the manufacturer or producer
shall apply for a specific manufacturing drawback ruling under
Sec. 191.8 of this subpart.
(ii) Copies. Letters of notification of intent shall be submitted
in duplicate unless claims are to be filed at more than one drawback
office, in which case one additional copy of the letter of notification
shall be filed for each additional office. Upon issuance of a letter of
acknowledgment (paragraph (c)(1) of this section), the drawback office
with which the letter of notification is submitted shall forward the
additional copy to such additional office(s), with a copy of the letter
of acknowledgment.
(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 manufacturer or producer (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
[[Page 11010]]
Sec. 191.6(a)(1) through (6) who will sign drawback documents;
(iii) Locations of the factories which will operate under the
letter of notification;
(iv) Identity (by T.D. number and title) of the general
manufacturing drawback ruling under which the manufacturer or producer
will operate;
(v) Description of the merchandise and articles, unless
specifically described in the general manufacturing drawback ruling;
(vi) Description of the manufacturing or production process, unless
specifically described in the general manufacturing drawback ruling;
(vii) Basis of claim used for calculating drawback; and
(viii) IRS (Internal Revenue Service) number (with suffix) of the
manufacturer or producer.
(c) Review and action by Customs. The drawback office to which the
letter of notification of intent to operate under a general
manufacturing drawback ruling was submitted shall review the letter of
notification of intent.
(1) Acknowledgment. The drawback office shall promptly issue a
letter of acknowledgment, acknowledging receipt of the letter of intent
and authorizing the person to operate under the identified general
manufacturing drawback ruling, subject to the requirements and
conditions of that general manufacturing drawback ruling and the law
and regulations, to the person who submitted the letter of notification
if:
(i) The letter of notification is complete (i.e., containing the
information required in paragraph (b)(3) of this section);
(ii) The general manufacturing drawback ruling identified by the
manufacturer or producer is applicable to the manufacturing or
production process;
(iii) The general manufacturing drawback ruling identified by the
manufacturer or producer is followed without variation; and
(iv) The described manufacturing or production process is a
manufacture or production under Sec. 191.2(q) of this subpart.
(2) Computer-generated number. With the letter of acknowledgment
the drawback office shall include the unique computer-generated number
assigned to the acknowledgment of the letter of notification of intent
to operate. This number must be stated when the person files
manufacturing drawback claims with Customs under the general
manufacturing drawback ruling.
(3) Non-conforming letters of notification of intent. If the letter
of notification of intent to operate does not meet the requirements of
paragraph (c)(1) of this section in any respect, the drawback office
shall promptly and in writing specifically advise the person of this
fact and why this is so. A letter of notification of intent to operate
which is not acknowledged may be resubmitted to the drawback office
with which it was initially submitted with modifications and/or
explanations addressing the reasons given for non-acknowledgment, or
the matter may be referred (by letter from the manufacturer or
producer) to Customs Headquarters (Attention: Duty and Refund
Determination Branch, Office of Regulations and Rulings).
(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) 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 (with suffix) 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 (6) 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: Duty and Refund Determination Branch, Office
of Regulations and Rulings). If drawback claims are to be filed under
the ruling at more than one drawback office, one additional copy of the
application shall be filed with Customs Headquarters 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 1 copy 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 specific manufacturing drawback ruling
shall be assigned a unique computer-generated manufacturing number
which shall be included in the letter of approval to the applicant from
Customs Headquarters, 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 and in writing 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.
[[Page 11011]]
(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 to
Customs Headquarters (Attention: Duty and Refund Determination Branch,
Office of Regulations and Rulings). Such a supplemental application
may, at the discretion of the manufacturer or producer, be in the form
of the original application, or it may identify the specific
manufacturing drawback ruling to be modified (by T.D. number and unique
computer-generated number) and include only those paragraphs of the
application to be modified, with a statement that all other paragraphs
are unchanged and are incorporated by reference in the supplemental
application.
(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 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;
(E) A change in the basis of claim used for calculating drawback;
(F) A change in the decision to use or not to use an agent under
Sec. 191.9 of this chapter, or a change in the identity of an agent
under that section;
(G) A change in the drawback office where claims will be filed
under the ruling (see paragraph (g)(2)(iii) of this section); or
(H) 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. To effect a limited modification, the
manufacturer or producer shall file with the drawback office(s) where
claims are filed (with a copy to Customs Headquarters, Attention, Duty
and Refund Determination Branch, Office of Regulations and Rulings) a
letter stating the modifications to be made. The drawback office shall
promptly acknowledge, in writing, acceptance of the limited
modifications, with a copy to Customs Headquarters, Attention, Duty and
Refund Determination Branch, Office of Regulations and Rulings.
(iii) To effect a change in the drawback office where claims will
be filed, the manufacturer or producer shall file with the new drawback
office where claims will be filed, a written application to file claims
at that office, with a copy of the application and approval letter
under which claims are currently filed. The manufacturer or producer
shall provide a copy of the written application to file claims at the
new drawback office to the drawback office where claims are currently
filed.
(h) Duration. Subject to 19 U.S.C. 1625 and part 177 of this
chapter, 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) General. An owner of the identified merchandise, the designated
imported merchandise and/or the substituted other merchandise that is
used to produce the exported articles may employ another person to do
part, or all, of the manufacture or production under 19 U.S.C. 1313(a)
or (b) and Sec. 191.2(q) of this subpart. For purposes of this section,
such owner is the principal and such other person is the agent. Under
19 U.S.C. 1313(b), the principal shall be treated as the manufacturer
or producer of merchandise used in manufacture or production by the
agent. The principal must be able to establish by its manufacturing
records, the manufacturing records of its agent(s), or the
manufacturing records of both (or all) parties, compliance with all
requirements of this part (see, in particular, Sec. 191.26 of this
part).
(b) 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, or both, for the principal. The contract must include:
(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
under this section.
(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 establish
existence of a principal-agency relationship under this section.
(c) Specific manufacturing drawback rulings; general manufacturing
drawback rulings. (1) Owner. An owner who intends to operate under the
principal-agent procedures of this section must state that intent in
any letter of notification of intent to operate under a general
manufacturing drawback ruling filed under Sec. 191.7 of this subpart or
in any application for a specific manufacturing drawback ruling filed
under Sec. 191.8 of this subpart.
(2) Agent. Each agent operating under this section must have filed
a letter of notification of intent to operate under a 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.
(d) Certificate; Drawback entry; Certificate of manufacture and
delivery. (1) Contents of certificate; when filing not required.
Principals and agents operating under this section are not required to
file a certificate of delivery (for the merchandise transferred from
[[Page 11012]]
the principal to the agent) or a certificate of manufacture and
delivery (for the articles transferred from the agent to the
principal). The principal for whom processing is conducted under this
section shall file, with any drawback claim or certificate of
manufacture and delivery based on an article manufactured or produced
under the principal-agent procedures in this section, a certificate,
subject to the recordkeeping requirements of Secs. 191.15 of this
subpart and 191.26 of this part, certifying that upon request by
Customs it can establish the following:
(i) Quantity, kind and quality of merchandise transferred from the
principal to the agent;
(ii) Date of transfer of the merchandise from the principal to the
agent;
(iii) Date of manufacturing or production operations performed by
the agent;
(iv) Total quantity and description of merchandise appearing in or
used in manufacturing or production operations performed by the agent;
(v) Total quantity and description of articles produced in
manufacturing or production operations performed by the agent;
(vi) Quantity, kind and quality of articles transferred from the
agent to the principal; and
(vii) Date of transfer of the articles from the agent to the
principal.
(2) Blanket certificate. The certificate required under paragraph
(d)(1) of this section may be a blanket certificate for a particular
kind and quality of merchandise for a stated period.
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 exists; 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;
(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;
(10) Description of the merchandise delivered;
(11) The HTSUS number with a minimum of 6 digits, for the
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, or a certificate of manufacture
and delivery, in which case such HTSUS number shall be from the other
certificate); and
(12) If the merchandise transferred is substituted for the
designated imported merchandise under 19 U.S.C. 1313(j)(2), the HTSUS
or Schedule B commodity number, with a minimum of 6 digits.
(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 transfer after the
transfer from the manufacturer (which shall be documented by means of a
certificate of manufacture and delivery) 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 or longer
period if required by law (see 19 U.S.C. 1508(c)(3)).
(e) Retention; submission to Customs. The certificate of delivery
shall be retained by the party to whom the merchandise or article
covered by the certificate was delivered. Customs may request the
certificate from the claimant for the drawback claim based upon the
certificate (see Secs. 191.51, 191.52). If the certificate is requested
by Customs, but is not provided by the claimant, the part of the
drawback claim dependent on that certificate will be denied.
(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
Sec. 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 an exchange of same kind and quality merchandise and
nothing else (the exchange may be of different quantities of same kind
and quality merchandise, but may not involve the payment or receipt of
cash payments or other than same kind and quality merchandise). If the
quantities of merchandise exchanged are different, the lesser quantity
shall be the quantity available for drawback. If the quantity of
domestic merchandise received is greater than the quantity of imported
merchandise exchanged, the merchandise identified for drawback shall be
the portion of the domestic merchandise equal to the quantity of
imported merchandise which is first received.
(c) Application. Each would-be user of tradeoff, except those
operating under an approved specific manufacturing drawback ruling
covering substitution, must apply to the Duty and Refund
[[Page 11013]]
Determination 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 application for a specific manufacturing drawback
ruling (Sec. 191.8). For those users manufacturing under 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 a general
manufacturing drawback ruling (Sec. 191.7), Sec. 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
provision. The claimant may raise alternative provisions prior to
liquidation or by protest.
Sec. 191.13 Packaging materials.
Drawback of duties is provided for in Sec. 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 Sec. 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, and
all other information and documents required for the particular
drawback provision under which the claim is made shall be provided for
the packaging material.
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 or production (see Sec. 191.2(h) of
this subpart). This section is not applicable to situations in which
the drawback law authorizes substitution (substitution is allowed in
specified situations under 19 U.S.C. 1313(b), 1313(j)(2), 1313(k), and
1313(p); this section does apply to situations in these subsections in
which substitution is not allowed, as well as to the subsections of the
drawback law under which no substitution is allowed). 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.
(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(o) of this part);
(2) The person using the identification method must be able to
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 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 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). (i) General. The FIFO method is the
method by which fungible merchandise or articles are identified by
recordkeeping 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.
(ii) Example. If the beginning inventory is zero, 100 units with $1
drawback attributable per unit are received in inventory on the 2nd of
the month, 50 units with no drawback attributable per unit are received
into inventory on the 5th of the month, 75 units are withdrawn for
domestic (non-export) shipment on the 10th of the month, 75 units with
$2 drawback attributable per unit are received in inventory on the 15th
of the month, 100 units are withdrawn for export on the 20th of the
month, and no other receipts or withdrawals occurred in the month, the
drawback attributable to the 100 units withdrawn for export on the 20th
is a total of $75 (25 units from the receipt on the 2nd with $1
drawback attributable per unit, 50 units from the receipt on the 5th
with no drawback attributable per unit, and 25 units from the receipt
on the 15th with $2 drawback attributable per unit). The basis of the
foregoing and the effects on the inventory of the receipts and
withdrawals, and balance in the inventory thereafter are as follows: On
the 2nd of the month the receipt of 100 units ($1 drawback/unit)
results in a balance of that amount; the receipt of 50
[[Page 11014]]
units ($0 drawback/unit) on the 5th results in a balance of 150 units
(100 with $1 drawback/unit and 50 with $0 drawback/unit); the
withdrawal on the 10th of 75 units ($1 drawback/unit) results in a
balance of 75 units (25 with $1 drawback/unit and 50 with $0 drawback/
unit); the receipt of 75 units ($2 drawback/unit) on the 15th results
in a balance of 150 units (25 with $1 drawback/unit, 50 with $0
drawback/unit, and 75 with $2 drawback/unit); the withdrawal on the
20th of 100 units (25 with $1 drawback/unit, 50 with $0 drawback/unit,
and 25 with $2 drawback unit) results in a balance of 50 units (all 50
with $2 drawback/unit).
(2) Last-in, first out (LIFO). (i) General. The LIFO method is the
method by which fungible merchandise or articles are identified by
recordkeeping 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.
(ii) Example. In the example in paragraph (c)(1)(ii) of this
section, the drawback attributable to the 100 units withdrawn for
export on the 20th is a total of $175 (75 units from the receipt on the
15th with $2 drawback attributable per unit and 25 units from the
receipt on the 2nd with $1 drawback attributable per unit). The basis
of the foregoing and the effects on the inventory of the receipts and
withdrawals, and balance in the inventory thereafter are as follows: On
the 2nd of the month the receipt of 100 units ($1 drawback/unit)
results in a balance of that amount; the receipt of 50 units ($0
drawback/unit) on the 5th results in a balance of 150 units (100 with
$1 drawback/unit and 50 with $0 drawback/unit); the withdrawal on the
10th of 75 units (50 with $0 drawback/unit and 25 with $1 drawback/
unit) results in a balance of 75 units (all with $1 drawback/unit); the
receipt of 75 units ($2 drawback/unit) on the 15th results in a balance
of 150 units (75 with $1 drawback/unit and 75 with $2 drawback/unit);
the withdrawal on the 20th of 100 units (75 with $2 drawback/unit and
25 with $1 drawback/unit) results in a balance of 50 units (all 50 with
$1 drawback/unit).
(3) Low-to-high. (i) General. The low-to-high method is the method
by which fungible merchandise or articles are identified by
recordkeeping on the basis of the lowest drawback amount per unit of
the merchandise or articles in inventory. Merchandise or articles with
no drawback attributable to them (for example, domestic merchandise or
duty-free merchandise) must be accounted for and are treated as having
the lowest drawback attributable to them. Under this method,
withdrawals are from the merchandise or articles with the least amount
of drawback attributable to them, then those with the next higher
amount, and so forth. If the same amount of drawback is attributable to
more than one lot of merchandise or articles, withdrawals are from the
oldest (first-in) merchandise or articles among those lots with the
same amount of drawback attributable. Drawback requirements are
applicable to withdrawn merchandise or articles as identified (for
example, if the merchandise or articles identified were attributable to
an import more than 5 years (more than 3 years for unused merchandise
drawback) before the claimed export, no drawback could be granted).
(ii) Ordinary. (A) Method. Under the ordinary low-to-high method,
all receipts into and all withdrawals from the inventory are recorded
in the accounting record and accounted for so that each withdrawal,
whether for export or domestic shipment, is identified by recordkeeping
on the basis of the lowest drawback amount per unit of the merchandise
or articles available in the inventory.
(B) Example. In this example, the beginning inventory is zero, and
receipts into and withdrawals from the inventory are as follows:
------------------------------------------------------------------------
Receipt ($ per
Date unit) Withdrawals
------------------------------------------------------------------------
Jan. 2........................ 100 (zero).......
Jan. 5........................ 50 ($1.00).......
Jan. 15....................... ................. 50 (export).
Jan. 20....................... 50 ($1.01).......
Jan. 25....................... 50 ($1.02).......
Jan. 28....................... ................. 50 (domestic).
Jan. 31....................... 50 ($1.03).......
Feb. 5........................ ................. 100 (export).
Feb. 10....................... 50 ($.95)........
Feb. 15....................... ................. 50 (export).
Feb. 20....................... 50 (zero)........
Feb. 23....................... ................. 50 (domestic).
Feb. 25....................... 50 ($1.05).......
Feb. 28....................... ................. 100 (export).
Mar. 5........................ 50 ($1.06).......
Mar. 10....................... 50 ($.85)........
Mar. 15....................... ................. 50 (export).
Mar. 21....................... ................. 50 (domestic).
Mar. 20....................... 50 ($1.08).......
Mar. 25....................... 50 ($.90)........
Mar. 31....................... ................. 100 (export).
------------------------------------------------------------------------
The drawback attributable to the January 15 withdrawal for export
is zero (the available receipt with the lowest drawback amount per unit
is the January 2 receipt), the drawback attributable to the January 28
withdrawal for domestic shipment (no drawback) is zero (the remainder
of the January 2 receipt), the drawback attributable to the February 5
withdrawal for export is $100.50 (the January 5 and January 20
receipts), the drawback attributable to the February 15 withdrawal for
export is $47.50 (the February 10 receipt), the drawback attributable
to the February 23 withdrawal for domestic shipment (no drawback) is
zero (the February 20 receipt), the drawback attributable to the
February 28 withdrawal for export is $102.50 (the January 25 and
January 31 receipts), the drawback attributable to the March 15
withdrawal for export is $42.50 (the March 10 receipt), the drawback
attributable to the March 21 withdrawal for domestic shipment (no
drawback) is $52.50 (the February 25 receipt), and the drawback
attributable to the March 31 withdrawal for export is $98.00 (the March
25 and March 5 receipts). Remaining in inventory is the March 20
receipt of 50 units ($1.08 drawback/unit). Total drawback attributable
to withdrawals for export in this example would be $381.00.
(iii) Low-to-high method with established average inventory turn-
over period. (A) Method. Under the low-to-high method with established
average inventory turn-over period, all receipts into and all
withdrawals for export are recorded in the accounting record and
accounted for so that each withdrawal is identified by recordkeeping on
the basis of the lowest drawback amount per available unit of the
merchandise or articles received into the inventory in the established
average inventory turn-over period preceding the withdrawal.
(B) Accounting for withdrawals (for domestic shipments and for
export). Under this method, domestic withdrawals (withdrawals for
domestic shipment) are not accounted for and do not affect the
available units of merchandise or articles. All withdrawals for export
must be accounted for whether or not drawback is available or claimed
on the withdrawals. Once a withdrawal for export is made and accounted
for under this method, the merchandise or articles withdrawn are no
longer available for identification.
(C) Establishment of inventory turn-over period. 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
[[Page 11015]]
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 (instead of using a different inventory turn-over period for each
kind of merchandise or article).
(D) Example. In the example in paragraph (c)(3)(ii)(B) of this
section (but, as required for this method, without accounting for
domestic withdrawals, and with an established average inventory turn-
over period of 30 days), the drawback attributable to the January 15
withdrawal for export is zero (the available receipt in the preceding
30 days with the lowest amount of drawback is the January 2 receipt, of
which 50 units will remain after the withdrawal), the drawback
attributable to the February 5 withdrawal for export is $101.50 (the
January 20 and January 25 receipts), the drawback attributable to the
February 15 withdrawal for export is $47.50 (the February 10 receipt),
the drawback attributable to the February 28 withdrawal for export is
$51.50 (the February 20 and January 31 receipts), the drawback
attributable to the March 15 withdrawal for export is $42.50 (the March
10 receipt), and the drawback attributable to the March 31 withdrawal
for export is $98.00 (the March 25 and March 5 receipts). No drawback
may be claimed on the basis of the January 5 receipt or the February 25
receipt because in the case of each, there were insufficient
withdrawals for export within the established average inventory turn-
over period; the 50 units remaining from the January 2 receipt after
the January 15 withdrawal are not identified for a withdrawal for
export because there is no other withdrawal for export (other than the
January 15 withdrawal) within the established average inventory turn-
over period. Total drawback attributable to withdrawals for export in
this example would be $331.00.
(iv) Low-to-high blanket method. (A) Method. Under the low-to-high
blanket method, all receipts into and all withdrawals for export are
recorded in the accounting record and accounted for so that each
withdrawal is identified by recordkeeping on the basis of the lowest
drawback amount per available unit of the merchandise or articles
received into inventory in the period preceding the withdrawal equal to
the statutory period for export under the kind of drawback involved
(e.g., 180 days under 19 U.S.C. 1313(p), 3 years under 19 U.S.C.
1313(c) and 1313(j), and 5 years otherwise under 19 U.S.C. 1313(i)).
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 19 U.S.C. 1313(j); more than 180 days after the date of
import or after the close of the manufacturing period for 19 U.S.C.
1313(p)) before the claimed export, no drawback could be granted).
(B) Accounting for withdrawals (for domestic shipments and for
export). Under this method, domestic withdrawals (withdrawals for
domestic shipment) are not accounted for and do not affect the
available units of merchandise or articles. All withdrawals for export
must be accounted for whether or not drawback is available or claimed
on the withdrawals. Once a withdrawal for export is made and accounted
for under this method, the merchandise or articles withdrawn are no
longer available for identification.
(C) Example. In the example in paragraph (c)(3)(ii)(B) of this
section (but, as required for this method, without accounting for
domestic withdrawals), the drawback attributable to the January 15
withdrawal for export is zero (the available receipt in the inventory
the lowest amount of drawback is the January 2 receipt, of which 50
units will remain after the withdrawal), the drawback attributable to
the February 5 withdrawal for export is $50.00 (the remainder of the
January 2 receipt and the January 5 receipt), the drawback attributable
to the February 15 withdrawal for export is $47.50 (the February 10
receipt), the drawback attributable to the February 28 withdrawal for
export is $50.50 (the February 20 and January 20 receipts), the
drawback attributable to the March 15 withdrawal for export is $42.50
(the March 10 receipt), and the drawback attributable to the March 31
withdrawal for export is $96.00 (the March 25 and January 25 receipts).
Receipts not attributed to withdrawals for export are the January 31
(50 units at $1.03), February 25 (50 units at $1.05), and March 20 (50
units at $1.08) receipts. Total drawback attributable to withdrawals
for export in this example would be $276.50.
(4) Average. (i) General. The average method is the method by which
fungible merchandise or articles are identified on the basis of the
calculation by recordkeeping of the amount of drawback that may be
attributed to each unit of merchandise or articles in the inventory. In
this method, the ratio of:
(A) The total units of a particular receipt of the fungible
merchandise in the inventory at the time of a withdrawal to;
(B) The total units of all receipts of the fungible merchandise
(including each receipt into inventory) at the time of the withdrawal;
(C) Is applied to the withdrawal, so that the withdrawal consists
of a proportionate quantity of units from each particular receipt and
each receipt is correspondingly decreased. Withdrawals and
corresponding decreases to receipts are rounded to the nearest whole
number.
(ii) Example. In the example in paragraph (c)(1)(ii) of this
section, the drawback attributable to the 100 units withdrawn for
export on the 20th is a total of $133 (50 units from the receipt on the
15th with $2 drawback attributable per unit, 33 units from the receipt
on the 2nd with $1 drawback attributable per unit, and 17 units from
the receipt on the 5th with $0 drawback attributable per unit). The
basis of the foregoing and the effects on the inventory of the receipts
and withdrawals, and balance in the inventory thereafter are as
follows: On the 2nd of the month the receipt of 100 units ($1 drawback/
unit) results in a balance of that amount; the receipt of 50 units ($0
drawback/unit) on the 5th results in a balance of 150 units (100 with
$1 drawback/unit and 50 with $0 drawback/unit); the withdrawal on the
10th of 75 units (50 with $1 drawback/unit (applying the ratio of 100
units from the receipt on the 2nd to the total of 150 units at the time
of withdrawal) and 25 with $0 drawback/unit (applying the ratio of 50
units from the receipt on the 5th to the total of 150 units at the time
of withdrawal)) results in a balance of 75 units (with 50 with $1
drawback/unit and 25 with $0 drawback/unit, on the basis of the same
ratios); the receipt of 75 units ($2 drawback/unit) on the 15th results
in a balance of 150 units (50 with $1 drawback/unit, 25 with $0
drawback/unit, and 75 with $2 drawback/unit); the withdrawal on the
20th of 100 units (50 with $2 drawback/unit (applying the ratio of the
75 units from the receipt on the 15th to the total of 150 units at the
time of withdrawal), 33 with $1 drawback/unit (applying the ratio of
the 50 units remaining from the receipt on the 2nd to the total of 150
units at the time of withdrawal, and 17 with $0 drawback/unit (applying
the ratio of the 25 units remaining from the receipt on the 5th to the
total of 150 units at the time of withdrawal)) results in a balance of
50 units (25 with $2 drawback/unit, 17 with $1 drawback/unit, and 8
with $0 drawback/unit, on the basis of the same ratios).
[[Page 11016]]
(5) Inventory turn-over for limited purposes. A properly
established average inventory turn-over period, as provided for in
paragraph (c)(3)(iii)(C) 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 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.
Sec. 191.15 Recordkeeping.
Pursuant to 19 U.S.C. 1508(c)(3), all records which pertain to the
filing of a drawback claim or to the information contained in the
records required by 19 U.S.C. 1313 in connection with the filing of a
drawback claim shall be retained for 3 years after payment of such
claims or longer period if required by law (under 19 U.S.C. 1508, the
same records may be subject to a different period for different
purposes).
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 and/or drawback product(s).
Where two or more products result, drawback shall be distributed among
the products in accordance with their relative value (see
Sec. 191.2(u)) 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
Sec. 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; 19 U.S.C. 1313(s). (1) General rule.
Upon compliance with the requirements in this section and under 19
U.S.C. 1313(s), 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, 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 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) Multiple products. (1) General. Where two or more products are
produced concurrently in a substitution manufacturing operation,
drawback
[[Page 11017]]
shall be distributed to each product in accordance with its relative
value (see Sec. 191.2(u)) 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(u) 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 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) Abstract or schedule. A drawback claimant may use either the
abstract or schedule method to show the quantity of material used or
appearing in the exported or destroyed article. An abstract is the
summary of records which shows the total quantity used in or appearing
in all articles produced during the period covered by the abstract. A
schedule shows the quantity of material used in producing, or appearing
in, each unit of product. Manufacturers or producers submitting letters
of notification of intent to operate under a general manufacturing
drawback ruling (see Sec. 191.7) and applicants for approval of
specific manufacturing drawback rulings (see Sec. 191.8) shall state
whether the abstract or schedule method is used; if no such statement
is made, drawback claims must be based upon the abstract method.
(e) 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 to manufacture or produce the exported or
destroyed articles, as well as the market value of the resulting waste,
under the used in less valuable waste method (see Sec. 191.2(u) 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 an article or drawback product manufactured
or produced under a general manufacturing drawback ruling or a specific
manufacturing drawback ruling is transferred from the manufacturer or
producer to another party, a certificate of manufacture and delivery
shall be prepared and certified by the manufacturer.
(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 person to whom the article or drawback product is
delivered;
(2) If the article or drawback product was manufactured or produced
under a general manufacturing drawback ruling, the unique computer-
generated number assigned to the letter of acknowledgment for that
ruling, and if the article or drawback product was manufactured or
produced under a specific manufacturing drawback ruling, either the
unique computer number or the T.D. number for that ruling;
(3) The quantity, kind and quality of imported, duty-paid
merchandise or drawback product designated;
(4) Import entry numbers, HTSUS number for the imported merchandise
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;
(5) Date received at factory;
(6) Date used in manufacture;
(7) Value at factory, if applicable;
(8) Quantity of waste, if any, if applicable;
(9) Market value of any waste, if applicable;
(10) Total quantity and description of merchandise appearing in or
used;
(11) Total quantity and description of articles produced;
(12) Date of manufacture or production of the articles;
(13) The quantity of articles transferred; and
(14) The person from whom the article or drawback product is
delivered.
(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 documents the delivery of articles from the manufacturer or
producer to another party, identifies such articles as being those to
which a potential right to drawback exists, and assigns such potential
rights to the transferee (see also Sec. 191.82 of this part).
Sec. 191.25 Destruction under Customs supervision.
A claimant may destroy merchandise and obtain manufacturing
drawback by complying with the procedures set forth in Sec. 191.71 of
this part relating to destruction.
Sec. 191.26 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
[[Page 11018]]
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, and/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), (iv)
through (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 appearing in) the exported or destroyed
articles; and
(3) That, within 3 years after receiving the designated merchandise
at its plant, 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 to manufacture
or produce the exported or destroyed article, as well as the quantity
and market value of the waste incurred (see Sec. 191.2(u) 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. The
waste replacement reduction will be determined by reducing from the
quantity of merchandise actually used 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) Multiple claimants. (1) General. Multiple claimants may file
for drawback with respect to the same export (for example, if an
automobile is exported, where different parts of the automobile have
been produced by different manufacturers under drawback conditions and
the exporter waives the right to claim drawback and assigns such right
to the manufacturers under Sec. 191.82 of this part).
(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 (Sec. 191.73 of this part) 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, if known at the time the drawback claim
is filed. The exporter shall endorse the summaries, as required, to
show the respective interests of the claimants. Each claimant shall
have on file and make available to Customs upon request, the
endorsement from the exporter assigning the right to claim drawback.
(f) Retention of records. Pursuant to 19 U.S.C. 1508(c)(3), 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 with
respect to drawback claims shall be retained for 3 years after the date
of payment of the related claims (under 19 U.S.C. 1508, the same
records may be subject to a different retention period for different
purposes).
Sec. 191.27 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, or within 5 years of the earliest date of
importation associated with a drawback product.
(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 acknowledgement or approval, as appropriate.
[[Page 11019]]
Sec. 191.28 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. The certification
provided for under this section may be a blanket certification for a
stated period. 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) Operations performed on imported merchandise. In cases in which
an operation or operations is or are performed on the imported
merchandise, the performing of any operation or combination of
operations, not amounting to manufacture or production under the
provisions of the manufacturing drawback law, on the 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
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, Customs shall evaluate the critical
properties of the substituted merchandise and in that evaluation
factors to be considered include, but are not limited to, Governmental
and recognized industrial standards, part numbers, tariff
classification and value. A party may seek a nonbinding
predetermination of commercial interchangeability directly from the
appropriate drawback office. A determination of commercial
interchangeability can be obtained in one of two ways:
(1) A formal ruling from the Duty and Refund Determination Branch,
Office of Regulations and Rulings; or
(2) A submission of all the required documentation necessary to
make a commercial interchangeability determination with each individual
drawback claim filed.
(d) Time limitations. For substitution unused merchandise drawback:
(1) The claimant must have had possession of the exported or
destroyed merchandise at some time during the 3-year period following
the date of importation of the imported designated merchandise; and
(2) The merchandise to be exported or destroyed to qualify for
drawback must be exported, or destroyed under Customs supervision,
before the close of the 3-year period beginning on the date of
importation of the imported designated merchandise.
(e) Operations performed on substituted merchandise. In cases in
which an operation or operations is or are performed on the substituted
merchandise, the performing of any operation or combination of
operations, not amounting to manufacture or production under the
provisions of the manufacturing drawback law, on the commercially
interchangeable substituted merchandise is not a use of that
merchandise for purposes of this section.
(f) Designation by successor; 19 U.S.C. 1313(s). (1) General rule.
Upon compliance with the requirements of this section and under 19
U.S.C. 1313(s), a drawback successor as defined in paragraph (f)(2) of
this section may designate either of the following as the basis for
drawback on merchandise possessed by the successor after the date of
succession:
(i) Imported merchandise which the predecessor, before the date of
succession, imported; or
(ii) Imported and/or commercially interchangeable merchandise which
was transferred to the predecessor and for which the predecessor
received, before the date of succession, a certificate of delivery from
the person who imported and paid duty on the imported merchandise.
(2) Drawback successor. A ``drawback successor'' is an entity to
which another entity (predecessor) has transferred, by written
agreement, merger, or corporate resolution:
(i) All or substantially all of the rights, privileges, immunities,
powers, duties, and liabilities of the predecessor; or
(ii) The assets and other business interests of a division, plant,
or other business unit of such predecessor, provided that the value of
the transferred assets and interests (realty, personality, and
intangibles, exclusive of the drawback rights) exceeds the value of
such drawback rights, whether vested or contingent.
(3) Certifications and required evidence. (i) Records of
predecessor. The predecessor or successor must certify in an attachment
to the drawback claim that the successor is in possession of the
predecessor's records which are necessary to establish the right to
drawback under the law and regulations with respect to the imported
and/or commercially interchangeable merchandise.
(ii) Merchandise not otherwise designated. The predecessor or
successor must certify in an attachment to the drawback claim, that the
predecessor has not and will not designate, nor enable any other person
to designate, the 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.
[[Page 11020]]
(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 certification provided for under this section may be a
blanket certification for a stated period. The claimant shall file such
certification at the time of, or prior to, the filing of the claim(s)
covered by the certification.
(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 or destroys such transferred merchandise, that exporter or
destroyer 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 (multiple substitutions are not permitted).
(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 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 certification provided for under this section may be a
blanket certification for a stated period. The claimant shall file such
certification at the time of, or prior to, the filing of the claim(s)
covered by the certification.
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, a properly
executed certificate of delivery must be 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 transferred
merchandise (see Sec. 191.31(c) of this part).
(2) Retention; submission to Customs. The certificate of delivery
shall be retained by the party to whom the merchandise or article
covered by the certificate was delivered. Customs may request the
certificate from the claimant for the drawback claim based upon the
certificate (see Secs. 191.51, 191.52). If the certificate is requested
by Customs, but is not provided by the claimant, the part of the
drawback claim dependent on that certificate will be denied.
(b) Substitution. For purposes of substitution unused merchandise
drawback, 19 U.S.C. 1313(j)(2), if the importer, or a party who
received imported merchandise and a certificate of delivery for that
imported merchandise, directly or indirectly, from the importer,
transfers to another party imported merchandise, duty-paid merchandise,
commercially interchangeable merchandise, or any combination thereof,
the transferor 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
for any other drawback purposes. Each transfer, whether of the imported
merchandise or of imported merchandise, duty-paid merchandise,
commercially interchangeable merchandise, or any combination thereof,
must be documented by its own certificate of delivery. 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,
or Return Merchandise for Purposes of Drawback on Customs Form 7553 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, mailing address, and, if
available, fax number and e-mail address of a contact person, and the
location of 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,
or Return Merchandise for Purposes of Drawback (see paragraph (a) of
this section), Customs will notify the party designated
[[Page 11021]]
on the Notice in writing 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, or Return Merchandise for Purposes of
Drawback 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, Destroy, or
Return Merchandise for Purposes of Drawback.
(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 Internal Revenue Service (IRS) number (with
suffix) of applicant;
(B) Name, address, and Internal Revenue Service (IRS) number(s)
(with suffix) 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) Estimated number of drawback claims and estimated time of
filing those claims to be covered in this application;
(H) The port(s) of exportation;
(I) Estimated dollar value of potential drawback to be covered in
this application; and
(J) 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)), and,
as applicable:
(1) Business records prepared in the ordinary course of business;
(2) Laboratory records prepared in the ordinary course of business;
and/or
(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 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 after 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 and the reason therefor.
(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 date of denial. If Customs denies this
initial appeal, the applicant may file a further written appeal with
Customs Headquarters, Office of Field Operations, Office of Trade
Operations, 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.
[[Page 11022]]
Sec. 191.37 Destruction under Customs supervision.
A claimant may destroy merchandise and obtain unused merchandise
drawback by complying with the procedures set forth in Sec. 191.71 of
this part relating to destruction.
Sec. 191.38 Records.
(a) Maintained by claimant; by others. Pursuant to 19 U.S.C.
1508(c)(3), 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 with respect
to drawback claims, shall be retained for 3 years after payment of such
claims (under 19 U.S.C. 1508, the same records may be subject to a
different retention period for different purposes).
(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
or destruction; 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 (see subpart P for drawback of internal-revenue taxes for
unmerchantable or nonconforming distilled spirits, wines, or beer).
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 or destroyed 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 or destroyer, must file at the port of intended redelivery to
Customs custody a Notice of Intent to Export, Destroy, or Return
Merchandise for Purposes of Drawback on Customs Form 7553 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, mailing
address, and, if available, fax number and e-mail address 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, or Return
Merchandise for Purposes of Drawback (see paragraph (c) of this
section), Customs will notify, in writing, the party designated on the
Notice of Customs decision to either examine the merchandise to be
exported or destroyed, 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 or destroyed without having been presented to
Customs for such examination, any drawback claim, or part thereof,
based on the Notice of Intent to Export, Destroy, or Return Merchandise
for Purposes of Drawback, 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 or destroyed 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 merchandise to be exported or destroyed,
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
or destroyed 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 or destruction, the merchandise shall be transported in-
bond to the port of exportation or destruction.
(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 or destroyed.
(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 and
shall provide documentary evidence of exportation (see subpart G of
this part). 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.
[[Page 11023]]
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 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 7551, applicable certificate(s) of manufacture
and delivery, applicable Notice(s) of Intent to Export, Destroy, or
Return Merchandise for Purposes of Drawback, 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, at the time of the filing of the
claim, the associated certificate(s) of delivery must be in the
possession of the party to whom the merchandise or article covered by
the certificate was delivered. 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 (or
100% when 100% of the duty is available for drawback) will not be paid
until the calculations have been corrected by the claimant.) Claims for
less than 99 percent (or 100% when 100% of the duty is available for
drawback) 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. (1) General. 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.
(2) Imports. 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. 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) for the designated imported merchandise on
such certificate(s).
(3) Exports. 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.
(4) 6-digit level for HTSUS and Schedule B commodity numbers. The
HTSUS numbers and Schedule B commodity numbers shall be stated to at
least 6 digits.
(5) Effective date. For imports, HTSUS numbers are required for
merchandise entered, or withdrawn from warehouse, for consumption on or
after April 6, 1998. For exports, HTSUS numbers or Schedule B commodity
numbers are required for exported merchandise or articles exported on
or after the date 1 year after April 6, 1998.
(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.
(e) Time of filing. (1) General. A completed drawback claim, with
all required documents, shall be filed within 3 years after the date of
exportation or destruction of the merchandise or articles which are the
subject of the claim. Except for landing certificates (see Sec. 191.76
of this part), or unless this time is extended as provided in paragraph
(e)(2) of this section, claims not completed within the 3-year period
shall be considered abandoned. Except as provided in paragraph (e)(2)
of this section, no extension will be granted unless it is established
that Customs was responsible for the untimely filing.
(2) Major disaster. The 3-year period for filing a completed
drawback claim provided for in paragraph (e)(1) of this section may be
extended for a period not to exceed 18 months if:
(i) The claimant establishes to the satisfaction of Customs that
the claimant was unable to file the drawback claim because of an event
declared by the President to be a major disaster, within the meaning
given to that term in 42 U.S.C. 5122(2), on or after January 1, 1994;
and
(ii) The claimant files a request for such extension with Customs
within 1 year from the last day of the 3-year period referred to in
paragraph (e)(1) of this section.
(3) Record retention. If an extension is granted with respect to a
request filed under paragraph (e)(2)(ii) of this section, the periods
of time for retaining records under 19 U.S.C. 1508(c)(3) shall be
extended for an additional 18 months.
Sec. 191.52 Rejecting, perfecting or amending claims.
(a) Rejecting the claim. 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 in writing. The
filer shall then have the opportunity to complete the claim subject to
the requirement for filing a complete claim within 3 years.
(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 in writing. 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) The export bill of lading or other actual evidence of
exportation, as provided for in Sec. 191.72(a) of this part, 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,
[[Page 11024]]
showing that the party filing the entry 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;
(3) A copy of the export invoice annotated to indicate the items on
which drawback is being claimed; and
(4) Certificate(s) of delivery upon which the claim is based (see
Sec. 191.10(e) of this part).
(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 original 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 and letter of approval for
a specific manufacturing drawback ruling, and request for verification,
to other drawback offices when deemed necessary.
(b) Method. The verifying office shall verify compliance with the
law and this part, the accuracy of the related general manufacturing
drawback ruling or specific manufacturing drawback ruling (as
applicable), 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.
(d) Errors in specific or general manufacturing drawback rulings.
(1) Specific manufacturing drawback ruling. (i) Action by port
director. If verification of a drawback claim filed under a specific
manufacturing drawback ruling (see Sec. 191.8 of this part) reveals
errors of deficiencies in the drawback ruling or application therefore,
the port director shall promptly inform Customs Headquarters
(Attention: Duty and Refund Determination Branch, Office of Regulations
and Rulings).
(2) General manufacturing drawback ruling. If verification of a
drawback claim filed under a general manufacturing drawback ruling (see
Sec. 191.7 of this part) reveals errors or deficiencies in a general
manufacturing drawback ruling, the letter of notification of intent to
operate under the general manufacturing drawback ruling, or the
acknowledgment of the letter of notification of intent, the port
director shall promptly inform Customs Headquarters (Attention: Duty
and Refund Determination Branch, Office of Regulations and Rulings).
(3) Action by Customs Headquarters. Customs Headquarters shall
review the stated errors or deficiencies and take appropriate action
(see 19 U.S.C. 1625; 19 CFR part 177).
Sec. 191.62 Penalties.
(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--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, or Return
Merchandise for Purposes of Drawback on Customs Form 7553 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 after receipt of the
Customs Form 7553, Customs shall advise the filer in writing 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
[[Page 11025]]
determines to witness the destruction, the destruction of the articles
following timely notification on Customs Form 7553 shall be deemed to
have occurred under Customs supervision. If Customs attends the
destruction, it must certify the Notice of Intent to Export, Destroy,
or Return Merchandise for Purposes of Drawback.
(b) Evidence of destruction. When Customs does not attend the
destruction, the claimant must submit evidence that destruction took
place in accordance with the approved Notice of Intent to Export,
Destroy, or Return Merchandise for Purposes of Drawback. 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
must provide the Customs Form 7553, certified by the Customs official
witnessing the destruction in accordance with paragraph (a) of this
section, to Customs as part of the completed drawback claim based on
the destruction (see Sec. 191.51(a) of this part). If Customs has not
attended the destruction, the claimant must provide the evidence that
destruction took place in accordance with the approved Customs Form
7553, as provided for in paragraph (b) of this section, as part of the
completed drawback claim based on the destruction (see Sec. 191.51(a)
of this part).
Sec. 191.72 Exportation procedures.
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 if
applicable (see Secs. 191.35, 191.36, 191.42, and 191.91 of this
part)). Supporting documentary evidence shall establish fully the date
and fact of exportation and the identity of the exporter. The
procedures for establishing exportation outlined by this section
include, but are not limited to:
(a) Actual evidence of exportation consisting of documentary
evidence, such as an originally signed 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 Summary of Exports. The Chronological
Summary of 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 ________.
Exporter if not Unique export Sched. B com. # or
Date of export claimant identifier \1\ Description Net quantity HTSUS # Destination
(1) (2)............... (3)............... (4)............... (5)............... (6)............... (7)
AAAA\1\ This number is to be used to associate the export transaction presented on the Chronological Summary of Exports to the appropriate documentary
evidence of exportation (for example, Bill of Lading, Manifest no., invoice, identification of vessel or aircraft and voyage or aircraft number (see
subpart K), etc.).
(c) Documentary evidence. (1) Records. The claimant, whether or not
the exporter, shall maintain the Chronological Summary of Exports and
such additional evidence of exportation required by Customs to
establish fully the identity of the exported articles and the fact of
exportation. Actual evidence of exportation, as described in
Sec. 191.72(a) of this subpart, is the primary evidence of export for
drawback purposes.
(2) Maintenance of records. The claimant shall submit as part of
the claim the Chronological Summary of Exports (see Sec. 191.51). The
claimant shall retain records supporting the Chronological Summary of
Exports for 3 years after payment of the related claim, and such
records are subject to review by Customs.
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).
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 Secs. 191.72 and 191.73 of this subpart (see
Sec. 191.4 of this part).
(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 Secs. 191.72
and 191.73 of this subpart.
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 Sec. 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
[[Page 11026]]
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, to the
extent that the estimated duties on the unliquidated import entry are
included in the drawback claim for which drawback on estimated duties
is requested under this paragraph. 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, except in those cases when drawback is 100%
of the duty, 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 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) General. Subject to the requirements in paragraph (c)(2) of this
section, drawback may be paid on voluntary tenders of the unpaid amount
of lawful ordinary Customs duties or any other payment of lawful
ordinary Customs duties for an entry, or withdrawal from warehouse, for
consumption (see Sec. 191.3(a)(1)(iii) of this part), provided that:
(i) The tender or 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
tender or 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.
(2) 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 claim to payment or refund under other provisions of law,
to the extent that the voluntary tenders or other payment of duties
under this paragraph are included in the drawback claim for which
drawback on the voluntary tenders or other payment of duties is
requested under this paragraph.
(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) Relative value; 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(u) 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)
and (2), see Sec. 191.33(a) and (b)). 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. The certification provided for in this section may be
a blanket certification for a stated period.
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--Waiver of Prior Notice of Intent To Export; Accelerated
Payment of Drawback
Sec. 191.91 Waiver of prior notice of intent to export.
(a) General. (1) Scope. 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 Sec. 313(j) of
the Act, as amended (19 U.S.C. 1313(j)), may be waived under the
provisions of this section.
(2) Effective date for claimants with existing approval. For
claimants approved for waiver of prior notice as of
[[Page 11027]]
April 6, 1998, such approval of waiver of prior notice shall remain in
effect, under the Customs Regulations in effect as of the time of the
approval of waiver of prior notice, for a period of 1 year after April
6, 1998. The previously approved waiver of prior notice shall terminate
at the end of such 1-year period unless the claimant applies for waiver
of prior notice under this section. If a claimant approved for waiver
of prior notice as of April 6, 1998 applies for waiver of prior notice
under this section within such 1-year period, the claimant may continue
to operate under its existing waiver of prior notice until Customs
approves or denies the application for waiver of prior notice under
this section, subject to the provisions in this section (see, in
particular, paragraphs (d) and (e) of this section).
(3) Limited successorship for waiver of prior notice. When a
claimant (predecessor) is approved for waiver of prior notice under
this section and all of the rights, privileges, immunities, powers,
duties and liabilities of the claimant are transferred by written
agreement, merger, or corporate resolution to a successor, such
approval of waiver of prior notice shall remain in effect for a period
of 1 year after such transfer. The approval of waiver of prior notice
shall terminate at the end of such 1-year period unless the successor
applies for waiver of prior notice under this section. If such
successor applies for waiver of prior notice under this section within
such 1-year period, the successor may continue to operate under the
predecessor's waiver of prior notice until Customs approves or denies
the successor's application for waiver of prior notice under this
section, subject to the provisions in this section (see, in particular,
paragraphs (d) and (e) 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 Internal Revenue Service (IRS) number (with
suffix) of applicant;
(B) Name, address, and Internal Revenue Service (IRS) number (with
suffix) of current exporter(s) (if more than 3 exporters, such
information is required only for the 3 most frequently used exporters),
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
calendar year covered by this application;
(G) Port(s) of exportation to be used during the next calendar year
covered by this application;
(H) Estimated dollar value of potential drawback during the next
calendar year 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 whether the applicant has
previously requested a 1-time waiver of prior notice under Sec. 191.36,
and whether such request was approved or denied; 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)), and,
as applicable:
(1) Business records prepared in the ordinary course of business;
(2) Laboratory records prepared in the ordinary course of business;
and/or
(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) Any other evidence establishing compliance with other
applicable drawback 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 and the reason therefor. 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, but are not limited to (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, or Return Merchandise for
Purposes of Drawback 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. An approval of waiver of prior notice may be stayed, for
a specified reasonable period, should
[[Page 11028]]
Customs desire for any reason to examine the merchandise being exported
with drawback prior to its exportation for purposes of verification.
Customs shall provide written notice, by registered or certified mail,
of such a stay to the person for whom waiver of prior notice was
approved. Customs shall specify the reason(s) for the stay in such
written notice. The stay shall take effect 2 working days after the
date the person signs the return post office receipt for the registered
or certified mail. The stay shall remain in effect for the period
specified in the written notice, or until such earlier date as Customs
notifies the person for whom waiver of prior notice was approved in
writing that the reason for the stay has been satisfied. After the stay
is lifted, operation under the waiver of prior notice procedure may
resume for exports on or after the date the stay is lifted.
(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 (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. The
written notice of proposed revocation may be included with a notice of
stay of approval of waiver of prior notice as provided under paragraph
(d) of this section. The revocation of the approval of waiver of prior
notice shall take effect 30 days after the date of the proposed
revocation if not timely challenged under paragraph (g) of this
section. If timely challenged, the revocation will take effect after
completion of the challenge procedures in paragraph (g) of this section
unless the challenge is successful.
(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 refer to such approval in the first drawback claim filed after
such approval in the drawback office approving waiver of prior notice
and 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, Office
of Field Operations, Office of Trade Operations, 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 holder for such extension filed with the
appropriate office within the 30-day period.
Sec. 191.92 Accelerated payment.
(a) General. (1) Scope. Accelerated payment of drawback is
available under this section on drawback claims under this part, unless
specifically excepted from such accelerated payment. Accelerated
payment of drawback consists of the payment of estimated drawback
before liquidation of the drawback entry. Accelerated payment of
drawback is only available when Customs review of the request for
accelerated payment of drawback does not find omissions from, or
inconsistencies with the requirements of the drawback law and part 191
(see, especially, subpart E of this part). Accelerated payment of a
drawback claim does not constitute liquidation of the drawback entry.
(2) Effective date for claimants with existing approval. For
claimants approved for accelerated payment of drawback as of April 6,
1998, such approval of accelerated payment shall remain in effect,
under the Customs Regulations in effect as of the time of the approval
of accelerated payment, for a period of 1 year after April 6, 1998. The
previously approved accelerated payment of drawback shall terminate at
the end of such 1-year period unless the claimant applies for
accelerated payment under this section. If a claimant approved for
accelerated payment of drawback as of April 6, 1998 applies for
accelerated payment under this section within such 1-year period, the
claimant may continue to operate under its existing approval of
accelerated payment until Customs approves or denies the application
for accelerated payment under this section, subject to the provisions
in this section (see, in particular, paragraph (f) of this section).
(3) Limited successorship for approval of accelerated payment. When
a claimant (predecessor) is approved for accelerated payment of
drawback under this section and all of the rights, privileges,
immunities, powers, duties and liabilities of the claimant are
transferred by written agreement, merger, or corporate resolution to a
successor, such approval of accelerated payment shall remain in effect
for a period of 1 year after such transfer. The approval of accelerated
payment of drawback shall terminate at the end of such 1-year period
unless the successor applies for accelerated payment of drawback under
this section. If such successor applies for accelerated payment of
drawback under this section within such 1-year period, the successor
may continue to operate under the predecessor's approval of accelerated
payment until Customs approves or denies the successor's application
for accelerated payment under this section, subject to the provisions
in this section (see, in particular, paragraph (f) of this section).
(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) Internal Revenue Service (IRS) number (with suffix);
(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.
[[Page 11029]]
(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 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,
but are not limited to (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 waiver of prior
notice of intent to export 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 and the reason therefor.
(3) Approval. The approval of an application for accelerated
payment, under this section, shall be effective as of the date of
Customs written notification of approval under paragraph (e)(2) of this
section. Accelerated payment of drawback shall be available under this
section to unliquidated drawback claims filed before and after such
date. For claims filed before such date, accelerated payment of
drawback shall be paid only if the claimant furnishes a properly
executed single transaction bond covering the claim, in an amount
sufficient to cover the amount of accelerated drawback to be paid on
the claim.
(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) 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, by registered or certified mail, of the proposed
revocation of the approval of accelerated payment. The notice shall
specify the reasons for Customs proposed action and the procedures for
challenging Customs proposed revocation action as prescribed in
paragraph (h) of this section. The revocation shall take effect 30 days
after the date of the proposed revocation if not timely challenged
under paragraph (h) of this section. If timely challenged, the
revocation will take effect after completion of the challenge
procedures in paragraph (h) of this section unless the challenge is
successful.
(g) Action by drawback office controlling. Action by the
appropriate drawback office to approve, deny, stay, or revoke
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, the claimant shall
refer to such approval in the first drawback claim filed after such
approval in the drawback office approving accelerated payment of
drawback and shall submit a copy of the approval letter with the first
drawback claim filed in a drawback office other than the approving
office.
(h) 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
[[Page 11030]]
denial of an appeal or challenge made to the drawback office may itself
be appealed to Customs Headquarters, Office of Field Operations, Office
of Trade Operations, 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 holder for such extension filed with the appropriate
office within the 30-day period.
(i) Payment. The drawback office approving a drawback claim in
which accelerated payment of drawback was requested 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 procedures provided for in Secs. 191.91 and
191.92 of this subpart may apply for only one procedure, both
procedures separately, or both procedures in one application package
(see also Sec. 191.195 of this part regarding combined applications for
certification in the drawback compliance program and waiver of prior
notice and/or approval of accelerated payment of drawback). In the
latter instance, the intent to apply for both procedures must be
clearly stated. In all instances, all of the requirements for the
procedure(s) applied for must be met (for example, in a combined
application for both procedures, all of the information required for
each procedure, all required sample documents for each procedure, 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
Sec. 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 Secs. 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
[[Page 11031]]
(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 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 Sec. 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 Sec. 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 7551 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,
and the requirements in paragraphs (d)(1) and (f)(1) of this section
shall also be complied with.
(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 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.
(i) 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
[[Page 11032]]
used in the maintenance or repair of aircraft.
(j) 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 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.
(k) 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 Sec. 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, or to materials used in a
``major conversion'', as defined in this section, of a vessel or
aircraft. Section 313(g) does not apply 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 Sec. 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.
(c) Major conversion. For purposes of this subpart, a ``major
conversion'' means a conversion that substantially changes the
dimensions or carrying capacity of the vessel or aircraft, changes the
type of the vessel or aircraft, substantially prolongs the life of the
vessel or aircraft, or otherwise so changes the vessel or aircraft that
it is essentially a new vessel or aircraft, as determined by Customs
(see 46 U.S.C. 2101(14a)).
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 7551, modified to
show that the entry covers jet aircraft engines processed under
Sec. 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
[[Page 11033]]
destruction, and shall not be available for drawback, under Sec. 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:
(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 Sec. 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 satisfactory evidence of
destruction is furnished to Customs (see Sec. 191.71), 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 7551 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 7551) 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.
[[Page 11034]]
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.
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 7551 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 evidence 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 7551.
(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
7553.
Sec. 191.167 Liquidation.
No deduction of 1 percent of the internal revenue taxes paid or
determined shall be made in allowing entries under Sec. 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.
Drawback due under this paragraph shall not be subject to the deduction
of 1 percent.
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.
[[Page 11035]]
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;
(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 7551; 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 7551;
(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 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.
Subpart R--Merchandise Transferred to a Foreign Trade Zone From
Customs Territory
Sec. 191.181 Drawback allowance.
The fourth proviso of Sec. 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 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 as otherwise provided,
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) Evidence of export. The notice of zone
transfer on Customs Form 214 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
[[Page 11036]]
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 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, 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. The
transferor shall verify that the notice has been certified before
filing it with the drawback claim.
(d) Drawback entries. Drawback entries shall be filed on Customs
Form 7551 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 removed
from the foreign trade zone 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 7551 in duplicate. The drawback office shall forward one copy of
Customs Form 7551 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 7551 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, 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. After executing the declaration provided for in paragraph
(d)(3) of this section, the transferor shall resubmit Customs Form 7551
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 7551 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 7551 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 7551 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
removed from the foreign trade zone 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 7551 in duplicate. The drawback office shall forward
one copy of Customs Form 7551 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 7551 the receipt of the merchandise and
forward the form to the transferor or the person designated by the
transferor, 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.
After executing the declaration provided for in paragraph (d)(3) of
this section, the transferor shall resubmit Customs Form 7551 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 7551 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 7551 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)
[[Page 11037]]
(3) Transferor's declaration. The transferor shall declare on
Customs Form 7551 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 at2/32/32/32/32/32/3
(City and State) for the sole purpose of exportation, destruction,
or storage, not to be removed from the foreign trade zone 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.
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 authorized individual (see
Sec. 191.6(c) 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 number (with suffix), 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
[[Page 11038]]
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 applicant's
organization who is responsible for oversight of the applicant's
drawback program, and the name and title, with mailing address and, if
available, fax number and e-mail address, of the person[s] in the
applicant's organization responsible for the actual maintenance of the
applicant'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 (see
Secs. 191.7 and 191.8 of this part), as appropriate;
(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 waiver of prior
notice of intent to export 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. 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 Sec. 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) Revocation. If the participant commits repeated violations of
its drawback compliance program or negotiated alternative drawback
compliance 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. The revocation shall
take effect 30 days after the date of the proposed revocation if not
timely challenged under paragraph (f) of this section. If timely
challenged, the revocation will take effect after completion of the
challenge procedures in paragraph (f) of this section unless the
challenge is successful.
(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
[[Page 11039]]
revocation may itself be appealed to Customs Headquarters, Office of
Field Operations, Office of Trade Operations, 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 waiver of prior notice and/or approval of
accelerated payment of drawback.
An applicant for certification in the drawback compliance program
may also, in the same application, apply for waiver of prior notice of
intent to export and accelerated payment of drawback, under subpart I
of this part. Alternatively, an applicant may separately apply for
certification in the drawback compliance program and either or both
waiver of prior notice and accelerated payment of drawback. In the
former instance, the intent to apply for certification and waiver of
prior notice and/or approval of accelerated payment of drawback must be
clearly stated. In all instances, all of the requirements for
certification and the procedure applied for must be met (for example,
in a combined application for certification in the drawback compliance
program and both procedures, all of the information required for
certification and each procedure, all required sample documents for
certification and each procedure, and all required certifications must
be included in and with the application).
Appendix A to Part 191--General Manufacturing Drawback Rulings
Table of Contents
I. General Instructions
II. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a)
(T.D. 81-234; T.D. 83-123)
III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a)
or 1313(b) for Agents (T.D. 81-181)
IV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a)
for Burlap or Other Textile Material (T.D. 83-53)
V. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for
Component Parts (T.D. 81-300)
VI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a)
for Flaxseed (T.D. 83-80)
VII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a)
for Fur Skins or Fur Skin Articles (T.D. 83-77)
VIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Orange Juice (T.D. 85-110)
IX. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Petroleum or Petroleum Derivatives (T.D. 84-49)
X. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for
Piece Goods (T.D. 83-73)
XI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Raw Sugar (T.D. 83-59)
XII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Steel (T.D. 81-74)
XIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Sugar (T.D. 81-92)
XIV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a)
for Woven Piece Goods (T.D. 83-84)
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 (see Sec. 191.7 of this part). Such a
letter of notification shall include the following information:
1. Name and address of manufacturer or producer;
2. IRS (Internal Revenue Service) number (with suffix) of
manufacturer or producer;
3. Location[s] of factory[ies] which will operate under the
general ruling;
4. If a business entity, names of persons who will sign drawback
documents (see Sec. 191.6 of this part);
5. Identity (by T.D. number and title, as stated in this
Appendix) of general manufacturing drawback ruling under which the
manufacturer or producer intends to operate;
6. Description of the merchandise and articles, unless
specifically described in the general manufacturing drawback ruling;
7. Only for General Manufacturing Drawback Ruling Under 19
U.S.C. 1313(b) for Petroleum or Petroleum Derivatives, the name of
each article to be exported or, if the identity of the product is
not clearly evident by its name, what the product is, and the
abstract period to be used for each refinery (monthly or other
specified period (not to exceed 1 year)), subject to the conditions
in the General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b)
for Petroleum or Petroleum Derivatives, I. Procedures and Records
Maintained, 4(a) or (b);
8. Basis of claim used for calculating drawback; and
9. Description of the manufacturing or production process,
unless specifically described in the general manufacturing drawback
ruling.
For the General Manufacturing Drawback Ruling under
Sec. 1313(a), the General Manufacturing Drawback Ruling Under 19
U.S.C. 1313(b) for Component Parts, and the General Manufacturing
Drawback Ruling Under 19 U.S.C. 1313(a) or 1313(b) for Agents, if
the drawback office has doubts as to whether there is a manufacture
or production, as defined in Sec. 191.2(q) of this part, the
manufacturer or producer will be asked to provide details of the
operation purported to be a manufacture or production.
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,
83-53, 83-59, 83-73, 83-77, 83-80, 83-123, 84-49, and 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 Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) (T.D.
81-234; T.D. 83-123)
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. General Statement
The manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
D. Process Of Manufacture Or Production
The imported merchandise or drawback products will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
E. Multiple 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 multiple products are produced records will be
maintained of the market value of each 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 multiple products are
produced.
F. Loss or Gain
Records will be maintained showing the extent of any loss or
gain in net weight or measurement of the imported merchandise,
[[Page 11040]]
caused by atmospheric conditions, chemical reactions, or other
factors.
G. 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 manufacturer or producer 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).
H. 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.
I. 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.
J. 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.
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of the sentence should read ``appearing in 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. Records establishing compliance with these
requirements will be available for audit by Customs during business
hours. Drawback is not payable without proof of compliance)
K. Inventory Procedures
The inventory records of the manufacturer or producer 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.
L. 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.
M. General Requirements
The manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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, part 191 of the Customs
Regulations and this general ruling.
III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) or
1313(b) for Agents (T.D. 81-181)
Manufacturers or producers operating under this general
manufacturing drawback ruling must comply with T.D.s 55027(2),
55207(1), and 19 U.S.C. 1313(b), if applicable, as well as 19 CFR
part 191 (see particularly, Sec. 191.9).
A. Name and Address of Principal
B. Process of Manufacture or Production
The imported merchandise or drawback products or other
substituted merchandise will be used to manufacture or produce
articles in accordance with Sec. 191.2(q) of this part.
C. Procedures and Records Maintained
Records will be maintained to establish:
1. Quantity, kind and quality of merchandise transferred from
the principal to the agent;
2. Date of transfer of the merchandise from the principal to the
agent;
3. Date of manufacturing or production operations performed by
the agent;
4. Total quantity and description of merchandise appearing in or
used in manufacturing or production operations performed by the
agent;
5. Total quantity and description of articles produced in
manufacturing or production operations performed by the agent;
6. Quantity, kind and quality of articles transferred from the
agent to the principal; and
7. Date of transfer of the articles from the agent to the
principal.
D. General Requirements
The manufacturer or producer will:
1. Comply fully with the terms of this general ruling when
manufacturing or producing articles for account of the 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 letter of 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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, part 191 of the Customs
Regulations and this general ruling.
IV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for
Burlap or Other Textile Material (T.D. 83-53)
Drawback may be allowed under 19 U.S.C. 1313(a) upon the
exportation of burlap or other textile material manufactured with
the use of imported burlap or other textile material, subject to the
following special requirements:
A. Imported Merchandise or Drawback Products \1\ Used
Imported merchandise or drawback products (burlap or other
textile material) 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. General Statement
The manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer
[[Page 11041]]
or producer for the account of the manufacturer or producer under
contract within the principal and agency relationship outlined in
T.D.''s 55027(2) and 55207(1) (see Sec. 191.9 of this part).
D. Process of Manufacture or Production
The imported merchandise or drawback products will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
E. Multiple Products
Not applicable.
F. Loss or Gain
Not applicable.
G. 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.
H. 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. Records establishing 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 inventory records of the manufacturer or producer 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.
Each lot of imported material received by a manufacturer or
producer shall be given a lot number and kept separate from other
lots until used. The records of the manufacturer or producer shall
show, as to each manufacturing lot or period of manufacture, the
quantity of material used from each import lot and the number of
each kind and size of bags or meat wrappers obtained. If applicable,
a certificate of manufacture and delivery shall be filed covering
each manufacturing lot or period of manufacture.
All bags or meat wrappers manufactured or produced for the
account of the same exporter during a specified period may be
designated as one manufacturing lot and, as applicable, covered by
one certificate of manufacture and delivery. All exported bags or
meat wrappers shall be identified by the exporter with the
certificate of manufacture and delivery covering their manufacture,
if applicable.
J. 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.
K. General Requirements
The manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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 19,
United States Code, Sec. 1313, part 191 of the Customs Regulations
and this general ruling.
V. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for
Component Parts (T.D. 81-300)
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products \1\ to be Designated as the Domestic Merchandise of the
Basis for Drawback on the Exported Same Kind and Quality as that
Products. Designated which will be Used
in the Production of the
Exported Products.
Component parts identified by Component parts identified with
individual part numbers.. the same individual part
numbers as those in the column
immediately to the left
hereof.
Component parts identified identified Component parts with the same
by individual part numbers.. 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.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of the sentence should read ``appearing in the exported
articles.''
---------------------------------------------------------------------------
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 manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
D. Process of Manufacture or Production
The components described in the parallel columns will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
E. Multiple Products
Not applicable.
F. Waste
[[Page 11042]]
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 manufacturer or producer used the
merchandise to produce articles. During the same 3-year period, the
manufacturer or producer produced \3\ the exported articles. To
obtain drawback the claimant must establish 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. Drawback is not payable without proof of compliance.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
I. Inventory Procedures
The inventory records of the manufacturer or producer 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
appear 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 manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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, part 191 of the Customs
Regulations and this general ruling.
VI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for
Flaxseed (T.D. 83-80)
Drawback may be allowed under the provision of 19 U.S.C. 1313(a)
upon the exportation of linseed oil, linseed oil cake, and linseed
oil meal, manufactured or produced with the use of imported
flaxseed, subject to the following special requirements:
A. Imported Merchandise or Drawback Products \1\ Used
Imported merchandise or drawback products (flaxseed) 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. General Statement
The manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
D. Process of Manufacture or Production
The imported merchandise or drawback products will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
E. Multiple Products
Drawback law mandates the assignment of relative values when two
or more products necessarily are produced concurrently in the same
operation. If multiple products are produced records will be
maintained of the market value of each product at the time it is
first separated in the manufacturing process (when a claim covers a
manufacturing period, 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 Secs. 191.2(u), 191.22(e)).
The ``appearing in'' basis may not be used if multiple products are
produced.
F. 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.
G. 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.
H. 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.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of the sentence should read ``appearing in 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. Records establishing 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 inventory records of the manufacturer or producer 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.
The inventory records of the manufacturer or producer shall show
the inclusive dates of manufacture; the quantity, identity, and
value of the imported flaxseed or screenings, scalpings, chaff, or
scourings used; the quantity by actual weight and value, if any, of
the material removed from the foregoing
[[Page 11043]]
by screening prior to crushing; the quantity and kind of domestic
merchandise added, if any; the quantity by actual weight or gauge
and value of the oil, cake, and meal obtained; and the quantity and
value, if any, of the waste incurred. The quantity of imported
flaxseed, screenings, scalpings, chaff, or scourings used or of
material removed shall not be estimated nor computed on the basis of
the quantity of finished products obtained, but shall be determined
by actually weighing the said flaxseed, screenings, scalpings,
chaff, scourings, or other material; or, at the option of the
crusher, the quantities of imported materials used may be determined
from Customs weights, as shown by the import entry covering such
imported materials, and the Government weight certificate of
analysis issued at the time of entry. The entire period covered by
an abstract shall be deemed the time of separation of the oil and
cake covered thereby.
If the records of the manufacturer or producer do not show the
quantity of oil cake used in the manufacture or production of the
exported oil meal and the quantity of oil meal obtained, the net
weight of the oil meal exported shall be regarded as the weight of
the oil cake used in the manufacture thereof.
If various tanks are used for the storage of imported flaxseed,
the mill records shall establish the tank or tanks in which each lot
or cargo is stored. If raw or processed oil manufactured or produced
during different periods of manufacture is intermixed in storage, a
record shall be maintained showing the quantity, identity, and kind
of oil so intermixed. Identity of merchandise or articles in either
instance shall be in accordance with Sec. 191.14 of this part.
J. 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.
K. General Requirements
The manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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 19,
United States Code, Sec. 1313, part 191 of the Customs Regulations
and this general ruling.
VII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for
Fur Skins or Fur Skin Articles (T.D. 83-77)
Drawback may be allowed under 19 U.S.C. 1313(a) upon the
exportation of dressed, redressed, dyed, redyed, bleached, blended,
or striped fur skins or fur skin articles manufactured or produced
by any one or a combination of the foregoing processes with the use
of fur skins or fur skin articles, such as plates, mats, sacs,
strips, and crosses, imported in a raw, dressed, or dyed condition,
subject to the following special requirements:
A. Imported Merchandise or Drawback Products \1\ Used
Imported merchandise or drawback products (fur skins or fur skin
articles) 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. General Statement
The manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
D. Process of Manufacture or Production
The imported merchandise or drawback products will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
Drawback shall not be allowed under this general manufacturing
drawback ruling when the process performed results only in the
restoration of the merchandise to its condition at the time of
importation.
E. Multiple Products
Not applicable.
F. 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.
G. 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.
H. 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.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of the sentence should read ``appearing in 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. Records establishing 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 inventory records of the manufacturer or producer 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.
The records of the manufacturer or producer shall show, as to
each lot of fur skins and/or fur skin articles used in the
manufacture or production of articles for exportation with benefit
of drawback, the lot number and date or inclusive dates of
manufacture or production, the quantity, identity, and description
of the imported merchandise used, the condition in which imported,
the process or processes applied thereto, the quantity and
description of the finished articles obtained, and the quantity of
imported pieces rejected, if any, or spoiled in manufacture or
production.
J. 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
[[Page 11044]]
would replace. (If rejects and/or spoilage are incurred, the
quantity of imported merchandise used shall be determined by
deducting from the quantity of fur skins or fur skin articles put
into manufacture or production the quantity of such rejects and/or
spoilage.)
K. General Requirements
The manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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 19,
United States Code, Sec. 1313, part 191 of the Customs Regulations
and this general ruling.
VIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for
Orange Juice (T.D. 85-110)
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products \1\ To Be Designated as the Domestic Merchandise of the
Basis for Drawback on the Exported Same Kind and Quality as That
Products. Designated Which Will Be Used
in the Production of the
Exported Products
Concentrated orange juice for Concentrated orange juice for
manufacturing (of not less than 55 manufacturing as described in
deg. Brix) as defined in the standard the left-hand parallel column.
of identity of the Food and Drug
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 manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
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. Multiple 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 manufacturer or producer used the
designated merchandise to produce articles. During the same 3-year
period, the manufacturer or producer 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 inventory records of the manufacturer or producer 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'',
and will show what components were blended with the concentrated
orange juice for manufacturing. 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 manufacturer or producer 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
[[Page 11045]]
which liquidates its claims any changes in the information required
by the General Instructions of this Appendix to be included therein
(I. General Instructions, 1 through 9) or the corporate name or
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, part 191 of the Customs
Regulations and this general ruling.
IX. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for
Petroleum or Petroleum Derivatives (T.D. 84-49)
A. Parallel Columns--``Same Kind and Quality''
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products \1\ To Be Designated as the Domestic Merchandise of the
Basis for Drawback on the Exported Same Kind and Quality as That
Products. Designated Which Will Be Used
in the Production of the
Exported Products.
\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 manufacturer or producer 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 the manufacturer or producer will
designate on its 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.
B. 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
C. Exported Articles on Which Drawback Will Be Claimed
See the General Instructions, I.A.7., for this general drawback
ruling. Each article to be exported must be named. When the identity
of the product is not clearly evident by its name, there must be a
statement as to what the product is, e.g., a herbicide.
D. General Statement
The manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
E. 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.
F. Multiple Products
1. Relative Values
Fractionation results in 17 products. In order to insure proper
distribution of drawback to each of these products, the manufacturer
or producer agrees to record the relative values at the time of
separation. The entire period covered by an abstract is to be
treated at the time of separation. The value per unit of each
product shall be the average market value for the abstract period.
2. Producibility
The manufacturer or producer can vary the proportionate quantity
of each product. The manufacturer or producer understands that
drawback is payable on exported products only to the extent that
these products could have been produced from the designated
merchandise. The records of the manufacturer or producer will show
that all of the products exported for which drawback will be claimed
under this general manufacturing drawback ruling could have been
produced concurrently on a practical operating basis from the
designated merchandise.
The manufacturer or producer agrees to establish the amount to
be designated by reference to the Industry Standards of Potential
Production published in T.D. 66-16.\2\
---------------------------------------------------------------------------
\2\ 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.
G. Loss or Gain
Because the manufacturer or producer keeps 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.
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 merchandise
designated;
2. The quantity of merchandise of the same kind and quality as
the designated merchandise used to produce the exported articles.
3. That, within 3 years after receiving it at its refinery, the
manufacturer or producer used the designated merchandise to produce
articles. During the same 3-year period, the manufacturer or
producer produced the exported articles.
4(a). The manufacturer or producer agrees to use a 28-31 day
period (monthly) abstract period for each refinery covered by this
general manufacturing drawback ruling, or
(b). The manufacturer or producer agrees to use an abstract
period (not to exceed 1 year) for each refinery covered by this
general manufacturing drawback ruling. The manufacturer or producer
certifies that if it 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), and state which is selected in the application, and, if (b) is
selected, specify the length of the particular abstract period
[[Page 11046]]
chosen (not to exceed 1 year (see General Instruction I.A.7.)).)
5. On each abstract of production the manufacturer or producer
agrees to show the value per barrel to five decimal places.
6. The manufacturer or producer agrees to file claims in the
format set forth in exhibits A through F which are attached to this
general manufacturing drawback ruling. The manufacturer or producer
realizes that to obtain drawback the claimant must establish that
the completed articles were exported within 5 years after
importation of the imported merchandise. Records establishing
compliance with these requirements will be available for audit by
Customs during business hours. It is understood that drawback is not
payable without proof of compliance. Records will be kept in
accordance with T.D. 84-49, as amended by T.D. 95-61.
J. 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 the manufacturer or producer
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.
K. Inventory Procedures
The manufacturer or producer realizes that inventory control is
of major importance. In accordance with the normal accounting
procedures of the manufacturer or producer, 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 the drawback claims of the
manufacturer or producer and will support adherence with the
requirements discussed under the heading PROCEDURES AND RECORDS
MAINTAINED.
L. 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.
M. Agreements
The manufacturer or producer specifically agrees that it will:
1. Comply fully with the terms of this general 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
information required by the General Instructions of this Appendix to
be included therein (I. General Instructions, 1 through 9) or the
corporate name or 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, part 191 of the Customs
Regulations and this general ruling.
BILLING CODE 4820-02-P
[[Page 11047]]
[GRAPHIC] [TIFF OMITTED] TR05MR98.000
[[Page 11048]]
[GRAPHIC] [TIFF OMITTED] TR05MR98.001
BILLING CODE 4820-02-C
[[Page 11049]]
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
---------------------
Bbls. Drawback Bbls. Drawback Bbls. Drawback Drawback
factor factor factor Bbls. factor
--------------------------------------------------------------------------------------------------------------------------------------------------------
(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.
BILLING CODE 4820-02-M
[[Page 11050]]
[GRAPHIC] [TIFF OMITTED] TR05MR98.002
[[Page 11051]]
[GRAPHIC] [TIFF OMITTED] TR05MR98.003
[[Page 11052]]
[GRAPHIC] [TIFF OMITTED] TR05MR98.004
BILLING CODE 4820-02-C
[[Page 11053]]
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]
----------------------------------------------------------------------------------------------------------------
(24) Quantity of
raw material of (20)
(22) (23) type and class (19) Crude
(21) Product Quantity Industry designated needed Drawback allowed
in barrels standard to produce factor for
(%) product per drawback
barrel
----------------------------------------------------------------------------------------------------------------
Aviation Gasoline \1\........................ \1\ 11,218 40 28,485 1.00126 11,232
\1\ 176 40 440 1.01300 178
Residual Oils \1\............................ \1\ 21,221 83 25,567 .45962 9,754
\1\ 104,39
7 83 125,780 .43642 45,561
Lubricating Oils \1\......................... \1\ 8,774 50 17,548 4.52178 39,674
Petrochemicals, Other \1\.................... \1\ 195 29 672 1.00244 195
Petrochemicals, Other \2\.................... \2\ 696 29 2,400 1.00244 698
Petrochemicals, Other \2\.................... \2\ 319 29 1,100 1.07895 344
------------------------------------------------------------------
Total.................................. 146,996 .......... ................. .......... 107,636
----------------------------------------------------------------------------------------------------------------
\1\ Exports.
\2\ Drawback deliveries.
A--Crude allowed (column 20: 107,636 bbls. (106,594 for export, plus 1,042 for drawback deliveries)).
B--Total quantity exported (including drawback deliveries) (column 22): 146,996.
C--Largest quantity of raw material needed to produce an individual exported product (see column 24): 151,347.
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 bbs.
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.
BILLING CODE 4820-02-M
[[Page 11054]]
[GRAPHIC] [TIFF OMITTED] TR05MR98.005
BILLING CODE 4820-02-C
[[Page 11055]]
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 No. 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 ......do..................... 37,240 08/04/94 Oct. 1994.............. .1050
3155........................... 22517 10/05/94 ......do..................... 38,982 10/05/94 Nov. 1994.............. .1050
--------------------------------------------------------------------------------------------------------------------------------------------------------
X. General Manufacturing Drawback Ruling under 19 U.S.C. 1313(b) for
Piece Goods (T.D. 83-73)
A. Same Kind and Quality (Parallel
Columns)
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products 1 to be Designated as the Domestic Merchandise of the
Basis for Drawback on the Exported Same Kind and Quality as that
Products 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 (including, if
applicable, multiple 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 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 manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.'s. 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
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. Multiple Products
Not applicable.
F. Waste
Rag waste may be incurred. 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, the records of the manufacturer or producer will
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 may be assumed that such
rag waste constituted 2% of the piece goods put into the finishing
processes.
G. Shrinkage, Gain, and Spoilage
Unless the claim for drawback is based on the quantity of
merchandise appearing in the exported articles, the records of the
manufacturer or producer will show the yardage lost by shrinkage or
gained by stretching during manufacture or production, 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 manufacturer or producer used the
merchandise to produce articles. During the same 3-year period, the
manufacturer or producer 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
[[Page 11056]]
of the imported merchandise. Records establishing 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 inventory records of the manufacturer or producer 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 manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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.
XI. General Manufacturing Drawback Ruling under 19 U.S.C. 1313(b) for
Raw Sugar (T.D. 83-59)
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 the 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 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
consist of: (1) A raw stock record (accounting for Refiner's raw lot
No., Import entry No., Packages No. and kind, Pounds, Polarization,
By whom imported or withdrawn, Date of importation, Date of receipt
by refiner, Date of melt, Importing carrier, Country of origin); (2)
A melt record [number of pounds in each lot melted] (accounting for
Lot No. Pounds, and Polarization degrees and pounds sucrose); (3)
Sirup stock records (accounting for Date of boiling, Refinery serial
manufacture No., Quantity of sirup in gallons, and Pounds
[[Page 11057]]
sucrose contained therein); (4) Refined sugar stock record
(accounting for Refinery serial production No., Date of manufacture,
Hard or soft refined, Polarization and No., Net weight in pounds);
(5) Recapitulation (consisting of (in pounds): (a) sucrose in
process at beginning of period, (b) sucrose melted during period,
(c) sucrose in process at end of period, (d) sucrose used in
manufacture, and (e) sucrose contained in manufacture, in which item
(a) plus item (b), minus item (c), should equal item (d)); and (6) A
statement as follows:
I, ________, the ________ refiner at the ________ refinery of
________, located at ________, do solemnly and truly declare that
each of the statements contained in the foregoing abstract is true
to the best of my knowledge and belief and can be verified by the
refinery records, which have been kept in accordance with Treasury
Decision 83-59 and Appendix A of 19 CFR Part 191 and which are at
all times open to the inspection of Customs.
. Date----------------------------------------------------------------
. Signature-----------------------------------------------------------
O. The refiner shall file with each abstract a statement,
showing the average market values of the products specified in the
abstract and including a statement as follows:
I, ________, (Official capacity) of the ________ (Refinery), do
solemnly and truly declare that the values shown above are true to
the best of my knowledge and belief, and can be verified by our
records.
Date-----------------------------------------------------------------
Signature------------------------------------------------------------
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 manufacture and delivery under this general
ruling shall be in the following form:
Certificate of manufacture and delivery--Sugar and Sirup No.
________
Certificate of manufacture and delivery of ________ manufactured
by ________ under abstract No. ________ filed at the port of
________.
------------------------------------------------------------------------
Description Quantity Polarization
------------------------------------------------------------------------
------------------------------------------------------------------------
Designation of Imported Sugar
--------------------------------------------------------------------------------------------------------------------------------------------------------
By whom imported or Quantity of
Import entry No. withdrawn from Name of importing When Where imported raw sugar Polarization Sucrose
warehouse carrier imported (pounds) (pounds)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
I, ________, the ________ of ________, located at ________,
declare that the sugar (or sirup) described in the within
certificate of manufacture and delivery was manufactured by said
company at its refinery at ________ and is part of the sugar (or
sirup) covered by abstract No. ____________, filed at the port of
________ and was delivered to ________ on or about ________,
____________, and that no other certificate of manufacture and
delivery has been issued covering the above merchandise; that,
subject to 19 U.S.C. 1508 and 1313(t), the refinery and other
records of the company verifying the statements contained in said
abstract are now and at all times hereafter will be open to
inspection by Customs.
I further declare that the above-designated imported sugar (upon
which the duties have been paid) was received by said company on
________ and was used in the manufacture of sugar and sirup on
________.
. Date----------------------------------------------------------------
. Signature-----------------------------------------------------------
S. Drawback entries under this general ruling shall be on
Customs Form 7551 and, in addition to the information required
thereon, shall state the polarization in degrees and the sucrose in
pounds for the designated imported sugar. Drawback claims under this
general ruling shall include a statement as follows:
I, ________, the ________ of ________, located at ________
declare that the sugar (or sirup) described in this entry, was
manufactured by said company at its refinery at ________ [or, if the
claim is based on a certificate of manufacture and delivery, was
manufactured by ________ at its refinery at ________ for which the
accompanying certificate of manufacture and delivery was received by
this company] and is part of the sugar (or sirup) covered by
abstract No. ________, filed at the port of ________; that, subject
to 19 U.S.C. 1508 and 1313(t), the refinery and other records of the
company verifying the statements contained in said abstract are now
and at all times hereafter will be open to inspection by Customs. I
further declare that the above-designated imported sugar (upon which
the duties have been paid) was received by said company on ________
and was used in the manufacture of sugar and sirup during the period
covered by abstract No. ________, Customs No. ________, on file with
the port director at ________.
I further declare that the sugar or sirup specified therein was
exported as stated in the entry.
. Date----------------------------------------------------------------
. Signature-----------------------------------------------------------
T. General Statement. The refiner manufactures or produces for
its own account. The refiner may manufacture or produce articles for
the account of another or another manufacturer or producer may
manufacture or produce for the refiner's account under contract
within the principal and agency relationship outlined in T.D.'s
55027(2) and 55207(1) (see Sec. 191.9 of this part).
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 \1\ used to produce the exported
articles.
---------------------------------------------------------------------------
\1\ 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
[[Page 11058]]
produce articles. During the same 3-year period, the refiner
produced\2\ the exported articles.
To obtain drawback the claimant must establish 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. 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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, part 191 of the Customs
Regulations and this general ruling.
XII. General Manufacturing Drawback Ruling under 19 U.S.C. 1313(b) for
Steel (T.D. 81-74)
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products \1\ to be Designated as the Domestic Merchandise of the
Basis for Drawback on the Exported Same Kind and Quality as that
Products. 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, class, specification, and
or ASTM \2\ specification and, if the grade as the steel in the
specification contains one or more column immediately to the left
grades, falling within one grade of hereof.
the 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-paid, duty-free, or domestic steel used instead of
the imported, duty-paid steel (or drawback products) will be
interchangeable for manufacturing purposes with the duty-paid steel.
To be 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\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
2. Because the duty-paid steel (or drawback products) 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 (or drawback products) 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-paid, duty-free, or domestic steel used in place of the
duty-paid steel (or drawback products) 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-paid, 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 manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
D. Process of Manufacture or Production
The steel described in the parallel columns will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
E. Multiple 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 manufacturer or producer 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 manufacturer or producer used the
merchandise to produce articles. During the same 3-year period, the
manufacturer or producer 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. Records establishing compliance with these
requirements will be available for audit by Customs during business
hours. Drawback is not payable without proof of compliance.
---------------------------------------------------------------------------
[[Page 11059]]
J. Inventory Procedures
The inventory records of the manufacturer or producer 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 manufacturer or producer 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 information required by the
General Instructions of this Appendix to be included therein (I.
General Instructions, 1 through 9) or the corporate name or
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.
XIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for
Sugar (T.D. 81-92)
A. Same Kind and Quality (Parallel Columns)
Imported Merchandise or Drawback Duty-Paid, Duty-Free or
Products \1\ to be Designated as the Domestic Merchandise of the
Basis for Drawback on the Exported Same Kind and Quality as that
Products. Designated which will be Used
in the Production of the
Exported Products.
1. Granulated or liquid sugar for 1. Granulated or liquid sugar
manufacturing, containing sugar solids for manufacturing, containing
of not less than 99.5 sugar degrees. sugar solids of not less than
99.5 sugar degrees.
2. Granulated or liquid sugar for 2. Granulated or liquid sugar
manufacturing, containing sugar solids for manufacturing, containing
of less than 99.5 sugar degrees. 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, 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 manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
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. Multiple 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 manufacturer or producer 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 manufacturer or producer used the
merchandise to produce articles. During the same 3-year period, the
manufacturer or producer produced \3\ the exported articles. To
obtain drawback the claimant must establish 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. Drawback is not payable without proof of compliance.
---------------------------------------------------------------------------
\3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------
J. Inventory Procedures
The inventory records of the manufacturer or producer 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
[[Page 11060]]
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 manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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.
XIV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for
Woven Piece Goods (T.D. 83-84)
Drawback may be allowed under 19 U.S.C. 1313(a) upon the
exportation of bleached, mercerized, printed, dyed, or redyed piece
goods manufactured or produced by any one or a combination of the
foregoing processes with the use of imported woven piece goods,
subject to the following special requirements:
A. Imported Merchandise or Drawback Products \1\ Used
Imported merchandise or drawback products (woven piece goods)
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. General Statement
The manufacturer or producer manufactures or produces for its
own account. The manufacturer or producer may manufacture or produce
articles for the account of another or another manufacturer or
producer may manufacture or produce for the account of the
manufacturer or producer under contract within the principal and
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see
Sec. 191.9 of this part).
D. Process of Manufacture or Production
The imported merchandise or drawback products will be used to
manufacture or produce articles in accordance with Sec. 191.2(q) of
this part.
The piece goods used in manufacture or production under this
general manufacturing drawback ruling may also be subjected to one
or more finishing processes. Drawback shall not be allowed under
this general manufacturing drawback ruling when the process
performed results only in the restoration of the merchandise to its
condition at the time of importation.
E. Multiple Products
Not applicable.
F. Waste
Rag waste may be incurred. 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, the records of the manufacturer or producer will
show the quantity of rag waste, if any, its value, and its
disposition. If no waste results, records will be maintained to
establish that fact. In instances where rag waste occurs and it is
impractical to account for the actual quantity of rag waste
incurred, it may be assumed that such rag waste constituted 2% of
the woven piece goods put into process.
G. Shrinkage, Gain, and Spoilage
Unless the claim for drawback is based on the quantity of
merchandise appearing in the exported articles, the records of the
manufacturer or producer will 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. 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.
---------------------------------------------------------------------------
\2\ If claims are to be made on an ``appearing in'' basis, the
remainder of the sentence should read ``appearing in 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. Records establishing 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 inventory records of the manufacturer or producer 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.
The records of the manufacturer or producer shall show, as to
each lot of piece goods manufactured or produced for exportation
with benefit of drawback, the lot number and the date or inclusive
dates of manufacture or production, the quantity, identity, and
value of the imported (or drawback product) piece goods used, the
condition in which imported or received (whether in the gray,
bleached, dyed, or mercerized), the working allowance specified in
the contract under which they are received, the process or processes
applied thereto, and the quantity and description of the piece goods
obtained. The records shall also show the yardage lost by shrinkage
or gained by stretching during manufacture or production, and the
quantity of remnants resulting and of spoilage incurred.
J. 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. (If remnants and/or
spoilage occur during manufacture or production, the quantity of
imported merchandise used shall be determined by deducting from the
quantity of piece goods received and put into manufacture or
production the quantity of such remnants and/or spoilage. The
remaining quantity shall be reduced by the quantity thereof which
the value of the rag waste, if any, would replace.)
K. General Requirements
The manufacturer or producer 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 information
required by the General Instructions of this Appendix to be included
therein (I. General Instructions, 1 through 9) or the corporate name
or 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
[[Page 11061]]
6. Issue instructions to insure proper compliance with 19,
United States Code, Sec. 1313, part 191 of the Customs Regulations
and this general ruling.
Appendix B to Part 191--Sample Formats for Applications for Specific
Manufacturing Drawback Rulings
Table of Contents
I. General.
II. Format for Application for Specific Manufacturing Drawback
Ruling Under 19 U.S.C. 1313(a) and 1313(b) (Combination).
III. Format for Application for Specific Manufacturing Drawback
Ruling Under 19 U.S.C. 1313(b).
IV. Format for Application for Specific Manufacturing Drawback
Ruling Under 19 U.S.C. 1313(d).
V. Format for Application for Specific Manufacturing Drawback Ruling
Under 19 U.S.C. 1313(g).
I. General
These sample formats for applications for specific manufacturing
drawback rulings must be submitted to and reviewed and approved by
Customs Headquarters. A specific manufacturing drawback ruling
consists of the letter of approval that Customs issues to the
applicant, a synopsis of which is published in the Customs Bulletin,
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.
II. Format for Application for Specific Manufacturing Drawback Ruling
Under 19 U.S.C. 1313(a) and 1313(b) (Combination).
COMPANY LETTERHEAD (Optional)
U.S. Customs Service, Duty and Refund Determination Branch, 1300
Pennsylvania 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) & (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 (WITH SUFFIX) 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.)
PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS
(List 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 employee 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 (see footnote at end of this sample
format for persons who may sign applications for specific
manufacturing drawback rulings).)
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, one additional copy 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 Sec. 191.9, as applicable, 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 DUTY-PAID, DUTY-FREE OR DOMESTIC
PRODUCTS \1\ TO BE DESIGNATED AS MERCHANDISE OF THE SAME KIND AND
THE BASIS FOR DRAWBACK ON THE QUALITY AS THAT DESIGNATED WHICH
EXPORTED PRODUCTS WILL BE USED IN THE PRODUCTION OF
THE EXPORTED PRODUCTS.
1. 1.
2. 2.
3. 3.
\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.)
(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
[[Page 11062]]
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 OR PRODUCTION section below and
each article listed here.)
PROCESS OF MANUFACTURE OR PRODUCTION
(Drawback under Sec. 1313(b) is not allowable except where a
manufacture or production exists. Manufacture or production is
defined, for drawback purposes, in Sec. 191.2(q). In order to obtain
drawback under Sec. 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 manufacture or
production has occurred. 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.)
MULTIPLE 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 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 any of multiple products, but
is not allowable on exports of valuable waste. In making this
distinction between a product and 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 MULTIPLE PRODUCTS section consists of two sub-sections:
Relative Values and Producibility. If multiple products do not
result from your operation state ``Not Applicable'' for the entire
section. If multiple 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 multiple 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,
[[Page 11063]]
which affects the allowance of drawback. Stock in process may exist
when residual material resulting from a manufacturing or processing
operation is reintroduced into a subsequent manufacturing or
processing operation; e.g., trim pieces from a cast article. The
effect of stock in process on a drawback claim is that the amount of
drawback for the period in which the stock in process was withdrawn
from the manufacturing or processing operation (or the manufactured
article, if manufacturing or processing periods are not used) is
reduced by the quantity of merchandise or drawback products used to
produce the stock in process if the ``used in'' or ``used in less
valuable waste'' methods are used (if the ``appearing in'' method is
used, there will be no effect on the amount of drawback), and the
quantity of merchandise or drawback products used to produce the
stock in process is added to the merchandise or drawback products
used in the subsequent manufacturing or production period (or the
subsequently produced article)).
(If stock in process occurs and claims are to be based on stock in
process, the application must include a statement to that effect.
The application must also 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 \2\ we used to produce the exported
articles;
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\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.''
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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 \3\ the exported articles.
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\3\ The date of production is the date an article is completed.
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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, as applicable, 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 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. 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
multiple products are involved.)
(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 is 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 would 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 191.26(c) of the
Customs Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a
value of $.50 per
[[Page 11064]]
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 7551) 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.
(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 Sec. 1313(a) is not also used under
Sec. 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 Sec. 1313(a).
However, if the merchandise used under Sec. 1313(a) is also used
under Sec. 1313(b) these sections need not be repeated unless they
differ in some way from the Sec. 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
2. The quantity of imported merchandise \4\ we used in producing
the exported articles
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\4\ 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.''
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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. We understand that drawback
is not payable without proof of compliance.
INVENTORY PROCEDURES
(This section must be completed separately from that set forth under
the Sec. 1313(b) portion of your application. The legal requirements
under Sec. 1313(a) differ from those under Sec. 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 Sec. 1313(b).
Either repeat the same basis of claim or use a different basis of
claim, as described above, specifically for drawback claimed under
Sec. 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,
the persons who will sign drawback documents, the basis of claim
used for calculating drawback, the decision to use or not to use an
agent under Sec. 191.9 or the identity of an agent under that
section, the drawback office where claims will be filed under the
ruling, 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, 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
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(Name of Applicant Corporation, Partnership, or Sole Proprietorship)
By \5\-----------------------------------------------------------------
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\5\ Section 191.6(a) requires that applications for specific
manufacturing drawback rulings be signed by any individual legally
authorized to bind the person (or entity) for whom the application
is signed or the owner of a sole proprietorship, a full partner in a
partnership, or, if a corporation, the president, a vice president,
secretary, treasurer or employee 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.
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(Signature and Title)
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(Print Name)
III. Format for Application for Specific Manufacturing Drawback Ruling
Under 19 U.S.C. 1313(b)
COMPANY LETTERHEAD (Optional)
U.S. Customs Service, Duty and Refund Determination Branch, 1300
Pennsylvania 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
[[Page 11065]]
Service authorize drawback on the basis of this application.
NAME AND ADDRESS AND IRS NUMBER (WITH SUFFIX) 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.)
PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS
(List 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 employee 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 (see
footnote at end of this sample format for persons who may sign
applications for specific manufacturing drawback rulings).)
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, one additional copy 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 Sec. 191.9, as applicable,
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 DUTY-PAID, DUTY-FREE OR DOMESTIC
PRODUCTS \1\ TO BE DESIGNATED AS MERCHANDISE OF THE SAME KIND AND
THE BASIS FOR DRAWBACK ON THE QUALITY AS THAT DESIGNATED WHICH
EXPORTED PRODUCTS. WILL BE USED IN THE PRODUCTION OF
THE EXPORTED PRODUCTS.
1. 1.
2. 2.
3. 3.
\1\ Drawback products are those produced in the United States in
accordance with the drawback law and regulations. Such products have
``dual status'' under Sec. 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.,
[[Page 11066]]
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 Sec. 1313(b) is not allowable except where a
manufacture or production exists. Manufacture or production is
defined, for drawback purposes, in Sec. 191.2(q). In order to obtain
drawback under Sec. 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 manufacture or
production has occurred. 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.)
MULTIPLE 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 any of multiple products, but
is not allowable on exports of valuable waste. In making this
distinction between a product and 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 MULTIPLE PRODUCTS section consists of two sub-sections:
Relative Values and Producibility. If multiple products do not
result from your operation state ``Not Applicable'' for the entire
section. If multiple 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 multiple 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 may exist when residual material resulting from a
manufacturing or processing operation is reintroduced into a
subsequent manufacturing or processing operation; e.g., trim pieces
from a cast article. The effect of stock in process on a drawback
claim is that the amount of drawback for the period in which the
stock in process was withdrawn from the manufacturing or processing
operation (or the manufactured article, if manufacturing or
processing periods are not used) is reduced by the quantity of
merchandise or drawback products used to produce the stock in
process if the ``used in'' or ``used in less valuable waste''
methods are used (if the ``appearing in'' method is used, there will
be no effect on the amount of drawback), and the quantity of
merchandise or drawback products used to produce the stock in
process is added to the merchandise or drawback products used in the
subsequent manufacturing or production period (or the subsequently
produced article)).
(If stock in process occurs and claims are to be based on stock in
process, the application must include a statement to that effect.
The application must also 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
[[Page 11067]]
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 \2\ we 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 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 \3\ the exported articles;
---------------------------------------------------------------------------
\3\ 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, as applicable, 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. 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
multiple products are involved.)
(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 is 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 would 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 191.26(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 7551) 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
[[Page 11068]]
changes in the quantities of material used to produce the exported
articles, or different styles or capacities of containers of such
exported merchandise.
(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,
the persons who will sign drawback documents, the basis of claim
used for calculating drawback, the decision to use or not to use an
agent under Sec. 191.9 or the identity of an agent under that
section, the drawback office where claims will be filed under the
ruling, 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, 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\------------------------------------------------------------------
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\4\ Section 191.6(a) requires that applications for specific
manufacturing drawback rulings be signed by any individual legally
authorized to bind the person (or entity) for whom the application
is signed or the owner of a sole proprietorship, a full partner in a
partnership, or, if a corporation, the president, a vice president,
secretary, treasurer or employee 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)
IV. Format for Application for Specific Manufacturing Drawback Ruling
Under 19 U.S.C. 1313(d)
COMPANY LETTERHEAD (Optional)
U.S. Customs Service, Duty and Refund Determination Branch, 1300
Pennsylvania 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 (WITH SUFFIX) 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.)
PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS
(List 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 employee 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 (see
footnote at end of this sample format for persons who may sign
applications for specific manufacturing drawback rulings).
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, one additional copy 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 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.)
(If an agent is to be used, the applicant must state it will comply
with T.D.'s 55027(2) and 55207(1), and Sec. 191.9, as applicable,
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).)
(Regarding drawback operations conducted under Sec. 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 Sec. 1313(d) is not allowable except where a
manufacture or production exists. ``Manufacture or production'' is
defined, for drawback purposes, in Sec. 191.2(q). In order to obtain
drawback under Sec. 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
[[Page 11069]]
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 may exist when residual material resulting from a
manufacturing or processing operation is reintroduced into a
subsequent manufacturing or processing operation; e.g., trim pieces
from a cast article. The effect of stock in process on a drawback
claim is that the amount of drawback for the period in which the
stock in process was withdrawn from the manufacturing or processing
operation (or the manufactured article, if manufacturing or
processing periods are not used) is reduced by the quantity of
merchandise or drawback products used to produce the stock in
process if the ``used in'' or ``used in less valuable waste''
methods are used (if the ``appearing in'' method is used, there will
be no effect on the amount of drawback), and the quantity of
merchandise or drawback products used to produce the stock in
process is added to the merchandise or drawback products used in the
subsequent manufacturing or production period (or the subsequently
produced article)).
(If stock in process occurs and claims are to be based on stock in
process, the application must include a statement to that effect.
The application must also 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 \1\ we used in
producing the exported articles.
---------------------------------------------------------------------------
\1\ 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.)
(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 would 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
[[Page 11070]]
7551) 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.
(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,
the persons who will sign drawback documents, the basis of claim
used for calculating drawback, the decision to use or not to use an
agent under Sec. 191.9 or the identity of an agent under that
section, the drawback office where claims will be filed under the
ruling, 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, 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 \2\-----------------------------------------------------------------
(Signature and Title)
---------------------------------------------------------------------------
\2\ Section 191.6(a) requires that applications for specific
manufacturing drawback rulings be signed by any individual legally
authorized to bind the person (or entity) for whom the application
is signed or the owner of a sole proprietorship, a full partner in a
partnership, or, if a corporation, the president, a vice president,
secretary, treasurer or employee 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.
----------------------------------------------------------------------
(Print Name)
V. Format for Application for Specific Manufacturing Drawback Ruling
Under 19 U.S.C. 1313(g).
COMPANY LETTERHEAD (Optional)
U.S. Customs Service, Duty and Refund Determination Branch, 1300
Pennsylvania 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 (WITH SUFFIX) 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.)
PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS
(List 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 employee 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 (see
footnote at end of this sample format for persons who may sign
applications for specific manufacturing drawback rulings.)
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, one additional copy 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?)
(If an agent is to be used, the applicant must state it will comply
with T.D.s 55027(2) and 55207(1), and Sec. 191.9, as applicable, 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 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
[[Page 11071]]
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 the 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 \1\ we used in producing
the exported article.
---------------------------------------------------------------------------
\1\ 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. It 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 multiple products are involved.)
(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 is 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 would 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 191.26(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
[[Page 11072]]
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 7551) 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.
(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,
the persons who will sign drawback documents, the basis of claim
used for calculating drawback, the decision to use or not to use an
agent under Sec. 191.9 or the identity of an agent under that
section, the drawback office where claims will be filed under the
ruling, 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\2\------------------------------------------------------------------
(Signature and Title)
\2\ Section 191.6(a) requires that applications for specific
manufacturing drawback rulings be signed by any individual legally
authorized to bind the person (or entity) for whom the application
is signed or the owner of a sole proprietorship, a full partner in a
partnership, or, if a corporation, the president, a vice president,
secretary, treasurer or employee 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.
---------------------------------------------------------------------------
----------------------------------------------------------------------
Samuel H. Banks,
Acting Commissioner of Customs.
Approved: February 5, 1998.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-5045 Filed 3-4-98; 8:45 am]
BILLING CODE 4820-02-P
