[Title 19 CFR C]
[Code of Federal Regulations (annual edition) - April 1, 2002 Edition]
[Title 19 - CUSTOMS DUTIES]
[Chapter I - UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY]
[Part 191 - DRAWBACK]
[Subpart C - Unused Merchandise Drawback]
[From the U.S. Government Printing Office]


19CUSTOMS DUTIES22002-04-012002-04-01falseCSubpart CCUSTOMS DUTIESUNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURYDRAWBACK
                 Subpart C--Unused Merchandise Drawback



Sec. 191.31  Direct identification.

    (a) General. Section 313(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.

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



Sec. 191.32  Substitution drawback.

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

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    (2) The substituted merchandise must be commercially interchangeable 
with the imported merchandise that is designated for drawback; and
    (3) The substituted merchandise exported or destroyed must not have 
been used in the United States before its exportation or destruction 
(see paragraph (e) of this section).
    (c) Determination of commercial interchangeability. In determining 
commercial interchangeability, Customs shall evaluate the critical 
properties of the substituted merchandise and in that evaluation factors 
to be considered include, but are not limited to, Governmental and 
recognized industrial standards, part numbers, tariff classification and 
value. A party may seek a nonbinding predetermination of commercial 
interchangeability directly from the appropriate drawback office. A 
determination of commercial interchangeability can be obtained in one of 
two ways:
    (1) A formal ruling from the Duty and Refund Determination Branch, 
Office of Regulations and Rulings; or
    (2) A submission of all the required documentation necessary to make 
a commercial interchangeability determination with each individual 
drawback claim filed.
    (d) Time limitations. For substitution unused merchandise drawback:
    (1) The claimant must have had possession of the exported or 
destroyed merchandise at some time during the 3-year period following 
the date of importation of the imported designated merchandise; and
    (2) The merchandise to be exported or destroyed to qualify for 
drawback must be exported, or destroyed under Customs supervision, 
before the close of the 3-year period beginning on the date of 
importation of the imported designated merchandise.
    (e) Operations performed on substituted merchandise. In cases in 
which an operation or operations is or are performed on the substituted 
merchandise, the performing of any operation or combination of 
operations, not amounting to manufacture or production under the 
provisions of the manufacturing drawback law, on the commercially 
interchangeable substituted merchandise is not a use of that merchandise 
for purposes of this section.
    (f) Designation by successor; 19 U.S.C. 1313(s). (1) General rule. 
Upon compliance with the requirements of this section and under 19 
U.S.C. 1313(s), a drawback successor as defined in paragraph (f)(2) of 
this section may designate either of the following as the basis for 
drawback on merchandise possessed by the successor after the date of 
succession:
    (i) Imported merchandise which the predecessor, before the date of 
succession, imported; or
    (ii) Imported and/or commercially interchangeable merchandise which 
was transferred to the predecessor and for which the predecessor 
received, before the date of succession, a certificate of delivery from 
the person who imported and paid duty on the imported merchandise.
    (2) Drawback successor. A ``drawback successor'' is an entity to 
which another entity (predecessor) has transferred, by written 
agreement, merger, or corporate resolution:
    (i) All or substantially all of the rights, privileges, immunities, 
powers, duties, and liabilities of the predecessor; or
    (ii) The assets and other business interests of a division, plant, 
or other business unit of such predecessor, provided that the value of 
the transferred assets and interests (realty, personality, and 
intangibles, exclusive of the drawback rights) exceeds the value of such 
drawback rights, whether vested or contingent.
    (3) Certifications and required evidence. (i) Records of 
predecessor. The predecessor or successor must certify in an attachment 
to the drawback claim that the successor is in possession of the 
predecessor's records which are necessary to establish the right to 
drawback under the law and regulations with respect to the imported and/
or commercially interchangeable merchandise.
    (ii) Merchandise not otherwise designated. The predecessor or 
successor must certify in an attachment to the drawback claim, that the 
predecessor has not and will not designate, nor enable any other person 
to designate, the

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imported and/or commercially interchangeable merchandise as the basis 
for drawback.
    (iii) Value of transferred property. In instances in which assets 
and other business interests of a division, plant, or other business 
unit of a predecessor are transferred, the predecessor or successor must 
specify, and maintain supporting records to establish, the value of the 
drawback rights and the value of all other transferred property.
    (iv) Review by Customs. The written agreement, merger, or corporate 
resolution, provided for in paragraph (f)(2) of this section, and the 
records and evidence provided for in paragraph (f)(3)(i) through (iii) 
of this section, must be retained by the appropriate party(ies) for 3 
years from the date of payment of the related claim and are subject to 
review by Customs upon request.

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



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

[[Page 542]]

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 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

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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

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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.



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.

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