[Federal Register Volume 59, Number 210 (Tuesday, November 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26955]


[[Page Unknown]]

[Federal Register: November 1, 1994]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 10

RIN 1515-AB51

 

Treatment of Reusable Shipping Devices Arriving From Canada or 
Mexico

AGENCY: Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations to 
allow certain foreign-manufactured shipping devices arriving from 
Canada or Mexico to be released, under specified conditions, without 
entry and payment of duty at the time of arrival and without the 
devices being serially numbered or marked, if they are always 
transported on or within either intermodal and similar containers or 
containers which are themselves vehicles or vehicle appurtenances and 
accessories. As millions of these devices are used annually in hundreds 
of millions of transportation moves between the United States and 
Canada or Mexico, Customs recognizes that requiring the importing and 
exporting communities to individually mark and track these devices 
places a burden on commerce that Customs should attempt to alleviate.

DATES: Comments must be received on or before January 3, 1995.

ADDRESSES: Comments (preferably in triplicate) must be submitted to 
U.S. Customs Service, ATTN: Regulations Branch, Franklin Court, 1301 
Constitution Avenue, NW., Washington, D.C. 20229, and may be inspected 
at the Regulations Branch, 1099 14th Street, NW., Suite 4000, 
Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Louis Hryniw, Office of Regulatory 
Audit, (202-927-1100).

SUPPLEMENTARY INFORMATION:

Background

    Pursuant to Chapter 98, Subchapter III, U.S. Note 3, Harmonized 
Tariff Schedule of the United States (HTSUS) (19 U.S.C. 1202), in order 
to facilitate the prompt clearance at ports of entry of certain 
substantial containers and holders, the Secretary of the Treasury is 
authorized to permit the admission of the containers without entry and 
to permit any duties thereon to be paid cumulatively from time to time 
either before or after their importation when conditions exist which 
permit adequate Customs controls to be maintained. Pursuant to 
subheading 9803.00.50, HTSUS, substantial containers and holders which 
are of foreign production and previously imported and duty (if any) 
thereon paid, or if of a class specified by the Secretary of the 
Treasury as instruments of international traffic (IITs) are free of 
duty. Pursuant to 19 U.S.C. 1322, instruments of international traffic 
shall be excepted from the application of the customs laws to such 
extent and subject to such terms and conditions as may be prescribed in 
regulations or instruction of the Secretary of the Treasury.
    Current regulations regarding shipping devices are set forth in 
Secs. 10.41a and 10.41b, Customs Regulations (19 CFR 10.41a and 
10.41b). According to Sec. 10.41a, certain containers are designated as 
IITs and, as such, may be released without entry or duty subject to the 
provisions of the section. According to Sec. 10.41b, other substantial 
containers and holders are required to be serially numbered and marked 
in order to be released without entry or payment of duty. Section 
10.41b(b), (c) and (d) currently describe the numbering and marking 
requirements.
    In this latter regard, Customs has received a petition from, and 
has met with representatives of, the American Automobile Manufacturers 
Association (AAMA) concerning an amendment to the Customs Regulations 
intended to ease the burden of serially numbering and marking certain 
containers arriving from Canada or Mexico. According to the AAMA, the 
business community cannot efficiently and economically individually 
mark and track the millions of these smaller shipping devices that hold 
goods, such as racks, holders, pallets, totes, and packaging material, 
that are used annually in hundreds of millions of transportation moves 
between the United States and Canada or Mexico without placing an 
excessive and undue burden on commerce. In the highly integrated 
manufacturing environment of today's economy, programs which place 
strict reporting, control and usage requirements on reusable shipping 
devices, beyond what is actually necessary for Customs to acquit its 
responsibilities, create an unusual and unnecessary burden on the 
growth and competitiveness of companies located in the U.S. 
Restrictions on the use and control of these reusable shipping devices 
needlessly increase the cost of goods and materials in the U.S.
    After reviewing the AAMA proposal, Customs believes that the 
requirements to serially number and mark the substantial holders and 
containers in question can be eased without risking a loss of revenue.
    Accordingly, Customs is proposing to amend Sec. 10.41b to allow an 
importer or his agent to apply to a district director of Customs for 
permission to have certain foreign-made shipping devices arriving from 
Canada or Mexico released without entry and payment of duty at the time 
of arrival and without the devices being serially numbered or marked.
    The application would, among other things, describe the subject 
shipping devices, identify the ports where they would arrive and depart 
the U.S., and set forth the proposed program for accounting for and 
reporting the shipping devices to Customs. If the application is 
approved, the importer or agent would submit to Customs a periodic 
report for the shipping devices, which could not be less frequent than 
annual, using his own accounting and recordkeeping procedures to keep 
track of the devices. Records supporting the periodic reports of the 
shipping devices would have to be retained for at least 3 years from 
the date the reports are filed with Customs. Any duty applicable to the 
devices would have to be tendered cumulatively at the time specified in 
the approved application. Such tender could not occur more than 90 days 
following the end of the related reporting period.
     In the event the application should be denied, in whole or in 
part, by the district director, the applicant could appeal the denial 
to the regional commissioner.
    By eliminating the serial numbering and marking of the shipping 
devices concerned, and by permitting a consolidated accounting or 
reporting period for such devices, the real benefit of the proposal, it 
is believed, will be reduced operating costs for the international 
trade community.
    In this respect, the proposed rule would achieve the desired 
purposes for those who wish to apply, by supplanting the existing 
system which depends upon physical examination of the shipping devices 
concerned as well as the maintenance of elaborate and costly 
identification systems, with a system based upon the applicant's own 
books and records, including, most importantly, acquisition and repair 
cost records. Since duty would be due on all shipping devices acquired 
within the period covered by the periodic report which the applicant 
would undertake to file, even though the devices may not have yet been 
used in transborder traffic, accounting for specific movements of the 
devices or for diversions would be superfluous.
    The proposed amendments to the Customs Regulations are set forth 
below.

Comments

    Before adopting the proposed amendments, consideration will be 
given to any written comments timely submitted to Customs. Comments 
submitted will be available for public inspection in accordance with 
the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4, Treasury 
Department Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs 
Regulations (19 CFR 103.11(b)), on regular business days between the 
hours of 9 a.m. and 4:30 p.m. at the Regulations Branch, Franklin 
Court, 1099 14th Street, NW., Suite 4000, Washington, DC.

Regulatory Flexibility Act and Executive Order 12866

    For the reasons set forth in the preamble, pursuant to the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it 
is certified that, if adopted, the proposed amendments will not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, the amendments are not subject to the regulatory analysis 
or other requirements of 5 U.S.C. 603 and 604. Nor would the proposed 
amendments result in a ``significant regulatory action'' under E.O. 
12866.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1980 (44 
U.S.C. 3504(h)). Comments on this collection of information should be 
sent to the Office of Management and Budget, Attention: Desk officer 
for the Department of the Treasury, Office of Information and 
Regulatory Affairs, Washington, DC 20503. A copy should also be sent to 
Customs at the address set forth previously.
    The collection of information in these proposed regulations is in 
Sec. 10.41(b). The information is necessary so that Customs may 
determine whether the plan submitted by the importer or his agent to 
keep track of and pay duty on his shipping devices is acceptable. The 
likely respondents would be business organizations.
    Estimated total annual reporting and/or recordkeeping burden:
    Estimated average annual burden per respondent/recordkeeper:
    Estimated number of respondents and/or recordkeepers:
    Estimated annual frequency of responses:

Drafting Information

    The principal author of this document was Russell Berger, 
Regulations Branch, U.S. Customs Service. However, personnel from other 
offices participated in its development.

List of Subjects in 19 CFR Part 10

    Alterations, Bonds, Customs duties and inspection, Exports, 
Imports, Preference programs, Repairs, Reporting and recordkeeping 
requirements, Trade agreements.

Proposed Amendments to the Regulations

    It is proposed to amend part 10, Customs Regulations (19 CFR part 
10), as set forth below:

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The general authority citation for part 10 would continue to 
read as follows, and the specific sectional authority for part 10 would 
be amended by adding specific authority for Sec. 10.41b, in appropriate 
numerical order thereunder, to read as follows:

    Authority: 19 U.S.C. 66, 1202, 1481, 1484, 1498, 1508, 1623, 
1624;
* * * * *
    Section 10.41b also issued under 19 U.S.C. 1202 (Chapter 98, 
Subchapter III, U.S. Note 3, Harmonized Tariff Schedule of the U.S. 
(HTSUS)).
* * * * *
    2. It is proposed to amend section 10.41b by redesignating 
paragraphs (b), (c), (d), (e), (f), (g) and (h) as (c), (d), (e), (f), 
(g), (h) and (i), respectively, and by adding a new paragraph (b) to 
read as follows:


Sec. 10.41b  Clearance of serially numbered substantial holders or 
outer containers.

* * * * *
    (b) Subject to the approval of a district director pursuant to the 
procedures described in this paragraph, certain foreign-manufactured 
shipping devices arriving from Canada or Mexico, including racks, 
holders, pallets, totes, boxes and cans, need not be serially numbered 
or marked if they are always transported on or within either intermodal 
and similar containers or containers which are themselves vehicles or 
vehicle appurtenances and accessories such as twenty and forty foot 
containers of general use and ``igloo'' air freight containers.
    (1) An importer or his agent, regardless of whether the importer is 
the owner of the foreign-manufactured shipping devices, may apply to a 
district director of Customs at one of the importer's chiefly utilized 
Customs districts or the district within which the importer's or 
agent's recordkeeping center is located for permission to have such 
shipping devices arriving from Canada or Mexico released without entry 
and payment of duty at the time of arrival and without the devices 
being serially numbered or marked. Application may be filed in only one 
district. Although no particular format is specified for the 
application, it must contain the information enumerated in paragraph 
(b)(2) of this section. Any duty which may be due on these shipping 
devices shall be tendered and paid cumulatively at the time specified 
in an approved application, which may be either before or after the 
arrival of the shipping devices in the U.S. (e.g., at the time a 
contract, purchase order or lease agreement is issued).
    (2) The application shall:
    (i) Describe the types of shipping devices covered, their 
classification under the Harmonized Tariff Schedule of the U.S. 
(HTSUS), their countries of origin, and whether and to whom required 
duty was paid for them or when it will be paid for them, including 
duties for repair and modifications to such shipping devices while 
outside the U.S.;
    (ii) Identify the ports where the shipping devices will be arriving 
and departing the U.S., as well as the particular movements and 
conveyances in which they are intended to be utilized;
    (iii) Describe the applicant's proposed program for accounting for 
and reporting these shipping devices;
    (iv) Identify the reporting period (which shall in no event be less 
frequent than annual), as well as the payment period within which 
applicable duty and fees must be tendered (which shall in no event 
exceed 90 days following the close of the related reporting period);
    (v) Describe the type of inventory control and recordkeeping, 
including the specific records, to be maintained to support the reports 
of the shipping devices; and
    (vi) Provide the location in the United States where the records 
supporting the reports will be retained by law and will be made 
available for inspection and audit upon reasonable notice. (The records 
supporting the reports of the shipping devices must be kept for a 
period of at least 3 years from the date such reports are filed with 
the district director.)
    (3) The application shall be filed along with a continuous bond 
containing the conditions set forth in Sec. 113.66 of this chapter. If 
the application is approved by the district director and the conditions 
set forth in the application or of the bond are violated, the district 
director may issue a claim for liquidated damages equal to the domestic 
value of the container. If the domestic value exceeds the amount of the 
bond, the claim for liquidated damages will be equal to the amount of 
the bond.
    (4) The district director receiving the application shall evaluate 
the program proposed to account for, report and maintain records of the 
shipping devices. The district director may suggest amendments to the 
applicant's proposal. The district director shall notify the applicant 
in writing of his decision on the application within 90 days of its 
receipt, unless this period is extended for good cause and the 
applicant so informed in writing. The district director shall have 
authority to approve the application and procedures for utilization in 
each district or area identified in the application.
    (5) If the decision is to deny the application, in whole or in 
part, the district director shall specify the reason for the denial in 
a written reply, and inform the applicant that such denial may be 
appealed to the regional commissioner within 21 days of its date. If 
the decision is appealed, the regional commissioner shall coordinate 
his review thereof with the district director. The regional 
commissioner's decision shall be issued, in writing, within 30 days of 
the receipt of the appeal, and shall constitute the final Customs 
determination concerning the application.
    (6) If the application is approved, an importer may later apply to 
amend his application to add or delete particular types of shipping 
devices listed in the application and districts and areas identified in 
the application in which the procedures set forth in the application 
may be utilized. If a requested amendment to an approved application 
should be denied, in whole or in part, by the district director, the 
appeal process described in paragraph (b)(5) of this section shall 
apply.
    (7) Application for and approval of a reporting program shall not 
limit or restrict the use of other alternative means for obtaining the 
release of holders, containers and shipping devices.
* * * * *
George J. Weise,
Commissioner of Customs.
    Approved: October 13, 1994.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 94-26955 Filed 10-31-94; 8:45 am]
BILLING CODE 4820-02-P