[Federal Register Volume 62, Number 13 (Tuesday, January 21, 1997)]
[Proposed Rules]
[Pages 3082-3149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1048]



[[Page 3081]]

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Part II





Department of the Treasury





_______________________________________________________________________



Customs Service



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19 CFR Parts 7, 10, et al.



Drawback; Proposed Rule

  Federal Register / Vol. 62, No. 13 / Tuesday, January 21, 1997 / 
Proposed Rules  

[[Page 3082]]



DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 7, 10, 145, 173, 174, 181, 191

RIN 1515-AB95


Drawback

AGENCY: Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to revise the Customs Regulations 
regarding drawback. The document proposes to revise the regulations to 
implement the extensive and significant changes to the drawback law 
contained in the Customs modernization portion of the North American 
Free Trade Agreement Implementation Act; to change some administrative 
procedures involving manufacturing and unused merchandise drawback, for 
the purpose of expediting the filing and processing of drawback claims 
thereunder, while maintaining effective Customs enforcement and control 
over the drawback program; and to generally simplify and improve the 
editorial clarity of the regulations.

DATE: Comments must be received on or before March 24, 1997.

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

FOR FURTHER INFORMATION CONTACT:

Operational aspects: Maryanne Carney, Chief, Drawback and Records 
Branch, New York, (212-466-4575)
Legal aspects: Paul Hegland, Office of Regulations and Rulings, (202-
482-7040)

SUPPLEMENTARY INFORMATION:

Background

    Drawback is a refund or remission, in whole or in part, of a 
Customs duty, internal revenue tax, or fee. There are a number of 
different kinds of drawback authorized under law, including 
manufacturing and unused merchandise drawback. The statute providing 
for specific types of drawback is 19 U.S.C. 1313, the implementing 
regulations for which are contained in part 191, Customs Regulations 
(19 CFR part 191).
    The North American Free Trade Agreement Implementation Act, Pub. L. 
103-182 (December 8, 1993), specifically Title VI thereof, popularly 
known as the Customs Modernization Act, significantly amended certain 
Customs laws. In particular, section 632 of Title VI effected extensive 
and major amendments to the drawback law, 19 U.S.C. 1313. Also, section 
622 of Title VI authorized the establishment of a ``Drawback Compliance 
Program'' as well as specific civil monetary penalties for false 
drawback claims.
    Public Law 103-182 also approved and implemented the North American 
Free Trade Agreement (NAFTA). Section 203 of the Public Law provides 
special drawback provisions for exports to NAFTA countries. NAFTA 
drawback is separately provided for in part 181 of the Customs 
Regulations (19 CFR part 181). Drawback and other duty-deferral 
programs are addressed in subpart E of part 181. General drawback 
provisions under part 191 and the NAFTA drawback regulations in part 
181 contain substantial differences (e.g., the ``lesser of'' 
calculation versus full drawback, same condition versus unused 
merchandise drawback, etc.) Separate claims are required for drawback 
claims governed by NAFTA (see 19 CFR 181.46 and 191.0a).
    Accordingly, this document proposes regulatory revisions 
principally to part 191 in implementation of the statutory changes. In 
addition, this document proposes to generally rearrange and revise part 
191 largely in an effort to further simplify and improve the editorial 
clarity of those regulatory procedures primarily dealing with the 
manufacturing and unused merchandise provisions, these being the most 
commonly used types of drawback. Several administrative changes are 
being proposed as well with respect to the regulatory procedures 
governing these provisions, for the purpose of expediting the filing 
and processing of drawback claims thereunder, while ensuring that 
Customs has the necessary enforcement information to maintain effective 
administrative oversight over the drawback program. Also, minor 
conforming changes occasioned by the general reorganization of part 191 
are made with respect to other parts of the Customs Regulations (19 CFR 
parts 7, 10, 145, 173, 174 and 181).
    Specifically, with regard to part 173, a minor change is proposed 
whereby a party requesting the reliquidation of a consumption entry 
pursuant to 19 U.S.C. 1520(c)(1) would be required to state whether to 
the best of such party's knowledge, the entry is the subject of a 
drawback claim, or whether such entry was referenced on a certificate 
of delivery or a certificate of manufacture and delivery and thus could 
be made the subject of drawback. Likewise, a change is proposed to part 
174 whereby a party filing a protest must state whether, to the best of 
such party's knowledge, the consumption entry whose liquidation is 
protested is the subject of a drawback claim, or whether it was 
referenced on a certificate of delivery or a certificate of manufacture 
and delivery and thus could be the subject of a drawback claim. A 
corresponding change is also proposed in part 191, whereby a drawback 
claimant would be required to state whether, to the best of such 
claimant's knowledge, any consumption entry identified or designated as 
a basis for drawback is either under protest or the subject of a 
request for reliquidation (19 U.S.C. 1520(c)(1)). In this regard, when 
accelerated payment of drawback has been paid to a claimant on the 
basis of an entry of imported merchandise which has not been finally 
liquidated, and the duties on the import entry are increased or 
decreased in such final liquidation, drawback must be increased or 
reduced accordingly on liquidation of the drawback entry.
    Proposed changes to part 191 other than the major changes described 
below include the addition of new definitions for purposes of part 191 
in the section listing such definitions. New definitions for the 
following terms are set forth in the proposed regulations: Certificate 
of delivery; Certificate of manufacture and delivery; Act; Commercially 
interchangeable merchandise; Designated merchandise; Destruction; 
Exported article; Exportation; General manufacturing drawback ruling; 
Manufacture or production; Possession; Relative value; Specific 
manufacturing drawback ruling; and Substituted merchandise. Most of 
these definitions incorporate into the regulations terms which are used 
for drawback. The definition of commercially interchangeable 
merchandise is necessary because of the change (described elsewhere in 
this background) from fungibility as the standard for substitution to 
commercial interchangeability in the former same condition substitution 
drawback law (now unused substitution drawback law, in 19 U.S.C. 
1313(j)(2)). Similarly, the definition of possession is added because 
possession of the exported merchandise is a requirement for drawback 
under section 1313(j)(2) and because the statute includes defining 
language. The definition of exportation is based on the definition of 
that term currently in 19 CFR 101.1(k), but notice is also given that 
an exportation may be deemed to have occurred: (1) Under the

[[Page 3083]]

Foreign Trade Zones Act (see 19 U.S.C. 81c(a)) when zone-restricted 
status is taken; (2) or under 19 U.S.C. 1309, if goods subject to 
drawback are used for certain aircraft or vessel supplies. The 
definition of manufacture or production is based on court cases and 
administrative rulings interpreting that phrase (see Anheuser-Busch 
Brewing Association v. The United States, 207 U.S. 556 (1908); United 
States v. International Paint Co., Inc., 35 CCPA 87 (1948); et al.). In 
regard to the latter case, it is noted that a manufacture or 
production, for drawback purposes, occurs even if the processing 
operation does not change the general use for which the merchandise may 
be used (e.g., as paint) but does change the particular use for which 
the merchandise may be used (e.g., as anti-fouling paint designed for 
preventing marine growth on the bottom of ships).
    In addition, two current definitions, those of fungible merchandise 
and substitution drawback, are modified. In the case of the former, the 
modification makes it clear that the definition applies to both 
merchandise and articles, but does not change the definition of 
fungibility. In the case of the latter, instead of defining 
substitution drawback (referring only to substitution manufacturing 
drawback), as is currently true, the definition defines substituted 
merchandise, and does so for purposes of each of the subsections of 19 
U.S.C. 1313 authorizing such substitution.
    In regard to the definition of fungibility, for drawback purposes 
``merchandise'' is that which is imported, or substituted when 
substitution is permitted, and an ``article'' is that which is 
manufactured or produced, as provided for in the drawback law, from 
merchandise. Also in regard to the definition of fungibility, although 
the standard for substitution under unused (formerly same condition) 
drawback (19 U.S.C. 1313(j)(2)) is no longer fungibility (it is now 
commercial interchangeability, as discussed below), the definition of 
fungibility is retained in the proposed regulations because fungibility 
continues to be a significant concept in the proposed regulations 
(i.e., when merchandise or articles are identified by accounting 
method; see proposed Sec. 191.14). The definition of fungibility was 
first added to the Customs drawback regulations for this purpose and 
before enactment of the substitution provision for 19 U.S.C. 1313(j)(2) 
(see T.D. 83-212, 19 CFR 191.2(l)).
    Also related to definitions for drawback purposes, the current 
regulations (Sec. 191.3) provide that duties subject to drawback 
include all ordinary Customs duties and marking duties assessed under 
19 U.S.C. 1304(c). It is proposed to define ``ordinary Customs 
duties'', as used in this provision, to include finally liquidated 
duties paid on an entry, or withdrawal from warehouse, for consumption 
and estimated duties paid on such an entry or warehouse, provided that 
the application and waiver currently provided for in Sec. 191.71 are 
filed. Also defined as such ``ordinary Customs duties'' would be 
voluntary tenders of the unpaid amount of lawful ordinary Customs 
duties and any other payment of duties related to an entry, or 
withdrawal from warehouse, for consumption, such as payment of a demand 
for duties under 19 U.S.C. 1592(d), under certain enumerated 
conditions. This latter proposed addition to the definition of 
``ordinary Customs duties'' is consistent with Customs current 
administrative practice (see Customs Service Decision 85-50 (1985)). 
The enumerated conditions referred to are that liquidation of the 
import entry or withdrawal must have become final prior to the payment 
to Customs, that the payment must be specifically identified as being 
of duties for a specific entry or withdrawal, and that the drawback 
entry in which the import entry or withdrawal is designated may not 
itself have been finally liquidated. In the case of voluntary tenders 
and other payments of duty, procedures are proposed for a written 
request and waiver by the drawback claimant and any other party 
responsible for the other payments of duties similar to the current 
procedures for the payment of drawback on estimated duties.
    Other minor proposed changes are that a named officer or any other 
individual legally authorized to bind a corporation may sign drawback 
documents, instead of only those named officers. This is consistent 
with current regulations regarding Customs business (see 19 CFR 111.3; 
see also 19 U.S.C. 1641(b)(1)). Correspondingly, the regulations on so-
called (in the current regulations) general or specific ``contracts'' 
are proposed to be changed so that only the names of the persons who 
are authorized by regulation to sign drawback documents and who will 
sign such documents are listed.
    (In regard to the above-referenced general or specific drawback 
``contracts'', as discussed in detail below, it is proposed to change 
the terminology for these procedures, from ``specific drawback 
contracts'' to ``specific manufacturing drawback rulings'' and from 
``general drawback contracts'' to ``general manufacturing drawback 
rulings'' and to set out the formats for applying for the specific 
manufacturing drawback rulings, and the general manufacturing drawback 
rulings, in Appendices to part 191 of the Customs Regulations. The 
remainder of the background to this document uses the proposed new 
terms (i.e., ``specific manufacturing drawback ruling'' is used instead 
of ``specific drawback contract'' and ``general manufacturing drawback 
ruling'' is used instead of ``general drawback contract'').)
    Also in regard to general manufacturing drawback rulings, it is 
proposed to require that a description of the merchandise and articles 
covered by the ruling be submitted with the information required for 
letters of notification of intent to operate under a general ruling, 
unless such information is specifically provided in the particular 
general manufacturing drawback ruling. It is proposed to modify the 
regulations for both general and specific rulings for manufacturing 
drawback so that, consistent with Customs treatment of corporations for 
drawback purposes (see Moberly v. United States, 4 Cust. Ct. 91, C.D. 
294 (1940), and C.S.D. 89-12 (1989)), when a separately-incorporated 
subsidiary of a parent corporation is engaged in manufacture or 
production for drawback, the subsidiary is the proper party to give 
notice of its intent to operate under, or apply for, the general or 
specific ruling and cannot operate under any ruling issued in favor of 
the parent corporation. Finally, in regard to general and specific 
rulings for manufacturing drawback, it is proposed to provide that they 
will remain in effect indefinitely, unless no drawback claim or 
certificate of manufacture and delivery is filed under the ruling for a 
period of 5 years. If no such drawback claim or certificate is filed 
for 5 years, the ruling would automatically terminate following the 
publication of a notice to that effect in the Customs Bulletin. 
Currently, a drawback ``contract'' may remain in effect for 15 years 
unless a written request is filed to renew the ``contract''. This 
change would reduce unnecessary paperwork for drawback claimants and 
Customs.
    Also among changes to part 191 not listed below are proposed 
modifications to the subpart of part 191 regarding drawback on supplies 
for certain vessels and aircraft (current subpart I; proposed subpart 
K). It is proposed to add to the regulation regarding a composite 
(monthly) notice of lading of fuel laden on vessels or aircraft as 
supplies that the fuel included in such a notice includes fuel laden 
for flights or voyages between the contiguous U.S. and Hawaii, Alaska,

[[Page 3084]]

or any U.S. possessions, consistent with the applicability of the 
underlying statute (19 U.S.C. 1309). Also, consistent with the changes 
to the Exporter's Summary Procedure (ESP) (i.e., to make that procedure 
an alternative, instead of a privilege; see below) and an April 17, 
1978, administrative ruling, it is proposed to modify these regulations 
to make it clear that the ESP may be used for drawback under this 
subpart and that if the ESP is used, the applicable requirements must 
be complied with.
    The major changes to part 191 necessitated by statute are addressed 
below, following which the major administrative changes made to part 
191 are outlined.

Manufacturing Drawback

    Under the direct identification manufacturing drawback law, 19 
U.S.C. 1313(a), upon the exportation of articles manufactured or 
produced with the use of imported, duty-paid merchandise, 99% of the 
duty so paid may be refunded as drawback. Under substitution 
manufacturing drawback, 19 U.S.C. 1313(b), if imported, duty-paid 
merchandise and any other merchandise (whether imported or domestic) of 
the same kind and quality are used in the manufacture or production of 
articles, then upon the exportation of such articles, 99% of the duty 
so paid on the imported merchandise may be refunded as drawback, 
notwithstanding that none of the exported articles was manufactured 
with the imported merchandise.
    Section 632 of the Customs Modernization Act (hereinafter section 
632) amended section 1313 (a) and (b) to permit drawback on articles 
destroyed under Customs supervision, in lieu of being exported. In 
addition, it is made clear that for drawback to accrue, the articles 
manufactured or produced cannot be used in the United States prior to 
their exportation or destruction.
    The proposed regulations provide for a contract between the 
principal and agent when such a relationship is claimed to exist for 
purposes of substitution manufacturing drawback. The person who asserts 
that it is the manufacturer or producer by virtue of a principal-agency 
agreement under this section must establish that there was a contract 
between the principal and agent specifying the items in 
Sec. 191.9(c)(1) (i) through (vi). The person asserting this 
relationship has the burden of providing satisfactory evidence to 
establish the above. The question of the existence of such a contract 
is an evidentiary question. Of course, the terms of a written contract 
are always easier to establish than those of an oral contract.
    Principal-agency principles, in the drawback context, are used for 
drawback purposes to meet the ``one manufacturer'' requirement in 19 
U.S.C. 1313(b) (i.e., the requirement that the imported merchandise and 
the substituted merchandise must be used in a manufacture or production 
by the same person). With the use of principal-agency principles for 
drawback, the principal in such a relationship is treated as the 
manufacturer or producer when the agent performs that function as agent 
of the principal. The principal does not complete a certificate of 
delivery for merchandise transferred to the agent (because the 
principal, in effect, would be treated as transferring the merchandise 
to itself). The agent would be required to furnish a certificate of 
manufacture and delivery for the manufactured articles, relating to the 
designated or substituted merchandise and identifying the owner for 
whom the processing was conducted (i.e., to document the manufacturing 
or processing operation). However, such a certificate of manufacture 
and delivery would not assign the potential drawback rights to the 
principal (because, by virtue of the relationship, the agent would not 
have those rights to transfer; the rights would have remained in the 
principal).

Rejected Merchandise Drawback

    Section 632 also amended the rejected merchandise drawback law, 19 
U.S.C. 1313(c). Under section 1313(c), drawback is allowable upon the 
exportation of merchandise which is found not to conform to sample or 
specifications, or which is shipped without the consent of the 
consignee. Such merchandise previously had to be returned to Customs 
custody prior to exportation, generally within 90 days after its 
release from Government custody unless Customs extended this period.
    As amended by section 632, section 1313(c) extends the period for 
the return of merchandise to Customs custody to 3 years, permits 
destruction of the merchandise under Customs supervision in lieu of 
exportation, and allows drawback if the merchandise is determined to 
have been defective at the time of its importation without reference to 
purchase specifications or samples.

Unused Merchandise Drawback

    Formerly, under 19 U.S.C. 1313(j)(1), drawback was allowable on the 
exportation, or destruction under Customs supervision, of imported 
merchandise which was not used in the United States before exportation 
or destruction, and which was in the same condition at the time of 
exportation or destruction as it was when imported. Under the 
substitution provision, 19 U.S.C. 1313(j)(2), a similar drawback was 
allowable if other (fungible) merchandise was instead exported, or 
destroyed under Customs supervision, provided that before exportation 
or destruction, the fungible merchandise was not used in the United 
States, was in the possession of the party claiming drawback, and was 
in the same condition at the time of exportation or destruction as was 
the imported merchandise when imported.
    Section 632 liberalized these provisions in a number of ways. 
First, the requirement has been eliminated that the exported or 
destroyed merchandise be in the same condition as the imported 
merchandise when imported. Now it only must have been unused. For 
example, chemicals which deteriorated after importation are not in the 
same condition as the imported merchandise when imported and were not 
eligible for ``same condition'' drawback. Now such goods would be 
eligible for drawback under section 1313(j) as ``unused''. Second, the 
provision interpreting the restriction on ``use'' has been changed. 
Formerly, this provision provided that the performing of certain 
incidental operations on imported or substituted merchandise which did 
not amount to a manufacture or production for drawback purposes was not 
a ``use''. The new provision provides that the performing of any 
operations or combination of operations not amounting to a manufacture 
or production for drawback purposes on the imported or substituted 
merchandise is not a ``use''. The list of examples of the operations 
involved was expanded to include, but is not limited to: testing, 
cleaning, repacking, inspecting, sorting, refurbishing, freezing, 
blending, repairing, reworking, cutting, slitting, adjusting, replacing 
components, relabeling, disassembling, and unpacking, provided that 
they do not amount to manufacture or production for drawback purposes.
    In addition to the foregoing, a number of additional statutory 
changes were made by section 632 with respect to the substitution 
provision, 19 U.S.C. 1313(j)(2). The substituted merchandise exported 
or destroyed for drawback need no longer be fungible (commercially 
identical) with the imported merchandise. Instead the imported and 
substituted merchandise must be commercially interchangeable. The 
legislative history of section 632

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states that in determining whether merchandise is ``commercially 
interchangeable'', Customs should consider, but not be limited to, such 
factors as Governmental and recognized industrial standards, part 
numbers, tariff classification and values. Such merchandise, to be 
commercially interchangeable, need not be interchangeable in all 
situations.
    The proposed regulations would require a determination of 
``commercial interchangeability'' for all claims filed under 19 U.S.C. 
1313(j)(2). This determination can be obtained in one of three ways: 
(1) A formal binding ruling from the Entry and Carrier Rulings Branch, 
Office of Regulations and Rulings, (2) a nonbinding predetermination 
request sent directly to the appropriate drawback office, or (3) 
submission of all the required documentation necessary to make a 
commercial interchangeability determination with each individual 
drawback claim filed. The details for the documentation needed are 
outlined in the regulations. In the interest of administrative 
efficiency and because commercial interchangeability is no more 
restrictive than fungibility, all prior unrevoked rulings finding 
merchandise to be fungible may continue to be relied upon to establish 
commercial interchangeability and reapplication is unnecessary for the 
same merchandise.
    Moreover, the party entitled to claim drawback under section 
1313(j)(2), as amended by section 632, has now been more precisely 
defined. Such party must either be the importer of the imported 
merchandise, or must have received, directly or indirectly, from the 
importer the imported merchandise, commercially interchangeable 
merchandise, or any combination thereof. Thus, the proposed regulations 
allow for multiple transfers of imported or substituted merchandise, 
but do not permit multiple substitutions (see 19 U.S.C. 
1313(j)(2)(C)(ii)). Such transfers must be documented by a certificate 
of delivery. For example, it would be permissible for party A to import 
merchandise, transfer to party B commercially interchangeable 
merchandise documented by a Certificate of Delivery, and for party B to 
transfer the commercially interchangeable merchandise to party C 
documented by a Certificate of Delivery. If party C exports the 
merchandise, then party C is entitled to claim drawback, or to assign 
the right to claim drawback back through the chain of possession. To be 
entitled to claim drawback, the claimant must have been in possession 
of the specific substituted merchandise which is exported or destroyed 
with drawback. In this latter respect, the concept of possession under 
section 1313(j)(2), as amended by section 632, is further elucidated, 
to expressly include ownership while in bailment, in leased facilities, 
in transit to, or in any manner under the operational control of, the 
party claiming drawback.

Substitution of Finished Petroleum Derivatives

    As amended by section 632, drawback is payable under section 
1313(p) (19 U.S.C. 1313(p)), upon the timely exportation of an article 
which is of the same kind and quality as a qualified article. A 
qualified article is essentially either an imported, duty-paid article, 
or a manufactured article that would be eligible for drawback under 19 
U.S.C. 1313 (a) or (b), should such qualified article itself be 
exported; furthermore, the qualified article, to be such, must be 
described in headings 2707, 2708, 2710-2715, 2901, and 2902, or in 
headings 3901-3914 (to the extent that these latter headings apply to 
liquids, pastes, powders, granules and flakes), of the Harmonized 
Tariff Schedule of the United States (HTSUS).
    Also, for drawback to accrue under section 1313(p), the exporter of 
the exported article must have imported the qualified article or have 
manufactured it under section 1313 (a) or (b); or have purchased or 
exchanged, directly or indirectly, the qualified article from an 
importer, or from a refinery or facility which produced the article 
under section 1313 (a) or (b). In any event, the qualified article must 
have been manufactured, imported, or acquired by the exporter in the 
aforementioned manner, in a quantity at least as great as the quantity 
of the exported article. In addition, the exported article must be 
exported during the period in which the qualified article is 
manufactured or produced under section 1313 (a) or (b), or within 180 
days after the close of such period; or within 180 days after the date 
of entry of a qualified imported article.
    To be of the same kind and quality as the qualified article (solely 
for the purpose of section 1313(p)), the exported article must fall 
within the same 8-digit HTSUS tariff classification as, or be 
commercially interchangeable with, the qualified article. The drawback 
payable pursuant to section 1313(p) is 99% of the duty attributable to 
the qualified article when the qualified article is a manufactured 
article that would be eligible for drawback under 19 U.S.C. 1313 (a) or 
(b) and 100% of the duty attributable to the qualified article when the 
qualified article is an imported, duty-paid article and no such 
manufacture or production under section 1313 (a) or (b) is involved (19 
U.S.C. 1313(p)(4)).

Packaging Material

    Section 632 also amended 19 U.S.C. 1313(j)(4), recodifying this 
provision as 19 U.S.C. 1313(q), to allow drawback on imported material 
used to package or repackage goods that are exported or destroyed under 
Customs supervision and are eligible for drawback under the 
manufacturing, rejected or unused merchandise drawback provisions (19 
U.S.C. 1313 (a), (b), (c), or (j)). Drawback is payable under the 
particular provision to which the packaged goods themselves are 
subject. The duty refund on the packaging material is, of course, based 
on the particular tariff provision under which the packaging material 
itself was entered.

Filing Under Wrong Subsection

    Section 632 also amended the drawback law to provide that if a 
claimant files for drawback under one provision of section 1313, and 
Customs believes that drawback is more properly allowable under another 
provision thereof, the claim may simply be deemed filed under such 
other provision and processed with drawback accordingly.
    The legislative history to this provision makes it clear that this 
provision is not intended to require Customs to investigate all 
alternatives in addition to the claimed basis before liquidating a 
drawback claim as presented. That is, the burden of bringing to Customs 
attention the possible applicability of the alternative subsection is 
on the claimant, not Customs. Claimants who are denied drawback under 
the provision claimed may raise alternative claims under another 
provision by protest under section 514 of the Tariff Act of 1930, as 
amended (19 U.S.C. 1514) (see 19 CFR part 174).
    Since section 1313(r)(2) specifically requires that the claim be 
allowable under such other subsection (i.e., not the subsection under 
which the claim was originally filed), the requirements in the law for 
drawback under the other subsection must be met. For example, if the 
original claim is under subsection (a) or (b) and the other provision 
is subsection (j), exportation or destruction would have to be within 3 
years of importation, not 5 years; if the original claim was under 
subsection (j) and the other provision was subsection (c), the 
merchandise would have to be timely returned to Customs custody for 
exportation or destruction. These are

[[Page 3086]]

statutory requirements, and cannot be waived.

Successorship Under 19 U.S.C. 1313 (b) and (j)(2)

    Under substitution manufacturing drawback, 19 U.S.C. 1313(b), the 
party manufacturing the articles on which drawback is claimed also must 
have used in manufacture the imported, duty-paid merchandise which 
forms the basis for the claim. Similarly, under the substitution unused 
merchandise provision, 19 U.S.C. 1313(j)(2), in pertinent part, the 
drawback claimant must have either imported the duty-paid merchandise, 
or received from the importer the imported merchandise, commercially 
interchangeable merchandise, or any combination thereof (in addition to 
possessing the exported or destroyed merchandise on which drawback is 
claimed).
    Section 632 adds a new provision, codified as 19 U.S.C. 1313(s), 
which, under certain conditions, authorizes a business entity (the 
successor) to obtain the pre-existing drawback rights, whether vested 
or contingent, of another party (the predecessor) in the course of 
either acquiring all or substantially all of the rights and liabilities 
of such party, or acquiring the assets and business interests of a 
single plant, division or other business unit of such party, provided, 
in the case of the latter, that the value of the transferred property 
(real and personal) as well as intangibles, exceeds the value of the 
drawback rights.
    As a result, in manufacturing drawback, section 1313(b), this 
enables a company to satisfy the ``one manufacturer'' requirement. 
Duty-paid merchandise used in manufacture by the predecessor before the 
date of acquisition (the succession) may thus form a basis for drawback 
on articles manufactured by the successor after the date of succession. 
The use of the duty-paid merchandise by the predecessor is imputed to 
the successor.
    Likewise, in substitution unused merchandise drawback, section 
1313(j)(2), under the general circumstances outlined above, duty-paid 
merchandise imported by the predecessor before the date of succession 
may form a basis for drawback on exported or destroyed merchandise 
possessed by the successor after the date of succession. The 
importation of the duty-paid merchandise is implicitly ascribed to the 
successor.
    Similarly, commercially interchangeable merchandise received by a 
predecessor before the date of succession (19 U.S.C. 1313(s)(2)(B)) 
could become the basis for drawback on substituted merchandise received 
by the successor after the date of succession.

Agricultural Products Subject to Drawback

    Section 404(e)(5) of the Uruguay Round Agreements Act (URAA) (Pub. 
L. 103-465), codified as 19 U.S.C. 1313(w)(1), states that no drawback 
shall be available with respect to an agricultural product subject to 
an over-quota rate of duty established under a tariff-rate quota, 
except pursuant to 19 U.S.C. 1313(j)(1) (direct identification unused 
merchandise drawback). In addition, section 422(d) of the URAA, 
codified as 19 U.S.C. 1313(w)(2), provides that drawback shall be 
available under 19 U.S.C. 1313(a) (direct identification manufacturing) 
on any tobacco recognized as an agricultural product that is subject to 
an over-quota rate of duty established under a tariff-rate quota.
    Because this statute precludes the availability of drawback ``with 
respect'' to a described agricultural product, the proposed regulations 
provide that no drawback will be available when either the designated 
imported merchandise or the substituted merchandise, if substitution 
drawback is claimed, is such an agricultural product. Additionally, 
based on the legislative history to this provision of the URAA, which 
makes it clear that the limitation on drawback applies only to 
merchandise for which the over-quota tariff must be paid (i.e., only 
that exceeding the quantity provided for in the tariff rate quota), the 
proposed regulations make clear that the restriction applies to 
merchandise or articles to which the over-quota tariff rate is 
applicable.

Major Administrative Changes

    The proposed revision of part 191 also presents several 
administrative changes and additions to the regulatory procedures 
principally governing the manufacturing and unused merchandise 
provisions (19 U.S.C. 1313 (a), (b), and (j)).

Manufacturing Drawback ``Contracts''

    Under the current regulations, Customs requires manufacturers or 
producers of articles intended for exportation with drawback to apply 
for a so-called ``specific drawback contract'' (see subpart B of part 
191) or a so-called ``general drawback contract'' (see subpart D of 
part 191).
    In the case of the former, manufacturers or producers are currently 
required to file with the appropriate Customs office a proposal 
describing the manufacturing operation fully and the method of 
compliance with all requirements of the drawback law and regulations, 
to make a statement as to the records which will be maintained, and to 
agree to follow the methods and keep records concerning drawback 
procedures. Currently, Customs makes available sample proposals to 
prospective drawback applicants who request them. Customs reviews 
proposals submitted by manufacturers or producers and, if the proposals 
comply with the law and regulations, approves the proposals by means of 
a letter of approval to the applicant and publication in the Customs 
Bulletin of a synopsis of the approved proposal.
    In the case of the latter, Customs currently publishes in the 
Customs Bulletin an offer for a ``general drawback contract'' in 
situations where numerous manufacturers or producers have similar 
operations and wish to claim drawback. Any manufacturer or producer who 
can comply with the terms and conditions of the published offer may 
adhere to it by simply notifying a drawback office in writing of its 
acceptance and providing certain identifying information, after which 
the appropriate drawback office acknowledges, in writing, the letter of 
adherence.
    After thorough review and consideration of these procedures, 
changes to the current terminology for these procedures are proposed. 
In the case of ``specific drawback contracts'', what actually is 
involved is the request, by a prospective drawback claimant, for a 
ruling, in a special format described by Customs in the ``sample 
proposals'' referred to in the current regulations. Customs reviews the 
request and, if it complies with the law and regulations (e.g., if the 
specifications proposed for same-kind-and-quality substitution under 19 
U.S.C. 1313(b) meet the requirements for such substitution), Customs 
grants approval of the proposal. This is basically the procedure under 
which administrative rulings are obtained under part 177 of the Customs 
Regulations, with the addition for drawback of the special format 
described in the ``sample proposals''. Accordingly, it is proposed to 
substitute for the ``specific drawback contracts'' provided for in the 
current regulations the term ``specific manufacturing drawback 
rulings''.
    As is true in the current regulations, it is proposed that unless 
operating under a general manufacturing drawback ruling (currently, a 
``general drawback contract''; see discussion below), each manufacturer 
or producer

[[Page 3087]]

of articles intended to be claimed for drawback will be required to 
apply for a specific manufacturing drawback ruling. Sample formats for 
applications (combined application under 19 U.S.C. 1313(a) and (b); 
application under 19 U.S.C. 1313(b); application under 19 U.S.C. 
1313(b) for petroleum drawback (T.D. 84-49); application under 19 
U.S.C. 1313(d); and application under 19 U.S.C. 1313(g)) are contained 
in Appendix B of proposed part 191. Except for the described changes to 
the terminology and conforming changes necessitated by the proposed 
changes to the regulations, as described in this document, the sample 
formats for applications for specific manufacturing drawback rulings 
contained in appendix B are the same as the corresponding sample 
``specific drawback contracts'' currently made available by Customs to 
persons requesting them.
    Also as is currently true in regard to ``specific drawback 
contracts'', it is proposed that an application for a specific 
manufacturing drawback ruling be submitted to Customs Headquarters 
which will review it for consistency with the law and regulations and, 
based upon such review, approve or disapprove the application. If 
approved, a letter of approval will be issued to the applicant and a 
synopsis of the ruling will be published in the Customs Bulletin. If 
disapproved, the applicant will be promptly notified, with notification 
of the specific reason(s) for disapproval. A disapproved application 
may be resubmitted with modifications and/or explanations addressing 
the reasons given for disapproval, or the disapproval may be appealed 
to another office in Customs Headquarters.
    In the case of ``general drawback contracts'', what actually is 
involved is the publication by Customs, as a Treasury Decision, of the 
requirements and specific interpretations for a particular kind of 
operation (for example, certain manufactures involving orange juice 
(T.D. 85-110) or steel (T.D. 81-74)). The operation is one used by 
numerous manufacturers or producers. A manufacturer or producer using 
one of these operations may, basically merely by giving Customs notice, 
claim drawback using the procedures in a ``general drawback contract''. 
Thus, these procedures are basically a publication of a general ruling. 
It is proposed to substitute for the ``general drawback contracts'' 
provided for in the current regulations the term ``general 
manufacturing drawback rulings''.
    As is true in the current regulations, it is proposed that a 
manufacturer or producer engaged in an operation that falls within a 
published general manufacturing drawback ruling may submit a letter of 
notification to give Customs notice of the manufacturer's or producer's 
intent to operate under the general ruling. The current general rulings 
(for manufacturing under 19 U.S.C. 1313(a) (T.D.s 81-234 and 83-123); 
manufacturing under 19 U.S.C. 1313(b) for agents (T.D. 81-181); 
manufacturing under 19 U.S.C. 1313(b) for orange juice (T.D. 85-110); 
manufacturing under 19 U.S.C. 1313(b) for steel (T.D. 81-74); 
manufacturing under 19 U.S.C. 1313(b) for refined sugar (T.D. 81-92); 
and manufacturing under 19 U.S.C. 1313(b) for raw sugar (T.D. 83-59)) 
are contained in Appendix A of proposed part 191. Customs proposes to 
update this Appendix whenever new general manufacturing drawback 
rulings are issued or any such existing T.D.s are revised. Except for 
the described changes to the terminology and conforming changes 
necessitated by the proposed changes to the regulations, as described 
in this document, the general manufacturing drawback rulings contained 
in Appendix A are the same as the corresponding ``general drawback 
contracts'' published in the existing referenced Treasury Decisions.
    Also as is currently true in regard to ``general drawback 
contracts'', the letter of notification of intent to operate under a 
general ruling will be submitted to the drawback office where drawback 
claims are intended to be filed, and will contain certain identifying 
information. The drawback office is required to acknowledge, in 
writing, this letter of notification, after which no further action is 
required before drawback claims may be filed on the basis of the 
general manufacturing drawback ruling.
    These required procedures (i.e., notification and acknowledgement) 
are intended to facilitate Customs administrative processing of 
manufacturing drawback claims to be filed.

Completion of Drawback Claims

    In order to better ensure consistency and uniformity of practice, 
the section of the regulations dealing with the completion of drawback 
claims has been rewritten to clarify what documents constitute a 
complete drawback claim. The claim will be considered to be complete if 
all the required documentation is present with all the basic 
information provided.
    In regard to certificates of manufacture and delivery, which are a 
required part of a complete claim when the claim is based on such a 
certificate, it is recognized that a certificate of manufacture and 
delivery may relate to articles which are the subject of more than one 
drawback claim. In such an instance, only one certificate of 
manufacture and delivery is required and the proposed regulations 
specifically provide that certificates of manufacture and delivery 
applicable to a claim must be filed with the claim, unless previously 
filed with Customs (if previously filed, the certificates must be 
referenced in the claim).
    In cases in which there is some minor change or addition needed, 
such as a missing signature, numbers added incorrectly, information 
placed in the wrong part of the form, etc., the claim will be accepted 
and the 3-year time period to file a complete drawback claim after the 
date of exportation will be met although the claim must be corrected. 
However, if documentation is missing or the claim contains major 
inaccuracies and inconsistencies, the claim will be rejected and 
returned to the claimant for correction. The claim will not be 
considered to have been ac-cepted by Customs and the 3-year time period 
will not be consid-ered to have been met by the filing of such an 
incomplete claim. Proposed rules have also been included to allow 
Customs to require claimants to restructure drawback claims in order to 
improve administrative efficiency, as long as the restructuring is not 
shown to be impossible or impractical for the claimant.
    The regulations also differentiate between ``perfecting'' and 
``amending'' a claim which has been accepted. The claim is 
``perfected'' when the claimant, in response to a request from Customs, 
makes minor changes to the claim or provides documentation in support 
of the claim. The claim is ``amended'' when a major change must be made 
to the claim such as the designation of a different import entry or the 
claiming of a different export.

Privileges

    The proposed regulation establishes Waiver of Prior Notice to 
Export or Destroy Unused Merchandise (WPN) (Sec. 191.91) and 
Accelerated Payment (AP) (Sec. 191.92) as special privileges that may 
be requested by formal application. The Exporters' Summary Procedure 
(ESP) is no longer a special privilege because of the changes in the 
filing requirements. ESP is now available to all claimants as an option 
for establishing exportation. The application requirements for 
privileges are designed to address key internal controls identified by 
the Treasury Inspector General by providing Customs: (1) Reasonable 
assurance of the accuracy of drawback claims; and (2) a sufficient 
basis to appropriately

[[Page 3088]]

verify the validity of drawback claims. These key internal controls are 
applicable when the issue is whether to grant a privilege. Claim 
sufficiency would be determined on an assessment of past facts.
    Customs will allow claimants or exporters who hold existing 
privileges to continue utilizing these privileges for a period of one 
year after the effective date of the new drawback regulations. Those 
who want to continue these privileges must reapply prior to the 
conclusion of the one-year period under the requirements of the new 
regulations. Privileges will be revoked unless the claimant reapplies. 
This revocation would apply to all exportations subsequent to the 
revocation.
    Claimants may continue with their privileges once the new 
application has been submitted and received by Customs, unless Customs 
denies the new application. The one-year period provides a reasonable 
opportunity for applicants to assemble and submit the required 
material.
    Customs will act on the application within 90 days of submission or 
notify the applicant in writing regarding the reasons for requiring a 
longer time for acting on the application. Customs objective is to use 
the application process as an opportunity to promote informed 
compliance in the drawback process.
    If applications for privileges are received by Customs prior to the 
date of publication (not effective date) of the final rule in the 
Federal Register, Customs will process these applications based on the 
current drawback procedures and regulations in place. Claimants must 
understand that even though the applications will be processed under 
the drawback regulations and procedures in place at the time of receipt 
of the applications, they will still be required to reapply for these 
privileges within one year from the effective date of the new drawback 
regulations. Therefore, Customs would encourage new applicants to 
prepare their applications under the guidelines of the new regulations.

Notice of Intent to Export or Destroy

    Claimants filing a claim under 19 U.S.C. 1313 (j) or (c) must 
notify Customs prior to exportation or destruction (notice of 
destruction procedures also are applicable to drawback under 19 U.S.C. 
1313 (a) and (b)). This notice should be filed at the port of intended 
examination or destruction. It must provide the information needed by 
Customs to determine if the merchandise should be examined. Under 
section 1313(c), the merchandise must always be returned to Customs 
custody. Customs intends to make this determination in an expedited 
manner and it will notify the party designated on the Notice of Intent 
to Export or Destroy of its decision. It is the responsibility of the 
filer to deliver the goods in a prompt manner once the filer receives 
notice of Customs decision to examine the merchandise. Customs will 
work with the claimant if a problem arises on how promptly the 
merchandise should be presented to Customs, but it should be done as 
promptly as is reasonably possible.
    The terms ``present'', ``presented'', and ``presentation'', as used 
in proposed Sec. 191.35 (c) and (d) and in proposed 
Sec. 191.91(c)(1)(iv), mean the actual transporting of the merchandise 
to a location where Customs can examine it. Such transporting of the 
merchandise, however, is to take place only after Customs has notified 
the exporter or claimant of Customs decision to examine the 
merchandise.
    There are two different situations which are envisioned here. The 
first is a situation in which examination takes place at the premises 
of the claimant or exporter. The second is a situation in which the 
exporter or claimant transports the merchandise to a Customs designated 
location. In either of these situations, arrangements must be made 
mutually between Customs and the exporter or claimant.
    For exports that occur on or after the effective date of the 
regulations, a Notice of Intent to Export or Destroy must be filed with 
Customs, unless the exportation is covered by an existing waiver of 
prior notice. For destructions, a Notice of Intent to Export or Destroy 
must continue to be filed with Customs in all cases.
    In addition, the notice of exportation form (Customs Form 7511) 
would be eliminated, and the drawback entry forms would be consolidated 
into one form (Customs Form 331). Furthermore, a new form would be 
devised on which a party would give advance notice of intent to export 
or destroy merchandise or articles for drawback purposes.
    In recognition of the realities of the marketplace, it is further 
proposed to reduce the time frame from the current period of 5 working 
days to 2 working days from the date of intended exportation, within 
which prior notice of intent to export, unless waived, must be given to 
Customs for unused merchandise drawback, 19 U.S.C. 1313(j). A new 
Customs form (not a drawback entry form) will be devised on which prior 
notice would be given. Unless the claimant should be advised by Customs 
to the contrary during this 2-day period, the subject merchandise could 
thereafter be exported without delay. A drawback entry would later be 
filed with Customs.
    The proposed regulations allow a drawback claim to be filed for 
qualifying merchandise which has been destroyed under Customs 
supervision. However, if a drawback claimant has not filed the Notice 
of Intent to Export/Destroy at least 7 working days prior to the 
intended destruction of the merchandise, the Customs Service must 
reject the drawback claim.
    Once the Notice of Intent to Export or Destroy has been filed, the 
Customs Service has four working days to advise the party filing the 
notice as to whether Customs will witness the destruction. If the party 
is not so notified within four working days, the merchandise may be 
destroyed without delay and the destruction will be deemed to have 
occurred under Customs supervision.
    Evidence of destruction must be included with the drawback claim.
    For multiple or continuous drawback destructions other prearranged 
procedures may be developed with the applicable drawback office to 
foster administrative efficiency.

Retroactive Waiver of Notice of Intent to Export

    The proposed regulations eliminate the retroactive waiver practice 
which was reported as a significant internal control weakness by the 
Treasury Inspector General. However, the proposed regulations allow a 
one-time opportunity for drawback claims under 19 U.S.C. 1313(j) on 
merchandise which a party exported or destroyed without having provided 
Customs with prior notice. This was included to: (1) Provide a 
reasonable method for first time claimants or exporters who were not 
aware of the requirement for prior notice of intent to export to obtain 
such drawback; and (2) make potential claimants aware of the waiver 
privilege and how to apply for it.
    More than one claim may be included in this one-time opportunity, 
subject to the time requirements for filing complete claims (three 
years from the date of export). This would enable claimants to file for 
unused merchandise drawback on exportations which occur before the 
claimant may have known of the requirement for prior notice of intent 
to export.

Waiver of Notice of Intent to Export

    Claimants and exporters may apply for a waiver of the requirement 
(under proposed Sec. 191.35) to notify Customs of intent to export 
unused merchandise. The proposed regulations require that

[[Page 3089]]

applications include sufficient information about merchandise, export 
activities and recordkeeping to provide Customs reasonable assurance 
that merchandise subject to drawback claims will be unused and 
exported. The information will also give Customs a sufficient basis for 
verifying unused merchandise drawback claims.
    When applying for the waiver or the one-time application to file 
drawback claims on past exports, as provided for in proposed 
Sec. 191.36 of the regulations, a certification by the claimant is 
required. The claimant must certify the ability to support with 
business, laboratory or inventory records (prepared in the ordinary 
course of business) that the imported and exported or substituted 
merchandise (as applicable) was not used in the United States and, if 
substituted, was commercially interchangeable with the imported 
merchandise. The certification must also state that documentary 
evidence establishing compliance with all other applicable drawback 
requirements is likewise available. What is generally referred to is 
evidence (when applicable):
    1. Of possession of the substituted merchandise within statutory 
time periods.
    2. That the export and import transactions upon which the claim is 
based are within statutory time periods.
    3. That the exportation is bonafide.
    4. That Certificates of Delivery, when necessary, are in the 
possession of the claimant.
    5. That any waivers or assignments from one party to another, when 
necessary, are in the possession of the claimant.
    6. That any facts or conditions to complete the claim can be 
supported, such as those for successorship.
    It is proposed that Customs approval of an application for the 
waiver of prior notice privilege would be conditioned from the outset 
on the agency's right to immediately stay the privilege holder's 
operation under the privilege, for a specified reasonable period, 
should the agency desire for any reason to examine the merchandise 
being exported with drawback for purposes of verification. This key 
proposed limitation on the grant of approval of the privilege would not 
be an adverse action, suspension, or other form of sanction against the 
privilege or privilege holder. Rather, it is a proposed restriction on 
the grant of the privilege itself. See, e.g., Atlantic Richfield Co. v. 
United States, 774 F.2d 1193, 1201 (D.C. Cir. 1985). The Customs 
Service believes this limited privilege structure would best protect 
the revenue and the public interest in sound administration of the 
drawback program. Accordingly, the agency proposes to provide the 
privilege holder a letter notifying it of any stay, specifying the 
reason(s) therefor, and the period in which the stay will remain in 
effect. The stay would expire at the end of the period specified in the 
agency's letter, or such earlier date as the agency notifies the 
privilege holder in writing that the reason for the stay has been 
satisfied. After the stay is lifted, operation under the privilege 
could resume. The mere lifting of a stay is not tantamount to a 
certification of compliance; it simply reactivates the agency's 
predictive judgment in granting the privilege in the first place.

Accelerated Payment of Drawback

    As is true under the current regulations, accelerated (i.e., before 
liquidation) payment of drawback claims is available for drawback 
claims under the manufacturing, rejected, or unused merchandise law, as 
well as claims under the law for substitution of finished petroleum 
derivatives. The proposed regulations require that applications for 
this privilege include sufficient information about the applicant and 
its drawback program, including specific information about the bond 
coverage that the applicant intends to use to cover accelerated payment 
of drawback, to provide Customs reasonable assurance against losses to 
the revenue when accelerated payments of drawback are made. The 
proposed regulations also require a certification by the applicant that 
all applicable statutory and regulatory requirements for drawback will 
be met and a description (with sample documents) of how the applicant 
will ensure compliance with these requirements. The detail required in 
this description will vary, depending on the size and complexity of the 
applicant's accelerated drawback program. To assist applicants, Customs 
will make available a sample format for requests for accelerated 
payment of drawback.
    It is proposed that Customs would review and verify the information 
submitted in and with the application and, based on that information 
(and any additional information relating to the application requested 
by Customs), and the applicant's record of transactions with Customs, 
Customs would approve or deny the application. Criteria for Customs 
action, including the presence or absence of unresolved Customs 
charges, the accuracy of the claimant's past claims, and whether any 
previously approved drawback privilege was revoked or suspended, are 
specifically set forth in the proposed regulation.
    If an applicant is approved for accelerated payment of drawback, 
the applicant would be required to furnish a properly executed bond in 
an amount sufficient to cover the estimated amount of drawback to be 
claimed during the term of the bond, subject to increase if the amount 
of the bond is exceeded. Drawback claims for which accelerated payment 
of drawback was requested and approved would be certified for payment 
within 3 weeks after filing, if a component for electronic filing of 
drawback claims, records, or entries which has been implemented under 
the National Customs Automation Program (NCAP) (19 U.S.C. 1411-1414) is 
used, and within 3 months after filing otherwise. In regard to 
electronic filing of drawback claims, currently procedures exist for 
electronic filing of certain ``coding sheet'' data as a part of 
drawback claims. The agency is working on the development of the 
drawback components under NCAP, in accordance with its responsibilities 
under the cited statutory provisions. It is anticipated that by the 
effective date of a Final Rule, a component for electronic filing under 
NCAP will have been properly implemented so that participants will be 
able to take advantage of the 3-week time period in the proposed 
regulations.
    As is true of waiver of prior notice (see above), approval of the 
accelerated payment drawback privilege would be conditioned from the 
outset on the agency's right to immediately stay operation of that 
privilege, for a specified reasonable period, should the agency desire 
for any reason to examine compliance with the drawback law and 
regulations for purposes of verification. Claims filed in the absence 
of a privilege, or during the effect of a stay, would be paid in the 
normal manner--upon liquidation of the associated drawback entry(ies). 
However, if an accelerated payment privilege is granted, or reactivated 
after a stay, payment could proceed according to such privilege 
notwithstanding that the claim was filed in absence of such privilege 
or during a stay.

Harmonized Tariff Schedule or Schedule B Numbers

    A fundamental requirement for drawback is that there be a duty-paid 
importation and an exportation and that the claimant have evidence to 
prove each. Under the laws and regulations governing dutiable entries 
for consumption (see 19 U.S.C. 1484, 1498 and 19 CFR parts 141, 142, 
and 143), the tariff classification is required from the importer of 
record of the merchandise. Such tariff classification is required to be 
shown on the entry summary and

[[Page 3090]]

other documentation, including the invoice for the merchandise (19 CFR 
141.61(e), 19 CFR 141.90(b)). Under 19 CFR 141.61(e), the statistical 
reporting number required by the General Statistical Notes (GSN's) of 
the Harmonized Tariff Schedule of the United States (HTSUS) (10-digit 
number, see GSN 3), is required to be shown on the entry summary and 
other entry documentation. These documents (i.e., entry summaries and 
other entry documentation, such as invoices) comprise evidence which is 
used to establish duty-paid importation of imported merchandise for 
drawback purposes.
    The correct commodity number from Schedule B, Statistical 
Classification of Domestic and Foreign Commodities Exported from the 
United States, is required by the Census Bureau to be provided for 
exported merchandise. This Schedule B commodity number is required to 
be entered in the space provided on the Shipper's Export Declaration 
(SED) form (15 CFR 30.7(l)) (for most exports to Canada, no SED is 
required (see 15 CFR 30.58; see also Department of Commerce Final Rule 
published in the Federal Rgister on November 30, 1990 (55 FR 49613))). 
Under GSN 5 of the HTSUS, as well as in the ``Notice to Exporters'' 
following GSN 5 of the HTSUS, the HTSUS statistical reporting numbers 
referred to in the preceding paragraph may, with certain exceptions, be 
substituted on the SED in place of comparable Schedule B numbers. The 
SED, with other documentation, comprises evidence which is used to 
establish exportation for drawback purposes.
    In regard to imports, the proposed regulations would require 
claimants to provide on all drawback claims they submit the HTSUS 
number, to the six-digit level, for the designated imported 
merchandise. When such claimants are importers of record, the HTSUS 
number would be provided from the entry summary(s) and other entry 
documentation under which the merchandise originally entered the 
country. When such claimants are not importers of record (and thus 
would have received a Certificate of Delivery or a Certificate of 
Manufacture and Delivery for the imported merchandise (or substituted 
merchandise in certain cases; see below)), the HTSUS number would be 
provided from such Certificate (see below).
    Also in regard to imports, the proposed regulations would require 
importers of record and any other party(ies) preparing Certificates of 
Delivery and Certificates of Manufacture and Delivery to provide the 
HTSUS number for the imported merchandise, to the six-digit level, on 
such Certificates. Any intermediate party(ies) receiving merchandise on 
a Certificate of Delivery would be required to transfer it to another 
party using such a Certificate. If the party preparing the Certificates 
is the importer of record, the HTSUS number would be from the entry 
summary(s) and other entry documentation under which the merchandise 
originally entered the country. If the party preparing the Certificates 
is another party (e.g., an intermediate party), the HTSUS number would 
be from the Certificate on which that party received the merchandise, 
and thus ultimately be derived from the entry summary(s) and other 
entry documentation.
    The requirement for the HTSUS number on the Certificates of 
Delivery and Certificates of Manufacture and Delivery is necessary 
because, under the proposed regulations, these Certificates would no 
longer be part of the drawback entry form, as is currently true. In the 
case of Certificates of Delivery, those Certificates will not be filed 
with a claim; they will be required to be in the possession of the 
claimant at the time that a claim is filed. Therefore, for Certificates 
of Delivery, the HTSUS number must be on both the Certificates and the 
claim (so that the claim preparer can derive the HTSUS number, 
ultimately, from the entry summary(s) and other entry documentation and 
so that that HTSUS number is on the drawback claim filed with Customs). 
In the case of Certificates of Manufacture and Delivery, such 
Certificates are required to be filed with a claim or to have been 
previously filed with Customs and are necessary parts of a complete 
claim. Therefore, providing the HTSUS number on the Certificates, if a 
claim is based on such certificates, satisfies the requirement for 
providing the HTSUS number on the claim (i.e., if a claim is based on 
Certificate(s) of Manufacture and Delivery filed with the claim or 
previously filed with Customs, the HTSUS number need only be on the 
Certificate(s) and not the drawback entry form).
    In addition, in the case of the transfer of merchandise substituted 
for the imported merchandise under 19 U.S.C. 1313(j)(2) or 19 U.S.C. 
1313(p), the proposed regulations would require the claim and any 
Certificate of Delivery or Certificate of Manufacture and Delivery (see 
above) to bear the tariff numbers, to the six-digit level, for the 
substituted merchandise. This additional information proposed to be 
required for substituted merchandise is necessary to establish 
compliance with the drawback statute (i.e., either as one of the 
criteria to establish commercial interchangeability for purposes of 
section 1313(j)(2), see House Report No. 103-361, supra, page 131, and 
Senate Report No. 103-189, supra, page 83, or to establish same kind 
and quality for purposes of section 1313(p), per the explicit language 
in that subsection itself).
    In regard to exports, the proposed regulations would require all 
drawback claimants to provide on all drawback claims they submit the 
Schedule B numbers, or HTSUS numbers substituted therefor, for the 
exported merchandise or articles upon which the claims are based. These 
numbers would be provided from the SED(s) for such exported merchandise 
or articles, when an SED is required. If no SED is required (e.g., for 
certain exports to Canada (15 CFR 30.58)), the claimant is required to 
provide the Schedule B commodity number(s) or HTSUS number(s), to the 
6-digit level, that the exporter would have set forth on the SED, but 
for the exemption from the requirement for an SED.
    Consistent with the stated intent of both the House Committee on 
Ways and Means and the Senate Committee on Finance, although the 
amended drawback law will allow claimants to make greater use of 
drawback, Customs will be able to ensure greater compliance through the 
use of enhanced penalty and automated drawback selectively programs 
authorized elsewhere in the NAFTA Implementation Act (see 19 U.S.C. 
1593a, and its legislative history in House Report No. 103-361, supra, 
page 130, and Senate Report No. 103-189, supra, page 81). Customs 
intends the above-described proposed requirements, incorporating 
already required HTSUS and Schedule B commodity numbers into the 
drawback claim itself, to directly serve those specified means for 
achieving greater compliance. More generally, the above-described 
proposed requirements also serve the basic automation goals behind 
Title VI (Customs Modernization) of the NAFTA Implementation Act. These 
proposed requirements will result in numerical descriptions of 
merchandise or articles instead of narrative descriptions, which are 
far more amenable to electronic processing and automation. That is, 
since HTSUS and commodity numbers are the basic terms of reference for 
imports and exports of merchandise, inclusion of this information in 
drawback claims is necessary for Customs to be able to offer the 
enhanced electronic processing, uniformity, and automation Congress 
intended (see,

[[Page 3091]]

House Report No. 103-361, supra, pages 106-107; Senate Report No. 103-
189, supra, pages 63-64).
    For imports, the proposed requirement will go into effect for 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the effective date of the regulations. For exports, the proposed 
requirement will go into effect for exported merchandise or articles 
exported one year after the effective date of the regulations.

Procedures to Evidence Exportation

    It is the obligation of the claimant to have adequate evidence of 
export to support his drawback claim. There may be cases where the 
consignee shown on the bill of lading is not the ultimate consignee, or 
where, to retain commercial confidentiality, the identity of the 
ultimate consignee is not known to the claimant. The current practice 
in such a situation is for the exporter to either cut out or blank out 
the name of the ultimate consignee from the proof of export submitted 
to the claimant.
    As noted above in this background, under ``Privileges'', the 
Exporter's Summary Procedure (ESP) would no longer be a special 
privilege, but would be available to all claimants as an option for 
establishing exportation. It is proposed to revise the current subpart 
regarding evidence of exportation (subpart E) accordingly. That is, the 
proposed regulations would list the alternative procedures for 
establishing exportation (actual evidence of exportation, export 
summary, certified export invoice for mail shipments, notice of lading 
for supplies for certain vessels or aircraft, and notice of transfer 
for articles manufactured or produced in the United States which are 
transferred to a foreign trade zone). The actual evidence of 
exportation alternative is modified to make it clear that the 
documentary evidence listed therein consists of originals of the listed 
documents, or certified copies thereof (the current regulations omit 
the word ``original''). In addition, the ``Chronological Summary of 
Exports'', provided for in the ESP regulations, is proposed to be 
simplified to list only necessary information (date of export, unique 
export identifier (explained in a footnote) description, net quantity, 
Schedule B number or HTSUS number (see discussion of Harmonized Tariff 
Schedule or Schedule B Numbers in this background), and destination).

Selectivity

    The U.S. Customs Service has had an electronic selectivity program 
in operation for its National Drawback Program since 1994. The present 
system is a random statistical sampling whose methodology is based on 
the drawback claimant's overall history with Customs. This selectivity 
system will be further expanded in late 1996 to become a two-tier 
system whereby rules and criteria elements such as tariff 
classification numbers of the subject merchandise and articles, import 
and export locations, etc., would be used to evaluate risk and 
designate the level of Customs review of the claim. After this initial 
review, a random statistical targeting based on the claimant and the 
claimant's overall history with Customs would also be run (see Item 4 
under discussion of liquidation, below).

Drawback Compliance Program

    The drawback compliance program is designed to allow Customs to 
review claims in a post audit mode on an account basis rather than 
transaction by transaction. Any person, corporation or business may be 
certified as a participant in the drawback compliance program. Under 19 
U.S.C. 1593a(e), claimants and other parties in interest may 
participate. A ``party'' is considered to include any person or company 
who is involved in providing data on which a drawback claim may be 
based or who is the drawback claimant. This would include importers, 
intermediary parties and drawback claimants. Therefore, any party that 
provides information or documentation to one who intends to file a 
drawback claim is encouraged to participate in the drawback compliance 
program.
    Customs will be publishing another regulatory package in the 
Federal Register concerning penalties. That package, which will be 
subject to public comment, will set forth mitigation guidelines.
    In evaluating a drawback compliance application package, Customs 
will consider the following factors:
    --Size of the company;
    --Nature of the business;
    --Type of drawback claims being filed;
    --Number of claims being filed.
    In addition, depending on the complexity of the applicant's actual 
drawback program, Customs may request additional information or details 
before making its decision.
    It is anticipated that the initial number of requests will make it 
difficult to approve applicants within a specified time period.
    For corporations that have various business units and divisions, 
are decentralized or use several brokers to administer all or part of 
their drawback program, each entity may apply separately for the 
drawback compliance program.

Identification By Accounting Methods

    For those situations in which the statute does not allow 
substitution of merchandise or articles (see above), and in which a 
company is not able to specifically identify merchandise or articles 
(e.g., by serial number), accounting methods may be used to determine 
the identity thereof. Such identification may be made on the basis of a 
company's records, rather than on the basis of the actual physical 
movement of the inventory. Previous regulations and rulings required 
that merchandise or articles be commingled in the same inventory 
location in order for a company to use an accounting method to identify 
the merchandise or articles. The proposed regulations clarify that such 
commingling is allowed, but not mandated, and that a company's records 
will be the determining factor in the employment of an accounting 
method.
    Four accounting methods are approved for use in the proposed 
revision of part 191: first-in, first-out (FIFO), last-in, first-out 
(LIFO), low-to-high, and weighted average. Provision is also made for 
Customs to approve either a modification of one of these methods, or a 
different method. These proposed regulations reflect Customs position 
that a properly established turn-over period may be used to establish 
timely use in manufacture or production of the imported designated and 
other (substituted) merchandise under 19 U.S.C. 1313(b), and the 
manufacture or production of the finished articles under 19 U.S.C. 1313 
(a) and (b). These proposed regulations also incorporate the criteria 
set forth in T.D. 95-61, 60 FR 40995 (August 11, 1995), and are 
designed to provide a greater degree of predictability in the 
accounting methods that may be approved for drawback purposes.

Recordkeeping

    Records are required to be kept to establish compliance with the 
requirements in the drawback law and the regulations issued under that 
law. Individual records are identified and described in the proposed 
revision of part 191 at the point where the requirements underlying 
those records are found.
    Records supporting the information contained in any document 
required for filing a drawback claim would have to be maintained by the 
claimant or by the responsible party (e.g., importer, exporter, 
possessor). If deficiencies are revealed in the underlying records on

[[Page 3092]]

which a drawback claim is based, the payment of the claim would, of 
course, to this extent be adversely affected, notwithstanding that such 
records were generated and maintained by persons other than the 
claimant. Regarding the retention period for records kept by parties 
other than the claimant, it is the responsibility of such parties to 
communicate with the claimant to determine when a related claim for 
drawback has been filed and paid by Customs. The retention period for 
certificates of delivery begins upon their issuance (19 U.S.C. 
1313(t)). In addition, the retention period for records generally, 
including that for certificates of delivery, ends 3 years after the 
date of payment of the related claim. Notwithstanding the recordkeeping 
retention requirements, claimants are urged to maintain records that 
support the claim until the liquidation of the drawback entry becomes 
final. Moreover, records not specifically subject to recordkeeping 
retention which are maintained by a claimant, and support a claim, 
ought to be maintained until the liquidation of the drawback entry 
becomes final.

Redistribution of Drawback Workload

    Customs may transfer drawback claims to a location other than where 
they were originally filed to ensure the timely and efficient 
processing of the claims. This would occur primarily to evenly 
distribute the drawback claims or because an office has a particular 
expertise with a specific account or product. Customs believes that 
this is an internal Customs work management issue which does not 
require regulatory action. Therefore, the proposed regulations do not 
address this issue. However, Customs recognizes the public's concerns 
over the possibility of lost documentation or delays in processing. 
Customs will develop procedures to safeguard documents that are mailed 
and to monitor the time to process them. Customs believes that, until a 
fully-developed selectivity system and compliance program are 
operating, quicker, more efficient and more accurate processing of 
drawback claims will be the result of transferring claims among 
offices. If a claim is transferred for processing, the notice of 
liquidation of the associated drawback entry will remain the bulletin 
notice of liquidation posted at the port where the drawback claim was 
originally filed.

Liquidation of Drawback Entries

    The committee reports of both the Senate and House commented on 
their expectation that Customs drawback regulations will take into 
account the various time frames for recordkeeping, filing claims, 
amendments, and clarifications, and for auditing and liquidating 
drawback entries. Customs believes that these proposed regulations have 
addressed many of the Committees' concerns, specifically in proposed 
Secs. 191.25, 191.26, 191.37, 191.51, 191.52, 191.53, 191.61, and 
191.62. These proposed regulations do not, however, specify a time 
frame for liquidating drawback entries. This is because Customs 
believes that, absent statutory language such as the ``deemed 
liquidated'' language of 19 U.S.C. 1504, it lacks the authority to 
specify a deadline after which the drawback entry is ``deemed 
liquidated'' as entered.
    Customs is aware of the Congressional and trade interest in 
shortening the time between the filing of a drawback entry and the 
liquidation of that entry. Customs is pursuing the following actions in 
order to reduce the time in which to liquidate drawback entries:
    1. Customs has established 11 new positions and filled vacancies in 
all 8 drawback offices in order to bring them up to their designated 
staffing levels;
    2. Customs has developed and delivered standardized, national 
training to all drawback specialists (not just the new specialists) in 
FYs '95 and '96;
    3. Customs has developed automated tools (initially, diskette 
filings and ABI transmission of drawback claims) to more quickly 
identify, reject and return to filers claims that do not meet minimum 
filing standards.
    4. Customs has developed and is improving a selectivity system in 
ACS which already has reduced the number of designated import entries 
that must be physically retrieved by the drawback office, prior to 
liquidation of related drawback entries. Enhancements to this system 
will eventually lead to virtual ``instant liquidation'' of those 
drawback entries not selected by the system for pre-liquidation 
scrutiny by the drawback specialists.
    5. Through the Drawback Compliance Program, and increased use of 
claimant interviews and visits for claimants not in the Drawback 
Compliance Program, Customs expects to inform drawback claimants of 
their responsibilities with respect to filing and supporting their 
claims as well as to learn about claimants' drawback programs, 
recordkeeping, and internal controls. In the past, when drawback 
specialists questioned the claims, or sought evidence to support the 
claim, they often relied upon Regulatory Audit. With better staffing 
and training, as well as use of interviews with claimants, Customs 
expects that the number of referrals to Regulatory Audit will 
significantly decrease.
    6. In partnership with trade groups, Customs plans to use meetings, 
conferences, publications, satellite meetings and other forums, to 
educate and to learn from claimants.
    7. The largest single reason for the delays in liquidating drawback 
entries is that the designated import entry has not been liquidated. 
Approximately 75% of entries withheld from liquidation are because of 
suspensions under the antidumping or countervailing duty laws; however, 
antidumping and countervailing duties are not subject to drawback. In 
recognition of this, Customs announced in the Federal Register on May 
17, 1996, a pilot of the reconciliation process provided for in 19 
U.S.C. 1484(b) (as amended by section section 637 of the NAFTA 
Implementation Act) for entry summaries suspended under the antidumping 
or countervailing duty laws. The use of the reconciliation entry 
process will allow for the liquidation of the ordinary duty on these 
entry summaries, thereby expediting the liquidation of the drawback 
entries referencing those import entries.
    Customs believes that these actions, taken together, will bring 
about faster liquidation of drawback entries, thereby addressing the 
Congress's concerns.

Comments

    Customs has consulted extensively with the drawback community/trade 
in formulating these proposed regulations. Three drafts of the proposed 
regulations were made available to the public through Customs Automated 
Broker Interface (ABI) and the Customs Electronic Bulletin Board. 
Copies were also sent out to interested persons upon request. 
Additionally, since January 1992, Customs met 42 times with various 
groups representing drawback claimants, exporters, brokers, attorneys, 
and consultants to explain and discuss its proposals. In the summer of 
1995, the trade expressed its continuing dissatisfaction with the 
modifications Customs had made based upon comments to those earlier 
drafts.
    At the request of the American Association of Exporters and 
Importers, Customs agreed to continue these informal rulemaking 
consultations with trade groups in a series of meetings. These meetings 
were a continuation of the previous informal consultations with the 
trade. They were not a negotiation, mediation or a formal rulemaking 
procedure as provided for in the Negotiated Rulemaking Act of 1990 
(Pub. L. 101-648, codified at 5 U.S.C. 561 et seq.). Other groups that

[[Page 3093]]

participated in these meetings were the National Council on 
International Trade Development, the National Customs Brokers and 
Forwarders Association of America, and the American Petroleum 
Institute. The Customs participants represented the Trade Compliance 
program managers at Headquarters, the Office of Regulations and 
Rulings, field drawback offices, and Regulatory Audit. In view of 
concerns regarding Customs obligations under the Chief Financial 
Officer Act of 1990 (Pub. L. 101-576), representatives of the Treasury 
Inspector General and the Customs Office of Financial Management also 
participated. In addition, comments and recommendations from the 
public, the trade and Customs drawback offices were considered in this 
process.
    These proposed regulations are subject to the requirements of the 
Administrative Procedures Act (5 U.S.C. 553), which requires Customs to 
give notice and afford interested persons the opportunity to comment on 
the proposed rules. Therefore, before adopting this proposal, full 
consideration will be given to any written comments (preferably in 
triplicate) that are timely submitted to Customs. The comments 
submitted will receive full consideration and only Customs staff will 
prepare the analysis of the comments submitted in response to this 
notice of proposed rulemaking.
    In view of Customs extensive consultation with groups of interested 
persons, Customs believes that a 60-day comment period is adequate for 
review and comment by all interested parties. Interested persons are 
encouraged to file their comments within the 60-day period.
    All such comments received from the public pursuant to this notice 
of proposed rulemaking will be available for public inspection in 
accordance with the Freedom of Information Act (5 U.S.C. 552), 
Sec. 1.4, Treasury Department Regulations (31 CFR 1.4), and 
Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)), during regular 
business days between the hours of 9:00 a.m. and 4:30 p.m. at the 
Regulations Branch, 1099 14th Street, NW., Suite 4000, Washington, DC.

Regulatory Flexibility Act and Executive Order 12866

    The proposed rule would amend the Customs drawback regulations 
principally to reflect changes to the law occasioned by the Customs 
modernization portion of the NAFTA Implementation Act. The proposed 
rule also makes certain administrative changes to the existing 
regulations which are essentially intended to simplify and expedite the 
filing and processing of claims for the payment of drawback, and it 
generally revises and rearranges these regulations to improve their 
editorial clarity. As such, under the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), it is certified that the proposed rule would not 
have a significant economic impact on a substantial number of small 
entities. Thus, it is not subject to the requirements of 5 U.S.C. 603 
or 604, nor would it result in a ``significant regulatory action'' 
under E.O. 12866.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507).
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless the collection of 
information displays a valid control number.
    The collection of information in this document is in Secs. 191.0-
191.195. This information is necessary and will be used to enforce the 
requirements of the drawback law and protect the revenue. The likely 
respondents and/or recordkeepers are business and other for-profit 
institutions.
    Estimated annual reporting and/or recordkeeping burden: 216,650 
hours.
    Estimated average annual burden per respondent/recordkeeper: one 
hour for providing Harmonized Tariff System numbers; 60 hours for 
drawback compliance program participation.
    Estimated number of respondents and/or recordkeepers: 7000.
    Estimated annual frequency of responses: on occasion.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attention: Desk Officer of the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1301 Constitution Avenue, NW., Washington, DC 20229. Comments 
should be submitted within the time frame that comments are due 
regarding the substance of the proposal.
    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information shall have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the collection of 
the information; (c) ways to enhance the quality, utility, and clarity 
of the information to be collected; and (d) ways to minimize the burden 
of the collection of information on respondents, including through the 
use of automated collection techniques or other forms of information 
technology.

Parallel Reference Table

    [This table shows the relation of sections in the proposed revision 
of part 191 to existing part 191.]

------------------------------------------------------------------------
              Revised section                        Old section        
------------------------------------------------------------------------
191.0.....................................  191.0.                      
191.0a....................................  New.                        
191.1.....................................  191.1.                      
191.2(a)..................................  191.2(p).                   
191.2(b)..................................  New.                        
191.2(c)..................................  New.                        
191.2(d)..................................  New.                        
191.2(e)..................................  New.                        
191.2(f)..................................  191.2(b).                   
191.2(g)..................................  New.                        
191.2(h)..................................  191.2(j).                   
191.2(i)..................................  191.2(a).                   
191.2(j)..................................  191.2(i).                   
191.2(k)..................................  191.2(h).                   
191.2(l)..................................  191.2(g).                   
191.2(m)..................................  New.                        
191.2(n)..................................  191.2(l).                   
191.2(o)..................................  191.2(f).                   
191.2(p)..................................  New.                        
191.2(q)..................................  New.                        
191.2(r)..................................  New.                        
191.2(s)..................................  191.2(m).                   
191.2(t)..................................  191.2(n).                   
191.2(u)..................................  191.2(e).                   
191.2(v)..................................  191.2(o).                   
191.3.....................................  191.3.                      
191.4.....................................  191.11.                     
191.5.....................................  191.13.                     
191.6.....................................  191.6.                      
191.7(a)..................................  191.41.                     
191.7(b)(1)...............................  191.42(a).                  
191.7(b)(2)...............................  191.42(b).                  
191.7(c)..................................  191.43.                     
191.7(d)..................................  191.44                      
191.8(a)..................................  191.21(a).                  
191.8(b)..................................  191.21(c).                  
191.8(c)..................................  191.21(b).                  
191.8(d)..................................  191.21(d); 191.23(a).       
191.8(e)..................................  191.23(b).                  
191.8(f)..................................  191.24.                     
191.8(g)(1)...............................  191.25 (a)&(b)(1).          
191.8(g)(2)...............................  191.25(b)(2).               
191.8(g)(3)...............................  191.25(c).                  
191.8(h)..................................  191.26.                     
191.9.....................................  191.21(a)(2); 191.34; 191.66
                                             (b), (f).                  
191.9(a), first sentence..................  New.                        
191.10(a).................................  191.65(a).                  
191.10(b).................................  191.22(e).                  
191.10(c)(1)..............................  191.65(b).                  
191.10(c)(2)..............................  191.66(d).                  
191.10(d).................................  191.5; 191.22(e).           
191.10(e).................................  New.                        
191.10(f).................................  191.65(d).                  
191.11....................................  191.27.                     
191.12....................................  New.                        
191.13....................................  191.4(a)(11).               
191.14....................................  191.22(c).                  
191.21....................................  191.4(a)(1).                

[[Page 3094]]

                                                                        
191.22(a).................................  191.4(a)(2).                
191.22(b).................................  191.32(c).                  
191.22(c).................................  191.32(d).                  
191.22(d).................................  New.                        
191.22(e).................................  191.22(a)(5) & 191.33.      
191.23(a)-(c).............................  New.                        
191.23(d)(1)..............................  191.22(a)(2) & 191.32(b).   
191.23(d)(2)..............................  191.22(a)(1)(iv).           
191.24(a).................................  191.66(a).                  
191.24(b).................................  New.                        
191.24(c).................................  191.22(a)(4);               
                                             191.62(a)(2)(i).           
191.24(d).................................  New.                        
191.25(a)(1)..............................  191.22(a)(1).               
191.25(a)(1)(iii).........................  191.22(a)(3).               
191.25(a)(2)..............................  191.22(b).                  
191.25(a)(3)..............................  191.22(c).                  
191.25(b).................................  191.32(a).                  
191.25(c).................................  191.22(a)(2) & 191.32(b).   
191.25(d).................................  191.62(a)(2)(ii).           
191.25(e).................................  191.65(a)&(b).              
191.25(f).................................  191.62(c).                  
191.25(g).................................  191.5.                      
191.26(a).................................  191.8(a); 191.22(a)(1)(v).  
191.26(b).................................  191.32(a).                  
191.26(c).................................  191.23(c).                  
191.27....................................  New.                        
191.31(a).................................  191.4(a)(9); 191.141(a)(1). 
191.31(b).................................  191.8(b); 191.141(a)(2).    
191.31(c).................................  191.141(a)(3).              
191.32(a).................................  191.141(a)(10).             
191.32(b).................................  191.141(h).                 
191.32(c).................................  New.                        
191.32(d).................................  191.141(h).                 
191.32(e)&(f).............................  New.                        
191.33....................................  New.                        
191.34(a).................................  191.65(a); 191.141 (b) &    
                                             (e).                       
191.34(b).................................  New.                        
191.34(c).................................  191.65(d).                  
191.35....................................  191.141(b).                 
191.36....................................  New.                        
191.37(a).................................  191.5                       
191.37(b).................................  191.22(b).                  
191.41....................................  191.142(a)(1).              
191.42....................................  191.142(b).                 
191.43....................................  191.142(a)(2).              
191.44....................................  New.                        
191.51(a).................................  191.62 (a)&(b).             
191.51(b), (c) & (d)......................  New.                        
191.52(a).................................  191.61.                     
191.52(b) & (c)...........................  191.64.                     
191.61....................................  191.10.                     
191.62(a).................................  191.9.                      
191.62(b).................................  New.                        
191.71....................................  191.141(f).                 
191.72....................................  191.51.                     
191.73....................................  191.53.                     
191.74....................................  191.54.                     
191.75....................................  191.55.                     
191.76....................................  191.67.                     
191.81....................................  191.71.                     
191.82....................................  191.73(a).                  
191.83....................................  191.73(b).                  
191.84....................................  191.7.                      
191.91....................................  191.141(b)(2)(ii).          
191.92....................................  191.72.                     
191.93....................................  New.                        
191.101...................................  191.81.                     
191.102...................................  191.82.                     
191.103...................................  191.83.                     
191.104...................................  191.84.                     
191.105...................................  191.85.                     
191.106...................................  191.86.                     
191.111...................................  191.91.                     
191.112...................................  191.92; 191.93.             
191.121...................................  191.101.                    
191.122...................................  191.102.                    
191.123...................................  191.103.                    
191.131...................................  191.111.                    
191.132...................................  191.112.                    
191.133...................................  191.113.                    
191.141...................................  191.121.                    
191.142...................................  191.122.                    
191.143...................................  191.123.                    
191.144...................................  191.124.                    
191.151...................................  191.131.                    
191.151(a)(1).............................  191.8(c).                   
191.152...................................  191.132.                    
191.153...................................  191.133.                    
191.154...................................  191.134.                    
191.155...................................  191.135.                    
191.156...................................  191.136.                    
191.157...................................  191.137.                    
191.158...................................  191.138.                    
191.159...................................  191.139.                    
191.161...................................  191.151.                    
191.162...................................  191.152.                    
191.163...................................  191.153.                    
191.164...................................  191.154.                    
191.165...................................  191.155.                    
191.166...................................  191.156.                    
191.167...................................  191.157.                    
191.168...................................  191.158.                    
191.171...................................  New.                        
191.172...................................  New.                        
191.173...................................  New.                        
191.174...................................  New.                        
191.175...................................  New.                        
191.176...................................  New.                        
191.181...................................  191.161.                    
191.182...................................  191.162.                    
191.183...................................  191.163.                    
191.184...................................  191.164.                    
191.185...................................  191.165.                    
191.186...................................  191.166.                    
191.191...................................  New.                        
191.192...................................  New.                        
191.193...................................  New.                        
191.194...................................  New.                        
191.195...................................  New.                        
------------------------------------------------------------------------

Parallel Reference Table

    [This table shows the relation between the sections in existing 
part 191 to those in the proposed revision of part 191.]

------------------------------------------------------------------------
                Old section                        Revised section      
------------------------------------------------------------------------
191.0.....................................  191.0.                      
191.1.....................................  191.1.                      
191.2(a)..................................  191.2(i).                   
191.2(b)..................................  191.2(f).                   
191.2(c)..................................  Deleted.                    
191.2(d)..................................  Deleted.                    
191.2(e)..................................  191.2(u).                   
191.2(f)..................................  191.2(o).                   
191.2(g)..................................  191.2(l).                   
191.2(h)..................................  191.2(k).                   
191.2(i)..................................  191.2(j).                   
191.2(j)..................................  191.2(h).                   
191.2(k)..................................  Deleted.                    
191.2(l)..................................  191.2(n).                   
191.2(m)..................................  191.2(s).                   
191.2(n)..................................  191.2(t).                   
191.2(o)..................................  191.2(v).                   
191.2(p)..................................  191.2(a).                   
191.3.....................................  191.3                       
191.4(a)(1)...............................  191.21.                     
191.4(a)(2)...............................  191.22(a).                  
191.4(a) (3)-(8)..........................  Deleted.                    
191.4(a)(9)...............................  191.31(a).                  
191.4(a)(10)..............................  191.32(a).                  
191.4(a)(11)..............................  191.13.                     
191.4(a) (12)-(14)........................  Deleted.                    
191.4(b)..................................  Deleted.                    
191.5.....................................  191.10(d); 191.25(g);       
                                             191.37(a).                 
191.6.....................................  191.6.                      
191.7.....................................  191.84.                     
191.8(a)..................................  191.26(a).                  
191.8(b)..................................  191.31(b).                  
191.8(c)..................................  191.151(a)(1).              
191.9.....................................  191.62(a).                  
191.10....................................  191.61.                     
191.11....................................  191.4.                      
191.12....................................  Deleted.                    
191.13....................................  191.5.                      
191.21(a).................................  191.8(a).                   
191.21(a)(1)..............................  Deleted.                    
191.21(a)(2)..............................  191.9.                      
191.21(b).................................  191.8(c).                   
191.21(c).................................  191.8(b).                   
191.21(d).................................  191.8(d).                   
191.21(e).................................  Deleted.                    
191.22(a)(1)..............................  191.25(a)(1).               
191.22(a)(1)(iv)..........................  191.23(d)(2).               
191.22(a)(1)(v)...........................  191.26(a).                  
191.22(a)(2)..............................  191.23(d)(1); 191.25(c).    
191.22(a)(3)..............................  191.25(a)(1)(iii).          
191.22(a)(4)..............................  191.24(c).                  
191.22(a)(5)..............................  191.22(e).                  
191.22(b).................................  191.25(a)(2).               
191.22(c).................................  191.14.                     
191.22(d).................................  Deleted.                    
191.22(e).................................  191.10 (b) & (d).           
191.23(a).................................  191.8(d).                   
191.23(b).................................  191.8(e).                   
191.23(c).................................  191.26(c).                  
191.23(d).................................  Deleted.                    
191.24....................................  191.8(f).                   
191.25(a).................................  191.8(g)(1).                
191.25(b)(1)..............................  191.8(g)(1).                
191.25(b)(2)..............................  191.8(g)(2).                
191.25(c).................................  191.8(g)(3).                
191.26....................................  191.8(h).                   
191.27....................................  191.11.                     
191.31....................................  Deleted.                    
191.32(a).................................  191.25(b).                  
191.32(b).................................  191.25(c).                  
191.32(c).................................  191.22(b).                  
191.32(d).................................  191.22(c).                  
191.33....................................  191.22(e).                  
191.34....................................  191.9.                      
191.41....................................  191.7(a).                   
191.42(a).................................  191.7(b)(1).                
191.42(b).................................  191.7(b)(2).                
191.43....................................  191.7(c).                   

[[Page 3095]]

                                                                        
191.44....................................  191.7(d).                   
191.45....................................  Deleted.                    
191.51....................................  191.72.                     
191.52....................................  Deleted.                    
191.53....................................  191.73.                     
191.54....................................  191.74.                     
191.55....................................  191.75.                     
191.56....................................  Deleted.                    
191.57....................................  Deleted.                    
191.61....................................  191.52(a).                  
191.62(a).................................  191.51(a).                  
191.62(a)(2)(ii)..........................  191.25(d).                  
191.62(b).................................  191.51(a).                  
191.62(c).................................  191.25(f).                  
191.62(d).................................  Deleted.                    
191.63....................................  Deleted.                    
191.64....................................  191.52 (b) & (c).           
191.65(a).................................  191.10(a); 191.25(e).       
191.65(b).................................  191.10(c)(1); 191.25(e).    
191.65(c).................................  Deleted.                    
191.65(d).................................  191.10(f); 191.34(c).       
191.66(a).................................  191.24(a).                  
191.66(b).................................  191.9.                      
191.66(c).................................  Deleted.                    
191.66(d).................................  191.10(c)(2).               
191.66(e).................................  Deleted.                    
191.66(f).................................  191.9.                      
191.67....................................  191.76.                     
191.71....................................  191.81.                     
191.72....................................  191.92.                     
191.73(a).................................  191.82.                     
191.73(b).................................  191.83.                     
191.81....................................  191.101.                    
191.82....................................  191.102.                    
191.83....................................  191.103.                    
191.84....................................  191.104.                    
191.85....................................  191.105.                    
191.86....................................  191.106.                    
191.91....................................  191.111.                    
191.92, 191.93............................  191.112.                    
191.101...................................  191.121.                    
191.102...................................  191.122.                    
191.103...................................  191.123.                    
191.111...................................  191.131.                    
191.112...................................  191.132.                    
191.113...................................  191.133.                    
191.121...................................  191.141.                    
191.122...................................  191.142.                    
191.123...................................  191.143.                    
191.124...................................  191.144.                    
191.131...................................  191.151.                    
191.132...................................  191.152.                    
191.133...................................  191.153.                    
191.134...................................  191.154.                    
191.135...................................  191.155.                    
191.136...................................  191.156.                    
191.137...................................  191.157.                    
191.138...................................  191.158.                    
191.139...................................  191.159.                    
191.141(a)(1).............................  191.31(a).                  
191.141(a)(2).............................  191.31(b).                  
191.141(a)(3).............................  191.31(c).                  
191.141(b)................................  191.34(a); 191.35.          
191.141(b)(2)(ii).........................  191.91.                     
191.141(c)................................  191.51.                     
191.141(d)................................  191.73.                     
191.141(e)................................  Deleted.                    
191.141(f)................................  191.71.                     
191.141(g)................................  191.51; 191.52.             
191.141(h)................................  191.32 (b) & (d).           
191.142(a)(1).............................  191.41.                     
191.142(a)(2).............................  191.43.                     
191.142(b)................................  191.42.                     
191.151...................................  191.161.                    
191.152...................................  191.162.                    
191.153...................................  191.163.                    
191.154...................................  191.164.                    
191.155...................................  191.165.                    
191.156...................................  191.166.                    
191.157...................................  191.167.                    
191.158...................................  191.168.                    
191.161...................................  191.181.                    
191.162...................................  191.182.                    
191.163...................................  191.183.                    
191.164...................................  191.184.                    
191.165...................................  191.185.                    
191.166...................................  191.186.                    
------------------------------------------------------------------------

List of Subjects

19 CFR Part 7

    Customs duties and inspection, Exports, Imports.

19 CFR Part 10

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

19 CFR Part 145

    Customs duties and inspection, Imports, Postal Service.

19 CFR Part 173

    Administrative practice and procedure, Customs duties and 
inspection.

19 CFR Part 174

    Administrative practice and procedure, Customs duties and 
inspection, Reporting and recordkeeping requirements, Trade agreements.

19 CFR Part 181

    Administrative practice and procedure, Canada, Customs duties and 
inspection, Exports, Imports, Mexico, Reporting and recordkeeping 
requirements, Trade agreements (North American Free Trade Agreement).

19 CFR Part 191

    Canada, Commerce, Customs duties and inspection, Drawback, Mexico, 
Reporting and recordkeeping requirements, Trade agreements.

Proposed Amendments

    It is proposed to amend chapter I of title 19, Code of Federal 
Regulations (19 CFR chapter I), by amending parts 7, 10, 145, 173, 174, 
181 and 191 as set forth below.

PART 7--CUSTOMS RELATIONS WITH INSULAR POSSESSIONS AND GUANTANAMO 
BAY NAVAL STATION

    1. The general authority for part 7 would be revised to read as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1623, 1624; 48 U.S.C. 1406i.


Sec. 7.1  [Amended]

    2. It is proposed to amend Sec. 7.1(a) by removing the reference to 
``Secs. 191.85 and 191.86'' where appearing therein, and by adding in 
place thereof, ``Secs. 191.105 and 191.106''.

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

    1. The general authority citation for part 10 would continue to 
read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508, 
1623, 1624, 3314;
* * * * *


Sec. 10.38  [Amended]

    2. It is proposed to amend Sec. 10.38(f) by removing the reference 
to ``Sec. 191.10'' where appearing therein, and by adding in place 
thereof, ``Sec. 191.61''.

PART 145--MAIL IMPORTATIONS

    1. The general authority citation for part 145 would be revised to 
read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1624;
* * * * *


Sec. 145.72  [Amended]

    2. It is proposed to amend Sec. 145.72(e) by removing the reference 
to ``Sec. 191.142'' where appearing therein, and by adding in place 
thereof, ``Sec. 191.42''.

PART 173--ADMINISTRATIVE REVIEW IN GENERAL

    1. The general authority citation for part 173 would continue to 
read as follows:

    Authority: 19 U.S.C. 66, 1501, 1520, 1624.

    2. It is proposed to amend Sec. 173.4 by adding a sentence at the 
end of paragraph (c) to read as follows:

[[Page 3096]]

Sec. 173.4  Correction of clerical error, mistake of fact, or 
inadvertence.

* * * * *
    (c) * * * The party requesting reliquidation under section 
520(c)(1), Tariff Act of 1930, as amended (19 U.S.C. 1520(c)(1)) shall 
state, to the best of his knowledge, whether the entry for which 
correction is requested is the subject of a drawback claim, or whether 
the entry has been referenced on a certificate of delivery or 
certificate of manufacture and delivery so as to enable a party to make 
such entry the subject of drawback (see Secs. 181.50(b) and 191.81(b) 
of this chapter).
* * * * *

PART 174--PROTESTS

    1. The general authority citation for part 174 would continue to 
read as follows:

    Authority: 19 U.S.C. 66, 1514, 1515, 1624.

    2. It is proposed to amend Sec. 174.13 by adding a new paragraph 
(a)(9) to read as follows:


Sec. 174.13  Contents of protest.

    (a) Contents, in general. * * *

    (9) A declaration, to the best of the protestant's knowledge, as to 
whether the entry is the subject of drawback, or whether the entry has 
been referenced on a certificate of delivery or certificate of 
manufacture and delivery so as to enable a party to make such entry the 
subject of drawback (see Secs. 181.50(b) and Sec. 191.81(b) of this 
chapter).
* * * * *

PART 181--NORTH AMERICAN FREE TRADE AGREEMENT

    1. The general authority citation for part 181 would continue to 
read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1624, 3314.


Sec. 181.44  [Amended]

    2. It is proposed to amend Sec. 181.44(d) by removing the reference 
to ``Sec. 191.2(m)'' where appearing therein, and by adding in place 
thereof, ``Sec. 191.2(s)''.
    3. It is proposed to amend the ``Example'' in Sec. 181.44(f) by 
removing the reference to ``Customs Form 7575-A'' where appearing 
therein, and by adding in its place, ``Customs Form 331''.


Sec. 181.45  [Amended]

    4. It is proposed to amend Sec. 181.45(b)(2)(i) by removing the 
reference to ``Sec. 191.141(e)'' where appearing therein, and by adding 
in place thereof, ``Sec. 191.14''.


Sec. 181.46  [Amended]

    5. It is proposed to amend Sec. 181.46(b) by removing the term 
``port(s)'' and where appearing in the first sentence, and adding in 
place thereof, ``drawback office(s)''.


Sec. 181.47  [Amended]

    6. It is proposed to amend Sec. 181.47(b)(2)(i)(C) by removing the 
words ``Exporter's'' and ``exporter's'' where appearing therein, and by 
adding in place thereof, ``Export'' and ``export'', respectively.
    7. It is proposed to amend Sec. 181.47(b)(2)(ii)(A) by removing 
``Customs Form 7539J'', and adding in place thereof, ``Customs Form 
331''.
    8. It is proposed to amend Sec. 181.47(b)(2)(ii)(D) by removing the 
phrase ``The certificate of delivery portion of Customs Form 331'' 
where appearing therein, and adding in place thereof, ``A certificate 
of delivery''.
    9. It is proposed to amend Sec. 181.47(b)(2)(ii)(G) by revising the 
first two sentences to read:
* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (G) Evidence of exportation. Acceptable documentary evidence of 
exportation to Canada or Mexico shall include a bill of lading, air 
waybill, freight waybill, export ocean bill of lading, Canadian customs 
manifest, cargo manifest, or certified copies thereof, issued by the 
exporting carrier''. * * *
    10. It is proposed to amend Sec. 181.47(b)(2)(iii)(A) by removing 
``Customs Form 7539C'' where appearing therein, and by adding in place 
thereof, ``Customs Form 331''.


Sec. 181.48  [Amended]

    11. It is proposed to amend Sec. 181.47(b)(2)(v) by removing the 
reference to ``subpart L'' where appearing therein, and by adding in 
place thereof, ``subpart N''.


Sec. 181.49  [Amended]

    12. It is proposed to amend Sec. 181.49 by removing the reference 
to ``Sec. 191.5'' where appearing therein, and by adding in place 
thereof, ``Sec. 191.25(d)''.


Sec. 181.50  [Amended]

    13. It is proposed to amend Sec. 181.50(c) by removing the 
reference to ``Sec. 191.72'' where appearing therein, and by adding in 
place thereof, ``191.92''.

PART 191--DRAWBACK

    1. It is proposed to revise part 191 to read as follows:

Sec.
191.0  Scope.
191.0a  Claims filed under NAFTA.

Subpart A--General Provisions

191.1  Authority of the Commissioner of Customs.
191.2  Definitions.
191.3  Duties and fees subject or not subject to drawback.
191.4  Merchandise in which a U.S. Government interest exists.
191.5  Guantanamo Bay, insular possessions, trust territories.
191.6  Authority to sign drawback documents.
191.7  General manufacturing drawback ruling.
191.8  Specific manufacturing drawback ruling.
191.9  Agency.
191.10  Certificate of delivery.
191.11  Tradeoff.
191.12  Claim filed under incorrect provision.
191.13  Packaging materials.
191.14  Identification of merchandise or articles by accounting.

Subpart B--Manufacturing drawback

191.21  Direct identification drawback.
191.22  Substitution drawback.
191.23  Methods of claiming drawback.
191.24  Certificate of manufacture and delivery.
191.25  Recordkeeping for manufacturing drawback.
191.26  Time limitations.
191.27  Person entitled to claim drawback.

Subpart C--Unused Merchandise Drawback

191.31  Direct identification.
191.32  Substitution drawback.
191.33  Person entitled to drawback.
191.34  Certificate of delivery required.
191.35  Notice of intent to export; examination of merchandise.
191.36  Failure to file notice of intent to export or destroy 
merchandise.
191.37  Records.

Subpart D--Rejected Merchandise

191.41  Rejected merchandise drawback.
191.42  Procedure.
191.43  Unused merchandise claim.
191.44  Destruction under Customs supervision.

Subpart E--Completion of Drawback Claims

191.51  Completion of drawback claims.
191.52  Completing, perfecting or amending claims.
191.53  Restructuring of claims.

Subpart F--Verification of Claims

191.61  Verification of drawback claims.
191.62  Falsification of drawback claims.

[[Page 3097]]

Subpart G--Evidence of Exportation and Destruction

191.71  Drawback on articles destroyed under Customs supervision.
191.72  Alternative procedures for establishing exportation.
191.73  Export summary procedure.
191.74  Certification of exportation by mail.
191.75  Exportation by the Government.
191.76  Landing certificate.

Subpart H--Liquidation and Protest of Drawback Entries

191.81  Liquidation.
191.82  Person entitled to claim drawback.
191.83  Person entitled to receive payment.
191.84  Protests.

Subpart I--Privileges

191.91  Waiver of notice of intent to export.
191.92  Accelerated payment.
191.93  Combined applications.

Subpart J--Internal Revenue Tax on Flavoring Extracts and Medicinal or 
Toilet Preparations (Including Perfumery) Manufactured from Domestic 
Tax-Paid Alcohol

191.101  Drawback allowance.
191.102  Procedure.
191.103  Additional requirements.
191.104  Alcohol, Tobacco and Firearms certificates.
191.105  Liquidation.
191.106  Amount of drawback.

Subpart K--Supplies for Certain Vessels and Aircraft

191.111  Drawback allowance.
191.112  Procedure.

Subpart L--Meats Cured with Imported Salt

191.121  Drawback allowance.
191.122  Procedure.
191.123  Refund of duties.

Subpart M--Materials for Construction and Equipment of Vessels and 
Aircraft Built for Foreign Ownership and Account

191.131  Drawback allowance.
191.132  Procedure.
191.133  Explanation of terms.

Subpart N--Foreign-Built Jet Aircraft Engines Processed in the United 
States

191.141  Drawback allowance.
191.142  Procedure.
191.143  Drawback entry.
191.144  Refund of duties.

Subpart O--Merchandise Exported from Continuous Customs Custody

191.151  Drawback allowance.
191.152  Merchandise released from Customs custody.
191.153  Continuous Customs custody.
191.154  Filing the entry.
191.155  Merchandise withdrawn from warehouse for exportation.
191.156  Bill of lading.
191.157  Landing certificates.
191.158  Procedures.
191.159  Amount of drawback.

Subpart P--Distilled Spirits, Wines, or Beer Which Are Unmerchantable 
or Do Not Conform to Sample or Specifications

191.161  Refund of taxes.
191.162  Procedure.
191.163  Documentation.
191.164  Return to Customs custody.
191.165  No exportation by mail.
191.166  Destruction of merchandise.
191.167  Liquidation.
191.168  Time limit for exportation or destruction.

Subpart Q--Substitution of Finished Petroleum Derivatives

191.171  General; Drawback allowance.
191.172  Definitions.
191.173  Imported duty-paid derivatives (no manufacture).
191.174  Derivatives manufactured under 19 U.S.C. 1313 (a) or (b).
191.175  Drawback claimant; maintenance of records.
191.176  Procedures for claims filed under 19 U.S.C. 1313(p).

Subpart R--Merchandise Transferred to a Foreign Trade Zone from Customs 
Custody

191.181  Drawback allowance.
191.182  Zone-restricted merchandise.
191.183  Articles manufactured or produced in the United States.
191.184  Merchandise transferred from continuous Customs custody.
191.185  Unused merchandise drawback and merchandise not conforming 
to sample or specification, shipped without consent of the 
consignee, or found to be defective as of the time of importation.
191.186  Person entitled to claim drawback.

Subpart S--Drawback Compliance Program

191.191  Purpose.
191.192  Certification for compliance program.
191.193  Application procedure for compliance program.
191.194  Action on application to participate in compliance program.
191.195  Combined application for Certification in Drawback 
Compliance Program and Drawback Privileges.

Appendix A to Part 191--General Manufacturing Drawback Rulings

Appendix B to Part 191--Sample Formats for Applications for Specific 
Manufacturing Drawback Ruling Applications

    Authority: 5 U.S.C. 301, 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States), 1313, 1624.
    Sec. 191.62 also issued under 18 U.S.C. 550, 19 U.S.C. 1593a;
    Sec. 191.84 also issued under 19 U.S.C. 1514;
    Secs. 191.111, 191.112 also issued under 19 U.S.C. 1309;
    Secs. 191.151(a)(1), 191.153, 191.157, 191.159 also issued under 
19 U.S.C. 1557;
    Sec. 191.182-191.186 also issued under 19 U.S.C. 81c;
    Secs. 191.191-191.195 also issued under 19 U.S.C. 1593a.


Sec. 191.0  Scope.

    This part sets forth general provisions applicable to all drawback 
claims and specialized provisions applicable to specific types of 
drawback claims. Additional drawback provisions relating to the North 
American Free Trade Agreement (NAFTA) are contained in subpart E of 
part 181 of this chapter.


Sec. 191.0a  Claims filed under NAFTA.

    Claims for drawback filed under the provisions of part 181 of this 
chapter shall be filed separately from claims filed under the 
provisions of this part.

Subpart A--General Provisions


Sec. 191.1  Authority of the Commissioner of Customs.

    Pursuant to Treasury Department Order No. 165, Revised (T.D. 53654, 
19 FR 7241), as amended, the Commissioner of Customs, with the approval 
of the Secretary of the Treasury, shall prescribe rules and regulations 
regarding drawback.


Sec. 191.2  Definitions.

    For the purposes of this part:
    (a) Abstract. ``Abstract'' means the summary of the actual 
production records of the manufacturer.
    (b) Certificate of delivery. ``Certificate of delivery'' means 
Customs Form xxx summarizing information contained in original 
documents, establishing:
    (1) The delivery of imported merchandise, substituted merchandise 
under 19 U.S.C. 1313(j)(2), or drawback product, from one party 
(transferor) to another (transferee); and
    (2) The assignment of drawback rights for the merchandise 
transferred from the transferor to the transferee.
    (c) Certificate of manufacture and delivery. ``Certificate of 
manufacture and delivery'' means Customs Form xxx summarizing 
information contained in original documents, establishing the 
manufacture or production of articles under 19 U.S.C. 1313 (a) or (b). 
A certificate of manufacture and delivery must contain the information, 
and has the effect, set forth in Sec. 191.24 of this part.
    (d) Act. ``Act'', unless indicated otherwise, means the Tariff Act 
of 1930, as amended.
    (e) Commercially interchangeable merchandise. ``Commercially 
interchangeable merchandise'' means merchandise which may be 
substituted under the substitution unused merchandise drawback law, 
section 313(j)(2) of the Act, as amended (19 U.S.C. 1313(j)(2)) (see 
Sec. 191.32(b)(2) of this part), or under the provision for the 
substitution of finished petroleum derivatives, section 313(p), as 
amended (19 U.S.C. 1313(p)).
    (f) Designated merchandise. ``Designated merchandise'' means either

[[Page 3098]]

eligible imported duty-paid merchandise or drawback products selected 
by the drawback claimant as the basis for a drawback claim under 19 
U.S.C. 1313 (b) or (j)(2), as applicable, or qualified articles 
selected by the claimant as the basis for drawback under 19 U.S.C. 
1313(p).
    (g) Destruction. ``Destruction'' means the complete destruction of 
articles or merchandise to the extent that they have no commercial 
value.
    (h) Direct identification drawback. ``Direct identification 
drawback'' means drawback authorized either under section 313(a) of the 
Act, as amended (19 U.S.C. 1313(a)), on imported merchandise used to 
manufacture or produce an article which is either exported or 
destroyed, or under section 313(j)(1) of the Act, as amended (19 U.S.C. 
1313(j)(1)), on imported merchandise exported, or destroyed under 
Customs supervision, without having been used in the United States (see 
also sections 313 (c), (e), (f), (g), (h), and (q)).
    (i) Drawback. ``Drawback'' means the refund or remission, in whole 
or in part, of a customs duty, fee or internal revenue tax which was 
imposed on imported merchandise under Federal law because of its 
importation, and the refund of internal revenue taxes paid on domestic 
alcohol as prescribed in 19 U.S.C. 1313(d).
    (j) Drawback claim. ``Drawback claim'' means the drawback entry and 
related documents required by regulation which together constitute the 
request for drawback payment.
    (k) Drawback entry. ``Drawback entry'' means the document 
containing a description of, and other required information concerning, 
the exported or destroyed article on which drawback is claimed. 
Drawback entries are filed on Customs Form 331.
    (l) Drawback product. A ``drawback product'' means a product which 
is finished, partially finished or wholly manufactured in the United 
States under the procedures in this part for manufacturing drawback. A 
drawback product may be exported, or destroyed under Customs 
supervision with a claim for drawback, or it may be used in the further 
manufacture of other drawback products by manufacturers or producers 
operating under the procedures in this part for manufacturing drawback, 
in which case drawback would be claimed upon exportation or destruction 
of the ultimate product. Products manufactured or produced from 
substituted merchandise (imported or domestic) also become ``drawback 
products'' when applicable substitution provisions of the Act are met. 
For purposes of section 313(b) of the Act, as amended (19 U.S.C. 
1313(b)), drawback products may be designated as the basis for drawback 
or deemed to be substituted merchandise (see section 1313(b)). For a 
drawback product to be designated as the basis for drawback, the 
product must be associated with a certificate of manufacture and 
delivery (see section 191.24 of this part).
    (m) Exportation. ``Exportation'' means the severance of goods from 
the mass of goods belonging to this country, with the intention of 
uniting them with the mass of goods belonging to some foreign country. 
An exportation may be deemed to have occurred when goods subject to 
drawback are admitted into a foreign trade zone in zone-restricted 
status, or are used as aircraft or vessel supplies in accordance with 
section 309(b) of the Act, as amended (19 U.S.C. 1309(b)).
    (n) Fungible merchandise or articles. ``Fungible merchandise or 
articles'' means merchandise or articles which for commercial purposes 
are identical and interchangeable in all situations.
    (o) General manufacturing drawback ruling. A ``general 
manufacturing drawback ruling'' means a description of a manufacturing 
or production operation for drawback and the regulatory requirements 
and interpretations applicable to that operation which is published in 
appendix A of this part. A manufacturer or producer whose operation is 
within this description may operate under a particular ``general 
manufacturing drawback ruling'' by submitting to the appropriate 
drawback office a letter of notification of intent to operate under the 
general ruling, in accordance with Sec. 191.7, after which Customs 
issues a letter of acknowledgment.
    (p) Manufacture or production. ``Manufacture or production'' means:
    (1) A process, including, but not limited to, an assembly, by which 
merchandise is made into a new and different article having a 
distinctive ``name, character or use''; or
    (2) A process, including, but not limited to, an assembly, by which 
merchandise is made fit for a particular use even though it does not 
meet the requirements of paragraph (p)(1) of this section.
    (q) Possession. ``Possession'', for purposes of substitution unused 
merchandise drawback (19 U.S.C. 1313(j)(2)), means physical or 
operational control of the merchandise, including ownership while in 
bailment, in leased facilities, in transit to, or in any other manner 
under the operational control of, the party claiming drawback.
    (r) Relative value. ``Relative value'' means the value of a product 
divided by the total value of all products which are necessarily 
manufactured or produced concurrently in the same operation. Relative 
value is based on the market value, or other value approved by Customs, 
of each such product or by-product determined as of the time it is 
first separated in the manufacturing or production process. Market 
value is generally measured by the selling price, not including any 
packaging, transportation, or other identifiable costs, which accrue 
after the product itself is processed. Drawback law requires the 
apportionment of drawback to each such product or by-product based on 
its relative value at the time of separation.
    (s) Substituted merchandise. ``Substituted merchandise'' means same 
kind and quality merchandise that may be substituted under the 
substitution drawback provisions, either section 313(b) or 313(p) of 
the Act, as amended (19 U.S.C. 1313 (b) or (p)). Under section 313(b), 
substituted merchandise is of the same kind and quality if it is 
capable of being used interchangeably in manufacture or production of 
exported or destroyed articles with no substantial change in the 
manufacturing or production process. Under section 313(p), as amended, 
an exported article and a qualified article are of the same kind and 
quality if they fall under the same 8-digit Harmonized Tariff Schedule 
of the United States (HTSUS) tariff classification as enumerated in 
section 313(p)(3)(A)(i) (I) or (II), as amended, or are commercially 
interchangeable (see Sec. 191.2(e)). Under section 313(j)(2), 
substituted merchandise means merchandise which is commercially 
interchangeable with the imported designated merchandise.
    (t) Schedule. A ``schedule'' means a document filed by a drawback 
claimant, under section 313 (a) or (b), as amended (19 U.S.C. 1313 (a) 
or (b)), showing the quantity of imported or substituted merchandise 
used in or appearing in each article exported or destroyed for 
drawback.
    (u) Specific manufacturing drawback ruling. A ``specific 
manufacturing drawback ruling'' means an application, in one of the 
formats published in appendix B of this part, by a manufacturer or 
producer for a ruling on a specific manufacturing or production 
operation for drawback, as described in the format used, together with 
a letter of approval issued by Customs Headquarters to the applicant in 
response to the application in accordance with Sec. 191.8. Synopses of 
approved specific manufacturing drawback rulings are published in the 
Customs Bulletin with each synopsis

[[Page 3099]]

being published under an identifying Treasury Decision. Specific 
manufacturing drawback rulings are subject to the provisions in part 
177 of this chapter.
    (v) Verification. ``Verification'' means the examination of any and 
all records, maintained by the claimant, or any party involved in the 
drawback process, which are required by the appropriate Customs officer 
to render a meaningful recommendation concerning the drawback 
claimant's conformity to the law and regulations and the determination 
of supportability, correctness, and validity of the specific claim or 
groups of claims being verified.


Sec. 191.3  Duties and fees subject or not subject to drawback.

    (a) Duties subject to drawback include:
    (1) All ordinary Customs duties, including:
    (i) Duties paid on an entry, or withdrawal from warehouse, for 
consumption for which liquidation has become final;
    (ii) Estimated duties paid on an entry, or withdrawal from 
warehouse, for consumption, for which liquidation has not become final 
and for which the drawback claimant and any other party responsible for 
the payment of liquidated import duties have filed a written request 
and waiver under Sec. 191.82(b) of this part;
    (iii) Voluntary tenders of the unpaid amount of lawful duties on an 
entry, or withdrawal from warehouse, for consumption, provided that the 
import entry, or withdrawal from warehouse, for consumption for which 
the voluntary tender was made is specifically identified in the 
voluntary tender and provided that liquidation of the drawback entry in 
which that specifically identified import entry, or withdrawal from 
warehouse, for consumption is designated has not become final and that 
the drawback claimant and any other party responsible for the payment 
of the voluntary tender have filed a written request and waiver under 
Sec. 191.82(c) of this part; or
    (iv) Any payment of duty for an import entry, or withdrawal from 
warehouse, for consumption, such as payment of a demand for duties 
under 19 U.S.C. 1592(d), provided that the payment is specifically 
identified as duty on a specifically identified import entry, or 
withdrawal from warehouse, for consumption the liquidation of which 
became final prior to such payment, and provided that liquidation of 
the drawback entry in which that specifically identified entry, or 
withdrawal from warehouse, for consumption is designated has not become 
final and that the drawback claimant and any other party responsible 
for the other payments of duties have filed a written request and 
waiver under Sec. 191.82(c) of this part;
    (2) Marking duties assessed under section 304(c), Tariff Act of 
1930, as amended (19 U.S.C. 1304(c)); and,
    (3) Internal revenue taxes which attach upon importation (see 
Sec. 101.1(i) of this chapter).
    (b) Duties and fees not subject to drawback include:
    (1) Harbor maintenance fee (see Sec. 24.24 of this chapter);
    (2) Merchandise processing fee (see Sec. 24.23 of this chapter); 
and
    (3) Antidumping and countervailing duties on merchandise entered, 
or withdrawn from warehouse, for consumption on or after August 23, 
1988.
    (c) No drawback shall be allowed when the designated imported 
merchandise, or the substituted other merchandise (when applicable), 
consists of an agricultural product to which an over-quota rate of duty 
established under a tariff-rate quota is applicable, except that:
    (1) Agricultural products as described in paragraph (c) of this 
section may be eligible for drawback under section 313(j)(1) of the 
Act, as amended (19 U.S.C. 1313(j)(1)); and
    (2) Tobacco otherwise meeting the description of agricultural 
products in paragraph (c) of this section may also be eligible for 
drawback under section 313(a) of the Act, as amended (19 U.S.C. 
1313(a)).


Sec. 191.4   Merchandise in which a U.S. Government interest exists.

    (a) Restricted meaning of Government. A U.S. Government 
instrumentality operating with nonappropriated funds is considered a 
Government entity within the meaning of this section. Surety on any 
drawback bond undertaken by these instrumentalities will not be 
required.
    (b) Allowance of drawback. If the merchandise was sold to the U.S. 
Government, drawback shall be available only to the:
    (1) Department, branch, agency, or instrumentality of the U.S. 
Government which purchased it; or
    (2) Supplier, or any of the parties specified in Sec. 191.82 of 
this part, provided the claim is supported by documentation signed by a 
proper officer of the department, branch, agency, or instrumentality 
concerned certifying that the right to drawback was reserved by the 
supplier or other parties with the knowledge and consent of the 
department, branch, agency, or instrumentality.


Sec. 191.5   Guantanamo Bay, insular possessions, trust territories.

    Guantanamo Bay Naval Station shall be considered foreign territory 
for drawback purposes and, accordingly, drawback may be permitted on 
articles shipped there. Under 19 U.S.C. 1313, drawback of Customs duty 
is not allowed on articles shipped to Puerto Rico, the U.S. Virgin 
Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, 
Guam, Canton Island, Enderbury Island, Johnston Island, or Palmyra 
Island.


Sec. 191.6   Authority to sign drawback documents.

    (a) Documents listed in paragraph (b) of this section shall be 
signed only by one of the following:
    (1) The president, a vice-president, secretary, treasurer, or any 
other individual legally authorized to bind the corporation;
    (2) A full partner of a partnership;
    (3) The owner of a sole proprietorship;
    (4) Any employee of a business entity with a power of attorney;
    (5) An individual acting on his or her own behalf; or
    (6) A licensed Customs broker with a power of attorney.
    (b) The following documents require execution in accordance with 
paragraph (a) of this section:
    (1) Drawback entries;
    (2) Certificates of delivery;
    (3) Certificates of manufacture and delivery;
    (4) Applications of manufacturers or producers for approval of 
specific manufacturing drawback rulings, schedules, and supplemental 
schedules;
    (5) Letters of notification for general manufacturing drawback 
rulings;
    (6) Endorsements of exporters on bills of lading or evidence of 
exportation; and
    (7) Abstracts, schedules and extracts from monthly abstracts if not 
included as part of a drawback claim.


Sec. 191.7   General manufacturing drawback ruling.

    (a) Purpose; eligibility. General manufacturing drawback rulings 
are designed to simplify drawback for certain common manufacturing 
operations but do not preclude or limit the use of applications for 
specific manufacturing drawback rulings (see Sec. 191.8). A 
manufacturer or producer engaged in an operation that falls within a 
published general manufacturing drawback ruling may submit a letter of 
notification of intent to operate under that general ruling. Where a 
separately-

[[Page 3100]]

 incorporated subsidiary of a parent corporation is engaged in 
manufacture or production for drawback, the subsidiary is the proper 
party to submit the letter of notification, and cannot operate under a 
letter of notification submitted by the parent corporation.
    (b) Procedures--(1) Publication. General manufacturing drawback 
rulings are contained in Appendix A to this part. The Appendix will be 
updated when new general drawback rulings are issued (as Treasury 
Decisions) or existing general drawback rulings are revised.
    (2) Submission. Letters of notification of intent to operate under 
a general manufacturing drawback ruling shall be submitted in duplicate 
to any drawback office where drawback entries will be filed and 
liquidated. If claims are to be filed at more than one drawback office, 
two additional copies of the letter of notification shall be filed for 
each additional office and the drawback office with which the letter of 
notification is submitted shall forward the additional copies to such 
additional office(s).
    (3) Information required. Each manufacturer or producer submitting 
a letter of notification of intent to operate under a general 
manufacturing drawback ruling under this section must provide the 
following specific detailed information:
    (i) Name and address of producer or manufacturer (if the 
manufacturer or producer is a separately-incorporated subsidiary of a 
corporation, the subsidiary corporation must submit a letter of 
notification in its own name);
    (ii) In the case of a business entity, the names of the persons 
listed in Sec. 191.6(a)(1) through (5) who will sign drawback 
documents;
    (iii) Locations of the factories which will operate under the 
letter of notification;
    (iv) Description of the merchandise and articles, unless 
specifically described in the letter of notification;
    (v) Basis of claim used for calculating drawback; and
    (vi) IRS (Internal Revenue Service) number of the manufacturer or 
producer.
    (c) Acknowledgment. The appropriate drawback office shall 
acknowledge in writing the receipt of the letter of notification of 
intent to operate under the general manufacturing drawback ruling.
    (d) Duration. Acknowledged letters of notification under this 
section shall remain in effect under the same terms as provided for in 
Sec. 191.8(h) for specific manufacturing drawback rulings.


Sec. 191.8   Specific manufacturing drawback ruling.

    (a) Proper applicant. Unless operating under a general 
manufacturing drawback ruling (see Sec. 191.7), each manufacturer or 
producer of articles intended to be claimed for drawback shall apply 
for a specific manufacturing drawback ruling. Where a separately-
incorporated subsidiary of a parent corporation is engaged in 
manufacture or production for drawback, the subsidiary is the proper 
party to apply for a specific manufacturing drawback ruling, and cannot 
operate under any specific manufacturing drawback ruling approved in 
favor of the parent corporation.
    (b) Sample application. Sample formats for applications for 
specific manufacturing drawback rulings are contained in Appendix B to 
this part.
    (c) Content of application. The application of each manufacturer or 
producer shall include the following information as applicable:
    (1) Name and address of the applicant;
    (2) Internal Revenue Service (IRS) number of the applicant;
    (3) Description of the type of business in which engaged;
    (4) Description of the manufacturing or production process, which 
shows how the designated and substituted merchandise are used to make 
the article that is to be exported or destroyed;
    (5) In the case of a business entity, the names of persons listed 
in Sec. 191.6(a)(1) through (5) who will sign drawback documents;
    (6) Description of the imported merchandise including 
specifications;
    (7) Description of the exported article;
    (8) Basis of claim for calculating manufacturing drawback;
    (9) Summary of the records kept to support claims for drawback; and
    (10) Identity and address of the recordkeeper if other than the 
claimant.
    (d) Submission. An application for a specific manufacturing 
drawback ruling shall be submitted, in triplicate, to Customs 
Headquarters (Attention: Entry and Carrier Rulings Branch, Office of 
Regulations and Rulings). If drawback claims are to be filed under the 
ruling at more than one drawback office, two additional copies of the 
application shall be filed for each additional office.
    (e) Review and action by Customs. Customs Headquarters shall review 
the application for a specific manufacturing drawback ruling.
    (1) Approval. If consistent with the drawback law and regulations, 
Customs Headquarters shall issue a letter of approval to the applicant 
and shall forward 2 copies of the application for the specific 
manufacturing drawback ruling to the appropriate drawback office(s) 
with a copy of the letter of approval. Synopses of approved specific 
manufacturing drawback rulings shall be published in the weekly Customs 
Bulletin with each synopsis being published under an identifying 
Treasury Decision (T.D.). Each approved specific manufacturing drawback 
ruling shall be assigned a unique computer-generated manufacturing 
contract number which appears in the published synopsis and must be 
used when filing manufacturing drawback claims with Customs.
    (2) Disapproval. If not consistent with the drawback law and 
regulations, Customs Headquarters shall promptly inform the applicant 
that the application cannot be approved and shall specifically advise 
the applicant why this is so. A disapproved application may be 
resubmitted with modifications and/or explanations addressing the 
reasons given for disapproval, or the disapproval may be appealed to 
Customs Headquarters (Attention: Director, International Trade 
Compliance Division).
    (f) Schedules and supplemental schedules. When an application for a 
specific manufacturing drawback ruling states that drawback is to be 
based upon a schedule filed by the manufacturer or producer, the 
schedule will be reviewed by Customs Headquarters. The application may 
include a request for authorization for the filing of supplemental 
schedules with the drawback office where claims are filed.
    (g) Procedure to modify a specific manufacturing drawback ruling.--
(1) Supplemental application. Except as provided for limited 
modifications in paragraph (g)(2) of this section, a manufacturer or 
producer desiring to modify an existing specific manufacturing drawback 
ruling shall submit a supplemental application for such a ruling in the 
form of the original application to Customs Headquarters (Attention: 
Entry and Carrier Rulings Branch, Office of Regulations and Rulings). 
Except as specifically provided in this section, such modifications 
(not including those provided for in paragraph (g)(2) of this section) 
shall be subject to the procedures provided for in part 177 of this 
chapter.
    (2) Limited modifications. (i) A supplemental application for a 
specific manufacturing drawback ruling shall be submitted to the 
drawback office(s) where claims are filed if the modifications are 
limited to:
    (A) The location of a factory, or the addition of one or more 
factories where

[[Page 3101]]

the methods followed and records maintained are the same as those at 
another factory operating under the existing specific manufacturing 
drawback ruling of the manufacturer or producer;
    (B) The succession of a sole proprietorship, partnership or 
corporation to the operations of a manufacturer or producer;
    (C) A change in name of the manufacturer or producer;
    (D) A change in the persons who will sign drawback documents in the 
case of a business entity; or
    (E) Any combination of the foregoing changes.
    (ii) A limited modification, as provided for in this paragraph, 
shall contain only the modifications to be made, in addition to 
identifying the specific manufacturing drawback ruling and being signed 
by an authorized person (that is, such a modification need not be in 
the form of an original application, as under paragraph (g)(1) of this 
section).
    (h) Duration. Subject to part 177 of this chapter, an approval of a 
specific manufacturing drawback ruling under this section shall remain 
in effect indefinitely unless:
    (1) No drawback claim or certificate of manufacture and delivery is 
filed under the ruling for a period of 5 years and notice of 
termination is published in the Customs Bulletin; or
    (2) The manufacturer or producer to whom approval of the ruling was 
issued files a request to terminate the ruling, in writing, with 
Customs Headquarters.


Sec. 191.9   Agency.

    (a) Applicability. The principal-agent procedures described in 
paragraphs (b) through (e) of this section are applicable only in 
substitution manufacturing drawback under 19 U.S.C. 1313(b).
    (b) General. An owner of the designated and substituted merchandise 
that is used to produce the exported articles may employ another person 
to do part, or all, of the work that transforms either the designated 
or substituted merchandise into articles for the purpose of 19 U.S.C. 
1313(b), or which accomplishes any of the other manufacture or 
production processes stated in Sec. 191.2(p). The person who asserts 
that it is the manufacturer or producer under 19 U.S.C. 1313(b) must 
establish by its manufacturing records, the manufacturing records of 
its agent, or the manufacturing records of both parties, that the 
designated and substituted merchandise were used in the manufacture or 
production of articles.
    (c) Requirements.--(1) Contract. The manufacturer must establish 
that it is the principal in a contract between it and its agent who 
actually does the work on either the designated or substituted 
merchandise for the principal. The contract must specify:
    (i) Terms of compensation to show that the relationship is an 
agency rather than a sale;
    (ii) How transfers of merchandise and articles will be recorded by 
the principal and its agent;
    (iii) The work to be performed on the merchandise by the agent for 
the principal;
    (iv) The degree of control that is to be exercised by the principal 
over the agent's performance of work;
    (v) The party who is to bear the risk of loss on the merchandise 
while it is in the agent's custody; and
    (vi) The period that the contract is in effect.
    (2) Ownership of the merchandise by the principal. The records of 
the principal and/or the agent must establish that the principal had 
legal and equitable title to the merchandise before receipt by the 
agent. The right of the agent to assert a lien on the merchandise for 
work performed does not derogate the principal's ownership interest for 
the purpose of 19 U.S.C. 1313(b).
    (3) Sales prohibited. The relationship between the principal and 
agent must not be that of a seller and buyer. If the parties' records 
show that, with respect to the merchandise that is the subject of the 
principal-agent contract, the merchandise is sold to the agent by the 
principal, or the articles manufactured by the agent are sold to the 
principal by the agent, those records are inadequate to show compliance 
with the requirement in 19 U.S.C. 1313(b) that the principal was the 
manufacturer or producer of the articles.
    (d) Specific manufacturing drawback rulings; general manufacturing 
drawback rulings.--(1) Owner. An owner who intends to show that it is 
the manufacturer or producer of articles under 19 U.S.C. 1313(b) 
through the work of an agent must state that intent in any application 
for a specific manufacturing drawback ruling filed under Sec. 191.8.
    (2) Agent. Each agent operating under this section must have filed 
a letter of notification for the general manufacturing drawback ruling 
(see Sec. 191.7), for an agent, covering the articles manufactured or 
produced, or have obtained a specific manufacturing drawback ruling 
(see Sec. 191.8), as appropriate.
    (e) Certificate of manufacture and delivery; drawback entry.--(1) 
Agent. Each agent manufacturer conducting operations under this section 
shall furnish the principal for whom such agent processed merchandise a 
certificate of manufacture and delivery applicable to the operation so 
conducted, relating to the substituted or designated merchandise, and 
identifying the owner of the articles for whom processing was 
conducted. Certificates of Manufacture and Delivery issued to document 
the transfer of articles under this section do not assign the potential 
right to drawback to the person to whom such certificates are issued.
    (2) Principal. The principal for whom processing was conducted 
under this section shall complete and file a drawback entry on Customs 
Form 331 and attach to it the forms from its agents or agent, if 
necessary (see Secs. 191.10(e) and 191.24(c) of this part). The 
principal shall not complete a certificate of delivery for merchandise 
which it transfers to its agent(s) under the procedures in this 
section.


Sec. 191.10  Certificate of delivery.

    (a) Purpose; when required. A party who: imports and pays duty on 
imported merchandise; receives imported merchandise; in the case of 19 
U.S.C. 1313(j)(2), receives imported merchandise, commercially 
interchangeable merchandise, or any combination of imported and 
commercially interchangeable merchandise; or receives an article 
manufactured or produced under 19 U.S.C. 1313 (a) and/or (b): May 
transfer such merchandise or manufactured article to another party. The 
party shall record this transfer by preparing and issuing in favor of 
such other party a certificate of delivery, certified by the importer 
or other party through whose possession the merchandise or manufactured 
article passed (see paragraph (c) of this section). A certificate of 
delivery issued with respect to the delivered merchandise or article:
    (1) Documents the transfer of that merchandise or article;
    (2) Identifies such merchandise or article as being that to which a 
potential right to drawback has attached; and
    (3) Assigns such right to the transferee (see Sec. 191.82 of this 
part).
    (b) Required information. The certificate of delivery must include 
the following information:
    (1) The party to whom the merchandise or articles are delivered;
    (2) Date of delivery;
    (3) Import entry number;

[[Page 3102]]

    (4) Quantity delivered;
    (5) Total duty paid on, or attributable to, the delivered 
merchandise;
    (6) Date certificate was issued;
    (7) Date of importation;
    (8) Port where import entry filed;
    (9) Person from whom received; and
    (10) Description of the merchandise delivered, and if such 
merchandise is the designated imported merchandise or merchandise 
substituted therefor under 19 U.S.C. 1313(j)(2) or 1313(p), the HTSUS 
number with a minimum of 6 digits. (For designated imported 
merchandise, such HTSUS number shall be from the entry summary and 
other entry documentation for the merchandise unless the issuer of the 
certificate of delivery received the merchandise under another 
certificate of delivery, in which case such HTSUS number shall be from 
the other certificate of delivery.)
    (c) Intermediate transfer.--(1) Imported merchandise. If the 
imported merchandise was not delivered directly from the importer to 
the manufacturer, or from the importer to the exporter (or destroyer), 
each intermediate transfer of the imported merchandise shall be 
documented by means of a certificate of delivery issued in favor of the 
receiving party, and certified by the person through whose possession 
the merchandise passed.
    (2) Manufactured article. If the article manufactured or produced 
under 19 U.S.C. 1313 (a) or (b) is not delivered directly from the 
manufacturer to the exporter (or destroyer), each intermediate transfer 
of the article shall be documented by means of a certificate of 
delivery, issued in favor of the receiving party, and certified by the 
person through whose possession the article passed.
    (d) Retention period; supporting records. Records supporting the 
information required on the certificate(s) of delivery, as listed in 
paragraph (b) of this section, must be retained by the issuing party 
for 3 years from the date of payment of the related claim.
    (e) Submission to Customs; certification. The certificate of 
delivery shall be retained by the drawback claimant and, if requested, 
submitted to Customs as part of the claim. If the certificate is 
requested by Customs, but is not submitted as part of the claim, the 
drawback claim dependent on that certificate will be rejected (see 
Sec. 191.52 of this part).
    (f) Warehouse transfer and withdrawals. The person in whose name 
merchandise is withdrawn from a bonded warehouse shall be considered 
the importer for drawback purposes. No certificate of delivery is 
required covering prior transfers of merchandise while in a bonded 
warehouse.


Sec. 191.11  Tradeoff.

    (a) Exchanged merchandise. To comply with Secs. 191.21 and 191.22 
of this part, the use of domestic merchandise taken in exchange for 
imported merchandise of the same kind and quality (as defined in 
Sec. 191.2(s) of this part for purposes of 19 U.S.C. 1313(b)) shall be 
treated as use of the imported merchandise if no certificate of 
delivery is issued covering the transfer of the imported merchandise. 
This provision shall be known as tradeoff and is authorized by section 
313(k) of the Act, as amended (19 U.S.C. 1313(k)).
    (b) Requirements. Tradeoff must occur between two separate legal 
entities but it is not necessary that the entity exchanging the 
imported merchandise be the importer thereof. In addition, tradeoff 
must consist of a straight tradeoff of same kind and quality 
merchandise, with no additional payments of any type, including 
additional payment in kind.
    (c) Application. Each would-be user of tradeoff, except those 
operating under an approved specific manufacturing drawback ruling 
covering substitution, must apply to the Entry and Carrier Rulings 
Branch, Office of Regulations and Rulings, Customs Headquarters, for a 
determination of whether the imported and domestic merchandise are of 
the same kind and quality. For those users manufacturing under 
substitution drawback, this request should be contained in the drawback 
application. For those users manufacturing under direct identification 
drawback, the request should be made by a separate letter.


Sec. 191.12  Claim filed under incorrect provision.

    A drawback claim filed pursuant to any provision of section 313 of 
the Act, as amended (19 U.S.C. 1313) may be deemed filed pursuant to 
any other provision thereof should the drawback office determine that 
drawback is not allowable under the provision as originally filed, but 
that it is allowable under such other provision. To be allowable under 
such other provision, the claim must meet each of the requirements of 
such other provision.


Sec. 191.13  Packaging materials.

    Drawback of duties is provided for in section 313(q) of the Act, as 
amended (19 U.S.C. 1313(q)), on imported packaging material when used 
to package or repackage merchandise or articles exported or destroyed 
pursuant to section 313 (a), (b), (c), or (j) of the Act, as amended 
(19 U.S.C. 1313 (a), (b), (c), or (j)). Drawback is payable on the 
packaging material pursuant to the particular drawback provision to 
which the packaged goods themselves are subject. The drawback will be 
based on the duty, tax or fee paid on the importation of the packaging 
material. The packaging material must be separately identified on the 
claim.


Sec. 191.14  Identification of merchandise or articles by accounting 
method.

    (a) General. This section provides for the identification of 
merchandise or articles for drawback purposes by the use of accounting 
methods. This section applies to identification of merchandise or 
articles in inventory or storage, as well as identification of 
merchandise used in manufacture. This section is not applicable to 
situations in which the drawback law authorizes substitution (see 19 
U.S.C. 1313(b), 1313(j)(2), 1313(k), and 1313(p)). When substitution is 
authorized, merchandise or articles may be substituted without 
reference to this section, under the criteria and conditions 
specifically authorized in the statutory and regulatory provisions 
providing for the substitution. This section is not applicable to the 
identification of merchandise by accounting procedures for drawback 
under 19 U.S.C. 1313(j)(1) for exportations to Canada or Mexico under 
the NAFTA (see Sec. 181.45(b)(2)).
    (b) Conditions and criteria for identification by accounting 
method. Manufacturers, producers, claimants, or other appropriate 
persons may identify for drawback purposes lots of merchandise or 
articles under this section, subject to each of the following 
conditions and criteria:
    (1) The lots of merchandise or articles to be so identified must be 
fungible (see Sec. 191.2(n) of this part);
    (2) The person using the identification method must establish that 
inventory records (for example, material control records), prepared and 
used in the ordinary course of business, account for the lots of 
merchandise or articles to be identified as being received into and 
withdrawn from the same inventory. Even if merchandise or articles are 
received or withdrawn at different geographical locations, if such 
inventory records treat receipts or withdrawals as being from the same 
inventory, those inventory records may be used to identify the 
merchandise or articles under this section, subject to the conditions 
of this section. If any such inventory records (that is, inventory 
records prepared and used in the

[[Page 3103]]

ordinary course of business) treat receipts and withdrawals as being 
from different inventories, those inventory records must be used and 
receipts into or withdrawals from the different inventories may not be 
accounted for together. If units of merchandise or articles can be 
specifically identified (for example, by serial number), the 
merchandise or articles must be specifically identified and may not be 
identified by accounting method, unless it is established that 
inventory records, prepared and used in the ordinary course of 
business, treat the merchandise or articles to be identified as being 
received into and withdrawn from the same inventory (subject to the 
above conditions);
    (3) Unless otherwise provided in this section (see, for example, 
paragraph (c)(5) of this section) or specifically approved by Customs 
(by a binding ruling under part 177 of this chapter), all receipts (or 
inputs) into and all withdrawals from the inventory must be recorded in 
the accounting record;
    (4) The records which support any identification method under this 
section are subject to verification by Customs (see Sec. 191.61 of this 
part). If Customs requests such verification, the person using the 
identification method must be able to demonstrate how, under generally 
accepted accounting procedures, the records which support the 
identification method used account for all merchandise or articles in, 
and all receipts into and withdrawals from, the inventory, and the 
drawback per unit for each receipt and withdrawal; and
    (5) Any accounting method which is used by a person for drawback 
purposes under this section must be used without variation with other 
methods for a period of at least one year, unless approval is given by 
Customs for a shorter period.
    (c) Approved accounting methods. The following accounting methods 
are approved for use in the identification of merchandise or articles 
for drawback purposes under this section.
    (1) First-in, first-out (FIFO). The FIFO method is the method by 
which fungible merchandise or articles are identified on the basis of 
the first merchandise or articles received into the inventory. Under 
this method, withdrawals are from the oldest (first-in) merchandise or 
articles in the inventory at the time of withdrawal.
    (2) Last-in, first out (LIFO). The LIFO method is the method by 
which fungible merchandise or articles are identified on the basis of 
the last merchandise or articles received into the inventory. Under 
this method, withdrawals are from the newest (last-in) merchandise or 
articles in the inventory at the time of withdrawal.
    (3) Low-to-high.--(i) General. The low-to-high method is the method 
by which fungible merchandise or articles are identified on the basis 
of the lowest drawback amount per unit of the merchandise or articles 
received into the inventory. Merchandise or articles with no drawback 
attributable to them (for example, domestic merchandise or duty-free 
merchandise) must be accounted for and are treated as having the lowest 
drawback attributable to them. Under this method, withdrawals are from 
the merchandise or articles with the least amount of drawback 
attributable to them, then that with the next higher amount, and so 
forth. If the same amount of drawback is attributable to more than one 
lot of merchandise or articles, withdrawals are from the oldest (first-
in) merchandise or articles among those lots with the same amount of 
drawback attributable. This method may be used without accounting for 
domestic withdrawals. Drawback requirements are applicable to withdrawn 
merchandise or articles as identified (for example, if the merchandise 
or articles identified were attributable to an import more than 5 years 
(more than 3 years for unused merchandise drawback) before the claimed 
export, no drawback could be granted).
    (ii) Use with inventory turn-over period. The low-to-high method 
may be used with an established inventory turn-over period, provided 
that:
    (A) Merchandise or articles identified for drawback purposes under 
this method are the merchandise or articles with the least amount of 
drawback attributable to them among the lots of merchandise or articles 
received into the inventory during the inventory turn-over period 
preceding the month in which the merchandise or articles identified 
were withdrawn; and
    (B) The person establishes the average turnover period, as 
described in this paragraph. For purposes of this section, average 
inventory turn-over period is based on the rate of withdrawal from 
inventory and represents the time in which all of the merchandise or 
articles in the inventory at a given time must have been withdrawn. To 
establish an average of this time, at least 1 year, or three (3) turn-
over periods (if inventory turns over less than 3 times per year), must 
be averaged. The inventory turn-over period must be that for the 
merchandise or articles to be identified, except that if the person 
using the method has more than one kind of merchandise or articles with 
different inventory turn-over periods, the longest average turn-over 
period established under this section may be used. This method may be 
used without accounting for domestic withdrawals.
    (iii) Examples. (A) If the inventory contained 100 units with no 
drawback attributable to them, 100 units with $1 drawback attributable 
per unit, 100 units with $2 drawback attributable per unit, and the 
inventory turn-over method is not to be used, withdrawals would be 
identified as follows: The first 100 units withdrawn would have no 
drawback attributable to them, the next 100 units withdrawn would have 
a drawback attribution of $1 per unit, and the third 100 units 
withdrawn would have a drawback attribution of $2 per unit. If 50 units 
were first withdrawn for non-drawback purposes and the next 250 units 
were withdrawn for drawback purposes, the 250-unit withdrawal would 
consist of 100 units with no drawback attributable, 100 units with $1 
drawback attributable per unit, and 50 units with $2 drawback 
attributable per unit.
    (B) If the average turn-over period for the merchandise or articles 
identified is 3 months, the inventory turn-over method is used, and the 
withdrawal is any date in September, the merchandise or articles with 
the lowest drawback attribution received into inventory in June, July, 
and August would be that identified.
    (C) If the average turn-over period for the merchandise or articles 
identified is 3 months, the inventory turn-over method is used, the 
person using the identification method has more than one kind of 
merchandise or articles with different inventory turn-over periods the 
longest of which is 6 months, and the withdrawal is any date in 
September, the merchandise or articles with the lowest drawback 
attribution received into inventory in March, April, May, June, July, 
and August would be that identified.
    (4) Average. The average method is the method by which fungible 
merchandise or articles are identified on the basis of the calculation 
(by weighted averaging) of the amount of drawback that may be 
attributed to each unit of merchandise or articles in the inventory. A 
person proposing to use this method should obtain a ruling from Customs 
(see 19 CFR part 177).
    (5) Inventory turn-over for limited purposes. A properly 
established average inventory turn-over period, as provided for in 
paragraph (c)(3)(ii)(B) of this section, may be used to determine:
    (i) The fact and date(s) of use in manufacture or production of the 
imported designated merchandise and

[[Page 3104]]

other (substituted) merchandise (see 19 U.S.C. 1313(b)); or
    (ii) The fact and date(s) of manufacture or production of the 
finished articles (see 19 U.S.C. 1313(a) and (b)).
    (d) Approval of other accounting methods. (1) Persons proposing to 
use an accounting method for identification of merchandise or articles 
for drawback purposes which has not been previously approved for such 
use (see paragraph (c) of this section), or which includes 
modifications from the methods listed in paragraph (c) of this section, 
may seek approval by Customs of the proposed accounting method under 
the provisions for obtaining an administrative ruling (see part 177 of 
this chapter). The conditions applied and the criteria used by Customs 
in approving such an alternative accounting method, or a modification 
of one of the approved accounting methods, will be the criteria in 
paragraph (b) of this section, as well as those in paragraph (d)(2) of 
this section.
    (2) In order for a proposed accounting method to be approved by 
Customs for purposes of this section, it shall meet the following 
criteria:
    (i) For purposes of calculations of drawback, the proposed 
accounting method must be either revenue neutral or favorable to the 
Government; and
    (ii) The proposed accounting method should be:
    (A) Generally consistent with commercial accounting procedures, as 
applicable for purposes of drawback;
    (B) Consistent with inventory or material control records used in 
the ordinary course of business by the person proposing the method; and
    (C) Easily administered by both Customs and the person proposing 
the method.

Subpart B--Manufacturing Drawback


Sec. 191.21  Direct identification drawback.

    Section 313(a) of the Act, as amended (19 U.S.C. 1313(a)), provides 
for drawback upon the exportation, or destruction under Customs 
supervision, of articles which are not used in the United States prior 
to their exportation or destruction, and which are manufactured or 
produced in the United States wholly or in part with the use of 
particular imported, duty-paid merchandise. Where two or more products 
result, drawback shall be distributed among the products in accordance 
with their relative value (see Sec. 191.2(r)) at the time of 
separation. Merchandise may be identified for drawback purposes under 
19 U.S.C. 1313(a) in the manner provided for and prescribed in 
Sec. 191.14 of this part.


Sec. 191.22  Substitution drawback.

    (a) General. If imported, duty-paid, merchandise and any other 
merchandise (whether imported or domestic) of the same kind and quality 
are used in the manufacture or production of articles within a period 
not to exceed 3 years from the receipt of the imported merchandise by 
the manufacturer or producer of the articles, then upon the 
exportation, or destruction under Customs supervision, of any such 
articles, without their having been used in the United States prior to 
such exportation or destruction, drawback is provided for in section 
313(b) of the Act, as amended (19 U.S.C. 1313(b)), even though none of 
the imported, duty-paid merchandise may have been used in the 
manufacture or production of the exported or destroyed articles. The 
amount of drawback allowable cannot exceed that which would have been 
allowable had the merchandise used therein been the imported, duty-paid 
merchandise.
    (b) Use by same manufacturer or producer at different factory. 
Duty-paid merchandise or drawback products used at one factory of a 
manufacturer or producer within 3 years after the date on which the 
material was received by the manufacturer or producer may be designated 
as the basis for drawback on articles manufactured or produced in 
accordance with these regulations at other factories of the same 
manufacturer or producer.
    (c) Designation. A manufacturer or producer may designate any 
eligible imported merchandise or drawback product which it has used in 
manufacture or production.
    (d) Designation by successor.--(1) General rule. Upon compliance 
with the requirements in this section, a drawback successor as defined 
in paragraph (d)(2) of this section may designate merchandise or 
drawback product used by a predecessor before the date of succession as 
the basis for drawback on articles manufactured or produced by the 
successor after the date of succession.
    (2) Drawback successor. A ``drawback successor'' is a manufacturer 
or producer to whom another entity (predecessor) has transferred, by 
written agreement, merger, or corporate resolution:
    (i) All or substantially all of the rights, privileges, immunities, 
powers, duties, and liabilities of the predecessor; or
    (ii) The assets and other business interests of a division, plant, 
or other business unit of such predecessor, provided that the value of 
the transferred assets and interests (realty, personality, and 
intangibles, exclusive of the drawback rights) exceeds the value of 
such drawback rights, whether vested or contingent.
    (3) Certifications and required evidence--(i) Records of 
predecessor. The predecessor or successor must certify that the 
successor is in possession of the predecessor's records which are 
necessary to establish the right to drawback under the law and 
regulations with respect to the merchandise or drawback product.
    (ii) Merchandise not otherwise designated. The predecessor or 
successor must certify in an attachment to the claim, that the 
predecessor has not designated and will not designate, nor enable any 
other person to designate, such merchandise or product as the basis for 
drawback.
    (iii) Value of transferred property. In instances in which assets 
and other business interests of a division, plant, or other business 
unit of a predecessor are transferred, the predecessor or successor 
must specify, and maintain supporting records to establish, the value 
of the drawback rights and the value of all other transferred property.
    (iv) Review by Customs. The written agreement, merger, or corporate 
resolution, provided for in paragraph (d)(2) of this section, and the 
records and evidence provided for in paragraph (d)(3) (i) through (iii) 
of this section, must be retained by the appropriate party(s) for 3 
years from the date of payment of the related claim and are subject to 
review by Customs upon request.
    (e) By-products--(1) General. Where two or more products are 
produced concurrently in a substitution manufacturing operation, 
drawback shall be distributed to each product in accordance with its 
relative value (see Sec. 191.2(r)) at the time of separation.
    (2) Claims covering a manufacturing period. Where the claim covers 
a manufacturing period rather than a manufacturing lot, the entire 
period covered by the claim is the time of separation of the products 
and the value per unit of product is the market value for the period 
(see Sec. 191.2(r) of this part). Manufacturing periods in excess of 
one month may not be used without specific approval of Customs.
    (3) Recordkeeping. Records shall be maintained showing the relative 
value of each product at the time of separation.


Sec. 191.23  Methods of claiming drawback.

    (a) Used in. Drawback may be paid based on the amount of the 
imported or

[[Page 3105]]

substituted merchandise used in the manufacture of the exported 
article, where there is no waste or the waste is valueless or 
unrecoverable. This method must be used when byproducts also 
necessarily and concurrently result from the manufacturing process, and 
there is no valuable waste (see paragraph (c) of this section).
    (b) Appearing in. Drawback is allowable under this method based 
only on the amount of imported or substituted merchandise that appears 
in (is contained in) the exported articles. This method may not be used 
if there are byproducts also necessarily and concurrently resulting 
from the manufacturing process.
    (c) Used in less valuable waste. Drawback is allowable under this 
method based on the quantity of merchandise or drawback products used 
to manufacture the exported or destroyed article, reduced by an amount 
equal to the quantity of this merchandise that the value of the waste 
would replace. This method must be used when byproducts also 
necessarily and concurrently result from the manufacturing process, and 
there is valuable waste.
    (d) Recordkeeping.--(1) Valuable waste. When the waste has a value 
and the drawback claim is not limited to the quantity of imported or 
substituted merchandise or drawback products appearing in the exported 
or destroyed articles claimed for drawback, the manufacturer or 
producer shall keep records to show the market value of the merchandise 
or drawback products used in manufacture or production, as well as the 
market value of the resulting waste (see Sec. 191.2(r) of this part).
    (2) If claim for waste is waived. If claim for waste is waived, 
only the ``appearing in'' basis may be used (see paragraph (b) of this 
section). Waste records need not be kept unless required to establish 
the quantity of imported duty-paid merchandise or drawback products 
appearing in the exported or destroyed articles claimed for drawback.


Sec. 191.24  Certificate of manufacture and delivery.

    (a) When required. When the imported merchandise or drawback 
product undergoes some process of manufacture under a general 
manufacturing drawback ruling or a specific manufacturing drawback 
ruling, a certificate of manufacture and delivery shall be prepared and 
certified by the manufacturer. To assign drawback rights, see 
Sec. 191.82 of this part.
    (b) Information required on certificate. The following information 
shall be required on the certificate of manufacture and delivery 
executed by the manufacturer or producer:
    (1) The quantity, kind and quality of imported, duty-paid 
merchandise or drawback product designated;
    (2) Import entry numbers, HTSUS number to at least the 6th digit 
(such HTSUS number shall be from the entry summary and other entry 
documentation for the imported, duty-paid merchandise unless the issuer 
of the certificate of manufacture and delivery received the merchandise 
under another certificate (either of delivery or of manufacture and 
delivery), in which case such HTSUS number shall be from the other 
certificate), and applicable duty amounts, if applicable;
    (3) Date received at factory, if applicable;
    (4) Date used in manufacture, if applicable;
    (5) Value at factory, if applicable;
    (6) Quantity of waste, if any, if applicable;
    (7) Market value of any waste, if applicable;
    (8) Total quantity and description of merchandise appearing in or 
used;
    (9) Total quantity and description of articles produced;
    (10) Date of manufacture or production of the articles; and
    (11) The quantity of articles transferred.
    (c) Filing of certificate. The certificate of manufacture and 
delivery shall be filed with the drawback claim it supports (unless 
previously filed) (see Sec. 191.51 of this part).
    (d) Effect of certificate. A certificate of manufacture and 
delivery is used to document the physical delivery of articles from the 
manufacturer or producer to another party. A certificate of manufacture 
and delivery issued with respect to articles identifies such articles 
as being those to which a potential right to drawback has attached. 
Unless it is explicitly provided on the certificate of manufacture and 
delivery that potential drawback rights are not transferred by such 
certificate (for example, in the case of a principal-agency 
relationship under this part (see Sec. 191.9)), a certificate of 
manufacture and delivery assigns such potential rights to the 
transferee (see Sec. 191.82 of this part).


Sec. 191.25  Recordkeeping for manufacturing drawback.

    (a) Direct identification manufacturing.--(1) Records required. 
Each manufacturer or producer under 19 U.S.C. 1313(a) shall keep 
records to allow the verifying Customs official to trace all articles 
manufactured or produced for exportation or destruction with drawback, 
from importation, through production, to exportation or destruction. To 
this end, these records shall specifically establish:
    (i) The date or inclusive dates of manufacture or production;
    (ii) The quantity and identity of the imported duty-paid 
merchandise or drawback products used in or appearing in (see 
Sec. 191.23) the articles manufactured or produced;
    (iii) The quantity, if any, of the nondrawback merchandise used, 
when these records are necessary to determine the quantity of imported 
duty-paid merchandise or drawback product used in the manufacture or 
production of the exported or destroyed articles or appearing in them;
    (iv) The quantity and description of the articles manufactured or 
produced;
    (v) The quantity of waste incurred, if applicable; and
    (vi) That the finished articles on which drawback is claimed were 
exported or destroyed within 5 years after the importation of the duty-
paid merchandise, without having been used in the United States prior 
to such exportation or destruction. (If the completed articles were 
commingled after manufacture, their identity may be maintained in the 
manner prescribed in Sec. 191.14 of this part.)
    (2) Accounting. The merchandise and articles to be exported or 
destroyed shall be accounted for in a manner which will enable the 
manufacturer, producer, or claimant:
    (i) To determine, and the Customs official to verify, the 
applicable import entry, certificate of delivery, and/or certificate of 
manufacture and delivery associated with the claim; and
    (ii) To identify with respect to that import entry, certificate of 
delivery, or certificate of manufacture and delivery, the imported 
duty-paid merchandise or drawback products used in manufacture or 
production.
    (b) Substitution manufacturing. The records of the manufacturer or 
producer of articles manufactured or produced in accordance with 19 
U.S.C. 1313(b) shall establish the facts in paragraph (a)(1) (i)-(vi) 
of this section, and:
    (1) The quantity, identity, and specifications of the merchandise 
designated (imported duty-paid, or drawback product);
    (2) The quantity, identity, and specifications of merchandise of 
the same kind and quality as the designated merchandise before its use 
to manufacture or produce (or appearance in) the exported articles; and
    (3) That, within 3 years after receiving the designated merchandise 
at its plant,

[[Page 3106]]

the manufacturer or producer used it in manufacturing or production and 
that during the same 3-year period it manufactured or produced the 
exported or destroyed articles.
    (c) Valuable waste records. When waste has a value and the 
manufacturer, producer, or claimant, has not limited the claims based 
on the quantity of imported or substituted merchandise appearing in the 
articles exported or destroyed, the manufacturer or producer shall keep 
records to show the market value of the merchandise used, as well as 
the quantity and market value of the waste incurred (see Sec. 191.2(r) 
of this part). In such records, the quantity of merchandise identified 
or designated for drawback, under 19 U.S.C. 1313(a) or 1313(b), 
respectively, shall be based on the quantity of merchandise actually 
used to manufacture or produce the exported or destroyed articles, 
reduced by the amount of merchandise which the value of the waste would 
replace.
    (d) Purchase of manufactured articles for exportation. Where the 
claimant purchases articles from the manufacturer and exports them, the 
claimant shall file the related certificate of manufacture and delivery 
as part of the claim (see Sec. 191.51(a)(1) of this part).
    (e) Delivery of imported merchandise to manufacturer. The claimant 
shall retain the certificate of delivery for any identified or 
designated import entry covering merchandise that was not imported by 
the manufacturer.
    (f) Multiple claimants.--(1) General. Multiple claimants may file 
for drawback with respect to the same export (for example, a chemical 
is exported in a container, where the chemical and the container have 
been produced by different manufacturers under drawback conditions).
    (2) Procedures.--(i) Submission of letter. Each drawback claimant 
shall file a separate letter, as part of the claim, describing the 
component article on the export bill of lading to which each claim will 
relate. Each letter shall show the name of the claimant and bear a 
statement that the claim shall be limited to its respective component 
article. The exporter shall endorse the letters, as required, to show 
the respective interests of the claimants.
    (ii) Blanket waivers and assignments of drawback rights. Exporters 
may waive and assign their drawback rights for all, or any portion, of 
their exportations with respect to a particular commodity for a given 
period to a drawback claimant.
    (iii) Use of export summary procedure. If the parties elect to use 
the export summary procedure, each drawback claimant shall complete a 
chronological summary of exports for the respective component product 
to which each claim will relate. Each claimant shall identify in the 
chronological summary the name of the other claimant(s) and the 
component product for which each will independently claim drawback. The 
exporter shall endorse the summaries, as required, to show the 
respective interests of the claimants. The claimant shall have on file 
and make available to Customs upon request, the endorsement from the 
exporter assigning the right to claim drawback.
    (g) Retention of records. All records required to be kept by the 
manufacturer, producer, or claimant with respect to drawback claims, 
and records kept by others to complement the records of the 
manufacturer, producer, or claimant shall be retained for 3 years after 
the date of payment of the related claims.


Sec. 191.26  Time limitations.

    (a) Direct identification manufacturing. Drawback shall be allowed 
on imported merchandise used to manufacture or produce articles that 
are exported or destroyed under Customs supervision within 5 years 
after importation of the merchandise identified to support the claim.
    (b) Substitution manufacturing. Drawback shall be allowed on the 
imported merchandise if the following conditions are met:
    (1) The designated merchandise is used in manufacture or production 
within 3 years after receipt by the manufacturer or producer at its 
factory;
    (2) Within the 3-year period described in paragraph (b)(1) of this 
section, the exported or destroyed articles, or drawback products, were 
manufactured or produced; and
    (3) The completed articles must be exported or destroyed under 
Customs supervision within 5 years of the date of importation of the 
designated merchandise.
    (c) Drawback claims filed before specific or general manufacturing 
drawback ruling approved or acknowledged. Drawback claims may be filed 
before the letter of notification of intent to operate under a general 
manufacturing drawback ruling covering the claims is acknowledged 
(Sec. 191.7), or before the specific manufacturing drawback ruling 
covering the claims is approved (Sec. 191.8), but no drawback shall be 
paid until such acknowledgment or approval, as appropriate.


Sec. 191.27  Person entitled to claim drawback.

    The exporter (or destroyer) shall be entitled to claim drawback, 
unless the exporter (or destroyer), by means of a certification, 
assigns the right to claim drawback to the manufacturer, producer, 
importer, or intermediate party. Such certification shall also affirm 
that the exporter (or destroyer) has not and will not itself claim 
drawback or assign the right to claim drawback on the particular 
exportation or destruction to any other party. Drawback is paid to the 
claimant, who may be the manufacturer, producer, intermediate party, 
importer, or exporter (destroyer).

Subpart C--Unused Merchandise Drawback


Sec. 191.31  Direct identification.

    (a) General. Section 1313(j)(1) of the Act, as amended (19 U.S.C. 
1313(j)(1)), provides for drawback upon the exportation or destruction 
under Customs supervision of imported merchandise upon which was paid 
any duty, tax, or fee imposed under Federal law because of its 
importation, if the merchandise has not been used within the United 
States before such exportation or destruction.
    (b) Time of exportation or destruction. Drawback shall be allowed 
on imported merchandise if, before the close of the 3-year period 
beginning on the date of importation, the merchandise is exported from 
the United States or destroyed under Customs supervision.
    (c) Use. In general, for purposes of this section, merchandise is 
``used'' when it is employed to perform the function for which it was 
intended (for example, shoes worn as footwear have been ``used''). The 
performing of any operation or combination of operations, not amounting 
to manufacture or production under the provisions of the manufacturing 
drawback law, on the imported merchandise is not a use of that 
merchandise for purposes of this section.


Sec. 191.32  Substitution drawback.

    (a) General. Section 313(j)(2) of the Act, as amended (19 U.S.C. 
1313(j)(2)), provides for drawback on merchandise which is commercially 
interchangeable with imported merchandise if the commercially 
interchangeable merchandise is exported, or destroyed under Customs 
supervision, within 3 years after the importation of the imported 
merchandise, and before such exportation or destruction, the 
commercially interchangeable merchandise is not used in the United

[[Page 3107]]

States (see paragraph (e) of this section) and is in the possession of 
the party claiming drawback.
    (b) Requirements. (1) The claimant must have possessed the 
substituted merchandise that was exported or destroyed, as provided in 
paragraph (d)(1) of this section;
    (2) The substituted merchandise must be commercially 
interchangeable with the imported merchandise that is designated for 
drawback; and
    (3) The substituted merchandise exported or destroyed must not have 
been used in the United States before its exportation or destruction 
(see paragraph (e) of this section).
    (c) Determination of commercial interchangeability. In determining 
commercial interchangeability, factors to be considered include, but 
are not limited to, Governmental and recognized industrial standards, 
part numbers, tariff classification and value. This determination can 
be obtained in one of three ways:
    (1) A formal ruling from the Entry and Carrier Rulings Branch, 
Office of Regulations and Rulings;
    (2) A nonbinding predetermination request sent directly to the 
appropriate drawback office; or
    (3) A submission of all the required documentation necessary to 
make a commercial interchangeability determination with each individual 
drawback claim filed.
    (d) Time limitations. For substitution unused merchandise drawback:
    (1) The claimant must have had possession of the exported or 
destroyed merchandise at some time during the 3-year period following 
the date of importation of the imported designated merchandise; and
    (2) The merchandise to be exported or destroyed to qualify for 
drawback must be exported, or destroyed under Customs supervision, 
before the close of the 3-year period beginning on the date of 
importation of the imported designated merchandise.
    (e) Use. In general, for purposes of this section, merchandise is 
``used'' when it is employed to perform the function for which it was 
intended (for example, shoes worn as footwear have been ``used''). The 
performing of any operation or combination of operations, not amounting 
to manufacture or production under the provisions of the manufacturing 
drawback law, on the commercially interchangeable substituted 
merchandise is not a use of that merchandise for purposes of this 
section.
    (f) Designation by successor--(1) General rule. Upon compliance 
with the requirements of this section, a drawback successor as defined 
in paragraph (f)(2) of this section may designate either of the 
following as the basis for drawback on merchandise possessed by the 
successor after the date of succession:
    (i) Imported merchandise which the predecessor, before the date of 
succession, imported; or
    (ii) Imported and/or commercially interchangeable merchandise which 
was transferred to the predecessor and for which the predecessor 
received, before the date of succession, a certificate of delivery from 
the person who imported and paid duty on the imported merchandise.
    (2) Drawback successor. A ``drawback successor'' is an entity to 
which another entity (predecessor) has transferred, by written 
agreement, merger, or corporate resolution:
    (i) All or substantially all of the rights, privileges, immunities, 
powers, duties, and liabilities of the predecessor; or
    (ii) The assets and other business interests of a division, plant, 
or other business unit of such predecessor, provided that the value of 
the transferred assets and interests (realty, personalty, and 
intangibles, exclusive of the drawback rights) exceeds the value of 
such drawback rights, whether vested or contingent.
    (3) Certifications and required evidence.-(i) Records of 
predecessor. The predecessor or successor must certify in an attachment 
to the drawback claim that the successor is in possession of the 
predecessor's records which are necessary to establish the right to 
drawback under the law and regulations with respect to the imported 
and/or commercially interchangeable merchandise.
    (ii) Merchandise not otherwise designated. The predecessor or 
successor must certify in an attachment to the drawback claim, that the 
predecessor has not and will not designate, nor enable any other person 
to designate, the imported and/or commercially interchangeable 
merchandise as the basis for drawback.
    (iii) Value of transferred property. In instances in which assets 
and other business interests of a division, plant, or other business 
unit of a predecessor are transferred, the predecessor or successor 
must specify, and maintain supporting records to establish, the value 
of the drawback rights and the value of all other transferred property.
    (iv) Review by Customs. The written agreement, merger, or corporate 
resolution, provided for in paragraph (f)(2) of this section, and the 
records and evidence provided for in paragraph (f)(3) (i) through (iii) 
of this section, must be retained by the appropriate party(ies) for 3 
years from the date of payment of the related claim and are subject to 
review by Customs upon request.


Sec. 191.33  Person entitled to claim drawback.

    (a) Direct identification. (1) Under 19 U.S.C. 1313(j)(1), the 
exporter (or destroyer) shall be entitled to claim drawback.
    (2) The exporter or destroyer may waive the right to claim drawback 
and assign such right to the importer or any intermediate party. A 
drawback claimant under 19 U.S.C. 1313(j)(1) other than the exporter or 
destroyer shall secure and retain a certification signed by the 
exporter or destroyer that such party waived the right to claim 
drawback, and did not and will not authorize any other party to claim 
the exportation or destruction for drawback (see Sec. 191.82 of this 
part). The claimant shall file such certification as part of the 
drawback claim.
    (b) Substitution. (1) Under 19 U.S.C. 1313(j)(2), the following 
parties may claim drawback:
    (i) In situations where the exporter or destroyer of the 
substituted merchandise is also the importer of the imported 
merchandise, that party shall be entitled to claim drawback.
    (ii) In situations where the exporter or destroyer receives from 
the person who imported and paid the duty on the imported merchandise a 
certificate of delivery documenting the transfer of imported 
merchandise, commercially interchangeable merchandise, or any 
combination of imported and commercially interchangeable merchandise, 
and exports such transferred merchandise, that exporter shall be 
entitled to claim drawback. (Any such transferred merchandise, 
regardless of its origin, will be treated as imported merchandise for 
purposes of drawback under Sec. 1313(j)(2), and any retained 
merchandise will be treated as domestic merchandise.)
    (iii) In situations where the transferred merchandise described in 
paragraph (b)(1)(ii) of this section is the subject of further 
transfer(s), such transfer(s) shall be documented by certificate(s) of 
delivery, and the exporter or destroyer shall be entitled to claim 
drawback.
    (2) The exporter or destroyer may waive the right to claim drawback 
and assign such right to the importer or to any intermediate party, 
provided that the claimant had possession of the substituted 
merchandise prior to its exportation or destruction. A drawback 
claimant under 19 U.S.C. 1313(j)(2) other than the exporter or 
destroyer

[[Page 3108]]

shall secure and retain a certification signed by the exporter or 
destroyer that such party waived the right to claim drawback, and did 
not and will not authorize any other party to claim the exportation or 
destruction for drawback (see Sec. 191.82 of this part). The claimant 
shall file such certification as part of the drawback claim.


Sec. 191.34  Certificate of delivery required.

    (a) Direct identification; purpose; when required. If the exported 
or destroyed merchandise claimed for drawback under 19 U.S.C. 
1313(j)(1) was not imported by the exporter or destroyer, the drawback 
claimant must have a properly executed certificate of delivery prepared 
by the importer and each intermediate party. Each such transfer of the 
merchandise must be documented by its own certificate of delivery.
    (1) Completion. The certificate of delivery shall be completed as 
provided in Sec. 191.10 of this part. Each party must also certify on 
the certificate of delivery that the party did not use the exported or 
destroyed merchandise (see Sec. 191.31(c) of this part).
    (2) Retention. The drawback claimant shall retain the certificate 
for submission to Customs as part of the claim, if requested (see 
Sec. 191.51(a)(2) of this part).
    (b) Substitution. For purposes of substitution unused merchandise 
drawback, 19 U.S.C. 1313(j)(2), if the importer transfers to another 
party imported, duty-paid merchandise, commercially interchangeable 
merchandise, or any combination thereof, the importer shall prepare and 
issue in favor of such party a certificate of delivery covering the 
transferred merchandise. The certificate of delivery must expressly 
state that it is prepared pursuant to 19 U.S.C. 1313(j)(2). Merchandise 
so transferred for which drawback is allowed under 19 U.S.C. 1313(j)(2) 
may not be designated as imported merchandise for the purpose of 
manufacturing drawback. Certificates of delivery under this paragraph 
are subject to the provisions for completion and retention of 
certificates of delivery in paragraphs (a)(1) and (a)(2) of this 
section.
    (c) Warehouse transfer and withdrawals. The person in whose name 
merchandise is withdrawn from a bonded warehouse shall be considered 
the importer for drawback purposes. No certificate of delivery need be 
prepared covering prior transfers of merchandise while in a bonded 
warehouse, because such transfers will be recorded in the warehouse 
entry (see Sec. 144.22 of this chapter).


Sec. 191.35  Notice of intent to export; examination of merchandise.

    (a) Notice. A notice of intent to export merchandise which may be 
the subject of an unused merchandise drawback claim (19 U.S.C. 1313(j)) 
must be provided to the Customs Service to give Customs the opportunity 
to examine the merchandise. The claimant, or the exporter, must file at 
the port of intended examination a Notice of Intent to Export/Destroy 
on Customs Form xxx at least 2 working days prior to the date of 
intended exportation unless Customs approves another filing period or 
the claimant has been granted a waiver of prior notice (see Sec. 191.91 
of this part).
    (b) Required information. The notice shall certify that the 
merchandise has not been used in the United States before exportation. 
In addition, the notice shall provide the bill of lading number, if 
known, the name and telephone number of a contact person, and the 
location of the merchandise should Customs decide to examine the 
merchandise.
    (c) Decision to examine or to waive examination. Within two (2) 
working days after receipt of the Notice of Intent to Export/Destroy 
(see paragraph (a) of this section), Customs will notify the party 
designated on the Notice of Customs decision to either examine the 
merchandise to be exported, or to waive examination. If Customs timely 
notifies the designated party, in writing, of its decision to examine 
the merchandise (see paragraph (d) of this section), but the 
merchandise is exported without having been presented to Customs for 
examination, any drawback claim, or part thereof, based on the Notice 
of Intent to Export/Destroy, shall be denied. If Customs notifies the 
designated party, in writing, of its decision to waive examination of 
the merchandise, or, if timely notification of a decision by Customs to 
examine or to waive examination is absent, the merchandise may be 
exported without delay.
    (d) Time and place of examination. If Customs gives timely notice 
of its decision to examine the export merchandise, the merchandise to 
be examined shall be promptly presented to Customs. Customs shall 
examine the merchandise within five (5) working days after presentation 
of the merchandise. The merchandise may be exported without examination 
if Customs fails to timely examine the merchandise after presentation 
to Customs. If the examination is completed at a port other than the 
port of actual exportation, the merchandise shall be transported in-
bond to the port of exportation.
    (e) Extent of examination. The appropriate Customs office may 
permit release of merchandise without examination, or may examine 
routinely (to the extent determined to be necessary) the items 
exported.


Sec. 191.36  Failure to file Notice of Intent to Export or Destroy 
merchandise.

    (a) General; application. Merchandise which has been exported 
without complying with the requirements of Sec. 191.35(a) or 
Sec. 191.91 of this part may be eligible for unused merchandise 
drawback under 19 U.S.C. 1313(j) subject to the following conditions:
    (1) Application. The claimant must file a written application with 
the drawback office where the drawback claims will be filed. Such 
application shall include the following:
    (i) Required information.
    (A) Name, address, and identification number of applicant;
    (B) Name, address, and identification number of exporter(s), if 
applicant is not the exporter;
    (C) Export period covered by this application;
    (D) Commodity/product lines of imported and exported merchandise 
covered in this application;
    (E) The origin of the above merchandise;
    (F) Estimated number of export transactions covered in this 
application;
    (G) The port(s) of exportation;
    (H) Estimated dollar value of potential drawback to be covered in 
this application; and
    (I) The relationship between the parties involved in the import and 
export transactions;
    (ii) Written declarations regarding:
    (A) The reason(s) that Customs was not notified of the intent to 
export; and
    (B) Whether the applicant, to the best of its knowledge, will have 
future exportations on which unused merchandise drawback might be 
claimed; and
    (iii) A certification that the following documentary evidence will 
be made available for Customs review upon request:
    (A) For the purpose of establishing that the imported merchandise 
was not used in the United States (for purposes of drawback under 19 
U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the 
United States and was commercially interchangeable with the imported 
merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)):
    (1) Business records prepared in the ordinary course of business;
    (2) Laboratory records prepared in the ordinary course of business; 
and
    (3) Inventory records prepared in the ordinary course of business 
tracing all

[[Page 3109]]

relevant movements and storage of the imported merchandise, substituted 
merchandise, and/or exported merchandise; and
    (B) Evidence establishing compliance with all other applicable 
drawback requirements.
    (2) One-time use. The procedure provided for in this section may be 
used by a claimant only once, unless good cause is shown (for example, 
successorship).
    (3) Claims filed pending disposition of application. Drawback 
claims may be filed under this section pending disposition of the 
application. However, those drawback claims will not be processed or 
paid until the application is approved by Customs.
    (b) Customs action. In order for Customs to evaluate the 
application under this section, Customs may request, and the applicant 
shall provide, any of the information listed in paragraph 
(a)(1)(iii)(A) (1) through (3) of this section. In making its decision 
to approve or deny the application under this section, Customs will 
consider factors such as, but not limited to, the following:
    (1) Information provided by the claimant in the written 
application;
    (2) Any of the information listed in paragraph (a)(1)(iii)(A) (1) 
through (3) of this section and requested by Customs under this 
paragraph; and
    (3) The applicant's prior record with Customs.
    (c) Time for Customs action. Customs will notify the applicant in 
writing within 90 days of its decision to approve or deny the 
application, or of Customs inability to approve, deny or act on the 
application.
    (d) Appeal of denial of application. If Customs denies the 
application, the applicant may file a written appeal with the drawback 
office which issued the denial, provided that the applicant files this 
appeal within 30 days of the denial date of the application. If Customs 
denies this initial appeal, the applicant may file a further written 
appeal with Customs Headquarters, provided that the applicant files 
this further appeal within 30 days of the denial date of the initial 
appeal. Customs may extend the 30 day period for appeal to the drawback 
office or to Customs Headquarters, for good cause, if the applicant 
applies in writing for such extension within the appropriate 30 day 
period above.
    (e) Future intent to export unused merchandise. If an applicant 
states it will have future exportations on which unused merchandise 
drawback may be claimed (see paragraph (a)(1)(ii)(B) of this section), 
the applicant will be informed of the procedures for waiver of prior 
notice (see Sec. 191.91 of this part). If the applicant seeks waiver of 
prior notice under Sec. 191.91, any documentation submitted to Customs 
to comply with this section will be included in the request under 
Sec. 191.91. An applicant which states that it will have future 
exportations on which unused merchandise drawback may be claimed (see 
paragraph (a)(1)(ii)(B) of this section) and which does not obtain 
waiver of prior notice shall notify Customs of its intent to export 
prior to each such exportation, in accordance with Sec. 191.35.


Sec. 191.37  Records.

    (a) Maintained by claimant; by others. All records which are 
necessary to be maintained by the claimant under this part with respect 
to drawback claims, and records kept by others to complement the 
records of the claimant, which are essential to establish compliance 
with the legal requirements of 19 U.S.C. 1313 (j)(1) or (j)(2), as 
applicable, and this part, shall be retained for 3 years after payment 
of such claims.
    (b) Accounting for the merchandise. Merchandise subject to drawback 
under 19 U.S.C. 1313 (j)(1) and (j)(2) shall be accounted for in a 
manner which will enable the claimant:
    (1) To determine, and Customs to verify, the applicable import 
entry or certificate of delivery;
    (2) To determine, and Customs to verify, the applicable 
exportation; and
    (3) To identify with respect to the import entry or certificate of 
delivery, the imported duty-paid merchandise.

Subpart D--Rejected Merchandise


Sec. 191.41  Rejected merchandise drawback.

    Section 313(c) of the Act, as amended (19 U.S.C. 1313(c)), provides 
for drawback upon the exportation or destruction under Customs 
supervision of imported merchandise which has been entered, or 
withdrawn from warehouse, for consumption, duty-paid; and which does 
not conform to sample or specifications; has been shipped without the 
consent of the consignee; or has been determined to be defective as of 
the time of importation. The claimant must show by evidence 
satisfactory to Customs that the exported or destroyed merchandise was 
defective at the time of importation, or was not in accordance with 
sample or specifications, or was shipped without the consent of the 
consignee.


Sec. 191.42  Procedure.

    (a) Return to Customs custody. The claimant must return the 
merchandise to Customs custody within 3 years after the date the 
merchandise was originally released from Customs custody. Drawback will 
be denied on merchandise returned to Customs custody after the 
statutory 3-year time period or exported without return to Customs 
custody.
    (b) Required documentation. The claimant shall submit documentation 
to the drawback office as part of the drawback claim to establish that 
the merchandise did not conform to sample or specification, was shipped 
without the consent of the consignee, or was defective as of the time 
of importation. If the claimant was not the importer, the claimant 
must:
    (1) Submit a statement signed by the importer and every other 
person, other than the ultimate purchaser, that owned the goods that no 
other claim for drawback was made on the goods by any other person; and
    (2) Certify that records are available to support the statement 
required in paragraph (b)(1) of this section.
    (c) Notice. A notice of intent to export or destroy merchandise 
which may be the subject of a rejected merchandise drawback claim (19 
U.S.C. 1313(c)) must be provided to the Customs Service to give Customs 
the opportunity to examine the merchandise. The claimant, or the 
exporter, must file at the port of intended redelivery to Customs 
custody a Notice of Intent to Export/Destroy on Customs Form xxx at 
least 5 working days prior to the date of intended return to Customs 
custody. Waiver of prior notice for exportations under 19 U.S.C. 
1313(j) (see Sec. 191.91 of this part) is inapplicable to exportations 
under 19 U.S.C. 1313(c).
    (d) Required information. The notice shall provide the bill of 
lading number, if known, the name and telephone number of a contact 
person, and the location of the merchandise.
    (e) Decision to waive examination. Within two (2) working days 
after receipt of the Notice of Intent to Export/Destroy (see paragraph 
(c) of this section), Customs will notify the party designated on the 
Notice of Customs decision to either examine the merchandise to be 
exported, or to waive examination. If Customs timely notifies the 
designated party, in writing, of its decision to examine the 
merchandise (see paragraph (f) of this section), but the merchandise is 
exported without having been presented to Customs for such examination, 
any drawback claim, or part thereof, based on the Notice of Intent to 
Export/Destroy, shall be denied. If Customs notifies the designated 
party, in writing, of its decision to waive examination of the

[[Page 3110]]

merchandise, or, if timely notification of a decision by Customs to 
examine or to waive examination is absent, the merchandise may be 
exported without delay and shall be deemed to have been returned to 
Customs custody.
    (f) Time and place of examination. If Customs gives timely notice 
of its decision to examine the export merchandise, the merchandise to 
be examined shall be promptly presented to Customs. Customs shall 
examine the merchandise within five (5) working days after presentation 
of the merchandise. The merchandise may be exported without examination 
if Customs fails to timely examine the merchandise after presentation 
to Customs, and in such case the merchandise shall be deemed to have 
been returned to Customs custody. If the examination is completed at a 
port other than the port of actual exportation, the merchandise shall 
be transported in-bond to the port of exportation.
    (g) Extent of examination. The appropriate Customs office may 
permit release of merchandise without examination, or may examine, to 
the extent determined to be necessary, the items exported.
    (h) Drawback claim. When filing the drawback claim, the drawback 
claimant must correctly calculate the amount of drawback due (see 
Sec. 191.51(b) of this part). The procedures for restructuring a claim 
(see Sec. 191.53 of this part) shall apply to rejected merchandise 
drawback if the claimant has an ongoing export program which qualifies 
for this type of drawback.
    (i) Exportation. The claimant shall export the merchandise under 
Customs supervision and shall provide documentary evidence of 
exportation. The claimant may establish exportation by mail as set out 
in Sec. 191.74 of this part.


Sec. 191.43  Unused merchandise claim.

    Rejected merchandise may be the subject of an unused merchandise 
drawback claim under 19 U.S.C. 1313(j)(1), in accordance with subpart C 
of this part, to the extent that the merchandise qualifies therefor.


Sec. 191.44  Destruction under Customs supervision.

    A claimant may destroy merchandise and obtain rejected merchandise 
drawback by complying with the procedures set forth in Sec. 191.71(a) 
of this part relating to destruction.

Subpart E--Completion of Drawback Claims


Sec. 191.51  Completion of drawback claims.

    (a) General.--(1) Complete claim. Unless otherwise specified, a 
complete drawback claim under this part shall consist of the drawback 
entry on Customs Form 331, applicable certificate(s) of manufacture and 
delivery, applicable Notice(s) of Intent to Export or Destroy, 
applicable import entry number(s), coding sheet unless the data is 
filed electronically, and evidence of exportation or destruction under 
subpart G of this part.
    (2) Certificates. Additionally, the associated certificate(s) of 
delivery must be in the possession of the claimant at the time of the 
filing of the claim. Any required certificate(s) of manufacture and 
delivery, if not previously filed with Customs, must be filed with the 
claim. Previously filed certificates of manufacture and delivery, if 
required, shall be referenced in the claim.
    (b) Drawback due. Drawback claimants are required to correctly 
calculate the amount of drawback due. The amount of drawback requested 
on the drawback entry is generally to be 99 percent of the import 
duties eligible for drawback. (For example, if $1,000 in import duties 
are eligible for drawback less 1 percent ($10), the amount claimed on 
the drawback entry should be for $990. Claims exceeding 99 percent will 
not be paid until the calculations have been corrected by the 
claimant.) Claims for less than 99 percent will be paid as filed, 
unless the claimant amends the claim in accordance with Sec. 191.52(c).
    (c) HTSUS number(s) or Schedule B commodity number(s) of imports 
and exports. Drawback claimants are required to provide, on all 
drawback claims they submit, the Harmonized Tariff Schedule of the 
United States (HTSUS) number(s) for the designated imported merchandise 
and the HTSUS number(s) or the Schedule B commodity number(s) for the 
exported article or articles. For imports, HTSUS numbers shall be 
provided from the entry summary(s) and other entry documentation, when 
the claimant is the importer of record, or from the certificate of 
delivery and/or the certificate of manufacture and delivery, otherwise. 
For exports, the HTSUS number(s) or Schedule B commodity number(s) 
shall be from the Shipper's Export Declaration(s) (SEDs), when 
required. If no SED is required (see, e.g., 15 CFR 30.58), the claimant 
shall provide the Schedule B commodity number(s) or HTSUS number(s) 
that the exporter would have set forth on the SED, but for the 
exemption from the requirement for an SED. Manufacturing drawback 
claimants filing drawback claims based on certificate(s) of manufacture 
and delivery filed with the claims or previously filed with Customs 
(see paragraph (a) of this section), may meet this requirement with the 
HTSUS number(s) on such certificate(s). The HTSUS number will be stated 
to at least 6 digits.
     (d) Place of filing. For manufacturing drawback, the claimant 
shall file the drawback claim with the drawback office listed, as 
appropriate, in the general manufacturing drawback ruling or the 
specific manufacturing drawback ruling (see Secs. 191.7 and 191.8 of 
this part). For other kinds of drawback, the claimant shall file the 
claim with any drawback office.


Sec. 191.52  Completing, perfecting or amending claims.

     (a) Completing the claim. (1) Upon review of a drawback claim, if 
the claim is determined to be incomplete (see Sec. 191.51(a)(1)), the 
claim will be rejected and Customs will notify the filer. The filer 
shall then have the opportunity to complete the claim subject to the 
requirement for filing a complete claim within 3 years (see paragraph 
(a)(2) of this section).
    (2) A completed drawback claim, with all required documents, shall 
be filed within 3 years after the date of exportation or destruction of 
the articles which are the subject of the claim. No extension will be 
granted unless the claimant establishes that the Customs Service was 
responsible for the untimely filing (see 19 U.S.C. 1313(r)(1)). The 
only exception is for landing certificates under Sec. 191.76 of this 
part.
    (b) Perfecting the claim; additional evidence required. If Customs 
determines that the claim is complete according to the requirements of 
Sec. 191.51(a)(1), but that additional evidence or information is 
required, Customs will notify the filer. The claimant shall furnish, or 
have the appropriate party furnish, the evidence or information 
requested within 30 days of the date of notification by Customs. 
Customs may extend this 30 day period for good cause if the claimant 
files a written request for such extension within the 30 day period. 
The evidence or information required under this paragraph may be filed 
more than 3 years after the date of exportation or destruction of the 
articles which are the subject of the claim. Such additional evidence 
or information may include, but is not limited to:
    (1) A copy of the export bill of lading which shall show that the 
articles were shipped by the person filing the drawback entry, or a 
letter of endorsement from the party in whose name the articles were 
shipped which shall be attached to such bill of lading, showing that 
the party filing the entry

[[Page 3111]]

is authorized to claim drawback and receive payment (the claimant shall 
have on file and make available to Customs upon request, the 
endorsement from the exporter assigning the right to claim drawback);
    (2) A copy of the import entry and invoice annotated for the 
merchandise identified or designated; and
    (3) A copy of the export invoice annotated to indicate the items on 
which drawback is being claimed.
    (c) Amending the claim; supplemental filing. Amendments to claims 
for which the drawback entries have not been liquidated must be made 
within three (3) years after the date of exportation or destruction of 
the articles which are the subject of the drawback claim. Liquidated 
drawback entries may not be amended; however, they may be protested as 
provided for in Sec. 191.84 of this part and part 174 of this chapter.


Sec. 191.53  Restructuring of claims.

    (a) General. Customs may require claimants to restructure their 
drawback claims in such a manner as to foster Customs administrative 
efficiency. In making this determination, Customs will consider the 
following factors:
    (1) The number of transactions of the claimant (imports and 
exports);
    (2) The value of the claims;
    (3) The frequency of claims;
    (4) The product or products being claimed; and
    (5) For 19 U.S.C. 1313(a) and 1313(b) claims, the provisions, as 
applicable, of the general manufacturing drawback ruling or the 
specific manufacturing drawback ruling.
     (b) Exemption from restructuring; criteria. In order to be exempt 
from a restructuring, a claimant must demonstrate an inability or 
impracticability in restructuring its claims as required by Customs and 
must provide a mutually acceptable alternative. Criteria used in such 
determination will include a demonstration by the claimant of one or 
more of the following:
    (1) Complexities caused by multiple commodities or the applicable 
general manufacturing drawback ruling or the specific manufacturing 
drawback ruling;
    (2) Variable and conflicting manufacturing and inventory periods 
(for example, financial, accounting and manufacturing records 
maintained are significantly different);
    (3) Complexities caused by multiple manufacturing locations;
    (4) Complexities caused by difficulty in adjusting accounting and 
inventory records (for example, records maintained--financial or 
accounting--are significantly different); and/or
    (5) Complexities caused by significantly different methods of 
operation.

 Subpart F--Verification of Claims


Sec. 191.61  Verification of drawback claims.

    (a) Authority--(1) Drawback office. All claims shall be subject to 
verification by the port director where the claim is filed.
    (2) Two or more locations. The port director selecting the claim 
for verification may forward copies of the claim and, as applicable, 
letters of notification and acknowledgement for the general 
manufacturing drawback ruling or application for, and letter of 
approval of, a specific manufacturing drawback ruling, and request for 
verification, to other drawback offices when deemed necessary.
    (b) Method. The verifying office shall verify the accuracy of the 
related general manufacturing drawback ruling or specific manufacturing 
drawback ruling and the selected drawback claims. Verification may 
include an examination of all records relating to the transaction(s).
    (c) Liquidation. When a claim has been selected for verification, 
liquidation will be postponed only on the drawback entries for those 
claims selected for verification. Postponement will continue in effect 
until the verification has been completed and the appropriate port 
director issues a report. In the event that a substantial error is 
revealed during the verification, Customs may postpone liquidation of 
all related product line claims, or, in Customs discretion, all claims 
for that claimant.


Sec. 191.62  Falsification of drawback claims.

    (a) Criminal penalty. Any person who knowingly and willfully files 
any false or fraudulent entry or claim for the payment of drawback upon 
the exportation of merchandise or knowingly or willfully makes or files 
any false document for the purpose of securing the payment to himself 
or others of any drawback on the exportation of merchandise greater 
than that legally due, shall be subject to the criminal provisions of 
18 U.S.C. 550, 1001 or any other appropriate criminal sanctions.
    (b) Civil penalty. Any person who seeks, induces or affects the 
payment of drawback, by fraud or negligence, or attempts to do so, is 
subject to civil penalties, as provided under 19 U.S.C. 1593a. A 
fraudulent violation is subject to a maximum administrative penalty of 
3 times the total actual or potential loss of revenue. Repetitive 
negligent violations are subject to a maximum penalty equal to the 
actual or potential loss of revenue.

Subpart G--Evidence of Exportation and Destruction


Sec. 191.71  Drawback on articles destroyed under Customs supervision.

    (a) Procedure. At least 7 working days before the intended date of 
destruction of merchandise or articles upon which drawback is intended 
to be claimed, a Notice of Intent to Export/Destroy on Customs Form xxx 
shall be filed by the claimant with the Customs port where the 
destruction is to take place, giving notification of the date and 
specific location where the destruction is to occur. Within 4 working 
days, Customs shall advise the filer of its determination to witness or 
not to witness the destruction. If the filer of the notice is not so 
notified within 4 working days, the merchandise may be destroyed 
without delay and will be deemed to have been destroyed under Customs 
supervision. Unless Customs determines to witness the destruction, the 
destruction of the articles following timely notification on Customs 
Form xxx shall be deemed to have occurred under Customs supervision. If 
Customs attends the destruction, it must certify the Notice of Intent 
to Export/Destroy.
    (b) Evidence of destruction. When Customs declines the opportunity 
to attend the destruction, the claimant must submit evidence that 
destruction took place in accordance with the approved Notice of Intent 
to Export/Destroy. The evidence must be issued by a disinterested third 
party (for example, a landfill operator). The type of evidence depends 
on the method and place of destruction, but must establish that the 
merchandise was, in fact, destroyed within the meaning of 
``destruction'' in Sec. 191.2(g) (i.e., that no articles of commercial 
value remained after destruction).
    (c) Completion of drawback entry. After destruction, the claimant 
and, if applicable, the Customs official witnessing the destruction 
shall certify on an attachment to Customs Form 331 the time and place 
of destruction.


Sec. 191.72  Alternative procedures for establishing exportation.

    Exportation of articles for drawback purposes shall be established 
by complying with one of the procedures provided for in this section 
(in addition to providing prior notice of intent to export (see 
Secs. 191.35, 191.36, 191.42, and 191.91 of this part)). Supporting 
documentary evidence shall establish fully the time and fact of 
exportation

[[Page 3112]]

and the identity of the exporter. The alternative procedures for 
establishing exportation outlined by this section are:
    (a) Actual evidence of exportation consisting of documentary 
evidence, such as the original bill of lading, air waybill, freight 
waybill, Canadian Customs manifest, and/or cargo manifest, or certified 
copies thereof, issued by the exporting carrier;
    (b) Export summary (Sec. 191.73);
    (c) Certified export invoice for mail shipments (Sec. 191.74);
    (d) Notice of lading for supplies on certain vessels or aircraft 
(Sec. 191.112); or
    (e) Notice of transfer for articles manufactured or produced in the 
U.S. which are transferred to a foreign trade zone (Sec. 191.183).


Sec. 191.73  Export summary procedure.

    (a) General. The export summary procedure consists of a 
chronological summary of exports used to support a drawback claim. It 
may be submitted as part of the claim in lieu of actual documentary 
evidence of exportation. It may be used by any claimant for 
manufacturing drawback, and for unused or rejected merchandise 
drawback, as well as for drawback involving the substitution of 
finished petroleum derivatives (19 U.S.C. 1313 (a), (b), (c), (j), or 
(p)). It is intended to improve administrative efficiency.
    (b) Format of chronological export summary. The chronological 
summary of the exports shall contain the data provided for in the 
following sample:

CHRONOLOGICAL SUMMARY OF EXPORTS

Drawback entry No. ________.-------------------------------------------
Claimant ________; Exporter ________ (if different from claimant)
Period from ________ to ________.

                                                                                                                                                        
                                          Unique export                                                       Sched. B com. # or                        
           Date of export                 identifier 1             Description            Net quantity             HTSUS #             Destination #    
(1)                                  (2)...................  (3)...................  (4)..................  (5)..................  (6)                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 This number is to be used to associate the export transaction presented on the Chronological Export Summary to the appropriate documentary evidence of
  exportation (for example, Bill of Lading, Manifest no., invoice, etc.).                                                                               

    (c) Documentary evidence--(1) Records. The claimant, whether or not 
the exporter, shall maintain the chronological summary of the exports 
and such additional evidence of exportation required by Customs to 
establish fully the identity of the exported articles and the fact of 
exportation. The bill of lading issued by the exporting carrier is the 
primary proof of export for drawback purposes.
    (2) Maintenance of records. The claimant shall submit as part of 
the claim the chronological export summary (see Sec. 191.51). The 
claimant shall retain records supporting the Chronological Export 
Summary for 3 years after payment of the related claim. Customs may at 
any time request to review the underlying documentation supporting the 
Chronological Export Summary.


Sec. 191.74  Certification of exportation by mail.

    If the merchandise on which drawback is to be claimed is exported 
by mail or parcel post, the official postal records which describe the 
mail shipment shall be sufficient to prove exportation. The postal 
record shall be identified on the drawback entry, and shall be retained 
by the claimant and submitted as part of the drawback claim (see 
Sec. 191.10(e) of this part).


Sec. 191.75  Exportation by the Government.

    (a) Claim by U.S. Government. When a department, branch, agency, or 
instrumentality of the United States Government exports products with 
the intention of claiming drawback, it may establish the exportation in 
the manner provided in Sec. 191.73. No bond shall be required when the 
United States Government claims drawback.
    (b) Claim by supplier. When a supplier of merchandise to the 
Government or any of the parties specified in Sec. 191.82 of this part 
claims drawback, exportation shall be established under Sec. 191.73.


Sec. 191.76  Landing certificate.

    (a) Requirement. Prior to the liquidation of the drawback entry, 
Customs may require a landing certificate for every aircraft departing 
from the United States under its own power if drawback is claimed on 
the aircraft or a part thereof, except for the exportation of supplies 
under section 309 of the Act, as amended (19 U.S.C. 1309). The 
certificate shall show the exact time of landing in the foreign 
destination and describe the aircraft or parts subject to drawback in 
sufficient detail to enable Customs officers to identify them with the 
documentation of exportation.
    (b) Written notice of requirement and time for filing. A landing 
certificate shall be filed within one year from the written Customs 
request, unless Customs Headquarters grants an extension.
    (c) Signature. A landing certificate shall be signed by a revenue 
officer of the foreign country of the export's destination, unless the 
embassy of that country certifies in writing that there is no Customs 
administration in that country, in which case the landing certificate 
may be signed by the consignee or the carrier's agent at the place of 
unlading.
    (d) Inability to produce landing certificates. A landing 
certificate shall be waived by the requiring Customs authority if the 
claimant demonstrates inability to obtain a certificate and offers 
other satisfactory evidence of export.

Subpart H--Liquidation and Protest of Drawback Entries


Sec. 191.81  Liquidation.

    (a) Time of liquidation. Drawback entries may be liquidated after:
    (1) Liquidation of the import entry becomes final; or
    (2) Deposit of estimated duties on the imported merchandise and 
before liquidation of the import entry.
    (b) Claims based on estimated duties. (1) Drawback may be paid on 
estimated duties if the import entry has not been liquidated, or the 
liquidation has not become final (because of a protest being filed) 
(see also Sec. 173.4(c) of this chapter), and the drawback claimant and 
any other party responsible for the payment of liquidated import duties 
each file a written request for payment of each drawback claim, waiving 
any right to payment or refund under other provisions of law. The 
drawback claimant shall, to the best of its knowledge, identify each 
import entry that has been protested or that is the subject of a 
request for reliquidation (19 U.S.C. 1520(c)(1)) and that is included 
in the drawback claim. A drawback entry, once finally liquidated on the 
basis of estimated duties, shall not be adjusted by reason of a 
subsequent final liquidation of the import entry.
    (2) However, if final liquidation of the import entry discloses 
that the total amount of import duty is different from the total 
estimated duties deposited, the party responsible for the payment of 
liquidated duties, as applicable, shall:
    (i) Be liable for 1 percent of all increased duties found to be due 
on that

[[Page 3113]]

portion of merchandise recorded on the drawback entry; or
    (ii) Be entitled to a refund of 1 percent of all excess duties 
found to be paid on that portion of the merchandise recorded on the 
drawback entry.
    (c) Claims based on voluntary tenders or other payments of duties--
(1) Voluntary tenders. Drawback may be paid on voluntary tenders of the 
unpaid amount of lawful ordinary Customs duties on an entry, or 
withdrawal from warehouse, for consumption provided that:
    (i) The entry, or withdrawal from warehouse, for consumption for 
which the voluntary tender was made is specifically identified in the 
voluntary tender; and
    (ii) Liquidation of the drawback entry in which that specifically 
identified import entry, or withdrawal from warehouse, for consumption 
is designated has not become final.
    (2) Other payments of duty. Drawback may be paid on any other 
payment of lawful ordinary Customs duties for an entry, or withdrawal 
from warehouse, for consumption, such as payment of a demand for duties 
under 19 U.S.C. 1592(d), provided that:
    (i) The payment is specifically identified as duty on a 
specifically identified entry, or withdrawal from warehouse, for 
consumption;
    (ii) Liquidation of the specifically identified entry, or 
withdrawal from warehouse, for consumption became final prior to such 
payment; and
    (iii) Liquidation of the drawback entry in which that specifically 
identified import entry, or withdrawal from warehouse, for consumption 
is designated has not become final.
    (3) Written request and waiver. Drawback may be paid on claims 
based on voluntary tenders or other payments of duties under this 
subsection only if the drawback claimant and any other party 
responsible for the payment of the voluntary tenders or other payments 
of duties each file a written request for payment of each drawback 
claim based on such voluntary tenders or other payments of duties, 
waiving any right to payment or refund under other provisions of law.
    (d) Claims based on liquidated duties. Drawback shall be based on 
the final liquidated duties paid that have been made final by operation 
of law (except in the case of the written request for payment of 
drawback on the basis of estimated duties, voluntary tender of duties, 
and other payments of duty, and waiver, provided for in paragraphs (b) 
and (c) of this section).
    (e) Liquidation procedure. When the drawback claim has been 
completed by the filing of the entry and other required documents, and 
exportation (or destruction) of the articles has been established, the 
drawback office shall determine drawback due on the basis of the 
complete drawback claim, the applicable general manufacturing drawback 
ruling or specific manufacturing drawback ruling, and any other 
relevant evidence or information.
    (f) Distribution and value of multiple products--(1) Distribution. 
Where two or more products result from the manufacture or production of 
merchandise, drawback shall be distributed to the several products in 
accordance with their relative value at the time of separation.
    (2) Value. The value to be used in computing the distribution of 
drawback where two or more products result from the manufacture or 
production of merchandise under drawback conditions shall be the market 
value (see Sec. 191.2(r) of this part), unless another value is 
approved by Customs.
    (g) Payment. The drawback office shall authorize the amount of the 
refund due as drawback to the claimant.


Sec. 191.82  Person entitled to claim drawback.

    Unless otherwise provided in this part (see Secs. 191.42(b), 
191.162, 191.175(a), 191.186), the exporter (or destroyer) shall be 
entitled to claim drawback, unless the exporter (or destroyer), by 
means of a certification, waives the right to claim drawback and 
assigns such right to the manufacturer, producer, importer, or 
intermediate party (in the case of drawback under 19 U.S.C. 1313(j)(1), 
see Sec. 191.33(a)). Such certification shall also affirm that the 
exporter (or destroyer) has not and will not assign the right to claim 
drawback on the particular exportation or destruction to any other 
party.


Sec. 191.83  Person entitled to receive payment.

    Drawback is paid to the claimant (see Sec. 191.82).


Sec. 191.84 Protests.

    Procedures to protest the denial, in whole or in part, of a 
drawback entry shall be in accordance with part 174 of this chapter (19 
CFR part 174).

Subpart I--Privileges


Sec. 191.91  Waiver of prior notice of intent to export.

    (a) General. The requirement in Sec. 191.35 of this part for prior 
notice of intent to export merchandise which may be the subject of an 
unused merchandise drawback claim under section 313(j) of the Act, as 
amended (19 U.S.C. 1313(j)), may be waived under the provisions of this 
section.
    (b) Application--(1) Who may apply. A claimant for unused 
merchandise drawback under 19 U.S.C. 1313(j) may apply for a waiver of 
prior notice of intent to export merchandise under this section.
    (2) Contents of application. An applicant for a waiver of prior 
notice under this section must file a written application with the 
drawback office where the claims will be filed. Such application shall 
include the following:
    (i) Required information:
    (A) Name, address, and identification number of applicant;
    (B) Name, address, and identification number of current 
exporter(s), if applicant is not the exporter;
    (C) Export period covered by this application;
    (D) Commodity/product lines of imported and exported merchandise 
covered by this application;
    (E) Origin of merchandise covered by this application;
    (F) Estimated number of export transactions during the next 12-
month period covered by this application;
    (G) Port(s) of exportation to be used during the next 12-month 
period covered by this application;
    (H) Estimated dollar value of potential drawback during the next 
12-month period covered by this application; and
    (I) The relationship between the parties involved in the import and 
export transactions;
    (ii) A written declaration whether or not the applicant has 
previously been denied a waiver request, or had an approval of a waiver 
revoked, by any other drawback office; and
    (iii) A certification that the following documentary evidence will 
be made available for Customs review upon request:
    (A) For the purpose of establishing that the imported merchandise 
was not used in the United States (for purposes of drawback under 19 
U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the 
United States and was commercially interchangeable with the imported 
merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)):
    (1) Business records prepared in the ordinary course of business;
    (2) Laboratory records prepared in the ordinary course of business; 
and
    (3) Inventory records prepared in the ordinary course of business 
tracing all relevant movements and storage of the imported merchandise, 
substituted merchandise, and/or exported merchandise; and
    (B) Evidence establishing compliance with other applicable drawback

[[Page 3114]]

requirements, upon Customs request under paragraph (b)(2)(iii) of this 
section.
    (3) Samples of records to accompany application. To expedite the 
processing of applications under this section, the application should 
contain at least one sample of each of the records to be used to 
establish compliance with the applicable requirements (that is, sample 
of import document (for example, Customs Form 7501), sample of export 
document (for example, bill of lading), and samples of business, 
laboratory, and inventory records certified, under paragraph 
(b)(2)(iii)(A) (1) through (3) of this section, to be available to 
Customs upon request).
    (c) Action on application--(1) Customs review. The drawback office 
shall review and verify the information submitted on and with the 
application. Customs will notify the applicant in writing within 90 
days of receipt of the application of its decision to approve or deny 
the application, or of Customs inability to approve, deny, or act on 
the application. In order for Customs to evaluate the application, 
Customs may request any of the information listed in paragraph 
(b)(2)(iii)(A)(1) through (3) of this section. Based on the information 
submitted on and with the application and any information so requested, 
and based on the applicant's record of transactions with Customs, the 
drawback office will approve or deny the application. The criteria to 
be considered in reviewing the applicant's record with Customs include 
(as applicable):
    (i) The presence or absence of unresolved Customs charges (duties, 
taxes, or other debts owed Customs);
    (ii) The accuracy of the claimant's past drawback claims;
    (iii) Whether waiver of prior notice was previously revoked or 
suspended; and
    (iv) The presence or absence of any failure to present merchandise 
to Customs for examination after Customs had timely notified the party 
filing a Notice of Intent to Export/Destroy of Customs intent to 
examine the merchandise (see Sec. 191.35 of this part).
    (2) Approval. The approval of an application for waiver of prior 
notice of intent to export, under this section, shall operate 
prospectively, applying only to those export shipments occurring after 
the date of the waiver. It shall be subject to a stay, as provided in 
paragraph (d) of this section.
    (3) Denial. If an application for waiver of prior notice of intent 
to export, under this section, is denied, the applicant shall be given 
written notice, specifying the grounds therefor, together with what 
corrective action may be taken, and informing the applicant that the 
denial may be appealed in the manner prescribed in paragraph (g) of 
this section. The applicant may not reapply for a waiver until the 
reason for the denial is resolved.
    (d) Stay. A privilege holder's privilege may be stayed, for a 
specified reasonable period, should the agency desire for any reason to 
examine the merchandise being exported with drawback prior to its 
exportation for purposes of verification. A stay of this privilege 
shall take effect on the date of the agency's letter notifying the 
privilege holder of the stay and shall remain in effect for the period 
specified in that letter, or such earlier date as the agency notifies 
the privilege holder in writing that the reason for the stay has been 
satisfied. After the stay is lifted, operation under the privilege may 
resume.
    (e) Proposed revocation. Customs may propose to revoke the approval 
of an application for waiver of prior notice of intent to export, under 
this section, for good cause (that is, noncompliance with the drawback 
law and/or regulations). Customs shall give written notice of the 
proposed revocation of a waiver of prior notice of intent to export. 
The notice shall specify the reasons for Customs proposed action and 
provide information regarding the procedures for challenging Customs 
proposed revocation action as prescribed in paragraph (g) of this 
section.
    (f) Action by drawback office controlling. Action by the 
appropriate drawback office to approve, deny, stay, or revoke waiver of 
prior notice of intent to export, unless reversed by Customs 
Headquarters, will govern the applicant's eligibility for this 
procedure in all Customs drawback offices. If the application for 
waiver of prior notice of intent to export is approved, the claimant 
shall submit a copy of the approval letter with the first drawback 
claim filed in any drawback office other than the approving office, 
when the export upon which the claim is based was without prior notice, 
under this section.
    (g) Appeal of denial or challenge to proposed revocation. An appeal 
of a denial of an application under this section, or challenge to the 
proposed revocation of an approved application under this section, may 
be made by letter to the drawback office issuing the denial or proposed 
revocation and must be filed within 30 days of the date of denial or 
proposed revocation. A denial of an appeal or challenge made to the 
drawback office may itself be appealed to Customs Headquarters and must 
be filed within 30 days of the denial date of the initial appeal or 
challenge. The 30-day period for appeal or challenge to the drawback 
office or to Customs Headquarters may be extended for good cause, upon 
written request by the applicant or privilege holder for such extension 
filed with the appropriate office within the 30-day period.


Sec. 191.92  Accelerated payment.

    (a) Scope. Accelerated payment of drawback is available on claims 
covering exportations (or destructions, if applicable) under the 
manufacturing, rejected or unused merchandise drawback provisions, as 
well as claims for the substitution of finished petroleum derivatives 
(19 U.S.C. 1313 (a), (b), (c), (j), or (p)). Accelerated payment of a 
drawback claim does not constitute liquidation of the drawback entry.
    (b) Application for approval; contents. A person who wishes to 
apply for accelerated payment of drawback must file a written 
application with the drawback office where claims will be filed.
    (1) Required information. The application must contain:
    (i) Company name and address;
    (ii) Identification number (including suffixes);
    (iii) Identity (by name and title) of the person in claimant's 
organization who will be responsible for the drawback program;
    (iv) Description of the bond coverage the applicant intends to use 
to cover accelerated payments of drawback (see paragraph (d) of this 
section), including:
    (A) Identity of the surety to be used;
    (B) Dollar amount of bond coverage for the first year under the 
accelerated payment procedure; and
    (C) Procedures to ensure that bond coverage remains adequate (that 
is, procedures to alert the applicant when and if its accelerated 
payment potential liability exceeds its bond coverage);
    (v) Description of merchandise and/or articles covered by the 
application;
    (vi) Type(s) of drawback covered by the application; and
    (vii) Estimated dollar value of potential drawback during the next 
12-month period covered by the application.
    (2) Previous applications. In the application, the applicant must 
state whether or not the applicant has previously been denied an 
application for accelerated payment of drawback, or had an approval of 
such an application revoked by any drawback office.
    (3) Certification of compliance. In or with the application, the 
applicant must also submit a certification, signed by the

[[Page 3115]]

applicant, that all applicable statutory and regulatory requirements 
for drawback will be met.
    (4) Description of claimant's drawback program. With the 
application, the applicant must submit a description (with sample 
documents) of how the applicant will ensure compliance with its 
certification that the statutory and regulatory drawback requirements 
will be met. This description may be in the form of a booklet. The 
detail contained in this description should vary depending on the size 
and complexity of the applicant's accelerated drawback program (for 
example, if the dollar amount is great and there are several kinds of 
drawback involved, with differing inventory, manufacturing, and 
shipping methods, greater detail in the description will be required). 
The description must include at least:
    (i) The name of the official in the claimant's organization who is 
responsible for oversight of the claimant's drawback program;
    (ii) The procedures and controls demonstrating compliance with the 
statutory and regulatory drawback requirements;
    (iii) The parameters of claimant's drawback record-keeping program, 
including the retention period and method (for example, paper, 
electronic, etc.);
    (iv) A list of the records that will be maintained, including at 
least sample import documents, sample export documents, sample 
inventory and transportation documents (if applicable), sample 
laboratory or other documents establishing the qualification of 
merchandise or articles for substitution under the drawback law (if 
applicable), and sample manufacturing documents (if applicable);
    (v) The procedures that will be used to notify Customs of changes 
to the claimant's drawback program, variances from the procedures 
described in this application, and violations of the statutory and 
regulatory drawback requirements; and
    (vi) The procedures for an annual review by the claimant to ensure 
that its drawback program complies with the statutory and regulatory 
drawback requirements and that Customs is notified of any modifications 
from the procedures described in this application.
    (c) Sample application. The drawback office, upon request, shall 
provide applicants for accelerated payment with a sample letter format 
to assist them in preparing their submissions.
    (d) Bond required. If approved for accelerated payment, the 
claimant must furnish a properly executed bond in an amount sufficient 
to cover the estimated amount of drawback to be claimed during the term 
of the bond. If outstanding accelerated drawback claims exceed the 
amount of the bond, the drawback office will require additional bond 
coverage as necessary before additional accelerated payments are made.
    (e) Action on application. (1) Customs review. The drawback office 
shall review and verify the information submitted in and with the 
application. In order for Customs to evaluate the application, Customs 
may request additional information (including additional sample 
documents) and/or explanations of any of the information provided for 
in paragraph (b)(4) of this section. Based on the information submitted 
on and with the application and any information so requested, and based 
on the applicant's record of transactions with Customs, the drawback 
office will approve or deny the application. The criteria to be 
considered in reviewing the applicant's record with Customs include (as 
applicable):
    (i) The presence or absence of unresolved Customs charges (duties, 
taxes, or other debts owed Customs);
    (ii) The accuracy of the claimant's past drawback claims; and
    (iii) Whether accelerated payment of drawback or any other drawback 
privilege was previously revoked or suspended.
    (2) Notification to applicant. Customs will notify the applicant in 
writing within 90 days of receipt of the application of its decision to 
approve or deny the application, or of Customs inability to approve, 
deny, or act on the application.
    (3) Approval. The approval of an application for accelerated 
payment, under this section, shall operate prospectively, applying to 
those claims filed after the date of approval. It shall be subject to a 
stay, as provided in paragraph (f) of this section.
    (4) Denial. If an application for accelerated payment of drawback 
under this section is denied, the applicant shall be given written 
notice, specifying the grounds therefor, together with what corrective 
action may be taken, and informing the applicant that the denial may be 
appealed in the manner prescribed in paragraph (i) of this section. The 
applicant may not reapply for accelerated payment of drawback until the 
reason for the denial is resolved.
    (f) Stay. A privilege holder's privilege may be stayed, for a 
specified reasonable period, should the agency desire for any reason to 
examine compliance with the drawback law and regulations for purposes 
of verification. A stay of this privilege shall take effect on the date 
of the agency's letter notifying the privilege holder of the stay and 
shall remain in effect for the period specified in the agency's letter, 
or such earlier date as the agency notifies the privilege holder in 
writing that the reason for the stay has been satisfied. After the stay 
is lifted, operation under the privilege may resume.
    (g) Proposed revocation. Customs may propose to revoke the approval 
of an application for accelerated payment of drawback under this 
section, for good cause (that is, noncompliance with the drawback law 
and/or regulations). In case of such proposed revocation, Customs shall 
give written notice of the proposed revocation of the accelerated 
payment privilege. The notice shall specify the reasons for Customs 
proposed action and the procedures for challenging Customs proposed 
revocation action as prescribed in paragraph (i) of this section.
    (h) Action by drawback office controlling. Action by the 
appropriate drawback office to approve, deny, stay, or revoke the 
privilege of accelerated payment of drawback will govern the 
applicant's eligibility for this procedure in all Customs drawback 
offices. If the application for accelerated payment of drawback is 
approved and the claimant desires accelerated payment of drawback in a 
drawback claim filed in a drawback office other than the approving 
drawback office, the claimant shall submit a copy of the approval 
letter with the first drawback claim filed in the drawback office other 
than the approving office.
    (i) Appeal of denial or challenge to proposed revocation. An appeal 
of a denial of an application under this section, or challenge to the 
proposed revocation of an approved application under this section, may 
be made in writing to the drawback office issuing the denial or 
proposed revocation and must be filed within 30 days of the date of 
denial or proposed revocation. A denial of an appeal or challenge made 
to the drawback office may itself be appealed to Customs Headquarters 
and must be filed within 30 days. The 30-day period for appeal or 
challenge to the drawback office or to Customs Headquarters may be 
extended for good cause, upon written request by the applicant or 
privilege holder for such extension filed with the appropriate office 
within the 30-day period.
    (j) Payment. The drawback office approving a drawback claim in 
which accelerated payment of drawback was

[[Page 3116]]

requested (and in which the claimant has been approved for accelerated 
payment of drawback under this section) shall certify the drawback 
claim for payment within 3 weeks after filing, if a component for 
electronic filing of drawback claims, records, or entries which has 
been implemented under the National Customs Automation Program (NCAP) 
(19 U.S.C. 1411-1414) is used, and within 3 months after filing, if the 
claim is filed manually. After liquidation, the drawback office shall 
certify payment of any amount due or demand a refund of any excess 
amount paid. Any excess amount of duty the subject of accelerated 
payment that is not refunded within 30 days after the date of 
liquidation of the related drawback entry shall be considered 
delinquent (see Secs. 24.3a and 113.65(b) of this chapter.)


Sec. 191.93  Combined applications.

    An applicant for the privileges provided for in Secs. 191.91 and 
191.92 of this subpart may apply for only one privilege, both 
privileges separately, or both privileges in one application package. 
In the latter instance, the intent to apply for both privileges must be 
clearly stated. In all instances, all of the requirements for the 
privilege(s) applied for must be met (for example, in a combined 
application for both privileges, all of the information required for 
each privilege, all required sample documents for each privilege, and 
all required certifications must be included in and with the 
application).

Subpart J--Internal Revenue Tax on Flavoring Extracts and Medicinal 
or Toilet Preparations (Including Perfumery) Manufactured from 
Domestic Tax-Paid Alcohol


Sec. 191.101  Drawback allowance.

    (a) Drawback. Section 313(d) of the Act, as amended (19 U.S.C. 
1313(d)), provides for drawback of internal revenue tax upon the 
exportation of flavoring extracts and medicinal or toilet preparations 
(including perfumery) manufactured or produced in the United States in 
part from the domestic tax-paid alcohol.
    (b) Shipment to Puerto Rico, the Virgin Islands, Guam, and American 
Samoa. Drawback of internal revenue tax on articles manufactured or 
produced under this subpart and shipped to Puerto Rico, the Virgin 
Islands, Guam, or American Samoa shall be allowed in accordance with 
section 7653(c) of the Internal Revenue Code (26 U.S.C. 7653(c)). 
However, there is no authority of law for the allowance of drawback of 
internal-revenue tax on flavoring extracts or medicinal or toilet 
preparations (including perfumery) manufactured or produced in the 
United States and shipped to Wake Island, Midway Islands, Kingman Reef, 
Canton Island, Enderbury Island, Johnston Island, or Palmyra Island.


Sec. 191.102  Procedure.

    (a) General. Other provisions of this part relating to direct 
identification drawback (see subpart B of this part) shall apply to 
claims for drawback filed under this subpart insofar as applicable to 
and not inconsistent with the provisions of this subpart.
    (b) Manufacturing record. The manufacturer of flavoring extracts or 
medicinal or toilet preparations on which drawback is claimed shall 
record the products manufactured, the quantity of waste, if any, and a 
full description of the alcohol. These records shall be available at 
all times for inspection by Customs officers.
    (c) Additional information required on the manufacturer's 
application for a specific manufacturing drawback ruling. The 
manufacturer's application for a specific manufacturing drawback 
ruling, under Sec. 191.8 of this part, shall state the quantity of 
domestic tax-paid alcohol contained in each product on which drawback 
is claimed.
    (d) Variance in alcohol content--(1) Variance of more than 5 
percent. If the percentage of alcohol contained in a medicinal 
preparation, flavoring extract or toilet preparation varies by more 
than 5 percent from the percentage of alcohol in the total volume of 
the exported product as stated in a previously approved application for 
a specific manufacturing drawback ruling, the manufacturer shall apply 
for a new specific manufacturing drawback ruling pursuant to Sec. 191.8 
of this part. If the variation differs from a previously filed 
schedule, the manufacturer shall file a new schedule incorporating the 
change.
    (2) Variance of 5 percent or less. Variances of 5 percent or less 
of the volume of the product shall be reported to the appropriate 
drawback office where the drawback entries are liquidated. In such 
cases, the drawback office may allow drawback without specific 
authorization from Customs Headquarters.
    (e) Time period for completing claims. The 3-year period for the 
completion of drawback claims prescribed in 19 U.S.C. 1313(r)(1) shall 
be applicable to claims for drawback under this subpart.
    (f) Filing of drawback entries on duty-paid imported merchandise 
and tax-paid alcohol. When the drawback claim covers duty-paid imported 
merchandise in addition to tax-paid alcohol, the claimant shall file 
one set of entries for drawback of Customs duty and another set for 
drawback of internal revenue tax.
    (g) Description of the alcohol. The description of the alcohol 
stated in the drawback entry may be obtained from the description on 
the package containing the tax-paid alcohol.


Sec. 191.103  Additional requirements.

    (a) Manufacturer claims domestic drawback. In the case of medicinal 
preparations and flavoring extracts, the claimant shall file with the 
drawback entry, a declaration of the manufacturer showing whether a 
claim has been or will be filed by the manufacturer with the regional 
regulatory administrator of the Bureau of Alcohol, Tobacco and Firearms 
for domestic drawback on alcohol under section 5131, 5132, 5133 and 
5134, Internal Revenue Code, as amended (26 U.S.C. 5131, 5132, 5133 and 
5134).
    (b) Manufacturer does not claim domestic drawback--(1) Submission 
of statement. If no claim has been or will be filed with the Bureau of 
Alcohol, Tobacco and Firearms for domestic drawback on medicinal 
preparations or flavoring extracts, the manufacturer shall submit a 
statement, in duplicate, setting forth that fact to the appropriate 
regional regulatory administrator of the Bureau of Alcohol, Tobacco and 
Firearms for the region in which the manufacturer's factory is located.
    (2) Contents of the statement. The statement shall show the:
    (i) Quantity and description of the exported products;
    (ii) Identity of the alcohol used by serial number of package or 
tank car;
    (iii) Name and registry number of the warehouse from which the 
alcohol was withdrawn;
    (iv) Date of withdrawal;
    (v) Serial number of the tax-paid stamp or certificate, if any; and
    (vi) Drawback office where the claim will be filed.
    (3) Verification of the statement. The regional regulatory 
administrator, Bureau of Alcohol, Tobacco and Firearms, shall verify 
receipt of this statement, forward the original of the document to the 
drawback office designated, and retain the copy.


Sec. 191.104  Alcohol, Tobacco and Firearms certificates.

    (a) Request. The drawback claimant or manufacturer shall file a 
written request with the regional regulatory administrator, Bureau of 
Alcohol, Tobacco and Firearms, in whose region the alcohol used in the 
manufacture was withdrawn requesting him to provide the Customs 
drawback office where the

[[Page 3117]]

drawback claim will be processed, a tax-paid certificate on Alcohol, 
Tobacco and Firearms Form 5100.4 (Certificate of Tax-Paid Alcohol).
    (b) Contents. The request shall state the:
    (1) Quantity of alcohol in taxable gallons;
    (2) Serial number of each package;
    (3) Serial number of the stamp, if any;
    (4) Amount of tax paid on the alcohol;
    (5) Name, registry number, and location of the warehouse;
    (6) Date of withdrawal;
    (7) Name of the manufacturer using the alcohol in producing the 
exported articles;
    (8) Address of the manufacturer and his manufacturing plant; and
    (9) Customs drawback office where the drawback claim will be 
processed.
    (c) Extracts of Alcohol, Tobacco and Firearms certificates. If a 
certification of any portion of the alcohol described in the Bureau of 
Alcohol, Tobacco and Firearms Form 5100.4 is required for liquidation 
of drawback entries processed in another drawback office, the drawback 
office, on written application of the person who requested its 
issuance, shall transmit a copy of the extract from the certificate for 
use at that drawback office. The drawback office shall note that the 
copy of the extract was prepared and transmitted.


Sec. 191.105  Liquidation.

    The drawback office shall ascertain the final amount of drawback 
due by reference to the certificate of manufacture and delivery and the 
specific manufacturing drawback ruling under which the drawback claimed 
is allowable.


Sec. 191.106  Amount of drawback.

    (a) Claim filed with Bureau of Alcohol, Tobacco and Firearms. If 
the declaration required by Sec. 191.103 of this subpart shows that a 
claim has been or will be filed with the Bureau of Alcohol, Tobacco and 
Firearms for domestic drawback, drawback under section 313(d) of the 
Act, as amended (19 U.S.C. 1313(d)), shall be limited to the difference 
between the amount of tax paid and the amount of domestic drawback 
claimed.
    (b) Claim not filed with Bureau of Alcohol, Tobacco and Firearms. 
If the declaration and verified statement required by Sec. 191.103 show 
that no claim has been or will be filed by the manufacturer with the 
Bureau of Alcohol, Tobacco and Firearms for domestic drawback, the 
drawback shall be the full amount of the tax on the alcohol used.
    (c) No deduction of 1 percent. No deduction of 1 percent shall be 
made in drawback claims under section 313(d) of the Act, as amended (19 
U.S.C. 1313(d)).
    (d) Payment. The drawback due shall be paid in accordance with 
Sec. 191.81(f) of this part.

Subpart K--Supplies for Certain Vessels and Aircraft


Sec. 191.111  Drawback allowance.

    Section 309 of the Act, as amended (19 U.S.C. 1309), provides for 
drawback on articles laden as supplies on certain vessels or aircraft 
of the United States or as supplies including equipment upon, or used 
in the maintenance or repair of, certain foreign vessels or aircraft.


Sec. 191.112  Procedure.

    (a) General. The provisions of this subpart shall override other 
conflicting provisions of this part.
    (b) Customs forms. The drawback claimant shall file with the 
drawback office the drawback entry on Customs Form 331 annotated for 19 
U.S.C. 1309, and attach thereto a notice of lading on Customs Form 
7514, in quadruplicate, unless the export summary procedure, provided 
for in Sec. 191.73, is used. If the export summary procedure is used, 
the requirements in Sec. 191.73 shall be complied with, as applicable.
    (c) Time of filing notice of lading. In the case of drawback in 
connection with 19 U.S.C. 1309(b), the drawback notice of lading on 
Customs Form 7514 may be filed either before or after the lading of the 
articles. If filed after lading, the notice shall be filed within 3 
years after exportation of the articles.
    (d) Contents of notice. The notice of lading shall show:
    (1) The name of the vessel or identity of the aircraft on which 
articles were or are to be laden;
    (2) The number and kind of packages and their marks and numbers;
    (3) A description of the articles and their weight (net), gauge, 
measure, or number; and
    (4) The name of the exporter.
    (e) Assignment of numbers and return of one copy. The drawback 
office shall assign a number to each notice of lading and return one 
copy to the exporter for delivery to the master or authorized officer 
of the vessel or aircraft.
    (f) Declaration--(1) Requirement. The master or an authorized 
representative of the vessel or aircraft having knowledge of the facts 
shall complete the section of the notice entitled ``Declaration of 
Master or Other Officer''.
    (2) Procedure if notice filed before lading. If the notice is filed 
before lading of the articles, the declaration must be completed on the 
copy of the numbered drawback notice that was filed with the drawback 
office and returned to the exporter for this purpose.
    (3) Procedure if notice filed after lading. If the drawback notice 
is filed after lading of the articles, the drawback claimant may file a 
separate document containing the declaration required on the Drawback 
Notice, Customs Form 7514.
    (4) Filing. The drawback claimant shall file with the drawback 
office both the drawback entry and the drawback notice or separate 
document containing the declaration of the master or other officer or 
representative.
    (g) Information concerning class or trade. Information about the 
class of business or trade of a vessel or aircraft is required to be 
furnished in support of the drawback entry if the vessel or aircraft is 
American.
    (h) Vessel or aircraft required to clear or obtain a permit to 
proceed. After the vessel or aircraft has cleared or obtained a permit 
to proceed, the drawback office shall complete the section entitled 
``Customs Certification'' on one of the copies of the notice of lading. 
The drawback office shall return the completed copy and one other copy 
to the exporter or the person designated by the exporter for subsequent 
filing with the drawback claim.
    (i) Vessel or aircraft not required to clear or obtain a permit to 
proceed. If the vessel or aircraft is not required to clear or obtain a 
permit to proceed to another port, the drawback office shall return to 
the exporter or the person designated by the exporter two copies of the 
notice, noting the absence of a requirement for clearance or permit to 
proceed, for subsequent filing with the drawback claim. The claimant 
shall file with the claim an itinerary of the vessel or aircraft for 
the immediate voyage or flight showing that the vessel or aircraft is 
engaged in a class of business or trade which makes it eligible for 
drawback.
    (j) Articles laden or installed on aircraft as equipment or used in 
the maintenance or repair of aircraft. The drawback office where the 
drawback claim is filed shall require a declaration or other evidence 
showing to its satisfaction that articles have been laden or installed 
on aircraft as equipment or used in the maintenance or repair of 
aircraft.
    (k) Fuel laden on vessels or aircraft as supplies.--(1) Composite 
notice of lading. In the case of fuel laden on vessels or aircraft as 
supplies, the drawback claimant may file with the drawback office a 
composite notice of lading on the reverse side of Customs Form 7514, 
for each calendar month. The composite notice of lading shall

[[Page 3118]]

describe all of the drawback claimant's deliveries of fuel supplies 
during the one calendar month at a single port or airport to all 
vessels or airplanes of one vessel owner or operator or airline. This 
includes fuel laden for flights or voyages between the contiguous U.S. 
and Hawaii, Alaska, or any U.S. possessions (see Sec. 10.59 of this 
chapter).
    (2) Contents of composite notice. The composite notice shall show 
for each voyage or flight, either on the reverse side of Customs Form 
7514 or on a continuation sheet:
    (i) The identity of the vessel or aircraft;
    (ii) A description of the fuel supplies laden;
    (iii) The quantity laden; and
    (iv) The date of lading.
    (3) Declaration of owner or operator. An authorized vessel or 
airline representative having knowledge of the facts shall complete the 
section ``Declaration of Master or Other Officer'' on Customs Form 
7514.
    (l) Desire to land articles covered by notice of lading. The master 
of the vessel or commander of the aircraft desiring to land in the 
United States articles covered by a notice of lading shall apply for a 
permit to land those articles under Customs supervision. All articles 
landed, except those transferred under the original notice of lading to 
another vessel or aircraft entitled to drawback, shall be considered 
imported merchandise for the purpose of section 309(c) of the Act, as 
amended (19 U.S.C. 1309(c)).

Subpart L--Meats Cured with Imported Salt


Sec. 191.121  Drawback allowance.

    Section 313(f) of the Act, as amended (19 U.S.C. 1313(f)), provides 
for the allowance of drawback upon the exportation of meats cured with 
imported salt.


Sec. 191.122  Procedure.

    (a) General. Other provisions of this part relating to direct 
identification manufacturing drawback shall apply to claims for 
drawback under this subpart insofar as applicable to and not 
inconsistent with the provisions of this subpart.
    (b) Customs form. The forms used for other drawback claims shall be 
used and modified to show that the claim is being made for refund of 
duties paid on salt used in curing meats.


Sec. 191.123  Refund of duties.

    Drawback shall be refunded in aggregate amounts of not less than 
$100 and shall not be subject to the retention of 1 percent of duties 
paid.

Subpart M--Materials for Construction and Equipment of Vessels and 
Aircraft Built for Foreign Ownership and Account


Sec. 191.131  Drawback allowance.

    Section 313(g) of the Act, as amended (19 U.S.C. 1313(g)), provides 
for drawback on imported materials used in the construction and 
equipment of vessels and aircraft built for foreign account and 
ownership, or for the government of any foreign country, 
notwithstanding that these vessels or aircraft may not be exported 
within the strict meaning of the term.


Sec. 191.132  Procedure.

    Other provisions of this part relating to direct identification 
manufacturing drawback shall apply to claims for drawback filed under 
this subpart insofar as applicable to and not inconsistent with the 
provisions of this subpart.


Sec. 191.133  Explanation of terms.

    (a) Materials. Section 313(g) of the Act, as amended (19 U.S.C. 
1313(g)), applies only to materials used in the original construction 
and equipment of vessels and aircraft and not to materials used for 
alteration or repair, or to materials not required for safe operation 
of the vessel or aircraft.
    (b) Foreign account and ownership. Foreign account and ownership, 
as used in section 313(g) of the Act, as amended (19 U.S.C. 1313(g)), 
means only vessels or aircraft built or equipped for the account of an 
owner or owners residing in a foreign country and having a bona fide 
intention that the vessel or aircraft, when completed, shall be owned 
and operated under the flag of a foreign country.

 Subpart N--Foreign-Built Jet Aircraft Engines Processed in the 
United States


Sec. 191.141  Drawback allowance.

    Section 313(h) of the Act, as amended (19 U.S.C. 1313(h)), provides 
for drawback on the exportation of jet aircraft engines manufactured or 
produced abroad that have been overhauled, repaired, rebuilt, or 
reconditioned in the United States with the use of imported 
merchandise, including parts.


Sec. 191.142  Procedure.

    Other provisions of this part shall apply to claims for drawback 
filed under this subpart insofar as applicable to and not inconsistent 
with the provisions of this subpart.


Sec. 191.143  Drawback entry.

    (a) Filing of entry. Drawback entries covering these foreign-built 
jet aircraft engines shall be filed on Customs Form 331, modified to 
show that the entry covers jet aircraft engines processed under section 
313(h) of the Act, as amended (19 U.S.C. 1313(h)).
    (b) Contents of entry. The entry shall show the country in which 
each engine was manufactured and describe the processing performed 
thereon in the United States.


Sec. 191.144  Refund of duties.

    Drawback shall be refunded in aggregate amounts of not less than 
$100, and shall not be subject to the deduction of 1 percent of duties 
paid.

Subpart O--Merchandise Exported from Continuous Customs Custody


Sec. 191.151  Drawback allowance.

    (a) Eligibility of entered or withdrawn merchandise.--(1) Under 19 
U.S.C. 1557(a). Section 557(a) of the Act, as amended (19 U.S.C. 
1557(a)), provides for drawback on the exportation to a foreign 
country, or the shipment to the Virgin Islands, American Samoa, Wake 
Island, Midway Islands, Kingman Reef, Johnston Island, or Guam, of 
merchandise upon which duties have been paid which has remained 
continuously in bonded warehouse or otherwise in Customs custody for a 
period not to exceed 5 years from the date of importation.
    (2) Under 19 U.S.C. 1313. Imported merchandise that has not been 
regularly entered or withdrawn for consumption, shall not satisfy any 
requirement for use, importation, exportation or destruction, and shall 
not be available for drawback, under section 313 of the Act, as amended 
(19 U.S.C. 1313) (see 19 U.S.C. 1313(u)).
    (b) Guantanamo Bay. Guantanamo Bay Naval Station shall be 
considered foreign territory for drawback purposes under this subpart 
and merchandise shipped there is eligible for drawback. Imported 
merchandise which has remained continuously in bonded warehouse or 
otherwise in Customs custody since importation is not entitled to 
drawback of duty when shipped to Puerto Rico, Canton Island, Enderbury 
Island, or Palmyra Island.


Sec. 191.152  Merchandise released from Customs custody.

    No remission, refund, abatement, or drawback of duty shall be 
allowed under this subpart because of the exportation or destruction of 
any merchandise after its release from Government custody, except in 
the following cases:

[[Page 3119]]

    (a) When articles are exported or destroyed on which drawback is 
expressly provided for by law;
    (b) When prohibited articles have been regularly entered in good 
faith and are subsequently exported or destroyed pursuant to statute 
and regulations prescribed by the Secretary of the Treasury; or
    (c) When articles entered under bond are destroyed within the 
bonded period, as provided in section 557(c) of the Act, as amended (19 
U.S.C. 1557(c)), or destroyed within the bonded period by death, 
accidental fire, or other casualty, and proof of destruction is 
furnished to the satisfaction of the Secretary of the Treasury, in 
which case any accrued duties shall be remitted or refunded and any 
condition in the bond that the articles shall be exported shall be 
deemed to have been satisfied (see 19 U.S.C. 1558).


Sec. 191.153  Continuous Customs custody.

    (a) Merchandise released under an importer's bond and returned. 
Merchandise released to an importer under a bond prescribed by 
Sec. 142.4 of this chapter and later returned to the public stores upon 
requisition of the appropriate Customs office shall not be deemed to be 
in the continuous custody of Customs officers.
    (b) Merchandise released under Chapter 98, Subchapter XIII, 
Harmonized Tariff Schedule of the United States (HTSUS). Merchandise 
released as provided for in Chapter 98, Subchapter XIII, HTSUS (19 
U.S.C. 1202), shall not be deemed to be in the continuous custody of 
Customs officers.
    (c) Merchandise released from warehouse. For the purpose of this 
subpart, in the case of merchandise entered for warehouse, Customs 
custody shall be deemed to cease when estimated duty has been deposited 
and the appropriate Customs office has authorized the withdrawal of the 
merchandise.
    (d) Merchandise not warehoused, examined elsewhere than in public 
stores.--(1) General rule. Except as stated in paragraph (d)(2) of this 
section, merchandise examined elsewhere than at the public stores, in 
accordance with the provisions of Sec. 151.7 of this chapter, shall be 
considered released from Customs custody upon completion of final 
examination for appraisement.
    (2) Merchandise upon the wharf. Merchandise which remains on the 
wharf by permission of the appropriate Customs office shall be 
considered to be in Customs custody, but this custody shall be deemed 
to cease when the Customs officer in charge accepts the permit and has 
no other duties to perform relating to the merchandise, such as 
measuring, weighing, or gauging.


Sec. 191.154  Filing the entry.

    (a) Direct export. At least 6 working hours before lading the 
merchandise on which drawback is claimed under this subpart, the 
importer or the agent designated by him in writing shall file with the 
drawback office a direct export drawback entry on Customs Form 331 in 
duplicate.
    (b) Merchandise transported to another port for exportation. The 
importer of merchandise to be transported to another port for 
exportation shall file in triplicate with the drawback office an entry 
naming the transporting conveyance, route, and port of exit. The 
drawback office shall certify one copy and forward it to the Customs 
office at the port of exit. A bonded carrier shall transport the 
merchandise in accordance with the applicable regulations. Manifests 
shall be prepared and filed in the manner prescribed in Sec. 144.37 of 
this chapter.


Sec. 191.155  Merchandise withdrawn from warehouse for exportation.

    The regulations in part 18 of this chapter concerning the 
supervision of lading and certification of exportation of merchandise 
withdrawn from warehouse for exportation without payment of duty shall 
be followed to the extent applicable.


Sec. 191.156  Bill of lading.

    (a) Filing. In order to complete the claim for drawback under this 
subpart, a bill of lading covering the merchandise described in the 
drawback entry (Customs Form 331) shall be filed within 2 years after 
the merchandise is exported.
    (b) Contents. The bill of lading shall either show that the 
merchandise was shipped by the person making the claim or bear an 
endorsement of the person in whose name the merchandise was shipped 
showing that the person making the claim is authorized to do so.
    (c) Limitation of the bill of lading. The terms of the bill of 
lading may limit and define its use by stating that it is for Customs 
purposes only and not negotiable.
    (d) Inability to produce bill of lading. When a required bill of 
lading cannot be produced, the person making the drawback entry may 
request the drawback office, within the time required for the filing of 
the bill of lading, to accept a statement setting forth the cause of 
failure to produce the bill of lading and such evidence of exportation 
and of his right to make the drawback entry as may be available. The 
request shall be granted if the drawback office is satisfied by the 
evidence submitted that the failure to produce the bill of lading is 
justified, that the merchandise has been exported, and that the person 
making the drawback entry has the right to do so. If the drawback 
office is not so satisfied, such office shall transmit the request and 
its accompanying evidence to the Office of Field Operations, Customs 
Headquarters, for final determination.
    (e) Extracts of bills of lading. Drawback offices may issue 
extracts of bills of lading filed with drawback claims.


Sec. 191.157  Landing certificates.

    When required, a landing certificate shall be filed within the time 
prescribed in Sec. 191.76 of this part.


Sec. 191.158  Procedures.

    When the drawback claim has been completed and the bill of lading 
filed, together with the landing certificate, if required, the reports 
of inspection and lading made, and the clearance of the exporting 
conveyance established by the record of clearance in the case of direct 
exportation or by certificate in the case of transportation and 
exportation, the drawback office shall verify the importation by 
referring to the import records to ascertain the amount of duty paid on 
the merchandise exported. To the extent appropriate and not 
inconsistent with the provisions of this subpart, drawback entries 
shall be liquidated in accordance with the provisions of Sec. 191.81 of 
this part.


Sec. 191.159  Amount of drawback.

    Drawback due under this subpart shall not be subject to the 
deduction of 1 percent.

Subpart P--Distilled Spirits, Wines, or Beer Which Are 
Unmerchantable or Do Not Conform to Sample or Specifications


Sec. 191.161  Refund of taxes.

    Section 5062(c), Internal Revenue Code, as amended (26 U.S.C. 
5062(c)), provides for the refund, remission, abatement or credit to 
the importer of internal-revenue taxes paid or determined incident to 
importation, upon the exportation, or destruction under Customs 
supervision, of imported distilled spirits, wines, or beer found after 
entry to be unmerchantable or not to conform to sample or 
specifications and which are returned to Customs custody.

[[Page 3120]]

Sec. 191.162  Procedure.

    The export procedure shall be the same as that provided in 
Sec. 191.42 except that the claimant must be the importer and as 
otherwise provided in this subpart.


Sec. 191.163  Documentation.

    (a) Entry. Customs Form 331 shall be used to claim drawback under 
this subpart.
    (b) Documentation. The drawback entry for unmerchantable 
merchandise shall be accompanied by a certificate of the importer 
setting forth in detail the facts which cause the merchandise to be 
unmerchantable and any additional proof that the drawback office 
requires to establish that the merchandise is unmerchantable.


Sec. 191.164  Return to Customs custody.

    There is no time limit for the return to Customs custody of 
distilled spirits, wine, or beer subject to refund of taxes under the 
provisions of this subpart.


Sec. 191.165  No exportation by mail.

    Merchandise covered by this subpart shall not be exported by mail.


Sec. 191.166  Destruction of merchandise.

    (a) Action by the importer. A drawback claimant who proposes to 
destroy rather than export the distilled spirits, wine, or beer shall 
state that fact on Customs Form 331.
    (b) Action by Customs. Distilled spirits, wine, or beer returned to 
Customs custody at the place approved by the drawback office where the 
drawback entry was filed shall be destroyed under the supervision of 
the Customs officer who shall certify the destruction on Customs Form 
3499.


Sec. 191.167  Liquidation.

    No deduction of 1 percent of the internal revenue taxes paid or 
determined shall be made in allowing entries under Section 5062(c), 
Internal Revenue Code, as amended (26 U.S.C. 5062(c)).


Sec. 191.168  Time limit for exportation or destruction.

    Merchandise not exported or destroyed within 90 days from the date 
of notification of acceptance of the drawback entry shall be considered 
unclaimed, unless upon written request by the importer, prior to the 
expiration of the 90-day period, the drawback office grants an 
extension of not more than 90 days.

Subpart Q--Substitution of Finished Petroleum Derivatives


Sec. 191.171  General; Drawback allowance.

    (a) General. Section 313(p), of the Act, as amended (19 U.S.C. 
1313(p)), provides for drawback on the basis of qualified articles 
which consist of either imported duty-paid petroleum derivatives, or 
petroleum derivatives manufactured or produced in the United States and 
qualified for drawback under the manufacturing drawback law (19 U.S.C. 
1313 (a) or (b)).
    (b) Allowance of drawback. Drawback may be granted under 19 U.S.C. 
1313(p):
    (1) In cases where there is no manufacture, upon exportation of the 
imported article, an article of the same kind and quality, or any 
combination thereof; or
    (2) In cases where there is a manufacture or production, upon 
exportation of the manufactured or produced article, an article of the 
same kind and quality, or any combination thereof.


Sec. 191.172  Definitions.

    The following are definitions for purposes of this subpart only:
    (a) Qualified article. ``Qualified article'' means an article 
described in headings 2707, 2708, 2710 through 2715, 2901, 2902, or 
3901 through 3914 of the Harmonized Tariff Schedule of the United 
States (HTSUS). In the case of headings 3901 through 3914, the 
definition is limited as those headings apply to liquids, pastes, 
powders, granules and flakes.
    (b) Same kind and quality article. ``Same kind and quality 
article'' means an article which is commercially interchangeable with, 
or which is referred to under the same 8-digit classification of the 
HTSUS as, the article to which it is compared. (For example, unleaded 
gasoline and jet fuel (naphtha or kerosene-type), both falling under 
the same HTSUS classification (2710.00.15) would be considered same 
kind and quality articles because they fall under the same 8 digit 
HTSUS classification, even though they are not ``commercially 
interchangeable''.)
    (c) Exported article. ``Exported article'' means an article which 
has been exported and is the qualified article, an article of the same 
kind and quality as the qualified article, or any combination thereof.


Sec. 191.173  Imported duty-paid derivatives (no manufacture).

    When the basis for drawback under 19 U.S.C. 1313(p) is imported 
duty-paid petroleum derivatives (that is, not articles manufactured 
under 19 U.S.C. 1313 (a) or (b)), the requirements for drawback are as 
follows:
    (a) Imported duty-paid merchandise. The imported duty-paid 
merchandise designated for drawback must be a ``qualified article'' as 
defined in Sec. 191.172(a) of this subpart;
    (b) Exported article. The exported article on which drawback is 
claimed must be an ``exported article'' as defined in Sec. 191.172(c) 
of this subpart;
    (c) Exporter. The exporter of the exported article must have 
either:
    (1) Imported the qualified article in at least the quantity of the 
exported article; or
    (2) Purchased or exchanged (directly or indirectly) from an 
importer an imported qualified article in at least the quantity of the 
exported article;
    (d) Time of export. The exported article must be exported within 
180 days after the date of entry of the designated imported duty-paid 
merchandise; and
    (e) Amount of drawback. The amount of drawback payable may not 
exceed the amount of drawback which would be attributable to the 
imported qualified article which serves as the basis for drawback.


Sec. 191.174  Derivatives manufactured under 19 U.S.C. 1313 (a) or (b).

    When the basis for drawback under 19 U.S.C. 1313(p) is petroleum 
derivatives which were manufactured or produced in the United States 
and qualify for drawback under the manufacturing drawback law (19 
U.S.C. 1313 (a) or (b)), the requirements for drawback are as follows:
    (a) Merchandise. The merchandise which is the basis for drawback 
under 19 U.S.C. 1313(p) must:
    (1) Have been manufactured or produced as described in 19 U.S.C. 
1313 (a) or (b) from crude petroleum or a petroleum derivative; and
    (2) Be a ``qualified article'' as defined in Sec. 191.172(a) of 
this subpart;
    (b) Exported article. The exported article on which drawback is 
claimed must be an ``exported article'' as defined in Sec. 191.172(c) 
of this subpart;
    (c) Exporter. The exporter of the exported article must have 
either:
    (1) Manufactured or produced the qualified article in at least the 
quantity of the exported article; or
    (2) Purchased or exchanged (directly or indirectly) from a 
manufacturer or producer described in 19 U.S.C. 1313 (a) or (b) the 
qualified article in at least the quantity of the exported article;
    (d) Manufacture in specific facility. The qualified article must 
have been manufactured or produced in a specific petroleum refinery or 
production facility which must be identified;

[[Page 3121]]

    (e) Time of export. The exported article must be exported either:
    (1) During the period provided for in the manufacturer's or 
producer's specific manufacturing drawback ruling (see Sec. 191.8 of 
this part) in which the qualified article is manufactured or produced; 
or
    (2) Within 180 days after the close of the period in which the 
qualified article is manufactured or produced; and
    (f) Amount of drawback. The amount of drawback payable may not 
exceed the amount of drawback which would be attributable to the 
article manufactured or produced under 19 U.S.C. 1313 (a) or (b) which 
serves as the basis for drawback.


Sec. 191.175  Drawback claimant; maintenance of records.

    (a) Drawback claimant. A drawback claimant under 19 U.S.C. 1313(p) 
must be the exporter of the exported article, or the refiner, producer, 
or importer of that article. Any of these persons may designate another 
person to file the drawback claim.
    (b) Certificate of manufacture and delivery or delivery. A drawback 
claimant under 19 U.S.C. 1313(p) must provide a certificate of 
manufacture and delivery or a certificate of delivery, as applicable, 
establishing the drawback eligibility of the articles for which 
drawback is claimed.
    (c) Maintenance of records. The manufacturer, producer, importer, 
exporter and drawback claimant of the qualified article and the 
exported article must all maintain their appropriate records required 
by this part.


Sec. 191.176  Procedures for claims filed under 19 U.S.C. 1313(p).

    (a) Applicability. The general procedures for filing drawback 
claims shall be applicable to claims filed under 19 U.S.C. 1313(p) 
unless otherwise specifically provided for in this section.
    (b) Administrative efficiency, frequency of claims, and 
restructuring of claims. The procedures regarding administrative 
efficiency, frequency of claims, and restructuring of claims (as 
applicable, see Sec. 191.53 of this part) shall apply to claims filed 
under this subpart.
    (c) Imported duty-paid derivatives (no manufacture). When the basis 
for drawback under 19 U.S.C. 1313(p) is imported duty-paid petroleum 
(not articles manufactured under 19 U.S.C. 1313 (a) or (b)), claims 
under this subpart may be paid and liquidated if:
    (1) The claim is filed on Customs Form 331 and the letter ``P'' is 
marked thereon; and
    (2) The claimant provides a certification stating the basis (such 
as company records, or customer's written certification), for the 
information contained therein and certifying that:
    (i) The exported merchandise was exported within 180 days of entry 
of the designated, imported merchandise;
    (ii) The qualified article and the exported article are 
commercially interchangeable or both articles are subject to the same 
8-digit HTSUS tariff classification;
    (iii) To the best of the claimant's knowledge, the designated 
imported merchandise, the qualified article and the exported article 
have not and will not serve as the basis of any other drawback claim;
    (iv) Evidence in support of the certification will be retained by 
the person providing the certification for 3 years after payment of the 
claim; and
    (v) Such evidence will be available for verification by Customs.
    (d) Derivatives manufactured under 19 U.S.C. 1313 (a) or (b). When 
the basis for drawback under 19 U.S.C. 1313(p) is articles manufactured 
under 19 U.S.C. 1313 (a) or (b), claims under this section may be paid 
and liquidated if:
    (1) The claim is filed on Customs Form 331 and the letter ``P'' is 
marked in block 15 thereof;
    (2) All documents required to be filed with a manufacturing claim 
under 19 U.S.C. 1313 (a) or (b) are filed with the claim;
    (3) The claim identifies the specific refinery or production 
facility at which the derivatives were manufactured or produced;
    (4) The claim states the period of manufacture for the derivatives; 
and
    (5) The claimant provides a certification stating the basis (such 
as company records or a customer's written certification), for the 
information contained therein and certifying that:
    (i) The exported merchandise was exported during the manufacturing 
period for the qualified article or within 180 days after the close of 
that period;
    (ii) The 8-digit HTSUS tariff classification of the qualified 
article and the exported article is the same;
    (iii) To the best of the claimant's knowledge, the designated 
imported merchandise, the qualified article and the exported article 
have not and will not serve as the basis of any other drawback claim;
    (iv) Evidence in support of the certification will be retained by 
the person providing the certification for 3 years after payment of the 
claim; and
    (v) Such evidence will be available for verification by Customs.

Subpart R--Merchandise Transferred to a Foreign Trade Zone From 
Customs Territory


Sec. 191.181  Drawback allowance.

    The fourth proviso of section 3 of the Foreign Trade Zones Act of 
June 18, 1934, as amended (19 U.S.C. 81c), provides for drawback on 
merchandise transferred to a foreign trade zone from Customs territory 
for the sole purpose of exportation, storage or destruction (except 
destruction of distilled spirits, wines, and fermented malt liquors), 
provided there is compliance with the regulations of this subpart.


Sec. 191.182  Zone-restricted merchandise.

    Merchandise in a foreign trade zone for the purposes specified in 
Sec. 191.181 shall be given status as zone-restricted merchandise on 
proper application (see Sec. 146.44 of this chapter).


Sec. 191.183  Articles manufactured or produced in the United States.

    (a) Procedure for filing documents. Except for the evidence of 
exportation procedure, the drawback procedures prescribed in this part 
shall be followed as applicable to drawback under this subpart on 
articles manufactured or produced in the United States with the use of 
imported or substituted merchandise, and on flavoring extracts or 
medicinal or toilet preparations (including perfumery) manufactured or 
produced with the use of domestic tax-paid alcohol.
    (b) Notice of transfer--(1) Proof of export. The notice of zone 
transfer on Customs Form 7514 shall be in place of the documents under 
subpart G of this part to establish the exportation.
    (2) Filing procedures. The notice of transfer, in triplicate, shall 
be filed with the drawback office where the foreign trade zone is 
located prior to the transfer of the articles to the zone, or within 3 
years after the transfer of the articles to the zone. A notice filed 
after the transfer shall state the foreign trade zone lot number.
    (3) Contents of notice. Each notice of transfer shall show the:
    (i) Number and location of the foreign trade zone;
    (ii) Number and kind of packages and their marks and numbers;
    (iii) Description of the articles, including weight (gross and 
net), gauge, measure, or number; and
    (iv) Name of the transferor.
    (c) Action of drawback office on the notice of transfer. The 
drawback office shall assign a number to each notice of transfer, 
return one copy to the transferor and forward another copy to the zone 
operator at the foreign trade zone.

[[Page 3122]]

     (d) Action of foreign trade zone operator. After articles have 
been received in the zone, the zone operator shall certify on a copy of 
the notice of transfer the receipt of the articles (see 
Sec. 191.184(d)(2)) and forward the notice to the transferor or the 
person designated by the transferor. The transferor shall verify that 
the notice has been certified before filing it with the drawback claim.
    (e) Drawback entries. Drawback entries shall be filed on Customs 
Form 331 to indicate that the merchandise was transferred to a foreign 
trade zone. The ``Declaration of Exportation'' shall be modified as 
follows:

DECLARATION OF TRANSFER TO A FOREIGN TRADE ZONE

    I, __________ (member of firm, officer representing corporation, 
agent, or attorney), of __________, declare that, to the best of my 
knowledge and belief, the particulars of transfer stated in this 
entry, the notices of transfer, and receipts are correct, and that 
the merchandise was transferred to a foreign trade zone for the sole 
purpose of exportation, destruction, or storage, not to be returned 
to the customs territory of the United States for domestic 
consumption.

Dated------------------------------------------------------------------

----------------------------------------------------------------------
Transferor or agent.


Sec. 191.184  Merchandise transferred from continuous Customs custody.

    (a) Procedure for filing claims. The procedure described in subpart 
O of this part shall be followed as applicable, for drawback on 
merchandise transferred to a foreign trade zone from continuous Customs 
custody.
    (b) Drawback entry. Before the transfer of merchandise from 
continuous Customs custody to a foreign trade zone, the importer or a 
person designated in writing by the importer for that purpose shall 
file with the drawback office a direct export drawback entry on Customs 
Form 331 in duplicate. The drawback office shall forward one copy of 
Customs Form 331 to the zone operator at the zone.
    (c) Certification by zone operator. After the merchandise has been 
received in the zone, the zone operator shall certify on the copy of 
Customs Form 331 the receipt of the merchandise (see paragraph (d)(2) 
of this section) and forward the form to the transferor or the person 
designated by the transferor. After executing the certifications 
provided for in paragraph (d)(3) of this section, the transferor shall 
resubmit Customs Form 331 to the drawback office in place of the bill 
of lading required by Sec. 191.156.
    (d) Modification of drawback entry--(1) Indication of transfer. 
Customs Form 331 shall indicate that the merchandise is to be 
transferred to a foreign trade zone.
    (2) Endorsement. The transferor or person designated by the 
transferor shall endorse Customs Form 331 as follows, for execution by 
the foreign trade zone operator:

CERTIFICATION OF FOREIGN TRADE ZONE OPERATOR

    The merchandise described in the entry was received from 
__________ on __________, 19 ______ ; in Foreign Trade Zone No. 
__________, (City and State) Exceptions: __________.

__________ (Name and title)

By __________ (Name of operator)

    (3) Transferor's declaration. The transferor shall declare on 
Customs Form 331 as follows:

TRANSFEROR'S DECLARATION

    I, __________ of the firm of __________, declare that the 
merchandise described in this entry was duly entered at the 
customhouse on arrival at this port; that the duties thereon have 
been paid as specified in this entry; and that it was transferred to 
Foreign Trade Zone No.______, located at __________, (City and 
State) for the sole purpose of exportation, destruction, or storage, 
not to be returned to the customs territory of the United States for 
domestic consumption. I further declare that to the best of my 
knowledge and belief, this merchandise is in the same quantity, 
quality, value, and package, unavoidable wastage and damage 
excepted, as it was at the time of importation; that no allowance 
nor reduction of duties has been made for damage or other cause 
except as specified in this entry; and that no part of the duties 
paid has been refunded by drawback or otherwise.

Dated------------------------------------------------------------------
         (Transferor)


Sec. 191.185  Unused merchandise drawback and merchandise not 
conforming to sample or specification, shipped without consent of the 
consignee, or found to be defective as of the time of importation.

    (a) Procedure for filing claims. The procedures described in 
subpart C of this part relating to unused merchandise drawback, and in 
subpart D of this part relating to rejected merchandise, shall be 
followed as applicable to drawback under this subpart for unused 
merchandise drawback and merchandise that does not conform to sample or 
specification, is shipped without consent of the consignee, or is found 
to be defective as of the time of importation.
    (b) Drawback entry. Before transfer of the merchandise to a foreign 
trade zone, the importer or a person designated in writing by the 
importer for that purpose shall file with the drawback office an entry 
on Customs Form 331 in duplicate. The drawback office shall forward one 
copy of Customs Form 331 to the zone operator at the zone.
    (c) Certification by zone operator. After the merchandise has been 
received in the zone, the zone operator at the zone shall certify on 
the copy of Customs Form 331 the receipt of the merchandise and forward 
the form to the transferor or the person designated by the transferor. 
After executing the declarations provided for in paragraph (d)(3) of 
this section, the transferor shall resubmit Customs Form 331 to the 
drawback office in place of the bill of lading required by 
Sec. 191.156.
    (d) Modification of drawback entry.--(1) Indication of transfer. 
Customs Form 331 shall indicate that the merchandise is to be 
transferred to a foreign trade zone.
    (2) Endorsement. The transferor or person designated by the 
transferor shall endorse Customs Form 331 as follows, for execution by 
the foreign trade zone operator:

CERTIFICATION OF FOREIGN TRADE ZONE OPERATOR

    The merchandise described in this entry was received from 
____________ on __________, 19 __________, in Foreign Trade Zone No. 
__________, __________ (City and State). Exceptions: __________.

__________ (Name of operator)

By __________ (Name and title)

    (3) Transferor's declaration. The transferor shall declare on 
Customs Form 331 as follows:

TRANSFEROR'S DECLARATION

    I, __________, of the firm of __________, declare that the 
merchandise described in the within entry was duly entered at the 
customhouse on arrival at this port; that the duties thereon have 
been paid as specified in this entry; and that it was transferred to 
Foreign Trade Zone No. ________, located at __________, __________ 
(City and State) for the sole purpose of exportation, destruction, 
or storage, not to be returned to the customs territory of the 
United States for domestic consumption. I further declare that to 
the best of my knowledge and belief, said merchandise is the same in 
quantity, quality, value, and package as specified in this entry; 
that no allowance nor reduction in duties has been made; and that no 
part of the duties paid has been refunded by drawback or otherwise.

Dated------------------------------------------------------------------
        Transferor


Sec. 191.186  Person entitled to claim drawback.

    The person named in the foreign trade zone operator's certification 
on the notice of transfer or the drawback entry, as applicable, shall 
be considered to be the transferor. Drawback may be claimed by, and 
paid to, the transferor.

[[Page 3123]]

Subpart S--Drawback Compliance Program


Sec. 191.191  Purpose.

    This subpart sets forth the requirements for the Customs drawback 
compliance program in which claimants and other parties in interest, 
including Customs brokers, may participate after being certified by 
Customs. Participation in the program is voluntary. Under the program, 
Customs is required to inform potential drawback claimants and related 
parties clearly about their rights and obligations under the drawback 
law and regulations. Reduced penalties and/or warning letters may be 
issued once a party has been certified for the program, and is in 
general compliance with the appropriate procedures and requirements 
thereof.


Sec. 191.192  Certification for compliance program.

    (a) General. A party may be certified as a participant in the 
drawback compliance program after meeting the core requirements 
established under the program, or after negotiating an alternative 
drawback compliance program suited to the needs of both the party and 
Customs. Certification requirements shall take into account the size 
and nature of the party's drawback program, the type of drawback claims 
filed, and the volume of claims filed. Whether the party is a drawback 
claimant, a broker, or one that provides data and documentation on 
which a drawback claim is based, will also be considered.
    (b) Core requirements of program. In order to be certified as a 
participant in the drawback compliance program or negotiated 
alternative drawback compliance program, the party must be able to 
demonstrate that it:
    (1) Understands the legal requirements for filing claims, including 
the nature of the records that are required to be maintained and 
produced and the time periods involved;
    (2) Has in place procedures that explain the Customs requirements 
to those employees involved in the preparation of claims, and the 
maintenance and production of required records;
    (3) Has in place procedures regarding the preparation of claims and 
maintenance of required records, and the production of such records to 
Customs;
    (4) Has designated a dependable individual or individuals who will 
be responsible for compliance under the program, and maintenance and 
production of required records;
    (5) Has in place a record maintenance program approved by Customs 
regarding original records, or if approved by Customs, alternative 
records or recordkeeping formats for other than the original records; 
and
    (6) Has procedures for notifying Customs of variances in, or 
violations of, the drawback compliance or other alternative negotiated 
drawback compliance program, and for taking corrective action when 
notified by Customs of violations and problems regarding such program.
    (c) Broker certification. A Customs broker may be certified as a 
participant in the drawback compliance program only on behalf of a 
given claimant (see Sec. 191.194(b)). To do so, a Customs broker who is 
employed to assist a claimant in filing for drawback must be able to 
demonstrate, for and on behalf of such claimant, conformity with the 
core requirements of the drawback compliance program as set forth in 
paragraph (b) of this section. The broker shall ensure that the 
claimant has the necessary documentation and records to support the 
drawback compliance program established on its behalf, and that claims 
to be filed under the program are reviewed by the broker for accuracy 
and completeness.


Sec. 191.193  Application procedure for compliance program.

    (a) Who may apply. Claimants and other parties in interest may 
apply for participation in the drawback compliance program. This 
includes any person, corporation or business entity that provides 
supporting information or documentation to one who files drawback 
claims, as well as Customs brokers who assist claimants in filing for 
drawback. Program participants may further consist of importers, 
manufacturers or producers, agent-manufacturers, complementary 
recordkeepers, subcontractors, intermediate parties, and exporters.
    (b) Place of filing. An application in letter format containing the 
information as prescribed in paragraphs (c) and (d) of this section 
shall be submitted to any drawback office. However, in the event the 
applicant is a claimant for drawback, the application shall be 
submitted to the drawback office where the claims will be filed.
    (c) Letter of application; contents. A party requesting 
certification to become a participant in the drawback compliance 
program shall file with the applicable drawback office a written 
application in letter format, signed by an individual authorized to 
sign drawback documents (see Sec. 191.6 of this part). The detail 
required in the application shall take into account the size and nature 
of the applicant's drawback program, the type of drawback claims filed, 
and the dollar value and volume of claims filed. However, the 
application shall contain at least the following information:
    (1) Name of applicant, address, IRS identification number, and the 
type of business in which engaged, as well as the name(s) of the 
individual(s) designated by the applicant to be responsible for 
compliance under the program;
    (2) A description of the nature of the applicant's drawback 
program, including the type of drawback in which involved (such as, 
manufacturing, or unused or rejected merchandise), and the applicant's 
particular role(s) in the drawback claims process (such as claimant 
and/or importer, manufacturer or producer, agent-manufacturer, 
complementary recordkeeper, subcontractor, intermediate party 
(possessor or purchaser), or exporter (destroyer)); and
    (3) Size of applicant's drawback program. (For example, if the 
applicant is a claimant, the number of claims filed over the previous 
12-month period should be included, along with the number estimated to 
be filed over the next 12-month period, and the estimated amount of 
drawback to be claimed annually. Other parties should describe the 
extent to which they are involved in drawback activity, based upon 
their particular role(s) in the drawback process; for example, 
manufacturers should explain how much manufacturing they are engaged in 
for drawback, such as the quantity of drawback product produced on an 
annual basis, as established by the certificates of manufacture and 
delivery they have executed.)
    (d) Application package. Along with the letter of application as 
prescribed in paragraph (c) of this section, the application package 
must include a description of how the applicant will ensure compliance 
with statutory and regulatory drawback requirements. This description 
may be in the form of a booklet or set forth otherwise. The description 
must include at least the following:
    (1) The name and title of the official in the claimant's 
organization who is responsible for oversight of the claimant's 
drawback program;
    (2) If the applicant is a manufacturer and the drawback involved is 
manufacturing drawback, a copy of the letter of notification of intent 
to operate under a general manufacturing drawback ruling or the 
application for a specific manufacturing drawback ruling

[[Page 3124]]

(see Secs. 191.7 and 191.8 of this part), as appropriate, if such 
letter of notification has not yet been acknowledged or application has 
not yet been approved;
    (3) A description of the applicant's drawback record-keeping 
program, including the retention period and method (for example, paper, 
electronic, etc.);
    (4) A list of the records that will be maintained, including at 
least sample import documents, sample export documents, sample 
inventory and transportation documents (if applicable), sample 
laboratory or other documents establishing the qualification of 
merchandise or articles for substitution under the drawback law (if 
applicable), and sample manufacturing documents (if applicable);
    (5) A description of the applicant's specific procedures for:
    (i) How drawback claims are prepared (if the applicant is a 
claimant); and
    (ii) How the applicant will fulfill any requirements under the 
drawback law and regulations applicable to its role in the drawback 
program;
    (6) A description of the applicant's procedures for notifying 
Customs of variances in, or violations of, its drawback compliance 
program or negotiated alternative drawback compliance program, and 
procedures for taking corrective action when notified by Customs of 
violations or other problems in such program; and
    (7) A description of the applicant's procedures for annual review 
to ensure that its drawback compliance program meets the statutory and 
regulatory drawback requirements and that Customs is notified of any 
modifications from the procedures described in this application.


Sec. 191.194  Action on application to participate in compliance 
program.

    (a) Review by applicable drawback office.--(1) General. It is the 
responsibility of the drawback office where the drawback compliance 
application package is filed to coordinate its decision making on the 
package both with Customs Headquarters and with the other field 
drawback offices as appropriate. Customs processing of the package will 
consist of the review of the information contained therein as well as 
any additional information requested (see paragraph (a)(2) of this 
section).
    (2) Criteria for Customs review. The drawback office shall review 
and verify the information submitted in and with the application. In 
order for Customs to evaluate the application, Customs may request 
additional information (including additional sample documents) and/or 
explanations of any of the information provided for in Sec. 191.193 (c) 
and (d) of this subpart. Based on the information submitted on and with 
the application and any information so requested, and based on the 
applicant's record of transactions with Customs, the drawback office 
will approve or deny the application. The criteria to be considered in 
reviewing the applicant's record with Customs shall include (as 
applicable):
    (i) The presence or absence of unresolved Customs charges (duties, 
taxes, or other debts owed Customs);
    (ii) The accuracy of the claimant's past drawback claims; and
    (iii) Whether accelerated payment of drawback or any other drawback 
privilege was previously revoked or suspended.
    (b) Approval. Certification as a participant in the drawback 
compliance program will be given to applicants whose applications are 
approved under the criteria in paragraph (a)(2) of this section. The 
applicable drawback office will give written notification to an 
applicant of its certification as a participant in the drawback 
compliance program. A Customs broker obtaining certification for a 
drawback claimant will be sent written notification on behalf of such 
claimant, with a copy of the notification also being sent to the 
claimant.
    (c) Benefits of participation in program.--(1) Alternative to 
penalties; written notice. When a party that has been certified as a 
participant in the drawback compliance program and is generally in 
compliance with the appropriate procedures and requirements of the 
program commits a violation of 19 U.S.C. 1593a(a) (see Sec. 191.62(b) 
of this part), Customs shall, in the absence of fraud or repeated 
violations, and in lieu of a monetary penalty as otherwise provided 
under section 1593a, issue a written notice of the violation to the 
party. Repeated violations by a participant, including a Customs 
broker, may result in the issuance of penalties and the removal of 
certification under the program until corrective action, satisfactory 
to Customs, is taken.
    (d) Denial. If certification as a participant in the drawback 
compliance program is denied to an applicant, the applicant shall be 
given written notice by the applicable drawback office, specifying the 
grounds for such denial, together with any action that may be taken to 
correct the perceived deficiencies, and informing the applicant that 
such denial may be appealed to the appropriate drawback office and then 
appealed to Customs Headquarters.
    (e) Proposed revocation. If the participant commits repeated 
violations of its drawback compliance program or negotiated alternative 
program, the applicable drawback office, by written notice, may propose 
to revoke certification from the participant, until corrective action, 
satisfactory to Customs, is taken to prevent such violations. The 
written notice will describe the cause for the proposed revocation and 
the corrective actions required for re-certification.
    (f) Appeal of denial or challenge to proposed revocation. A party 
may appeal a denial or challenge a proposed revocation of certification 
as a participant in the drawback compliance program by filing a written 
appeal, within 30 days of the date of such denial or proposed 
revocation, with the applicable drawback office. A denial of an appeal 
or challenge to a proposed revocation may itself be appealed to Customs 
Headquarters within 30 days of receipt of the applicable drawback 
office's decision. The 30-day period for appeal or challenge with the 
applicable drawback office and/or with Customs Headquarters may be 
extended for good cause, upon written request by the applicant for such 
extension filed with the applicable drawback office or with Customs 
Headquarters, as the case may be, within the 30-day period.


Sec. 191.195  Combined application for certification in drawback 
compliance program and drawback privileges.

    An applicant for certification in the drawback compliance program 
may also, in the same application, apply for the drawback privileges 
provided for in subpart I of this part (waiver of prior notice of 
intent to export and accelerated payment of drawback). Alternatively, 
an applicant may separately apply for certification in the drawback 
compliance and one or both privilege(s). In the former instance, the 
intent to apply for certification and one or both privileges must be 
clearly stated. In all instances, all of the requirements for 
certification and the privilege(s) applied for must be met (for 
example, in a combined application for certification in the drawback 
compliance program and both privileges, all of the information required 
for certification and each privilege, all required sample documents for 
certification and each privilege, and all required certifications must 
be included in and with the application).

[[Page 3125]]

Appendix A to Part 191--General Manufacturing Drawback Rulings

I. General Instructions

    A. There follow various general manufacturing drawback rulings 
which have been designed to simplify drawback procedures. Any person 
who can comply with the conditions of any one of these rulings may 
notify a Customs drawback office in writing of its intention to 
operate under the ruling. Such a letter of notification shall 
include the following information:
    1. Name and address of operator;
    2. Factories which will operate under the general ruling;
    3. If a business entity, the names of officers or other persons 
legally authorized to bind the corporation who will sign drawback 
documents on behalf of operator;
    4. Description of the merchandise and articles, unless 
specifically described in the general ruling;
    5. For the general ruling for manufacturing drawback under 
section 1313(a) and the general ruling for manufacturing drawback 
(agents under section 1313(b)), if the drawback office has doubts as 
to whether the conversion of the imported merchandise into the 
exported articles is a manufacturing or production operation, the 
operator will be asked to give details of the operation.
    B. These general manufacturing drawback rulings supersede 
general ``contracts'' previously published under the following 
Treasury Decisions (T.D.'s): 81-74, 81-92, 81-181, 81-234, 81-300, 
83-59, 83-73, 83-123, 85-110.
    Anyone currently operating under any of the above-listed 
Treasury Decisions will automatically be covered by the superseding 
general ruling, including all privileges of the previous 
``contract''.

II. General Drawback Manufacturing Ruling Under 19 U.S.C. 1313(a)

A. Imported Merchandise or Drawback Products 1 Used

    Imported merchandise or drawback products are used in the 
manufacture of the exported articles upon which drawback claims will 
be based.
---------------------------------------------------------------------------

    \1\ Drawback products are those produced in the United States in 
accordance with the drawback law and regulations.
---------------------------------------------------------------------------

B. Exported Articles on Which Drawback Will Be Claimed

    Exported articles on which drawback will be claimed will be 
manufactured in the United States using imported merchandise or 
drawback products.

C. Process of Manufacture or Production

    The imported merchandise or drawback products will be used to 
manufacture new and different articles (see 19 CFR 191.2(p)).

D. By-Products

    1. Relative values. Drawback law mandates the assignment of 
relative values when two or more products necessarily are produced 
concurrently in the same operation. If by-products are produced 
records will be maintained of the market value of each product or 
by-product at the time it is first separated in the manufacturing 
process.
    2. Appearing-in method. The appearing in basis may not be used 
if by-products are produced unless all products are valued 
identically.

E. Loss or Gain

    Records will be maintained showing the extent of any loss or 
gain in net weight or measurement of the imported merchandise, 
caused by atmospheric conditions, chemical reactions, or other 
factors.

F. Tradeoff

    The use of any domestic merchandise acquired in exchange for 
imported merchandise that is of the same kind and quality as the 
imported merchandise, meeting specifications set forth in the 
application by the operator for a determination of same kind and 
quality (see Sec. 191.11(c)), shall be treated as use of the 
imported merchandise if no certificate of delivery is issued 
covering the imported merchandise (19 U.S.C. 1313(k)) upon 
compliance with the applicable regulations and rulings (see 19 CFR 
191.11).

G. Stock in Process

    Stock in process does not result; or if it does result, details 
will be given in claims as filed, and it will not be included in the 
computation of the merchandise used to manufacture the finished 
articles on which drawback is claimed.

H. Waste

    No drawback is payable on any waste which results from the 
manufacturing operation. Unless the claim for drawback is based on 
the quantity of merchandise appearing in the exported articles, 
records will be maintained to establish the value, the quantity, and 
the disposition of any waste that results from manufacturing the 
exported articles. If no waste results, records will be maintained 
to establish that fact.

I. Procedures and Records Maintained

    Records will be maintained to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise, and
    2. The quantity of imported merchandise \2\ used in producing 
the exported articles. To obtain drawback the claimant must 
establish that the completed articles were exported within 5 years 
after importation of the imported merchandise.
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of the sentence should read ``appearing in the exported 
articles.''
---------------------------------------------------------------------------

J. Inventory Procedures

    The operator's inventory records will show how the drawback 
recordkeeping requirements set forth in 19 U.S.C. 1313(a) and part 
191 of the Customs Regulations will be met, as discussed under the 
heading ``Procedures And Records Maintained''. If those records do 
not establish satisfaction of those legal requirements, drawback 
cannot be paid.

K. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of merchandise used in 
producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible merchandise that 
appears in the exported articles, regardless of whether there is 
waste, and no records of waste need be maintained. If there is 
valuable waste recovered from the manufacturing operation and 
records are kept which show the quantity and value of the waste, 
drawback may be claimed on the quantity of eligible material used to 
produce the exported articles less the amount of that merchandise 
which the value of the waste would replace.

L. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the number or 
locations of its offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(a), part 191 of the Customs 
Regulations and this general ruling.

III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Agents

    Operators under this general ruling must comply with T.D.s 
55027(2) and 55207(1), 19 U.S.C. 1313(b), and 19 CFR part 191 (see 
particularly, Sec. 191.9).

A. Name and Address of Principal

B. Imported Merchandise or Drawback Products, or Other (Substituted) 
Merchandise, Used in Manufacture or Production

C. Articles Manufactured or Produced From the Imported Merchandise or 
Drawback Products or Other (Substituted) Merchandise Used in 
Manufacture or Production.

D. Process of Manufacture or Production.

    The imported merchandise or drawback products or other 
substituted merchandise will be used to manufacture new and 
different articles (see 19 CFR 191.2(p)).

E. Procedures and Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the merchandise received 
from the principal;
    2. The date such merchandise was received from the principal;
    3. The date the merchandise received from the principal was used 
in manufacture or production, and the identity and

[[Page 3126]]

specifications of the articles produced thereby; and
    4. The date the articles produced were returned to the 
principal.

F. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
manufacturing or producing articles for account of principal under 
the principal's general manufacturing drawback ruling or specific 
manufacturing drawback ruling, as appropriate;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its notification of intent to operate under this general 
ruling current by reporting promptly to the drawback office which 
liquidates the claims any changes in the number or locations of the 
operator's offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

IV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Component Parts

A. Same Kind and Quality (Parallel Columns)

Imported Merchandise or Drawback Products   Duty-Paid, Duty-Free or     
 \1\ to be Designated as the Basis for       Domestic Merchandise of the
 Drawback on the Exported Products.          Same Kind and Quality as   
                                             that Designated which will 
                                             be Used in the Production  
                                             of the Exported Products.  
Component parts identified by individual    Component parts identified  
 part numbers.                               with the same individual   
                                             part numbers as those in   
                                             the column immediately to  
                                             the left hereof.           
                                                                        
\1\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise. 

    The designated components will have been manufactured in 
accordance with the same specifications and from the same materials, 
and identified by the same part number as the substituted 
components. Further, the designated and substituted components are 
used interchangeably in the manufacture of the exported articles 
upon which drawback will be claimed. Specifications or drawings will 
be maintained and made available for Customs officers. The imported 
merchandise designated on drawback claims will be so similar to the 
merchandise used in producing the exported articles on which 
drawback is claimed that the merchandise used would, if imported, be 
subject to the same rate of duty as the imported designated 
merchandise. Fluctuations in market value resulting from factors 
other than quality will not affect the drawback.

B. Exported Articles on Which Drawback Will Be Claimed

    The exported articles will have been manufactured in the United 
States using components described in the parallel columns above.

C. General Statement

    The operator manufactures for its own account. The operator may 
produce articles for the account of another or another manufacturer 
may produce for the operator's account under contract within the 
principal and agency relationship outlined in T.D.'s 55027(2) and 
55207(1).

D. Process of Manufacture or Production

    The components described in the parallel columns will be used to 
manufacture new and different articles (see 19 CFR 191.2(p)).

E. By-Products

    Not applicable.

F. Waste

    No drawback is payable on any waste which results from the 
manufacturing operation. Unless the claim for drawback is based on 
the quantity of components appearing in the exported articles, 
records will be maintained to establish the value (or the lack of 
value), the quantity, and the disposition of any waste that results 
from manufacturing the exported articles. If no waste results, 
records will be maintained to establish that fact.

G. Tradeoff

    The use of any domestic merchandise acquired in exchange for 
imported merchandise that meets the same kind and quality 
specifications contained in the parallel columns of this general 
ruling shall be treated as use of the imported merchandise if no 
certificate of delivery is issued covering the imported merchandise 
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations 
and rulings.

H. Procedures and Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \2\ used to produce the exported 
articles;
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the operator used the merchandise to 
produce articles. During the same 3-year period, the operator 
produced \3\ the exported articles.
---------------------------------------------------------------------------

    \3\ The date of production is the date an article is completed.)
---------------------------------------------------------------------------

    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation of the imported merchandise. The operator's records 
establishing its compliance with these requirements will be 
available for audit by Customs during business hours. Drawback is 
not payable without proof of compliance.

I. Inventory Procedures

    The operator's inventory records will show how the drawback 
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 
191 of the Customs Regulations will be met, as discussed under the 
heading ``Procedures And Records Maintained''. If those records do 
not establish satisfaction of those legal requirements, drawback 
cannot be paid.

J. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of eligible components 
used in producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible components that 
appears in the exported articles, regardless of whether there is 
waste, and no records of waste need be maintained. If there is 
valuable waste recovered from the manufacturing operation and 
records are kept which show the quantity and value of the waste, 
drawback may be claimed on the quantity of eligible components used 
to produce the exported articles less the amount of those components 
which the value of the waste would replace.

K. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the number or 
locations of its offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

[[Page 3127]]

V. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Orange Juice

A. Same Kind and Quality (Parallel Columns)

  Imported Merchandise or Drawback          Duty-Paid, Duty-Free or     
 Products\1\ to be Designated as the Basis   Domestic Merchandise of the
 for Drawback on the Exported Products.      Same Kind and Quality as   
                                             that Designated which Will 
                                             be Used in the Production  
                                             of Exported Products.      
  Concentrated orange juice for             Concentrated orange juice   
 manufacturing (of not less than 55 deg.     for manufacturing as       
 Brix) as defined in the standard of         described in the left-hand 
 identity of the Food and Drug               parallel column.           
 Administration (21 CFR 146.53) which                                   
 meets the Grade A standard of the U.S.                                 
 Dept. of Agriculture (7 CFR 52.1557,                                   
 Table IV).                                                             
                                                                        
\1\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise.)

    The imported merchandise designated on drawback claims will be 
so similar in quality to the merchandise used in producing the 
exported articles on which drawback is claimed that the merchandise 
used would, if imported, be subject to the same rate of duty as the 
imported designated merchandise. Fluctuations in the market value 
resulting from factors other than quality will not affect the 
drawback.

B. Exported Articles on Which Drawback Will Be Claimed

    1. Orange juice from concentrate (reconstituted juice).
    2. Frozen concentrated orange juice.
    3. Bulk concentrated orange juice.

C. General Statement

    The operator manufactures for its own account. The operator may 
produce articles for the account of another or another manufacturer 
may produce for the operator's account under contract within the 
principal and agency relationship outlined in T.D.'s 55027(2) and 
55207(1).

D. Process of Manufacture or Production

    1. Orange juice from concentrate (reconstituted juice). 
Concentrated orange juice for manufacturing is reduced to a desired 
11.8 deg. Brix by a blending process to produce orange juice from 
concentrate. The following optional blending processes may be used:
    i. The concentrate is blended with fresh orange juice (single 
strength juice); or
    ii. The concentrate is blended with essential oils, flavoring 
components, and water; or
    iii. The concentrate is blended with water and is heat treated 
to reduce the enzymatic activity and the number of viable 
microorganisms.
    2. Frozen concentrated orange juice. Concentrated orange juice 
for manufacturing is reduced to a desired degree Brix of not less 
than 41.8 deg. Brix by the following optional blending processes:
    i. The concentrate is blended with fresh orange juice (single 
strength juice); or
    ii. The concentrate is blended with essential oils and flavoring 
components and water.
    3. Bulk concentrated orange juice. Concentrated orange juice for 
manufacturing is blended with essential oils and flavoring 
components which would enable another processor such as a dairy to 
prepare finished frozen concentrated orange juice or orange juice 
from concentrate by merely adding water to the (intermediate) bulk 
concentrated orange juice.

E. By-Products, Waste, Loss or Gain

    Not applicable

F. Tradeoff

    The use of any domestic merchandise acquired in exchange for 
imported merchandise that meets the same kind and quality 
specifications contained in the parallel columns of this general 
ruling shall be treated as use of the imported merchandise if no 
certificate of delivery is issued covering the imported merchandise 
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations 
and rulings.

G. Procedures and Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \2\ used to produce the exported 
articles;
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the operator used the designated 
merchandise to produce articles. During the same 3-year period, the 
operator produced \3\ the exported articles.
---------------------------------------------------------------------------

    \3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    To obtain drawback it must be established that the completed 
articles were exported within 5 years after the importation of the 
imported merchandise. Records establishing compliance with these 
requirements will be available for audit by Customs during business 
hours. No drawback is payable without proof of compliance.

H. Inventory Procedures

    The operator's inventory records will show how the drawback 
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 
191 of the Customs Regulations will be met, as discussed under the 
heading ``Procedures And Records Maintained''. If those records do 
not establish satisfaction of those legal requirements, drawback 
cannot be paid.

I. Basis of Claim for Drawback

    The basis of claim for drawback will be the quantity of 
concentrated orange juice for manufacturing used in the production 
of the exported articles. It is understood that when fresh orange 
juice is used as cutback, it will not be included in the pound 
solids when computing the drawback due.

J. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the number or 
locations of its offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

VI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Piece Goods

A. Same Kind and Quality (Parallel Columns)

Imported Merchandise or Drawback Products   Duty-Paid, Duty-Free or     
 \1\ to be Designated as the Basis for       Domestic Merchandise of the
 Drawback on the Exported Products.          Same Kind and Quality as   
                                             that Designated which will 
                                             be Used in the Production  
                                             of the Exported Products.  
                                                                        
Piece goods.                                Piece goods.                
                                                                        
\1\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under 19 U.S.C. 1313(b). They may be designated as the
  basis for drawback and also may be deemed to be domestic merchandise. 

    The piece goods used in manufacture will be the same kind and 
quality as the piece goods designated as the basis of claim for 
drawback, and are used interchangeably without change in 
manufacturing processes or resultant products, by-products, or 
wastes. Some tolerances between imported-designated piece goods and 
the used-exported piece goods will be permitted to accommodate 
variations which are normally found in piece goods. These tolerances 
are no greater than the tolerances generally allowed in the industry 
for piece goods of the same kind and quality as follows:
    1. A 4% weight tolerance so that the piece goods used in 
manufacture will be not more

[[Page 3128]]

than 4% lighter or heavier than the imported piece goods which will 
be designated;
    2. A tolerance of 4% in the aggregate thread count per square 
inch so that the piece goods used in manufacture will have an 
aggregate thread count within 4%, more or less of the aggregate 
thread count of the imported piece goods which will be designated. 
In each case, the average yarn number of the domestic piece goods 
will be the same or greater than the average yarn number of the 
imported piece goods designated, and in each case, the substitution 
and tolerance will be employed only within the same family of 
fabrics, i.e., print cloth for print cloth, gingham for gingham, 
greige for greige, dyed for dyed, bleached for bleached, etc. The 
piece goods used in manufacture of the exported articles will be 
designated as containing the identical percentage of identical 
fibers as the piece goods designated as the basis for allowance of 
drawback; for example, piece goods containing 65% cotton and 35% 
dacron will be designated against the use of piece goods shown to 
contain 65% cotton and 35% dacron. The actual fiber composition may 
vary slightly from that described on the invoice or other acceptance 
of the fabric as having the composition described on documents in 
accordance with trade practices. The substituted piece goods used in 
the manufacture of articles for exportation with drawback will be so 
similar in quality to the imported piece goods designated for the 
basis of allowance of drawback, that the piece goods used, if 
imported, would have been subject to the same or greater amount of 
duty as was paid on the imported designated piece goods. Differences 
in value resulting from factors other than quality, as for example, 
price fluctuations, will not preclude an allowance of drawback.

B. Exported Articles on Which Drawback Will Be Claimed

    Finished piece goods.

C. General Statement

    The operator manufactures for its own account. The operator may 
produce articles for the account of another or another manufacturer 
may produce for the operator's account under contract within the 
principal and agency relationship outlined in T.D.s. 55027(2) and 
55207(1).

D. Process of Manufacture or Production

    Piece goods are subject to any one of the following finishing 
productions:
    1. Bleaching,
    2. Mercerizing,
    3. Dyeing,
    4. Printing,
    5. A combination of the above, or
    6. Any additional finishing processes.

E. By-Products

    Not applicable.

F. Waste

    Rag waste may be incurred. The operator's records shall show the 
quantity of rag waste, if any, and its value. In instances where rag 
waste occurs and it is impractical to account for the actual 
quantity of rag waste incurred, it shall be assumed in liquidation 
that such rag waste constituted 2% of the piece goods put into the 
finishing processes.

G. Shrinkage, Gain, and Spoilage

    The operator's records shall show the yardage lost by shrinkage 
or gained by stretching during manufacture, and the quantity of 
remnants resulting and of spoilage incurred, if any.

H. Tradeoff

    The use of any domestic merchandise acquired in exchange for 
imported merchandise that meets the same kind and quality 
specifications contained in the parallel columns of this general 
ruling shall be treated as use of the imported merchandise if no 
certificate of delivery is issued covering the imported merchandise 
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations 
and rulings.

I. Procedures and Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise 2 used to produce the exported 
articles;
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the operator used the merchandise to 
produce articles. During the same 3-year period, the operator 
produced 3 the exported articles.
---------------------------------------------------------------------------

    \3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation of the imported merchandise. The operator's records 
establishing its compliance with these requirements will be 
available for audit by Customs during business hours. Drawback is 
not payable without proof of compliance.

J. Inventory Procedures

    The operator's inventory records will show how the drawback 
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 
191 of the Customs Regulations will be met, as discussed under the 
heading ``Procedures And Records Maintained''. If those records do 
not establish satisfaction of those legal requirements, drawback 
cannot be paid.

K. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of eligible piece goods 
used in producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible piece goods that 
appears in the exported articles, regardless of whether there is 
waste, and no records of waste need be maintained. If there is 
valuable waste recovered from the manufacturing operation and 
records are kept which show the quantity and value of the waste from 
each lot of piece goods, drawback may be claimed on the quantity of 
eligible piece goods used to produce the exported articles less the 
amount of piece goods which the value of the waste would replace.

L. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the number or 
locations of its offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

VII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Steel

A. Same kind and Quality (Parallel Columns)

Imported Merchandise or Drawback Products   Duty-Paid, Duty-Free or     
 1 to be Designated as the Basis for         Domestic Merchandise of the
 Drawback on the Exported Products.          Same Kind and Quality as   
                                             that Designated which will 
                                             be Used in the Production  
                                             of the Exported Products.  
Steel of one general class, e.g., an        Steel of the same general   
 ingot, falling within one SAE, AISI, or     class, specification and   
 ASTM 2 specification, and if the            grade as the steel in the  
 specification contains one or more grades   column immediately to the  
 falling within one grade of the             left hereof.               
 specification.                                                         
                                                                        
1 Drawback products are those produced in the United States in          
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise. 
2 Standards set by the Society of Automotive Engineers (SAE), the       
  American Iron and Steel Institute (AISI), or the American Society for 
  Testing and Materials (ASTM).                                         

    1. The duty-free or domestic steel used instead of the duty-paid 
steel will be interchangeable for manufacturing purposes with the 
duty-paid steel. To be

[[Page 3129]]

interchangeable a steel must be able to be used in place of the 
substituted steel without any additional processing step in the 
manufacture of the article on which drawback is to be claimed.
    2. Because the duty-paid steel that is to be designated as the 
basis for drawback is dutiable according to its value, the amount of 
duty can vary with its size (gauge, width, or length) or composition 
(e.g., chrome content). If such variances occur, designation will be 
by ``price extra'', and in no case will drawback be claimed in a 
greater amount than that which would have accrued to that steel used 
in manufacture of or appearing in the exported articles. Price extra 
is not available for coated or plated steel, covered in paragraph 5, 
infra, insofar as the coating or plating is concerned.
    3. The duty-paid steel will be so similar in quality to the 
steel used to manufacture the articles on which drawback will be 
claimed that the steel so used, if imported, would be classifiable 
in the same tariff subheading number and at the same rate of duty as 
the duty-paid imported steel.
    4. Any fluctuation in market value caused by a factor other than 
quality does not affect drawback.
    5. If the steel is coated or plated with a base metal, in 
addition to meeting the requirements for uncoated or unplated steel 
set forth in the parallel columns, the base-metal coating or plating 
on the duty-free or domestic steel used in place of the duty-paid 
steel will have the same composition and thickness as the coating or 
plating on the duty-paid steel. If the coated or plated duty-paid 
steel is within a SAE, AISI, ASTM specification, any duty-free or 
domestic coated or plated steel covered by the same specification 
and grade (if two or more grades are in the specification) is 
considered to meet this criterion for same kind and quality.

B. Exported Articles on Which Drawback Will Be Claimed

    The exported articles will have been manufactured in the United 
States using steels described in the parallel columns above.

C. General Statement

    The operator manufactures for its own account. The operator may 
produce articles for the account of another or another manufacturer 
may produce for the operator's account under contract within the 
principal and agency relationship outlined in T.D.'s 55027(2) and 
55207(1).

D. Process of Manufacture or Production

    The steel described in the parallel columns will be used to 
manufacture new and different articles (see 19 CFR 191.2(p)).

E. By-Products

    Not applicable.

F. Waste

    No drawback is payable on any waste which results from the 
manufacturing operation. Unless the claim for drawback is based on 
the quantity of steel appearing in the exported articles, records 
will be maintained to establish the value (or the lack of value), 
the quantity, and the disposition of any waste that results from 
manufacturing the exported articles. If no waste results, records to 
establish that fact will be maintained.

G. Loss or Gain

    The operator will maintain records showing the extent of any 
loss or gain in net weight or measurement of the steel caused by 
atmospheric conditions, chemical reactions, or other factors.

H. Tradeoff

    The use of any domestic merchandise acquired in exchange for 
imported merchandise that meets the same kind and quality 
specifications contained in the parallel columns of this general 
ruling shall be treated as use of the imported merchandise if no 
certificate of delivery is issued covering the imported merchandise 
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations 
and rulings.

I. Procedures and Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise 3 used to produce the exported 
articles;
---------------------------------------------------------------------------

    \3\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the operator used the merchandise to 
produce articles. During the same 3-year period, the operator 
produced 4 the exported articles.
---------------------------------------------------------------------------

    \4\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation of the imported merchandise. The operator's records 
establishing its compliance with these requirements will be 
available for audit by Customs during business hours. Drawback is 
not payable without proof of compliance.

J. Inventory Procedures

    The operator's inventory records will show how the drawback 
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 
191 of the Customs Regulations will be met, as discussed under the 
heading ``Procedures And Records Maintained''. If those records do 
not establish satisfaction of those legal requirements, drawback 
cannot be paid.

K. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of steel used in 
producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible steel that 
appears in the exported articles, regardless of whether there is 
waste, and no records of waste need be maintained. If there is 
valuable waste recovered from the manufacturing operation and 
records are kept which show the quantity and value of the waste from 
each lot of steel, drawback may be claimed on the quantity of 
eligible steel used to produce the exported articles less the amount 
of that steel which the value of the waste would replace.

L. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification to operate under this general 
ruling current by reporting promptly to the drawback office which 
liquidates its claims any changes in the number or locations of its 
offices or factories, the corporate name, corporate officers, or the 
corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

VIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Sugar

A. Same Kind and Quality (Parallel Columns)

Imported Merchandise or Drawback Products   Duty-Paid, Duty-Free or     
 \1\ to be Designated as the Basis for       Domestic Merchandise of the
 Drawback on the Exported Products           Same Kind and Quality as   
                                             that Designated which will 
                                             be Used in the Production  
                                             of the Exported Products.  
1. Granulated or liquid sugar for           1. Granulated or liquid     
 manufacturing, containing sugar solids of   sugar for manufacturing,   
 not less than 99.5 sugar degrees            containing sugar solids of 
                                             not less than 99.5 sugar   
                                             degrees.                   
2. Granulated or liquid sugar for           2. Granulated or liquid     
 manufacturing, containing sugar solids of   sugar for manufacturing,   
 less than 99.5 sugar degrees                containing sugar solids of 
                                             less than 99.5 sugar       
                                             degrees.                   
                                                                        
\1\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise. 

    The sugars listed above test within three-tenths of a degree on 
the polariscope. Sugars in each column are completely 
interchangeable with the sugars directly opposite and designation 
will be made on this basis only. The designated sugar on which 
claims for drawback will be based will be so similar in quality to 
the sugar used in manufacture of the products exported with drawback 
that the sugar used in manufacture would, if imported, be subject to 
the same amount of duty paid on a like quantity of designated sugar. 
Differences in value resulting from factors other than quality,

[[Page 3130]]

such as market fluctuation, will not affect the allowance of 
drawback.

B. Exported Articles on Which Drawback Will Be Claimed

    Edible substances (including confectionery) and/or beverages 
and/or ingredients therefor.

C. General Statement

    The operator manufactures for its own account. The operator may 
produce articles for the account of another or another manufacturer 
may produce for the operator's account under contract within the 
principal and agency relationship outlined in T.D.'s 55027(2) and 
55207(1).

D. Process of Manufacture or Production

    The sugars are subjected to one or more of the following 
operations to form the desired product(s):
    1. Mixing with other substances,
    2. Cooking with other substances,
    3. Boiling with other substances,
    4. Baking with other substances,
    5. Additional similar processes

E. By-Products

    Not applicable.

F. Waste

    No drawback is payable on any waste which results from the 
manufacturing operation. Unless the claim for drawback is based on 
the quantity of sugar appearing in the exported articles, records 
will be maintained to establish the value (or the lack of value), 
the quantity, and the disposition of any waste that results from 
manufacturing the exported articles. If no waste results, records to 
establish that fact will be maintained.

G. Loss or Gain

    The operator will maintain records showing the extent of any 
loss or gain in net weight or measurement of the sugar caused by 
atmospheric conditions, chemical reactions, or other factors.

H. Tradeoff

    The use of any domestic merchandise acquired in exchange for 
imported merchandise that meets the same kind and quality 
specifications contained in the parallel columns of this general 
ruling shall be treated as use of the imported merchandise if no 
certificate of delivery is issued covering the imported merchandise 
(19 U.S.C. 1313(k)) upon compliance with the applicable regulations 
and rulings.

I. Procedures And Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \2\ used to produce the exported 
articles.
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the operator used the merchandise to 
produce
articles. During the same 3-year period, the operator produced \3\ the 
exported articles.
---------------------------------------------------------------------------

    \3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation of the imported merchandise. The operator's records 
establishing its compliance with these requirements will be 
available for audit by Customs during business hours. Drawback is 
not payable without proof of compliance.

J. Inventory Procedures

    The operator's inventory records will show how the drawback 
recordkeeping requirements set forth in 19 U.S.C. 1313(b) and part 
191 of the Customs Regulations will be met, as discussed under the 
heading ``Procedures And Records Maintained''. If those records do 
not establish satisfaction of those legal requirements, drawback 
cannot be paid.

K. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of sugar used in 
producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible sugar that 
appears in the exported articles regardless of whether there is 
waste, and no records of waste need be maintained. If there is 
valuable waste recovered from the manufacturing operation and 
records are kept which show the quantity and value of the waste, 
drawback may be claimed on the quantity of eligible material used to 
produce the exported articles less the amount of that sugar which 
the value of the waste would replace.

L. General Requirements

    The operator will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the number or 
locations of its offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

IX. General Drawback Ruling under 19 U.S.C. 1313(b) for Raw Sugar.

    Drawback may be allowed under 19 U.S.C. 1313(b) upon the 
exportation of hard or soft refined sugars and sirups manufactured 
from raw sugar, subject to the following special requirements:
    A. The drawback allowance shall not exceed 99 percent of the 
duty paid on a quantity of raw sugar designated by the refiner which 
contains a quantity of sucrose not in excess of the quantity 
required to manufacture the exported sugar or sirup, ascertained as 
provided in this general rule.
    B. The refined sugars and sirups shall have been manufactured 
with the use of duty-paid, duty-free, or domestic sugar, or 
combinations thereof, within 3 years after the date on which 
designated sugar was received by the refiner, and shall have been 
exported within 5 years from the date of importation of the 
designated sugar.
    C. All granulated sugar testing by the polariscope 99.5 deg. and 
over shall be deemed hard refined sugar. All refined sugar testing 
by the polariscope less than 99.5 deg. shall be deemed soft refined 
sugar. All ``blackstrap,'' ``unfiltered sirup,'' and ``final 
molasses'' shall be deemed sirup.
    D. The imported duty-paid sugar selected by the refiner as the 
basis for the drawback claim (designated sugar) shall be of the same 
kind and quality as that used in the manufacture of the exported 
refined sugar or sirup and shall have been used within 3 years after 
the date on which it was received by the refiner. Duty-paid sugar 
which has been used at a plant of a refiner within 3 years after the 
date on which it was received by such refiner may be designated as 
the basis for the allowance of drawback on refined sugars or sirups 
manufactured at another plant of the same refiner.
    E. For the purpose of distributing the drawback, relative values 
shall be established between hard refined (granulated) sugar, soft 
refined (various grades) sugar, and sirups at the time of 
separation. The entire period covered by an abstract shall be deemed 
the time of separation of the sugars and sirups covered by such 
abstract.
    F. The sucrose allowance per pound on hard refined (granulated) 
sugar established by an abstract, as provided for in this general 
ruling, shall be applied to hard refined sugar commercially known as 
loaf, cut loaf, cube, pressed, crushed, or powdered sugar 
manufactured from the granulated sugar covered by such abstract.
    G. The sucrose allowance per gallon on sirup established by an 
abstract, as provided for in this general ruling, shall be applied 
to sirup further advanced in value by filtration or otherwise, 
unless such sirup is the subject of a special manufacturing drawback 
ruling.
    H. As to each lot of imported or domestic sugar used in the 
manufacture of refined sugar or sirup on which drawback is to be 
claimed, the raw stock records shall show the refiner's raw lot 
number, the number and character of the packages, the settlement 
weight in pounds, and the settlement polarization. Such records 
covering imported sugar shall show, in addition to the foregoing, 
the import entry number, date of importation, name of importing 
carrier, country of origin, the Government weight, and the 
Government polarization.
    I. The melt records shall show the date of melting, the number 
of pounds of each lot of

[[Page 3131]]

raw sugar melted, and the full analysis at melting.
    J. There shall be kept a daily record of final products boiled 
showing the date of the melt, the date of boiling, the magma filling 
serial number, the number of the vacuum pan or crystallizer filling, 
the date worked off, and the sirup filling serial number.
    K. The sirup manufacture records shall show the date of boiling, 
the period of the melt, the sirup filling serial number, the number 
of barrels in the filling, the magma filling serial number, the 
quantity of sirup, its disposition in tanks or barrels and the 
refinery serial manufacture number.
    L. The refined sugar stock records shall show the refinery 
serial manufacture number, the period of the melt, the date of 
manufacture, the grade of sugar produced, its polarization, the 
number and kind of packages, and the net weight. When soft sugars 
are manufactured, the commercial grade number and quantity of each 
shall be shown.
    M. Each lot of hard or soft refined sugar and each lot of sirup 
manufactured, regardless of the character of the containers or 
vessels in which it is packed or stored, shall be marked immediately 
with the date of manufacture and the refinery manufacture number 
applied to it in the refinery records provided for and shown in the 
abstract, as provided for in this general ruling, from such records. 
If all the sugar or sirup contained in any lot manufactured is not 
intended for exportation, only such of the packages as are intended 
for exportation need be marked as prescribed above, provided there 
is filed with the drawback office immediately after such marking a 
statement showing the date of manufacture, the refinery manufacture 
number, the number of packages marked, and the quantity of sugar or 
sirup contained therein. No drawback shall be allowed in such case 
on any sugar or sirup in excess of the quantity shown on the 
statement as having been marked. If any packages of sugar or sirup 
so marked are repacked into other containers, the new containers 
shall be marked with the marks which appeared on the original 
containers and a revised statement covering such repacking and 
remarking shall be filed with the drawback office. If sirups from 
more than one lot are stored in the same tank, the refinery records 
shall show the refinery manufacture number and the quantity of sirup 
from each lot contained in such tank.
    N. An abstract from the foregoing records covering manufacturing 
periods of not less than 1 month nor more than 3 months, unless a 
different period shall have been authorized, shall be filed when 
drawback is to be claimed on any part of the refined sugar or sirup 
manufactured during such period. Such abstract shall be filed by 
each refiner with the drawback office where drawback claims are 
filed on the basis of this general ruling. Such abstract shall be in 
the form described in Treasury Decision 83-59.
    O. The refiner shall file with each abstract a statement, in the 
form described in Treasury Decision 83-59.
    P. At the end of each calendar month the refiner shall furnish 
to the drawback office a statement showing the actual sales of sirup 
and the average market values of refined sugars for the calendar 
month.
    Q. The sucrose allowance to be applied to the various products 
based on the abstract and statement provided for in this general 
ruling shall be in accordance with the example set forth in Treasury 
Decision 83-59.
    R. Certificates of delivery under this general ruling shall be 
in the form described in Treasury Decision 83-59.
    S. Drawback claims under this general ruling shall be in the 
form described in Treasury Decision 83-59.
    T. General Statement. The refiner manufactures for its own 
account. The refiner may produce articles for the account of another 
or another manufacturer may produce for the refiner's account under 
contract within the principal and agency relationship outlined in 
T.D.'s 55027(2) and 55207(1).
    U. Waste. No drawback is payable on any waste which results from 
the manufacturing operation. Unless drawback claims are based on the 
``appearing in'' method, records will be maintained to establish the 
value (or the lack of value), the quantity, and the disposition of 
any waste that results from manufacturing the exported articles. If 
no waste results, records to establish that fact will be maintained.
    V. Loss or Gain. The refiner will maintain records showing the 
extent of any loss or gain in net weight or measurement of the sugar 
caused by atmospheric conditions, chemical reactions, or other 
factors.
    W. Tradeoff. The use of any domestic merchandise acquired in 
exchange for imported merchandise that meets the same kind and 
quality requirements provided for in this general ruling shall be 
treated as use of the imported merchandise if no certificate of 
delivery is issued covering the imported merchandise (19 U.S.C. 
1313(k)) upon compliance with the applicable regulations and 
rulings.
    X. Procedures And Records Maintained. Records will be maintained 
to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \2\ used to produce the exported 
articles; and
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the refiner used the designated 
merchandise to produce articles. During the same 3-year period, the 
refiner produced \3\ the exported articles.
---------------------------------------------------------------------------

    \3\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation of the imported merchandise. The refiner's records 
establishing its compliance with these requirements will be 
available for audit by Customs during business hours. Drawback is 
not payable without proof of compliance.
    Y. General requirements. The refiner will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the number or 
locations of its offices or factories, the corporate name, corporate 
officers, or the corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

Appendix B to Part 191--Sample Formats for Applications for Specific 
Manufacturing Drawback Rulings

    These sample formats for applications for specific manufacturing 
drawback rulings are not rulings until reviewed and approved by 
Customs Headquarters. A specific manufacturing drawback ruling 
consists of the application plus the letter of acceptance, as 
provided in 19 CFR 191.8. In these application formats, remarks in 
parentheses and footnotes are for explanatory purposes only and 
should not be copied. Other material should be quoted directly in 
the applications.

Format for Sample 1313 (a) and (b) Application Company Letterhead 
(Optional)

U.S. Customs Service, Entry and Carrier Rulings Branch, 1301 
Constitution Avenue, N.W., Washington, D.C. 20229

    Dear Sir: We, (Applicant's Name), a (State, e.g., Delaware) 
corporation (or other described entity) submit this application for 
a specific manufacturing drawback ruling that our manufacturing 
operations qualify for drawback under title 19, United States Code, 
Secs. 1313 (a) and (b), and part 191 of the Customs Regulations. We 
request that the Customs Service authorize drawback on the basis of 
this application.

Name and Address and IRS Number of Applicant

    (Section 191.8(a) of the Customs Regulations provides that each 
manufacturer or producer of articles intended for exportation with 
the benefit of drawback shall apply for a specific manufacturing 
drawback ruling, unless operating under a general manufacturing 
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs 
will not approve an application which shows an unincorporated 
division or company as the applicant (see Sec. 191.8(a)).)

Location of Factory

    (Give the address of the factory(s) where the process of 
manufacture or production

[[Page 3132]]

will take place. If the factory is a different legal entity from the 
applicant, so state and indicate if operating under an Agent's 
general manufacturing drawback ruling.)

Corporate Officers

    (List officers and other persons legally authorized to bind the 
corporation who will sign drawback documents. Section 191.6 of the 
Customs Regulations permits only the president, vice-president, 
secretary, treasurer, or any other individual legally authorized to 
bind the corporation to sign for a corporation. In addition, a 
person within a business entity with a Customs power of attorney for 
the company may sign. A Customs power of attorney may also be given 
to a licensed Customs broker. This heading should be changed to 
NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole 
proprietorship, respectively.)

Customs Office Where Drawback Claims Will Be Filed

    (The 8 offices where drawback claims can be filed are located 
at: Boston, MA; New York, NY; Miami, FL; New Orleans, LA; Houston, 
TX; Long Beach, CA; Chicago, IL; San Francisco, CA)
    (An original application and two copies must be filed. If the 
applicant intends to file drawback claims at more than one drawback 
office, two additional copies of the application must be furnished 
for each additional office indicated.)

General Statement

    (The following questions must be answered:
    1. Who will be the importer of the designated merchandise? (If 
the applicant will not always be the importer of the designated 
merchandise, does the applicant understand its obligations to obtain 
the appropriate certificates of delivery (19 CFR 191.10), 
certificates of manufacture and delivery (19 CFR 191.24), or both?)
    2. Will an agent be used to process the designated or the 
substituted merchandise into articles? (If an agent is to be used, 
the applicant must state it will comply with T.D.'s 55027(2) and 
55207(1), and that its agent will submit a letter of notification of 
intent to operate under the general manufacturing drawback ruling 
for agents (see Sec. 191.7 and appendix A) or an application for a 
specific manufacturing drawback ruling (see Sec. 191.8 and this 
appendix B).)
    3. Will the applicant be the exporter? (If the applicant will 
not be the exporter in every case but will be the claimant, the 
manufacturer must state that it will reserve the right to claim 
drawback with the knowledge and written consent of the exporter (19 
CFR 191.82).)) (Since the permission to grant use of the accelerated 
payment procedure rests with the Customs office with which claims 
will be filed, do not include any reference to that procedure in 
this application.)

Procedures Under Section 1313(b)

Parallel Columns--``Same Kind and Quality''

Imported merchandise or drawback products   Duty-paid, duty-free or     
 \2\ to be designated as the basis for       domestic merchandise of the
 drawback on the exported products.          same kind and quality as   
                                             that designated which will 
                                             be used in the production  
                                             of the exported products.  
1.                                          1.                          
2.                                          2.                          
3.                                          3.                          
                                                                        
\2\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise.)

    (Following the items listed in the parallel columns, a statement 
will be made, by the applicant, that affirms the ``same kind and 
quality'' of the merchandise. This statement should be included in 
the application exactly as it is stated below:)
    The imported merchandise which we will designate on our claims 
will be so similar in quality to the merchandise used in producing 
the exported articles on which we claim drawback that the 
merchandise used would, if imported, be subject to the same rate of 
duty as the imported designated merchandise.
    Fluctuations in the market value resulting from factors other 
than quality will not affect the drawback.
    (In order to successfully claim drawback it is necessary to 
prove that the duty-paid, duty-free or domestic merchandise which is 
to be substituted for the imported merchandise is the ``same kind 
and quality''. ``Same kind and quality'' does not necessarily mean 
that the merchandise is identical. It does mean that the merchandise 
is of the same nature or character (``same kind'') and that the 
merchandise to be substituted is interchangeable with the imported 
merchandise with little or no change in the manufacturing process to 
produce the same exported article (``same quality''). In order to 
enable Customs to rule on ``same kind and quality'', the application 
must include a detailed description of the designated imported 
merchandise and of the substituted duty-paid, duty-free or domestic 
merchandise to be used to produce the exported articles.)
    (It is essential that all the characteristics which determine 
the quality of the merchandise are provided in the application in 
order to substantiate that the merchandise meets the ``same kind and 
quality'' statutory requirement. These characteristics should 
clearly distinguish merchandise of different qualities. For example, 
USDA standards; FDA standards; industry standards, e.g., ASTM; 
concentration; specific gravity; purity; luster; melting point, 
boiling point; odor; color; grade; type; hardness; brittleness; etc. 
Note that these are only a few examples of characteristics and that 
each kind of merchandise has its own set of specifications that 
characterizes its quality. If specifications are given with a 
minimum value, be sure to include a maximum value. The converse is 
also true. Often characteristics are given to Customs on attached 
specification sheets. These specifications should not include 
Material Safety Data sheets or other descriptions of the merchandise 
that do not contribute to the ``same kind and quality'' 
determination. When the merchandise is a chemical, state the 
chemical's generic name as well as its trade name plus any generally 
recognized identifying number, e.g. CAS number; Color Index Number, 
etc.)
    (In order to expedite the specific manufacturing drawback ruling 
process, it will be helpful if you provide copies of technical 
standards/specifications (particularly industry standards such as 
ASTM standards) referred to in your application.)
    (The descriptions of the ``same kind and quality'' merchandise 
should be formatted in the parallel columns. The left-hand column 
will consist of the name and specifications of the designated 
imported merchandise under the heading set forth above. The right-
hand column will consist of the name and specifications for the 
duty-paid, duty-free or domestic merchandise under the heading set 
forth above.)

Exported Articles on Which Drawback Will Be Claimed

    (Name each article to be exported. When the identity of the 
product is not clearly evident by its name state what the product 
is, e.g., a herbicide. There must be a match between each article 
described under the PROCESS OF MANUFACTURE AND PRODUCTION section 
below and each article listed here.)

Process of Manufacture or Production

    (Drawback under section 1313(b) is not allowable except where a 
manufacture or production exists. A manufacture or production exists 
when a ``new and different article emerges having a distinctive 
name, character, or use'', or when an article is made fit for a 
particular use (see 19 CFR 191.2(p); see also Anheuser-Busch Brewing 
Assoc. v. United States, 207 U.S. 556 (1907); United States v. 
International Paint Co., 35 CCPA 87 (1948), et al.). In order to 
obtain drawback under section 1313(b), it is essential for the 
applicant to show use in manufacture or production by giving a 
thorough description of the manufacturing process. This description 
should include the name and exact condition of the merchandise 
listed in the Parallel Columns, a complete explanation of the 
processes to which it is subjected in this country, the effect of 
such processes, the name and exact description of the finished 
article, and the use for which the finished article is intended. 
When applicable, give equations of the chemical reactions. The 
attachment of a flow chart in addition to the description showing 
the manufacturing process is an excellent means of illustrating 
whether or not a ``new and different article'' has been formed. Flow 
charts can clearly illustrate if and at what point during the 
manufacturing process by-products and wastes are generated.)
    (This section should contain a description of the process by 
which each item of

[[Page 3133]]

merchandise listed in the parallel columns above is used to make or 
produce every article that is to be exported.)

By-Products

1. Relative Values

    (Some processes result in the separation of the merchandise used 
in the same operation into two or more products. List all of the 
products. State that you will record the market value of each 
product or by-product at the time it is first separated in the 
manufacturing process. If this section is not applicable to you, 
then state so.)
    (Drawback law mandates the assignment of relative values when 
two or more products necessarily are produced concurrently in the 
same operation. For instance, the refining of flaxseed necessarily 
produces linseed oil and linseed husks (animal feed), and drawback 
must be distributed to each product in accordance with its relative 
value. However, the voluntary election of a steel fabricator, for 
instance, to use part of a lot of imported steel to produce 
automobile doors and part of the lot to produce automobile fenders 
does not call for relative value distribution.)
    (The relative value of a product is its value divided by the 
total value of all products, whether or not exported. For example, 
100 gallons of drawback merchandise are used to produce 100 gallons 
of products, including 60 gallons of product A, 20 gallons of 
product B, and 20 gallons of product C. At the time of separation, 
the unit values of products A, B, and C are $5, $10, and $50 
respectively. The relative value of product A is $300 divided by 
$1500 or \1/5\. The relative value of B is \2/15\ and of product C 
is \2/3\, calculated in the same manner. This means that \1/5\ of 
the drawback product payments will be distributed to product A, \2/
15\ to product B, and \2/3\ to product C.)
    (Drawback is allowable on exports of by-products, but is not 
allowable on exports of valuable waste. In making this distinction 
between by-product or valuable waste, the applicant should address 
the following significant elements: (1) The nature of the material 
of which the residue is composed; (2) the value of the residue as 
compared to the value of the principal manufactured product and the 
raw material; (3) the use to which it is put; (4) its status under 
the tariff laws, if imported; (5) whether it is a commodity 
recognized in commerce; (6) whether it must be subjected to some 
process to make it saleable.)

2. Producibility

    (Some processes result in the separation of fixed proportions of 
each product, while other processes afford the opportunity to 
increase or decrease the proportion of each product. An example of 
the latter is petroleum refining, where the refiner has the option 
to increase or decrease the production of one or more products 
relative to the others. State under this heading whether you can or 
cannot vary the proportionate quantity of each product.)
    (The BY-PRODUCT section consists of two sub-sections: Relative 
Values and Producibility. If no by-products result from your 
operation state ``Not Applicable'' for the entire section. If by-
products do result from your operation Relative Values will always 
apply. However, Producibility may or may not apply. If Producibility 
does not apply to your by-product operation state ``Not Applicable'' 
for this sub-section.)

Waste

    (Many processes result in residue materials which, for drawback 
purposes, are treated as wastes. Describe any residue materials 
which you believe should be so treated. If no waste results, include 
a positive statement to that effect under this heading.) (If waste 
occurs, state: (1) Whether or not it is recovered, (2) whether or 
not it is valueless, and (3) what you do with it. This information 
is required whether claims are made on a ``used in'' or ``appearing 
in'' basis and regardless of the amount of waste incurred.)
    (Irrecoverable wastes are those consisting of materials which 
are lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of imported material used in manufacturing. If the 
claim is based upon the quantity of imported merchandise appearing 
in the exported article, irrecoverable and valueless waste will 
cause a reduction in the amount of drawback.)
    (Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)
    (If you recover valuable waste and if you choose to claim on the 
basis of the quantity of imported or substituted merchandise used in 
producing the exported articles (less valuable waste), state that 
you will keep records to establish the quantity and value of the 
waste recovered. See ``Basis of Claim for Drawback'' section below.)

Stock in Process

    (Some processes result in another type of residual material, 
namely, stock in process, which affects the allowance of drawback. 
Stock in process necessarily reduces the quantity of imported 
material used in manufacture in a current lot or period, in that the 
amount manufactured in any given batch does not include the recycled 
merchandise going into the next batch. Therefore the amount of 
imported merchandise used in manufacture of exported articles is 
decreased.)
    (If stock in process occurs, the application must include a 
statement that merchandise is considered to be used in manufacture 
at the time it was originally processed so that the stock in process 
will not be included twice in the computation of the merchandise 
used to manufacture the finished articles on which drawback is 
claimed.)

Tradeoff

    (If an applicant proposes to use tradeoff (19 CFR 191.11), the 
applicant should so state and the applicant should describe the 
contractual arrangement between the applicant and its partner for 
tradeoff. The person claiming drawback under the tradeoff provision 
has the burden of establishing compliance with the law and 
regulations. In this regard, the terms of a written contract are 
always easier to establish than those of an oral contract.)

Loss or Gain (Separate and Distinct From WASTE)

    (Some manufacturing processes result in an intangible loss or 
gain of the net weight or measurement of the merchandise used. This 
loss or gain is caused by atmospheric conditions, chemical 
reactions, or other factors. State the approximate usual percentage 
or quantity of such loss or gain. Note that percentage values will 
be considered to be measured ``by weight'' unless otherwise 
specified. Loss or gain does not occur during all manufacturing 
processes. If loss or gain does not apply to your manufacturing 
process, state ``Not Applicable.'')

Procedures and Records Maintained

    We will maintain records to establish:
    1. The identity and specifications of the merchandise we 
designate;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \3\ we used to produce the exported 
articles.
---------------------------------------------------------------------------

    \3\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles we produce.'');
---------------------------------------------------------------------------

    3. That, within 3 years after receiving it at our factory, we 
used the designated merchandise to produce articles. During the same 
3-year period, we produced \4\ the exported articles.
---------------------------------------------------------------------------

    \4\ (The date of production is the date an article is 
completed.)
---------------------------------------------------------------------------

    We realize that to obtain drawback the claimant must establish 
that the completed articles were exported within 5 years after the 
importation of the imported merchandise.
    1Our records establishing our compliance with these requirements 
will be available for audit by Customs during business hours. We 
understand that drawback is not payable without proof of compliance.

Inventory Procedures

    (Describe your inventory records and state how those records 
will meet the drawback recordkeeping requirements set forth in 19 
U.S.C. 1313(b) and part 191 of the Customs Regulations as discussed 
under the heading PROCEDURES AND RECORDS MAINTAINED. To insure 
compliance the following areas should be included in your 
discussion:)

RECEIPT AND STORAGE OF DESIGNATED MERCHANDISE
RECORDS OF USE OF DESIGNATED MERCHANDISE
BILLS OF MATERIALS
MANUFACTURING RECORDS
WASTE RECORDS

[[Page 3134]]

RECORDS OF USE OF DUTY-PAID, DUTY-FREE OR DOMESTIC MERCHANDISE OF 
THE REQUIRED SAME KIND AND QUALITY WITHIN 3 YEARS AFTER THE RECEIPT 
OF THE DESIGNATED MERCHANDISE
FINISHED STOCK STORAGE RECORDS
SHIPPING RECORDS

    (Proof of time frames may be specific or inclusive, e.g. within 
120 days, but specific proof is preferable. Separate storage and 
identification of each article or lot of merchandise usually will 
permit specific proof of exact dates. Proof of inclusive dates of 
use, production or export may be acceptable, but in such cases it is 
well to describe very specifically the data you intend to use to 
establish each legal requirement, thereby avoiding misunderstandings 
at the time of audit.)
    (If you do not describe the inventory records that you will use, 
a statement that the legal requirements will be met by your 
inventory procedures is acceptable. However, it should be noted that 
without a detailed description of the inventory procedures set forth 
in the application a judgement as to the adequacy of such a 
statement cannot be made until a drawback claim is verified. 
Approval of this application for a specific manufacturing drawback 
ruling merely constitutes approval of the ruling application as 
submitted; it does not constitute approval of the applicant's record 
keeping procedures if, for example, those procedures are merely 
described as meeting the legal requirements, without specifically 
stating how the requirements will be met. Failure to describe how 
the specific records will show receipt, use and export may be a 
ground to deny use of the accelerated payment procedure until 
completion of a satisfactory audit. Drawback is not payable without 
proof of compliance.)

Basis of Claim for Drawback

    (There are three different bases that may be used to claim 
drawback: (1) Used in; (2) Appearing In; and (3) Used Less Valuable 
Waste.)
    (The ``Used In'' basis may be employed only if there is either 
no waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 99 percent of the duty paid on the quantity 
of imported material designated as the basis for the allowance of 
drawback on the exported articles. The designated quantity may not 
exceed the quantity of material actually used in the manufacture of 
the exported articles.)
    (For example, if 100 pounds of material, valued at $1.00 per 
pound, were used in manufacture resulting in 10 pounds of 
irrecoverable or valueless waste, the 10 pounds of irrecoverable or 
valueless waste would not reduce the drawback. In this case drawback 
would be payable on 99% of the duty paid on the 100 pounds of 
designated material used to produce the exported articles.)
    (The ``Appearing In'' basis may be used regardless of whether 
there is waste. If the ``Appearing In'' basis is used, the claimant 
does not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 99 
percent of the duty paid on the quantity of material designated, 
which may not exceed the quantity of eligible material that appears 
in the exported articles. ``Appearing In'' may not be used if by-
products are involved unless the applicant agrees to value all 
products identically.)
    (Based on the previous example, drawback would be payable on the 
90 pounds of merchandise which actually went into the exported 
product (appearing in) rather than the 100 pounds used in as set 
forth previously.)
    (The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of merchandise. The value 
of the waste reduces the amount of drawback when claims are based on 
the ``Used Less Valuable Waste'' basis. When valuable waste is 
incurred, the drawback allowance on the exported article may be 
based on the duty paid on the quantity of merchandise used in the 
manufacture, reduced by the quantity of such merchandise which the 
value of the waste will replace. Thus in this case, drawback is 
claimed on the quantity of eligible material actually used to 
produce the exported product, less the amount of such material which 
the value of the waste would replace. Note section 191.25(c) of the 
Customs Regulations.)
    (Based on the previous examples, if the 10 pounds of waste had a 
value of $.50 per pound, then the 10 pounds of waste, having a total 
value of $5.00, would be equivalent in value to 5 pounds of the 
designated material. Thus the value of the waste would replace 5 
pounds of the merchandise used, and drawback is payable on 99 
percent of the duty paid on the 95 pounds of imported material 
designated as the basis for the allowance of drawback on the 
exported article rather than on the 100 pounds ``Used In'' or the 90 
pounds ``Appearing In'' as set forth in the above examples.)
    (Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)
    (A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)
    (An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 331) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)
    (An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by Schedule follows:)
    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.
    (Section 191.8(f) of the Customs Regulations requires submission 
of the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)
    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.
    (Except as noted above in the explanation of the ``Appearing 
In'' basis, neither the ``Appearing In'' basis nor the ``schedule'' 
method for claiming drawback may be used where the relative value 
procedure is required.)

Procedures Under Section 1313(a) Imported Merchandise or Drawback 
Products Used Under 1313(a)

    (List the imported merchandise or drawback products)

Exported Articles on Which Drawback Will be Claimed

    (Name each article to be exported. When the identity of the 
product is not clearly evident by its name state what the product 
is, e.g., a herbicide. There must be a match between each article 
described under the PROCESS OF MANUFACTURE AND PRODUCTION section 
below and each article listed here.)
    (If the merchandise used under section 1313(a) is not also used 
under section 1313(b), the sections entitled PROCESS OF MANUFACTURE 
OR PRODUCTION, BY-PRODUCTS, LOSS OR GAIN, and STOCK IN PROCESS 
should be included here to cover merchandise used under section 
1313(a). However, if the merchandise used under section 1313(a) is 
also used under section 1313(b) these sections need not be repeated 
unless they differ in some way from the section 1313(b) 
descriptions.)

Procedures and Records Maintained

    We will maintain records to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise, and

[[Page 3135]]

    2. The quantity of imported merchandise \5\ we used in producing 
the exported articles.
---------------------------------------------------------------------------

    \5\ If claims are to be made on an ``Appearing In'' basis, the 
remainder of the sentence should read ``appearing in the exported 
articles we produce.''
---------------------------------------------------------------------------

    We realize that to obtain drawback the claimant must establish 
that the completed articles were exported within 5 years after 
importation of the imported merchandise.

Inventory Procedures

    (This section must be completed separately from that set forth 
under the section 1313(b) portion of your application. The legal 
requirements under section 1313(a) differ from those under section 
1313(b).)
    (Describe your inventory procedures and state how you will 
identify the imported merchandise from the time it is received at 
your factory until it is incorporated in the articles to be 
exported. Also describe how you will identify the finished articles 
from the time of manufacture until shipment.)

Basis of Claim for Drawback

    (See section with this title for procedures under section 
1313(b). Either repeat the same basis of claim or use a different 
basis of claim, as described above, specifically for drawback 
claimed under section 1313(a).)

Agreements

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
corporate officers, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(a) & (b), part 191 of the Customs 
Regulations and this application and letter of approval.

Declaration of Official

    I declare that I have read this application for a specific 
manufacturing drawback ruling; that I know the averments and 
agreements contained herein are true and correct; and that my 
signature on this ____________ day of ________________ 19______, 
makes this application binding on

----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)

By \6\-----------------------------------------------------------------
---------------------------------------------------------------------------

    \6\ Section 191.6(a) of the Customs Regulations requires that 
applications for specific manufacturing drawback rulings be signed 
by the owner of a sole proprietorship, a partner in a partnership, 
or the president, vice president, secretary, treasurer or other 
individual legally authorized to bind the corporation. In addition, 
any employee of a business entity with a customs power of attorney 
filed with the Customs port for the drawback office which will 
liquidate your drawback claims may sign such an application, as may 
a licensed Customs broker with a Customs power of attorney. You 
should state in which Customs port your Customs power(s) of attorney 
is/are filed.
---------------------------------------------------------------------------

(Signature and Title)

----------------------------------------------------------------------
(Print Name)

Format for 1313(b) Application Company Letterhead (Optional)

U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W., 
Washington, D.C. 20229

    Dear Sir: We, (Applicant's Name), a (State, e.g. Delaware) 
corporation (or other described entity) submit this application for 
a specific manufacturing drawback ruling that our manufacturing 
operations qualify for drawback under title 19, United States Code, 
section 1313(b), and part 191 of the Customs Regulations. We request 
that the Customs Service authorize drawback on the basis of this 
application.

Name and Address and IRS Number of Applicant

    (Section 191.8(a) of the Customs Regulations provides that each 
manufacturer or producer of articles intended for exportation with 
the benefit of drawback shall apply for a specific manufacturing 
drawback ruling, unless operating under a general manufacturing 
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs 
will not approve an application which shows an unincorporated 
division or company as the applicant (see Sec. 191.8(a)).)

Location of Factory

    (Give the address of the factory(ies) where the process of 
manufacture or production will take place. If the factory is a 
different legal entity from the applicant, so state and indicate if 
operating under an Agent's general manufacturing drawback ruling.)

Corporate Officers

    (List officers and other persons legally authorized to bind the 
corporation who will sign drawback documents. Section 191.6 of the 
Customs Regulations permits only the president, vice-president, 
secretary, treasurer, or any other individual legally authorized to 
bind the corporation to sign for a corporation. In addition, a 
person within a business entity with a Customs power of attorney for 
the company may sign. A Customs power of attorney may also be given 
to a licensed Customs broker. This heading should be changed to 
NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole 
proprietorship, respectively.)

Customs Office Where Drawback Claims Will be Filed

    (The 8 offices where drawback claims can be filed are located 
at:

Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)

    (An original application and two copies must be filed. If the 
applicant intends to file drawback claims at more than one drawback 
office, two additional copies of the application must be furnished 
for each additional office indicated.)

General Statement

    (The following questions must be answered:
    1. Who will be the importer of the designated merchandise?
    (If the applicant will not always be the importer of the 
designated merchandise, does the applicant understand its 
obligations to obtain the appropriate certificates of delivery (19 
CFR 191.10), certificates of manufacture and delivery (19 CFR 
191.24), or both?)
    2. Will an agent be used to process the designated or the 
substituted merchandise into articles?
    (If an agent is to be used, the applicant must state it will 
comply with T.D.'s 55027(2), 55207(1), and that its agent will 
submit a letter of notification of intent to operate under the 
general manufacturing drawback ruling for agents (see Sec. 191.7 and 
Appendix A), or an application for a specific manufacturing drawback 
ruling (see Sec. 191.8 and this appendix B).)
    3. Will the applicant be the exporter?
    (If the applicant will not be the exporter in every case but 
will be the claimant, the manufacturer must state that it will 
reserve the right to claim drawback with the knowledge and written 
consent of the exporter (19 CFR 191.82).)
    (Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

              (Parallel Columns--``Same Kind and Quality'')             
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
IMPORTED MERCHANDISE OR DRAWBACK PRODUCTS   DUTY-PAID, DUTY-FREE OR     
 \2\ TO BE DESIGNATED AS THE BASIS FOR       DOMESTIC MERCHANDISE OF THE
 DRAWBACK ON THE EXPORTED PRODUCTS.          SAME KIND AND QUALITY AS   
                                             THAT DESIGNATED WHICH WILL 
                                             BE USED IN THE PRODUCTION  
                                             OF THE EXPORTED PRODUCTS.  

[[Page 3136]]

                                                                        
1.                                          1.                          
2.                                          2.                          
3.                                          3.                          
------------------------------------------------------------------------
\2\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise. 

    (Following the items listed in the parallel columns, a statement 
will be made, by the applicant, that affirms the ``same kind and 
quality'' of the merchandise. This statement should be included in 
the application exactly as it is stated below:)
    The imported merchandise which we will designate on our claims 
will be so similar in quality to the merchandise used in producing 
the exported articles on which we claim drawback that the 
merchandise used would, if imported, be subject to the same rate of 
duty as the imported designated merchandise.
    Fluctuations in the market value resulting from factors other 
than quality will not affect the drawback.
    (In order to successfully claim drawback it is necessary to 
prove that the duty-paid, duty-free or domestic merchandise which is 
to be substituted for the imported merchandise is the ``same kind 
and quality''. ``Same kind and quality'' does not necessarily mean 
that the merchandise is identical. It does mean that the merchandise 
is of the same nature or character (``same kind'') and that the 
merchandise to be substituted is interchangeable with the imported 
merchandise with little or no change in the manufacturing process to 
produce the same exported article (``same quality''). In order to 
enable Customs to rule on ``same kind and quality'', the application 
must include a detailed description of the designated imported 
merchandise and of the substituted duty-paid, duty-free or domestic 
merchandise to be used to produce the exported articles.)
    (It is essential that all the characteristics which determine 
the quality of the merchandise are provided in the application in 
order to substantiate that the merchandise meets the ``same kind and 
quality'' statutory requirement. These characteristics should 
clearly distinguish merchandise of different qualities. For example, 
USDA standards; FDA standards; industry standards, e.g., ASTM; 
concentration; specific gravity; purity; luster; melting point, 
boiling point; odor; color; grade; type; hardness; brittleness; etc. 
Note that these are only a few examples of characteristics and that 
each kind of merchandise has its own set of specifications that 
characterizes its quality. If specifications are given with a 
minimum value, be sure to include a maximum value. The converse is 
also true. Often characteristics are given to Customs on attached 
specification sheets. These specifications should not include 
Material Safety Data sheets or other descriptions of the merchandise 
that do not contribute to the ``same kind and quality'' 
determination. When the merchandise is a chemical, state the 
chemical's generic name as well as its trade name plus any generally 
recognized identifying number, e.g. CAS number; Color Index Number, 
etc.)
    (In order to expedite the specific manufacturing drawback ruling 
review process, it will be helpful if you provide copies of 
technical standards/specifications (particularly industry standards 
such as ASTM standards) referred to in your application.)
    (The descriptions of the ``same kind and quality'' merchandise 
should be formatted in the parallel columns. The left-hand column 
will consist of the name and specifications of the designated 
imported merchandise under the heading set forth above. The right-
hand column will consist of the name and specifications for the 
duty-paid, duty-free or domestic merchandise under the heading set 
forth above.)

Exported Articles on Which Drawback Will be Claimed

    (Name each article to be exported. When the identity of the 
product is not clearly evident by its name state what the product 
is, e.g., a herbicide. There must be a match between each article 
described under the PROCESS OF MANUFACTURE AND PRODUCTION section 
below and each article listed here.)

Process of Manufacture or Production

    (Drawback under section 1313(b) is not allowable except where a 
manufacture or production exists. A manufacture or production exists 
when a ``new and different article emerges having a distinctive 
name, character, or use'', or when an article is made fit for a 
particular use (see 19 CFR 191.2(p); see also Anheuser-Busch Brewing 
Assoc. v. United States, 207 U.S. 556 (1907); United States v. 
International Paint Co., 35 CCPA 87 (1948), et al.). In order to 
obtain drawback under section 1313(b), it is essential for the 
applicant to show use in manufacture or production by giving a 
thorough description of the manufacturing process. This description 
should include the name and exact condition of the merchandise 
listed in the Parallel Columns, a complete explanation of the 
processes to which it is subjected in this country, the effect of 
such processes, the name and exact description of the finished 
article, and the use for which the finished article is intended. 
When applicable, give equations of the chemical reactions. The 
attachment of a flow chart in addition to the description showing 
the manufacturing process is an excellent means of illustrating 
whether or not a ``new and different article'' has been formed. Flow 
charts can clearly illustrate if and at what point during the 
manufacturing process by-products and wastes are generated.)
    (This section should contain a description of the process by 
which each item of merchandise listed in the parallel columns above 
is used to make or produce every article that is to be exported.)

By-Products

1. Relative Values

    (Some processes result in the separation of the merchandise used 
in the same operation into two or more products. List all of the 
products. State that you will record the market value of each 
product or by-product at the time it is first separated in the 
manufacturing process. If this section is not applicable to you, 
then state so.)
    (Drawback law mandates the assignment of relative values when 
two or more products necessarily are produced concurrently in the 
same operation. For instance, the refining of flaxseed necessarily 
produces linseed oil and linseed husks (animal feed), and drawback 
must be distributed to each product in accordance with its relative 
value. However, the voluntary election of a steel fabricator, for 
instance, to use part of a lot of imported steel to produce 
automobile doors and part of the lot to produce automobile fenders 
does not call for relative value distribution.)
    (The relative value of a product is its value divided by the 
total value of all products, whether or not exported. For example, 
100 gallons of drawback merchandise are used to produce 100 gallons 
of products, including 60 gallons of product A, 20 gallons of 
product B, and 20 gallons of product C. At the time of separation, 
the unit values of products A, B, and C are $5, $10, and $50 
respectively. The relative value of product A is $300 divided by 
$1500 or \1/5\. The relative value of B is \2/15\ and of product C 
is \2/3\, calculated in the same manner. This means that \1/5\ of 
the drawback product payments will be distributed to product A, \2/
15\ to product B, and \2/3\ to product C.)
    (Drawback is allowable on exports of by-products, but is not 
allowable on exports of valuable waste. In making this distinction 
between by-product or valuable waste, the applicant should address 
the following significant elements: (1) The nature of the material 
of which the residue is composed; (2) the value of the residue as 
compared to the value of the principal manufactured product and the 
raw material; (3) the use to which it is put; (4) its status under 
the tariff laws, if imported; (5) whether it is a commodity 
recognized in commerce; (6) whether it must be subjected to some 
process to make it saleable.)

2. Producibility

    (Some processes result in the separation of fixed proportions of 
each product, while other processes afford the opportunity to 
increase or decrease the proportion of each product. An example of 
the latter is petroleum refining, where the refiner has the option 
to increase or decrease the production of one or more products 
relative to the others. State under this heading whether you can or 
cannot vary the proportionate quantity of each product.)
    (The BY-PRODUCT section consists of two sub-sections: Relative 
Values and Producibility. If no by-products result from your 
operation state ``Not Applicable'' for the entire section. If by-
products do result from your operation Relative Values will always 
apply. However, Producibility may or may not apply. If Producibility 
does not apply to your by-product operation state ``Not Applicable'' 
for this sub-section.)

Waste

    (Many processes result in residue materials which, for drawback 
purposes, are treated as

[[Page 3137]]

wastes. Describe any residue materials which you believe should be 
so treated. If no waste results, include a positive statement to 
that effect under this heading.)
    (If waste occurs, state: (1) Whether or not it is recovered, (2) 
whether or not it is valueless, and (3) what you do with it. This 
information is required whether claims are made on a ``used in'' or 
``appearing in'' basis and regardless of the amount of waste 
incurred.)
    (Irrecoverable wastes are those consisting of materials which 
are lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of imported material used in manufacturing. If the 
claim is based upon the quantity of imported merchandise appearing 
in the exported article, irrecoverable and valueless waste will 
cause a reduction in the amount of drawback.)
    (Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)
    (If you recover valuable waste and if you choose to claim on the 
basis of the quantity of imported or substituted merchandise used in 
producing the exported articles less valuable waste, state that you 
will keep records to establish the quantity and value of the waste 
recovered. See ``Basis of Claim for Drawback'' section below.)

Stock in Process

    (Some processes result in another type of residual material, 
namely, stock in process, which affects the allowance of drawback. 
Stock in process necessarily reduces the quantity of imported 
material used in manufacture in a current lot or period, in that the 
amount manufactured in any given batch does not include the recycled 
merchandise going into the next batch. Therefore the amount of 
imported merchandise used in manufacture of exported articles is 
decreased.)
    (If stock in process occurs, the application must include a 
statement that merchandise is considered to be used in manufacture 
at the time it was originally processed so that the stock in process 
will not be included twice in the computation of the merchandise 
used to manufacture the finished articles on which drawback is 
claimed.)

Tradeoff

    (If an applicant proposes to use tradeoff (19 CFR 191.11), the 
applicant should so state and the applicant should describe the 
contractual arrangement between the applicant and its partner for 
tradeoff. The person claiming drawback under the tradeoff provisions 
has the burden of establishing compliance with the law and 
regulations. In this regard, the terms of a written contract are 
always easier to establish than those of an oral contract.)

Loss or Gain (Separate and Distinct From WASTE)

    (Some manufacturing processes result in an intangible loss or 
gain of the net weight or measurement of the merchandise used. This 
loss or gain is caused by atmospheric conditions, chemical 
reactions, or other factors. State the approximate usual percentage 
or quantity of such loss or gain. Note that percentage values will 
be considered to be measured ``by weight'' unless otherwise 
specified. Loss or gain does not occur during all manufacturing 
processes. If loss or gain does not apply to your manufacturing 
process, state ``Not Applicable.'')

Procedures and Records Maintained

    We will maintain records to establish:
    1. The identity and specifications of the merchandise we 
designate;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \3\ we used to produce the exported 
articles.
---------------------------------------------------------------------------

    \3\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles we produce.''
---------------------------------------------------------------------------

    3. That, within 3 years after receiving it at our factory, we 
used the designated merchandise to produce articles. During the same 
3-year period, we produced \4\ the exported articles.
---------------------------------------------------------------------------

    \4\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    We realize that to obtain drawback the claimant must establish 
that the completed articles were exported within 5 years after the 
importation of the imported merchandise.
    Our records establishing our compliance with these requirements 
will be available for audit by Customs during business hours. We 
understand that drawback is not payable without proof of compliance.

Inventory Procedures

    (Describe your inventory records and state how those records 
will meet the drawback recordkeeping requirements set forth in 19 
U.S.C. 1313(b) and part 191 of the Customs Regulations as discussed 
under the heading PROCEDURES AND RECORDS MAINTAINED.To insure 
compliance the following areas should be included in your 
discussion:)

RECEIPT AND STORAGE OF DESIGNATED MERCHANDISE
RECORDS OF USE OF DESIGNATED MERCHANDISE
BILLS OF MATERIALS
MANUFACTURING RECORDS
WASTE RECORDS
RECORDS OF USE OF DUTY-PAID, DUTY-FREE OR DOMESTIC MERCHANDISE OF 
THE REQUIRED SAME KIND AND QUALITY WITHIN 3 YEARS AFTER THE RECEIPT 
OF THE DESIGNATED MERCHANDISE
FINISHED STOCK STORAGE RECORDS
SHIPPING RECORDS

    (Proof of time frames may be specific or inclusive, e.g., within 
120 days, but specific proof is preferable. Separate storage and 
identification of each article or lot of merchandise usually will 
permit specific proof of exact dates. Proof of inclusive dates of 
use, production or export may be acceptable, but in such cases it is 
well to describe very specifically the data you intend to use to 
establish each legal requirement, thereby avoiding misunderstandings 
at the time of audit.)
    (If you do not describe the inventory records that you will use, 
a statement that the legal requirements will be met by your 
inventory procedures is acceptable. However, it should be noted that 
without a detailed description of the inventory procedures set forth 
in the application a judgement as to the adequacy of such a 
statement cannot be made until a drawback claim is verified. 
Approval of this application for a specific manufacturing drawback 
ruling merely constitutes approval of the ruling application as 
submitted; it does not constitute approval of the applicant's record 
keeping procedures if, for example, those procedures are merely 
described as meeting the legal requirements, without specifically 
stating how the requirements will be met. Failure to describe how 
the specific records will show receipt, use and export may be a 
ground to deny use of the accelerated payment procedure until 
completion of a satisfactory audit. Drawback is not payable without 
proof of compliance.)

Basis of Claim for Drawback

    (There are three different bases that may be used to claim 
drawback: (1) Used in; (2) Appearing In; and (3) Used less Valuable 
Waste.)
    (The ``Used In'' basis may be employed only if there is either 
no waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 99 percent of the duty paid on the quantity 
of imported material designated as the basis for the allowance of 
drawback on the exported articles. The designated quantity may not 
exceed the quantity of material actually used in the manufacture of 
the exported articles.)
    (For example, if 100 pounds of material, valued at $1.00 per 
pound, were used in manufacture resulting in 10 pounds of 
irrecoverable or valueless waste, the 10 pounds of irrecoverable or 
valueless waste would not reduce the drawback. In this case drawback 
would be payable on 99% of the duty paid on the 100 pounds of 
designated material used to produce the exported articles.)
    (The ``Appearing In'' basis may be used regardless of whether 
there is waste. If the ``Appearing In'' basis is used, the claimant 
does not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 99 
percent of the duty paid on the quantity of material

[[Page 3138]]

designated, which may not exceed the quantity of eligible material 
that appears in the exported articles. ``Appearing In'' may not be 
used if by-products are involved unless the applicant agrees to 
value all products identically.)
    (Based on the previous example, drawback would be payable on the 
90 pounds of merchandise which actually went into the exported 
product (appearing in) rather than the 100 pounds used in as set 
forth previously.)
    (The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of merchandise. The value 
of the waste reduces the amount of drawback when claims are based on 
the ``Used Less Valuable Waste'' basis. When valuable waste is 
incurred, the drawback allowance on the exported article may be 
based on the duty paid on the quantity of merchandise used in the 
manufacture, reduced by the quantity of such merchandise which the 
value of the waste will replace. Thus in this case, drawback is 
claimed on the quantity of eligible material actually used to 
produce the exported product, less the amount of such material which 
the value of the waste would replace. Note section 191.25(c) of the 
Customs Regulations.)
    (Based on the previous examples, if the 10 pounds of waste had a 
value of $.50 per pound, then the 10 pounds of waste, having a total 
value of $5.00, would be equivalent in value to 5 pounds of the 
designated material. Thus the value of the waste would replace 5 
pounds of the merchandise used, and drawback is payable on 99 
percent of the duty paid on the 95 pounds of imported material 
designated as the basis for the allowance of drawback on the 
exported article rather than on the 100 pounds ``Used In'' or the 90 
pounds ``Appearing In'' as set forth in the above examples.)
    (Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)
    (A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)
    (An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 331) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)
    (An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by Schedule would read:)
    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.
    (Section 191.8(f) of the Customs Regulations requires submission 
of the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)
    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.
    (Except as noted above in the explanation of the ``Appearing 
In'' basis, neither the ``Appearing In'' basis nor the ``schedule'' 
method for claiming drawback may be used where the relative value 
procedure is required.)

Agreements

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2.Open its factory and records for examination at all reasonable 
hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
corporate officers, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service, all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this application and letter of approval.

Declaration of Official

    I declare that I have read this application for a specific 
manufacturing drawback ruling; that I know the averments and 
agreements contained herein are true and correct; and that my 
signature on this ____________ day of ________________ 19______, 
makes this application binding on

----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)

By \5\-----------------------------------------------------------------
---------------------------------------------------------------------------

    \5\ Section 191.6(a) of the Customs Regulations requires that 
applications for specific manufacturing drawback rulings be signed 
by the owner of a sole proprietorship, a partner in a partnership, 
or the president, vice president, secretary, treasurer or other 
individual legally authorized to bind the corporation. In addition, 
any employee of a business entity with a Customs power of attorney 
filed with the Customs port for the drawback office which will 
liquidate your drawback claims may sign such an application, as may 
a licensed Customs broker with a Customs power of attorney. You 
should state in which Customs port Customs power(s) of attorney is/
are filed.
---------------------------------------------------------------------------

(Signature and Title)

----------------------------------------------------------------------

    (Print Name)

Format for 1313(b) Petroleum Drawback Application Company Letterhead 
(Optional)

U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W., 
Washington, D.C. 20229

    Dear Sir: We (Applicant's Name), a (State, e.g. Delaware) 
corporation (or other described entity), submit this application for 
a specific manufacturing drawback ruling that our manufacturing 
operations qualify for drawback under title 19, United States Code, 
section 1313(b), and part 191 of the Customs Regulations. We request 
that the Customs Service authorize drawback on the basis of this 
application.

Name and Address and IRS Number of Applicant

    (Section 191.8(a) of the Customs Regulations provides that each 
manufacturer or producer of articles intended for exportation with 
the benefit of drawback shall apply for a specific manufacturing 
drawback ruling, unless operating under a general manufacturing 
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs 
will not approve an application which shows an unincorporated 
division or company as the applicant (see Sec. 191.8(a).)

Location of Refinery

    (Give the address of the refinery(s) where the process of 
manufacture or production will take place. If the refinery is a 
different legal entity from the applicant, so state and indicate if 
operating under an Agent's general manufacturing drawback ruling.)

Corporate Officers

    (List officers and other persons legally authorized to bind the 
corporation who will sign drawback documents. Section 191.6 of the 
Customs Regulations permits only the president, vice-president, 
secretary, treasurer, or any other individual legally authorized to 
bind the corporation to sign for a corporation. In addition, a 
person within a business entity with a Customs power of attorney for 
the company may sign. A Customs power of attorney may also be given 
to a licensed Customs broker. This heading should be

[[Page 3139]]

changed to NAMES OF PARTNERS or PROPRIETOR in the case of a 
partnership or sole proprietorship, respectively.)

Customs Office Where Drawback Claims Will Be Filed

    (The 8 offices where drawback claims can be filed are located 
at:

Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)

    (An original application and two copies must be filed. If the 
applicant intends to file drawback claims at more than one drawback 
office, two additional copies of the application must be furnished 
for each additional office indicated.)

General Statement

    (The following questions must be answered:
    1. Who will be the importer of the designated merchandise?
    (If the applicant will not always be the importer of the 
designated merchandise, does the applicant understand its 
obligations to obtain the appropriate certificates of delivery (19 
CFR 191.10), certificates of manufacture and delivery (19 CFR 
191.24), or both?)
    2. Will an agent be used to process the designated or the 
substituted merchandise into articles?
    (If an agent is to be used, the applicant must state it will 
comply with T.D.'s 55027(2) and 55207(1), and that its agent will 
submit a letter of notification of intent to operate under the 
general manufacturing drawback ruling for agents (see Sec. 191.7 and 
Appendix A), or an application for a specific manufacturing drawback 
ruling (see Sec. 191.8 and this appendix B).)
    3. Will the applicant be the exporter?
    (If the applicant will not be the exporter in every case but 
will be the claimant, the manufacturer must state that it will 
reserve the right to claim drawback with the knowledge and written 
consent of the exporter (19 CFR 191.82).)
    (Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

              (Parallel Columns--``Same Kind and Quality'')             
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
IMPORTED MERCHANDISE OR DRAWBACK PRODUCTS   DUTY-PAID, DUTY-FREE OR     
 \2\ TO BE DESIGNATED AS THE BASIS FOR       DOMESTIC MERCHANDISE OF THE
 DRAWBACK ON THE EXPORTED PRODUCTS           SAME KIND AND QUALITY AS   
                                             THAT DESIGNATED WHICH WILL 
                                             BE USED IN THE PRODUCTION  
                                             OF THE EXPORTED PRODUCTS.  
------------------------------------------------------------------------
\2\ (Drawback products are those produced in the United States in       
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise.)

    We will substitute crude petroleum for crude petroleum and a 
petroleum derivative for the same petroleum derivative on a class-
for-class basis only.

Class Designations:
    Class I--API Gravity 0-11.9
    Class II--API Gravity 12.0-24.9
    Class III--API Gravity 25.0-44.9
    Class IV--API Gravity 45-up

    The imported merchandise which we will designate on our claims 
will be so similar in quality to the merchandise used in producing 
the exported articles on which we claim drawback that the 
merchandise used would, if imported, be subject to the same rate of 
duty as the imported designated merchandise.

Exported Articles Produced From Fractionation

1. Motor Gasoline
2. Aviation Gasoline
3. Special Naphthas
4. Jet Fuel
5. Kerosene & Range Oils
6. Distillate Oils
7. Residual Oils
8. Lubricating Oils
9. Paraffin Wax
10. Petroleum Coke
11. Asphalt
12. Road Oil
13. Still Gas
14. Liquified Petroleum Gas
15. Petrochemical Synthetic Rubber
16. Petrochemical Plastics & Resins
17. All Other Petrochemical Products

Exported Articles on Which Drawback Will Be Claimed

    (Name each article to be exported. When the identity of the 
product is not clearly evident by its name, state what the product 
is, e.g., a herbicide. There must be a match between each article 
described under the PROCESS OF MANUFACTURE AND PRODUCTION section 
below and each article listed here.)

Process of Manufacture or Production

    Heated crude oil is charged to an atmospheric distillation tower 
where it is subjected to fractionation. The charge to the 
distillation tower consists of a single crude oil, or of commingled 
crudes which are fed to the tower simultaneously or after blending 
in a tank. During fractionation, components of different boiling 
ranges are separated.

By-Products

1. Relative Values

    Fractionation results in 17 products. In order to insure proper 
distribution of drawback to each of these products, we agree to 
record the relative values at the time of separation. The entire 
period covered by an abstract is to be treated as the time of 
separation. The value per unit of each product shall be the average 
market value for the abstract period.

2. Producibility

    We can vary the proportionate quantity of each product. We 
understand that drawback is payable on exported products only to the 
extent that these products could have been produced from the 
designated merchandise. Our records will show that all of the 
products exported for which drawback will be claimed under this 
specific manufacturing drawback ruling could have been produced 
concurrently on a practical operating basis from the designated 
merchandise.
    We agree to establish the amount to be designated by reference 
to the Industry Standards of Potential Production published in T.D. 
66-16.\3\
---------------------------------------------------------------------------

    \3\ A manufacturer who proposes to use standards other than 
those in T.D. 66-16 must state the proposed standards and provide 
sufficient information to the Customs Service in order for those 
proposed standards to be verified in accordance with T.D. 84-49.
---------------------------------------------------------------------------

    There are no valuable wastes as a result of the processing. 
Records will be kept in accordance with T.D. 84-49, as amended by 
T.D. 95-61.

Loss or Gain

    Because we keep records on a volume basis rather than a weight 
basis, it is anticipated that the material balance will show a 
volume gain. For the same reason, it is possible that occasionally 
the material balance will show a volume loss. Fluctuations in type 
of crude used, together with the type of finished product desired 
make an estimate of an average volume gain meaningless. However, 
records will be kept to show the amount of loss or gain with respect 
to the production of export products.

Tradeoff

    (If an applicant proposes to use tradeoff (19 CFR 191.11), the 
applicant should so state and the applicant should describe the 
contractual arrangement between the applicant and its partner for 
tradeoff. The person claiming drawback under the tradeoff provision 
has the burden of establishing compliance with the law and 
regulations. In this regard, the terms of a written contract are 
always easier to establish than those of an oral contract.)

Procedures and Records Maintained

    We will maintain records to establish:
    1. The identity and specifications of the merchandise we 
designate;
    2. The quantity of merchandise of the same kind and quality as 
the designated

[[Page 3140]]

merchandise we used to produce the exported articles.
    3. That, within 3 years after receiving it at our refinery, we 
used the designated merchandise to produce articles. During the same 
3-year period, we produced the exported articles.
    4(a). We agree to use a 28-31 day period (monthly) abstract 
period for each refinery covered by this application for a specific 
manufacturing drawback ruling.
    (b). We propose to use an abstract period ____________ (not to 
exceed 1 year) for each refinery covered by this application for a 
specific manufacturing drawback ruling. We certify that if we were 
to file abstracts covering each manufacturing period of not less 
than 28 days and not more than 31 days (monthly) within the longer 
period, in no such monthly abstract would the quantity of designated 
merchandise exceed, for the same class of designated merchandise, 
the material introduced into the manufacturing process during that 
monthly period. (Select (a) or (b))
    5. On each abstract of production we agree to show the value per 
barrel to five decimal places.
    6. We agree to file claims in the format set forth in exhibits A 
through F which are attached to this application for a specific 
manufacturing drawback ruling. We realize that to obtain drawback 
the claimant must establish that the completed articles were 
exported within 5 years after importation of the imported 
merchandise. Our records establishing our compliance with these 
requirements will be available for audit by Customs during business 
hours. We understand that drawback is not payable without proof of 
compliance.

Residual Rights

    It is understood that the refiner can reserve as the basis for 
future payment the right to drawback only on the number of barrels 
of raw material computed by subtracting from Line E the larger of 
Lines A or B, of a given Exhibit E. It is further understood that 
this right to future payment can be claimed only against products 
concurrently producible with the products listed in Column 21, in 
the quantities shown in Column 22 of such Exhibit E. Such residual 
right can be transferred to another refinery of the same refiner 
only when Line B of Exhibit E is larger than Line A. Unless the 
number of residual barrels is specifically computed and rights 
thereto are expressly reserved on Exhibit E, such residual rights 
shall be deemed waived. The procedure we shall follow in preparing 
drawback entries claiming this residual right is illustrated in the 
attached sample Exhibit E-1. It is understood that claims involving 
residual rights shall be filed only at the port where the Exhibit E 
reserving such right was filed.

Inventory Procedures

    We realize that inventory control is of major importance. In 
accordance with our normal accounting procedures, each refinery 
prepares a monthly stock and yield report, which accounts for 
inventories, production and disposals from time of receipt to time 
of disposition. This provides an audit trail of all products.
    The above-noted records will provide the required audit trail 
from the initial source documents to our drawback claims and will 
support adherence with the requirements discussed under the heading 
PROCEDURES AND RECORDS MAINTAINED.

Basis of Claim for Drawback

    The amount of raw material on which drawback may be based shall 
be computed by multiplying the quantity of each product exported by 
the drawback factor for that product. The amount of any one type and 
class of raw material which may be designated as the basis for 
drawback on the exported products produced at a given refinery and 
covered by a drawback entry shall not exceed the quantity of such 
raw material used at the refinery during the abstract period or 
periods from which the exported products were produced. The quantity 
of raw material to be designated as the basis for drawback on 
exported products must be at least as great as the quantity of raw 
material of the same type and class which would be required to 
produce the exported products in the quantities exported.

Agreements

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its refinery and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
corporate officers, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service, all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this application and letter of approval.

Declaration of Official

    I declare that I have read this application for a specific 
manufacturing drawback ruling; that I know the averments and 
agreements contained herein are true and correct; and that my 
signature on this ____________ day of ________________ 19______ , 
makes this application binding on

----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)

By \4\-----------------------------------------------------------------
---------------------------------------------------------------------------

    \4\ Section 191.6(a) of the Customs Regulations requires that 
applications for specific manufacturing drawback rulings be signed 
by the owner of a sole proprietorship, a partner in a partnership, 
or the president, vice president, secretary, treasurer or other 
individual legally authorized to bind the corporation. In addition, 
any employee of a business entity with a Customs power of attorney 
filed with the Customs port for the drawback office which will 
liquidate your drawback claims may sign such an application, as may 
a licensed Customs broker with a Customs power of attorney. You 
should state in which Customs port Customs power(s) of attorney is/
are filed.
---------------------------------------------------------------------------

(Signature and Title)

----------------------------------------------------------------------
(Print Name)

    (Exhibits A-F of the Petroleum Drawback Proposal follow)

       Exhibit A.--Abstract of Manufacturing Records, ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to January 31, 1995       
                                                          [Material Used (in Bbls. at 60 deg.)]                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Crudes                                Derivatives      
                                                                        --------------------------------------------------------------------------------
                                                             Totals                                                                           Unfinished
                                                                           Class I      Class II      Class III      Class IV    Crude tops    naphtha  
                                                                                                                                  class IV     class IV 
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Opening Inventory..................................       4,007,438  ...........  ...........  ..............  ...........  ...........  ...........
(2) Material Introduced*...............................       7,450,732            0      619,473       6,367,991            0      101,224      362,044
(3) Closing Inventory..................................       3,671,005  ...........  ...........  ..............  ...........  ...........  ...........

[[Page 3141]]

                                                                                                                                                        
(4) Total Consumption..................................       7,787,165  ...........  ...........  ..............  ...........  ...........  ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line (1)--Stock in process at beginning of manufacturing period.                                                                                        
Line (2)--Raw material introduced into manufacturing process during the period. The amount, by type and class, shown hereon, shall be the maximum that  
  may be designated under T.D. 84-49.                                                                                                                   
Line (3)--Stock in process at end of period.                                                                                                            
Line (4)--Total Consumed, namely, line 1 plus line 2 less line 3.                                                                                       
* All raw materials of a type and class not to be designated may be shown as a total.                                                                   


  Exhibit B.--Abstract of Production ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to 
                                                January 31, 1995                                                
                                                                                                                
                                                                                                      Drawback  
                       Product                          Quantity in     Value per      Value of      factor per 
                                                           bbls.          bbl.          product         bbl.    
(5)                                                              (6)     (7)                   (8)     (9)      
================================================================================================================
1. Motor Gasoline...................................      2,699,934      $ 6.14333     $16,586,586       1.06678
2. Aviation Gasoline................................        108,269        5.83363         631,601       1.01300
3. Special Naphthas.................................        372,676        8.06356       3,005,095       1.40023
4. Jet Fuel.........................................        249,386        3.95698         986,815        .68712
5. Kerosene and Range Oil...........................        321,263        4.69857       1,509,477        .81590
6. Distillate Oils..................................      2,567,975        4.45713      11,445,798        .77398
7. Residual Oils....................................        308,002        2.51322         774,077        .43642
8. Lubricating Oils.................................        292,492       26.72296       7,816,252       4.64041
9. Paraffin Wax.....................................         19,063       10.49642         200,093       1.82269
10. Petroleum Coke..................................        122,353        1.24291         152,074        .21583
11. Asphalt.........................................         75,231        3.59105         270,158        .62358
12. Road Oil........................................              0        0                     0       0      
13. Still Gas.......................................        245,784        1.00530         247,087        .17457
14. Liquified Refinery Gas..........................        524,423        2.23013       1,169,531        .38726
15. Petrochemical Synthetic Rubber..................              0        0                     0       0      
16. Petrochemical Plastics & Resins.................              0        0                     0       0      
17. All Other Petrochemical Products................          7,996        6.21343          49,683       1.07895
                                                     -----------------------------------------------------------
      Loss (or Gain)................................       (127,682)  ............  ..............  ............
                                                     ===========================================================
      Total.........................................      7,787,165   ............      44,844,327  ............
----------------------------------------------------------------------------------------------------------------
Col. (6) Products are shown in the net quantities realized in the refining process and do not include non-      
  petroleum additives.                                                                                          
Col. (7) Weighted average realization for the period covered.                                                   
Col. (8) Column 6 multiplied by column 7.                                                                       
Col. (9) Quantity of raw materials allowable per barrel of product. (Formula for obtaining drawback factors:    
  $44,844,327  7,787,165 bbls. = $5.75875 divided into product values per barrel equals drawback        
  factor.)                                                                                                      


[[Page 3142]]


             Exhibit C.--Inventory Control Sheet ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to January 31, 1995            
                                                    [All quantities exclude non-petroleum additives]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Aviation gasoline           Residual oils           Lubricating oils      Petrochemicals all other
                                                 -------------------------------------------------------------------------------------------------------
                                                    Drawback                  Drawback                  Drawback                  Drawback              
                                                     factor       Bbls.        factor       Bbls.        factor       Bbls.        factor       Bbls.   
--------------------------------------------------------------------------------------------------------------------------------------------------------
(10) Opening Inventory..........................       11,218      1.00126       21,221       .45962        9,242      4.52178          891      1.00244
(11) Production.................................      108,269      1.01300      308,002       .43642      292,492      4.64041        7,996      1.07895
(11-A) Receipts.................................                                                                                                        
(12) Exports....................................       11,218      1.00126       21,221       .45962        8,774      4.52178          195      1.00244
                                                          176      1.01300      104,397       .43642                                                    
(13) Drawback Deliveries........................                                                                                        696      1.00244
                                                                                                                                        319      1.07895
(14) Domestic Shipments.........................       97,863      1.01300      180,957       .43642          468      4.52178        6,867      1.07895
                                                                                                          278,286      4.64041                          
(15) Closing Inventory..........................       10,230      1.01300       22,648       .43642       14,206      4.64041          810     1.07895 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line (10)--Opening inventory from previous period's closing inventory.                                                                                  
Line (11)--From production period under consideration.                                                                                                  
Line (11-A)--Product received from other sources.                                                                                                       
Line (12)--From earliest on hand (inventory or production). Totals from drawback entry or entries recapitulated (see column 18).                        
Line (13)--Deliveries for export or for designation against further manufacture--earliest on hand after exports are deducted.                           
Line (14)--From earliest on hand after lines (12) and (13) are deducted.                                                                                
Line (15)--Balance on hand.                                                                                                                             


[[Page 3143]]


 Exhibit D.--Recapitulation of Drawback Entry ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1,
                                            1995 to January 31, 1995                                            
                                                                                                                
                                                              Quantity in                            Crude to be
                                                 Quantity in    bbls. in     Drawback      Crude     allowed for
                    Product                         bbls.      the terms    factor per  allowed for    drawback 
                                                   exported      of the        bbl.     drawback in   deliveries
                                                                Abstract                   bbls.       in bbls. 
(16)                                                    (17)         (18)         (19)         (20)        (20a)
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Aviation Gasoline..............................       11,410       11,218      1.00126       11,232             
                                                                      176      1.01300          178             
Residual Oils..................................      125,618       21,221       .45962        9,754             
                                                                  104,397       .43642       45,561             
Lubricating Oils...............................        8,875        8,774      4.52178       39,674             
Petrochemicals--...............................                       696      1.00244                       698
    Other......................................                       319      1.07895                       344
                                                         195          195      1.00244          195             
                                                ----------------------------------------------------------------
      Total....................................      146,098      146,996                   106,594        1,042
----------------------------------------------------------------------------------------------------------------


Duty paid on raw material selected for designation--$.1050              
 per bbl. (class III crude):                                            
    Amount of drawback claim--gross--106,594  x  .1050 =...      $11,192
    Less 1%................................................         -112
                                                            ------------
    Amount of drawback claim--net..........................       11,080
------------------------------------------------------------------------
Col. (16) Lists only products exported.                                 
Col. (17) Quantities in condition as shown on the notices of exportation
  and notices of lading.                                                
Col. (18) Quantities in condition as shown on the abstract (i.e., less  
  additives if any). These quantities will appear in line 12.           
Col. (19) The drawback factor(s) shown on line 12.                      
Col. (20) Raw materials (crude or derivatives) allowable, determined by 
  multiplying column 18 by column 19.                                   
Col. (20a) Raw materials (crude or derivatives) allowable, for drawback 
  deliveries determined by multiplying column 18 by column 19.          


Exhibit E.--Producibility Test for Products Exported (Including Drawback
   Deliveries) ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From  
                   January 1, 1995 to January 31, 1995                  
      [Type and Class of Raw Material Designated--Crude, Class III]     
                                                                        
                                                             Quantity of
                                                            raw material
                                                             of type and
                                  Quantity in    Industry       class   
             Product                barrels      standard    designated 
                                                (percent)     needed to 
                                                               produce  
                                                               product  
(21)                                     (22)         (23)          (24)
                                                                        
------------------------------------------------------------------------
Aviation Gasoline...............      11,394            40        28,485
Residual Oils...................     125,618            83       151,347
Lubricating Oils................       8,774            50        17,548
Petrochemicals, other...........        (195)  ...........  ............
Petrochemicals, other (Drawback                                         
 Deliveries)....................      (1,015)  ...........  ............
Petrochemicals--Total...........       1,210            29         4,172
                                 -------------                          
      Total.....................     146,996   ...........  ............
------------------------------------------------------------------------
A--Crude allowed (column 20: 106,594 plus column 20a: 1,042; 107,636    
  bbls.                                                                 
B--Total quantity exported (including drawback deliveries) (column 22): 
  146,996; 107,636 bbls.                                                
C--Largest quantity of raw material needed to produce an individual     
  exported product (see column 24): 151,347; 107,636 bbls.              
D--The excess of raw material over the largest of lines A, B, or C,     
  required to produce concurrently on a practical operating basis, using
  the most efficient processing equipment existing within the domestic  
  industry, the exported articles (including drawback deliveries) in the
  quantities exported (or delivered): None.                             
E--Minimum quantity of raw material required to be designated (which is 
  A, B, or C, whichever is largest, plus D, if applicable): 151,347,    
  None.                                                                 
I hereby certify that all the above drawback deliveries and products    
  exported by the Beaumont Refinery of ABC Oil Co., Inc. during the     
  period from January 1, 1995 to January 31, 1995 could have been       
  produced concurrently on a practical operating basis from 151,347     
  barrels of imported Class III crude against which drawback is claimed.
                                                                        
    Signature                                                           


[[Page 3144]]


     Exhibit E-1.--Producibility Test for Products on Which Residual Right to Drawback is Now Claimed and Products Covered by Abstracts on Which Raw    
        Materials Covered Were Previously Designated ABC Oil Co., Inc.--Tulsa, Oklahoma Refinery Period From January 1, 1995 to January 31, 1995        
                                              [Type and Class of Raw Material Designated--Crude, Class III]                                             
                                                                                                                                                        
                                                                        Quantity of raw                                                                 
                                                                     material of type and                                                               
                                                           Industry    class designated                                         Drawback        Crude   
                   Product                     Quantity    standard    needed to produce       Covered by: 1. period  2.       factor per    allowed for
                                              in barrels  (percent)         product                    refinery                  barrel        drawback 
                                                                    ----------------------                                                              
                                                                      Separate   Combined                                                               
(21)                                                (22)       (23)                                                                                     
(1)(24)                                                        (19)       (20)                                                                          
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aviation Gasoline...........................     11,394          40     28,485     29,125  ................................      1.00126         11, 232
                                              ..........  .........  .........  .........  ................................      1.01300             178
Residual Oils...............................    125,618          83    151,347    151,347  1. Jan. 1995....................       .45962           9,754
                                              ..........  .........  .........  .........  ................................       .43642          45,561
Lubricating Oils............................      8,774          50     17,548     17,932  2. Beaumont.....................      4.52178          39,674
Petrochemicals, Other.......................       (195)  .........  .........  .........  ................................      1.00244             195
Petrochemicals, Other (Drawback Deliveries).     (1,015)  .........  .........  .........  ................................  ..............  ...........
                                                  1,210          29      4,172      4,503  ................................  ..............  ...........
[Residual Rights]:                                                                                                                                      
    Aviation Gasoline.......................        256          40        640     29,125  ................................      1.01265259          259
    Lubricating Oils........................        192          50        384     17,932  1. Jan. 1995....................      4.59006881          881
    Petrochemicals, Other...................         96          29        331      4,503  2. Tulsa........................      1.12412108          108
    Distillate Oils.........................       3807          89      4,278      4,278  ................................       .76624           2,917
                                             -----------------------------------------------------------------------------------------------------------
      Subtotal..............................  ..........  .........  .........  .........  ................................  ..............        4,165
                                             ===========================================================================================================
      Total.................................    151,347   .........  .........  .........  ................................  ..............      110,759
--------------------------------------------------------------------------------------------------------------------------------------------------------
A--Crude allowed (column 20: 110,759; plus crude allowed for drawback deliveries: 1,042); 111,801 bbls.                                                 
B--Total quantity exported (including drawback deliveries) (column 22): 151,347 bbls.                                                                   
C--Largest quantity of raw material needed to produce an individual exported product (see col. 24): 151,347.                                            
D--The excess of raw material over the largest of line A, B, or C, required to produce concurrently on a practical operating basis, using the most      
  efficient processing equipment existing within the domestic industry, the exported articles (including drawback deliveries) in the quantities exported
  (or delivered): None.                                                                                                                                 
E--Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus D, if applicable): 151,347.              
                                                                                                                                                        
Drawback Computation                                                                                                                                    
                                                                                                                                                        
 4,165*bbls. @10\1/2\ = $437.33                                                                                                                         
Less 1%    4.37                                                                                                                                         
Amount of Drawback Claim--Net $432.96                                                                                                                   
See subtotal, col. 20, for Residual Rights above.                                                                                                       
                                                                                                                                                        
Certificate                                                                                                                                             
                                                                                                                                                        
I hereby certify that all the above drawback deliveries and products exported by the Tulsa, Oklahoma refinery of ABC Oil Co., Inc., during the period   
  from January 1, 1995 to January 31, 1995, could have been produced concurrently on a practical operating basis together with all drawback deliveries  
  and products exported covered by Exhibit E of the abstract for the period January 1, 1995 to January 31, 1995, filed by the Beaumont, Texas refinery  
  of the company from 151,347 barrels of imported Class III crude against which drawback is claimed.                                                    
                                                                                                                                                        
    Signature                                                                                                                                           
                                                                                                                                                        
The attached sample, EXHIBIT E (COMBINATION), illustrates the procedures to be followed when two classes or types of raw material are designated on a   
  given abstract. For purposes of illustration it is assumed that the refiner has only 100,000 barrels of Class III crude to designate, but adequate    
  supplies of Class II to designate.                                                                                                                    
In addition, please note that the computation of drawback on EXHIBIT D will be as follows:                                                              
Duty paid on raw material selected for designation:                                                                                                     
  $.1050 per barrel (Class III crude)                                                                                                                   
  $.0525 per barrel (Class II crude)                                                                                                                    


Amount of drawback claim--gross: 81,638  x  .1050=......       $8,571.99
    24,956  x  .0525=...................................        1,310.19
                                                         ---------------
                                                                9,882.18
    (Rounded Off).......................................        9,882   
        Less 1%.........................................          -99   
                                                         ---------------
Amount of drawback claim--net:..........................        9,783   


[[Page 3145]]


 Exhibit E (Combination).--Producibility Test for Products Exported (Including Drawback Deliveries) ABC Oil Co.,
                 Inc.--Beaumont, Texas Refinery Period from January 1, 1995 to January 31, 1995                 
                          [Type and Class of Raw Material Designated--Crude, Class III]                         
                                                                                                                
                                                                           Quantity of                          
                                                                               raw                              
                                                                           material of                          
                                                                Industry     type and     Drawback      Crude   
                    Product                      Quantity in    standard      class      factor per  allowed for
                                                   barrels     (percent)    designated     barrel      drawback 
                                                                            needed to                           
                                                                             produce                            
                                                                             product                            
(21)                                                    (22)         (23)         (24)         (19)         (20)
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Aviation Gasoline..............................       11,218           40       28,485      1.00126       11,232
                                                         176  ...........  ...........      1.01300          178
Residual Oils..................................       21,221           83       25,567       .45962        9,754
                                                      47,214           83       56,884       .43642       20,605
Lubricating Oils...............................        8,774           50       17,548      4.52178       39,674
Petrochemicals, Other..........................          195  ...........  ...........      1.00244          195
Petrochemicals, Other..........................          696  ...........  ...........      1.00244  ...........
    (Drawback Deliveries)......................          319  ...........  ...........      1.07895  ...........
                                                       1,210           29        4,172  ...........  ...........
      Total....................................       89,813  ...........  ...........  ...........       81,638
----------------------------------------------------------------------------------------------------------------
 A--Crude allowed (column 20: 81,638; plus crude allowed for drawback deliveries: 1,042): 82,680 bbls.          
 B--Total quantity exported (including drawback deliveries) (column 22): 89,813 bbls.                           
 C--Largest quantity of raw material needed to produce an individual exported product (see column 24): 82,451   
  bbls.                                                                                                         
 D--The excess of raw material over the largest of lines A, B, or C, required to produce concurrently on a      
  practical operating basis, using the most efficient processing equipment existing within the domestic         
  industry, the exported articles (including drawback deliveries) in the quantities exported (or delivered):    
  10,187.                                                                                                       
 E--Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus 
  D, if applicable): 100,000 bbls.                                                                              
 I hereby certify that all the above drawback deliveries and products exported by the Beaumont refinery of ABC  
  Oil Co., Inc. during the period from January 1, 1995 to January 31, 1995, could have been produced            
  concurrently on a practical operating basis from 100,000 barrel of imported Class III crude against which     
  drawback is claimed.                                                                                          
                                                                                                                
    Signature                                                                                                   


         Exhibit F.--Designations for Drawback Claim ABC Oil Co., Inc.--Beaumont, Texas Refinery Period From January 1, 1995 to January 31, 1995        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Quantity of                                                   
 Certificate of delivery number   Entry No.     Date of          Kind of materials         materials       Date          Date consumed         Rate of  
                                              importation                                  in barrels    received                                duty   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       26192     04/13/93  Class III Crude..............       75,125     04/13/93  May 1993...............       $.1050
                                       23990     08/04/94  Class III Crude..............       37,240     08/04/94  Oct. 1994..............        .1050
3155...........................        22517     10/05/94  Class III Crude..............       38,982     10/05/94  Nov. 1994..............        .1050
--------------------------------------------------------------------------------------------------------------------------------------------------------

Format for 1313(d) Application Company Letterhead (Optional)

U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W., 
Washington, D.C. 20229
    Dear Sir: We, (Applicant's Name), a (State, e.g., Delaware) 
corporation (or other described entity) submit this application for 
a specific manufacturing drawback ruling that our manufacturing 
operations qualify for drawback under title 19, United States Code, 
section 1313(d), and part 191 of the Customs Regulations. We request 
that the Customs Service authorize drawback on the basis of this 
application.

Name and Address and IRS Number of Applicant

    (Section 191.8(a) of the Customs Regulations provides that each 
manufacturer or producer of articles intended for exportation with 
the benefit of drawback shall apply for a specific manufacturing 
drawback ruling, unless operating under a general manufacturing 
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs 
will not approve an application which shows an unincorporated 
division or company as the applicant (see Sec. 191.8(a)).)

Location of Factory

    (Give the address of the factory(s) where the process of 
manufacture or production will take place. If the factory is a 
different legal entity from the applicant, so state and indicate if 
operating under an Agent's general manufacturing drawback ruling.)

Corporate Officers

    (List officers and other persons legally authorized to bind the 
corporation who will sign drawback documents. Section 191.6 of the 
Customs Regulations permits only the president, vice-president, 
secretary, treasurer, or any other individual legally authorized to 
bind the corporation to sign for a corporation. In addition, a 
person within a business entity with a Customs power of attorney for 
the company may sign. A Customs power of attorney may also be given 
to a licensed Customs broker. This heading should be changed to 
NAMES OF PARTNERS or PROPRIETOR in the case of a partnership or sole 
proprietorship, respectively.)

Customs Office Where Drawback Claims Will Be Filed

    (The 8 offices where drawback claims can be filed are located 
at:

Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)

    (An original application and two copies must be filed. If the 
applicant intends to file drawback claims at more than one drawback 
office, two additional copies of the application must be furnished 
for each additional office indicated.)

General Statement

    (The exact material placed under this heading in individual 
cases will vary, but it

[[Page 3146]]

should include such information as the type of business in which the 
manufacturer is engaged, whether the manufacturer is manufacturing 
for his own account or is performing the operation on a toll basis 
(including commission or conversion basis) for the account of 
others, whether the manufacturer is a direct exporter of his 
products or sells or delivers them to others for export, and whether 
drawback will be claimed by the manufacturer or by others.)
    (Regarding drawback operations conducted under section 1313(d), 
the data may describe the flavoring extracts, medicinal, or toilet 
preparations (including perfumery) manufactured with the use of 
domestic tax-paid alcohol; and where such alcohol is obtained or 
purchased.)
    (Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

Tax-Paid Material Used Under Section 1313(d)

    (Describe or list the tax-paid material)

Exported Articles on Which Drawback Will Be Claimed

    (Name each article to be exported)

Process of Manufacture or Production

    (Drawback under section 1313(d) is not allowable except where a 
manufacture or production exists. A manufacture or production exists 
when a ``new and different article emerges having a distinctive 
name, character, or use'', or when an article is made fit for a 
particular use (see 19 CFR 191.2(p); see also (Anheuser-Busch 
Brewing Assoc. v. United States, 207 U.S. 556 (1907); United States 
v. International Paint Co., 35 CCPA 87 (1948), et al.). In order to 
obtain drawback under section 1313(d), it is essential for the 
applicant to show use in manufacture or production by giving a 
thorough description of the manufacturing process. Describe how the 
tax-paid material is processed into the export article.)

Waste

    (Many processes result in residue materials which, for drawback 
purposes, are treated as wastes. Describe any residue materials 
which you believe should be so treated. If no waste results, include 
a positive statement to that effect under this heading.)
    (If waste occurs, state: (1) Whether or not it is recovered, (2) 
whether or not it is valueless, and (3) what you do with it. This 
information is required whether claims are made on a ``used in'' or 
``appearing in'' basis and regardless of the amount of waste 
incurred.)
    (Irrecoverable wastes are those consisting of materials which 
are lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of domestic tax-paid alcohol used in manufacturing. 
If the claim is based upon the quantity of domestic tax-paid alcohol 
appearing in the exported article, irrecoverable and valueless waste 
will cause a reduction in the amount of drawback.)
    (Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation, does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)
    (If you recover valuable waste and if you choose to claim on the 
basis of the quantity of domestic tax-paid alcohol used in producing 
the exported articles (less valuable waste), state that you will 
keep records to establish the quantity and value of the waste 
recovered. See ``Basis of Claim for Drawback'' section below.)

Stock in Process

    (Some processes result in another type of residual material, 
namely, stock in process, which affects the allowance of drawback. 
Stock in process necessarily reduces the quantity of domestic tax-
paid alcohol used in manufacture in a current lot or period, in that 
the amount manufactured in any given batch does not include the 
recycled merchandise going into the next batch. Therefore, the 
amount of domestic tax-paid alcohol used in manufacture of exported 
articles is decreased.)
    (If stock in process occurs, the application must include a 
statement that the domestic tax-paid alcohol is considered to be 
used in manufacture at the time it was originally processed so that 
the stock in process will not be included twice in the computation 
of the domestic tax-paid alcohol used to manufacture the finished 
articles on which drawback is claimed.)

Loss or Gain (Separate and Distinct From WASTE)

    (Some manufacturing processes result in an intangible loss or 
gain of the net weight or measurement of the merchandise used. This 
loss or gain is caused by atmospheric conditions, chemical 
reactions, or other factors. State the approximate usual percentage 
or quantity of such loss or gain. Note that percentage values will 
be considered to be measured ``by weight'' unless otherwise 
specified. Loss or gain does not occur during all manufacturing 
processes. If loss or gain does not apply to your manufacturing 
process, state ``Not Applicable.'')

Procedures and Records Maintained

    We will maintain records to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of a particular lot (or lots) of domestic tax-
paid alcohol, and
    2. The quantity of domestic tax-paid alcohol \2\ we used in 
producing the exported articles.
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles we produce.''
---------------------------------------------------------------------------

    We realize that to obtain drawback the claimant must establish 
that the completed articles were exported within 5 years after the 
tax has been paid on the domestic alcohol.
    Our records establishing our compliance with these requirements 
will be available for audit by Customs during business hours. We 
understand that drawback is not payable without proof of compliance.

Inventory Procedures

    (Describe your inventory records and state how those records 
will meet the drawback recordkeeping requirements set forth in 19 
U.S.C. 1313(d) and part 191 of the Customs Regulations as discussed 
under the heading PROCEDURES AND RECORDS MAINTAINED. To insure 
compliance the following areas should be included in your 
discussion:)

RECEIPT AND RAW STOCK STORAGE RECORDS
MANUFACTURING RECORDS
FINISHED STOCK STORAGE RECORDS

Basis of Claim for Drawback

    (There are three different bases that may be used to claim 
drawback: (1) Used in; (2) Appearing In; and (3) Used less Valuable 
Waste.)
    (The ``Used In'' basis may be employed only if there is either 
no waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 100% of the tax paid on the quantity of 
domestic alcohol used in the manufacture of flavoring extracts and 
medicinal or toilet preparation (including perfumery).) (For 
example, if 100 gallons of alcohol, valued at $1.00 per gallon, were 
used in manufacture resulting in 10 gallons of irrecoverable or 
valueless waste, the 10 gallons of irrecoverable or valueless waste 
would not reduce the drawback. In this case drawback would be 
payable on 100% of the tax paid on the 100 gallons of domestic 
alcohol used to produce the exported articles.)
    The ``Appearing In'' basis may be used regardless of whether 
there is waste. If the ``Appearing In'' basis is used, the claimant 
does not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 100% of 
the tax paid on the quantity of domestic alcohol which appears in 
the exported articles.
    (Based on the previous example, drawback would be payable on the 
90 gallons of domestic alcohol which actually went into the exported 
product (appearing in) rather than the 100 gallons used in as set 
forth previously.)

[[Page 3147]]

    (The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of domestic tax-paid 
alcohol. The value of the waste reduces the amount of drawback when 
claims are based on the ``Used Less Valuable Waste'' basis. When 
valuable waste is incurred, the drawback allowance on the exported 
article is based on the quantity of tax-paid alcohol used to 
manufacture the exported articles, reduced by the quantity of such 
alcohol which the value of the waste will replace.)
    (Based on the previous examples, if the 10 gallons of waste had 
a value of $.50 per gallon, then the 10 gallons of waste, having a 
total value of $5.00, would be equivalent in value to 5 gallons of 
the tax-paid alcohol. Thus the value of the waste would replace 5 
gallons of the alcohol used, and drawback is payable on 100% of the 
tax paid on 95 gallons of alcohol rather than on the 100 gallons 
``Used In'' or the 90 gallons ``Appearing In'' as set forth in the 
above examples.)
    (Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)
    (A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)
    (An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 331) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)
    (An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by schedule follows:)
    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.
    (Section 191.8(f) of the Customs Regulations requires submission 
of the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)
    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.
    (Except as noted above in the explanation of the ``Appearing 
In'' basis, neither the ``Appearing In'' basis nor the ``schedule'' 
method for claiming drawback may be used where the relative value 
procedure is required.)

Agreements

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
corporate officers, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(d), part 191 of the Customs 
Regulations and this application and letter of approval.

Declaration of Official

    I declare that I have read this application for a specific 
manufacturing drawback ruling; that I know the averments and 
agreements contained herein are true and correct; and that my 
signature on this ____________ day of ______________ 19______ , 
makes this application binding on

----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)

By \3\__________________________---------------------------------------
---------------------------------------------------------------------------

    \3\ Section 191.6(a) of the Customs Regulations requires that 
applications for specific manufacturing drawback rulings be signed 
by the owner of a sole proprietorship, a partner in a partnership, 
or the president, vice president, secretary, treasurer or other 
individual legally authorized to bind the corporation. In addition, 
any employee of a business entity with a customs power of attorney 
filed with the Customs port for the drawback office which will 
liquidate your drawback claims may sign such an application, as may 
a licensed Customs broker with a Customs power of attorney. You 
should state in which Customs port Customs power(s) of attorney is/
are filed.
---------------------------------------------------------------------------

(Signature and Title)

----------------------------------------------------------------------
(Print Name)

Format for 1313(g) Application Company Letterhead (Optional)

U.S. Customs Service,
Entry and Carrier Rulings Branch, 1301 Constitution Avenue, N.W., 
Washington, D.C. 20229

    Dear Sir: We, (Applicant's Name), a (State, e.g., Delaware) 
corporation (or other described entity) submit this application for 
a specific manufacturing drawback ruling that our manufacturing 
operations qualify for drawback under title 19, United States Code, 
section 1313(g), and part 191 of the Customs Regulations. We request 
that the Customs Service authorize drawback on the basis of this 
application.

Name and Address and IRS Number of Applicant

    (Section 191.8(a) of the Customs Regulations provides that each 
manufacturer or producer of articles intended for exportation with 
the benefit of drawback shall apply for a specific manufacturing 
drawback ruling, unless operating under a general manufacturing 
drawback ruling under Sec. 191.7 of the Customs Regulations. Customs 
will not approve an application which shows an unincorporated 
division or company as the applicant (see Sec. 191.8(a)).)

Location of Factory or Shipyard

    (Give the address of the factory(s) or shipyard(s) at which the 
construction and equipment will take place. If the factory or 
shipyard is a different legal entity from the applicant, so state 
and indicate if operating under an Agent's general manufacturing 
drawback ruling.)

Corporate Officers

    (List officers and other persons legally authorized to bind the 
corporation who will sign drawback documents. Section 191.6 of the 
Customs Regulations permits only the president, vice-president, 
secretary, treasurer, or any other individual legally authorized to 
bind corporation to sign for a corporation. In addition, a person 
within a business entity with a Customs power of attorney for the 
company may sign. A Customs power of attorney may also be given to a 
licensed Customs broker. This heading should be changed to NAMES OF 
PARTNERS or PROPRIETOR in the case of a partnership or sole 
proprietorship, respectively.)

Customs Office Where Drawback Claims Will be Filed

    (The 8 offices where drawback claims can be filed are located 
at:

Boston, MA;
New York, NY;
Miami, FL;
New Orleans, LA;
Houston, TX;
Long Beach, CA;
Chicago, IL;
San Francisco, CA)

    (An original application and two copies must be filed. If the 
applicant intends to file drawback claims at more than one drawback

[[Page 3148]]

office, two additional copies of the application must be furnished 
for each additional office indicated.)

General Statement

    (The following questions must be answered:
    1. Who will be the importer of the merchandise?
    (If the applicant will not always be the importer, does the 
applicant understand its obligations to obtain the appropriate 
certificates of delivery (19 CFR 191.10), certificates of 
manufacture and delivery (19 CFR 191.24), or both?)
    2. Who is the manufacturer?
    (Is the applicant constructing and equipping for his own account 
or merely performing the operation on a toll basis for others?)
    3. Will the applicant be the drawback claimant?
    (State how the vessel will qualify for drawback under 19 U.S.C. 
1313(g). Who is the foreign person or government for whom the vessel 
is being made or equipped?)
    (There shall be included under this heading the following 
statement:
    We are particularly aware of the terms of Sec. 191.76(a)(1) of 
and subpart M of part 191 of the Customs Regulations, and shall 
comply with these sections where appropriate.)
    (Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

Imported Merchandise or Drawback Products Used

    (Describe the imported merchandise or drawback products)

Articles Constructed and Equipped for Export

    (Name the vessel or vessels to be made with imported merchandise 
or drawback products)

Process of Construction and Equipment

    (What is required here is a clear, concise description of the 
process of construction and equipment involved. The description 
should also trace the flow of materials through the manufacturing 
process for the purpose of establishing physical identification of 
the imported or drawback merchandise and of the articles resulting 
from the processing.)

Waste

    (Many processes result in residue materials which, for drawback 
purposes, are treated as wastes. Describe any residue materials 
which you believe should be so treated. If no waste results, include 
a positive statement to that effect under this heading.) (If waste 
occurs, state: (1) Whether or not it is recovered, (2) whether or 
not it is valueless, and (3) what you do with it. This information 
is required whether claims are made on a ``used in'' or ``appearing 
in'' basis and regardless of the amount of waste incurred.)
    (Irrecoverable wastes are those consisting of materials which 
are lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of imported material used in manufacturing. If the 
claim is based upon the quantity of imported merchandise appearing 
in the exported article, irrecoverable and valueless waste will 
cause a reduction in the amount of drawback.)
    (Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)
    (If you recover valuable waste and if you choose to claim on the 
basis of the quantity of imported or substituted merchandise used in 
producing the exported articles (less valuable waste), state that 
you will keep records to establish the quantity and value of the 
waste recovered. See ``Basis of Claim for Drawback'' section below.)

Loss or Gain (Separate and Distinct From WASTE)

    (Some manufacturing processes result in an intangible loss or 
gain of the net weight or measurement of the merchandise used. This 
loss or gain is caused by atmospheric conditions, chemical 
reactions, or other factors. State the approximate usual percentage 
or quantity of such loss or gain. Note that percentage values will 
be considered to be measured ``by weight'' unless otherwise 
specified. Loss or gain does not occur during all manufacturing 
processes. If loss or gain does not apply to your manufacturing 
process, state ``Not Applicable.'')

Procedures and Records Maintained

    We will maintain records to establish:
    1. That an exported article on which drawback is claimed was 
constructed and equipped with the use of a particular lot (or lots) 
of imported material; and
    2. The quantity of imported merchandise \2\ we used in producing 
the exported article. ( \2\ If claims are to be made on an 
``appearing in'' basis, the remainder of this sentence should read 
``appearing in the exported articles we produce.'')
    We realize that to obtain drawback the claimant must establish 
that the completed articles were exported within 5 years after the 
importation of the imported merchandise.
    Our records establishing our compliance with these requirements 
will be available for audit by Customs during business hours. We 
understand that drawback is not payable without proof of compliance.

Inventory Procedures

    (Describe your inventory records and state how those records 
will meet the drawback recordkeeping requirements set forth in 19 
U.S.C. 1313 and part 191 of the Customs Regulations as discussed 
under the heading PROCEDURES AND RECORDS MAINTAINED. To insure 
compliance the following should be included in your discussion:)

RECEIPT AND RAW STOCK STORAGE RECORDS
CONSTRUCTION AND EQUIPMENT RECORDS
FINISHED STOCK STORAGE RECORDS
SHIPPING RECORDS

Basis of Claim for Drawback

    (There are three different bases that may be used to claim 
drawback: (1) Used in; (2) Appearing In; and (3) Used less Valuable 
Waste.)
    (The ``Used In'' basis may be employed only if there is either 
no waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 99 percent of the duty paid on the quantity 
of imported material used to construct and equip the exported 
article.)
    (For example, if 100 pounds of material, valued at $1.00 per 
pound, were used in manufacture resulting in 10 pounds of 
irrecoverable or valueless waste, the 10 pounds of irrecoverable or 
valueless waste would not reduce the drawback. In this case drawback 
would be payable on 99% of the duty paid on the 100 pounds of 
imported material used in constructing and equipping the exported 
articles.)
    (The ``Appearing In'' basis may be used regardless of whether 
there is waste. If the ``Appearing In'' basis is used, the claimant 
does not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 99 
percent of the duty paid on the quantity of imported material which 
appears in the exported articles. ``Appearing In'' may not be used 
if by-products are involved unless the applicant agrees to value all 
products identically.)
    (Based on the previous example, drawback would be payable on the 
90 pounds of imported material which actually went into the exported 
product (appearing in) rather than the 100 pounds used in as set 
forth previously.)
    (The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of merchandise. The value 
of the waste reduces the amount of drawback when claims are based on 
the ``Used Less Valuable Waste'' basis. When valuable waste is 
incurred, the drawback allowance on the exported article may be 
based on the duty paid on the quantity of imported material used to 
construct and equip the exported product, reduced by the quantity of 
such material which the value of the waste will replace. Thus in 
this case, drawback is claimed on the quantity of eligible material 
actually used to produce the exported

[[Page 3149]]

product, less the amount of such material which the value of the 
waste would replace. Note section 191.25(c) of the Customs 
Regulations.)
    (Based on the previous examples, if the 10 pounds of waste had a 
value of $.50 per pound, then the 10 pounds of waste, having a total 
value of $5.00, would be equivalent in value to 5 pounds of the 
imported material. Thus the value of the waste would replace 5 
pounds of the merchandise used, and drawback is payable on 99 
percent of the duty paid on the 95 pounds of imported material 
rather than on the 100 pounds ``Used In'' or the 90 pounds 
``Appearing In'' as set forth in the above examples.)
    (Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)
    (A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)
    (An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 331) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)
    (An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by Schedule would read:)
    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.
    (Section 191.8(f) of the Customs Regulations requires submission 
of the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)
    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.
    (Except as noted above in the explanation of the ``Appearing 
In'' basis, neither the ``Appearing In'' basis nor the ``schedule'' 
method for claiming drawback may be used where the relative value 
procedure is required.)

Agreements

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
corporate officers, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(g), part 191 of the Customs 
Regulations and this application and letter of approval.

Declaration of Official

    I declare that I have read this application for a specific 
manufacturing drawback ruling; that I know the averments and 
agreements contained herein are true and correct; and that my 
signature on this ____________ day of ________________19 ______, 
makes this application binding on

----------------------------------------------------------------------
(Name of Applicant Corporation, Partnership, or Sole Proprietorship)

By \3\-----------------------------------------------------------------
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    \3\ Section 191.6(a) of the Customs Regulations requires that 
applications for specific manufacturing drawback rulings be signed 
by the owner of a sole proprietorship, a partner in a partnership, 
or the president, vice president, secretary, treasurer or other 
individual legally authorized to bind the corporation. In addition, 
any employee of a business entity with a Customs power of attorney 
with the Customs port for the drawback office which will liquidate 
your drawback claims may sign such an application, as may a licensed 
Customs broker with a Customs power of attorney. You should state in 
which Customs port Customs power(s) of attorney is/are filed.
---------------------------------------------------------------------------

(Signature and Title)

----------------------------------------------------------------------
(Print Name)
Samuel H. Banks,
Acting Commissioner of Customs.

    Approved: December 10, 1996.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 97-1048 Filed 1-17-97; 8:45 am]
BILLING CODE 4820-02-P