[Federal Register Volume 62, Number 50 (Friday, March 14, 1997)]
[Proposed Rules]
[Pages 12129-12133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6522]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 146
RIN 1515-AC05
Weekly Entry Procedure for Foreign Trade Zones
AGENCY: U.S. Customs Service, Treasury.
ACTION: Proposed rule.
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SUMMARY: This document proposes to amend and expand the weekly entry
procedure for foreign trade zones under certain circumstances to
include merchandise involved in activities other than exclusively
assembly-line type production operations. Under the proposed expanded
procedure, weekly entries covering the estimated removals of
merchandise for the weekly period and the associated entry summaries
would have to be filed exclusively through the Automated Broker
Interface. The expanded weekly procedure, which, as is presently the
case, would remain an entirely optional procedure, would thus be
conducted in a fully paperless environment. The expanded weekly
procedure would reduce the number of entries from zones as well as
automate and expedite the processing of such entries. The proposed
expansion of the weekly procedure would allow zone users to not have to
delay their operations pending the acceptance of an entry and Customs
examination of the subject merchandise. 2
DATES: Comments must be received on or before April 14, 1997.
ADDRESSES: Written comments (preferably in triplicate) may be addressed
to the Regulations Branch, Office of Regulations and Rulings, U.S.
Customs Service, 1301 Constitution Avenue, N.W., Washington, D.C.
20229. Comments may be inspected at the Regulations Branch, Office of
Regulations and Rulings, Franklin Court, 1099 14th Street, N.W., Suite
4000, Washington, D.C.
FOR FURTHER INFORMATION CONTACT:
Marsha Malbrough, Office of Field Operations, (202-927-0457).
SUPPLEMENTARY INFORMATION:
Background
The Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a-u)
(the ``FTZA''), provides for the establishment and regulation of
foreign trade zones. Foreign trade zones are secured areas to which
foreign and domestic merchandise, except that prohibited by law, may be
brought for the purposes enumerated in the FTZA without being subject
to the Customs laws of the U.S. Foreign trade zones, by virtue of being
exempt from the Customs laws, are intended to attract and promote
international trade and commerce. Part 146, Customs Regulations (19 CFR
part 146), sets forth the documentation and recordkeeping requirements
governing the admission of merchandise into a zone, 3 its removal from
the zone, and, among other things, its manipulation, manufacture,
storage, destruction or exhibition, while in the zone.
[[Page 12130]]
The current weekly entry procedure for foreign trade zones,
contained in Sec. 146.63(c)(1), Customs Regulations (19 CFR
146.63(c)(1)), has been in effect since May 12, 1986, having first been
authorized in T.D. 86-16, 51 FR 5040. That weekly entry process has
been limited to merchandise which is manufactured or changed into its
final form just shortly (within 24 hours) before physical transfer from
the zone. This procedure was believed to be especially necessary for
assembly-line type manufacturing operations because in these
circumstances there would otherwise be little time for examination of
the merchandise and furnishing of entry documentation after the
merchandise was in its final form but before its physical removal from
the zone. Accordingly, under the weekly entry process, the assembly-
line operation would not have to be delayed pending acceptance of an
entry and Customs examination of the merchandise.
Title VI of the North American Free Trade Agreement Implementation
Act (Pub. L. 103-182, 107 Stat. 2057), popularly known as the Customs
Modernization Act, was enacted on December 8, 1993. Section 637 of the
Customs Modernization Act, which amended 19 U.S.C. 1484 concerning the
entry of merchandise generally, provides further statutory support for
the weekly 4 entry procedure, in concert with section 3 of the FTZA (19
U.S.C. 81c(a)), which deals specifically with the entry of merchandise
from zones.
Since its inception, there have been no major problems associated
with the use of weekly entry. Therefore, Customs is proposing to expand
the use of the procedure by adding a weekly entry procedure to cover
merchandise involved in activities other than manufacturing operations.
Also, under the proposed amendment, the weekly entry under both the
present procedure and the proposed expanded procedure would cover any
seven-day consecutive period (i.e., the weekly period would not be
limited to a calendar week).
It is expected that the expanded weekly entry procedure would be
available to zones (including subzones) having large quantities of
different types of merchandise. A pilot program, implemented in
September 1994, to test such an expanded weekly entry procedure at a
selected number of zones/subzones has since been evaluated as a
success.
Under the proposed expanded procedure, weekly entries and entry
summaries would have to be filed electronically through the Automated
Broker Interface (ABI). Thus, the participant making entry would have
to do so using ABI, or employ an ABI-qualified Customs broker for this
purpose. Specifically, the port director would allow the person making
entry to file an electronic entry containing the data required on
Customs Form 3461 for the estimated removals of merchandise intended to
occur during the related weekly period. The electronic entry would be
filed prior to any transfers of merchandise from the zone, and an
electronic entry summary containing the data required on Customs Form
7501 would be filed within 10 working days after the first day of the
weekly period covered by the electronic entry. Payment of applicable
duties and taxes would likewise be scheduled for no later than 10
working days after the date of entry, using the Automated Clearinghouse
(ACH) as prescribed in Sec. 24.25, Customs Regulations (19 CFR 24.25).
The principal purpose of the proposed expanded weekly procedure, as
conducted in a fully paperless environment, is to reduce the number of
entries from zones and further expedite the processing of such entries,
with the added benefit that zone users would not have to delay their
operations pending the acceptance of an entry and Customs examination
of the subject merchandise.
Hence, while the expanded weekly entry procedure, like the current
weekly manufacturing entry procedure, is a voluntary program, an
integral component thereof, under the proposed amendment, would be the
use of electronic entry filing. Indeed, electronic entry processing
accords precisely with and fully effects the purpose of the program, as
described. At the same time, however, zone users not wishing to use the
expanded weekly entry may, of course, continue to operate in a zone,
and, to this end, if desired, may file paper entries covering
individual transfers of merchandise from the zone, inasmuch as
electronic entry filing is also a voluntary program (see 19 U.S.C.
1411(b); 19 CFR 143.31).
No retail trade or retail sales within the zone would be permitted
through this procedure. Retail trade is prohibited in a zone except as
provided in 19 U.S.C. 810(d) of the FTZA.
The person with the right to make entry, who has established an
importing history, and who is not delinquent or otherwise remiss in
transactions with Customs, would make application to the port director
at least 30 days before the expanded weekly entry procedure were to
become effective. Each person seeking permission to use the expanded
procedure under the proposed section 146.63(c)(2) would have to file an
individual application therefor. The application would describe the
merchandise to be handled or processed, the accounting and
transportation controls exercised over the merchandise, and the kind of
activity or operation it would undergo in the zone. The port director
would evaluate the application based on the quality of the accounting
and transportation controls exercised over the merchandise in the zone,
the enforcement risk presented, the type of merchandise imported,
Customs knowledge of the business conducted in the zone, and any local
criteria developed by the port director. The port director would have
to provide written notice of any special local criteria that would be
used in evaluating the application.
It is noted that filers eligible for weekly entry under
Sec. 146.63(c)(1) would not be required to apply or reapply for
participation in that program.
To be approved for expanded weekly entry, the merchandise to be
admitted to the zone, its handling or processing therein, and the
shipments of such merchandise from the zone, would have to be fairly
predictable, continuing and repetitive, and relatively fixed in variety
by the type of merchandise and the nature of the business conducted at
the site. In addition, the subject merchandise would have to have been
preclassified or otherwise have been determined to be risk-free; it
could not be restricted or sensitive or of a type which required
Customs examination before or at the time of its admission to, or
removal from, the zone. Quota-class merchandise would thus be excluded
from the program. Also, the records with respect to the merchandise and
its handling and/or processing in the zone, if not computerized, would
have to be maintained in an organized and readily retrievable manner,
and be capable of being accessed by Customs within a reasonable time
after due notice.
Additionally, in the case of a general-purpose zone with multiple
users, the zone operator would, in writing, have to certify to the port
director that he understands the requirements of the expanded weekly
entry program, and agree to supervise and monitor the movement of
merchandise thereunder. The operator would also have to expressly agree
to maintain inventory records that accurately accounted for all
transfers of merchandise from the zone related to the respective weekly
entry of each person using the procedure therein. The zone operator's
written acknowledgement of responsibilities in this regard would be
required to be on file with the applicable port director
[[Page 12131]]
before any application to use the weekly entry procedure could be
approved in relation to the zone.
The port director, following his evaluation of the application,
would notify the applicant, in writing, of his decision. If the
application was denied, the port director would specify the reason for
the denial in his reply, and would inform the applicant that such
denial may be appealed to the port director for reconsideration. A
request for reconsideration may, if denied, be appealed to the
Assistant Commissioner, Office of Field Operations, Customs
Headquarters. Such appeals must be made within 30 days of the date of
the adverse decision being appealed. The port director's decision or
the Assistant Commissioner's decision, as applicable, would be issued,
in writing, within 30 days of the receipt of the appeal. The Assistant
Commissioner's decision would constitute the final Customs
determination concerning the application.
If the application were approved, the port director could stay
participation in the weekly entry program for a specified reasonable
period, should examination of the merchandise or its documentation be
needed for any reason.
In addition, the port director could later propose to revoke the
approval, if there were a subsequent failure to fulfill the criteria
under which the initial approval had been obtained, or if it thereafter
became routinely necessary to examine the merchandise or its
documentation before or upon admission to, or removal from, the zone,
should the merchandise have become restricted or sensitive or otherwise
of a type which likewise routinely required Customs examination. A
challenge to a proposed revocation of participation in the weekly entry
program could be filed with the port director. An adverse decision by
the port director could be appealed to the Assistant Commis-sioner,
Field Operations, Customs Headquarters. The Assistant Commissioner's
decision in this connection would constitute the final Customs
determination concerning the challenge.
It is also proposed to add a new paragraph (d) to Sec. 146.68 to
provide for weekly reporting of transfers from a foreign trade zone to
a class 9 warehouse (duty-free store), provided the zone grantee or
operator is also the class 9 warehouse proprietor. The procedure is
similar to the warehouse transfer procedure set out in Sec. 144.34 of
the Customs Regulations (19 CFR 144.34).
Comments
Before adopting this proposal, consideration will be given to any
written comments that are timely submitted to Customs. Comments
submitted will be available for public inspection in accordance with
the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4, Treasury
Department Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs
Regulations (19 CFR 103.11(b)), during regular business days between
the hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch,
Franklin Court, 1099 14th Street, N.W., Suite 4000, Washington, D.C.
Regulatory Flexibility Act and Executive Order 12866
As explained in the preamble, the proposed rule is intended to
expand electronic entry filing on a weekly basis in foreign trade
zones, and thus reduce the number of entry filings from zones as well
as automate and expedite the processing of such entries. As such,
pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C.
601 et seq.), it is hereby certified that the proposed amendments set
forth in this document, if adopted, will not have a significant
economic impact on a substantial number of small entities. Accordingly,
they are not subject to the regulatory analysis or other requirements
of 5 U.S.C. 603 and 604. Nor do the proposed amendments result in a
``significant regulatory action'' under E.O. 12866.
Paperwork Reduction Act
The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 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
Sec. 146.63(c). This information is needed and will be used to enforce
Customs entry procedures as required by law and to ensure the
protection of the revenue. The likely respondents and/or recordkeepers
are businesses.
Estimated annual reporting and/or recordkeeping burden: 300 hours.
Estimated average annual burden per respondent/recordkeeper: 30
minutes.
Estimated number of respondents and/or recordkeepers: 600.
Estimated annual frequency of responses: 1.
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, D.C. 20503. A copy should also be sent to the
Regulations Branch, Office of Regulations and Rulings, U.S. Customs
Service, 1301 Constitution Avenue, N.W., Washington, D.C. 20229.
Comments should be submitted within the same time frame as comments on
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; (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; and (e) estimates of capital or startup costs and costs of
operations, maintenance, and purchase of services to provide
information.
List of Subjects in Part 146
Customs duties and inspection, Exports, Foreign trade zones,
Imports, Reporting and recordkeeping requirements.
Proposed Amendment
It is proposed to amend part 146, Customs Regulations (19 CFR part
146), as set forth below.
PART 146--FOREIGN TRADE ZONES
1. The authority citation for part 146 would continue to read as
follows:
Authority: 19 U.S.C. 66, 81a-u, 1202 (General Note 20,
Harmonized Tariff Schedule of the United States), 1623, 1624.
2. It is proposed to amend Sec. 146.63 by revising paragraph (c) to
read as set forth below:
Sec. 146.63 Entry for consumption.
* * * * *
(c) Estimated activity--(1) Weekly manufacturing. When merchandise
is manufactured or its physical condition as entered (exclusive of
packing) is otherwise changed in a zone within 24 hours before physical
transfer from the zone for consumption, the port director may allow the
person making entry to file an entry on Customs Form 3461 for the
estimated removals of merchandise during any consecutive 7-day period
[[Page 12132]]
(such period is thus not limited to being a calendar week). The Customs
Form 3461 must be accompanied by a pro forma invoice or schedule
showing the number of units of each type of merchandise to be removed
during the weekly period and their zone and dutiable values.
Merchandise 13 covered by an entry made under the provisions of this
paragraph will be considered to be entered and may be removed only when
the port director has accepted the entry on Customs Form 3461. If the
actual removals will exceed the estimate for the week, the person
making entry shall file an additional Customs Form 3461 to cover the
additional units before their removal from the zone. Notwithstanding
that a weekly entry may be allowed, all merchandise will be dutiable as
provided in Sec. 146.65 of this subpart, with the time of entry being
determined as provided in Sec. 141.68 of this chapter. When estimated
removals exceed actual removals, that excess merchandise will not be
considered to have been entered or constructively transferred from the
zone. After acceptance of the weekly entry, and any additional entries
required to be filed hereunder, individual transfers of merchandise
covered by the entry may be made from the zone.
(2) Weekly expanded. Regarding merchandise not qualifying for
weekly entry under paragraph (c)(1) of this section, the port director
may, upon application, allow the person making entry of such
merchandise to file an electronic entry containing the data required on
Customs Form 3461 for the estimated removals of merchandise intended to
occur during the related weekly period. Such weekly period may cover
any consecutive 7-day period and is not limited to being a calendar
week. The electronic data submitted must show the number of units of
each type of merchandise to be removed during the weekly period and
their dutiable values (see Sec. 143.36 of this chapter). Merchandise
covered by an electronic entry made under the provisions of this
paragraph will be considered to be entered and may be removed from the
zone only when the port director has accepted the entry. If the actual
removals will exceed the estimate for the week, the person making entry
shall file an additional electronic entry to cover the additional units
before their removal from the zone. An electronic entry summary
containing the data required on Customs Form 7501 must be filed within
10 working days after the first day of the weekly period covered by the
electronic entry. Both the weekly entry and the related entry summary
must be filed electronically through the Automated Broker Interface,
with payment of applicable duties and taxes being scheduled, through
the Automated Clearinghouse, for no later than 10 working days after
the date of entry (see subpart D, part 143, and Sec. 24.25 of this
chapter). Under this weekly entry procedure, all merchandise will be
dutiable as provided in Sec. 146.65 of this subpart, with the time of
entry being determined as provided in Sec. 141.68 of this chapter. When
estimated removals exceed actual removals, such excess merchandise will
not be considered to have been entered or constructively transferred
from the zone.
(i) Application required; criteria. Each person seeking permission
to make a weekly zone entry under paragraph (c)(2) of this section must
file an individual application therefor. The person must have an
established importing history 15 and must not be delinquent or
otherwise remiss in transactions with Customs. The written application
shall be filed with the port director at least 30 days before the
applicant wishes to use the weekly expanded entry procedure. The
application must state that weekly entries and entry summaries will be
filed with Customs electronically using the Automated Broker Interface;
describe the merchandise to be handled or processed citing the
Harmonized Tariff Schedule of the United States classification (and
providing to Customs changes thereto), describe the accounting and
transportation controls exercised over the merchandise, and describe
the kind of operation such merchandise will undergo in the zone. The
port director will evaluate the application based on the quality of the
accounting and transportation controls exercised over the merchandise,
the enforcement risk presented, the type of merchandise imported, and
Customs knowledge of the business conducted in the zone. The port
director shall also consider in his evaluation of the application the
following additional criteria:
(A) The merchandise to be admitted to the zone, its handling or
processing therein, and the shipments of such merchandise from the zone
must be predictable, repetitive, and stable over the long term, and
relatively fixed in variety by the type of merchandise and the nature
of the business conducted at the site;
(B) The subject merchandise must have been preclassified or
otherwise have been determined to be risk-free; such merchandise may
not be restricted or sensitive or of a type which requires Customs
examination before or at the time of its admission to, or removal from,
the zone;
(C) Records with respect to the merchandise and its handling and/or
processing in the zone, if not computerized, must be maintained in an
organized and readily retrievable manner, and be capable of being
produced within a reasonable time after due notice; and
(D) Any other local criteria that the port director considers
essential to the application process. (The port director must provide a
written announcement of such criteria by a notice posted at the
customhouse, or by any other written methods considered appropriate.)
(ii) Application decision. The port director shall notify the
applicant, in writing, of Customs decision on the application. If the
application is denied, the port director shall specify the reason for
the denial in his reply, together with what corrective action may be
taken, and shall inform the applicant that such denial may be appealed
in the manner prescribed in paragraph (c)(2)(v) of this section. The
party may not reapply for participation in the weekly entry program
until the reason for the denial is resolved. If the application is
approved, the party may later apply to amend its application to add
merchandise not previously covered therein, for inclusion in its weekly
entry program. If a requested amendment is denied, the procedures set
forth in this paragraph shall apply.
(iii) Stay. If the application to participate in the weekly entry
program is approved, the party's use of weekly entry for particular
merchandise may thereafter be stayed, for a specified reasonable
period, should the port director determine, for any reason, to examine
the merchandise or its associated documentation prior to entry, for
purposes of verification. A stay of the weekly entry procedure in this
regard shall take effect on the date of the port director's letter
notifying the party thereof and shall remain in effect for the period
specified in that letter, or such earlier date as the port director
notifies the party in writing that the reason for the stay has been
satisfied. After the stay is lifted, the entry of such merchandise
under the weekly entry program may resume.
(iv) Proposed revocation of approval. The port director may propose
to revoke the approval given under this section, if there is a failure
to sustain the criteria in paragraph (c)(2)(i) of this section, or if
it thereafter becomes routinely necessary to examine the merchandise or
documentation before or upon
[[Page 12133]]
admission to, or removal from, the zone, because the merchandise has
become restricted or sensitive or otherwise of a type which likewise
requires examination. The port director shall notify the appropriate
party, in writing, specifying in detail the reason for the proposed
revocation, and shall inform the party of its right to challenge the
proposed revocation action as prescribed in paragraph (c)(2)(v) of this
section.
(v) 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 approval to use the weekly entry procedure
under this section, may be made to the port director issuing the denial
or proposed revocation and must be filed within 30 days of the date of
the denial or proposed revocation. A denial of an appeal or challenge
made to the port director may itself be appealed to the Assistant
Commissioner, Office of Field Operations, Customs Headquarters, and
must be filed within 30 days of the denial date of the initial appeal
or challenge. The 30-day period for filing an appeal or challenge with
the port director or with the Assistant Commissioner, Field Operations,
as applicable, may be extended for good cause, upon written request by
the party for such extension filed with the port director or, in the
case of appeals or challenges directed to the Assistant Commissioner,
Field Operations, with the Assistant Commissioner or other Customs
officer designated by him, within the 30-day period. The port
director's decision or the Assistant Commissioner's decision, as
applicable, shall be issued, in writing, within 30 working days of the
receipt of the appeal or challenge, unless extended with due
notification to the party. The Assistant Commissioner's decision shall
constitute the final Customs determination concerning the application
or challenge.
(vi) General-purpose zones--(A) Operator responsibilities. In the
case of a general-purpose zone with 18a multiple users, not only is
paragraph (c)(2)(ii) of this section applicable, but also the zone
operator must, in writing, certify to the port director that he
understands the requirements of the 19 weekly entry program under
paragraph (c)(2) of this section, and agree to supervise and monitor
the movement of merchandise thereunder (see Sec. 146.4 of this part).
The operator must also expressly agree to maintain inventory records
that accurately account for all transfers of merchandise from the zone
related to the respective weekly entry of each person using the
procedure therein as provided for in Secs. 146.4 and 146.21 of this
part. The zone operator's written acknowledgement of responsibilities
in this regard must be on file with the applicable port director before
any application to use the weekly expanded entry procedure may be
approved in relation to the zone (see paragraph (c)(2)(i) of this
section).
(B) Bond coverage; operator; person making entry. The operator's
responsibilities under the weekly entry procedure are covered under the
Foreign Trade Zone Operator's Bond (see Sec. 113.73 of this chapter).
The responsibilities of the person making entry are covered under such
party's basic importation and entry bond (see Sec. 113.62 of this
chapter).
* * * * *
3. It is proposed to amend Sec. 146.68 by adding a new paragraph
(d) to read as follows:
Sec. 146.68 Transfer for transportation or exportation; estimated
production.
* * * * *
(d) Weekly entry for class 9 warehouse (duty-free store).
(1) Requirements for transfer. Merchandise that 20 qualifies for
entry into a class 9 warehouse (duty-free store) pursuant to
Sec. 19.36(e) of this chapter, and subject also to Sec. 146.64 of this
subpart, may be transferred from a zone for that purpose under a weekly
entry procedure, provided:
(i) The zone operator or grantee is the same party, or shares
common ownership with, the class 9 warehouse proprietor (hereinafter
called ``the party''); and
(ii) The party utilizes a Customs approved centralized inventory
control system that shows the location of all the zone and warehoused
merchandise at all times, including merchandise in transit.
(2) Procedure. The following weekly entry procedure is to be
utilized for qualifying merchandise:
(i) The party shall file electronically a weekly entry permit to
enter the merchandise with the port director on Customs Form 7501 for
the estimated removal during any consecutive 7-day period, along with a
pro forma invoice or schedule pursuant to Sec. 146.63(c)(1) of this
subpart.
(ii) Upon acceptance of the permit by the port director, the party
may effect transfers of the merchandise from the zone to the warehouse
during the 7-day period.
(iii) Both an amended warehouse entry and warehouse withdrawal for
immediate exportation, covering the 21 merchandise actually removed
from the zone to the warehouse during the period covered by the permit,
will be filed by the close of the second business day following the end
of the period.
Approved: February 7, 1997.
George J. Weise,
Commissioner of Customs, Deputy Assistant
John P. Simpson,
Secretary of the Treasury.
[FR Doc. 97-6522 Filed 3-13-97; 8:45 am]
BILLING CODE 4820-02-P