[Federal Register Volume 63, Number 43 (Thursday, March 5, 1998)]
[Rules and Regulations]
[Pages 10970-11072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5045]



[[Page 10969]]

_______________________________________________________________________

Part II





Department of the Treasury





_______________________________________________________________________



Customs Service



_______________________________________________________________________



19 CFR Part 7, et al.



Drawback; Final Rule

  Federal Register / Vol. 63, No. 43 / Thursday, March 5, 1998 / Rules 
and Regulations  

[[Page 10970]]



DEPARTMENT OF THE TREASURY

Customs Service

19 CFR PARTS 7, 10, 145, 173, 174, 178, 181, 191

[T.D. 98-16]
RIN 1515-AB95


Drawback

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Final rule.

-----------------------------------------------------------------------

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

EFFECTIVE DATE: April 6, 1998.

FOR FURTHER INFORMATION CONTACT: Operational aspects: Maryanne Carney, 
Chief, Drawback and Records Branch, New York, (212-466-4575).
    Legal aspects: Paul Hegland, Office of Regulations and Rulings, 
(202-927-1172).

SUPPLEMENTARY INFORMATION:

Background

    Drawback is a refund or remission, in whole or in part, of a 
Customs duty, internal revenue tax, or fee. There are a number of 
different kinds of drawback authorized under law, including 
manufacturing and unused merchandise drawback. The statute providing 
for specific types of drawback is 19 U.S.C. 1313, the implementing 
regulations for which are contained in part 191, Customs Regulations 
(19 CFR part 191).
    The North American Free Trade Agreement Implementation Act, Public 
Law 103-182 (December 8, 1993), specifically Title VI thereof, 
popularly known as the Customs Modernization Act, significantly amended 
certain Customs laws. In particular, Sec. 632 of Title VI effected 
extensive and major amendments to the drawback law, 19 U.S.C. 1313. 
Also, Sec. 622 of Title VI authorized the establishment of a ``Drawback 
Compliance Program'' as well as specific civil monetary penalties for 
false drawback claims.
    Public Law 103-182 also approved and implemented the North American 
Free Trade Agreement (NAFTA). Section 203 of the Public Law provides 
special drawback provisions for exports to NAFTA countries. NAFTA 
drawback is separately provided for in part 181 of the Customs 
Regulations (19 CFR part 181). Drawback and other duty-deferral 
programs are addressed in subpart E of part 181. General drawback 
provisions under part 191 and the NAFTA drawback regulations in part 
181 contain substantial differences (e.g., the ``lesser of'' 
calculation versus full drawback, same condition versus unused 
merchandise drawback, etc.) Separate claims are required for drawback 
claims governed by NAFTA (see 19 CFR 181.46 and 191.0a).
    By a document published in the Federal Register on January 21, 1997 
(62 FR 3082), Customs proposed regulatory revisions principally to part 
191 in implementation of the statutory changes. In addition, the 
document proposed to generally rearrange and revise part 191 largely in 
an effort to further simplify and improve the editorial clarity of 
those regulatory procedures primarily dealing with the manufacturing 
and unused merchandise provisions, these being the most commonly used 
types of drawback. Several administrative changes were proposed as well 
with respect to the regulatory procedures governing these provisions, 
for the purpose of expediting the filing and processing of drawback 
claims thereunder, while ensuring that Customs has the necessary 
enforcement information to maintain effective administrative oversight 
over the drawback program. Also, minor conforming changes occasioned by 
the general reorganization of part 191 were proposed with respect to 
other parts of the Customs Regulations (19 CFR parts 7, 10, 145, 173, 
174 and 181).
    In formulating the notice of proposed rulemaking, as noted therein, 
Customs consulted extensively with the drawback trade community. In 
particular, in the summer of 1995, Customs initiated informal 
rulemaking consultations in a series of meetings with various trade 
groups.
    Numerous comments from the public were received in response to the 
publication of the notice of proposed rulemaking. A description, 
together with Customs analysis, of the comments that were submitted is 
set forth below.

Discussion of Comments

General

    Comment: Many views were expressed about the process of informal 
consultations that were effected through a series of meetings initiated 
by Customs with various trade groups, most of these commenters 
variously observing that this process was instrumental and effective in 
assisting Customs in the preparation of a notice of proposed rulemaking 
which would fairly and accurately implement the drawback and related 
laws, and their underlying Congressional intent, as well as better 
reflect current industry practices and expectations.
    Customs Response: Customs agrees that this final rule, based on the 
notice of proposed rulemaking which was developed through the 
innovative process described, correctly reflects the intent of the 
drawback law, as well as current industry concerns, and will improve 
drawback processing efficiency.
    Comment: It was stated that the paperwork burden which would be 
generated by the proposed regulations was underestimated, due in part 
to the need to obtain certification in the drawback compliance program, 
and to provide Harmonized Tariff Schedule numbers in certain instances.
    Customs Response: It should be noted that the information 
collection and recordkeeping burden in question contained in the 
proposed rule represents an estimated average annual burden. Customs, 
in accordance with the Paperwork Reduction Act of 1995, periodically 
reviews the accuracy of the information collection estimates required 
for compliance with its regulatory provisions. In the course of such 
review, changes to an estimated information collection burden will be 
made as appropriate.
    Comment: The concern was expressed about the new Customs Forms that 
would be issued for drawback; it was asked that Customs work closely 
with the trade in the development of such forms, with one comment 
suggesting that the forms be finalized and included in the final 
drawback regulations herein.
    Customs Response: Customs has worked closely with the public in 
developing new Customs Forms for drawback. The new drawback forms are: 
``Drawback Entry'' (Customs Form 7551), ``Delivery Certificate for 
Purposes of Drawback'' (Customs Form 7552), and ``Notice of Intent to 
Export, Destroy, or Return Merchandise for Purposes of Drawback'' 
(Customs Form 7553). The titles and numbers of the new forms are 
inserted where appropriate in the regulations.
    Comment: Questions were raised about the nature and intent 
underlying the information contained in the

[[Page 10971]]

``BACKGROUND'' section of the proposed rule.
    Customs Response: The ``BACKGROUND'' section of a rulemaking 
document presents its regulatory history. The information in this 
section is intended to give the specific detail necessary to explain 
the basis and purpose of the subject regulatory provisions and to 
furnish adequate notice of the issues to be commented on, as required 
by the Administrative Procedure Act. This enables a reviewing body, 
such as a court of law, to be aware of the legal and factual framework 
underlying an agency's action (see, e.g., American Standard, Inc., v. 
United States, 602 F. 2d 256, 269 (Ct. Cl. 1979)).
    Comment: A comment noted that some general drawback contracts were 
not included in Appendix A to part 191 in the proposed rule, along with 
the other general contracts.
    Customs Response: The comment has merit. Four of the general 
manufacturing drawback rulings, as they are now considered, 
specifically T.D.s 83-53, 83-77, 83-80, and 83-84, were inadvertently 
omitted from Appendix A. They are now included therein. Also, T.D. 84-
49, which required Customs Headquarters approval to obtain petroleum 
drawback under 19 U.S.C. 1313(b), was thus included in Appendix B as 
``Format for 1313(b) Petroleum Drawback Application''. However, T.D. 
84-49 is now included among the general manufacturing drawback rulings 
for which a letter of notification of intent to operate must be 
submitted to a drawback field office.
    Comment: A statement was desired in the ``BACKGROUND'' section of 
the final rule that certain existing rulings concerning what 
constituted a manufacture or production for drawback purposes would 
remain in effect.
    Customs Response: No change as to what constitutes a manufacture or 
production is intended by these regulations. As to non-revoked rulings 
generally, to the extend that such rulings do not materially conflict 
with the statute and these regulations, they remain in effect and may 
be relied upon to the extent provided in 19 U.S.C. 1625 and 19 CFR part 
177.
    It is also pointed out that any changes made to the rulings 
published in the Appendix to part 191 in this final rule are merely 
conforming to these regulations and do not adversely affect the public.
    Comment: An objection was made about the planned transfer of 
drawback claims from the Customs field office where filed to another 
such office having more expertise in the handling of the particular 
claims, as was mentioned in the ``BACKGROUND'' section of the proposed 
rule.
    Customs Response: Customs believes that the planned redistribution 
of drawback workload, as described, which, as observed in the proposed 
rule, is an internal work management issue not requiring regulatory 
action, will result in quicker, more efficient, and more accurate 
processing of drawback claims.
    Comment: Changes were requested in the drawback and duty-deferral 
provisions, related primarily to inventory management procedures and 
accounting, that were promulgated in part 181, Customs Regulations (19 
CFR part 181) pursuant to the North American Free Trade Agreement 
(NAFTA).
    Customs Response: The provision in part 181 for accounting for 
fungible goods in inventory which are to be exported to Canada or 
Mexico in the same condition as imported and for which drawback is 
claimed under 19 U.S.C 1313(j)(1) is modified consistent with the 
changes to accounting methods for drawback in part 191 (see 
Sec. 191.14). Under the amended provision, if all of the goods in a 
particular inventory are non-originating goods, the identification of 
the goods for purposes of designation for drawback shall be on the 
basis of one of the accounting methods authorized in 19 CFR 191.14, as 
authorized therein, including first-in first-out (FIFO), last-in, first 
out (LIFO), low-to-high (ordinary, with established average inventory 
turn-over period, and blanket methods), and average. Fungible 
originating and non-originating goods still may be commingled in 
inventory. When such originating and non-originating goods are 
commingled, the origin of the goods would continue to be determined 
according to the inventory methods provided for in the appendix to part 
181, see 19 U.S.C. 3333(a)(2)(B). In this situation (i.e., when 
originating and non-originating fungible goods are commingled in 
inventory), the identification of the goods for purposes of designation 
for drawback must also be on the basis of the inventory method from the 
appendix to part 181. The reason that one of the accounting methods 
authorized in Sec. 191.14 may not be used in the latter instance is 
that to do so would make so complicated area that verification by 
Customs would be an extreme administrative burden.

Subpart A, Part 191

    Comment: It was asked that definitions for ``merchandise'', 
``articles'', ``perfecting'', ``restructuring'', and ``stay'' be added 
to proposed Sec. 191.2. It was requested that a definition be included 
for the term ``operator'' as used in Appendix A, while another comment 
suggested adding a definition for the term ``records''.
    Customs Response: Customs concludes that definitions for 
``merchandise'' and ``articles'' are unnecessary and could prove 
confusing, inasmuch as these general terms have different meanings 
depending on the particular type of drawback involved. Also, Customs 
finds that the terms ``perfecting'', restructuring'', and ``stay'' are 
already adequately explained in the specific regulatory sections in 
which they appear. Furthermore, no definition of ``operator'' is added, 
but any confusion caused by the use of this term in the general 
manufacturing drawback rulings in Appendix A is removed by substituting 
``Manufacturer or Producer'' therefor.
    Customs has, however, determined to include a definition in 
Sec. 191.2 for the term ``records'' based on the definition of this 
term appearing in 19 U.S.C. 1508. In addition, a definition of 
``filing'', based in part on the definition of that term in 19 CFR 
141.0a for purposes of the entry of merchandise, is included in 
Sec. 191.2 to implement 19 U.S.C. 1313(l), which authorizes regulations 
which may include, but need not be limited to, the electronic 
submission of drawback entries. These definitions are added to 
Sec. 191.2 in appropriate alphabetical order.
    Comment: It was suggested that proposed Sec. 191.2(a) defining the 
term ``abstract'' be clarified by stating that a certificate of 
manufacture and delivery when properly completed may serve as an 
abstract.
    Customs Response: Customs finds that this is unnecessary. No 
reference is made in these regulations to an ``abstract of 
manufacturing records'', which is how the term ``abstract'' was 
apparently viewed. As used herein, an abstract is simply one of two 
methods (the other being the schedule method) by which a manufacturer 
may show the amount of merchandise used or appearing in the exported 
article. To make this clear, a paragraph (d) is included in 
Sec. 191.23.
    Comment: The definition for a certificate of delivery in proposed 
Sec. 191.2(b) was addressed, with the suggestion being made that the 
definition provide for the delivery of the qualified or substituted 
article under 19 U.S.C. 1313(p) dealing with the substitution of 
finished petroleum products. It was further recommended that the 
definition be made consistent with proposed Sec. 191.10, in particular 
by

[[Page 10972]]

providing that a certificate of delivery was also used to document 
intermediate transfers of merchandise or product.
    Customs Response: These comments have merit. The transfer of a 
qualified article from a manufacturer, producer or importer, under 19 
U.S.C. 1313(p), is added to the definition of a certificate of delivery 
in Sec. 191.2(c), as redesignated, and this definition is made 
consistent with the meaning and purpose of a certificate of delivery as 
set forth in Sec. 191.10.
    In the case of certificates of delivery for transfers under 19 
U.S.C. 1313(p), a certificate of delivery would be required for a 
transfer of the qualified article from the importer to the exporter and 
for all intermediate transfers of the qualified article from the 
importer to the exporter (Secs. 1313(p)(2)(A)(iv), 1313(p)(2)(F)). 
Similarly, a certificate of manufacture and delivery would be required 
for a transfer of the qualified article from the manufacturer or 
producer to the exporter (intermediate transfers of the qualified 
article would require a certificate of delivery) 
(Secs. 1313(p)(2)(A)(ii), 1313(p)(2)(F)). Because the exporter of the 
exported (substituted) article must itself either have manufactured or 
produced or imported the qualified article or have purchased or 
exchanged, directly or indirectly, the qualified article from the 
manufacturer or producer or the importer (Sec. 1313(p)(2)(A)(i), (ii), 
(iii), and (iv)), no certificate or delivery would be used for the 
substituted exported article under 19 U.S.C. 1313(p), (i.e., because 
the exporter would not transfer the exported article and issue a 
certificate of delivery to itself).
    Also, proposed Sec. 191.2(d) defining the term ``Act'' is 
redesignated as Sec. 191.2(b).
    Comment: It was requested that the definition for a certificate of 
manufacture and delivery in proposed Sec. 191.2(c) be changed to make 
it consistent with proposed Sec. 191.24.
    Customs Response: Customs agrees and has modified the definition of 
a certificate of manufacture and delivery in Sec. 191.2(d), as 
redesignated, to be consistent with the information for this 
certificate as set forth in Sec. 191.24. Also, Sec. 191.2(d) adds a 
cross-reference to Sec. 191.24.
    Comment: The recommendation was made that the definition for 
commercially interchangeable merchandise in proposed Sec. 191.2(e) 
include a reference to proposed Sec. 191.32(c) dealing with 
determinations of commercial interchangeability under the substitution 
unused merchandise drawback law. A comment urged that proposed 
Sec. 191.32(c) be changed to declare that commercial interchangeability 
existed if the governing criteria in this regard were substantially 
rather than completely met.
    Customs Response: A cross reference to Sec. 191.32(c) is added to 
Sec. 191.2(e). However, Customs cannot change Sec. 191.32(c) as 
requested. The criteria employed in determining commercial 
interchangeability is adopted from the legislative history of the 
substitution unused merchandise drawback law. However, to better 
implement legislative intent in this regard, Sec. 191.32(c) is changed 
to provide that in determining commercial interchangeability, Customs 
will evaluate the critical properties of the substituted merchandise. 
It is noted that procedures for contesting specific rulings on 
commercial interchangeability are found in 19 U.S.C. 1625 and 19 CFR 
part 177.
    Comment: It was observed that the definition of designated 
merchandise appearing in proposed Sec. 191.2(f) to include drawback 
products could be misleading in relation to proposed Sec. 191.26(b)(3) 
which provided for exportation or destruction ``within 5 years of the 
importation of the designated merchandise'', the concern apparently 
being that drawback products would not be imported.
    Customs Response: Customs agrees, and has appropriately modified 
Sec. 191.27(b)(3) as redesignated. No change to the definition of 
designated merchandise in Sec. 191.2(f) is warranted.
    Comment: It was variously contended that the definition of 
destruction in proposed Sec. 191.2(g) should provide for the allowance 
of drawback when merchandise was not completely destroyed, had value, 
and was partially recovered or recycled.
    Customs Response: It is Customs position that the proposal to allow 
drawback when complete destruction does not occur (and the resulting 
scrap has value) is not within Customs authority to implement by 
regulations.
    Comment: A suggestion was made that the definition for direct 
identification drawback reflect that such identification could be 
effected using an approved accounting method provided for in proposed 
Sec. 191.14.
    Customs Response: Customs agrees. Section 191.2(h) is modified 
accordingly.
    Comment: A request was made that the definition of drawback in 
proposed Sec. 191.2(i) state the amount of the drawback refund and 
include a cross reference to proposed Sec. 191.3 concerning the types 
of duty which could be the subject of drawback recovery.
    Customs Response: A reference to Sec. 191.3 is added to 
Sec. 191.2(i). However, the measure of the drawback refund is not 
warranted. Customs has reviewed each kind of drawback to ensure that in 
situations in which the amount of drawback recovery is 100%, the 
applicable regulation specifically so states.
    Comment: It was remarked, with respect to the definition for 
drawback product in proposed Sec. 191.2(l), that such a product need 
not be ``wholly'' manufactured in the United States.
    Customs Response: This comment has merit. The reference to a 
drawback product as being wholly manufactured in the United States is 
deleted.
    Comment: The suggestion was put forth that the definition of 
exportation in proposed Sec. 191.2(m) be revised to make provision for 
the lading of goods on qualifying vessels and aircraft under 19 U.S.C. 
1309.
    Customs Response: Customs agrees. Section 191.2(m) is revised 
consistent with 19 U.S.C. 1309 and reference to 19 CFR 10.59 through 
10.65 is added. Also, as already noted, a definition of ``exporter'' is 
added to this provision, consistent with the definition of this term in 
the regulations of the Bureau of Export Administration, Department of 
Commerce (15 CFR part 772).
    Consistent with the definition of ``exportation'', the definition 
of ``exporter'' provides that for ``deemed exportations'' the exporter 
is the person who as the principal party in interest in the transaction 
deemed to be an exportation has the power and responsibility for 
determining and controlling the transaction (e.g., in the case of 
aircraft or vessel supplies under 19 U.S.C. 1309(b), the party who has 
the power and responsibility for lading the supplies on the qualifying 
aircraft or vessel). Thus, if an aircraft or vessel operator has such 
power and responsibility, that aircraft or vessel operator is the 
exporter and is entitled to claim drawback or to waive and assign the 
right to claim drawback to another authorized party (see Sec. 191.82). 
If another party (e.g., a fuel supply company) has such power and 
responsibility, that party is the exporter and is entitled to claim 
drawback or to waive and assign the right to claim drawback to another 
authorized party. This will enable the public, and Customs, to identify 
with greater certainty the party responsible for keeping records of 
exportation and the party who may claim drawback.
    Comment: It was recommended that the term ``general manufacturing 
drawback ruling'' in proposed Sec. 191.2(o) be changed to ``general 
drawback

[[Page 10973]]

statement''. It was asked that any new general rulings be published 
first as Treasury Decisions (T.D.s) and thereafter included in Appendix 
A to part 191.
    Customs Response: Customs hereby affirms the change from drawback 
``contracts'' to ``rulings'', which was occasioned only after thorough 
review and consideration, as noted in the proposed rule (see 62 FR 
3086). The reasons for this change were thoroughly described in the 
proposed rule (see 62 FR 3083 and 3096-3087).
    The comment suggesting that new general rulings should first be 
published as T.D.s and subsequently added to the Appendix has merit and 
is adopted. To this end, the definition for general manufacturing 
drawback rulings now appearing in Sec. 191.2(p), as redesignated, is 
changed to note that such rulings will be published as T.D.s and in 
Appendix A of part 191. This change is also effected in greater detail 
in Sec. 191.7 dealing with the procedures for general manufacturing 
drawback rulings.
    Additionally, the explanation in the definition stating when a 
manufacturer or producer may operate under a general manufacturing 
drawback ruling and describing the procedures for such rulings is 
removed as unnecessary and not a part of the definition. The removed 
material is instead provided for in Sec. 191.7.
    Comment: The question was asked as to whether the definition of 
manufacture or production in proposed Sec. 191.2(p) was intended in any 
way to undermine existing precedential rulings or decisions in this 
connection.
    Customs Response: There is no intent to change the existing 
definition of manufacture or production for drawback purposes (now 
redesignated as Sec. 191.2(q)). This was made clear in the proposed 
rule.
    Comment: It was asked that the term ``possession'' in proposed 
Sec. 191.2(q) be further defined and explained.
    Customs Response: Customs believes that the definition of 
possession (now redesignated as Sec. 191.2(s)), which is based on the 
language of the statute (19 U.S.C. 1313(j)(2)), is sufficiently clear 
as is.
    Comment: With respect to proposed Sec. 191.2(r) defining relative 
value in situations where multiple products concurrently result in 
manufacture, it was suggested that a definition be included in proposed 
Sec. 191.2 for multiple products.
    Customs Response: Customs agrees. A definition for multiple 
products as ``two or more products produced concurrently by a 
manufacture or production operation or operations'' is added in 
appropriate alphabetical order to Sec. 191.2. The definition for 
relative value is redesignated as Sec. 191.2(u), and the reference to 
by-product appearing therein is removed.
    Comment: Changes were suggested to the definition for substituted 
merchandise in proposed Sec. 191.2(s) to provide, respectively, for 
substitution under 19 U.S.C. 1313(b), 1313(j)(2), and 1313(p). Also, it 
was suggested that this definition be placed in alphabetical order in 
proposed Sec. 191.2.
    Another comment requested that Customs provide guidance to the 
trade as to what constituted a substantial change in manufacture or 
production, which would preclude merchandise from being of the ``same 
kind and quality'' under 19 U.S.C. 1313(b), the criterion for 
permitting substitution for drawback purposes thereunder. This comment 
asked that merchandise falling under the same 8-digit harmonized tariff 
schedule (HTS) number be accepted as being of the same kind and 
quality.
    Customs Response: Customs has revised the definition for 
substituted merchandise under Sec. 191.2(x), as redesignated, so as to 
simplify it. Also, the definitions in Sec. 191.2 have been placed in 
alphabetical order.
    However, the comment suggesting the inclusion of an explanation as 
to what constitutes a substantial change in manufacture or production 
which would preclude a finding of same kind and quality under 19 U.S.C. 
1313(b) is not adopted, inasmuch as Customs believes that such 
determinations are better made on a case-by-case basis. While the use 
of the HTS number is expressly recognized for this purpose under 19 
U.S.C. 1313(p), no such provision to this effect exists in 
Sec. 1313(b).
    Comment: Various concerns were expressed over the definition of a 
specific manufacturing drawback ruling under proposed Sec. 191.2(u); it 
was generally desired that the term ``ruling'' be changed to 
``statement'', which would occasion the removal of the reference to the 
applicability of 19 CFR part 177 to such rulings. Since a ruling under 
part 177 applied to prospective transactions, it was principally asked 
whether drawback claims could still be filed prior to issuance of a 
general or specific manufacturing drawback ruling, and what type of 
confidential treatment would be accorded the manufacturing drawback 
ruling request.
    Customs Response: As already noted, Customs has determined to 
retain the term ``ruling'' in Sec. 191.2(w), as redesignated, rather 
than the term ``contract'' or ``statement'', for the reasons amply 
explained in the proposed rule. In any event, Sec. 191.27(c) as 
redesignated makes it clear that drawback claims may continue to be 
filed before a letter of notification of intent to operate under a 
general manufacturing drawback ruling is acknowledged or a specific 
manufacturing drawback ruling is approved.
    Also, the applicability of 19 U.S.C. 1625 and 19 CFR part 177 to a 
drawback ruling hereunder will not affect the confidentiality otherwise 
accorded under the Freedom of Information Act either to an application 
for a specific manufacturing drawback ruling, or to a letter of intent 
to operate under a general manufacturing drawback ruling. That is, the 
general ``ruling'' is the published T.D. appearing in Appendix A to 
part 191. In the case of a specific manufacturing drawback ruling, the 
``ruling'' is the letter of approval issued by Customs, which would be 
published as a synopsis in the Customs Bulletin. Section 191.2(w) as 
redesignated is changed to clarify this.
    Comment: With respect to proposed Sec. 191.3(a), clarity was 
requested regarding the payment of drawback on voluntary tenders made 
in connection with notices of prior disclosure pursuant to 19 U.S.C. 
1592(c). Also, it was advocated that proposed Sec. 191.3(a)(1)(iii) set 
forth a definition of what comprised voluntary tenders subject to 
drawback, in order to avoid confusion.
    It was suggested that proposed Sec. 191.3(a)(1) (ii), (iii) and 
(iv) be changed to simply reference proposed Sec. 191.81 which would 
contain the substantive requirement pertaining to the provisions that a 
written request be submitted for the payment of drawback, along with a 
waiver of payment under any other provision of law. It was also 
suggested that proposed Sec. 191.3(a)(1)(iii) be changed to indicate 
that any waiver be conditioned on the refund being received as drawback 
and not subject to repayment. A comment asked with reference to 
proposed Sec. 191.3(a) (and proposed Sec. 191.81) that the filing of 
the written request waiver be allowed at any time prior to final 
liquidation of the drawback entry.
    In addition, in proposed Sec. 191.3(a)(1) (iii) and (iv), a 
question was presented as to the need for a waiver of payment in the 
case of warehouse withdrawals whose liquidation had become final.
    It was also noted that the references in proposed Sec. 191.3(a)(1) 
(ii), (iii), and (iv) to Sec. 191.82 (b) and (c) should be instead to 
proposed Sec. 191.81 (b) and (c).
    Customs Response: The erroneous citations are duly corrected.

[[Page 10974]]

    The comment suggesting a clear definition of ``voluntary tenders'' 
has merit and is adopted. ``Voluntary tenders'' are thus defined in 
Sec. 191.3(a)(1)(iii) for purposes of Sec. 191.3, as a payment of 
duties on imported merchandise in excess of the amount of duties 
included in the liquidation of the entry, or withdrawal from warehouse, 
for consumption, provided that the liquidation has become final and 
that the other conditions in the provision and Sec. 191.81 are met.
    In response to the comment about what must be waived, it is any 
claim to payment or refund limited to the drawback granted. However, 
this is provided for in Sec. 191.81(c), not in Sec. 191.3. Also in this 
regard, the comment that the written request and waiver may be filed at 
any time prior to final liquidation of the drawback entry requires no 
change to Sec. 191.81(c) because there is no time limit provided 
therein.
    The comment suggesting inclusion of tenders made in connection with 
a notice of prior disclosure pursuant to 19 U.S.C. 1592 has merit and 
is adopted. The adoption of this suggestion is implemented by combining 
Sec. 191.3(a)(1) (iii) and (iv), and adding to it tenders of duty made 
in connection with notices of prior disclosure under 19 U.S.C. 
1592(c)(4), so that there is now one provision (Sec. 191.3(a)(1)(iii)) 
providing that duties subject to drawback include tenders of duties 
after liquidation has become final, such tenders to include voluntary 
tenders, including tenders of duty in connection with notices of prior 
disclosure under 19 U.S.C. 1592(c)(4), and duties restored under 19 
U.S.C. 1592(d).
    Insofar as the comment suggesting the removal to Sec. 191.81 of the 
requirement for filing a written request and waiver is concerned, this 
comment has merit. The provision is being changed to refer to 
Sec. 191.81, which will contain the substantive requirement for a 
written request and waiver. In answer to the question of why a waiver 
would be needed for warehouse withdrawals, the reason such a waiver 
would be needed is that the warehouse withdrawal for consumption would 
have been liquidated, and liquidation would have become final, after 
which the tender upon which drawback is claimed would have been made, 
so that a waiver would be desirable to ensure that Customs would not 
pay both drawback and a refund of the tender under some other provision 
of law.
    Comment: The assertion was made, with respect to proposed 
Sec. 191.3(b), that harbor maintenance fees should be subject to 
drawback. Also, a comment wanted drawback payable on interest paid 
pursuant to post-entry assessments.
    Customs Response: Customs disagrees that harbor maintenance fees 
should be subject to drawback, inasmuch as such fees are imposed in 
connection with part use, not importation of merchandise (within the 
legal meanings of 19 U.S.C. 1313 and 26 U.S.C. 4462). Likewise, 
drawback is not payable on interest.
    Comment: A comment asserted that proposed Sec. 191.3(c) needed to 
be revised specifically to make clear that products falling within the 
tariff-rate quota (but not payable at the over-quota rate of duty) were 
eligible for all types of drawback, while products assessed the over-
quota rates of duty were eligible only under 19 U.S.C. 1313(j)(1), with 
tobacco being eligible under both 19 U.S.C. 1313(j)(1) and 1313(a).
    Customs Response: This comment has merit and is adopted. The 
provision is re-drafted accordingly.
    Comment: One comment suggested that, in proposed Sec. 191.4(b), the 
word ``was'' be changed to ``is''.
    Customs Response: The comment has merit and is adopted.
    Comment: It was contended that proposed Sec. 191.6 concerning who 
may sign drawback documents was in contradiction to proposed Sec. 191.8 
dealing with specific manufacturing drawback rulings, as well as 19 CFR 
part 177 regarding the submission of requests for rulings. One such 
comment noted that the list of persons did not include attorneys who 
should have signing authority for their clients at least with respect 
to applications for drawback rulings.
    Customs Response: These comments have merit, insofar as they raise 
questions regarding the applicability of the limitations on who may 
conduct ``Customs business'' under 19 U.S.C. 1641 and 19 CFR part 111. 
The comments are adopted, and Sec. 191.6 is appropriately redrafted to 
add a new paragraph (c), so that the persons listed in paragraph (a) 
are the only persons who may sign any of the documents listed in 
paragraph (b).
    Under new paragraph (c), letters of notification of intent to 
operate under a general manufacturing drawback ruling (Sec. 191.7(b)) 
and applications for a specific manufacturing drawback ruling 
(Sec. 191.8), as well as requests for nonbinding predeterminations of 
commercial interchangeability (Sec. 191.32(c)(2)), applications for 
waiver of prior notice (Sec. 191.91), applications for accelerated 
payment (Sec. 191.92), and applications for participation in the 
drawback compliance program (subpart S) may be signed by any of the 
persons listed in paragraph (a), or any other individual legally 
authorized to bind the person (or entity).
    Comment: Referring to proposed Sec. 191.6(a)(1), a question was 
raised as to who specifically would be ``any other individual legally 
authorized to bind the corporation''.
    Customs Response: The comment has merit. The word ``individual'' 
therein is changed to ``employee''.
    Comment: With respect to proposed Sec. 191.6(a)(4), it was 
suggested that any employee of ``a'' business entity be changed to 
``the'' business entity.
    Customs Response: The comment has merit and is adopted.
    Comment: One comment expressed concern that the authority of an 
individual acting on his or her own behalf, as set forth in proposed 
Sec. 191.6(a)(5), implied that an unlicensed person might be permitted 
to conduct Customs business.
    Customs Response: This provision is intended to provide for a 
situation in which an individual (e.g., an individual drawback claimant 
or exporter) signs documents in his or her own capacity. Since the 
provision contains the modifier ``acting on his or her own behalf'', 
Customs does not believe that this provision could be interpreted to 
allow an unlicensed person to conduct Customs business on behalf of 
another (see 19 U.S.C. 1641(a)(2)).
    Comment: A question was presented as to whether proposed 
Sec. 191.6(b) should include a Notice of Intent to Export, Destroy, or 
Return Merchandise for Purposes of Drawback.
    Customs Response: The suggestion that Notices of Intent to Export, 
Destroy or Return Merchandise for Purposes of Drawback should be listed 
as one of the documents that can be signed by the persons in 
Sec. 191.6(a) has merit and is adopted.
    Comment: A concern was raised about ``endorsements'' of exporters 
on bills of lading or evidence of exportation in proposed 
Sec. 191.6(b)(6).
    Customs Response: The comment appears to be concerned that the 
practice of permitting blanket letters of endorsement (which should be 
blanket certifications) be provided for in the regulations. This 
comment has merit and is adopted; the reference to ``Endorsements'' is 
changed to ``Certifications'', and citations to Secs. 191.28 (as 
redesignated from proposed Sec. 191.27) and 191.82 are added in 
Sec. 191.6(b)(5), as redesignated (proposed Sec. 191.6(b)(7) is also 
redesignated as Sec. 191.6(b)(6)). It is noted that Secs. 191.28 as 
redesignated and 191.82 are modified to provide for ``blanket'' 
certifications.

[[Page 10975]]

    Comment: As to proposed Sec. 191.7 dealing with general 
manufacturing drawback rulings, the recommendation was made in 
connection with proposed Sec. 191.2(o) that the term ``rulings'' be 
changed to ``statements''.
    It was asked that general drawback rulings be published first as 
T.D.s, and then subsequently be included in Appendix A to part 191. 
Another comment asked how the general rulings in Appendix A would be 
identified.
    A comment wanted Customs to acknowledge requests for general 
rulings within 30 days.
    It was stated that approved letters of intent should receive a 
unique computer-generated ruling number.
    The question was asked as to how modifications of letters of intent 
to operate under a general ruling would be handled; a comment wanted 
provisions included in proposed Sec. 191.7 concerning the use of 
accounting procedures and tradeoff; another comment stated that there 
was no provision for transferring a general ruling to another drawback 
office.
    Customs Response: In regard to the comment suggesting that new 
general rulings should first be published as T.D.s and subsequently 
added to the Appendix, this comment has merit and is adopted in 
Sec. 191.7(b)(1). Furthermore, the general manufacturing drawback 
rulings in Appendix A are being identified by their T.D. numbers.
    In regard to the change in nomenclature (from ``rulings''), these 
comments are not adopted, as previously discussed in reference to 
proposed Sec. 191.2(o).
    In regard to the suggestion that there should be a time limitation 
on acknowledgments by drawback offices of applications and that the 
time should be 30 days, Customs is not adopting this suggestion, as 
such, but is adding in Sec. 191.7(c) that Customs is required to act 
``promptly'' on applications. Because drawback claims may be filed 
pending acknowledgment of a letter of notification of intent to operate 
under a general drawback ruling or before approval of a specific 
manufacturing drawback ruling (see Sec. 191.27(c) as redesignated), it 
is Customs' position that a time limit for action is not necessary.
    In regard to the comment suggesting a unique electronic ruling 
number for each general manufacturing drawback ruling, this comment has 
merit and is also added in Sec. 191.7(c).
    In regard to the comment asking how modifications to letters of 
intent are to be made, because letters of notification of intent are 
relatively short and simple, no provision like that appearing in 
Sec. 191.8(g) is provided. When the information included in a letter of 
notification of intent changes, a new letter of notification of intent 
must be filed.
    The suggestion relating to a statement regarding the use of a 
particular accounting method and the use of tradeoff under the general 
manufacturing drawback ruling is not adopted (because application of 
those provisions is provided for in the applicable regulations).
    In regard to the comment that the regulation does not address how a 
change in the drawback office where claims will be filed may be made, 
no provision such as that added to Sec. 191.8 is being provided for in 
this section (because, as is true of modifications, letters of intent 
are relatively short and simple). When the person who submitted the 
letter of intent wishes to add a different drawback office, a new 
letter of intent (to that drawback office) must be filed.
    Comment: The observation was made that the identification of the 
general manufacturing drawback rulings was potentially confusing. It 
was suggested that the precise general manufacturing drawback ruling 
under which the manufacturer proposed to operate should be listed as 
one of the requirements in proposed Sec. 191.7(b)(3) and that the 
general manufacturing drawback rulings in Appendix A should be 
identified by their Treasury Decision numbers (or some other Customs-
assigned number).
    Customs Response: This comment has merit and is adopted. Section 
191.7 is revised to include a paragraph (b)(3)(iv) to this effect, with 
redesignation accordingly. As already noted, the T.D. numbers of the 
respective general manufacturing drawback rulings have been included in 
Appendix A.
    Comment: A comment, with respect to proposed Sec. 191.7(b)(2), 
stated that the number of copies of letters of intent required to be 
submitted should be limited to only one copy per drawback office.
    Customs Response: This comment has merit and is adopted.
    Comment: Concerning proposed Sec. 191.7(b)(3)(iv), one comment 
asked that a description of the merchandise and articles be included in 
the letter of intent under a general ruling, while another comment 
wanted to require a description of the manufacturing process. A third 
comment asked about the processing of a letter of intent under proposed 
Sec. 191.7(c).
    Customs Response: Section 191.7(b)(3)(v), as redesignated from 
proposed Sec. 191.7(b)(3)(iv), requires that merchandise and articles 
be described unless specifically described in the letter of 
notification (instead of ``letter of notification'', this should have 
read ``general manufacturing drawback ruling'' and is changed 
accordingly). There are instances in which the merchandise and articles 
are specifically so described (e.g., orange juice (T.D. 85-110, raw 
sugar (T.D. 83-59)) and it is in these situations that the merchandise 
and articles do not have to be described (because they are already 
described in the general manufacturing drawback ruling).
    As for the second comment, Sec. 191.7 is changed by adding a 
paragraph (b)(3)(vi) (with redesignation accordingly), to provide that 
a letter of notification of intent to operate under a general 
manufacturing drawback ruling must include a description of the 
manufacture, if such a description is not already described in the 
general manufacturing drawback ruling.
    Additionally, Sec. 191.7(c) is changed to provide that the drawback 
office will acknowledge the letter of intent if: (1) the letter of 
notification of intent is complete; (2) the general manufacturing 
drawback ruling identified by the manufacturer or producer is 
applicable to the manufacturing or production process described; (3) 
the general manufacturing drawback ruling is followed without 
variation; and (4) the manufacturing or production process described 
meets the definition of a manufacture or production under Sec. 191.2(q) 
(as redesignated).
    In this latter regard, as further provided in Sec. 191.7(c), the 
letter of acknowledgment from the drawback office will contain specific 
authorization to operate under the general manufacturing drawback 
ruling, subject to the requirements and conditions of that general 
manufacturing drawback ruling and the law and regulations.
    In addition, Sec. 191.7(c) is revised to require that the 
manufacturer or producer be advised, in writing, if the letter of 
intent cannot be acknowledged. To this end, if the letter of 
notification of intent to operate under a general manufacturing 
drawback ruling includes conditions or terms varying from the general 
manufacturing drawback ruling published as a T.D. or in Appendix A, the 
drawback office may not acknowledge the letter and will return it to 
the manufacturer or producer for modification and resubmission or for 
submission to Customs Headquarters as a specific manufacturing drawback 
ruling.
    Comment: It was commented, with respect to proposed 
Sec. 191.7(b)(3)(vi),

[[Page 10976]]

that the requirement of a suffix to the IRS number should be included.
    Customs Response: The comment that a suffix to the IRS number 
should be stated has merit and is adopted. This provision is 
redesignated as Sec. 191.7(b)(3)(viii).
    Comment: A comment requested that, rather than terminating a ruling 
automatically after 5 years of non-use, proposed Sec. 191.7(d) be 
changed to permit a manufacturer a period of time, such as 60 days, 
within which to request Customs not to revoke the ruling.
    Customs Response: This request is not adopted. This suggestion 
would add unnecessarily to the administrative burden of processing 
drawback. If a claimant is inactive for 5 years and notice of 
termination is published, the claimant may, under the very simple 
procedures provided in Sec. 191.7, submit a new notification of intent 
to operate under the general manufacturing drawback ruling.
    Comment: The statement was made, in relation to proposed Sec. 191.8 
addressing the procedures for specific manufacturing drawback rulings, 
that the term be changed from ``rulings'' to ``statements'', and that 
requests for manufacturing contracts under 19 U.S.C. 1313(a) should 
continue to be approvable by local drawback offices.
    Customs Response: As already averred, Customs has determined to 
retain the change from drawback ``contracts'' or ``statements'' to 
``rulings''. Drawback offices would, as proposed and as in this final 
rule, acknowledge receipt of letters of notification of intent to 
operate under a general manufacturing drawback ruling under 19 U.S.C. 
1313(a) (unless the proposal varied from the general manufacturing 
drawback ruling, in which case Headquarters approval would be 
necessary.) An application for a specific manufacturing drawback ruling 
under Sec. 191.8(d) must be submitted to Customs Headquarters.
    Comment: A comment suggested that the IRS number required in the 
application for a specific ruling in proposed Sec. 191.8(c)(2), include 
the suffix.
    Customs Response: This comment has merit and is adopted.
    Comment: A comment with respect to proposed Sec. 191.8(e)(1) 
questioned the use of T.D.s under which to publish approved drawback 
rulings. It was noted that the term ``contract'' was inadvertently used 
in this provision. Another comment suggested that the Headquarters 
approval letter should include the computer-generated ruling number.
    Customs Response: Customs is not prepared at this time to eliminate 
the use of T.D.s for this purpose. The comment noting the misuse of the 
term ``contract'' in this provision is correct; the provision is 
changed. The comment that the Headquarters approval letters should 
include the computer-generated number has merit and is adopted.
    In addition, consistent with the comment and response for 
Sec. 191.7(b)(2), only 1 copy of the approved application for the 
specific manufacturing drawback ruling is forwarded to the appropriate 
drawback office(s). A change to this same effect is made in 
Sec. 191.8(d).
    Comment: A comment on proposed Sec. 191.8(e)(2) stated that, for 
consistency, the notification to an applicant that the application 
could not be approved should be in writing. Another comment suggested 
that the term ``promptly'' (within which to notify the applicant that 
the application could not be approved) should be specifically defined.
    Customs Response: The comment suggestion that the notice of 
disapproval be in writing has merit and is adopted. However, the 
suggestion that ``promptly'' be specifically defined is not adopted.
    Comment: Concerning the modification of specific manufacturing 
drawback rulings in proposed Sec. 191.8(g), it was variously asked if 
changes in corporate officers, changes in factory locations, changes in 
the basis of claim, changes in filing location, and changes in brokers 
could also be handled by the limited modification procedure, set forth 
in proposed Sec. 191.8(g)(2), or were they intended to be made through 
Headquarters, as provided in proposed Sec. 191.8(g)(1) which required 
the filing of a supplemental application in the form of the original 
application.
    Another comment asked for which limited modification should the 
drawback office notify Headquarters, for which limited modification 
should the drawback office notify the claimant in writing of receipt, 
and for which limited modification should the ACS (Automated Commercial 
Systems) drawback database ruling be revoked and reissued, and when 
would an amendment be appropriate.
    Customs Response: These comments have some merit and, to the extent 
necessary, are adopted in Sec. 191.8(g)(2). It is noted that changes in 
factory locations are already covered in Sec. 191.8(g)(2)(i)(A), and 
changes in corporate officers and brokers are covered by the provision 
for those persons who will sign drawback documents in 
Sec. 191.8(g)(2)(i)(D) (corporate officers are no longer required).
    Changes in the basis of claim are added in Sec. 191.8(g)(2)(i), as 
are changes in the filing location. In addition, changes in the 
decision to use or not to use an agent for drawback purposes, and the 
identity of an agent if one is used, are made subject to the limited 
modification procedures.
    In the case of changes in the filing location, Customs is adding to 
the regulation a provision (Sec. 191.8(g)(2)(iii)), based on current 
practice as shown by a letter of October 19, 1960 (published as Customs 
Information Exchange letter (CIE) 1454/60), which permits the change of 
the drawback office where claims will be filed.
    Under the foregoing provision in Sec. 191.8(g)(2)(iii), the 
claimant files, with the new drawback office, a written application to 
file claims at that office, with a copy of the application and approval 
letter from the drawback office where claims are currently filed. The 
claimant is required to provide a copy to the latter drawback office of 
the written application to the new drawback office.
    Also, Sec. 191.8(g)(2)(ii) is revised to specifically provide 
detailed procedures for handling limited modifications (the drawback 
office is given notice by the manufacturer or producer operating under 
a specific manufacturing drawback ruling, with a copy to Customs 
Headquarters, and the drawback office acknowledges acceptance of the 
limited modification in writing to the manufacturer or producer (with a 
copy to Customs Headquarters) and makes corresponding changes to the 
ACS drawback database, as necessary (the latter (changes to the ACS 
drawback database) is not provided for in the regulations, as this is 
an internal administrative procedure). No revocation in the ACS 
drawback database is necessary.
    Furthermore, to simplify the process and limit the administrative 
burden, the provision for supplemental application procedures in 
Sec. 191.8(g)(1) is changed to provide that, at the discretion of the 
manufacturer or producer, a supplemental application may be in the form 
of an original application or it may include only the provisions in the 
specific manufacturing drawback ruling application that are sought to 
be modified, and the unchanged provisions, in an existing approved 
specific manufacturing drawback ruling, may be incorporated by 
reference to the approved ruling.
    Comment: It was desired that a successorship under 19 U.S.C. 
1313(s) be handled under the limited

[[Page 10977]]

modification procedure of proposed Sec. 191.8(g)(2).
    Customs Response: This comment is not adopted. Successorships under 
Sec. 1313(s) are subject to the supplemental application procedures. 
However, it is noted here that the supplemental application procedures 
of Sec. 191.8(g)(1) have been simplified.
    Comment: A change was requested in the duration of the approval of 
a specific drawback ruling in proposed Sec. 191.8(h). A comment asked 
about the effect of these final regulations on existing drawback 
contracts.
    Customs Response: The comment suggesting a change to the duration 
of the approval of a drawback ruling is not adopted. Customs believes 
that this suggestion would add unnecessarily to the administrative 
burden of processing drawback.
    As for the comment questioning the effect of these regulations on 
existing drawback ``contracts'' under the prior subparts B and D of 
part 191, such existing drawback ``contracts'' may continue to be 
relied upon by the manufacturer or producer who applied for or adhered 
to the ``contract'', provided that such existing drawback ``contracts'' 
do not materially conflict with the statute or these regulations. 
Existing drawback ``contracts'' which materially conflict with the 
statute or these regulations are superseded by the statute or these 
regulations effective as follows. A drawback entry based upon existing 
drawback ``contract'' which materially conflicts with these regulations 
and for which exportation is before the effective date of these 
regulations is governed by the existing drawback ``contract'', unless 
there is also a necessary material conflict with the amendments to the 
statute (19 U.S.C. 1313) made by the NAFTA Implementation Act (Public 
Law 103-182, Sec. 632), in which case the effective date of Sec. 632 of 
that Act controls.
    It is further noted, with respect to Sec. 191.8(h), that the 
reference to part 177 in this provision is modified to include a 
reference as well to 19 U.S.C. 1625.
    Comment: With reference to proposed Sec. 191.9 dealing with the 
principal-agent procedure in drawback, one comment opposed limiting the 
principal-agent procedure exclusively to substitution manufacturing 
drawback under 19 U.S.C. 1313(b), stating that the procedure should be 
available as well under 19 U.S.C. 1313(a).
    It was said that the terms ``owner'', ``principal'', ``agent'', 
``use'' and ``manufacture'', as employed therein, should be more 
clearly defined. It was also remarked that the specific provisions 
required in the contract between the principal and agent in proposed 
Sec. 191.9(c) should be deleted, particularly if such a contract was 
required to be in force before there was any transfer of merchandise. 
The provision, if retained, should allow for oral contracts. It was 
also contended here that legal or equitable title, but not both, to the 
merchandise in question should be enough to establish principal status 
under the contract.
    It was contended that the requirement that the agent provide a 
certificate of manufacture and delivery to the principal should be 
eliminated or be allowed to be waived in appropriate circumstances.
    Customs Response: The intent was to limit this provision to 
drawback under 19 U.S.C. 1313(b) where the imported merchandise was 
used in manufacture or production by the principal or an agent and the 
exported article or drawback product was respectively manufactured or 
produced by an agent or the principal, or the imported merchandise was 
used in manufacture or production and the exported article or drawback 
product was manufactured or produced by different agents.
    After further consideration and consistent with Customs current 
practice, Customs is now taking the position that the application of 
drawback principal-agent principles need not be so limited. The 
provision applies to drawback under 19 U.S.C. 1313(b) and 1313(a) and 
may be used regardless of whether different parties (agent-principal, 
principal-agent, or two agents) are involved. To this end, 
Sec. 191.9(a) as proposed is deleted, with the succeeding paragraphs 
redesignated accordingly Section 191.9(a), as thus redesignated from 
proposed Sec. 191.9(b), is revised as described.
    As much as possible, the terms questioned (owner, principal, agent, 
and use in manufacture or production) are clarified in Sec. 191.9(a) 
and (c) as thus redesignated.
    The provision in Sec. 191.9(b), as redesignated from proposed 
Sec. 191.9(c), for what the contract (between principal and agent) must 
provide, is retained, to provide notice to persons using this provision 
of what is required, but rather than mandating that the requirements be 
``specified'', the requirements are to be ``included'' in the contract.
    As for the comment that a contract should not be required to have 
been in force before there was a transfer of merchandise, Sec. 191.6(b) 
as redesignated provides the requirements for a principal-agent 
drawback relationship. To use the principal-agent procedures in 
drawback, these requirements must be met (i.e., for the principal to be 
deemed the manufacturer or producer when the agent does the physical 
manufacturing or production, the requirements (including those for a 
contract) must be met, although there is no requirement that the 
contract be in writing).
    Regarding the comment that the provision should specifically 
authorize oral contracts, redesignated Sec. 191.9(b) does not require 
the form that the contract must take; it requires that there be a 
contract and what the contract must contain.
    As for the comment referring to legal and/or equitable title, the 
basic requirement in redesignated Sec. 191.9(b) for assertion of the 
principal-agent relationship under the provision is that the principal 
be ``[a]n owner'' of the merchandise. It is Customs position here that 
the requirement for both legal and equitable title is consistent with 
the requirements for assertion of the principal-agent relationship for 
drawback purposes.
    Consistent with the purpose of a certificate of manufacture and 
delivery and with the treatment of the owner-principal as the 
manufacturer or producer when an agent performs the manufacturing or 
production operations for the principal, no certificate of manufacture 
and delivery is required from the agent to the principal. Hence, 
Sec. 191.9(d) as redesignated from proposed Sec. 191.9(e) is revised as 
described. As such, the comment regarding waiver of the requirement for 
certificate of manufacture and delivery from the agent to the principal 
is moot.
    However, to ensure compliance with the drawback law, while 
simplifying drawback procedures where possible, a principal using the 
principal-agent procedures for drawback is required to attach to its 
drawback entries, or certificates of manufacture and delivery, a 
certificate certifying that it can establish certain specific facts, 
upon request by Customs. The principal must certify that it can 
establish the information that would have otherwise been required in a 
certificate of manufacture and delivery. The certificate and 
information are specifically provided to be subject to the 
recordkeeping requirements in Sec. 191.26 as redesignated (including 
the requirement for maintenance of records 3 years from the date of 
payment of a drawback claim). Provision is also made for the 
certificate to be in ``blanket'' form, covering a particular kind and 
quality of merchandise for a stated period.
    Comment: In proposed Sec. 191.10, it was asked that transfers under 
19 U.S.C. 1313(p) included among the purposes

[[Page 10978]]

for which a certificate of delivery may be used.
    It was also suggested that the word ``exists'' instead of ``has 
attached'' be used in proposed Sec. 191.10(a)(2). In addition, it was 
stated that the term ``if applicable'' should be used for the 
information required in proposed Sec. 191.10(b)(3), (7), and (8). It 
was also said that it was unclear when the HTSUS would be required for 
merchandise under proposed Sec. 191.10(b)(10).
    The requirement in proposed Sec. 191.10(b)(5) that the total duty 
paid be shown on the certificate of delivery was opposed. It was 
advocated that Customs, with its computer access, should itself be able 
to identify the duties paid on the imported merchandise on which 
drawback was claimed.
    It was also contended that certificates of manufacture and delivery 
(as opposed to certificates of delivery) should be used in all cases 
where the transferred article was manufactured under drawback 
conditions, and, as such, that proposed Sec. 191.10(c)(2) be 
eliminated. It was suggested that there be a clarification as to the 
requirement for a certificate of delivery to transfer articles received 
by an intermediate party from a drawback manufacturer or producer.
    One comment asked that the recordkeeping requirement in proposed 
Sec. 191.10(d) be eliminated. Another comment suggested that a citation 
to 19 U.S.C. 1508(c) be added to this provision, indicating the 
statutory basis for the record retention requirement here.
    With regard to proposed Sec. 191.10(e) relating to the submission 
of a certificate of delivery to Customs, concerns were raised about the 
language of this provision. In particular, it was stated that the 
certificate was not ``part'' of a drawback claim, but that it 
``supported'' the claim; and that the claim submitted without the 
certificate should not be ``rejected'', but would be ``denied''.
    Customs Response: The comment relating to inclusion of transfers 
under 19 U.S.C. 1313(p) among the purposes for which a certificate of 
delivery may be used is adopted, to the extent provided therein (see 
CUSTOMS RESPONSE to the comment on the definition of certificate of 
delivery, in proposed Sec. 191.2(b) redesignated as Sec. 191.2(c), 
above).
    In regard to the comment that the three effects of certificates of 
delivery should be included in the regulation, this has been provided 
for in Sec. 191.2(c) as redesignated.
    The suggestion that the term ``exists'' be used in place of ``has 
attached'' in Sec. 191.10(a)(2) is adopted.
    As for the requirement in Sec. 191.10(b)(5) that total duty paid be 
stated on a certificate of delivery, Customs believes this information 
is no more sensitive than other information required on the certificate 
(e.g., the HTSUS number and entry number with the person from whom the 
merchandise was received (usually the importer)). The procedure 
suggested by the comment would be effective in the verification stage, 
but would create an untenable administrative burden in Customs 
processing of drawback claims and of accelerated payment claims.
    The comment that ``if applicable'' should be included for 
Sec. 191.10(b)(3), (7), and (8) (information required on a certificate 
of delivery includes import entry number, date of importation, and port 
where import entry filed), is also not adopted. The requirement for 
this information is applicable for all certificates of delivery (there 
is always an import number, date of importation, and port of import 
entry filing for a drawback claim).
    The comment questioning when HTSUS numbers are required for 
certificates of delivery has merit, in that it points out a lack of 
clarity in the regulation. The provision is modified, by adding 
Sec. 191.10(b)(11) and (12), to make it clear that the HTSUS number (to 
at least 6 digits) is always required for the designated imported 
merchandise on a certificate of delivery and, additionally, when the 
certificate of delivery transfers merchandise substituted under 19 
U.S.C. 1313(j)(2) for the designated imported merchandise, the HTSUS 
number or Schedule B commodity number (to at least 6 digits) is 
likewise required for the substituted merchandise. Otherwise (e.g., if 
what is transferred is an article manufactured under 19 U.S.C. 1313(a) 
or (b) from a party who received the article from the manufacturer or 
producer), no such number is required for the article transferred.
    In any event, although only the 6-digit HTSUS or Schedule B 
commodity number is required on the certificate of delivery for the 
transfer of substituted merchandise under 19 U.S.C. 1313(j)(2), full 
tariff classification is required to establish commercial 
interchangeability under 19 U.S.C. 1313(j)(2) (see Sec. 191.32(c)).
    The comment that certificates of manufacture and delivery should be 
used in all cases where a manufactured article is being delivered is 
inconsistent with the purposes of the two kinds of certificates (of 
delivery and of manufacture and delivery). The former is used when the 
deliverer did not manufacture or produce the merchandise or article 
transferred and the latter is used when the deliverer did manufacture 
or produce the article transferred. It is Customs position that this 
provision is the most simple for the public to follow and the most 
simple for Customs to administer. This comment is not adopted.
    The comment suggesting clarification of the requirement for a 
certificate of delivery to transfer articles received by an 
intermediate party from a manufacturer or producer (under 19 U.S.C. 
1313(a) or (b)) has some merit. Section 191.10(c)(2) is changed to make 
it clear that the manufacturer or producer transfers the manufactured 
or produced article on a certificate of manufacture and delivery and 
subsequent non-manufacturers or producers who are intermediate parties 
transfer the article on a certificate of delivery (as already stated, 
the certificate of delivery for such a transfer would not require the 
6-digit HTSUS number for the transferred article).
    The requirement for retention of records supporting the information 
on certificates of delivery for 3 years after payment of a drawback 
claim is statutorily required (see 19 U.S.C. 1508(c)(3)). The comment 
suggesting inclusion in the regulation of a citation to 19 U.S.C. 
1508(c)(3) has merit and is adopted. In addition, to alert the public 
to the general applicability to drawback of the statutory recordkeeping 
requirements in 19 U.S.C. 1508, a new Sec. 191.15, based on Sec. 1508, 
is added stating those general requirements.
    The comment concerning the particular language used in 
Sec. 191.10(e) has merit and is adopted. Consistent with Sec. 191.51, 
certificates of delivery are not ``part'' of claims but support claims, 
so that if Customs requests a certificate of delivery upon which a 
drawback claim is dependent and the certificate is not provided, the 
claim is not rejected but, instead, is denied.
    Since a certificate of delivery is not ``part'' of a complete claim 
(as the regulation is modified), providing a certificate of delivery 
upon Customs request is in the nature of ``perfecting'' a claim (see 
Sec. 191.52 (note the addition of this as one of the instances of 
perfection provided in Sec. 191.52(b))) and may be done outside the 3-
year time for filing a complete claim. Denial of a drawback claim for 
failure to supply, in response to Customs request, a certificate of 
delivery upon which a portion of the claim is dependent is limited to 
denial of that portion of the claim dependent on the certificate of

[[Page 10979]]

delivery which is not supplied. The provision is changed to make this 
clear.
    Also, pursuant to changes to other sections (see Secs. 191.51(a) 
and 191.52(b)), certificates of delivery are required to be in the 
possession of the party to whom the merchandise covered in the 
certificate was delivered, and if that party is not the claimant, the 
claimant is required to obtain the certificate and provide it to 
Customs, if Customs requests the certificate under the procedures for 
``perfecting'' a claim.
    Comment: With respect to proposed Sec. 191.11(a), it was requested 
that the words ``or drawback product'' be included in the tradeoff 
provision. A Customs ruling was cited in support of this request. With 
respect to proposed Sec. 191.11(b), it was asserted that additional 
payments, including payments in kind, in relation to the exchanged 
merchandise, should be permitted. In regard to the problem of how much 
drawback should be allowed (when additional payments in kind are made), 
it was suggested that language could be inserted to limit drawback to 
the amount of duty paid on the imported barrels.
    Customs Response: The statute involved (19 U.S.C. 1313(k)) 
expressly provides only for the use of any domestic merchandise 
acquired in exchange for imported merchandise of the same kind and 
quality. The Customs ruling cited by the comments held that a drawback 
claimant may identify a commercial lot of imported duty-paid 
merchandise as domestic merchandise for purposes of substitution 
drawback, 19 U.S.C. 1313(b), which is the provision interpreted in the 
ruling. This was adopted by Public Law 103-182, for purposes of 
Sec. 1313(j) (by providing for the substitution of any other 
merchandise (whether imported or domestic) instead of duty-free or 
domestic merchandise). No similar change was made to Sec. 1313(k), 
however. Accordingly, Customs concludes that no such interpretation was 
intended.
    The comment relating to Sec. 191.11(b) has merit and is adopted, in 
part. Customs must ensure that no more drawback than that attributable 
to the imported merchandise may be allowed. Also, the merchandise which 
is to be treated as the imported merchandise must be identified.
    Accordingly, the second sentence of Sec. 191.11(b) is changed to 
provide that the quantity of imported merchandise and domestic 
merchandise exchanged under this provision need not be the same, but 
that if the quantities are different, the lesser quantity shall be the 
quantity available for drawback. If a greater quantity of domestic 
merchandise than that of imported merchandise is received, the quantity 
identified for drawback shall be the quantity first received.
    The restriction on payments other than payments in kind under 
Sec. 191.11(b), however, is retained. Section 1313(k) provides for the 
use of any domestic merchandise acquired in exchange for imported 
merchandise of the same kind and quality, not for the use of domestic 
merchandise acquired for imported merchandise and a payment of 
something other than domestic merchandise of the same kind and quality.
    Further, the use of the term ``exchange'' indicates an intent to 
provide for exchange of merchandise only (if the statutory provision 
was intended to provide for the ``purchase or exchange'' of the 
imported merchandise of the same kind and quality, Congress could have 
explicitly so provided (see, e.g., 19 U.S.C. 1313(p)(2)(A)(ii) and 
(iv))).
    Comment: With reference to proposed Sec. 191.12 dealing with a 
claim filed under the wrong subsection of the drawback statute, it was 
advocated that this provision be rewritten to require Customs to notify 
the claimant as expeditiously as possible that the claim was filed 
under the wrong provision; it was also remarked that proposed 
Sec. 191.12 was wrong in requiring a drawback claim to have to meet all 
the legal requirements of an alternative subsection of the drawback 
statute.
    It was also pointed out that Sec. 7 of Public Law 104-295, adding 
19 U.S.C. 1313(r)(3) to the drawback law, allowing an extension of time 
for filing a drawback claim in the case of a major disaster, was not 
provided for in the proposed drawback regulations.
    Customs Response: The legislative history to the statutory 
provision (19 U.S.C. 1313(r)(2)) is that the provision does not impose 
a requirement on Customs to investigate all alternatives in addition to 
the claimed basis before liquidating a drawback claim as presented (see 
H. Rep. 103-361, 103d Cong., 1st Sess. (1993), part I, at 131; Sen. 
Rep. 103-189, 103d Cong., 1st Sess. (1993), at 84). Accordingly to the 
Senate Report, Sec. 1313(r)(2) was intended to allow a claimant to 
raise the alternative subsections by protest under 19 U.S.C. 1514. If 
an alternative provision of the drawback law is applicable, and the 
claimed provision is not applicable, it is clearly within the 
claimant's self-interest to bring to the attention of Customs the 
alternative provision (i.e., so that the claimant may be paid 
drawback). Therefore, and consistent with the legislative intent stated 
in the Senate Report (see above) for Sec. 1313(f)(2), Sec. 191.12 is 
modified by the addition of a statement that the claimant may raise 
alternative provisions prior to liquidation or by protest. (It is in 
the interest of Customs and the public to provide that a claimant may 
raise alternative provisions prior to liquidation, as well as by 
protest, because this simplifies administration of the provision (by 
not requiring the filing and processing of a protest when the 
alternative provisions can be raised prior to liquidation).)
    As the background to the proposed rule clearly stated, a claimant 
seeking to take advantage of this provision must qualify under the 
alternative subsection (see the example given in the background to the 
proposed rule). Customs may not waive the statutory requirement that a 
complete claim be filed within 3 years of export. Compliance with the 
alternative subsection is a statutory requirement (see 19 U.S.C. 
1313(r)(2)).
    It is recommended that claimants who are unsure of the correct 
subsection under which to claim drawback should ensure that their 
claims are filed promptly to allow compliance with the possible 
alternatives, and they should ensure that their claims comply with the 
possible alternatives.
    Additionally, the comment pointing out that Sec. 7 of Public Law 
104-295, adding 19 U.S.C. 1313(r)(3) to the drawback law, is not 
implemented in the regulations has merit and is adopted, although in 
Sec. 191.51(e)(2), and not in Sec. 191.12.
    Comment: It was suggested that proposed Sec. 191.13 relating to 
packaging material be revised to make clear that all information 
required by the particular drawback provision under which the packaging 
material was being claimed had to be furnished for such material.
    Customs Response: This suggestion has merit and is adopted, with 
the last sentence in Sec. 191.13 being changed with the addition of the 
following at the end thereof: ``and all other information and documents 
required for the particular drawback provision under which the claim is 
made shall be provided for the packaging material''.
    Comment: Regarding proposed Sec. 191.14(a), the issue was variously 
raised about the applicability of the accounting procedures included in 
this section to merchandise exported to Canada or Mexico under the 
North American Free Trade Agreement (NAFTA), when the merchandise was 
exported in the same condition as imported. It was also requested that 
proposed Sec. 191.14(a) make clear that the accounting procedures of 
this section

[[Page 10980]]

were not applicable in cases where the drawback law specifically 
authorized substitution. It was further asked that a cross reference to 
proposed Sec. 191.2(h) defining direct identification drawback be 
included in proposed Sec. 191.14(a).
    Customs Response: The concerns presented regarding Sec. 191.14(a) 
raise questions on the applicability of the accounting procedures 
provided for in Sec. 191.14 to exportations to Canada or Mexico, given 
the enactment and implementation of NAFTA. In order to avoid confusion 
in this matter, the last sentence of Sec. 191.14(a) as proposed, 
regarding the applicability of Sec. 191.14 to exportations to Canada or 
Mexico under the NAFTA, is deleted. Applicability to such exportations 
will be governed by the law (see 19 U.S.C. 3333) and regulations 
promulgated thereunder.
    The comment that the statement as to when this section is 
applicable (not in cases where substitution is permitted, citing 
specific subsections of 19 U.S.C. 1313) may be misinterpreted has merit 
and is adopted. The third sentence of Sec. 191.14(a) is modified to 
make clear that Sec. 191.14 is inapplicable in those situations in the 
cited subsections where substitution is allowed, but that the section 
does apply to situations in those subsections in which substitution is 
not allowed.
    As for the comment suggesting a cross-reference to Sec. 191.2(h), 
this comment has merit and is adopted. The second sentence of 
Sec. 191.14(a) is modified accordingly. Additionally, a cross-reference 
to Sec. 191.14 is added to Sec. 191.2(h).
    Comment: One comment asked that the words ``is established'' 
appearing in the last sentence of proposed Sec. 191.14(b)(2) be 
modified to read ``can be established''. Otherwise, according to the 
comment, the provision might be read that each claimant had to seek a 
ruling establishing the inventory requirements contained therein.
    Customs Response: The comment requesting the change of language in 
Sec. 191.14(b)(2) has merit. However, instead of making the 
modification to the last sentence, the first sentence is modified to 
provide that ``[t]he person using the identification method must be 
able to establish * * *''. The language in the provision following this 
first sentence is interpretive and the described change to the first 
sentence resolves the problem raised by the comment.
    Comment: It was recommended that the parenthetical language 
appearing in proposed Sec. 191.14(b)(3) be revised or removed.
    Customs Response: Customs agrees. The parenthetical appearing in 
Sec. 191.14(b)(3) is deleted as unnecessary.
    Comment: As to proposed Sec. 191.14(b)(4), it was asserted that if 
the verification of inventory records supporting a drawback 
identification method required the ability of the inventory system to 
include drawback per unit, this requirement should be removed from the 
regulation. It was further declared that this provision presumed that 
all acceptable identification methods required accounting for all 
inputs and withdrawals from inventory, which was not true.
    Customs Response: Regarding the requirement in Sec. 191.14(b)(4) 
that the records supporting any identification method employed are 
subject to Customs verification, the intent of this requirement is to 
provide that the person using the identification method must be able to 
demonstrate how the records account for the drawback per unit of each 
receipt and withdrawal (in addition to the other things the records 
must account for). It is not required that the records themselves 
account for, or state, drawback per unit; rather that the person using 
the records must be able to demonstrate how drawback per unit can be 
established from the records.
    It is correct that the low-to-high method with inventory turnover 
and the low-to-high blanket method may be used without accounting for 
domestic withdrawals; however if the method is subject to verification 
by Customs, the person using the method must be able to demonstrate, 
under generally accepted accounting procedures, how the records account 
for the required elements (including all withdrawals). That is, the 
integrity of the accounting method, as used by the person involved, is 
subject to verification. It is Customs position that no change to this 
provision is necessary.
    Comment: Concerning proposed Sec. 191.14(c) (1) and (2) addressing 
the first-in, first-out (FIFO), and last-in, first out (LIFO) 
accounting methods, it was recommended that after the word 
``identified'' in each paragraph, the words ``by recordkeeping'' be 
added.
    Customs Response: The recommendation that the words ``by 
recordkeeping'' be added after ``identified'' is adopted for 
Sec. 191.14(c) (1) and (2), and in Sec. 191.14(c) (3) and (4) as well. 
Additionally, examples are provided for each of the methods set forth 
therein.
    Comment: With reference to proposed Sec. 191.14(c)(3), it was 
declared that other accounting methods approved under other Customs 
rulings could be used if applicable.
    One comment believed that direct identification under the unused 
merchandise drawback law, 19 U.S.C. 1313(j)(1), was a fiction; that the 
law did not require the type of accounting methods that were provided 
in this proposed section; and that, at the very least, high-to-low 
accounting as allowed in C.S.D. 84-82 should be reinstated.
    Another comment suggested that Customs permit industries to submit 
proposals for acceptable accounting methods.
    It was further asked that accounting methods in addition to low-to-
high with inventory turnover (LIFO and FIFO) permit the claimant to 
omit accounting for domestic withdrawals when all receipts into 
inventory were of foreign origin.
    Customs Response: Section 191.14 is intended to establish the 
accounting methods which may be used to identify merchandise or 
articles for drawback purposes, and is intended to be consistent with 
T.D. 95-61. Rulings issued prior to the effective date of these 
regulations may not be resorted to unless consistent with Sec. 191.14 
and T.D. 95-61. However, in order to make available to the public as 
many options for identification by recordkeeping as possible, while 
adhering to the principles of T.D. 95-61, Sec. 191.14(c)(3) is modified 
by the addition of the so-called ``blanket'' low-to-high accounting 
method.
    Under this long-established and used method (see, e.g., 19 CFR 
22.4(f) (1982 Customs Regulations) and C.S.D. 80-132), commingled 
merchandise or articles are identified first from the lot or lots of 
merchandise or articles with the lowest drawback attributable, then 
from the lot or lots with the next higher drawback attributable, and so 
on from lower to higher until all lots have been accounted for. The 
period from which withdrawals for export are identified is the 
statutory period for export under the kind of drawback involved (e.g., 
180 days under 19 U.S.C. 1313(p), 3 years under 19 U.S.C. 1313(c) and 
1313(j), and 5 years otherwise under 19 U.S.C. 1313(i)). Thus, this 
method is similar to the low-to-high method with inventory turn-over 
method, except that instead of identifying the merchandise or articles 
with the lowest drawback attributable in the established average 
inventory period, merchandise or articles with the lowest drawback 
attributable in the statutory period for export are identified.
    Members of the public should be aware that drawback requirements 
are applicable to withdrawn merchandise or

[[Page 10981]]

articles as identified (for example, if the merchandise or articles 
identified were attributable to merchandise which had been imported 2 
years, 11 months prior to withdrawal and export or destruction did not 
occur until 2 months later, drawback under 19 U.S.C. 1313(j) would be 
denied (because that provision requires export or destruction within 3 
years of import)).
    Additionally, language is added to make it clear that, once a 
withdrawal for export is made and accounted for under the low-to-high 
method with established average inventory turn-over period, or under 
the ``blanket'' method, the merchandise or articles so withdrawn are no 
longer available for identification under the method.
    Also, new examples, more clearly illustrative of the low-to-high 
methods (ordinary, with average inventory turn-over period, and 
blanket), and comparing the results of those methods, are added to 
Sec. 191.14(c)(3).
    Customs does have procedures under which industries may obtain from 
Customs a ruling, or an approved manufacturing drawback ruling, upon 
which it may rely (see 19 CFR part 177, for rulings, and the sample 
formats for specific manufacturing drawback rulings in Appendix B).
    Regarding the suggestion that the ``high-to-low'' accounting method 
should be reinstated as a drawback accounting method, that would be 
inconsistent with T.D. 95-61, which revoked the published Customs 
ruling (C.S.D 84-82) permitting use of that method.
    The requirement in certain of the drawback identification 
procedures for accounting for domestic withdrawals (with the exceptions 
described) is consistent with T.D. 95-61, in which Customs and Treasury 
stated the criteria for accounting methods used for identification of 
merchandise or articles for drawback purposes, and it is consistent 
with generally accepted accounting procedures.
    As for the comment that the description of drawback under 19 U.S.C. 
1313(j)(1) as direct identification drawback is a fiction, Customs 
disagrees. Under the plain language of this law, the imported 
merchandise must be exported or destroyed and drawback is payable on 
the amount of duty specifically paid thereon.
    Comment: With specific regard to proposed Sec. 191.14(c)(3)(i) 
describing the low-to-high inventory accounting method, it was 
reiterated that domestic (or nondrawback) input and domestic sales from 
inventory should not have to be taken into consideration.
    Customs Response: As made clear in the modified regulation, all 
receipts and all withdrawals (including domestic withdrawals) must be 
accounted for when using the ``ordinary'' low-to-high method (low-to-
high without an established average inventory turn-over period and not 
under the ``blanket'' method). Under the low-to-high method with 
average inventory turn-over period and the low-to-high blanket method 
all receipts into and all withdrawals for export are recorded in the 
accounting record and accounted for and domestic withdrawals 
(withdrawals for domestic shipment) are not accounted for and do not 
affect the available (under the methods) units of merchandise or 
articles.
    Comment: With specific regard to proposed Sec. 191.14(c)(3)(ii)(B) 
concerning the use of low-to-high accounting with an inventory turn-
over period, it was stated that rather than providing that ``the 
longest average turn-over period * * * may be used'', this should 
provide instead that it ``must'' be used, and asked in this connection 
whether users of this method would have an option to choose periods.
    Customs Response: This comment has merit and is adopted (although 
instead of the change proposed, the provision as redesignated 
(Sec. 191.14(c)(3)(iii)(C)) is modified by the addition of a 
parenthetical statement to make it clear that users of this method will 
have the option of using either the properly established average turn-
over period for the merchandise or articles to be identified, or, if 
the person using the method has more than one kind of merchandise or 
articles with different inventory turn-over periods, the properly 
established average turn-over period which is longest).
    Comment: With respect to proposed Sec. 191.14(c)(4) concerning the 
average inventory method, a question was raised about the requirement 
that claimants wishing to use this inventory method obtain a ruling 
under 19 CFR part 177. In particular, it was remarked in this regard 
that the use of a weighted average as set forth therein was an 
officially recognized method of inventory management. Another comment 
asked that a practical example of how this inventory method would work 
be included under this provision.
    Customs Response: The comment questioning why a ruling is needed 
for use of the average method and/or asking that an illustration of the 
average method be included in the regulations has merit and is adopted 
in Sec. 191.14(c)(4). An example of an average method and provision for 
use of the average method, if in compliance with the applicable 
requirements of Sec. 191.14 and the example, are included in the 
section.
    When the average method is used the ratio of each receipt in 
inventory to all merchandise in the inventory at the time of the 
withdrawal is applied to the withdrawal, so that the withdrawal is 
comprised of proportionate quantities of each receipt and each receipt 
is correspondingly decremented. The reference to ``weighted averaging'' 
is removed, because weighting is unnecessary in this method.
    As with other methods, when a person proposes a method which 
diverts from the methods as provided for in the regulations, a ruling 
must be obtained from Headquarters, or approval may be obtained in a 
specific manufacturing drawback ruling (see Sec. 191.8 and Appendix B).
    Comment: One comment asserted that the requirement in proposed 
Sec. 191.14(d)(2)(i) that any accounting system approved by Customs be 
``either revenue neutral or favorable to the Government'' was 
imprecise, and recommended the addition of the words, ``when compared 
to the method of separate storage and specific identification'' 
following the word ``Government'' in this provision.
    Customs Response: Customs disagrees. The phrase, ``either revenue 
neutral or favorable to the Government'', was approved after notice and 
comment procedures pursuant to T.D. 95-61. The intent here is that the 
accounting methods for the identification of merchandise or articles 
for drawback purposes must meet the requirements in Sec. 191.14(d)(2), 
as demonstrated by the methods provided for in Sec. 191.14 (which now 
includes much more illustrative examples).

Subpart B

    Comment: It was asked that a reference to drawback products be 
included in proposed Sec. 191.21 concerning direct identification 
drawback, 19 U.S.C. 1313(a).
    Customs Response: This request has merit and is adopted.
    Comment: It was stated that proposed Sec. 191.22(d) fell under the 
heading of substitution drawback and discussed designation by a 
successor; it was stated that this gave the impression that 
designations by successors were restricted to substitution claims.
    Customs Response: This provision deals with successorship under 19 
U.S.C. 1313(s), which concerns only substitution drawback under 19 
U.S.C. 1313(b) and 19 U.S.C. 1313(j)(2). The concern raised here is 
addressed by making reference in this provision to

[[Page 10982]]

successorship under Sec. 1313(s). Notably, the same change is also made 
with respect to Sec. 191.32(f).
    Comment: With respect to proposed Sec. 191.22(e), concerning 
multiple products, it was advocated that Customs approval should not be 
required for manufacturing periods longer than a month. It was also 
stated that the use of an alternative to market value in determining 
the relative value of multiple products was unnecessary.
    Customs Response: These comments are not adopted. As to the length 
of the manufacturing period, the provision follows current practice and 
provides for ``specific approval of Customs'' for a longer period.
    With respect to the determination of relative value, it is provided 
in Sec. 191.2(u) (as redesignated) that relative value is based on the 
market value of the products, or an alternative value approved by 
Customs. In other words, the default value is market value and if 
another value is to be used, Customs is to be advised (and such advice 
to Customs would be in the specific manufacturing drawback ruling of 
the company involved). Otherwise, a claimant would have to establish by 
its records that the value used is proper.
    It is noted that consistent with the comments and response for 
proposed Sec. 191.2(r), the heading for this paragraph is changed from 
``By-products'' to ``Multiple products''.
    Comment: As to proposed Sec. 191.23(d)(1), it was asserted that the 
reference to the ``market value of the merchandise or products used in 
manufacture'' was not clear. A clarification of this language was 
requested.
    Customs Response: The provision is modified to require records to 
show the market value of the merchandise or drawback products used to 
manufacture the exported or destroyed article, consistent with 
Sec. 191.23(c).
    It is also noted that a new Sec. 191.23(d) is added providing for 
use of the ``abstract'' or ``schedule'' method of showing the quantity 
of material used or appearing in the exported or destroyed article. 
Thus, Sec. 191.23(d) as proposed is renumbered as Sec. 191.23(e).
    Comment: It was requested that proposed Sec. 191.24(a) concerning 
the certificate of manufacture and delivery be revised to make clear 
that such a certificate was required for each delivery of an article 
which had been manufactured or produced.
    Customs Response: A certificate of manufacture and delivery is 
required for each delivery of an article which has been manufactured or 
produced (as defined in Sec. 191.2(q), as redesignated) (this would be 
so whether the article has been subject to one or more than one 
manufacturing or production operations). The section is modified to 
make this clear.
    Comment: It was believed that paragraphs (a) and (d) of proposed 
Sec. 191.24 were in conflict (one required physical delivery, the other 
did not). It was suggested the provisions be reworded for consistency.
    Customs Response: This comment has merit and is adopted. Section 
191.24 (a) and (d) are revised accordingly.
    Comment: Concerning the information required on a certificate of 
manufacture and delivery in proposed Sec. 191.24(b), it was asked that 
the identity of the transferee and transferor, IRS number, and unique 
electronic number assigned to the manufacturing ruling be added.
    Customs Response: The identity of the transferee and transferor is 
added, consistent with Sec. 191.10, as Sec. 191.24 (b)(1) and (b)(14), 
respectively. The comment as to the unique electronic number assigned 
to the manufacturing drawback ruling is also adopted in 
Sec. 191.24(b)(2), although either the unique electronic number or the 
T.D. number may be provided (the latter, if the manufacturer or 
producer is operating under a specific manufacturing drawback ruling). 
The paragraphs of Sec. 191.24(b) are renumbered accordingly.
    Comment: It was stated, with respect to proposed Sec. 191.24(b)(2), 
that the section inferred that the HTSUS numbers for designated 
merchandise from one certificate of manufacture and delivery should be 
transferred to a second certificate of manufacture and delivery. It was 
further stated here that, even if known, it would be a useless gesture 
to repeat import HTSUS numbers on the second certificate of manufacture 
and delivery, as they would not relate to the merchandise designated on 
the second certificate. It was asked that the provision clearly state 
that HTSUS numbers were not required on a second certificate of 
manufacture and delivery.
    It was also noted that the language therein to the effect, ``* * * 
and applicable duty amounts, if applicable'' appeared redundant.
    Customs Response: The reference to the redundancy of ``if 
applicable'' has merit. The second ``if applicable'' is deleted from 
this provision.
    The concerns expressed in relation to HTSUS numbers have merit (in 
that the section does not make it clear that the HTSUS numbers required 
are those for the imported merchandise, and not for the manufactured or 
produced merchandise).
    Insofar as the comment suggesting that import HTSUS numbers should 
not be repeated on a second certificate of manufacture and delivery, 
this comment is not adopted because in many cases involving more than 
one certificate of manufacture and delivery for sequential 
manufacturing or production operations, the merchandise and/or drawback 
products covered by one certificate may not be completely covered by 
the other certificate(s).
    Comment: It was observed that, in proposed Sec. 191.24(b) (3) and 
(4), the words ``if applicable'' did not pertain to this information; 
the dates received and used in manufacture should always be supplied.
    Customs Response: This comment has merit and is adopted. Customs is 
aware of no situation in which the information provided for in the 
subsections would not be applicable (particularly in view of the 
changes made to the requirement for a certificate of manufacture and 
delivery in the principal-agent situation).
    Comment: It was stated that proposed Sec. 191.24(c) was unclear 
insofar as it required the filing of a certificate of delivery with the 
drawback claim unless such certificate was ``previously filed''. The 
phrase ``previously filed'' was found to be vague. The previous filing 
may be at a different port. It was recommended that information as to 
the port and date of filing along with a copy of the certificate be 
submitted therewith, if the original certificate was not filed with the 
claim.
    Customs Response: This comment has merit and is adopted (although 
it is adopted in Sec. 191.51(a)(2), and not in this provision).
    Comment: With respect to proposed Sec. 191.24(d) concerning the 
effect of a certificate of manufacture and delivery, it was asked 
whether there would be a place on the certificate of manufacture and 
delivery to indicate whether drawback rights were being transferred 
and, if not, how an issuer would so indicate on the certificate. It was 
also stated that this section should address the ``effect'' of internal 
certificates of manufacture and delivery in order to document multiple 
manufacturing processes performed by one manufacturer.
    Customs Response: The comment regarding the effect of certificates 
of manufacture and delivery is addressed by the changes made to the 
requirements for a certificate of manufacture and delivery (i.e., such 
a certificate is only used when drawback rights are transferred and is 
not used in

[[Page 10983]]

a transfer from an agent to the principal).
    Therefore, the provision is modified accordingly (i.e., a 
certificate of manufacture and delivery establishes the transfer of an 
article manufactured or produced under 19 U.S.C. 1313 (a) or (b), 
identifies that article as an article to which a potential right to 
drawback exists, and assigns the drawback rights for the article from 
the transferor to the transferee). For the same reason, the example 
referring to principal-agency is removed.
    The comment stating that the provision should address the 
``effect'' of internal certificates of manufacture and delivery 
(internal to the company involved) is not adopted; since certificates 
of manufacture and delivery always transfer drawback rights, a 
certificate of manufacture and delivery would not be appropriate in 
such a situation (because the same legal person transfers and receives 
the merchandise).
    Comment: With respect to proposed Sec. 191.25(a), it was asked what 
would happen if the manufacturer did not want to divulge the abstract 
details to the claimant. It was recommended here that the current 
practice be followed--i.e., the manufacturer would file the certificate 
of manufacture and delivery and advise the claimant of the certificate 
number and the port where filed and the claimant could designate 
against the certificate.
    Customs Response: This comment is not adopted. The procedure 
suggested by the comment would create an untenable administrative 
burden in Customs processing of drawback claims and of accelerated 
payment claims.
    (It is noted that Sec. 191.25 as proposed is now redesignated as 
Sec. 191.26, due to the addition of a new Sec. 191.25 covering the 
destruction of articles manufactured or produced for drawback; and, as 
such, Secs. 191.26 and 191.27 as proposed are redesignated as 
Secs. 191.27 and 191.28, respectively.)
    Comment: Regarding proposed Sec. 191.25(b) addressing recordkeeping 
requirements for substitution manufacturing drawback, it was stated 
that the requirement that a manufacturer claiming drawback under 19 
U.S.C. 1313(b) establish the facts in proposed Sec. 191.25(a)(1) (ii) 
and (iii) was incorrect, since under substitution, the manufacturer 
only had to provide the quantity and kind of merchandise used or 
appearing in the manufactured articles. It was observed that proposed 
Sec. 191.25(a)(1) (ii) and (iii) related specifically to drawback under 
19 U.S.C. 1313(a), and should be removed from the reference in proposed 
Sec. 191.25(b).
    Customs Response: This request has merit and is adopted.
    Comment: It was observed that the words ``or destroyed'' should be 
inserted between the words ``exported'' and ``articles'' in proposed 
Sec. 191.25(b)(2). Also, it was noted therein that the term ``(or 
appearance in)'' should be ``or appearing in''.
    Customs Response: This comment has merit and is adopted.
    Comment: Regarding proposed Sec. 191.25(c) dealing with valuable 
waste, it was asserted that the statement that ``the quantity of 
merchandise identified or designated * * * shall be based on the 
quantity of merchandise actually used * * * reduced by the amount of 
merchandise which the value of the waste would replace'' was incorrect 
and misleading, in that a claimant might think that it need only 
designate the reduced quantity (after the waste replacement). It was 
recommended that this language be revised.
    It was also suggested that it be clarified as to which merchandise 
value was subject to reporting and recordkeeping with regard to 19 
U.S.C. 1313(a) versus 19 U.S.C. 1313(b).
    Customs Response: These comments have merit and are adopted. 
Section 191.26(c) as redesignated is revised accordingly.
    Comment: Concerning the requirement in proposed Sec. 191.25(e) that 
the claimant retain the certificate of delivery if the related 
merchandise was not imported by the manufacturer, it was asserted that 
this provision would be impossible for the claimant to comply with if 
the claimant was a party other than the manufacturer and the 
manufacturer was a party other than the importer because the claimant 
would never have received the certificate of delivery (the certificate 
would be from the importer to the manufacturer). An objection was also 
raised here as to the use of the word ``designated'' in the phrase 
``designated on a certificate of delivery for manufacturing drawback'' 
because designation inferred substitution. It was advocated that 
proposed Sec. 191.25(e) either be deleted or revised.
    Customs Response: The assertion that this provision would be 
impossible to comply with when the claimant is a party other than the 
manufacturer, and the manufacturer a party other than the importer, 
raises a valid concern. The provision is deleted, consistent with the 
changes to Secs. 191.10 (c) and (e), 191.51(a), and 191.52(b).
    Under the previously cited provisions, certificates of delivery are 
required to be in the possession of the party to whom the merchandise 
covered in the certificate is delivered, and if that party is not the 
claimant, the claimant is required to obtain the certificate and 
provide it to Customs, if Customs requests the certificate under the 
procedures for ``perfecting'' a claim.
    With the deletion of paragraph (e) of Sec. 191.26 as redesignated, 
paragraphs (f) and (g) thereof are themselves redesignated as 
paragraphs (e) and (f), respectively. Also, the example in 
Sec. 191.26(e)(1), as redesignated, is modified, consistent with the 
restriction in 19 U.S.C. 1313 (a) and (b) on the use in the United 
States after manufacture of articles manufactured or produced under 
those provisions.
    Comment: In regard to proposed Sec. 191.25(f)(2)(iii) dealing with 
the export summary procedure, it was recommended that the clause ``if 
known at the time of entry'' be added at the end of the requirement 
that ``[e]ach claimant shall identify in the chronological summary the 
name of the other claimant(s) and the component product for which each 
will independently claim drawback''. It was observed here that one 
claimant might be unaware of other claimants and to which component 
part they could claim.
    Customs Response: The request has merit and is adopted.
    Comment: With reference to proposed Sec. 191.25(g) dealing with 
recordkeeping requirements for manufacturing drawback, it was observed 
that this section provided a reasonable reflection of the various 
records required to establish entitlement to the kinds of drawback 
involved.
    However, the concern was expressed about the possible confusion 
resulting from the 3-year (from date of payment) record-retention 
period for drawback and the general 5-year record retention period for 
other Customs purposes. It was suggested that greater clarity was 
needed here, because a drawback claimant could think it could dispose 
of records after the 3-year period and be subject to penalties for 
disposing of them before the termination of the 5-year general period 
(if the records were also subject to the 5-year record retention 
period).
    It was further recommended that the final rule here should 
expressly state whether all drawback-related records had to be retained 
for a minimum of 5 years from the date of entry of the imported 
merchandise, or 3 years from the date of payment of the related 
drawback claim, or, alternatively, a detailed, comprehensive list of 
records and the time periods for retaining each one should be provided.
    It was also noted that in the background of the proposed rule,

[[Page 10984]]

Customs had stated that drawback records ought to be maintained until 
the liquidation of the drawback entry became final. It was asserted in 
this regard that if more than 3 years had passed since payment, but the 
subject drawback claim was still not finally liquidated, and a question 
regarding documents arose, Customs should presume that the claimant 
satisfied the drawback documentation requirements as long as the 
claimant had been approved under the drawback compliance program.
    Furthermore, it was suggested that, in the case of an audit 
commenced more than 3 years after payment of a drawback claim, Customs 
should not be able to recover any drawback paid, if a relevant 
supporting record was no longer in existence.
    It was additionally asked that a claimant be permitted to maintain 
the required documentation in paper or electronic form, either of which 
could be used to satisfy the recordkeeping requirements, and where a 
party was unable to produce necessary documentation, including records 
that were in the possession of another party or an original signature 
from a carrier, Customs should allow that party to present alternative 
documentation.
    It was stated that a reference to 19 U.S.C. 1508(c)(3) should be 
included in proposed Sec. 191.25(g) concerning the time period for the 
retention of records.
    Customs Response: The comment suggesting more clarity as to the 
time period for keeping drawback records (3 years from payment) versus 
other records provided for in 19 U.S.C. 1508, which are generally 
required to be retained for 5 years from the date of entry, filing of a 
reconciliation, or exportation, as appropriate, is adopted. Paragraph 
(g) of Sec. 191.25, as proposed (now redesignated as Sec. 191.26(f)), 
is modified to clarify that the 3-year time period provided for therein 
is for drawback purposes, and that the same records may be required, 
for other purposes (with a citation to 19 U.S.C. 1508), to be retained 
for a different time period.
    In reference to the statement in the background that drawback 
records ought to be maintained until liquidation of the drawback entry 
becomes final, the comment is correct that the applicable statutory 
provision (as well as the regulations based thereon) require retention 
for 3 years from the date of payment.
    It is Customs position that the effect of a claimant not having 
records prior to final liquidation but after termination of the 3-year 
period, as well as the effect of an audit commenced after termination 
of this period, must be determined on a case-by-case basis.
    In regard to the comment that a claimant be permitted to maintain 
the required documentation in paper or electronic form, a definition of 
``records'' has been added to Sec. 191.2, to the effect that records 
include electronically generated or machine readable data normally kept 
in the ordinary course of business.
    A reference to 19 U.S.C. 1508(c)(3) is added to Sec. 191.26(f) as 
thus redesignated.
    Comment: It was believed that a conflict was apparent in proposed 
Sec. 191.26(b)(3) regarding the phrase ``importation of the designated 
merchandise''. It was remarked that there was no date of importation 
for a drawback product, which could also be designated for drawback.
    Customs Response: The comment has merit. The following phrase is 
added at the end of paragraph (b)(3) of this section (Sec. 191.27 as 
redesignated): ``, or within 5 years of the earliest date of 
importation associated with a drawback product''.
    Comment: It was asked if the exporter could waive its right to 
drawback in proposed Sec. 191.27 by means of a blanket letter covering 
extended time frames.
    Customs Response: The comment referring to a ``blanket'' letter for 
certification by the exporter (or destroyer) assigning drawback rights 
has merit. Section 191.28 as thus redesignated is revised accordingly.

Subpart C

    Comment: In proposed Sec. 191.31(c), relating to when merchandise 
would be considered to be used for purposes of the unused merchandise 
drawback law (19 U.S.C. 1313(j)(1)), it was variously recommended that 
the words ``In general'' be deleted from the beginning of the first 
sentence thereof, and that the sentence be revised to be more specific, 
or be deleted entirely.
    Customs Response: The comment concerning the use of the phrase ``In 
general'' at the beginning of the first sentence of Sec. 191.31(c) is 
addressed by changing the heading of the provision to read ``Operations 
performed on imported merchandise.'', by deleting the first sentence, 
and by adding to the second sentence as proposed the phrase, ``In cases 
in which an operation or operations is or are performed on the imported 
merchandise,''. Notably, the same changes are also made with respect to 
Sec. 191.32(e).
    Further definition of the restriction on ``use'' in 19 U.S.C. 
1313(j) will be addressed on a case-by-case basis by ruling.
    Comment: In proposed Sec. 191.32(c), concerns were raised 
essentially as to how Customs would interpret and apply the four 
criteria listed therein in making commercial interchangeability 
determinations.
    It was stated that by listing the four factors to be used in making 
such determinations, Customs was creating a ``bright line'' test in 
contravention of the legislative intent underlying the statute.
    Customs Response: The criteria used by Customs in making commercial 
interchangeability determinations are adopted from the legislative 
history of 19 U.S.C. 1313(j)(2). In order to better implement 
legislative intent, Sec. 191.32(c) is modified to provide that in 
determining commercial interchangeability, Customs shall evaluate the 
critical properties of the substituted merchandise, and, pursuant to 
that evaluation, Customs consideration will include, but not be limited 
to, the factors listed in the legislative history.
    Further definition of commercial interchangeability will be on a 
case-by-case basis, by obtaining a determination as provided in 
Sec. 191.32(c). Procedures for contesting specific rulings are found in 
19 U.S.C. 1625 and 19 CFR part 177.
    Section 191.32(c) is modified to make it clear that the 
determination of commercial interchangeability may be obtained by a 
formal ruling or submission of all required documentation with each 
individual claim, while the nonbinding predetermination is just that, 
nonbinding and a pre-determination, and, therefore, is not sufficient 
to obtain a determination of commercial interchangeability. Required 
documentation for commercial interchangeability determinations includes 
competent evidence of the basis on which the merchandise is claimed to 
be exchanged.
    For example, if merchandise meeting a range of criteria is claimed 
to be exchanged in the industry, contracts evidencing that fact should 
be provided.
    Comment: As concerns the person entitled to claim drawback set 
forth in proposed Sec. 191.33(a), it was suggested that the waiver of 
drawback by the exporter be permitted by a blanket letter.
    Customs Response: The suggestion regarding a blanket certification 
by the exporter (or destroyer) assigning drawback rights is adopted. 
Section 191.33(a)(2) is revised accordingly. In addition, 
Sec. 191.33(a)(2) is changed to provide that the certification must be 
filed at the time of, or prior to, filing of the claim(s) covered by 
the certification.

[[Page 10985]]

    Comment: It was requested, under proposed Sec. 191.33(b)(2), that 
blanket waiver letters also be authorized.
    Customs Response: Customs agrees. Section 191.33(b)(2) is revised 
accordingly. Furthermore, Sec. 191.33(a)(2) is changed to provide that 
the certification must be filed at the time of, or prior to, filing of 
the claim(s) covered by the certification.
    Comment: In the context of proposed Sec. 191.33(b), it was 
extensively argued, citing the statute, its legislative history, as 
well as case law, that multiple substitutions of merchandise were 
permissible under the substitution unused merchandise drawback 
provision, 19 U.S.C. 1313(j)(2). It was contended that, by permitting 
an intermediate party to claim drawback in proposed Sec. 191.33(b), 
Customs itself provided for multiple substitutions. It was asserted 
that multiple substitutions were allowable under Sec. 1313(j)(2), in 
the case of a successorship thereunder, pursuant to 19 U.S.C. 1313(s). 
One comment said that the matter of multiple substitutions under 
Sec. 1313(j)(2) should be specifically addressed in the regulations.
    Customs Response: Customs is bound by the current statutory 
language in 19 U.S.C. 1313(j)(2). Under the current statute (19 U.S.C. 
1313(j)(2)), the other (substituted merchandise) must be commercially 
interchangeable with the imported merchandise, exported or destroyed 
within 3 years after import of the imported merchandise, and before 
exportation or destruction, not be used in the United States and be in 
the possession of the drawback claimant.
    The drawback claimant (under Sec. 1313(j)(2)(C)(ii)) must be the 
importer of the imported merchandise or have received from the importer 
(and person who paid any duty) a certificate of delivery transferring 
to the claimant the imported merchandise, commercially interchangeable 
merchandise, or any combination thereof (and the transferred 
merchandise will be treated as the imported merchandise and any 
retained merchandise will be treated as domestic merchandise), and upon 
exportation or destruction of the other merchandise, drawback shall be 
refunded.
    In the first case (when the claimant is the importer of the 
imported merchandise), no multiple substitutions are authorized by the 
statute, since the other merchandise must be in the possession of the 
claimant, and it (the other merchandise) must be exported (i.e., no 
matter how many transfers or substitutions of the merchandise which 
becomes the ``other'' merchandise occur prior to receipt by the 
claimant of the merchandise, what is required to be exported is the 
``other'' merchandise which the claimant must have possessed).
    In the second case (when the claimant receives from the importer 
and duty payer a certificate of delivery), no multiple substitutions 
are authorized by the statute since the other merchandise must be in 
the possession of the claimant and it (the other merchandise) must be 
exported (i.e., if the ``other'' merchandise is treated as the imported 
merchandise, so that it, or commercially interchangeable merchandise, 
could be transferred to another party, the transferror would not be the 
importer and duty payer, as required by the statute).
    Customs position in this regard is consistent with the legislative 
history of the statute (see also Senate Report 103-189, page 182, 
declaring that Sec. 1313(j)(2) would allow exporters to claim drawback 
on imported merchandise, or other domestic or imported merchandise that 
is substituted for the imported merchandise).
    As for the contention that Customs, in the proposed provision, by 
permitting an intermediate party to claim drawback under 
Sec. 1313(j)(2), provides for multiple substitutions, Customs 
disagrees. Customs proposed interpretation of the statute, authorizing 
multiple transfers and claims by intermediate parties (under the waiver 
and assignment, and certification procedures) is based on the provision 
in Sec. 1313(j)(1) as to who may claim drawback (the exporter (or 
destroyer) or, with endorsement, the importer or any intermediate 
party), and the legislative history (H. Rep. 103-361, 103d Cong., 1st 
Sess. (1993), part I, at 129; Sen. Rep. 103-189, 103d Cong., 1st Sess. 
(1993), at 82, noting that, due to a recent court decision, the 
provision also permitted an exporter or destroyer to endorse the right 
to claim drawback to the importer or any intermediate party).
    Section 1313(j)(2) does not specifically authorize the delivery 
``directly or indirectly'' of the certificate of delivery for the 
imported merchandise, commercially interchangeable merchandise, or any 
combination thereof, so the proposed construction of the statute, based 
on the allowance in the regulations for an intermediate party to claim 
drawback (with the required waiver and assignment, and certification) 
must fail.
    As for the comment that 19 U.S.C. 1313(s) permits multiple 
substitutions under Sec. 1313(j)(2), Customs disagrees. Under 
Sec. 1313(s), in pertinent part, a drawback successor (meeting the 
requirements of that section) may designate as the basis for drawback 
on merchandise possessed by the drawback successor after the date of 
succession imported merchandise, commercially interchangeable 
merchandise, or any combination thereof for which the predecessor 
received, before the date of succession, from the importer and duty 
payer a certificate of delivery transferring to the predecessor such 
merchandise.
    In other words, under Sec. 1313(s), the predecessor receives a 
certificate of delivery for the ``other'' merchandise and the successor 
possesses the merchandise. Section 1313(j)(2) requires the party 
claiming drawback to both possess the ``other'' merchandise and to have 
received from the importer and duty payer a certificate of delivery for 
the imported merchandise, commercially interchangeable merchandise, or 
any combination thereof. Thus, Sec. 1313(s) allows drawback when these 
parties are different and a permitted succession occurs, it does not 
allow a further substitution, nor does the legislative history have any 
indication of an intent to add such substantive rights in the 
successorship situation.
    The comment that the restriction on multiple substitutions should 
be provided for in the regulations themselves has merit and is adopted. 
Section 191.33(b)(1)(iii) is revised accordingly.
    Comment: It was suggested, with respect to proposed 
Sec. 191.33(b)(1)(ii), that the words ``or destroys'' should be 
inserted following the phrase, ``commercially interchangeable 
merchandise, and exports'' and before the phrase, ``such transferred 
merchandise'', and the words ``or destroyer'' should be inserted 
following the phrase, ``that exporter'', and before the phrase, ``shall 
be entitled to claim drawback''.
    Customs Response: The comment has merit and is adopted.
    Comment: It was recommended, in proposed Sec. 191.34(a)(1), that 
instead of certifying on the certificate of delivery that the party did 
not use ``the exported or destroyed merchandise'', the requirement 
should be for a certificate that the party did not use ``the 
transferred merchandise''. It was noted that the merchandise, at the 
time of the certification, would not yet be exported or destroyed.
    Customs Response: The comment has merit and is adopted.
    Comment: With respect to proposed Sec. 191.34(a)(2), it was stated 
that instead of requiring the drawback claimant to ``retain the 
certificate for submission to Customs as part of the claim, if 
requested'', the requirement should be

[[Page 10986]]

to ``retain the certificate for submission to Customs when requested''.
    Customs Response: Consistent with Sec. 191.51, certificates of 
delivery are not ``part'' of claims but support claims, so that if 
Customs requests a certificate of delivery upon which a drawback claim 
is dependent and the certificate is not provided, the claim is not 
rejected but, instead, is denied. Since a certificate of delivery is 
not ``part'' of a complete claim (as the regulation is modified), 
providing a certificate of delivery upon Customs request is in the 
nature of ``perfecting'' a claim. Notably, this is added as one of the 
instances of perfection provided in Sec. 191.52(b), and may be done 
outside the 3-year time for filing a complete claim.
    The denial of a drawback claim for failure to supply, in response 
to Customs request, a certificate of delivery upon which part of the 
claim is dependent is limited to denial of that portion of the claim 
dependent on the certificate of delivery which is not supplied. The 
provision is changed to make this clear.
    Also, pursuant to changes to other sections (see Secs. 191.51(a) 
and 191.52(b)), certificates of delivery are required to be in the 
possession of the party to whom the merchandise covered in the 
certificate was delivered, and if that party is not the claimant, the 
claimant is required to obtain the certificate and provide it to 
Customs, if Customs requests the certificate under the procedures for 
``perfecting'' a claim. The provision is changed to make this clear.
    Comment: With respect to proposed Sec. 191.34 (a) and (b) 
generally, it was contended that these provisions imply that a 
certificate of delivery which directly identified imported merchandise 
could not be used to transfer merchandise to a party who claimed 
drawback under 19 U.S.C. 1313(j)(2). It was asserted that the opposite 
was true, and that proposed Sec. 191.34(a) should specifically state 
that a directly identified certificate of delivery to a party may be 
subject to a Sec. 1313(j)(1) or 1313(j)(2) claim by that party.
    Customs Response: The intent of these provisions is to make clear 
the requirements for and effect of certificates of delivery. Section 
191.34(a) does not preclude the use of a certificate of delivery for 
the imported merchandise (and not substituted merchandise) which then 
may be the subject of a further delivery (under substitution procedures 
under 19 U.S.C. 1313(j)(2)), nor does Sec. 191.34(b) preclude transfers 
(but not substitutions) before and/or after the substitution-transfer. 
The provisions are changed to make this clearer.
    Further, the provisions are changed to reflect that the certificate 
of delivery is required to be retained by the person to whom the 
merchandise was delivered (and is not a ``part'' of a drawback claim), 
and must be provided to Customs by the claimant upon a request to 
``perfect'' the claim.
    Comment: It was observed that proposed Sec. 191.34(b) did not 
contain a provision dealing with intermediate transfers.
    Customs Response: The comment has merit and is adopted. A sentence 
similar to the last sentence of Sec. 191.34(a) is added to 
Sec. 191.34(b).
    Further, in the penultimate sentence of Sec. 191.34(b) as proposed, 
the words ``as imported merchandise for the purpose of manufacturing 
drawback'' are deleted and replaced with ``for any other drawback 
purposes''.
    Comment: It was requested that the procedures for the waiver of 
prior notice set forth in proposed Sec. 191.35 for purposes of 19 
U.S.C. 1313(j) also be employed for purposes of drawback under 19 
U.S.C. 1313(c). It was further suggested that the form referred to here 
and in other sections as ``Notice of Intent to Export'' or ``Notice of 
Intent to Export or Destroy'' be renamed as the ``Notice of Intent to 
Export, Destroy or Return Merchandise to Customs Custody''.
    Customs Response: The comment, suggesting that the provision for 
waiver of prior notice should be extended to drawback under 19 U.S.C. 
1313(c), is not adopted. The statutory provisions are different. Under 
Sec. 1313(c) the merchandise is required to be returned to Customs 
custody for exportation or destruction under Customs supervision; there 
is no such requirement in 19 U.S.C. 1313(j) for the return to Customs 
custody. The form for export or destruction or return to Customs 
custody, however, is renamed, as stated above.
    Comment: It was recommended that the information required on the 
notice of intent in proposed Sec. 191.35(b) include, in addition to the 
name and telephone number of a contact person, the mailing address, fax 
number and, if available, the e-mail address.
    Also, it was stated that the phrase, ``* * * the bill of lading 
number, if known'', as set forth therein, was unnecessary, since the 
bill of lading number would not be known prior to export of the 
merchandise (the bill of lading is numbered upon preparation of the 
Outward Manifest).
    Customs Response: The recommendation that other information 
regarding the contact person should be stated has merit and is adopted. 
The comment suggesting deletion of the requirement for the bill of 
lading number, if known, is not adopted (i.e., the requirement is 
subject to the caveat ``if known'').
    Comment: It was stated, with respect to proposed Sec. 191.35(c) 
that the regulations on the process of filing the notice of intent to 
export should provide the ability to file notice to Customs 
electronically. Furthermore, it was contended that Customs should be 
required to notify the party named in proposed Sec. 191.35(b) by 
telephone, within 2 working days, and that a telephone contact should 
be required as well.
    Customs Response: The comment that the regulations should provide 
for electronic filing of the ``Notice of Intent to Export, Destroy, or 
Return Merchandise for Purposes of Drawback'' has merit and is adopted. 
This is accomplished by the addition of a definition of ``filing'' in 
Sec. 191.2. The comment (that the party should be notified by 
telephone) is not adopted. Customs believes that the existing 
requirements in Sec. 191.35(c) are adequate as regards the examination 
of merchandise to be exported or destroyed.
    Comment: Referring to the time and place of examination in proposed 
Sec. 191.35(d), it was mentioned that, for consistency, the notice of 
the decision to examine provided for in this provision should be ``in 
writing''.
    Customs Response: The suggestion that notice of the decision to 
examine should be in writing has merit, although the requirement for 
notice in this regard is in Sec. 191.35(c), not (d). Thus, the 
requested modification is made to Sec. 191.35(c).
    Comment: It was observed that inclusion of a requirement in 
proposed Sec. 191.36(a)(1)(i) for the estimated number of claims to be 
filed under this procedure, and when they would be filed, would assist 
Customs in maintaining control over the filing of the claims under this 
provision.
    Customs Response: A requirement to this effect is included in 
Sec. 191.36(a)(1)(i).
    Comment: It was stated that the IRS number (9-digit number plus two 
character suffix) was needed in proposed Sec. 191.36(a)(1)(i) (A) and 
(B).
    Customs Response: The comment has merit and is adopted.
    Comment: A question was presented as to the meaning of the phrase, 
``Export period covered by this application'' appearing in proposed 
Sec. 191.36(a)(1)(i)(C). It was asked

[[Page 10987]]

whether the term ``export period'' included past as well as future 
export activity.
    Customs Response: ``Export period covered by this application'', as 
used in Sec. 191.36(a)(1)(i)(C), means the time beginning with the 
first export for which prior notice was not given and ending with the 
time of the last export for which such notice was not given. Section 
191.36 deals with merchandise which has been exported without the 
filing of a notice of intent to do so. This provision, therefore, 
covers past transactions.
    Comment: There was a recommendation that the words ``and/or'' be 
added to proposed Sec. 191.36(a)(1)(iii)(A) (1) and (2), on the basis 
that a claimant might not have ``laboratory records'' as such.
    Customs Response: The comment has merit and is adopted, with the 
additional statement that the requirements for the records are ``as 
applicable''.
    Comment: It was contended that the restriction, in proposed 
Sec. 191.36(a)(2), of retroactivity for waivers of prior notice to a 
``one-time'' use by the claimant was unfair and might not be legal.
    It was also stated that the one-time restriction should be on a 
product basis, because, with the diversification of business today, a 
firm could have several business areas that operated independently and 
could discover retroactive unused merchandise drawback scenarios at 
different times. It was further observed that the phrase ``unless good 
cause is shown'' afforded Customs too much discretion and could lead to 
capricious judgments.
    Customs Response: The one-time restriction is retained in 
Sec. 191.36(a)(2). Because this provision may be used for all exports 
occurring prior to approval by Customs of the application, a reasonably 
prudent drawback claimant should not be harmed (i.e., once aware of the 
requirement for prior notice of intent to export or destroy, such 
notice should be given, and under this procedure past exports may 
qualify for drawback).
    It is Customs position that the phrase ``unless good cause is 
shown'' as used in Sec. 191.36(a)(2) gives proper discretion to the 
Customs officers responsible for administering the provision.
    Comment: In relation to proposed Sec. 191.36(c), the suggestion was 
made that the words ``receipt of the application of'' should be 
inserted immediately after the words ``within 90 days of'', so that the 
provision did not require Customs to make its decision to approve or 
deny and then inform the applicant within 90 days of that decision. It 
was further stated in this regard that Customs should have to justify 
and state its reasons for the ``inability to approve, deny or act on 
the application''. It was observed that this could be accomplished by 
the addition of ``and the reason thereof'' at the end of this section.
    Customs Response: The comments have merit and are adopted.
    Comment: It was asserted that the second sentence in proposed 
Sec. 191.36(e) should be: ``If the applicant seeks waiver of prior 
notice under 191.91, reference should be included that application was 
submitted under this section and whether or not it was approved.''.
    Customs Response: The comment has merit and is adopted (but by a 
change to Sec. 191.91(b)(2)(ii) stating that the statement as to action 
on previous waiver requests includes one-time waivers under 
Sec. 191.36).
    Comment: It was believed that proposed Sec. 191.37 provided no 
guidance as to the specific document type and format that the claimant 
or other recordkeeper had to maintain.
    Concern was also expressed here that possible confusion could 
result from the 3-year (from date of payment) record-retention period 
for drawback, and the general 5-year record retention period for other 
Customs purposes. More clarity was requested.
    It was further stated that if more than 3 years had passed since 
payment but a drawback claim was not finally liquidated and a question 
regarding documents arose, Customs should presume that the claimant had 
satisfied the drawback documentation requirements as long as the 
claimant was approved under the drawback compliance program.
    It was additionally suggested that a claimant should be permitted 
to maintain the required documentation in paper or electronic form.
    Customs Response: Customs plans to make available to the public, 
from the field drawback offices, descriptions, with examples, of the 
documents referred to in this section (now redesignated as Sec. 191.38, 
due to the addition of a Sec. 191.37 regarding destruction).
    Section 191.38(a) as redesignated is also modified to make it clear 
that the 3-year time period provided for therein is for drawback 
purposes, and that the same records may be required, for other 
purposes, to be retained for a different time period. To this end, a 
citation to 19 U.S.C. 1508 is also added to redesignated 
Sec. 191.38(a).
    While records must be retained for 3 years from the date of payment 
of a drawback claim, it is Customs position, as previously stated, that 
the effect of a claimant no longer having records following this period 
must be determined on a case-by-case basis, when the related drawback 
claim has not yet been finally liquidated.
    Concerning the particular format in which records may be kept, as 
also previously noted, Customs has determined to include a definition 
in Sec. 191.2 for the term ``records'' based on the definition of this 
term appearing in 19 U.S.C. 1508.
    Comment: It was observed that a reference to the destruction of 
merchandise should be included in proposed Sec. 191.37(b)(2), and that 
a section should be added to subpart C addressing the destruction of 
merchandise.
    Customs Response: The comment that Sec. 191.38(b)(2) as 
redesignated should also include a reference to destruction has merit 
and is adopted. Also, as already noted, a new Sec. 191.37 is added to 
subpart C addressing the destruction of unused merchandise under 
Customs supervision. A similar section regarding destruction for 
manufacturing drawback has likewise been included in subpart B.

Subpart D

    Comment: It was asked, with reference to proposed Sec. 191.41, 
whether taxes or fees are eligible for drawback on rejected merchandise 
under 19 U.S.C. 1313(c).
    Customs Response: Section 1313(c)) authorizes drawback on 
``duties''. However, this comment indirectly raises the question of the 
applicability of 26 U.S.C. 5062(c) (drawback on distilled spirits, 
wines, or beer, which are unmerchantable or do not conform to sample or 
specifications). To alert the public to the possible application of 
that provision, a parenthetical reference to subpart P dealing with 
that type of drawback is added to Sec. 191.41.
    Comment: It was observed that a close reading of proposed 
Sec. 191.42(c), (e), and (f) revealed that the ``Notice of Intent to 
Export/Destroy'' form was to be used not only as a notice of intent to 
export or destroy merchandise, but also as a notice of intent to return 
merchandise to Customs custody. As such, it was suggested that the form 
be appropriately renamed.
    It was further stated that, by providing, in proposed 
Sec. 191.42(e) and (f), certain situations in which merchandise would 
``be deemed'' to have been returned to Customs custody, these 
provisions indicated that the merchandise might not actually have been 
returned to Customs custody. It was advocated that this should be

[[Page 10988]]

reconciled with the wording in proposed Sec. 191.42(a) providing that 
the claimant had to return the merchandise to Customs custody.
    In addition, for consistency, it was requested here that each time 
the terms ``exported'' or ``exportations'' were used in proposed 
Sec. 191.42, the terms ``destroyed'' and ``destructions'' should be 
added.
    Customs Response: The request regarding the use of ``destroyed'' or 
``destruction'' with the corresponding exportation terms has merit and 
is adopted, and, as previously noted, the form is re-named.
    Customs, however, sees no need for any change to Sec. 191.42(a). 
Since Sec. 191.42(e) and (f) provide that merchandise is ``deemed'' to 
have been returned to Customs custody in the situations provided for, 
the requirement for return to Customs custody in Sec. 191.42(a) is met.
    Comment: It was requested that the waiver of prior notice and the 
one-time retroactive claim procedures provided for unused merchandise 
in proposed Sec. 191.36 be made available for drawback under 19 U.S.C. 
1313(c) and for destroyed merchandise, and that if this were done, 
merchandise exported or destroyed under these procedures should be 
``deemed'' to be ``returned to Customs custody'' or destroyed ``under 
Customs supervision''.
    Customs Response: The comment suggesting that waiver of prior 
notice and the one-time waiver procedures be made available for 
drawback under 19 U.S.C. 1313(c) is not adopted. In particular, as 
previously pointed out, 19 U.S.C. 1313(c) and 1313(j) are different 
statutory provisions. Under Sec. 1313(c), there must be a return to 
Customs custody for exportation. There is no such requirement in 
Sec. 1313(j).
    Comment: It was recommended that the information required in the 
notice under proposed Sec. 191.42(d) should include, in addition to the 
name and telephone number of a contact person, the mailing address, fax 
number and, if available, the e-mail address.
    Customs Response: Customs agrees, and Sec. 191.42(d) is changed to 
provide for this additional information.
    Comment: It was asked that the notification given by Customs to 
examine merchandise under the first sentence in proposed Sec. 191.42(e) 
be in writing.
    Customs Response: This comment has merit and is adopted.
    Comment: A concern was expressed in relation to proposed 
Sec. 191.42(i), in that the provision appeared to require the 
exportation of rejected merchandise under Customs supervision.
    Customs Response: The comment raises a valid concern. The statute 
does not require exportation to be under Customs supervision. The 
phrase, ``under Customs supervision'', is thus deleted from this 
section. Also, a parenthetical reference to subpart G is added to 
Sec. 191.42(i).
    Comment: In proposed Sec. 191.44, it was suggested that the 
reference to ``Sec. 191.71(a)'' be changed to ``191.71''.
    Customs Response: This comment has merit and is adopted.

Subpart E

    Comment: It was asserted that, in proposed Sec. 191.51, a complete 
claim should contain a calculation sheet.
    Customs Response: The provision in Sec. 191.51(b) does require the 
correct calculation of drawback due, under which claims exceeding 99% 
of the duties will not be paid until corrected, and claims for less 
than 99% will be paid as filed, unless the claimant amends the claim. 
This provision is modified to provide for those situations when 
drawback is 100% of duties.
    In addition, it is noted that the provision on the time for filing 
a complete claim (in proposed Sec. 191.52(a)(2)) is moved to 
Sec. 191.51, as paragraph (e), and titled ``Time of filing''. The 
provision in 19 U.S.C. 1313(r)(3), providing for an extension to the 
time for filing a drawback claim when a claimant establishes that it 
was unable to file the drawback claim because of a major disaster is 
also included in Sec. 191.51(e).
    Comment: A question was posed, in connection with proposed 
Sec. 191.51(a)(1), as to why drawback offices still required a coding 
sheet for disk/electronic filings, and would those offices be informed 
to eliminate this requirement.
    Customs Response: As set forth in Sec. 191.51(a)(1), a coding sheet 
is required, unless the data is filed electronically.
    Comment: Concern was expressed about the requirement in proposed 
Sec. 191.51(a)(2) that certificates of delivery be in the possession of 
the claimant at the time of filing the claim.
    Customs Response: Certificates of delivery must be in possession of 
the party to whom the merchandise is delivered. Section 191.51(a)(2) is 
changed to so state.
    Comment: A question was presented regarding the statement in 
proposed Sec. 191.51(b) that claims for less than 99 percent would be 
paid as filed, unless the claimant amended the claim. It was advocated 
that Customs make an additional refund in such cases on its own.
    Customs Response: Customs recognizes the interest of a claimant in 
being able to exercise caution by under-claiming. Also, adoption of the 
procedure suggested by the comment would create an untenable 
administrative burden for Customs in its processing of drawback claims.
    Comment: With respect to proposed Sec. 191.51(c), it was suggested 
that the effective dates for providing HTSUS numbers on drawback claims 
be included in the regulations themselves. It was also contended that 
if a certificate of manufacture and delivery was identified or 
designated, the claimant should be exempt from providing the HTSUS 
numbers on the related claim. As such, it was requested that the 
phrase, ``and/or the certificate of manufacture and delivery'', be 
deleted from proposed Sec. 191.51(c).
    A concern was also expressed that proposed Sec. 191.51(c) might 
imply that for exports, if Schedule B commodity numbers were used, the 
entire ten-digit number would be required. It was advocated that it 
should be specified here that the Schedule B number was limited to 6-
digits.
    A question was raised as to what the effect of incorrect HTSUS 
numbers or Schedule B commodity numbers would be when those numbers 
were incorrect on the entry documentation or Shipper's Export 
Declarations (SEDs) from which they were derived. It was suggested that 
``good faith effort'' language, as discussed in prior consultations, 
should be incorporated within proposed Sec. 191.51. It was further 
suggested that if drawback claims were required to provide the SED 
tariff number to the 6-digit level for exports, they should also be 
permitted to provide a statement as to any discrepancy between that 
number and the actual number that would be reported to Customs at entry 
if the merchandise had been imported.
    In addition, with reference to the provision in proposed 
Sec. 191.51(c) that claimants using certificates of manufacture and 
delivery could meet the requirement with the HTSUS number on such a 
certificate, it was asked if this meant the HTSUS number of the 
imported designated merchandise, or the manufactured article, since the 
claimant might be using the previously manufactured article to make a 
second product for export.
    Customs Response: The comment that the effective dates for when 
HTSUS numbers or Schedule B commodity numbers are required should be 
included in the regulations has merit and is adopted. Section 191.51(c) 
adds a provision in this regard.

[[Page 10989]]

    As for the second comment suggesting deletion of the reference to a 
certificate of manufacture and delivery, this comment points out a lack 
of clarity in the regulation. The provision is modified to make it 
clear that the 6-digit HTSUS number is always required for the 
designated imported merchandise, and that this number shall be provided 
from the entry documentation when the claimant is the importer of 
record and from the certificate of delivery and/or certificate of 
manufacture and delivery when the claimant is not the importer of 
record. Because the certificate of manufacture and delivery is part of 
a drawback claim, manufacturing drawback claimants filing claims for 
which such a certificate or certificates is or are parts may meet the 
requirement for providing the HTSUS number for the imported merchandise 
with the HTSUS number(s) on such certificate(s).
    In the case of exports, the HTSUS number(s) or Schedule B commodity 
number(s) (to the 6-digit level in each instance) are also always 
required, and they shall be from the Shipper's Export Declaration(s) 
when required, or if not required, the numbers shall be the numbers 
that the exporter would have set forth on the SED(s), but for the 
exemption from the requirement for an SED.
    As provided in Secs. 191.10(b)(12) and 191.24(b), HTSUS numbers 
and/or Schedule B commodity number(s) are not required to be included 
for the transferred merchandise on certificates of delivery or 
certificates of manufacture and delivery unless the transferred 
merchandise is the designated imported merchandise or merchandise 
substituted therefor under 19 U.S.C. 1313(j)(2).
    The comment regarding the possible implication that the 10-digit 
HTSUS number is required for Schedule B numbers from an SED is 
addressed by making clear in Sec. 191.51(c) that the 6-digit limitation 
applies to both HTSUS numbers and/or Schedule B numbers.
    As for the comment regarding the effect on drawback of the use of 
incorrect HTSUS numbers or Schedule B commodity numbers, when those 
numbers were incorrect on the entry documentation and/or SEDs from 
which they were derived, the requirement is that the HTSUS numbers for 
the designated imported merchandise be from the entry summary and other 
entry documentation (Secs. 191.51(c), 191.10(b)(11), 191.24(b)(4)) and 
that the HTSUS numbers or Schedule B commodity numbers for the exported 
merchandise or articles be from the SED or, if no SED is required, the 
numbers that would have been on an SED if required. Thus, in each 
instance (except in the case of substituted merchandise under 19 U.S.C. 
1313(j)(2), in which, according to the legislative history (see above), 
classification is one of the criteria on which commercial 
interchangeability is based), the HTSUS or Schedule B commodity numbers 
are derived from other documents. That is, no independent 
classification is required.
    It is true that earlier consultations discussed a ``good faith 
effort'' in the HTSUS or Schedule B commodity numbers to be used on 
drawback entries and certificates. As stated in the background to the 
proposed regulations, the intent of the requirement for HTSUS or 
Schedule B commodity numbers was to enable Customs to ensure greater 
compliance through the use of enhanced penalty and automated drawback 
selectivity programs (62 FR 3090). The change from earlier discussions 
under which, instead of requiring independent classification for 
drawback, the HTSUS or Schedule B commodity numbers to be provided on 
drawback entries and certificates are those already required (except in 
the case of substitution under 19 U.S.C. 1313(j)(2), see above), 
simplifies drawback procedures in this regard. As stated above, all 
that is required is that the HTSUS numbers or Schedule B commodity 
numbers from the entry summary and other entry documentation or the SED 
be provided.
    In view of these changes, Customs sees no need, benefit, or purpose 
to be served by some sort of ``good faith effort'' requirement. 
However, the current requirement, which merely provides for the source 
of the classification number for exports, does not preclude a claimant 
from explaining any discrepancy in this number for other drawback 
purposes (e.g., commercial interchangeability under 19 U.S.C. 
1313(j)(2) or same kind and quality under 19 U.S.C. 1313(p)).
    The comment questioning whether the HTSUS number on a certificate 
of manufacture and delivery is that for the imported designated 
merchandise or the manufactured article raises a valid concern and is 
addressed by further clarifying Sec. 191.51(c) in this respect.
    Comment: A definition of the term ``perfecting'' was requested in 
proposed Sec. 191.52. It was also requested that Customs develop a 
formal procedure for tolling or suspending the 3-year claim completion 
period during an audit, internal advice request, or other action 
initiated by Customs regarding a drawback claim.
    It was observed that copies of export bills of lading were 
requested in proposed Sec. 191.52(b)(1), but that in proposed 
Sec. 191.72(a), the original was required.
    It was also asked whether protesting a drawback claim gave the 
right to amend the claim even though the 3-year period may have passed.
    Customs Response: Customs believes that a specific definition of 
the term ``perfecting'' in Sec. 191.52 is unnecessary. The comment that 
procedures should be provided for tolling or suspending the 3-year 
period for completion of a claim is also not adopted. It is the 
claimant's responsibility to file a complete claim; a prudent claimant 
would ensure timely filing of a complete claim for all possible 
applicable provisions.
    The comment regarding copies or originals of bills of lading, in 
Sec. 191.52(b)(1), raises a valid concern. Modifications, consistent 
Sec. 191.72(a), are made here.
    In response to the question of whether protesting a claim may allow 
a claimant to amend a claim outside the 3-year time period, the 3-year 
time period is statutory, and may not be extended unless specifically 
provided for in the statute. As part of protest procedures, a claim may 
be perfected, but it may not be amended (insofar as amendment would 
result in a complete claim not being filed within the 3-year time 
limit).
    It is noted that the heading of Sec. 191.52 is changed to 
``Rejecting, perfecting or amending claims'', and the heading of 
paragraph (a) thereof is changed to ``Rejecting the claim''.
    Comment: It was believed that, for consistency, the notification to 
the applicant provided for in proposed Sec. 191.52(a)(1) should be ``in 
writing.''
    Customs Response: This comment has merit and is adopted.
    Comment: It was asserted that proposed Sec. 191.52(a)(2) failed to 
recognize the retroactive application of 19 U.S.C. 1313(p), in that the 
restriction in 19 U.S.C. 1313(r)(1) did not apply to claims under 
Sec. 1313(p).
    Customs Response: As for the retroactive application of 19 U.S.C. 
1313(p), it is Customs position that resolution of the applicability of 
Sec. 1313(p) to past drawback claims will be resolved on a case-by-case 
basis.
    In addition, a reference to 19 U.S.C. 1313(r)(3) is included in 
Sec. 191.51(a)(2) as proposed, which, as noted, is redesignated as 
Sec. 191.51(e). Additionally, Sec. 191.51(e), as thus redesignated, 
which provides the time for filing a completed claim, is further 
modified by the addition of the statutory provision that claims not 
completed within the 3-year period (unless specifically exempted) shall 
be considered abandoned.

[[Page 10990]]

    Comment: With reference to proposed Sec. 191.52(b), it was thought 
that a new paragraph should be added to include certificates of 
delivery requested by Customs among the additional evidence or 
information that could be filed more than 3 years after the date of 
exportation. It was also suggested that a new paragraph be added to 
provide for the submission of other alternative information as approved 
by the drawback office, in lieu of that set forth in proposed 
Sec. 191.52(b)(1)-(3). In addition, it was mentioned that provision 
should be made for a situation when the drawback office decides after 
receipt of the claim that the claimant should have its own filer code. 
Furthermore, it was recommended that, for consistency, the notification 
to the applicant provided for in this provision should be in writing.
    Customs Response: The comment suggesting the inclusion of requested 
certificates of delivery to perfect a drawback claim has merit and is 
adopted. The comment regarding the addition of a paragraph providing 
for other alternative information is not adopted, as not necessary. 
Section Sec. 191.52(b) already provides that the information described 
therein may include, but not be limited to, the information set forth 
in paragraphs (b)(1)-(3) thereof, as modified. The comment regarding a 
claimant's filer code is not adopted, as unnecessary. The comment that, 
for consistency, the notification to the filer should be ``in writing'' 
has merit and is adopted.
    Comment: It was observed, with respect to proposed 
Sec. 191.52(b)(2), that if the drawback claimant was not also the 
importer, the requirement that the import entry and invoice be 
submitted would be difficult to meet. The comment suggests that 
providing the entry number and a full description of the imported 
merchandise (but not the total duty paid or total value and volume of 
the import) should be sufficient for Customs.
    Customs Response: Customs believes that the total duty paid is no 
more sensitive than the other information required under 
Sec. 191.52(b). This comment is not adopted.
    Comment: It was suggested that it be specifically set forth in 
proposed Sec. 191.52(b)(2) and (3) that other types of data, in lieu of 
invoices, would be acceptable.
    Customs Response: Customs believes that this is unnecessary. As 
previously noted, Sec. 191.52(b) already provides that the information 
required may include, but is not limited to, that specifically set 
forth thereunder.
    Comment: Regarding proposed Sec. 191.52(c), the request was made 
that the word ``original'' be added before ``drawback claim'' to avoid 
confusion.
    Customs Response: The comment that ``original'' should be added 
before ``drawback claim'' has merit and is adopted.
    Comment: A question was raised about the need for proposed 
Sec. 191.53, concerning the ``restructuring'' of claims; it was asked 
that this term be defined. The concern was also expressed that drawback 
offices might not fairly exercise the discretionary authority given to 
them in this section.
    Customs Response: The procedures in Sec. 191.53 permit Customs to 
require claimants to restructure their drawback claims so as to foster 
Customs administrative efficiency, subject to consideration by Customs 
of relevant factors (as listed in the provision). To protect the 
interests of claimants, a claimant may demonstrate an inability or 
impracticability in restructuring, with the criteria for so 
demonstrating specifically provided, and may propose a mutually 
acceptable alternative. Customs plans to provide training on the 
restructuring procedures to the field drawback offices.

Subpart F

    Comment: A recommendation was made that a provision be added to 
proposed Sec. 191.61 for the amendment of a claimant's specific or 
general manufacturing drawback ruling, if verification revealed errors 
or deficiencies with respect thereto. Current Sec. 191.10(e) was 
referred to here.
    Customs Response: Regarding amendments to correct errors or 
deficiencies found in verification, Customs agrees that Sec. 191.61 
should be appropriately changed to deal with this matter, although not 
with inclusion of all of the material currently in Sec. 191.10(e). In 
this connection, with the change in terminology from drawback 
``contracts'' to specific and general manufacturing drawback rulings, 
modification of the rulings and the effect thereof are governed by 19 
U.S.C. 1625 and 19 CFR part 177.
    As changed, Sec. 191.61 adds a new paragraph (d), to provide that 
Customs Headquarters shall be promptly informed of any errors or 
deficiencies in a specific manufacturing drawback ruling or a general 
manufacturing drawback ruling, the letter of notification of intent to 
operate under a general manufacturing drawback ruling, or the 
acknowledgment of the letter of notification of intent, and that 
Customs Headquarters shall take appropriate action (with a citation to 
19 U.S.C. 1625 and 19 CFR part 177).
    Comment: It was stated that proposed Sec. 191.61(b) appeared to be 
limited to manufacturing claims, and recommended that the language be 
expanded to cover the verification of all types of claims.
    Customs Response: Customs agrees. Section 191.61 is modified 
accordingly.
    Comment: With reference to proposed Sec. 191.61(c), even though 
firm deadlines were not able to be established in the absence of 
``deemed liquidated'' language, it was asked that Customs indicate the 
maximum time period it planned to use to liquidate a drawback entry.
    Customs Response: This comment is not adopted. It is Customs 
position that, as previously set forth, no such time period must be 
specified, but claimants can avail themselves of accelerated drawback 
provisions to obtain early payment secured by a bond.
    Comment: The suggestion was made that if the technical definition 
of ``falsification'', as used in proposed Sec. 191.62, meant or implied 
fraudulent activity to the exclusion of negligent activity, then, in 
order to clarify the subject matter thereof (which included both fraud 
and negligence), the title of proposed Sec. 191.62 should be changed. 
It was also observed here that a negligent violation was not 
necessarily a falsification.
    Customs Response: The heading of Sec. 191.62 is changed to 
``Penalties''.
    Comment: The question was raised in relation to proposed 
Sec. 191.62(a) as to why criminal penalties were included therein. It 
was believed that Customs had agreed to eliminate the criminal 
provisions if civil penalties were included in the Customs 
Modernization Act.
    Customs Response: Neither the statute nor the legislative history 
thereto contains any such provision.

Subpart G

    Comment: It was believed that the phrase, ``after receipt'', should 
be added after ``4 working days'' in proposed Sec. 191.71(a).
    Customs Response: Customs agrees. The provision is changed 
accordingly.
    Comment: For consistency, it was recommended that advising the 
filer, as provided in proposed Sec. 191.71(a), be ``in writing''. It 
was also stated that the 7-day period for notice before the intended 
date of destruction was too long and that the same 2-day period used 
for notice of export should be used.
    Customs Response: Customs agrees that advising the filer should be 
in

[[Page 10991]]

writing, and this provision is changed accordingly. However, Customs 
disagrees that a change in the applicable time period is needed. 
Customs does not anticipate undue confusion resulting from the 
different time frames for different purposes.
    Comment: The view was expressed that proposed Sec. 191.71(b) failed 
to provide for the evidence required when the merchandise was 
destroyed, in those cases where Customs did not notify the filer within 
the time in proposed Sec. 191.71(a). It was believed that the wording 
of this provision should be changed from, ``When Customs declines the 
opportunity to attend'', to: ``When Customs does not attend (or 
witness) the destruction''.
    Customs Response: This comment has merit and is adopted, although 
the modification of the wording, by the addition of ``(or witness)'' is 
not made, as unnecessary. Evidence of destruction must be provided 
whether or not Customs declines the opportunity to attend the 
destruction, or Customs decides to witness the destruction but does not 
do so.
    Comment: A rewording of proposed Sec. 191.71(c) was recommended, 
concerning the submission of evidence of destruction.
    Customs Response: Customs agrees. After destruction the claimant 
must provide either the Notice of Intent to Export, Destroy, or Return 
Merchandise for Purposes of Drawback, certified by the Customs officer 
attending the destruction, or, if Customs has not witnessed the 
destruction, the evidence that destruction took place in accordance 
with the approved Notice of Intent to Export, Destroy, or Return 
Merchandise for Purposes of Drawback. The provision is changed 
accordingly.
    In addition, the heading of subpart G is changed from ``Evidence of 
Exportation and Destruction'' to ``Exportation and Destruction'' 
because the subpart contains export and destruction provisions on 
procedures as well as evidence.
    Comment: It was stated that the list of documentation for 
establishing exportation in proposed Sec. 191.72(a) through (e) is not 
all inclusive. A suggestion was put forth here that the introductory 
text of proposed Sec. 191.72 preceding paragraphs (a) through (e) 
should be revised to read: ``The procedures for establishing 
exportation outlined by this section include, but are not limited 
to:''. It was further recommended that the word ``Alternative'' should 
be removed from the heading and introductory text. It was also 
suggested that the word ``time'' of exportation in the introductory 
text be replaced with ``date'' of exportation.
    Customs Response: The comment that ``include, but are not limited 
to'' should be inserted is adopted. The use of the word ``alternative'' 
in the heading and introductory text of Sec. 191.72 is superfluous, as 
this section contains the exportation procedures in question. The 
heading is changed to ``Exportation procedures''. Also, the word 
``time'' appearing in the introductory text is changed to ``date''.
    Comment: The requirement in proposed Sec. 191.72(a) for an original 
bill of lading was said to be inconsistent with industry practice. The 
elimination of this requirement was requested.
    Customs Response: Customs agrees that the requirement for ``the 
original'' bill of lading or other document is inconsistent with actual 
practice. The provision is thus changed to provide for ``an originally 
signed bill of lading, air waybill, freight waybill, Canadian Customs 
manifest, and/or cargo manifest, or copies thereof certified by the 
exporting carrier or holder of the original, issued by the exporting 
carrier''. This is consistent with C.S.D. 82-59.
    Comment: The recommendation was made that a separate column be 
added in the sample format for the export summary procedure in proposed 
Sec. 191.73, to indicate the exporter's name, if different from the 
claimant. Additionally, it was asked if this procedure could be used 
for transfers to a foreign trade zone.
    It was also noted that the capitalization of Chronological Export 
Summary was inconsistent in this provision.
    Customs Response: A column is added to the sample format in 
Sec. 191.73 to indicate the exporter's name if different from the 
claimant. In addition, a change is made to subpart R to include 
language making the export summary procedure applicable to transfers to 
foreign trade zones of merchandise placed in zone-restricted status 
(see 19 CFR 146.44). Also, Sec. 191.73 is changed to consistently 
capitalize ``Chronological Summary of Exports'' throughout. Also, 
export identification is provided for ``deemed'' exports under subpart 
K.
    Comment: In proposed Sec. 191.73(b), it was said that the number 
sign (``#'') after the word ``destination'' appeared to be a ``typo''
    Customs Response: Customs agrees, and the number sign ``#'' is 
deleted.
    Comment: It was asked that a requirement be added to proposed 
Sec. 191.73(c), specifying that the claimant, if not the exporter, 
would have to have an endorsement from the exporter to order to claim 
drawback.
    Customs Response: The comment is correct. However, this is now 
provided for in Sec. 191.82.
    Comment: A recommendation was made that the word ``proof'' 
appearing in proposed Sec. 191.73(c)(1) be changed to ``evidence''. It 
was also suggested that the last sentence thereof should be amended 
consistent with proposed Sec. 191.72(a), which would prevent a filer 
from claiming that a copy or unsigned duplicate original was 
satisfactory.
    Customs Response: These proposals have merit and are adopted. In 
Sec. 191.73(c)(1), the word ``proof'' is changed to ``evidence'', and a 
reference is made to the actual evidence provided for in 
Sec. 191.72(a).
    Comment: The deletion of the last sentence in proposed 
Sec. 191.73(c)(2) was requested.
    Customs Response: Customs agrees. The last sentence in 
Sec. 191.73(c)(2) is removed, and the second sentence is modified by 
the addition, at the end thereof, of the phrase ``, and such records 
are subject to review by Customs''.
    Comment: It was asked whether the reference in proposed 
Sec. 191.75(a) and (b) to ``Sec. 191.73'' should instead be to 
``191.72''.
    Customs Response: The comment has merit. However, reference to both 
Secs. 191.72 and 191.73 is intended. The provision is changed 
accordingly.
    Comment: A question was raised as to the meaning of the statement 
in proposed Sec. 191.75(a) that no bond would be required when the U.S. 
Government claimed drawback.
    Customs Response: This comment raises a valid concern. The quoted 
statement, in Sec. 191.75(a) as proposed, is of general application and 
is incorporated, as a separate paragraph, in Sec. 191.4, which is 
revised accordingly.
    Comment: In proposed Sec. 191.75(b), it was believed that a 
reference to Sec. 191.4(b) was needed.
    Customs Responses: The comment has merit and is adopted.

Subpart H

    Comment: With reference to proposed Sec. 191.81, the comment was 
made that nowhere did Customs discuss the actual determination of 
drawback due.
    It was also suggested that the regulations include a provision 
encouraging the timely and expeditious payment and liquidation of 
drawback claims.
    Customs Response: Section 191.51(b) addresses the determination of 
drawback due. Also, the suggested inclusion of a provision encouraging

[[Page 10992]]

timely and expeditious payment of drawback and liquidation of drawback 
entries is not adopted. The accelerated payment procedure provides for 
expeditious payment of drawback. As previously noted, Customs takes the 
position that a categorical time limit regarding liquidation of 
drawback entries will not be set out, but claimants can avail 
themselves of accelerated drawback provisiosn to obtain early payment 
secured by a bond.
    Comment: A comment suggested that the following be added at the end 
of the first sentence of proposed Sec. 191.81(b)(1): ``only to the 
extent the merchandise in the quantities identified or designated is 
subject to a drawback claim''.
    Customs Response: Customs agrees. To this end, the phrase, ``, to 
the extent that the estimated duties on the unliquidated import entry 
are included in the drawback claim for which drawback on estimated 
duties is requested under this paragraph.'', is added at the end of the 
first sentence of Sec. 191.81(b)(1).
    It is also pointed out here that in identifying, to the best of its 
knowledge, each import entry on a drawback claim that has been 
protested or that is the subject of a request for reliquidation, as 
required under Sec. 191.81(b), the drawback claimant must use 
reasonable care (see 19 U.S.C. 1593a).
    Comment: A clear definition of what constituted a voluntary tender 
was recommended in relation to proposed Sec. 191.81(c), as well as a 
corresponding change to the waiver language in proposed 
Sec. 191.81(c)(3). In this latter regard, it was asked what exactly was 
meant by the phrase in proposed Sec. 191.81(c)(3), ``waiving any right 
to payment or refund under other provisions of law''.
    Customs Response: A definition of voluntary tenders is added in 
Sec. 191.3(a)(1)(iii). In addition, for purposes of clarification, 
proposed Sec. 191.81(c)(3) is modified in the same manner as 
Sec. 191.81(b)(1). It is also noted that proposed Sec. 191.81(c)(1) and 
(2) are combined and redesignated as Sec. 191.81(c)(1), and proposed 
Sec. 191.81(c)(3) is redesignated as Sec. 191.81(c)(2).
    Comment: It was suggested that the heading in proposed 
Sec. 191.81(f) be changed to ``By-products''. It was further suggested 
that the term ``Relative values'' be added there as well.
    Customs Response: In view of the changes made in Sec. 191.2(u) as 
redesignated, the heading of Sec. 191.81(f) is changed to read 
``Relative value; multiple products''.
    Comment: Noting that specific reference was made in proposed 
Sec. 191.82 as to the party who could claim drawback under 19 U.S.C. 
1313(j)(1), it was suggested that specific reference also be provided 
in this section for Sec. 1313(j)(2). Also, based on the second sentence 
of proposed Sec. 191.175(a), Customs was urged to adopt a similar 
provision to apply to claims for all other types of drawback.
    It was further asked whether the ``certification'' referred to in 
this section had to be executed on a new Customs Form or whether it 
could be done on company letterhead; whether it had to be submitted as 
part of the claim; and whether the manufacturer would have to issue a 
certificate of manufacture and delivery to the exporter who would then 
issue a certification back to the manufacturer allowing the 
manufacturer to file and claim drawback.
    Customs Response: A reference to Sec. 191.33(b) is included in 
Sec. 191.82, for parties who may claim under 19 U.S.C. 1313(j)(2).
    The comment that a provision such as in Sec. 191.175(a) be added to 
Sec. 191.82 is not adopted. The authority for the provision in 
Sec. 191.175(a) is specifically provided in 19 U.S.C. 1313(p)(3)(C), 
but such a provision is not specifically provided for other subsections 
of the drawback law.
    The certification may be executed on company letterhead as in 
current practice; it need not be submitted as part of a claim (although 
it must be filed at the time of, or prior to, the filing of the claim). 
Furthermore, in the situation covered by this provision, a certificate 
of manufacture and delivery is not required from the manufacturer to 
the exporter, nor is a certificate required from the exporter back to 
the manufacturer (see Sec. 191.25). Also, provision is made for the 
filing of a ``blanket'' certification for a specified period, under 
this provision, consistent with similar provisions elsewhere in the 
regulations (see Secs. 191.28, 191.33(a), 191.33(b)).

Subpart I

    Comment: In proposed Secs. 191.91 and 191.92, it was advocated that 
a successor be allowed to assume a predecessor's approvals for waiver 
of prior notice and accelerated payment, on the basis of the language 
in 19 U.S.C. 1313(s)(3)(A) providing for drawback successorship when an 
entity had transferred to another entity all or substantially all of 
the rights, privileges, immunities, powers, duties, and liabilities of 
the predecessor.
    It was suggested in this regard that such an assumption would be 
effective for one year from the date of succession. Within that year, 
the successor corporation would have to re-apply for the privilege. If 
the successor company applied within one year, then the privilege would 
remain in force until the new application was acted upon by Customs.
    The suggestion was also put forth that the effect of existing 
waiver of prior notice and accelerated payment approvals, and 
requirements for reapplication, be included in the regulations 
themselves.
    Customs Response: The assumption of waiver of prior notice and 
accelerated payment approvals by a successor has some merit, although 
Customs must ensure the protection of the revenue. Therefore, the 
provisions (Secs. 191.91 and 191.92) are modified to provide for the 
limited, temporary assumption by a successor of waiver of prior notice 
of intent to export and accelerated payment approvals in a 
successorship such as that described in 19 U.S.C. 1313(s)(3)(A).
    Unlimited assumption by the successor, however, is not provided for 
in a successorship such as that described in 19 U.S.C. 1313(s)(3)(B) 
(transfer of the assets and other business interests of a division, 
plant, or other business unit of the predecessor, under certain 
conditions).
    The assumption by the successor of waiver of prior notice and 
accelerated payment approvals provided for will be effective for 1 year 
from the date of succession. Within that year, the successor must re-
apply following the application procedures in Sec. 191.91 and/or 
191.92, as appropriate, and if the successor applies within 1 year, the 
approval of waiver of prior notice or accelerated payment remains in 
force until the new application is acted upon by Customs.
    Furthermore, the request that provision for existing waiver of 
prior notice and accelerated payment approvals and requirements for re-
applications be included in the regulations themselves has merit and is 
adopted.
    In addition, all references to ``privileges'' are eliminated from 
subpart I and throughout part 191, and the references are replaced by 
reference to the particular procedure involved (either waiver of prior 
notice of intent to export or accelerated payment).
    Comment: It was observed in relation to proposed Sec. 191.91(b)(1) 
that the procedures for waiver of prior notice should also be extended 
to applicants who might wish to apply under 19 U.S.C. 1313(c).
    Customs Response: This comment is not adopted. The waiver of the 
notice of intent to export applies under 19 U.S.C.

[[Page 10993]]

1313(j), which is a different statutory provision than 19 U.S.C. 
1313(c). Under 19 U.S.C. 1313(c), the merchandise is required to be 
returned to Customs custody for exportation. No such requirement exists 
with respect to 19 U.S.C. 1313(j).
    Comment: The observation was made that the nine-digit suffix, plus 
two-character suffix, should be required in proposed 
Sec. 191.91(b)(2)(i)(A) and (B). Also, with reference to proposed 
Sec. 191.91(b)(2)(i)(B), it was noted that the name, address, and 
identification number of current exporters, if the applicant was not 
the exporter, would be of minimal value, since it would be an extensive 
list and the exporters would be constantly changing.
    Customs Response: Paragraphs (b)(2)(i)(A) and (B) of Sec. 191.91 
are modified to require the suffix in question; and paragraph 
(b)(2)(i)(B) thereof is further modified to require only the 3 most 
frequently used exporters, if there are multiple exporters, to appear 
in the application.
    Comment: The question was asked as to what was meant by the term 
``export period'', in proposed Sec. 191.91(b)(2)(i)(C). It was further 
asserted in this connection that it was unnecessary to require 
applicants to provide the ``export period covered'', except in cases 
where the application was intended to cover other than prospective 
transactions.
    Customs Response: The export period covered by the application 
means the period during which exports are made for which waiver of 
prior notice is requested (the period may be indefinite beginning with 
a stated date; or it may be a period with specified beginning and 
ending dates); it is Customs position that this information is 
necessary.
    Comment: In proposed Sec. 191.91(b)(2)(i)(F), (G), and (H), it was 
recommended that the reference to the ``next 12-month period'' be 
changed to refer to the next calendar year; it was asked what other 
requirements were referred to in proposed Sec. 191.91(b)(2)(iii)(B); 
and it was suggested that a statement be required in proposed 
Sec. 191.91(b)(2)(ii) as to whether an applicant was previously denied 
or had been approved for the one-time waiver procedure.
    Customs Response: The ``12-month period'' referred to in 
Sec. 191.91(b)(2)(F), (G), and (H) is changed to make it clear that the 
period covered is the next calendar year; Sec. 191.91(b)(2)(ii) is 
changed to include a statement of whether the applicant was previously 
denied or had approved a 1-time waiver of prior notice under 
Sec. 191.36; and the evidence referred to in Sec. 191.91(b)(2)(iii)(B) 
is ``any other'' evidence, and the provision is changed by the addition 
of this modifier.
    Comment: The suggestion was made that the words ``and/or'' be added 
for proposed Sec. 191.91(b)(2)(iii)(A)(1) and (2), on the ground that a 
claimant may not have laboratory records as such.
    Customs Response: This comment has merit and is adopted, with the 
additional statement that the requirements for the records are ``as 
applicable''.
    Comment: It was remarked that Customs should justify and state its 
reason for the ``inability to* * *act on the application'', as set 
forth in proposed Sec. 191.91(c)(1). It was further observed in this 
connection that the last sentence should add the language, ``but are 
not limited to''. It was stated here that the proposal was too 
restrictive, and that it would require granting of a waiver if the 
applicant had a history of bad exams.
    Customs Response: The comment that Customs must justify and state 
its reason for the inability to act on the application has merit and is 
adopted. Customs will endeavor to meet a directory 90-day time limit in 
this regard. The comment requesting the addition of ``but are not 
limited to'' is also adopted, for the reason given.
    Comment: In proposed Sec. 191.91(c)(2), it was contended that 
Customs did not have the right to limit future filings for waiver of 
prior notice (and it was contended that Customs could not limit 
retroactive waivers of prior notice). It was asked that if the waiver 
could only be ``prospective'' as used in proposed Sec. 191.91(c)(2), it 
be from the date of the application for waiver, not the waiver 
approval. In this regard, it was noted that proposed Sec. 191.36 
provided for claims that were filed pending disposition of application. 
The question was put as to what an applicant was supposed to do between 
filing its request for waiver of notice of intent to export and 
receiving approval of the request.
    Customs Response: These comments are not adopted. The elimination 
of unlimited retroactive waivers of prior notice meets the interest of 
eliminating a significant internal control weakness reported by the 
Treasury Inspector General; while the provision for a one-time 
opportunity for drawback claims under 19 U.S.C. 1313(j), without having 
provided Customs with prior notice, meets the interest of claimants who 
may not have known of the requirement for prior notice of intent to 
export before the exports occurred.
    Approvals of waiver of prior notice are effective for exportations 
occurring after the date of approval. Between the time of filing a 
request for waiver of prior notice and approval of the waiver, 
applicants should provide prior notice of export as provided in 
Sec. 191.35.
    Comment: With reference to proposed Sec. 191.91(d), it was 
contended that a ``stay'' without cause could become too burdensome to 
the drawback community. It was urged that the provision be eliminated 
entirely or changed to allow Customs to inspect a few export 
transactions during a specified period of time. If Customs wanted to 
``stay'' waiver of prior notice altogether, then there should be a 
``good cause'' requirement for staying waiver of prior notice, for any 
duration of time. In this latter connection, it was asked that a stay 
be specifically limited, such as for 30 days.
    It was also observed that under proposed Sec. 191.91(d), a ``stay'' 
would take effect on the date of the agency's letter of notification, 
even though such a letter would be received after the date thereon. It 
was requested here that a privilege holder be afforded a reasonable 
period after the date of Customs letter of notification of a ``stay''.
    In addition, a suggestion was made that the last sentence of 
proposed Sec. 191.91(d) make clear that, upon reinstatement, the waiver 
of prior notice would apply to exports occurring on or after the date 
of such reinstatement. Also, an editorial comment recommended that the 
word ``agency'' appearing several times in the provision be replaced 
with other terminology.
    Customs Response: The stay procedure for waiver of prior notice is 
retained in Sec. 191.91(d). The waiver of prior notice procedure has 
been identified as a significant weakness in Customs administration of 
drawback. As explained in the BACKGROUND'' section of the proposed 
rule, the stay procedure would not be an adverse action, suspension, or 
other form of sanction against the person for whom the privilege is 
approved; rather it is a limitation on what is being granted in the 
approval itself, there being no statutory entitlement to this 
procedure. Customs continues to believe that this limitation would best 
protect the revenue and the public interest in sound administration of 
the drawback program.
    However, the time within which a stay goes into effect, that is, 
before the person received notice of the stay, raises concerns. The 
provision is accordingly changed to provide that written notice of a 
stay be given to the person for

[[Page 10994]]

whom waiver of prior notice was approved, and that such written notice 
shall be by registered or certified mail. The stay will take effect two 
working days after the date the person signs the return post office 
receipt for the registered mail. The delay of two business days is 
required by 19 CFR Sec. 191.35(a) (i.e., notice of intent to export at 
least 2 working days prior to the date of intended export).
    The comment stating that ``good cause'' or similar language be 
added in proposed Sec. 191.91(d) governing the implementation of a stay 
is not adopted. Once Customs has waived the requirement for prior 
notice of intent to export, Customs has no way of ensuring, before the 
fact, that the exported merchandise is the merchandise claimed and 
meets the requirements of the drawback law. Thus, it continues to be 
Customs position that an approval of waiver of prior notice may be 
stayed, should Customs for any reason desire to examine the subject 
merchandise prior to its exportation, for purposes of verification. 
However, the provision is modified to provide that in its letter 
notifying the person to whom approval of waiver of prior notice has 
been granted Customs must specify the reason(s) for the stay.
    In regard to the comment asking that the period for a stay be 
limited to a specific period, such as 30 days, this comment is also not 
adopted. The period for a stay remains ``a specified reasonable 
period''. The reason that the time-period may not be specified is that 
the time will vary from case to case (e.g., one person for whom waiver 
of prior notice has been approved may have many exports within a month 
and another may have only a few exports in a year; thus it could be 
that sufficient exports for Customs to verify compliance with the 
drawback laws occur in less than a month or no exports occur within 
several months).
    The editorial comment (noting the frequency of use of the term 
``agency'') is addressed. Also, Sec. 191.91(d) is further modified by 
the addition of the phrase, ``, for exports occurring on or after the 
date of reinstitution'' after the word ``resume'' in the last sentence 
of this section.
    Comment: A question was raised as to the meaning of the phrase 
``proposed revocation'' as used in proposed Sec. 191.91(e). 
Clarification was also urged here as to when such a revocation would 
take effect.
    Customs Response: To address the commenter's inquiry, a proposed 
revocation does not immediately deprive the person of waiver of prior 
notice procedures, unless it is accompanied by a notice of stay under 
Sec. 191.91(d), under which the stay is effective two working days 
after the date the person signs the return post office receipt for the 
registered mail. The provision is changed to make that clear. 
Otherwise, proposed revocation will become effective 30 days after 
written notice thereof, unless the proposed revocation is timely 
challenged under Sec. 191.91(g). If challenged, the procedures in 
Sec. 191.91(g) apply to the proposed revocation.
    In addition, because it is anticipated that many claimants will 
have approval of waiver of prior notice, approval of accelerated 
payment of drawback (under Sec. 191.92), and certification in the 
drawback compliance program (under subpart S), in the interest of 
administrative efficiency, therefore, the same delay procedures (except 
for the stay, which is only potentially applicable to waiver of prior 
notice) are provided for revocation of accelerated payment and 
certification in the drawback compliance program.
    As a result, claimants with approval for more than one of these 
procedures and/or certification (see Secs. 191.93 and 191.195) could be 
notified in one written notice of the proposed revocation of the 
procedure[s] and/or certification, if applicable.
    Comment: It was stated that, in proposed Sec. 191.91(f), the claim 
should also be flagged to indicate that it was the first claim filed 
with waiver of prior notice, to reduce the possibility of the drawback 
office's failure to record that the claimant had waiver of prior 
notice.
    Customs Response: This comment has merit and is adopted, the last 
sentence in the section being changed to provide that in addition to 
submitting a copy of the approval letter with the first drawback claim 
filed in any drawback office other than the approving office, reference 
shall be made to the approval of waiver of prior notice in the first 
drawback claim filed after approval in the approving drawback office.
    Comment: The contention was made that the requirements for 
accelerated payment of drawback in proposed Sec. 191.92 were virtually 
identical to the requirements for participation in the drawback 
compliance program. The accelerated payment requirements were said to 
be quite onerous, and would be time consuming and costly.
    Customs Response: Customs disagrees. It is Customs position that 
the criteria for approval for accelerated payment and certification for 
participation in the drawback compliance program are not identical. The 
criteria for each were developed with specific regard for each of the 
programs and criteria.
    Comment: It was advocated that accelerated payment of drawback 
should be available under 19 U.S.C. 1313(d).
    Customs Response: This comment has merit and is adopted (consistent 
with current practice). Section 191.92(a) is modified to provide that 
accelerated payment of drawback is available for all kinds of drawback 
claims, unless specifically excepted.
    Additionally, accelerated payment of drawback is defined as the 
payment of estimated drawback before liquidation of the drawback entry. 
Also, this provision is modified to make it clear that, consistent with 
current practice, accelerated payment of drawback is only available 
when Customs review of the request for accelerated payment of drawback 
does not find omissions from, or inconsistencies with, the requirements 
of the drawback law and part 191. A reference to subpart E is also 
added to this provision, to make it clear to the public that, at a 
minimum, a complete drawback claim meeting the requirements in that 
subpart is required for accelerated drawback.
    Comment: It was believed that the IRS number (9 digits, plus 2 
character suffix) was needed in proposed Sec. 191.92(b)(1)(ii).
    Customs Response: This comment has merit and is adopted.
    Comment: A requirement should be added to proposed 
Sec. 191.92(e)(2) that Customs justify its reasons for being unable to 
act on the application within 90 days.
    Customs Response: This request has merit and is adopted.
    Comment: Opposition was expressed to the requirement in proposed 
Sec. 191.92(e) that approval of accelerated payment operated only 
prospectively. This was said to be counter to past administrative 
practices. Past drawback claims could be bonded by single transaction 
bonds.
    Customs Response: Customs agrees. Consistent with current practice, 
accelerated payment, following its approval, will be available for 
claims filed prior thereto, but such claims must be covered by a single 
transaction bond. Section 191.92(e) is so modified.
    Comment: The need for a stay of the privilege of accelerated 
payment was questioned, in proposed Sec. 191.92(f).
    Customs Response: The provision for a ``stay'' is removed for 
approvals of accelerated payment because, in the case of that 
procedure, there are procedures protecting the revenue (the requirement 
for a bond in an amount sufficient to cover the estimated amount

[[Page 10995]]

of drawback to be claimed during the term of the bond 
(Secs. 191.92(b)(1)(iv)(A) through (C) and 191.92(d)), and Customs may 
determine whether to grant accelerated payment for a claim before the 
fact (distinguished from waiver of prior notice, in which case the 
exportation has occurred and Customs has no before-the-fact opportunity 
for review). Section 191.92 is changed accordingly; paragraph (f) 
thereof is removed, and the succeeding paragraphs duly redesignated.
    Comment: The meaning of ``proposed revocation'' in proposed 
Sec. 191.92(g) was questioned, as well as when the notice thereof would 
take effect.
    Customs Response: Section 191.92(f) as thus redesignated from 
proposed Sec. 191.92(g) is revised, consistent with the changes made in 
Sec. 191.91(e).
    Comment: With reference to proposed Sec. 191.92(h), it was advised 
that the first claim should be flagged to reduce the possibility of the 
drawback office's failure to record that the claimant had approval of 
accelerated payment.
    Customs Response: Customs agrees. Section 191.92(g) as redesignated 
from proposed Sec. 191.92(h) is revised, consistent with the changes 
made in Sec. 191.91(f).
    Comment: In proposed Sec. 191.92(j), it was requested that Customs 
address the circumstance when accelerated payment was less than the 
actual refund entitlement.
    A request was also made here that the requirement for certifying 
the drawback claim for payment within 3 weeks after filing should be 
changed to 3 weeks after filing a complete and accurate claim or, 
alternatively, the term ``filing'' should be clearly defined as 
requiring filing a complete and accurate claim, not simple 
presentation. Furthermore, it was asserted that the parenthetical in 
proposed Sec. 191.92(j) appeared to contradict proposed paragraph (h) 
thereof, by restricting accelerated payment to the office where the 
privilege was approved.
    Customs Response: Customs disagrees that it should address the 
situation where a party claims less drawback than entitled. Customs 
recognizes the interest of a claimant in exercising caution by under-
claiming, as well as its own interest in not assuming the 
administrative burden of correcting such claims.
    Also, Sec. 191.92(a) has been modified to make it clear that, 
consistent with current practice, accelerated payment of drawback under 
Sec. 191.92 is only available when Customs review of the request for 
accelerated payment does not find omissions from, or inconsistencies 
with, the requirements of the drawback law and part 191. In this 
regard, a parenthetical reference to subpart E is added to 
Sec. 191.92(a).
    The comment that this provision may be inconsistent with proposed 
Sec. 191.92(h) (now redesignated as Sec. 191.92(g)), permitting 
accelerated payment to be applied for at a drawback office other than 
the approving office, has merit. The first sentence of Sec. 191.92(i) 
as redesignated from proposed Sec. 191.92(j) is modified, by deleting 
the parenthetical therefrom, in order to make it clear that the 
drawback office where the request for accelerated payment is made is 
responsible for certifying the claim for payment.
    Comment: It was suggested that proposed Sec. 191.93, relating to 
combined applications, be revised to more closely parallel 
Sec. 191.195, concerning the drawback compliance program.
    Customs Response: This comment has merit in that it raises the 
concern that Sec. 191.93 does not refer to the drawback compliance 
program, which may also be applied for in a combined application for 
waiver of prior notice and approval of accelerated payment of drawback. 
The provision is modified by the addition of a parenthetical citation 
to Sec. 191.195.

Subpart K

    Comment: The requirement in proposed Sec. 191.112(h) that the 
drawback office certify the Customs Form 7514 after the vessel or 
aircraft had cleared from the port of entry, and return a copy to the 
exporter, was said to be unnecessary. The deletion of this requirement 
was advised.
    Customs Response: Customs agrees. The certification is deleted 
therefrom. Also, if the export summary procedure is used under this 
subpart, the requirements for a notice of lading in Sec. 191.112(d)(1) 
and declaration in Sec. 191.112(f)(1) must be met.

Subpart M

    Comment: A question was raised as to the requirement in proposed 
Sec. 191.133(a) that 19 U.S.C. 1313(g) applied only to materials used 
in the ``original'' construction and equipment of vessels or aircraft. 
An objection was also raised about the reference therein to 
Sec. 1313(g) not applying to material not required for the safe 
operation of a vessel or aircraft.
    Customs Response: A similar comment was made when the same 
provision was added to the current regulations (see T.D. 83-212). 
Customs position at that time was that this restriction followed the 
intent of Congress. If an article is not attached to, or made a part 
of, a vessel, or is merely placed aboard the vessel and not required 
for safe operation of the vessel or safety of the crew, Congress did 
not intend that it be the subject of drawback. Customs position here 
has not changed.
    However, the comment does raise a valid concern. The statute (19 
U.S.C. 1313(g)) provides for drawback on materials imported and used in 
the construction and equipment of the covered vessels. The statute does 
not directly address the precise question of whether the materials have 
to be imported and used in original construction and equipment of 
vessels and aircraft.
    Accordingly, Sec. 191.133(a) is modified to provide that 19 U.S.C. 
1313(g) applies only to materials used in the original construction and 
equipment of vessels and aircraft, or to materials used in a ``major 
conversion'' of a vessel or aircraft. ``Major conversion'' has the same 
meaning as in 46 U.S.C. 2101(14a) (a conversion that substantially 
changes the dimensions or carrying capacity of the vessel or aircraft, 
changes the type of the vessel or aircraft, substantially prolongs the 
life of the vessel or aircraft, or otherwise so changes the vessel or 
aircraft that it is essentially a new vessel or aircraft, as determined 
by Customs).
    In either instance, the restriction against materials used for 
alteration or repair, or against materials not required for safe 
operation of the vessel or aircraft, continues in effect (except to the 
extent that a qualifying ``major conversion'' could be considered an 
alteration).

Subpart O

    Comment: A comment with reference to proposed Sec. 191.152(c) 
suggested the use of ``evidence of destruction'' instead of ``proof of 
destruction''.
    Customs Response: This comment has merit and is adopted.

Subpart P

    Comment: The comment was made that the phrase ``any additional 
proof'' in proposed Sec. 191.163(b) be changed to ``any additional 
evidence''.
    Customs Response: This comment has merit and is adopted.

Subpart Q

    Comment: It was requested that Customs implement in proposed 
Sec. 191.175(b) certain interim procedures relating to certificates of 
manufacture and delivery and certificates of delivery, as set forth in 
a Customs issuance dated September 2, 1994 (although referred to in the 
comment as being dated September 14, 1994).

[[Page 10996]]

    Customs Response: The provision implements the statutory language 
(see Secs. 191.173(c)(1) and (2), and 191.174(c)(1) and (2)). Further, 
it is not inconsistent with the cited interim procedures which, in any 
case, are superseded by these regulations.
    Comment: It was requested, in connection with proposed 
Sec. 191.176, that Customs allow drawback claimants a certain period of 
time in which to file new drawback claims, or amend previously filed 
claims, that satisfy the requirements of 19 U.S.C. 1313(p), without 
regard to the requirement that drawback claims would have to be 
completed within 3 years after the date of exportation.
    Customs Response: As previously stated, it is Customs position that 
the applicability of 19 U.S.C. 1313(p) to past drawback claims will be 
resolved on a case-by-case basis.

Subpart R

    Comment: It was suggested that the phrase, ``Proof of export'', in 
proposed Sec. 191.183(b)(1), be changed to ``Evidence of export''.
    Customs Response: This comment has merit and is adopted.
    Comment: A comment suggested adoption of Customs Form 214 for 
drawback in proposed Sec. 191.183(b), and that the functions that 
proposed Sec. 191.183(c) required to be performed by drawback offices 
should be removed.
    Customs Response: Customs agrees. The Customs Form for transfers to 
a foreign trade zone of zone restricted merchandise (Customs Form 214) 
is used for notice of transfer instead of Customs Form 7514. Section 
191.183(b) is revised accordingly, and Sec. 191.183(c) is deleted, as 
unnecessary.

Subpart S

    Comment: It was asked how Customs intended to inform the public of 
its obligations to drawback, pursuant to proposed Sec. 191.191.
    Customs Response: The statute and the regulations inform the public 
of its obligations and responsibilities for drawback purposes. As a 
matter of outreach and to enhance understanding thereof, Customs is 
developing and will make available, from field drawback offices, 
materials to help inform the public of its obligations and 
responsibilities for drawback purposes. This material will be available 
to the public in paper form and electronically.
    Comment: Regarding the individuals authorized to sign an 
application for the drawback compliance program, in proposed 
Sec. 191.193(c), it was suggested that this matter be reviewed in 
connection with parts 111, 177, and 191 of the Customs Regulations.
    Customs Response: The concerns expressed in this comment have 
already been addressed by the changes made to Sec. 191.6.
    Comment: It was recommended that proposed Sec. 191.193(c)(1) 
include the 9-digit IRS number, plus two character suffix, as being 
required to be used on drawback claims.
    Customs Response: This comment has merit and is adopted.
    Comment: It was requested that the term ``subcontractor'' in 
proposed Sec. 191.193(c)(2) be defined. It was noted that ``agent'' in 
proposed Sec. 191.9(d)(2) was defined, but not ``subcontractor''.
    Customs Response: The concerns raised here are addressed by changes 
made in Secs. 191.9, 191.10, and 191.26 (Sec. 191.25 as proposed).
    Comment: The recommendation was made that the oversight 
responsibilities of the official described in proposed 
Sec. 191.193(d)(1) be specifically shown, and that proposed 
Sec. 191.193(d)(1) be further amended to require the name, title, and 
telephone number of the individual(s) responsible for the actual 
maintenance of the drawback program.
    Customs Response: This comment has merit and is adopted in part; 
provision is made for the inclusion of the individual(s) responsible 
for the actual maintenance of the drawback program (as opposed to 
supervisory responsiblity), if different from the person responsible 
for oversight of the drawback program. Additionally, the reference 
therein to ``claimant's'' is changed to ``applicant's'' because 
applicants for participation in the drawback compliance program may be 
other than claimants.
    Comment: It was recommended, with respect to proposed 
Sec. 191.193(d)(2), that if a drawback manufacturing ruling or 
acknowledgment had been previously issued under Sec. 191.8 or 191.7, a 
copy or statement of that fact with the date and place of issue be 
submitted.
    Customs Response: This comment has merit and is adopted.
    Comment: It was stated that proposed Sec. 191.194 had a paragraph 
(c)(1) but no paragraph (c)(2).
    Customs Response: Section 191.194(c) is revised accordingly.
    Comment: A question arose as to the meaning of ``proposed 
revocation'' in proposed Sec. 191.194(e), and it was further asked when 
such a revocation would take effect. It was also suggested that the 
words ``drawback compliance'' be inserted after the word ``negotiated'' 
and before the words ``alternative program'' therein.
    Customs Response: Section 191.194(e) is changed, consistent with 
the changes made in Secs. 191.91(e) and 191.92(g). Also, the editorial 
comment that ``drawback compliance'' should be inserted between 
``negotiated alternative'' and ``program'' has merit and is adopted.

Appendix A

    Comment: It was asked why a detailed format for the drawback 
compliance program was not included as an appendix to proposed part 
191.
    Customs Response: The material referred to by the comment was 
determined to be appropriate for publication as part of the regulations 
or an appendix thereto. The material, and other similar material, will, 
when satisfactorily developed, be made available to the public both in 
paper form (from the field drawback offices) and electronically.
    Comment: A comment was made that the general manufacturing drawback 
rulings in Appendix A should be identified by their Treasury Decision 
(T.D.) numbers (or some other Customs-assigned number).
    Customs Response: The comment has merit and is adopted; the general 
manufacturing drawback rulings are identified by their T.D. numbers. 
Additionally, to provide easier access to the public and to simplify 
use of the appendices, a table of contents is added to each Appendix 
listing each of the general and specific manufacturing drawback 
rulings, the general manufacturing drawback rulings are set forth in 
alphabetical order in Appendix A, and the specific manufacturing 
drawback rulings are set forth in numerical order in Appendix B.
    Comment: It was observed with respect to Appendix A that ``I.A.'' 
(General Instructions) did not include the basis of claim for drawback 
as one of the items; that ``operator'' was used instead of 
``claimant''; that ``I.A.3.'' should be explained better and reference 
made to proposed Sec. 191.6; that ``I.B.'' indicated old general T.D. 
numbers were superseded, but did not include T.D.s 83-53, 83-8, 83-77, 
and 83-80; that the meaning of ``privileges'' in the last sentence of 
``I.B.'' was unclear; that Ruling ``III.'' needed an explanatory 
paragraph as to when this Ruling would apply (it was also asked if the 
reference therein to T.D.s 55027(2) and 55207(1) could be removed).
    Customs Response: The basis of claim is added to the information 
that the applicant must provide in ``I.A.'' (General Instructions) in 
Appendix A; the word ``operator'' therein is changed to ``manufacturer 
or producer'';

[[Page 10997]]

reference is added to Sec. 191.6; the T.D.s not included in the 
proposed rule are added; to avoid confusion the phrase, ``including all 
privileges of the previous `contract' '', is deleted from the last 
sentence of ``I.B.'' of the General Instructions in Appendix A.
    The comment on Ruling ``III.'' (agent's general ruling) is 
addressed by changes to Sec. 191.9, making clear that principal-agency 
drawback principles may be used for both 19 U.S.C. 1313(a) and 1313(b), 
and are not limited to situations with multiple manufacturers or 
producers The introductory sentence for ``III.'' is changed to read: 
``Manufacturers or producers operating under this general manufacturing 
drawback ruling must comply with T.D.s 55027(2), 55207(1), and 19 
U.S.C. 1313(b), if applicable, as well as 19 CFR part 191 (see 
particularly, Sec. 191.9).''). Also, a new paragraph ``C.'' (General 
Statement) concerning principal-agency is added to Ruling ``II.'', and 
the succeeding paragraphs are redesignated accordingly.
    Comment: The following was also stated with respect to ``I.A.'' and 
``I.B.'' of the General Instructions to proposed Appendix A: the IRS 
number with suffix should be included; the General Instructions should 
not omit any information, or applicants should be directed to 
Sec. 191.7 for complete information; and in ``I.B.'', the list of 
general Treasury Decisions appeared to omit T.D. 84-49, and T.D. 83-123 
for Relative Values was not described in full, even though listed.
    Customs Response: The IRS number with suffix is added in ``I.A.''; 
the general requirements are changed to require all necessary 
information, and reference to Sec. 191.7 is added.
    T.D. 83-123 is combined with T.D. 81-234 to cover manufacturing or 
producing under 19 U.S.C. 1313(a), with or without multiple products. 
It is Customs position that all necessary components from these T.D.s 
were included (except for the sentences in the Procedures and Records 
Maintained section that ``The records of the manufacturer or producer 
establishing compliance with these requirements will be available for 
audit by Customs during business hours.'', and ``Drawback is not 
payable without proof of compliance.'', both of which are now added to 
that section, consistent with the other general manufacturing drawback 
rulings).
    Although included in the specific rulings in proposed Appendix B 
(consistent with current practice), T.D. 84-49 is now added to Appendix 
A as a general manufacturing drawback ruling.
    Comment: It was suggested that the passage under ``II.C.'' of 
Appendix A should instead read: ``The imported merchandise or drawback 
products will be used to manufacture or produce articles in accordance 
with 19 CFR 191.2(p)''. Similar changes in all of the general rulings.
    Customs Response: This comment has merit and is adopted, although 
proposed ``II.C'' is redesignated as ``II.D.'', and proposed 
Sec. 191.2(p) is redesignated as Sec. 191.2(q). Similar changes as 
requested by the comment are made throughout the Appendices.
    Comment: The suggestion was made that ``II.D.1.'' and ``II.D.2.'' 
should use the term ``multiple products'' instead of ``by products'', 
and that similar changes should be made to all of the general rulings.
    Customs Response: This comment has merit and is adopted. Similar 
changes are made throughout the Appendices. It is noted that ``II.D.'' 
is redesignated as ``II.E.''.
    Comment: It is asserted, with respect to ``II.F.'', that the term 
``operator'' should be replaced by ``manufacturer or producer'', and 
that similar changes should be made to all of the general and specific 
rulings.
    Customs Response: This comment has merit and is adopted. Similar 
changes are made throughout the Appendices. It is noted that ``II.F.'' 
is redesignated as ``II.G.''.
    Comment: A comment was made that, in ``II.L.4.'', the phrase, ``or 
other persons legally authorized to bind the corporation'', should be 
added after ``corporate officers'' to be consistent with ``I.A.3.'' 
(General Instructions).
    Customs Response: This comment has merit; the provision is changed 
to be consistent with the cited reference and Secs. 191.6 and 191.7; 
further, in the interest of simplicity, the provision is changed to 
require the reporting of any changes in the information required in the 
letter of notification, as well as any changes in the corporate name or 
corporate organization by succession or reincorporation. It is also 
noted that proposed ``II.L.'' is redesignated as ``II.M.''.
    Comment: The general ruling for agents in ``III.'', it was noted, 
did not include provision for ``Waste'' or ``Stock in Process''. It was 
further noted that proposed paragraph ``D.'' thereof appeared to imply 
that only agents performing operations under proposed Sec. 191.2(p)(1) 
could use the general agents' ruling (and not those performing 
operations under proposed Sec. 191.2(p)(2)). With reference to proposed 
paragraph ``E.'' thereof providing that records would be maintained to 
establish certain dates, it was believed that the ``month'' was 
sufficient for this purpose, but that this was not clear from this 
general ruling.
    Customs Response: ``Waste'' and ``Stock in Process'' sections are 
not required in this general manufacturing drawback ruling; if 
applicable, such sections would be included in the principal's 
manufacturing drawback ruling.
    The change to manufacturing or production (referring to proposed 
Sec. 191.2(p), now redesignated as Sec. 191.2(q)), addresses this 
issue; actual dates of receipt of merchandise, dates of use in 
manufacture or production, and dates of return to the principal are 
required (except that manufacturing or production periods (for a period 
of a month unless Customs specifically approves a different period) may 
be used). If a manufacturing period is used, receipt of all of the 
merchandise must be before the beginning of the month and the date of 
return to the principal must be after the end of the month.
    It is also noted that proposed paragraphs ``B.'' and ``C.'' of 
``III.'' (general ruling for agents) are deleted, with the succeeding 
paragraphs thereof redesignated accordingly. To this end, paragraphs 
``D.'' and ``E.'' thereof, as proposed, are redesignated as paragraphs 
``B.'' and ``C.'', respectively. In addition, the section on procedures 
and records maintained of this general ruling for agents (paragraph 
``E.'', now redesignated as paragraph ``C.'', as indicated) is modified 
to be consistent with Sec. 191.10(e), in requiring the same information 
provided for in that section.
    Comment: An editorial point was raised in the proposed component 
parts general ruling, ``IV.'', paragraph ``J.'', that ``Eligible 
components that appears in'' should be ``Eligible components that 
appear in''.
    Customs Response: This comment has merit and is adopted. It is also 
noted that this general ruling is redesignated as ``V.'' in Appendix 
A., due to the addition of the other general rulings, and the 
repositioning thereof in alphabetical order, as already mentioned.
    Comment: In proposed ``V.'', the general ruling for orange juice, 
it was stated that proposed paragraph ``G.'' appeared twice, once for 
``Procedures and Records Maintained'' and again for ``Inventory''.
    Customs Response: This comment is incorrect, due probably to an 
error in the electronic version not occurring in the Federal Register 
version. It is also noted that this general ruling is redesignated as 
``VIII.''.

[[Page 10998]]

    Comment: It was also advised that the general ruling for orange 
juice in proposed paragraph ``H.'' should not, as it did, omit the 
wording ``and will show what components were blended with concentrated 
orange juice for manufacturing'', which was important for liquidation 
and compliance purposes (to know what components were utilized).
    Customs Response: This comment has merit and is adopted.
    Comment: It was observed that the general ruling for piece goods in 
proposed ``VI.'' deviated from T.D. 83-73 in that ``appearing in'' and 
``used in'' were permitted as a basis of claim. The ``appearing in'' 
basis, it was said, appeared to conflict with the paragraphs on Waste 
and Shrinkage, Gain and Spoilage, in terms of recordkeeping.
    Customs Response: This comment raises a valid concern. The 
paragraphs on Waste and Shrinkage, and Gain and Spoilage in this 
general ruling, now redesignated as ``X.'', are modified to provide 
that records thereof need not be kept if the appearing in method is 
used (if necessary to establish the quantity of merchandise eligible 
piece goods appearing in the exported articles, of course, such records 
would have to be kept).
    Comment: The paragraphs ``N.'', ``O.'', ``R.'', and ``S.'' in the 
proposed general ruling for raw sugar (``IX.'') referred specifically 
to the forms in the previous T.D. 83-59; it was recommended that these 
forms should be reproduced and made part of the Appendix.
    Customs Response: The comment suggesting inclusion in the general 
ruling of the forms in T.D. 83-59 is adopted (by, as appropriate, a 
description of the forms or a sample form). This general ruling is 
redesignated as ``XIII.''.

Appendix B

    Comment: In Appendix B, it was suggested that provision be made for 
review of proposals for specific manufacturing drawback rulings by the 
appropriate regulatory audit office of Customs, if requested by a 
claimant.
    Customs Response: Customs disagrees. The matter commented on is a 
matter for Customs internal administration of the drawback program.
    Comment: It was recommended, with respect to the sample formats for 
the specific rulings under 19 U.S.C. 1313(a) and (b) (combination), and 
for 19 U.S.C. 1313(b), that, under the respective sections on Process 
of Manufacture or Production, the reference to the court cases was 
unnecessary, that the ``new and different article'' language should be 
removed, and a reference to the definition of manufacture or production 
in proposed Sec. 191.2(p) should be added.
    Customs Response: This recommendation is adopted, except the ``new 
and different article'' language is not removed, as it is part of the 
definition in Sec. 191.2(q), as thus redesignated, which reflects long-
standing administration of manufacturing drawback.
    Comment: Under the format for the specific ruling for 19 U.S.C. 
1313(b), in the Waste section, it was disagreed that the determination 
of whether waste was valuable should be based on industry practice.
    Customs Response: The treatment of waste described is consistent 
with Customs current practice.
    Comment: It was suggested that the Inventory Procedures section for 
the formats for specific rulings under 19 U.S.C. 1313(a) and (b) 
(combination), and 19 U.S.C. 1313(b), be modified as concerns the 
maintenance of waste records thereunder.
    Customs Response: The second sentence under Inventory Procedures is 
modified by the insertion after the words ``following areas'' of the 
phrase ``, as applicable,''.
    Comment: The Stock In Process sections in the formats for specific 
rulings under 19 U.S.C. 1313(a) and (b) (combination), and 19 U.S.C. 
1313(b), were said to need clarification.
    Customs Response: Customs finds that the Stock In Process sections 
in both Appendices A and B are confusing. The Stock In Process 
paragraphs are modified.
    Comment: It was advocated that the petroleum general ruling be 
treated like all other general rulings, in that applications for 
general rulings for petroleum drawback should be filed with a local 
drawback office and moved from Appendix B to Appendix A. In Exhibit C, 
the labels for the columns were said to be transposed. It was suggested 
that Exhibits D and E be changed to reflect that all petroleum claims 
were now filed preliminarily in the form of certificates of manufacture 
(CM) (i.e., instead of ``amount of drawback claim'' in Exhibit D, the 
reference should be to ``amount of CM''; Exhibit E was always a 
combination of drawback deliveries and exported quantities; the 
quantities indicated on Exhibit E combination did not reflect the 
numbers within Exhibit C, as it related to exports (i.e., residual oils 
category)--these Exhibits should be changed to reflect this practice)).
    Customs Response: The comment that the petroleum general ruling 
should be treated like all other general manufacturing drawback rulings 
and should be acknowledged by field drawback offices has merit and is 
adopted. The petroleum general manufacturing drawback ruling (T.D. 84-
49) is added to Appendix A. As already noted, language is added to 
Sec. 191.7 and the General Instructions for Appendix A making clear 
that applications to operate under one of the general manufacturing 
drawback rulings in Appendix A are to be made to the field drawback 
offices and be acknowledged by those offices, provided that the letter 
of notification of intent to operate under the general manufacturing 
drawback ruling is complete, the general manufacturing drawback ruling 
is applicable, the general manufacturing drawback ruling is followed 
without variation, and the manufacturing or production process 
described meets the definition of a manufacture or production.
    If there is any deviation from the general manufacturing drawback 
ruling, the procedures for specific manufacturing drawback rulings are 
applicable. Regarding the Exhibits for this general ruling, the comment 
about the transposition of columns in Exhibit C is correct; the columns 
are re-transposed; Exhibits D and E are modified to state the ``amount 
of drawback claimed'' instead of ``amount of drawback claim''; and the 
comments are correct that the numbers in Exhibit E (Combination) for 
the quantity in barrels of Residual Oils, and reflected therefrom in 
other calculations, are inconsistent with the other Exhibits.
    As such, Exhibit E and Exhibit E (Combination) are modified to be 
consistent with the other exhibits, and the descriptions of the 
products in the exhibits are modified to specify whether the product is 
an export or a drawback delivery.
    Comment: In the Inventory Procedures sections of the formats under 
both 19 U.S.C. 1313(a) and (b) (combination), and 19 U.S.C. 1313(b), a 
question was raised about the statement that accelerated payment would 
be denied, pending an audit, if records failed to establish drawback 
requirements. The deletion of this statement was recommended.
    Customs Response: The described sentence is deleted, as not 
appropriate where stated. Accelerated payment of drawback is governed 
by the regulation applicable thereto (19 CFR 191.92).

Conclusion

    In view of the foregoing, and following careful consideration of 
the comments received and further review of the matter, Customs has 
concluded

[[Page 10999]]

that the proposed amendments with the modifications above should be 
adopted.
    Furthermore, in Appendix B, the format for a 19 U.S.C. 1313(d) 
specific ruling is modified by the addition of the material on 
principal-agent operations, as done in the formats for 19 U.S.C. 
1313(a) and (b) (combination), and 19 U.S.C. 1313(b).

Regulatory Flexibility Act and Executive Order 12866

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

Paperwork Reduction Act

    The collection of information contained in this final rule has been 
reviewed and approved by the Office of Management and Budget (OMB) for 
review in accordance with the Paperwork Reduction Act (44 U.S.C. 
3507(d)) under control number 1505-0213. An agency may not conduct or 
sponsor, and a person is not required to respond to a collection of 
information unless the collection of information displays a valid 
control number assigned by OMB.
    The collection of information in this final rule is in Secs. 191.0-
191.195. This information is necessary and will be used to enforce the 
requirements of the drawback law and protect the revenue. The likely 
respondents and/or recordkeepers are business and other for-profit 
institutions.
    The estimated average burden associated with the collection of 
information in this final rule per respondent/recordkeeper is 2 hours 
for filing drawback-related entry documents, and 60 hours for Drawback 
Compliance Program participation.
    Customs has submitted a copy of the revised information collection 
contained in 19 CFR part 191, and previously approved under OMB control 
number 1515-0213, and requested approval for the revision.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be directed to the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, N.W., Washington, D.C. 20229 and to 
OMB, Attention: Desk Officer for the Department of the Treasury, Office 
of Information and Regulatory Affairs, Washington, D.C. 20503.

                                            Parallel Reference Table                                            
      [This table shows the relation of sections in the proposed revision of part 191 to existing part 191]     
----------------------------------------------------------------------------------------------------------------
               Revised section                                            Old section                           
----------------------------------------------------------------------------------------------------------------
191.0.......................................  191.0.                                                            
191.0a......................................  New.                                                              
191.1.......................................  191.1.                                                            
191.2(a)....................................  191.2(p).                                                         
191.2(b)....................................  New.                                                              
191.2(c)....................................  New.                                                              
191.2(d)....................................  New.                                                              
191.2(e)....................................  New.                                                              
191.2(f)....................................  191.2(b).                                                         
191.2(g)....................................  New.                                                              
191.2(h)....................................  191.2(j).                                                         
191.2(i)....................................  191.2(a).                                                         
191.2(j)....................................  191.2(i).                                                         
191.2(k)....................................  191.2(h).                                                         
191.2(l)....................................  191.2(g).                                                         
191.2(m)....................................  New.                                                              
191.2(n)....................................  New.                                                              
191.2(o)....................................  191.2(l).                                                         
191.2(p)....................................  191.2(f).                                                         
191.2(q)....................................  New.                                                              
191.2(r)....................................  New.                                                              
191.2(s)....................................  New.                                                              
191.2(t)....................................  New.                                                              
191.2(u)....................................  New.                                                              
191.2(v)....................................  191.2(n).                                                         
191.2(w)....................................  191.2(e).                                                         
191.2(x), (x)(2), (x)(3)....................  New.                                                              
191.2(x)(1).................................  191.2(m).                                                         
191.2(y)....................................  191.2(o).                                                         
191.3.......................................  191.3.                                                            
191.4.......................................  191.11.                                                           
191.5.......................................  191.13.                                                           
191.6.......................................  191.6.                                                            
191.7(a)....................................  191.41.                                                           
191.7(b)(1).................................  191.42(a).                                                        
191.7(b)(2).................................  191.42(b).                                                        
191.7(c)....................................  191.43.                                                           
191.7(d)....................................  191.44.                                                           
191.8(a)....................................  191.21(a).                                                        
191.8(b)....................................  191.21(c).                                                        

[[Page 11000]]

                                                                                                                
191.8(c)....................................  191.21(b).                                                        
191.8(d)....................................  191.21(d); 191.23(a).                                             
191.8(e)....................................  191.23(b).                                                        
191.8(f)....................................  191.24.                                                           
191.8(g)(1).................................  191.25(a) & (b)(1).                                               
191.8(g)(2).................................  191.25(b)(2).                                                     
191.8(g)(3).................................  191.25(c).                                                        
191.8(h)....................................  191.26.                                                           
191.9.......................................  191.21(a)(2); 191.34; 191.66(b), (f).                             
191.10(a)...................................  191.65(a).                                                        
191.10(b)...................................  191.22(e).                                                        
191.10(c)(1)................................  191.65(b).                                                        
191.10(c)(2)................................  191.66(d).                                                        
191.10(d)...................................  191.5; 191.22(e).                                                 
191.10(e)...................................  New.                                                              
191.10(f)...................................  191.65(d).                                                        
191.11......................................  191.27.                                                           
191.12......................................  New.                                                              
191.13......................................  191.4(a)(11).                                                     
191.14......................................  191.22(c).                                                        
191.15......................................  191.5.                                                            
191.21......................................  191.4(a)(1).                                                      
191.22(a)...................................  191.4(a)(2).                                                      
191.22(b)...................................  191.32(c).                                                        
191.22(c)...................................  191.32(d).                                                        
191.22(d)...................................  New.                                                              
191.22(e)...................................  191.22(a)(5) & 191.33.                                            
191.23(a)-(d)...............................  New.                                                              
191.23(e)(1)................................  191.22(a)(2) & 191.32(b).                                         
191.23(e)(2)................................  191.22(a)(1)(iv).                                                 
191.24(a)...................................  191.66(a).                                                        
191.24(b)...................................  New.                                                              
191.24(c)...................................  191.22(a)(4); 191.62(a)(2)(i).                                    
191.24(d)...................................  New.                                                              
191.25......................................  New.                                                              
191.26(a)(1)................................  191.22(a)(1).                                                     
191.26(a)(1)(iii)...........................  191.22(a)(3).                                                     
191.26(a)(2)................................  191.22(b).                                                        
191.26(b)...................................  191.32(a).                                                        
191.26(c)...................................  191.22(a)(2) & 191.32(b).                                         
191.26(d)...................................  191.62(a)(2)(ii).                                                 
191.26(e)...................................  191.62(c).                                                        
191.26(f)...................................  191.5.                                                            
191.27(a)...................................  191.8(a); 191.22(a)(1)(v).                                        
191.27(b)...................................  191.32(a).                                                        
191.27(c)...................................  191.23(c).                                                        
191.28......................................  New.                                                              
191.31(a)...................................  191.4(a)(9); 191.141(a)(1).                                       
191.31(b)...................................  191.8(b); 191.141(a)(2).                                          
191.31(c)...................................  191.141(a)(3).                                                    
191.32(a)...................................  191.141(a)(10).                                                   
191.32(b)...................................  191.141(h).                                                       
191.32(c)...................................  New.                                                              
191.32(d)...................................  191.141(h).                                                       
191.32(e) & (f).............................  New.                                                              
191.33......................................  New.                                                              
191.34(a)...................................  191.65(a); 191.141(b) & (e).                                      
191.34(b)...................................  New.                                                              
191.34(c)...................................  191.65(d).                                                        
191.35......................................  191.141(b).                                                       
191.36......................................  New.                                                              
191.37......................................  New.                                                              
191.38(a)...................................  191.5                                                             
191.38(b)...................................  191.22(b).                                                        
191.41......................................  191.142(a)(1).                                                    
191.42......................................  191.142(b).                                                       
191.43......................................  191.142(a)(2).                                                    
191.44......................................  New.                                                              
191.51(a)...................................  191.62(a) & (b).                                                  
191.51(b), (c) & (d)........................  New.                                                              
191.52(a)...................................  191.61.                                                           

[[Page 11001]]

                                                                                                                
191.52(b) & (c).............................  191.64.                                                           
191.53......................................  New.                                                              
191.61......................................  191.10.                                                           
191.62(a)...................................  191.9.                                                            
191.62(b)...................................  New.                                                              
191.71......................................  191.141(f).                                                       
191.72......................................  191.51.                                                           
191.73......................................  191.53.                                                           
191.74......................................  191.54.                                                           
191.75......................................  191.55.                                                           
191.76......................................  191.67.                                                           
191.81......................................  191.71.                                                           
191.82......................................  191.73(a).                                                        
191.83......................................  191.73(b).                                                        
191.84......................................  191.7.                                                            
191.91......................................  191.141(b)(2)(ii).                                                
191.92......................................  191.72.                                                           
191.93......................................  New.                                                              
191.101.....................................  191.81.                                                           
191.102.....................................  191.82.                                                           
191.103.....................................  191.83.                                                           
191.104.....................................  191.84.                                                           
191.105.....................................  191.85.                                                           
191.106.....................................  191.86.                                                           
191.111.....................................  191.91.                                                           
191.112.....................................  191.92; 191.93.                                                   
191.121.....................................  191.101.                                                          
191.122.....................................  191.102.                                                          
191.123.....................................  191.103.                                                          
191.131.....................................  191.111.                                                          
191.132.....................................  191.112.                                                          
191.133.....................................  191.113.                                                          
191.141.....................................  191.121.                                                          
191.142.....................................  191.122.                                                          
191.143.....................................  191.123.                                                          
191.144.....................................  191.124.                                                          
191.151.....................................  191.131.                                                          
191.151(a)(1)...............................  191.8(c).                                                         
191.152.....................................  191.132.                                                          
191.153.....................................  191.133.                                                          
191.154.....................................  191.134.                                                          
191.155.....................................  191.135.                                                          
191.156.....................................  191.136.                                                          
191.157.....................................  191.137.                                                          
191.158.....................................  191.138.                                                          
191.159.....................................  191.139.                                                          
191.161.....................................  191.151.                                                          
191.162.....................................  191.152.                                                          
191.163.....................................  191.153.                                                          
191.164.....................................  191.154.                                                          
191.165.....................................  191.155.                                                          
191.166.....................................  191.156.                                                          
191.167.....................................  191.157.                                                          
191.168.....................................  191.158.                                                          
191.171.....................................  New.                                                              
191.172.....................................  New.                                                              
191.173.....................................  New.                                                              
191.174.....................................  New.                                                              
191.175.....................................  New.                                                              
191.176.....................................  New.                                                              
191.181.....................................  191.161.                                                          
191.182.....................................  191.162.                                                          
191.183.....................................  191.163.                                                          
191.184.....................................  191.164.                                                          
191.185.....................................  191.165.                                                          
191.186.....................................  191.166.                                                          
191.191.....................................  New.                                                              
191.192.....................................  New.                                                              
191.193.....................................  New.                                                              
191.194.....................................  New.                                                              

[[Page 11002]]

                                                                                                                
191.195.....................................  New.                                                              
----------------------------------------------------------------------------------------------------------------


                        Parallel Reference Table                        
[This table shows the relation between the sections in existing part 191
             to those in the proposed revision of part 191]             
------------------------------------------------------------------------
         Old section                        Revised section             
------------------------------------------------------------------------
191.0........................  191.0.                                   
191.1........................  191.1.                                   
191.2(a).....................  191.2(i).                                
191.2(b).....................  191.2(f).                                
191.2(c).....................  Deleted.                                 
191.2(d).....................  Deleted.                                 
191.2(e).....................  191.2(w).                                
191.2(f).....................  191.2(p).                                
191.2(g).....................  191.2(l).                                
191.2(h).....................  191.2(k).                                
191.2(i).....................  191.2(j).                                
191.2(j).....................  191.2(h).                                
191.2(k).....................  Deleted.                                 
191.2(l).....................  191.2(o).                                
191.2(m).....................  191.2(x)(1).                             
191.2(n).....................  191.2(v).                                
191.2(o).....................  191.2(y).                                
191.2(p).....................  191.2(a).                                
191.3........................  191.3.                                   
191.4(a)(1)..................  191.21.                                  
191.4(a)(2)..................  191.22(a).                               
191.4(a)(3)-(8)..............  Deleted.                                 
191.4(a)(9)..................  191.31(a).                               
191.4(a)(10).................  191.32(a).                               
191.4(a)(11).................  191.13.                                  
191.4(a)(12)-(14)............  Deleted.                                 
191.4(b).....................  Deleted.                                 
191.5........................  191.10(d); 191.15; 191.26(f); 191.38(a). 
191.6........................  191.6.                                   
191.7........................  191.84.                                  
191.8(a).....................  191.27(a).                               
191.8(b).....................  191.31(b).                               
191.8(c).....................  191.151(a)(1).                           
191.9........................  191.62(a).                               
191.10.......................  191.61.                                  
191.11.......................  191.4.                                   
191.12.......................  Deleted.                                 
191.13.......................  191.5.                                   
191.21(a)....................  191.8(a).                                
191.21(a)(1).................  Deleted.                                 
191.21(a)(2).................  191.9.                                   
191.21(b)....................  191.8(c).                                
191.21(c)....................  191.8(b).                                
191.21(d)....................  191.8(d).                                
191.21(e)....................  Deleted.                                 
191.22(a)(1).................  191.26(a)(1).                            
191.22(a)(1)(iv).............  191.23(e)(2).                            
191.22(a)(1)(v)..............  191.27(a).                               
191.22(a)(2).................  191.23(e)(1); 191.26(c).                 
191.22(a)(3).................  191.26(a)(1)(iii).                       
191.22(a)(4).................  191.24(c).                               
191.22(a)(5).................  191.22(e).                               
191.22(b)....................  191.26(a)(2); 191.38(b).                 
191.22(c)....................  191.14.                                  
191.22(d)....................  Deleted.                                 
191.22(e)....................  191.10(b) & (d).                         
191.23(a)....................  191.8(d).                                
191.23(b)....................  191.8(e).                                
191.23(c)....................  191.27(c).                               
191.23(d)....................  Deleted.                                 
191.24.......................  191.8(f).                                

[[Page 11003]]

                                                                        
191.25(a)....................  191.8(g)(1).                             
191.25(b)(1).................  191.8(g)(1).                             
191.25(b)(2).................  191.8(g)(2).                             
191.25(c)....................  191.8(g)(3).                             
191.26.......................  191.8(h).                                
191.27.......................  191.11.                                  
191.31.......................  Deleted.                                 
191.32(a)....................  191.26(b); 191.27(b).                    
191.32(b)....................  191.26(c); 191.23(e)(1).                 
191.32(c)....................  191.22(b).                               
191.32(d)....................  191.22(c).                               
191.33.......................  191.22(e).                               
191.34.......................  191.9.                                   
191.41.......................  191.7(a).                                
191.42(a)....................  191.7(b)(1).                             
191.42(b)....................  191.7(b)(2).                             
191.43.......................  191.7(c).                                
191.44.......................  191.7(d).                                
191.45.......................  Deleted.                                 
191.51.......................  191.72.                                  
191.52.......................  Deleted.                                 
191.53.......................  191.73.                                  
191.54.......................  191.74.                                  
191.55.......................  191.75.                                  
191.56.......................  Deleted.                                 
191.57.......................  Deleted.                                 
191.61.......................  191.52(a).                               
191.62(a)....................  191.51(a).                               
191.62(a)(2)(ii).............  191.26(d).                               
191.62(b)....................  191.51(a).                               
191.62(c)....................  191.26(e).                               
191.62(d)....................  Deleted.                                 
191.63.......................  Deleted.                                 
191.64.......................  191.52(b) & (c).                         
191.65(a)....................  191.10(a).                               
191.65(b)....................  191.10(c)(1).                            
191.65(c)....................  Deleted.                                 
191.65(d)....................  191.10(f); 191.34(c).                    
191.66(a)....................  191.24(a).                               
191.66(b)....................  191.9.                                   
191.66(c)....................  Deleted.                                 
191.66(d)....................  191.10(c)(2).                            
191.66(e)....................  Deleted.                                 
191.66(f)....................  191.9.                                   
191.67.......................  191.76.                                  
191.71.......................  191.81.                                  
191.72.......................  191.92.                                  
191.73(a)....................  191.82.                                  
191.73(b)....................  191.83.                                  
191.81.......................  191.101.                                 
191.82.......................  191.102.                                 
191.83.......................  191.103.                                 
191.84.......................  191.104.                                 
191.85.......................  191.105.                                 
191.86.......................  191.106.                                 
191.91.......................  191.111.                                 
191.92, 191.93...............  191.112.                                 
191.101......................  191.121.                                 
191.102......................  191.122.                                 
191.103......................  191.123.                                 
191.111......................  191.131.                                 
191.112......................  191.132.                                 
191.113......................  191.133.                                 
191.121......................  191.141.                                 
191.122......................  191.142.                                 
191.123......................  191.143.                                 
191.124......................  191.144.                                 
191.131......................  191.151.                                 
191.132......................  191.152.                                 
191.133......................  191.153.                                 
191.134......................  191.154.                                 

[[Page 11004]]

                                                                        
191.135......................  191.155.                                 
191.136......................  191.156.                                 
191.137......................  191.157.                                 
191.138......................  191.158.                                 
191.139......................  191.159.                                 
191.141(a)(1)................  191.31(a).                               
191.141(a)(2)................  191.31(b).                               
191.141(a)(3)................  191.31(c).                               
191.141(b)...................  191.34(a); 191.35.                       
191.141(b)(2)(ii)............  191.91.                                  
191.141(c)...................  191.51.                                  
191.141(d)...................  191.73.                                  
191.141(e)...................  Deleted.                                 
191.141(f)...................  191.71.                                  
191.141(g)...................  191.51; 191.52.                          
191.141(h)...................  191.32(b) & (d).                         
191.142(a)(1)................  191.41.                                  
191.142(a)(2)................  191.43.                                  
191.142(b)...................  191.42.                                  
191.151......................  191.161.                                 
191.152......................  191.162.                                 
191.153......................  191.163.                                 
191.154......................  191.164.                                 
191.155......................  191.165.                                 
191.156......................  191.166.                                 
191.157......................  191.167.                                 
191.158......................  191.168.                                 
191.161......................  191.181.                                 
191.162......................  191.182.                                 
191.163......................  191.183.                                 
191.164......................  191.184.                                 
191.165......................  191.185.                                 
191.166......................  191.186.                                 
------------------------------------------------------------------------

List of Subjects

19 CFR Part 7

    Customs duties and inspection, Exports, Imports.

19 CFR Part 10

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

19 CFR Part 145

    Customs duties and inspection, Imports, Postal Service.

19 CFR Part 173

    Administrative practice and procedure, Customs duties and 
inspection.

19 CFR Part 174

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

19 CFR Part 178

    Administrative practice and procedure, Exports, Imports, Reporting 
and recordkeeping requirements.

19 CFR Part 181

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

19 CFR Part 191

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

Amendments to the Regulations

    Parts 7, 10, 145, 173, 174, 181 and 191, Customs Regulations (19 
CFR parts 7, 10, 145, 173, 174, 181 and 191) are amended as set forth 
below.

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

    1. The general authority citation for part 7 is revised to read as 
follows:

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


Sec. 7.1  [Amended]

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

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

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

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


Sec. 10.38  [Amended]

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

PART 145--MAIL IMPORTATIONS

    1. The general authority citation for part 145 continues to read as 
follows:


[[Page 11005]]


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


Sec. 145.72  [Amended]

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

PART 173--ADMINISTRATIVE REVIEW IN GENERAL

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

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

    2. Section 173.4 is amended by adding a sentence at the end of 
paragraph (c) to read as follows:


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

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

PART 174--PROTESTS

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

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

    2. Section 174.13 is amended by adding a new paragraph (a)(9) to 
read as follows:


Sec. 174.13  Contents of protest.

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

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

    1. The authority citation for part 178 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

    2. Section 178.2 is amended by removing the listings, respectively, 
for ``Secs. 191.0-191.166'' and for ``Sec. 191.53'' together with the 
corresponding descriptions and OMB control numbers therefor; and by 
adding, in place thereof, a new listing to the table in numerical order 
to read as follows:


Sec. 178.2  Listing of OMB Control Numbers.

----------------------------------------------------------------------------------------------------------------
                                                                                                    OMB control 
              19 CFR section                                    Description                             No.     
----------------------------------------------------------------------------------------------------------------
                                                                                                                
*                  *                  *                  *                  *                  *                
                                                        *                                                       
Secs.  191.0-191.195.....................  Recordkeeping and reporting requirements relating to        1515-0213
                                            drawback.                                                           
                                                                                                                
*                  *                  *                  *                  *                  *                
                                                        *                                                       
----------------------------------------------------------------------------------------------------------------

PART 181--NORTH AMERICAN FREE TRADE AGREEMENT

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

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


Sec. 181.44  [Amended]

    2. Section 181.44(d) is amended by removing the reference to 
``Sec. 191.2(m)'' where appearing therein, and by adding in place 
thereof, ``Sec. 191.2(x)(1)''.
    3. The ``Example'' in Sec. 181.44(f) is amended by removing the 
reference to ``Customs Form 7575-A'' where appearing therein, and by 
adding in its place, ``Customs Form 7551''.


Sec. 181.45  [Amended]


Sec. 181.45  Goods eligible for full drawback.

    4. Section 181.45 is amended by revising paragraph (b)(2)(i) to 
read:
* * * * *
    (b) * * *
    (2) * * *
    (i) General. (A) Inventory of other than all non-originating goods. 
Commingling of fungible originating and non-originating goods in 
inventory is permissible provided that the origin of the goods and the 
identification of entries for designation for same condition drawback 
are on the basis of an approved inventory method set forth in the 
appendix to this part.
    (B) Inventory of the non-originating goods. If all goods in a 
particular inventory are non-originating goods, identification of 
entries for designation for same condition drawback shall be on the 
basis of one of the accounting methods in Sec. 191.14 of this chapter, 
as provided therein.


Sec. 181.46  [Amended]

    5. Section 181.46(b) is amended by removing the term ``port(s)'' 
where appearing in the first sentence, and adding in place thereof, 
``drawback office(s)''.


Sec. 181.47  [Amended]

    6. Section 181.47(b)(2)(i)(C) is amended by removing the words 
``Exporter's'' and ``exporter's'' where appearing therein, and by 
adding in place thereof, ``Export'' and ``export'', respectively.
    7. Section 181.47(b)(2)(ii)(A) is amended by removing ``Customs 
Form 7539J'', and adding in place thereof, ``Customs Form 7551''.
    8. Section 181.47(b)(2)(ii)(D) is amended by removing the phrase 
``The certificate of delivery portion of Customs Form 331'' where 
appearing therein, and adding in place thereof, ``A certificate of 
delivery on Customs Form 7552''.
    9. Section 181.47(b)(2)(ii)(G) is amended by revising the first two 
sentences to read:


Sec. 181.47  Completion of claim for drawback.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (G) Evidence of exportation. Acceptable documentary evidence of 
exportation to Canada or Mexico shall include a bill of lading, air 
waybill, freight waybill, export ocean bill of lading, Canadian customs 
manifest, cargo manifest, or certified copies thereof, issued by the 
exporting carrier. * * *.
    10. Section 181.47(b)(2)(iii)(A) is amended by removing ``Customs 
Form 7539C'' where appearing therein, and by

[[Page 11006]]

adding in place thereof, ``Customs Form 7551''.
    11. Section 181.47(b)(2)(v) is amended by removing the reference to 
``subpart L'' where appearing therein, and by adding in place thereof, 
``subpart N''.


Sec. 181.49  [Amended]

    12. Section 181.49 is amended by removing the reference to 
``Sec. 191.5'' where appearing therein, and by adding in place thereof, 
``Sec. 191.15 (see also Secs. 191.26(f), 191.38, 191.175(c))''.


Sec. 181.50  [Amended]

    13. Section 181.50(c) is amended by removing the reference to 
``Sec. 191.72'' where appearing therein, and by adding in place 
thereof, ``191.92''.
    1. Part 191 is revised to read as follows:

PART 191--DRAWBACK

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

Subpart A--General Provisions

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

Subpart B--Manufacturing drawback

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

Subpart C--Unused Merchandise Drawback

191.31  Direct identification.
191.32  Substitution drawback.
191.33  Person entitled to claim drawback.
191.34  Certificate of delivery required.
191.35  Notice of intent to export; examination of merchandise.
191.36  Failure to file Notice of Intent to Export, Destroy or 
Return Merchandise for Purposes of Drawback.
191.37  Destruction under Customs supervision.
191.38  Records.

Subpart D--Rejected Merchandise

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

Subpart E--Completion of Drawback Claims

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

Subpart F--Verification of Claims

191.61  Verification of drawback claims.
191.62  Penalties.

Subpart G--Exportation and Destruction

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

Subpart H--Liquidation and Protest of Drawback Entries

191.81  Liquidation.
191.82  Person entitled to claim drawback.
191.83  Person entitled to receive payment.
191.84  Protests.
Subpart I--Waiver of Prior Notice of Intent to Export; Accelerated 
Payment of Drawback
191.91  Waiver of notice of intent to export.
191.92  Accelerated payment.
191.93  Combined applications.
Subpart J--Internal Revenue Tax on Flavoring Extracts and Medicinal or 
Toilet Preparations (Including Perfumery) Manufactured From Domestic 
Tax-Paid Alcohol
191.101  Drawback allowance.
191.102  Procedure.
191.103  Additional requirements.
191.104  Alcohol, Tobacco and Firearms certificates.
191.105  Liquidation.
191.106  Amount of drawback.

Subpart K--Supplies for Certain Vessels and Aircraft

191.111  Drawback allowance.
191.112  Procedure.

Subpart L--Meats Cured With Imported Salt

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

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

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

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

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

Subpart O--Merchandise Exported From Continuous Customs Custody

191.151  Drawback allowance.
191.152  Merchandise released from Customs custody.
191.153  Continuous Customs custody.
191.154  Filing the entry.
191.155  Merchandise withdrawn from warehouse for exportation.
 191.156  Bill of lading.
 191.157  Landing certificates.
 191.158  Procedures.
 191.159  Amount of drawback.
Subpart P--Distilled Spirits, Wines, or Beer Which Are Unmerchantable 
or Do Not Conform to Sample or Specifications
 191.161  Refund of taxes.
 191.162  Procedure.
 191.163  Documentation.
 191.164  Return to Customs custody.
 191.165  No exportation by mail.
 191.166  Destruction of merchandise.
 191.167  Liquidation.
 191.168  Time limit for exportation or destruction.

Subpart Q--Substitution of Finished Petroleum Derivatives

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

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

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

Subpart S--Drawback Compliance Program

 191.191  Purpose.
 191.192  Certification for compliance program.
 191.193  Application procedure for compliance program.
 191.194  Action on application to participate in compliance 
program.
 191.195  Combined application for Certification in Drawback 
Compliance Program and waiver of prior notice and/or approval of 
accelerated payment of drawback.
Appendix A to Part 191--General Manufacturing Drawback Rulings

[[Page 11007]]

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

    Authority: 5 U.S.C. 301, 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States), 1313, 1624.

    Sec. 191.62 also issued under 18 U.S.C. 550, 19 U.S.C. 1593a;
    Sec. 191.84 also issued under 19 U.S.C. 1514;
    Secs. 191.111, 191.112 also issued under 19 U.S.C. 1309;
    Secs. 191.151(a)(1), 191.153, 191.157, 191.159 also issued under 
19 U.S.C. 1557;
    Sec. 191.182-191.186 also issued under 19 U.S.C. 81c;
    Secs. 191.191-191.195 also issued under 19 U.S.C. 1593a.


Sec. 191.0  Scope.

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


Sec. 191.0a  Claims filed under NAFTA.

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

Subpart A--General Provisions


Sec. 191.1  Authority of the Commissioner of Customs.

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


Sec. 191.2  Definitions.

    For the purposes of this part:
    (a) Abstract. Abstract means the summary of the actual production 
records of the manufacturer.
    (b) Act. Act, unless indicated otherwise, means the Tariff Act of 
1930, as amended.
    (c) Certificate of delivery. Certificate of delivery (see 
Sec. 191.10 of this part) means Customs Form 7552, Delivery Certificate 
for Purposes of Drawback, summarizing information contained in original 
documents, establishing:
    (1) The transfer from one party (transferor) to another 
(transferee) of:
    (i) Imported merchandise;
    (ii) Substituted merchandise under 19 U.S.C. 1313(j)(2);
    (iii) A qualified article under 19 U.S.C. 1313(p)(2)(A)(ii) from 
the manufacturer or producer to the exporter or under 1313(p)(2)(A)(iv) 
from the importer to the exporter; or
    (iv) Drawback product;
    (2) The identity of such merchandise or article as being that to 
which a potential right to drawback exists; and
    (3) The assignment of drawback rights for the merchandise or 
article transferred from the transferor to the transferee.
    (d) Certificate of manufacture and delivery. Certificate of 
manufacture and delivery (see Sec. 191.24 of this part) means Customs 
Form 7552, Delivery Certificate for Purposes of Drawback, summarizing 
information contained in original documents, establishing:
    (1) The transfer of an article manufactured or processed under 19 
U.S.C. 1313(a) or 1313(b) from one party (transferor) to another 
(transferee);
    (2) The identity of such article as being that to which a potential 
right to drawback exists; and
    (3) The assignment of drawback rights for the article transferred 
from the transferor to the transferee.
    (e) Commercially interchangeable merchandise. Commercially 
interchangeable merchandise means merchandise which may be substituted 
under the substitution unused merchandise drawback law, Sec. 313(j)(2) 
of the Act, as amended (19 U.S.C. 1313(j)(2)) (see Sec. 191.32(b)(2) 
and (c) of this part), or under the provision for the substitution of 
finished petroleum derivatives, Sec. 313(p), as amended (19 U.S.C. 
1313(p)).
    (f) Designated merchandise. Designated merchandise means either 
eligible imported duty-paid merchandise or drawback products selected 
by the drawback claimant as the basis for a drawback claim under 19 
U.S.C. 1313(b) or (j)(2), as applicable, or qualified articles selected 
by the claimant as the basis for drawback under 19 U.S.C. 1313(p).
    (g) Destruction. Destruction means the complete destruction of 
articles or merchandise to the extent that they have no commercial 
value.
    (h) Direct identification drawback. Direct identification drawback 
means drawback authorized either under Sec. 313(a) of the Act, as 
amended (19 U.S.C. 1313(a)), on imported merchandise used to 
manufacture or produce an article which is either exported or 
destroyed, or under Sec. 313(j)(1) of the Act, as amended (19 U.S.C. 
1313(j)(1)), on imported merchandise exported, or destroyed under 
Customs supervision, without having been used in the United States (see 
also Secs. 313(c), (e), (f), (g), (h), and (q)). Merchandise or 
articles may be identified for purposes of direct identification 
drawback by use of the accounting methods provided for in Sec. 191.14 
of this subpart.
    (i) Drawback. Drawback means the refund or remission, in whole or 
in part, of a customs duty, fee or internal revenue tax which was 
imposed on imported merchandise under Federal law because of its 
importation, and the refund of internal revenue taxes paid on domestic 
alcohol as prescribed in 19 U.S.C. 1313(d) (see also Sec. 191.3 of this 
subpart).
    (j) Drawback claim. Drawback claim means the drawback entry and 
related documents required by regulation which together constitute the 
request for drawback payment.
    (k) Drawback entry. Drawback entry means the document containing a 
description of, and other required information concerning, the exported 
or destroyed article on which drawback is claimed. Drawback entries are 
filed on Customs Form 7551.
    (l) Drawback product. A drawback product means a finished or 
partially finished product manufactured in the United States under the 
procedures in this part for manufacturing drawback. A drawback product 
may be exported, or destroyed under Customs supervision with a claim 
for drawback, or it may be used in the further manufacture of other 
drawback products by manufacturers or producers operating under the 
procedures in this part for manufacturing drawback, in which case 
drawback would be claimed upon exportation or destruction of the 
ultimate product. Products manufactured or produced from substituted 
merchandise (imported or domestic) also become ``drawback products'' 
when applicable substitution provisions of the Act are met. For 
purposes of Sec. 313(b) of the Act, as amended (19 U.S.C. 1313(b)), 
drawback products may be designated as the basis for drawback or deemed 
to be substituted merchandise (see Sec. 1313(b)). For a drawback 
product to be designated as the basis for drawback, the product must be 
associated with a certificate of manufacture and delivery (see 
Sec. 191.24 of this part).
    (m) Exportation; exporter. (1) Exportation. Exportation means the 
severance of goods from the mass of goods belonging to this country, 
with the intention of uniting them with the mass of goods belonging to 
some foreign country. An exportation may be deemed to have occurred 
when goods subject to drawback are admitted into a foreign trade zone 
in zone-restricted status, or are laden upon qualifying aircraft or 
vessels as aircraft or vessel supplies in accordance with Sec. 309(b) 
of the Act, as amended (19 U.S.C. 1309(b)) (see Secs. 10.59 through 
10.65 of this chapter).

[[Page 11008]]

    (2) Exporter. Exporter means that person who, as the principal 
party in interest in the export transaction, has the power and 
responsibility for determining and controlling the sending of the items 
out of the United States. In the case of ``deemed exportations'' (see 
paragraph (m)(1) of this section), the exporter means that person who, 
as the principal party in interest in the transaction deemed to be an 
exportation, has the power and responsibility for determining and 
controlling the transaction (in the case of aircraft or vessel supplies 
under 19 U.S.C. 1309(b), the party who has the power and responsibility 
for lading the vessel supplies on the qualifying aircraft or vessel).
    (n) Filing. Filing means the delivery to Customs of any document or 
documentation, as provided for in this part, and includes electronic 
delivery of any such document or documentation.
    (o) Fungible merchandise or articles. Fungible merchandise or 
articles means merchandise or articles which for commercial purposes 
are identical and interchangeable in all situations.
    (p) General manufacturing drawback ruling. A general manufacturing 
drawback ruling means a description of a manufacturing or production 
operation for drawback and the regulatory requirements and 
interpretations applicable to that operation (see Sec. 191.7 of this 
subpart).
    (q) Manufacture or production. Manufacture or production means:
    (1) A process, including, but not limited to, an assembly, by which 
merchandise is made into a new and different article having a 
distinctive ``name, character or use''; or
    (2) A process, including, but not limited to, an assembly, by which 
merchandise is made fit for a particular use even though it does not 
meet the requirements of paragraph (p)(1) of this section.
    (r) Multiple products. Multiple products mean two or more products 
produced concurrently by a manufacture or production operation or 
operations.
    (s) Possession. Possession, for purposes of substitution unused 
merchandise drawback (19 U.S.C. 1313(j)(2)), means physical or 
operational control of the merchandise, including ownership while in 
bailment, in leased facilities, in transit to, or in any other manner 
under the operational control of, the party claiming drawback.
    (t) Records. Records include, but are not limited to, statements, 
declarations, documents and electronically generated or machine 
readable data) which pertain to the filing of a drawback claim or to 
the information contained in the records required by Chapter 4 of Title 
19, United States Code, in connection with the filing of a drawback 
claim and which are normally kept in the ordinary course of business 
(see 19 U.S.C. 1508).
    (u) Relative value. Relative value means the value of a product 
divided by the total value of all products which are necessarily 
manufactured or produced concurrently in the same operation. Relative 
value is based on the market value, or other value approved by Customs, 
of each such product determined as of the time it is first separated in 
the manufacturing or production process. Market value is generally 
measured by the selling price, not including any packaging, 
transportation, or other identifiable costs, which accrue after the 
product itself is processed. Drawback law requires the apportionment of 
drawback to each such product based on its relative value at the time 
of separation.
    (v) Schedule. A schedule means a document filed by a drawback 
claimant, under Sec. 313(a) or (b), as amended (19 U.S.C. 1313(a) or 
(b)), showing the quantity of imported or substituted merchandise used 
in or appearing in each article exported or destroyed for drawback.
    (w) Specific manufacturing drawback ruling. A specific 
manufacturing drawback ruling means a letter of approval issued by 
Customs Headquarters in response to an application, by a manufacturer 
or producer for a ruling on a specific manufacturing or production 
operation for drawback, as described in the format used. Synopses of 
approved specific manufacturing drawback rulings are published in the 
Customs Bulletin with each synopsis being published under an 
identifying Treasury Decision. Specific manufacturing drawback rulings 
are subject to the provisions in part 177 of this chapter.
    (x) Substituted merchandise or articles. Substituted merchandise or 
articles means merchandise or articles that may be substituted under 19 
U.S.C. 1313(b), 1313(j)(2), or 1313(p) as follows:
    (1) Under Sec. 1313(b), substituted merchandise must be of the same 
kind and quality as the imported designated merchandise or drawback 
product, that is, the imported designated merchandise or drawback 
products and the substituted merchandise must be capable of being used 
interchangeably in the manufacture or production of the exported or 
destroyed articles with no substantial change in the manufacturing or 
production process;
    (2) Under Sec. 1313(j)(2), substituted merchandise must be 
commercially interchangeable with the imported designated merchandise; 
and
    (3) Under Sec. 1313(p), a substituted article must be of the same 
kind and quality as the qualified article for which it is substituted, 
that is, the articles must be commercially interchangeable or described 
in the same 8-digit HTSUS tariff classification.
    (y) Verification. Verification means the examination of any and all 
records, maintained by the claimant, or any party involved in the 
drawback process, which are required by the appropriate Customs officer 
to render a meaningful recommendation concerning the drawback 
claimant's conformity to the law and regulations and the determination 
of supportability, correctness, and validity of the specific claim or 
groups of claims being verified.


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

    (a) Duties subject to drawback include:
    (1) All ordinary Customs duties, including:
    (i) Duties paid on an entry, or withdrawal from warehouse, for 
consumption for which liquidation has become final;
    (ii) Estimated duties paid on an entry, or withdrawal from 
warehouse, for consumption, for which liquidation has not become final, 
subject to the conditions and requirements of Sec. 191.81(b) of this 
subpart;
    (iii) Tenders of duties after liquidation of the entry, or 
withdrawal from warehouse, for consumption for which the duties are 
paid, subject to the conditions and requirements of Sec. 191.81(c) of 
this part, including:
    (A) Voluntary tenders (for purposes of this section, a ``voluntary 
tender'' is a payment of duties on imported merchandise in excess of 
duties included in the liquidation of the entry, or withdrawal from 
warehouse, for consumption, provided that the liquidation has become 
final and that the other conditions of this section and Sec. 191.81 of 
this part are met);
    (B) Tenders of duties in connection with notices of prior 
disclosure under 19 U.S.C. 1592(c)(4); and
    (C) Duties restored under 19 U.S.C. 1592(d).
    (2) Marking duties assessed under Sec. 304(c), Tariff Act of 1930, 
as amended (19 U.S.C. 1304(c)); and,
    (3) Internal revenue taxes which attach upon importation (see 
Sec. 101.1(i) of this chapter).
    (b) Duties and fees not subject to drawback include:

[[Page 11009]]

    (1) Harbor maintenance fee (see Sec. 24.24 of this chapter);
    (2) Merchandise processing fee (see Sec. 24.23 of this chapter); 
and
    (3) Antidumping and countervailing duties on merchandise entered, 
or withdrawn from warehouse, for consumption on or after August 23, 
1988.
    (c) No drawback shall be allowed when the identified merchandise, 
the designated imported merchandise, or the substituted other 
merchandise (when applicable), consists of an agricultural product 
which is duty-paid at the over-quota rate of duty established under a 
tariff-rate quota, except that:
    (1) Agricultural products as described in this paragraph are 
eligible for drawback under 19 U.S.C. 1313(j)(1); and
    (2) Tobacco otherwise meeting the description of agricultural 
products in this paragraph is eligible for drawback under 19 U.S.C. 
1313(j)(1) or 19 U.S.C. 1313(a).


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

    (a) Restricted meaning of Government. A U.S. Government 
instrumentality operating with nonappropriated funds is considered a 
Government entity within the meaning of this section.
    (b) Allowance of drawback. If the merchandise is sold to the U.S. 
Government, drawback shall be available only to the:
    (1) Department, branch, agency, or instrumentality of the U.S. 
Government which purchased it; or
    (2) Supplier, or any of the parties specified in Sec. 191.82 of 
this part, provided the claim is supported by documentation signed by a 
proper officer of the department, branch, agency, or instrumentality 
concerned certifying that the right to drawback was reserved by the 
supplier or other parties with the knowledge and consent of the 
department, branch, agency, or instrumentality.
    (c) Bond. No bond shall be required when a United States Government 
entity claims drawback.


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

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


Sec. 191.6  Authority to sign drawback documents.

    (a) Documents listed in paragraph (b) of this section shall be 
signed only by one of the following:
    (1) The president, a vice-president, secretary, treasurer, or any 
other employee legally authorized to bind the corporation;
    (2) A full partner of a partnership;
    (3) The owner of a sole proprietorship;
    (4) Any employee of the business entity with a power of attorney;
    (5) An individual acting on his or her own behalf; or
    (6) A licensed Customs broker with a power of attorney.
    (b) The following documents require execution in accordance with 
paragraph (a) of this section:
    (1) Drawback entries;
    (2) Certificates of delivery;
    (3) Certificates of manufacture and delivery;
    (4) Notices of Intent to Export, Destroy, or Return Merchandise for 
Purposes of Drawback;
    (5) Certifications of exporters on bills of lading or evidence of 
exportation (see Secs. 191.28 and 191.82 of this part); and
    (6) Abstracts, schedules and extracts from monthly abstracts if not 
included as part of a drawback claim.
    (c) The following documents (see also part 177 of this chapter) may 
be executed by one of the persons described in paragraph (a) of this 
section or by any other individual legally authorized to bind the 
person (or entity) for whom the document is executed:
    (1) A letter of notification of intent to operate under a general 
manufacturing drawback ruling under Sec. 191.7 of this part;
    (2) An application for a specific manufacturing drawback ruling 
under Sec. 191.8 of this part;
    (3) A request for a nonbinding predetermination of commercial 
interchangeability under Sec. 191.32(c)(2) of this part;
    (4) An application for waiver of prior notice under Sec. 191.91 of 
this part;
    (5) An application for approval of accelerated payment of drawback 
under Sec. 191.92 of this part; and
    (6) An application for certification in the Drawback Compliance 
Program under Sec. 191.93 of this part.


Sec. 191.7  General manufacturing drawback ruling.

    (a) Purpose; eligibility. General manufacturing drawback rulings 
are designed to simplify drawback for certain common manufacturing 
operations but do not preclude or limit the use of applications for 
specific manufacturing drawback rulings (see Sec. 191.8). A 
manufacturer or producer engaged in an operation that falls within a 
published general manufacturing drawback ruling may submit a letter of 
notification of intent to operate under that general ruling. Where a 
separately-incorporated subsidiary of a parent corporation is engaged 
in manufacture or production for drawback, the subsidiary is the proper 
party to submit the letter of notification, and cannot operate under a 
letter of notification submitted by the parent corporation.
    (b) Procedures. (1) Publication. General manufacturing drawback 
rulings are contained in appendix A to this part. As deemed necessary 
by Customs, new general manufacturing drawback rulings will be issued 
as Treasury Decisions and added to the appendix thereafter.
    (2) Submission. (i) Where filed. Letters of notification of intent 
to operate under a general manufacturing drawback ruling shall be 
submitted to any drawback office where drawback entries will be filed 
and liquidated, provided that the general manufacturing drawback ruling 
will be followed without variation. If there is any variation in the 
general manufacturing drawback ruling, the manufacturer or producer 
shall apply for a specific manufacturing drawback ruling under 
Sec. 191.8 of this subpart.
    (ii) Copies. Letters of notification of intent shall be submitted 
in duplicate unless claims are to be filed at more than one drawback 
office, in which case one additional copy of the letter of notification 
shall be filed for each additional office. Upon issuance of a letter of 
acknowledgment (paragraph (c)(1) of this section), the drawback office 
with which the letter of notification is submitted shall forward the 
additional copy to such additional office(s), with a copy of the letter 
of acknowledgment.
    (3) Information required. Each manufacturer or producer submitting 
a letter of notification of intent to operate under a general 
manufacturing drawback ruling under this section must provide the 
following specific detailed information:
    (i) Name and address of manufacturer or producer (if the 
manufacturer or producer is a separately-incorporated subsidiary of a 
corporation, the subsidiary corporation must submit a letter of 
notification in its own name);
    (ii) In the case of a business entity, the names of the persons 
listed in

[[Page 11010]]

Sec. 191.6(a)(1) through (6) who will sign drawback documents;
    (iii) Locations of the factories which will operate under the 
letter of notification;
    (iv) Identity (by T.D. number and title) of the general 
manufacturing drawback ruling under which the manufacturer or producer 
will operate;
    (v) Description of the merchandise and articles, unless 
specifically described in the general manufacturing drawback ruling;
    (vi) Description of the manufacturing or production process, unless 
specifically described in the general manufacturing drawback ruling;
    (vii) Basis of claim used for calculating drawback; and
    (viii) IRS (Internal Revenue Service) number (with suffix) of the 
manufacturer or producer.
    (c) Review and action by Customs. The drawback office to which the 
letter of notification of intent to operate under a general 
manufacturing drawback ruling was submitted shall review the letter of 
notification of intent.
    (1) Acknowledgment. The drawback office shall promptly issue a 
letter of acknowledgment, acknowledging receipt of the letter of intent 
and authorizing the person to operate under the identified general 
manufacturing drawback ruling, subject to the requirements and 
conditions of that general manufacturing drawback ruling and the law 
and regulations, to the person who submitted the letter of notification 
if:
    (i) The letter of notification is complete (i.e., containing the 
information required in paragraph (b)(3) of this section);
    (ii) The general manufacturing drawback ruling identified by the 
manufacturer or producer is applicable to the manufacturing or 
production process;
    (iii) The general manufacturing drawback ruling identified by the 
manufacturer or producer is followed without variation; and
    (iv) The described manufacturing or production process is a 
manufacture or production under Sec. 191.2(q) of this subpart.
    (2) Computer-generated number. With the letter of acknowledgment 
the drawback office shall include the unique computer-generated number 
assigned to the acknowledgment of the letter of notification of intent 
to operate. This number must be stated when the person files 
manufacturing drawback claims with Customs under the general 
manufacturing drawback ruling.
    (3) Non-conforming letters of notification of intent. If the letter 
of notification of intent to operate does not meet the requirements of 
paragraph (c)(1) of this section in any respect, the drawback office 
shall promptly and in writing specifically advise the person of this 
fact and why this is so. A letter of notification of intent to operate 
which is not acknowledged may be resubmitted to the drawback office 
with which it was initially submitted with modifications and/or 
explanations addressing the reasons given for non-acknowledgment, or 
the matter may be referred (by letter from the manufacturer or 
producer) to Customs Headquarters (Attention: Duty and Refund 
Determination Branch, Office of Regulations and Rulings).
    (d) Duration. Acknowledged letters of notification under this 
section shall remain in effect under the same terms as provided for in 
Sec. 191.8(h) for specific manufacturing drawback rulings.


Sec. 191.8  Specific manufacturing drawback ruling.

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

[[Page 11011]]

    (g) Procedure to modify a specific manufacturing drawback ruling. 
(1) Supplemental application. Except as provided for limited 
modifications in paragraph (g)(2) of this section, a manufacturer or 
producer desiring to modify an existing specific manufacturing drawback 
ruling shall submit a supplemental application for such a ruling to 
Customs Headquarters (Attention: Duty and Refund Determination Branch, 
Office of Regulations and Rulings). Such a supplemental application 
may, at the discretion of the manufacturer or producer, be in the form 
of the original application, or it may identify the specific 
manufacturing drawback ruling to be modified (by T.D. number and unique 
computer-generated number) and include only those paragraphs of the 
application to be modified, with a statement that all other paragraphs 
are unchanged and are incorporated by reference in the supplemental 
application.
    (2) Limited modifications. (i) A supplemental application for a 
specific manufacturing drawback ruling shall be submitted to the 
drawback office(s) where claims are filed if the modifications are 
limited to:
    (A) The location of a factory, or the addition of one or more 
factories where the methods followed and records maintained are the 
same as those at another factory operating under the existing specific 
manufacturing drawback ruling of the manufacturer or producer;
    (B) The succession of a sole proprietorship, partnership or 
corporation to the operations of a manufacturer or producer;
    (C) A change in name of the manufacturer or producer;
    (D) A change in the persons who will sign drawback documents in the 
case of a business entity;
    (E) A change in the basis of claim used for calculating drawback;
    (F) A change in the decision to use or not to use an agent under 
Sec. 191.9 of this chapter, or a change in the identity of an agent 
under that section;
    (G) A change in the drawback office where claims will be filed 
under the ruling (see paragraph (g)(2)(iii) of this section); or
    (H) Any combination of the foregoing changes.
    (ii) A limited modification, as provided for in this paragraph, 
shall contain only the modifications to be made, in addition to 
identifying the specific manufacturing drawback ruling and being signed 
by an authorized person. To effect a limited modification, the 
manufacturer or producer shall file with the drawback office(s) where 
claims are filed (with a copy to Customs Headquarters, Attention, Duty 
and Refund Determination Branch, Office of Regulations and Rulings) a 
letter stating the modifications to be made. The drawback office shall 
promptly acknowledge, in writing, acceptance of the limited 
modifications, with a copy to Customs Headquarters, Attention, Duty and 
Refund Determination Branch, Office of Regulations and Rulings.
    (iii) To effect a change in the drawback office where claims will 
be filed, the manufacturer or producer shall file with the new drawback 
office where claims will be filed, a written application to file claims 
at that office, with a copy of the application and approval letter 
under which claims are currently filed. The manufacturer or producer 
shall provide a copy of the written application to file claims at the 
new drawback office to the drawback office where claims are currently 
filed.
    (h) Duration. Subject to 19 U.S.C. 1625 and part 177 of this 
chapter, a specific manufacturing drawback ruling under this section 
shall remain in effect indefinitely unless:
    (1) No drawback claim or certificate of manufacture and delivery is 
filed under the ruling for a period of 5 years and notice of 
termination is published in the Customs Bulletin; or
    (2) The manufacturer or producer to whom approval of the ruling was 
issued files a request to terminate the ruling, in writing, with 
Customs Headquarters.


Sec. 191.9  Agency.

    (a) General. An owner of the identified merchandise, the designated 
imported merchandise and/or the substituted other merchandise that is 
used to produce the exported articles may employ another person to do 
part, or all, of the manufacture or production under 19 U.S.C. 1313(a) 
or (b) and Sec. 191.2(q) of this subpart. For purposes of this section, 
such owner is the principal and such other person is the agent. Under 
19 U.S.C. 1313(b), the principal shall be treated as the manufacturer 
or producer of merchandise used in manufacture or production by the 
agent. The principal must be able to establish by its manufacturing 
records, the manufacturing records of its agent(s), or the 
manufacturing records of both (or all) parties, compliance with all 
requirements of this part (see, in particular, Sec. 191.26 of this 
part).
    (b) Requirements. (1) Contract. The manufacturer must establish 
that it is the principal in a contract between it and its agent who 
actually does the work on either the designated or substituted 
merchandise, or both, for the principal. The contract must include:
    (i) Terms of compensation to show that the relationship is an 
agency rather than a sale;
    (ii) How transfers of merchandise and articles will be recorded by 
the principal and its agent;
    (iii) The work to be performed on the merchandise by the agent for 
the principal;
    (iv) The degree of control that is to be exercised by the principal 
over the agent's performance of work;
    (v) The party who is to bear the risk of loss on the merchandise 
while it is in the agent's custody; and
    (vi) The period that the contract is in effect.
    (2) Ownership of the merchandise by the principal. The records of 
the principal and/or the agent must establish that the principal had 
legal and equitable title to the merchandise before receipt by the 
agent. The right of the agent to assert a lien on the merchandise for 
work performed does not derogate the principal's ownership interest 
under this section.
    (3) Sales prohibited. The relationship between the principal and 
agent must not be that of a seller and buyer. If the parties' records 
show that, with respect to the merchandise that is the subject of the 
principal-agent contract, the merchandise is sold to the agent by the 
principal, or the articles manufactured by the agent are sold to the 
principal by the agent, those records are inadequate to establish 
existence of a principal-agency relationship under this section.
    (c) Specific manufacturing drawback rulings; general manufacturing 
drawback rulings. (1) Owner. An owner who intends to operate under the 
principal-agent procedures of this section must state that intent in 
any letter of notification of intent to operate under a general 
manufacturing drawback ruling filed under Sec. 191.7 of this subpart or 
in any application for a specific manufacturing drawback ruling filed 
under Sec. 191.8 of this subpart.
    (2) Agent. Each agent operating under this section must have filed 
a letter of notification of intent to operate under a general 
manufacturing drawback ruling (see Sec. 191.7), for an agent, covering 
the articles manufactured or produced, or have obtained a specific 
manufacturing drawback ruling (see Sec. 191.8), as appropriate.
    (d) Certificate; Drawback entry; Certificate of manufacture and 
delivery. (1) Contents of certificate; when filing not required. 
Principals and agents operating under this section are not required to 
file a certificate of delivery (for the merchandise transferred from

[[Page 11012]]

the principal to the agent) or a certificate of manufacture and 
delivery (for the articles transferred from the agent to the 
principal). The principal for whom processing is conducted under this 
section shall file, with any drawback claim or certificate of 
manufacture and delivery based on an article manufactured or produced 
under the principal-agent procedures in this section, a certificate, 
subject to the recordkeeping requirements of Secs. 191.15 of this 
subpart and 191.26 of this part, certifying that upon request by 
Customs it can establish the following:
    (i) Quantity, kind and quality of merchandise transferred from the 
principal to the agent;
    (ii) Date of transfer of the merchandise from the principal to the 
agent;
    (iii) Date of manufacturing or production operations performed by 
the agent;
    (iv) Total quantity and description of merchandise appearing in or 
used in manufacturing or production operations performed by the agent;
    (v) Total quantity and description of articles produced in 
manufacturing or production operations performed by the agent;
    (vi) Quantity, kind and quality of articles transferred from the 
agent to the principal; and
    (vii) Date of transfer of the articles from the agent to the 
principal.
    (2) Blanket certificate. The certificate required under paragraph 
(d)(1) of this section may be a blanket certificate for a particular 
kind and quality of merchandise for a stated period.


Sec. 191.10  Certificate of delivery.

    (a) Purpose; when required. A party who: imports and pays duty on 
imported merchandise; receives imported merchandise; in the case of 19 
U.S.C. 1313(j)(2), receives imported merchandise, commercially 
interchangeable merchandise, or any combination of imported and 
commercially interchangeable merchandise; or receives an article 
manufactured or produced under 19 U.S.C. 1313(a) and/or (b): may 
transfer such merchandise or manufactured article to another party. The 
party shall record this transfer by preparing and issuing in favor of 
such other party a certificate of delivery, certified by the importer 
or other party through whose possession the merchandise or manufactured 
article passed (see paragraph (c) of this section). A certificate of 
delivery issued with respect to the delivered merchandise or article:
    (1) Documents the transfer of that merchandise or article;
    (2) Identifies such merchandise or article as being that to which a 
potential right to drawback exists; and
    (3) Assigns such right to the transferee (see Sec. 191.82 of this 
part).
    (b) Required information. The certificate of delivery must include 
the following information:
    (1) The party to whom the merchandise or articles are delivered;
    (2) Date of delivery;
    (3) Import entry number;
    (4) Quantity delivered;
    (5) Total duty paid on, or attributable to, the delivered 
merchandise;
    (6) Date certificate was issued;
    (7) Date of importation;
    (8) Port where import entry filed;
    (9) Person from whom received;
    (10) Description of the merchandise delivered;
    (11) The HTSUS number with a minimum of 6 digits, for the 
designated imported merchandise (such HTSUS number shall be from the 
entry summary and other entry documentation for the merchandise unless 
the issuer of the certificate of delivery received the merchandise 
under another certificate of delivery, or a certificate of manufacture 
and delivery, in which case such HTSUS number shall be from the other 
certificate); and
    (12) If the merchandise transferred is substituted for the 
designated imported merchandise under 19 U.S.C. 1313(j)(2), the HTSUS 
or Schedule B commodity number, with a minimum of 6 digits.
    (c) Intermediate transfer. (1) Imported merchandise. If the 
imported merchandise was not delivered directly from the importer to 
the manufacturer, or from the importer to the exporter (or destroyer), 
each intermediate transfer of the imported merchandise shall be 
documented by means of a certificate of delivery issued in favor of the 
receiving party, and certified by the person through whose possession 
the merchandise passed.
    (2) Manufactured article. If the article manufactured or produced 
under 19 U.S.C. 1313 (a) or (b) is not delivered directly from the 
manufacturer to the exporter (or destroyer), each transfer after the 
transfer from the manufacturer (which shall be documented by means of a 
certificate of manufacture and delivery) shall be documented by means 
of a certificate of delivery, issued in favor of the receiving party, 
and certified by the person through whose possession the article 
passed.
    (d) Retention period; supporting records. Records supporting the 
information required on the certificate(s) of delivery, as listed in 
paragraph (b) of this section, must be retained by the issuing party 
for 3 years from the date of payment of the related claim or longer 
period if required by law (see 19 U.S.C. 1508(c)(3)).
    (e) Retention; submission to Customs. The certificate of delivery 
shall be retained by the party to whom the merchandise or article 
covered by the certificate was delivered. Customs may request the 
certificate from the claimant for the drawback claim based upon the 
certificate (see Secs. 191.51, 191.52). If the certificate is requested 
by Customs, but is not provided by the claimant, the part of the 
drawback claim dependent on that certificate will be denied.
    (f) Warehouse transfer and withdrawals. The person in whose name 
merchandise is withdrawn from a bonded warehouse shall be considered 
the importer for drawback purposes. No certificate of delivery is 
required covering prior transfers of merchandise while in a bonded 
warehouse.


Sec. 191.11  Tradeoff.

    (a) Exchanged merchandise. To comply with Secs. 191.21 and 191.22 
of this part, the use of domestic merchandise taken in exchange for 
imported merchandise of the same kind and quality (as defined in 
Sec. 191.2(s) of this part for purposes of 19 U.S.C. 1313(b)) shall be 
treated as use of the imported merchandise if no certificate of 
delivery is issued covering the transfer of the imported merchandise. 
This provision shall be known as tradeoff and is authorized by 
Sec. 313(k) of the Act, as amended (19 U.S.C. 1313(k)).
    (b) Requirements. Tradeoff must occur between two separate legal 
entities but it is not necessary that the entity exchanging the 
imported merchandise be the importer thereof. In addition, tradeoff 
must consist of an exchange of same kind and quality merchandise and 
nothing else (the exchange may be of different quantities of same kind 
and quality merchandise, but may not involve the payment or receipt of 
cash payments or other than same kind and quality merchandise). If the 
quantities of merchandise exchanged are different, the lesser quantity 
shall be the quantity available for drawback. If the quantity of 
domestic merchandise received is greater than the quantity of imported 
merchandise exchanged, the merchandise identified for drawback shall be 
the portion of the domestic merchandise equal to the quantity of 
imported merchandise which is first received.
    (c) Application. Each would-be user of tradeoff, except those 
operating under an approved specific manufacturing drawback ruling 
covering substitution, must apply to the Duty and Refund

[[Page 11013]]

Determination Branch, Office of Regulations and Rulings, Customs 
Headquarters, for a determination of whether the imported and domestic 
merchandise are of the same kind and quality. For those users 
manufacturing under substitution drawback, this request should be 
contained in the application for a specific manufacturing drawback 
ruling (Sec. 191.8). For those users manufacturing under the request 
should be made by a separate letter.


Sec. 191.12  Claim filed under incorrect provision.

    A drawback claim filed pursuant to any provision of a general 
manufacturing drawback ruling (Sec. 191.7), Sec. 313 of the Act, as 
amended (19 U.S.C. 1313) may be deemed filed pursuant to any other 
provision thereof should the drawback office determine that drawback is 
not allowable under the provision as originally filed, but that it is 
allowable under such other provision. To be allowable under such other 
provision, the claim must meet each of the requirements of such 
provision. The claimant may raise alternative provisions prior to 
liquidation or by protest.


Sec. 191.13  Packaging materials.

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


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

    (a) General. This section provides for the identification of 
merchandise or articles for drawback purposes by the use of accounting 
methods. This section applies to identification of merchandise or 
articles in inventory or storage, as well as identification of 
merchandise used in manufacture or production (see Sec. 191.2(h) of 
this subpart). This section is not applicable to situations in which 
the drawback law authorizes substitution (substitution is allowed in 
specified situations under 19 U.S.C. 1313(b), 1313(j)(2), 1313(k), and 
1313(p); this section does apply to situations in these subsections in 
which substitution is not allowed, as well as to the subsections of the 
drawback law under which no substitution is allowed). When substitution 
is authorized, merchandise or articles may be substituted without 
reference to this section, under the criteria and conditions 
specifically authorized in the statutory and regulatory provisions 
providing for the substitution.
    (b) Conditions and criteria for identification by accounting 
method. Manufacturers, producers, claimants, or other appropriate 
persons may identify for drawback purposes lots of merchandise or 
articles under this section, subject to each of the following 
conditions and criteria:
    (1) The lots of merchandise or articles to be so identified must be 
fungible (see Sec. 191.2(o) of this part);
    (2) The person using the identification method must be able to 
establish that inventory records (for example, material control 
records), prepared and used in the ordinary course of business, account 
for the lots of merchandise or articles to be identified as being 
received into and withdrawn from the same inventory. Even if 
merchandise or articles are received or withdrawn at different 
geographical locations, if such inventory records treat receipts or 
withdrawals as being from the same inventory, those inventory records 
may be used to identify the merchandise or articles under this section, 
subject to the conditions of this section. If any such inventory 
records (that is, inventory records prepared and used in the ordinary 
course of business) treat receipts and withdrawals as being from 
different inventories, those inventory records must be used and 
receipts into or withdrawals from the different inventories may not be 
accounted for together. If units of merchandise or articles can be 
specifically identified (for example, by serial number), the 
merchandise or articles must be specifically identified and may not be 
identified by accounting method, unless it is established that 
inventory records, prepared and used in the ordinary course of 
business, treat the merchandise or articles to be identified as being 
received into and withdrawn from the same inventory (subject to the 
above conditions);
    (3) Unless otherwise provided in this section or specifically 
approved by Customs (by a binding ruling under part 177 of this 
chapter), all receipts (or inputs) into and all withdrawals from the 
inventory must be recorded in the accounting record;
    (4) The records which support any identification method under this 
section are subject to verification by Customs (see Sec. 191.61 of this 
part). If Customs requests such verification, the person using the 
identification method must be able to demonstrate how, under generally 
accepted accounting procedures, the records which support the 
identification method used account for all merchandise or articles in, 
and all receipts into and withdrawals from, the inventory, and the 
drawback per unit for each receipt and withdrawal; and
    (5) Any accounting method which is used by a person for drawback 
purposes under this section must be used without variation with other 
methods for a period of at least one year, unless approval is given by 
Customs for a shorter period.
    (c) Approved accounting methods. The following accounting methods 
are approved for use in the identification of merchandise or articles 
for drawback purposes under this section.
    (1) First-in, first-out (FIFO). (i) General. The FIFO method is the 
method by which fungible merchandise or articles are identified by 
recordkeeping on the basis of the first merchandise or articles 
received into the inventory. Under this method, withdrawals are from 
the oldest (first-in) merchandise or articles in the inventory at the 
time of withdrawal.
    (ii) Example. If the beginning inventory is zero, 100 units with $1 
drawback attributable per unit are received in inventory on the 2nd of 
the month, 50 units with no drawback attributable per unit are received 
into inventory on the 5th of the month, 75 units are withdrawn for 
domestic (non-export) shipment on the 10th of the month, 75 units with 
$2 drawback attributable per unit are received in inventory on the 15th 
of the month, 100 units are withdrawn for export on the 20th of the 
month, and no other receipts or withdrawals occurred in the month, the 
drawback attributable to the 100 units withdrawn for export on the 20th 
is a total of $75 (25 units from the receipt on the 2nd with $1 
drawback attributable per unit, 50 units from the receipt on the 5th 
with no drawback attributable per unit, and 25 units from the receipt 
on the 15th with $2 drawback attributable per unit). The basis of the 
foregoing and the effects on the inventory of the receipts and 
withdrawals, and balance in the inventory thereafter are as follows: On 
the 2nd of the month the receipt of 100 units ($1 drawback/unit) 
results in a balance of that amount; the receipt of 50

[[Page 11014]]

units ($0 drawback/unit) on the 5th results in a balance of 150 units 
(100 with $1 drawback/unit and 50 with $0 drawback/unit); the 
withdrawal on the 10th of 75 units ($1 drawback/unit) results in a 
balance of 75 units (25 with $1 drawback/unit and 50 with $0 drawback/
unit); the receipt of 75 units ($2 drawback/unit) on the 15th results 
in a balance of 150 units (25 with $1 drawback/unit, 50 with $0 
drawback/unit, and 75 with $2 drawback/unit); the withdrawal on the 
20th of 100 units (25 with $1 drawback/unit, 50 with $0 drawback/unit, 
and 25 with $2 drawback unit) results in a balance of 50 units (all 50 
with $2 drawback/unit).
    (2) Last-in, first out (LIFO). (i) General. The LIFO method is the 
method by which fungible merchandise or articles are identified by 
recordkeeping on the basis of the last merchandise or articles received 
into the inventory. Under this method, withdrawals are from the newest 
(last-in) merchandise or articles in the inventory at the time of 
withdrawal.
    (ii) Example. In the example in paragraph (c)(1)(ii) of this 
section, the drawback attributable to the 100 units withdrawn for 
export on the 20th is a total of $175 (75 units from the receipt on the 
15th with $2 drawback attributable per unit and 25 units from the 
receipt on the 2nd with $1 drawback attributable per unit). The basis 
of the foregoing and the effects on the inventory of the receipts and 
withdrawals, and balance in the inventory thereafter are as follows: On 
the 2nd of the month the receipt of 100 units ($1 drawback/unit) 
results in a balance of that amount; the receipt of 50 units ($0 
drawback/unit) on the 5th results in a balance of 150 units (100 with 
$1 drawback/unit and 50 with $0 drawback/unit); the withdrawal on the 
10th of 75 units (50 with $0 drawback/unit and 25 with $1 drawback/
unit) results in a balance of 75 units (all with $1 drawback/unit); the 
receipt of 75 units ($2 drawback/unit) on the 15th results in a balance 
of 150 units (75 with $1 drawback/unit and 75 with $2 drawback/unit); 
the withdrawal on the 20th of 100 units (75 with $2 drawback/unit and 
25 with $1 drawback/unit) results in a balance of 50 units (all 50 with 
$1 drawback/unit).
    (3) Low-to-high. (i) General. The low-to-high method is the method 
by which fungible merchandise or articles are identified by 
recordkeeping on the basis of the lowest drawback amount per unit of 
the merchandise or articles in inventory. Merchandise or articles with 
no drawback attributable to them (for example, domestic merchandise or 
duty-free merchandise) must be accounted for and are treated as having 
the lowest drawback attributable to them. Under this method, 
withdrawals are from the merchandise or articles with the least amount 
of drawback attributable to them, then those with the next higher 
amount, and so forth. If the same amount of drawback is attributable to 
more than one lot of merchandise or articles, withdrawals are from the 
oldest (first-in) merchandise or articles among those lots with the 
same amount of drawback attributable. Drawback requirements are 
applicable to withdrawn merchandise or articles as identified (for 
example, if the merchandise or articles identified were attributable to 
an import more than 5 years (more than 3 years for unused merchandise 
drawback) before the claimed export, no drawback could be granted).
    (ii) Ordinary. (A) Method. Under the ordinary low-to-high method, 
all receipts into and all withdrawals from the inventory are recorded 
in the accounting record and accounted for so that each withdrawal, 
whether for export or domestic shipment, is identified by recordkeeping 
on the basis of the lowest drawback amount per unit of the merchandise 
or articles available in the inventory.
    (B) Example. In this example, the beginning inventory is zero, and 
receipts into and withdrawals from the inventory are as follows:

------------------------------------------------------------------------
                                 Receipt  ($ per                        
             Date                     unit)             Withdrawals     
------------------------------------------------------------------------
Jan. 2........................  100 (zero).......                       
Jan. 5........................  50 ($1.00).......                       
Jan. 15.......................  .................  50 (export).         
Jan. 20.......................  50 ($1.01).......                       
Jan. 25.......................  50 ($1.02).......                       
Jan. 28.......................  .................  50 (domestic).       
Jan. 31.......................  50 ($1.03).......                       
Feb. 5........................  .................  100 (export).        
Feb. 10.......................  50 ($.95)........                       
Feb. 15.......................  .................  50 (export).         
Feb. 20.......................  50 (zero)........                       
Feb. 23.......................  .................  50 (domestic).       
Feb. 25.......................  50 ($1.05).......                       
Feb. 28.......................  .................  100 (export).        
Mar. 5........................  50 ($1.06).......                       
Mar. 10.......................  50 ($.85)........                       
Mar. 15.......................  .................  50 (export).         
Mar. 21.......................  .................  50 (domestic).       
Mar. 20.......................  50 ($1.08).......                       
Mar. 25.......................  50 ($.90)........                       
Mar. 31.......................  .................  100 (export).        
------------------------------------------------------------------------

    The drawback attributable to the January 15 withdrawal for export 
is zero (the available receipt with the lowest drawback amount per unit 
is the January 2 receipt), the drawback attributable to the January 28 
withdrawal for domestic shipment (no drawback) is zero (the remainder 
of the January 2 receipt), the drawback attributable to the February 5 
withdrawal for export is $100.50 (the January 5 and January 20 
receipts), the drawback attributable to the February 15 withdrawal for 
export is $47.50 (the February 10 receipt), the drawback attributable 
to the February 23 withdrawal for domestic shipment (no drawback) is 
zero (the February 20 receipt), the drawback attributable to the 
February 28 withdrawal for export is $102.50 (the January 25 and 
January 31 receipts), the drawback attributable to the March 15 
withdrawal for export is $42.50 (the March 10 receipt), the drawback 
attributable to the March 21 withdrawal for domestic shipment (no 
drawback) is $52.50 (the February 25 receipt), and the drawback 
attributable to the March 31 withdrawal for export is $98.00 (the March 
25 and March 5 receipts). Remaining in inventory is the March 20 
receipt of 50 units ($1.08 drawback/unit). Total drawback attributable 
to withdrawals for export in this example would be $381.00.
    (iii) Low-to-high method with established average inventory turn-
over period. (A) Method. Under the low-to-high method with established 
average inventory turn-over period, all receipts into and all 
withdrawals for export are recorded in the accounting record and 
accounted for so that each withdrawal is identified by recordkeeping on 
the basis of the lowest drawback amount per available unit of the 
merchandise or articles received into the inventory in the established 
average inventory turn-over period preceding the withdrawal.
    (B) Accounting for withdrawals (for domestic shipments and for 
export). Under this method, domestic withdrawals (withdrawals for 
domestic shipment) are not accounted for and do not affect the 
available units of merchandise or articles. All withdrawals for export 
must be accounted for whether or not drawback is available or claimed 
on the withdrawals. Once a withdrawal for export is made and accounted 
for under this method, the merchandise or articles withdrawn are no 
longer available for identification.
    (C) Establishment of inventory turn-over period. For purposes of 
this section, average inventory turn-over period is based on the rate 
of withdrawal from inventory and represents the time in which all of 
the merchandise or articles in the inventory at a given time must have 
been withdrawn. To establish an average of this time, at least 1 year, 
or three (3) turn-over periods (if inventory turns over less than 3 
times per year), must be averaged. The inventory turn-over

[[Page 11015]]

period must be that for the merchandise or articles to be identified, 
except that if the person using the method has more than one kind of 
merchandise or articles with different inventory turn-over periods, the 
longest average turn-over period established under this section may be 
used (instead of using a different inventory turn-over period for each 
kind of merchandise or article).
    (D) Example. In the example in paragraph (c)(3)(ii)(B) of this 
section (but, as required for this method, without accounting for 
domestic withdrawals, and with an established average inventory turn-
over period of 30 days), the drawback attributable to the January 15 
withdrawal for export is zero (the available receipt in the preceding 
30 days with the lowest amount of drawback is the January 2 receipt, of 
which 50 units will remain after the withdrawal), the drawback 
attributable to the February 5 withdrawal for export is $101.50 (the 
January 20 and January 25 receipts), the drawback attributable to the 
February 15 withdrawal for export is $47.50 (the February 10 receipt), 
the drawback attributable to the February 28 withdrawal for export is 
$51.50 (the February 20 and January 31 receipts), the drawback 
attributable to the March 15 withdrawal for export is $42.50 (the March 
10 receipt), and the drawback attributable to the March 31 withdrawal 
for export is $98.00 (the March 25 and March 5 receipts). No drawback 
may be claimed on the basis of the January 5 receipt or the February 25 
receipt because in the case of each, there were insufficient 
withdrawals for export within the established average inventory turn-
over period; the 50 units remaining from the January 2 receipt after 
the January 15 withdrawal are not identified for a withdrawal for 
export because there is no other withdrawal for export (other than the 
January 15 withdrawal) within the established average inventory turn-
over period. Total drawback attributable to withdrawals for export in 
this example would be $331.00.
    (iv) Low-to-high blanket method. (A) Method. Under the low-to-high 
blanket method, all receipts into and all withdrawals for export are 
recorded in the accounting record and accounted for so that each 
withdrawal is identified by recordkeeping on the basis of the lowest 
drawback amount per available unit of the merchandise or articles 
received into inventory in the period preceding the withdrawal equal to 
the statutory period for export under the kind of drawback involved 
(e.g., 180 days under 19 U.S.C. 1313(p), 3 years under 19 U.S.C. 
1313(c) and 1313(j), and 5 years otherwise under 19 U.S.C. 1313(i)). 
Drawback requirements are applicable to withdrawn merchandise or 
articles as identified (for example, if the merchandise or articles 
identified were attributable to an import more than 5 years (more than 
3 years for 19 U.S.C. 1313(j); more than 180 days after the date of 
import or after the close of the manufacturing period for 19 U.S.C. 
1313(p)) before the claimed export, no drawback could be granted).
    (B) Accounting for withdrawals (for domestic shipments and for 
export). Under this method, domestic withdrawals (withdrawals for 
domestic shipment) are not accounted for and do not affect the 
available units of merchandise or articles. All withdrawals for export 
must be accounted for whether or not drawback is available or claimed 
on the withdrawals. Once a withdrawal for export is made and accounted 
for under this method, the merchandise or articles withdrawn are no 
longer available for identification.
    (C) Example. In the example in paragraph (c)(3)(ii)(B) of this 
section (but, as required for this method, without accounting for 
domestic withdrawals), the drawback attributable to the January 15 
withdrawal for export is zero (the available receipt in the inventory 
the lowest amount of drawback is the January 2 receipt, of which 50 
units will remain after the withdrawal), the drawback attributable to 
the February 5 withdrawal for export is $50.00 (the remainder of the 
January 2 receipt and the January 5 receipt), the drawback attributable 
to the February 15 withdrawal for export is $47.50 (the February 10 
receipt), the drawback attributable to the February 28 withdrawal for 
export is $50.50 (the February 20 and January 20 receipts), the 
drawback attributable to the March 15 withdrawal for export is $42.50 
(the March 10 receipt), and the drawback attributable to the March 31 
withdrawal for export is $96.00 (the March 25 and January 25 receipts). 
Receipts not attributed to withdrawals for export are the January 31 
(50 units at $1.03), February 25 (50 units at $1.05), and March 20 (50 
units at $1.08) receipts. Total drawback attributable to withdrawals 
for export in this example would be $276.50.
    (4) Average. (i) General. The average method is the method by which 
fungible merchandise or articles are identified on the basis of the 
calculation by recordkeeping of the amount of drawback that may be 
attributed to each unit of merchandise or articles in the inventory. In 
this method, the ratio of:
    (A) The total units of a particular receipt of the fungible 
merchandise in the inventory at the time of a withdrawal to;
    (B) The total units of all receipts of the fungible merchandise 
(including each receipt into inventory) at the time of the withdrawal;
    (C) Is applied to the withdrawal, so that the withdrawal consists 
of a proportionate quantity of units from each particular receipt and 
each receipt is correspondingly decreased. Withdrawals and 
corresponding decreases to receipts are rounded to the nearest whole 
number.
    (ii) Example. In the example in paragraph (c)(1)(ii) of this 
section, the drawback attributable to the 100 units withdrawn for 
export on the 20th is a total of $133 (50 units from the receipt on the 
15th with $2 drawback attributable per unit, 33 units from the receipt 
on the 2nd with $1 drawback attributable per unit, and 17 units from 
the receipt on the 5th with $0 drawback attributable per unit). The 
basis of the foregoing and the effects on the inventory of the receipts 
and withdrawals, and balance in the inventory thereafter are as 
follows: On the 2nd of the month the receipt of 100 units ($1 drawback/
unit) results in a balance of that amount; the receipt of 50 units ($0 
drawback/unit) on the 5th results in a balance of 150 units (100 with 
$1 drawback/unit and 50 with $0 drawback/unit); the withdrawal on the 
10th of 75 units (50 with $1 drawback/unit (applying the ratio of 100 
units from the receipt on the 2nd to the total of 150 units at the time 
of withdrawal) and 25 with $0 drawback/unit (applying the ratio of 50 
units from the receipt on the 5th to the total of 150 units at the time 
of withdrawal)) results in a balance of 75 units (with 50 with $1 
drawback/unit and 25 with $0 drawback/unit, on the basis of the same 
ratios); the receipt of 75 units ($2 drawback/unit) on the 15th results 
in a balance of 150 units (50 with $1 drawback/unit, 25 with $0 
drawback/unit, and 75 with $2 drawback/unit); the withdrawal on the 
20th of 100 units (50 with $2 drawback/unit (applying the ratio of the 
75 units from the receipt on the 15th to the total of 150 units at the 
time of withdrawal), 33 with $1 drawback/unit (applying the ratio of 
the 50 units remaining from the receipt on the 2nd to the total of 150 
units at the time of withdrawal, and 17 with $0 drawback/unit (applying 
the ratio of the 25 units remaining from the receipt on the 5th to the 
total of 150 units at the time of withdrawal)) results in a balance of 
50 units (25 with $2 drawback/unit, 17 with $1 drawback/unit, and 8 
with $0 drawback/unit, on the basis of the same ratios).

[[Page 11016]]

    (5) Inventory turn-over for limited purposes. A properly 
established average inventory turn-over period, as provided for in 
paragraph (c)(3)(iii)(C) of this section, may be used to determine:
    (i) The fact and date(s) of use in manufacture or production of the 
imported designated merchandise and other (substituted) merchandise 
(see 19 U.S.C. 1313(b)); or
    (ii) The fact and date(s) of manufacture or production of the 
finished articles (see 19 U.S.C. 1313(a) and (b)).
    (d) Approval of other accounting methods. (1) Persons proposing to 
use an accounting method for identification of merchandise or articles 
for drawback purposes which has not been previously approved for such 
use (see paragraph (c) of this section), or which includes 
modifications from the methods listed in paragraph (c) of this section, 
may seek approval by Customs of the proposed accounting method under 
the provisions for obtaining an administrative ruling (see part 177 of 
this chapter). The conditions applied and the criteria used by Customs 
in approving such an alternative accounting method, or a modification 
of one of the approved accounting methods, will be the criteria in 
paragraph (b) of this section, as well as those in paragraph (d)(2) of 
this section.
    (2) In order for a proposed accounting method to be approved by 
Customs for purposes of this section, it shall meet the following 
criteria:
    (i) For purposes of calculations of drawback, the proposed 
accounting method must be either revenue neutral or favorable to the 
Government; and
    (ii) The proposed accounting method should be:
    (A) Generally consistent with commercial accounting procedures, as 
applicable for purposes of drawback;
    (B) Consistent with inventory or material control records used in 
the ordinary course of business by the person proposing the method; and
    (C) Easily administered by both Customs and the person proposing 
the method.


Sec. 191.15  Recordkeeping.

    Pursuant to 19 U.S.C. 1508(c)(3), all records which pertain to the 
filing of a drawback claim or to the information contained in the 
records required by 19 U.S.C. 1313 in connection with the filing of a 
drawback claim shall be retained for 3 years after payment of such 
claims or longer period if required by law (under 19 U.S.C. 1508, the 
same records may be subject to a different period for different 
purposes).

Subpart B--Manufacturing Drawback


Sec. 191.21  Direct identification drawback.

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


Sec. 191.22  Substitution drawback.

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

[[Page 11017]]

shall be distributed to each product in accordance with its relative 
value (see Sec. 191.2(u)) at the time of separation.
    (2) Claims covering a manufacturing period. Where the claim covers 
a manufacturing period rather than a manufacturing lot, the entire 
period covered by the claim is the time of separation of the products 
and the value per unit of product is the market value for the period 
(see Sec. 191.2(u) of this part). Manufacturing periods in excess of 
one month may not be used without specific approval of Customs.
    (3) Recordkeeping. Records shall be maintained showing the relative 
value of each product at the time of separation.


Sec. 191.23  Methods of claiming drawback.

    (a) Used in. Drawback may be paid based on the amount of the 
imported or substituted merchandise used in the manufacture of the 
exported article, where there is no waste or the waste is valueless or 
unrecoverable. This method must be used when byproducts also 
necessarily and concurrently result from the manufacturing process, and 
there is no valuable waste (see paragraph (c) of this section).
    (b) Appearing in. Drawback is allowable under this method based 
only on the amount of imported or substituted merchandise that appears 
in (is contained in) the exported articles. This method may not be used 
if there are byproducts also necessarily and concurrently resulting 
from the manufacturing process.
    (c) Used in less valuable waste. Drawback is allowable under this 
method based on the quantity of merchandise or drawback products used 
to manufacture the exported or destroyed article, reduced by an amount 
equal to the quantity of this merchandise that the value of the waste 
would replace. This method must be used when byproducts also 
necessarily and concurrently result from the manufacturing process, and 
there is valuable waste.
    (d) Abstract or schedule. A drawback claimant may use either the 
abstract or schedule method to show the quantity of material used or 
appearing in the exported or destroyed article. An abstract is the 
summary of records which shows the total quantity used in or appearing 
in all articles produced during the period covered by the abstract. A 
schedule shows the quantity of material used in producing, or appearing 
in, each unit of product. Manufacturers or producers submitting letters 
of notification of intent to operate under a general manufacturing 
drawback ruling (see Sec. 191.7) and applicants for approval of 
specific manufacturing drawback rulings (see Sec. 191.8) shall state 
whether the abstract or schedule method is used; if no such statement 
is made, drawback claims must be based upon the abstract method.
    (e) Recordkeeping. (1) Valuable waste. When the waste has a value 
and the drawback claim is not limited to the quantity of imported or 
substituted merchandise or drawback products appearing in the exported 
or destroyed articles claimed for drawback, the manufacturer or 
producer shall keep records to show the market value of the merchandise 
or drawback products used to manufacture or produce the exported or 
destroyed articles, as well as the market value of the resulting waste, 
under the used in less valuable waste method (see Sec. 191.2(u) of this 
part).
    (2) If claim for waste is waived. If claim for waste is waived, 
only the ``appearing in'' basis may be used (see paragraph (b) of this 
section). Waste records need not be kept unless required to establish 
the quantity of imported duty-paid merchandise or drawback products 
appearing in the exported or destroyed articles claimed for drawback.


Sec. 191.24  Certificate of manufacture and delivery.

    (a) When required. When an article or drawback product manufactured 
or produced under a general manufacturing drawback ruling or a specific 
manufacturing drawback ruling is transferred from the manufacturer or 
producer to another party, a certificate of manufacture and delivery 
shall be prepared and certified by the manufacturer.
    (b) Information required on certificate. The following information 
shall be required on the certificate of manufacture and delivery 
executed by the manufacturer or producer:
    (1) The person to whom the article or drawback product is 
delivered;
    (2) If the article or drawback product was manufactured or produced 
under a general manufacturing drawback ruling, the unique computer-
generated number assigned to the letter of acknowledgment for that 
ruling, and if the article or drawback product was manufactured or 
produced under a specific manufacturing drawback ruling, either the 
unique computer number or the T.D. number for that ruling;
    (3) The quantity, kind and quality of imported, duty-paid 
merchandise or drawback product designated;
    (4) Import entry numbers, HTSUS number for the imported merchandise 
to at least the 6th digit (such HTSUS number shall be from the entry 
summary and other entry documentation for the imported, duty-paid 
merchandise unless the issuer of the certificate of manufacture and 
delivery received the merchandise under another certificate (either of 
delivery or of manufacture and delivery), in which case such HTSUS 
number shall be from the other certificate), and applicable duty 
amounts;
    (5) Date received at factory;
    (6) Date used in manufacture;
    (7) Value at factory, if applicable;
    (8) Quantity of waste, if any, if applicable;
    (9) Market value of any waste, if applicable;
    (10) Total quantity and description of merchandise appearing in or 
used;
    (11) Total quantity and description of articles produced;
    (12) Date of manufacture or production of the articles;
    (13) The quantity of articles transferred; and
    (14) The person from whom the article or drawback product is 
delivered.
    (c) Filing of certificate. The certificate of manufacture and 
delivery shall be filed with the drawback claim it supports (unless 
previously filed) (see Sec. 191.51 of this part).
    (d) Effect of certificate. A certificate of manufacture and 
delivery documents the delivery of articles from the manufacturer or 
producer to another party, identifies such articles as being those to 
which a potential right to drawback exists, and assigns such potential 
rights to the transferee (see also Sec. 191.82 of this part).


Sec. 191.25  Destruction under Customs supervision.

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


Sec. 191.26  Recordkeeping for manufacturing drawback.

    (a) Direct identification manufacturing. (1) Records required. Each 
manufacturer or producer under 19 U.S.C. 1313(a) shall keep records to 
allow the verifying Customs official to trace all articles manufactured 
or produced for exportation or destruction with drawback, from 
importation, through production, to exportation or destruction. To this 
end, these records shall specifically establish:
    (i) The date or inclusive dates of manufacture or production;
    (ii) The quantity and identity of the imported duty-paid 
merchandise or drawback products used in or appearing

[[Page 11018]]

in (see Sec. 191.23) the articles manufactured or produced;
    (iii) The quantity, if any, of the nondrawback merchandise used, 
when these records are necessary to determine the quantity of imported 
duty-paid merchandise or drawback product used in the manufacture or 
production of the exported or destroyed articles or appearing in them;
    (iv) The quantity and description of the articles manufactured or 
produced;
    (v) The quantity of waste incurred, if applicable; and
    (vi) That the finished articles on which drawback is claimed were 
exported or destroyed within 5 years after the importation of the duty-
paid merchandise, without having been used in the United States prior 
to such exportation or destruction. (If the completed articles were 
commingled after manufacture, their identity may be maintained in the 
manner prescribed in Sec. 191.14 of this part.)
    (2) Accounting. The merchandise and articles to be exported or 
destroyed shall be accounted for in a manner which will enable the 
manufacturer, producer, or claimant:
    (i) To determine, and the Customs official to verify, the 
applicable import entry, certificate of delivery, and/or certificate of 
manufacture and delivery associated with the claim; and
    (ii) To identify with respect to that import entry, certificate of 
delivery, and/or certificate of manufacture and delivery, the imported 
duty-paid merchandise or drawback products used in manufacture or 
production.
    (b) Substitution manufacturing. The records of the manufacturer or 
producer of articles manufactured or produced in accordance with 19 
U.S.C. 1313(b) shall establish the facts in paragraph (a)(1)(i), (iv) 
through (vi) of this section, and:
    (1) The quantity, identity, and specifications of the merchandise 
designated (imported duty-paid, or drawback product);
    (2) The quantity, identity, and specifications of merchandise of 
the same kind and quality as the designated merchandise before its use 
to manufacture or produce (or appearing in) the exported or destroyed 
articles; and
    (3) That, within 3 years after receiving the designated merchandise 
at its plant, the manufacturer or producer used it in manufacturing or 
production and that during the same 3-year period it manufactured or 
produced the exported or destroyed articles.
    (c) Valuable waste records. When waste has a value and the 
manufacturer, producer, or claimant, has not limited the claims based 
on the quantity of imported or substituted merchandise appearing in the 
articles exported or destroyed, the manufacturer or producer shall keep 
records to show the market value of the merchandise used to manufacture 
or produce the exported or destroyed article, as well as the quantity 
and market value of the waste incurred (see Sec. 191.2(u) of this 
part). In such records, the quantity of merchandise identified or 
designated for drawback, under 19 U.S.C. 1313(a) or 1313(b), 
respectively, shall be based on the quantity of merchandise actually 
used to manufacture or produce the exported or destroyed articles. The 
waste replacement reduction will be determined by reducing from the 
quantity of merchandise actually used the amount of merchandise which 
the value of the waste would replace.
    (d) Purchase of manufactured articles for exportation. Where the 
claimant purchases articles from the manufacturer and exports them, the 
claimant shall file the related certificate of manufacture and delivery 
as part of the claim (see Sec. 191.51(a)(1) of this part).
    (e) Multiple claimants. (1) General. Multiple claimants may file 
for drawback with respect to the same export (for example, if an 
automobile is exported, where different parts of the automobile have 
been produced by different manufacturers under drawback conditions and 
the exporter waives the right to claim drawback and assigns such right 
to the manufacturers under Sec. 191.82 of this part).
    (2) Procedures. (i) Submission of letter. Each drawback claimant 
shall file a separate letter, as part of the claim, describing the 
component article on the export bill of lading to which each claim will 
relate. Each letter shall show the name of the claimant and bear a 
statement that the claim shall be limited to its respective component 
article. The exporter shall endorse the letters, as required, to show 
the respective interests of the claimants.
    (ii) Blanket Waivers and Assignments of Drawback Rights. Exporters 
may waive and assign their drawback rights for all, or any portion, of 
their exportations with respect to a particular commodity for a given 
period to a drawback claimant.
    (iii) Use of export summary procedure. If the parties elect to use 
the export summary procedure (Sec. 191.73 of this part) each drawback 
claimant shall complete a chronological summary of exports for the 
respective component product to which each claim will relate. Each 
claimant shall identify in the chronological summary the name of the 
other claimant(s) and the component product for which each will 
independently claim drawback, if known at the time the drawback claim 
is filed. The exporter shall endorse the summaries, as required, to 
show the respective interests of the claimants. Each claimant shall 
have on file and make available to Customs upon request, the 
endorsement from the exporter assigning the right to claim drawback.
    (f) Retention of records. Pursuant to 19 U.S.C. 1508(c)(3), all 
records required to be kept by the manufacturer, producer, or claimant 
with respect to drawback claims, and records kept by others to 
complement the records of the manufacturer, producer, or claimant with 
respect to drawback claims shall be retained for 3 years after the date 
of payment of the related claims (under 19 U.S.C. 1508, the same 
records may be subject to a different retention period for different 
purposes).


Sec. 191.27  Time limitations.

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

[[Page 11019]]

Sec. 191.28  Person entitled to claim drawback.

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

Subpart C--Unused Merchandise Drawback


Sec. 191.31  Direct identification.

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


Sec. 191.32  Substitution drawback.

    (a) General. Section 313(j)(2) of the Act, as amended (19 U.S.C. 
1313(j)(2)), provides for drawback on merchandise which is commercially 
interchangeable with imported merchandise if the commercially 
interchangeable merchandise is exported, or destroyed under Customs 
supervision, within 3 years after the importation of the imported 
merchandise, and before such exportation or destruction, the 
commercially interchangeable merchandise is not used in the United 
States (see paragraph (e) of this section) and is in the possession of 
the party claiming drawback.
    (b) Requirements. (1) The claimant must have possessed the 
substituted merchandise that was exported or destroyed, as provided in 
paragraph (d)(1) of this section;
    (2) The substituted merchandise must be commercially 
interchangeable with the imported merchandise that is designated for 
drawback; and
    (3) The substituted merchandise exported or destroyed must not have 
been used in the United States before its exportation or destruction 
(see paragraph (e) of this section).
    (c) Determination of commercial interchangeability. In determining 
commercial interchangeability, Customs shall evaluate the critical 
properties of the substituted merchandise and in that evaluation 
factors to be considered include, but are not limited to, Governmental 
and recognized industrial standards, part numbers, tariff 
classification and value. A party may seek a nonbinding 
predetermination of commercial interchangeability directly from the 
appropriate drawback office. A determination of commercial 
interchangeability can be obtained in one of two ways:
    (1) A formal ruling from the Duty and Refund Determination Branch, 
Office of Regulations and Rulings; or
    (2) A submission of all the required documentation necessary to 
make a commercial interchangeability determination with each individual 
drawback claim filed.
    (d) Time limitations. For substitution unused merchandise drawback:
    (1) The claimant must have had possession of the exported or 
destroyed merchandise at some time during the 3-year period following 
the date of importation of the imported designated merchandise; and
    (2) The merchandise to be exported or destroyed to qualify for 
drawback must be exported, or destroyed under Customs supervision, 
before the close of the 3-year period beginning on the date of 
importation of the imported designated merchandise.
    (e) Operations performed on substituted merchandise. In cases in 
which an operation or operations is or are performed on the substituted 
merchandise, the performing of any operation or combination of 
operations, not amounting to manufacture or production under the 
provisions of the manufacturing drawback law, on the commercially 
interchangeable substituted merchandise is not a use of that 
merchandise for purposes of this section.
    (f) Designation by successor; 19 U.S.C. 1313(s). (1) General rule. 
Upon compliance with the requirements of this section and under 19 
U.S.C. 1313(s), a drawback successor as defined in paragraph (f)(2) of 
this section may designate either of the following as the basis for 
drawback on merchandise possessed by the successor after the date of 
succession:
    (i) Imported merchandise which the predecessor, before the date of 
succession, imported; or
    (ii) Imported and/or commercially interchangeable merchandise which 
was transferred to the predecessor and for which the predecessor 
received, before the date of succession, a certificate of delivery from 
the person who imported and paid duty on the imported merchandise.
    (2) Drawback successor. A ``drawback successor'' is an entity to 
which another entity (predecessor) has transferred, by written 
agreement, merger, or corporate resolution:
    (i) All or substantially all of the rights, privileges, immunities, 
powers, duties, and liabilities of the predecessor; or
    (ii) The assets and other business interests of a division, plant, 
or other business unit of such predecessor, provided that the value of 
the transferred assets and interests (realty, personality, and 
intangibles, exclusive of the drawback rights) exceeds the value of 
such drawback rights, whether vested or contingent.
    (3) Certifications and required evidence. (i) Records of 
predecessor. The predecessor or successor must certify in an attachment 
to the drawback claim that the successor is in possession of the 
predecessor's records which are necessary to establish the right to 
drawback under the law and regulations with respect to the imported 
and/or commercially interchangeable merchandise.
    (ii) Merchandise not otherwise designated. The predecessor or 
successor must certify in an attachment to the drawback claim, that the 
predecessor has not and will not designate, nor enable any other person 
to designate, the imported and/or commercially interchangeable 
merchandise as the basis for drawback.
    (iii) Value of transferred property. In instances in which assets 
and other business interests of a division, plant, or other business 
unit of a predecessor are transferred, the predecessor or successor 
must specify, and maintain supporting records to establish, the value 
of the drawback rights and the value of all other transferred property.

[[Page 11020]]

    (iv) Review by Customs. The written agreement, merger, or corporate 
resolution, provided for in paragraph (f)(2) of this section, and the 
records and evidence provided for in paragraph (f)(3)(i) through (iii) 
of this section, must be retained by the appropriate party(ies) for 3 
years from the date of payment of the related claim and are subject to 
review by Customs upon request.


Sec. 191.33  Person entitled to claim drawback.

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


Sec. 191.34  Certificate of delivery required.

    (a) Direct identification; purpose; when required. If the exported 
or destroyed merchandise claimed for drawback under 19 U.S.C. 
1313(j)(1) was not imported by the exporter or destroyer, a properly 
executed certificate of delivery must be prepared by the importer and 
each intermediate party. Each such transfer of the merchandise must be 
documented by its own certificate of delivery.
    (1) Completion. The certificate of delivery shall be completed as 
provided in Sec. 191.10 of this part. Each party must also certify on 
the certificate of delivery that the party did not use the transferred 
merchandise (see Sec. 191.31(c) of this part).
    (2) Retention; submission to Customs. The certificate of delivery 
shall be retained by the party to whom the merchandise or article 
covered by the certificate was delivered. Customs may request the 
certificate from the claimant for the drawback claim based upon the 
certificate (see Secs. 191.51, 191.52). If the certificate is requested 
by Customs, but is not provided by the claimant, the part of the 
drawback claim dependent on that certificate will be denied.
    (b) Substitution. For purposes of substitution unused merchandise 
drawback, 19 U.S.C. 1313(j)(2), if the importer, or a party who 
received imported merchandise and a certificate of delivery for that 
imported merchandise, directly or indirectly, from the importer, 
transfers to another party imported merchandise, duty-paid merchandise, 
commercially interchangeable merchandise, or any combination thereof, 
the transferor shall prepare and issue in favor of such party a 
certificate of delivery covering the transferred merchandise. The 
certificate of delivery must expressly state that it is prepared 
pursuant to 19 U.S.C. 1313(j)(2). Merchandise so transferred for which 
drawback is allowed under 19 U.S.C. 1313(j)(2) may not be designated 
for any other drawback purposes. Each transfer, whether of the imported 
merchandise or of imported merchandise, duty-paid merchandise, 
commercially interchangeable merchandise, or any combination thereof, 
must be documented by its own certificate of delivery. Certificates of 
delivery under this paragraph are subject to the provisions for 
completion and retention of certificates of delivery in paragraphs 
(a)(1) and (a)(2) of this section.
    (c) Warehouse transfer and withdrawals. The person in whose name 
merchandise is withdrawn from a bonded warehouse shall be considered 
the importer for drawback purposes. No certificate of delivery need be 
prepared covering prior transfers of merchandise while in a bonded 
warehouse, because such transfers will be recorded in the warehouse 
entry (see Sec. 144.22 of this chapter).


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

    (a) Notice. A notice of intent to export merchandise which may be 
the subject of an unused merchandise drawback claim (19 U.S.C. 1313(j)) 
must be provided to the Customs Service to give Customs the opportunity 
to examine the merchandise. The claimant, or the exporter, must file at 
the port of intended examination a Notice of Intent to Export, Destroy, 
or Return Merchandise for Purposes of Drawback on Customs Form 7553 at 
least 2 working days prior to the date of intended exportation unless 
Customs approves another filing period or the claimant has been granted 
a waiver of prior notice (see Sec. 191.91 of this part).
    (b) Required Information. The notice shall certify that the 
merchandise has not been used in the United States before exportation. 
In addition, the notice shall provide the bill of lading number, if 
known, the name and telephone number, mailing address, and, if 
available, fax number and e-mail address of a contact person, and the 
location of the merchandise.
    (c) Decision to examine or to waive examination. Within two (2) 
working days after receipt of the Notice of Intent to Export, Destroy, 
or Return Merchandise for Purposes of Drawback (see paragraph (a) of 
this section), Customs will notify the party designated

[[Page 11021]]

on the Notice in writing of Customs decision to either examine the 
merchandise to be exported, or to waive examination. If Customs timely 
notifies the designated party, in writing, of its decision to examine 
the merchandise (see paragraph (d) of this section), but the 
merchandise is exported without having been presented to Customs for 
examination, any drawback claim, or part thereof, based on the Notice 
of Intent to Export, Destroy, or Return Merchandise for Purposes of 
Drawback shall be denied. If Customs notifies the designated party, in 
writing, of its decision to waive examination of the merchandise, or, 
if timely notification of a decision by Customs to examine or to waive 
examination is absent, the merchandise may be exported without delay.
    (d) Time and place of examination. If Customs gives timely notice 
of its decision to examine the export merchandise, the merchandise to 
be examined shall be promptly presented to Customs. Customs shall 
examine the merchandise within five (5) working days after presentation 
of the merchandise. The merchandise may be exported without examination 
if Customs fails to timely examine the merchandise after presentation 
to Customs. If the examination is completed at a port other than the 
port of actual exportation, the merchandise shall be transported in-
bond to the port of exportation.
    (e) Extent of examination. The appropriate Customs office may 
permit release of merchandise without examination, or may examine 
routinely (to the extent determined to be necessary) the items 
exported.


Sec. 191.36  Failure to file Notice of Intent to Export, Destroy, or 
Return Merchandise for Purposes of Drawback.

    (a) General; application. Merchandise which has been exported 
without complying with the requirements of Sec. 191.35(a) or 
Sec. 191.91 of this part may be eligible for unused merchandise 
drawback under 19 U.S.C. 1313(j) subject to the following conditions:
    (1) Application. The claimant must file a written application with 
the drawback office where the drawback claims will be filed. Such 
application shall include the following:
    (i) Required information.
    (A) Name, address, and Internal Revenue Service (IRS) number (with 
suffix) of applicant;
    (B) Name, address, and Internal Revenue Service (IRS) number(s) 
(with suffix) of exporter(s), if applicant is not the exporter;
    (C) Export period covered by this application;
    (D) Commodity/product lines of imported and exported merchandise 
covered in this application;
    (E) The origin of the above merchandise;
    (F) Estimated number of export transactions covered in this 
application;
    (G) Estimated number of drawback claims and estimated time of 
filing those claims to be covered in this application;
    (H) The port(s) of exportation;
    (I) Estimated dollar value of potential drawback to be covered in 
this application; and
    (J) The relationship between the parties involved in the import and 
export transactions;
    (ii) Written declarations regarding:
    (A) The reason(s) that Customs was not notified of the intent to 
export; and
    (B) Whether the applicant, to the best of its knowledge, will have 
future exportations on which unused merchandise drawback might be 
claimed; and
    (iii) A certification that the following documentary evidence will 
be made available for Customs review upon request:
    (A) For the purpose of establishing that the imported merchandise 
was not used in the United States (for purposes of drawback under 19 
U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the 
United States and was commercially interchangeable with the imported 
merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)), and, 
as applicable:
    (1) Business records prepared in the ordinary course of business;
    (2) Laboratory records prepared in the ordinary course of business; 
and/or
    (3) Inventory records prepared in the ordinary course of business 
tracing all relevant movements and storage of the imported merchandise, 
substituted merchandise, and/or exported merchandise; and
    (B) Evidence establishing compliance with all other applicable 
drawback requirements.
    (2) One-Time Use. The procedure provided for in this section may be 
used by a claimant only once, unless good cause is shown (for example, 
successorship).
    (3) Claims filed pending disposition of application. Drawback 
claims may be filed under this section pending disposition of the 
application. However, those drawback claims will not be processed or 
paid until the application is approved by Customs.
    (b) Customs action. In order for Customs to evaluate the 
application under this section, Customs may request, and the applicant 
shall provide, any of the information listed in paragraph 
(a)(1)(iii)(A)(1) through (3) of this section. In making its decision 
to approve or deny the application under this section, Customs will 
consider factors such as, but not limited to, the following:
    (1) Information provided by the claimant in the written 
application;
    (2) Any of the information listed in paragraph (a)(1)(iii)(A)(1) 
through (3) of this section and requested by Customs under this 
paragraph; and
    (3) The applicant's prior record with Customs.
    (c) Time for Customs action. Customs will notify the applicant in 
writing within 90 days after receipt of the application of its decision 
to approve or deny the application, or of Customs inability to approve, 
deny or act on the application and the reason therefor.
    (d) Appeal of denial of application. If Customs denies the 
application, the applicant may file a written appeal with the drawback 
office which issued the denial, provided that the applicant files this 
appeal within 30 days of the date of denial. If Customs denies this 
initial appeal, the applicant may file a further written appeal with 
Customs Headquarters, Office of Field Operations, Office of Trade 
Operations, provided that the applicant files this further appeal 
within 30 days of the denial date of the initial appeal. Customs may 
extend the 30 day period for appeal to the drawback office or to 
Customs Headquarters, for good cause, if the applicant applies in 
writing for such extension within the appropriate 30 day period above.
    (e) Future intent to export unused merchandise. If an applicant 
states it will have future exportations on which unused merchandise 
drawback may be claimed (see paragraph (a)(1)(ii)(B) of this section), 
the applicant will be informed of the procedures for waiver of prior 
notice (see Sec. 191.91 of this part). If the applicant seeks waiver of 
prior notice under Sec. 191.91, any documentation submitted to Customs 
to comply with this section will be included in the request under 
Sec. 191.91. An applicant which states that it will have future 
exportations on which unused merchandise drawback may be claimed (see 
paragraph (a)(1)(ii)(B) of this section) and which does not obtain 
waiver of prior notice shall notify Customs of its intent to export 
prior to each such exportation, in accordance with Sec. 191.35.

[[Page 11022]]

Sec. 191.37  Destruction under Customs supervision.

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


Sec. 191.38  Records.

    (a) Maintained by claimant; by others. Pursuant to 19 U.S.C. 
1508(c)(3), all records which are necessary to be maintained by the 
claimant under this part with respect to drawback claims, and records 
kept by others to complement the records of the claimant, which are 
essential to establish compliance with the legal requirements of 19 
U.S.C. 1313(j)(1) or (j)(2), as applicable, and this part with respect 
to drawback claims, shall be retained for 3 years after payment of such 
claims (under 19 U.S.C. 1508, the same records may be subject to a 
different retention period for different purposes).
    (b) Accounting for the merchandise. Merchandise subject to drawback 
under 19 U.S.C. 1313(j)(1) and (j)(2) shall be accounted for in a 
manner which will enable the claimant:
    (1) To determine, and Customs to verify, the applicable import 
entry or certificate of delivery;
    (2) To determine, and Customs to verify, the applicable exportation 
or destruction; and
    (3) To identify with respect to the import entry or certificate of 
delivery, the imported duty-paid merchandise.

Subpart D--Rejected Merchandise


Sec. 191.41  Rejected merchandise drawback.

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


Sec. 191.42  Procedure.

    (a) Return to Customs custody. The claimant must return the 
merchandise to Customs custody within 3 years after the date the 
merchandise was originally released from Customs custody. Drawback will 
be denied on merchandise returned to Customs custody after the 
statutory 3-year time period or exported or destroyed without return to 
Customs custody.
    (b) Required documentation. The claimant shall submit documentation 
to the drawback office as part of the drawback claim to establish that 
the merchandise did not conform to sample or specification, was shipped 
without the consent of the consignee, or was defective as of the time 
of importation. If the claimant was not the importer, the claimant 
must:
    (1) Submit a statement signed by the importer and every other 
person, other than the ultimate purchaser, that owned the goods that no 
other claim for drawback was made on the goods by any other person; and
    (2) Certify that records are available to support the statement 
required in paragraph (b)(1) of this section.
    (c) Notice. A notice of intent to export or destroy merchandise 
which may be the subject of a rejected merchandise drawback claim (19 
U.S.C. 1313(c)) must be provided to the Customs Service to give Customs 
the opportunity to examine the merchandise. The claimant, or the 
exporter or destroyer, must file at the port of intended redelivery to 
Customs custody a Notice of Intent to Export, Destroy, or Return 
Merchandise for Purposes of Drawback on Customs Form 7553 at least 5 
working days prior to the date of intended return to Customs custody. 
Waiver of prior notice for exportations under 19 U.S.C. 1313(j) (see 
Sec. 191.91 of this part) is inapplicable to exportations under 19 
U.S.C. 1313(c).
    (d) Required Information. The notice shall provide the bill of 
lading number, if known, the name and telephone number, mailing 
address, and, if available, fax number and e-mail address of a contact 
person, and the location of the merchandise.
    (e) Decision to waive examination. Within two (2) working days 
after receipt of the Notice of Intent to Export, Destroy, or Return 
Merchandise for Purposes of Drawback (see paragraph (c) of this 
section), Customs will notify, in writing, the party designated on the 
Notice of Customs decision to either examine the merchandise to be 
exported or destroyed, or to waive examination. If Customs timely 
notifies the designated party, in writing, of its decision to examine 
the merchandise (see paragraph (f) of this section), but the 
merchandise is exported or destroyed without having been presented to 
Customs for such examination, any drawback claim, or part thereof, 
based on the Notice of Intent to Export, Destroy, or Return Merchandise 
for Purposes of Drawback, shall be denied. If Customs notifies the 
designated party, in writing, of its decision to waive examination of 
the merchandise, or, if timely notification of a decision by Customs to 
examine or to waive examination is absent, the merchandise may be 
exported or destroyed without delay and shall be deemed to have been 
returned to Customs custody.
    (f) Time and place of examination. If Customs gives timely notice 
of its decision to examine the merchandise to be exported or destroyed, 
the merchandise to be examined shall be promptly presented to Customs. 
Customs shall examine the merchandise within five (5) working days 
after presentation of the merchandise. The merchandise may be exported 
or destroyed without examination if Customs fails to timely examine the 
merchandise after presentation to Customs, and in such case the 
merchandise shall be deemed to have been returned to Customs custody. 
If the examination is completed at a port other than the port of actual 
exportation or destruction, the merchandise shall be transported in-
bond to the port of exportation or destruction.
    (g) Extent of examination. The appropriate Customs office may 
permit release of merchandise without examination, or may examine, to 
the extent determined to be necessary, the items exported or destroyed.
    (h) Drawback claim. When filing the drawback claim, the drawback 
claimant must correctly calculate the amount of drawback due (see 
Sec. 191.51(b) of this part). The procedures for restructuring a claim 
(see Sec. 191.53 of this part) shall apply to rejected merchandise 
drawback if the claimant has an ongoing export program which qualifies 
for this type of drawback.
    (i) Exportation. The claimant shall export the merchandise and 
shall provide documentary evidence of exportation (see subpart G of 
this part). The claimant may establish exportation by mail as set out 
in Sec. 191.74 of this part.


Sec. 191.43  Unused merchandise claim.

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

[[Page 11023]]

Sec. 191.44  Destruction under Customs supervision.

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

Subpart E--Completion of Drawback Claims


Sec. 191.51  Completion of drawback claims.

    (a) General. (1) Complete claim. Unless otherwise specified, a 
complete drawback claim under this part shall consist of the drawback 
entry on Customs Form 7551, applicable certificate(s) of manufacture 
and delivery, applicable Notice(s) of Intent to Export, Destroy, or 
Return Merchandise for Purposes of Drawback, applicable import entry 
number(s), coding sheet unless the data is filed electronically, and 
evidence of exportation or destruction under subpart G of this part.
    (2) Certificates. Additionally, at the time of the filing of the 
claim, the associated certificate(s) of delivery must be in the 
possession of the party to whom the merchandise or article covered by 
the certificate was delivered. Any required certificate(s) of 
manufacture and delivery, if not previously filed with Customs, must be 
filed with the claim. Previously filed certificates of manufacture and 
delivery, if required, shall be referenced in the claim.
    (b) Drawback due. Drawback claimants are required to correctly 
calculate the amount of drawback due. The amount of drawback requested 
on the drawback entry is generally to be 99 percent of the import 
duties eligible for drawback. (For example, if $1,000 in import duties 
are eligible for drawback less 1 percent ($10), the amount claimed on 
the drawback entry should be for $990. Claims exceeding 99 percent (or 
100% when 100% of the duty is available for drawback) will not be paid 
until the calculations have been corrected by the claimant.) Claims for 
less than 99 percent (or 100% when 100% of the duty is available for 
drawback) will be paid as filed, unless the claimant amends the claim 
in accordance with Sec. 191.52(c).
    (c) HTSUS number(s) or Schedule B commodity number(s) of imports 
and exports. (1) General. Drawback claimants are required to provide, 
on all drawback claims they submit, the Harmonized Tariff Schedule of 
the United States (HTSUS) number(s) for the designated imported 
merchandise and the HTSUS number(s) or the Schedule B commodity 
number(s) for the exported article or articles.
    (2) Imports. For imports, HTSUS numbers shall be provided from the 
entry summary(s) and other entry documentation, when the claimant is 
the importer of record, or from the certificate of delivery and/or the 
certificate of manufacture and delivery, otherwise. Manufacturing 
drawback claimants filing drawback claims based on certificate(s) of 
manufacture and delivery filed with the claims or previously filed with 
Customs (see paragraph (a) of this section), may meet this requirement 
with the HTSUS number(s) for the designated imported merchandise on 
such certificate(s).
    (3) Exports. For exports, the HTSUS number(s) or Schedule B 
commodity number(s) shall be from the Shipper's Export Declaration(s) 
(SEDs), when required. If no SED is required (see, e.g., 15 CFR 30.58), 
the claimant shall provide the Schedule B commodity number(s) or HTSUS 
number(s) that the exporter would have set forth on the SED, but for 
the exemption from the requirement for an SED.
    (4) 6-digit level for HTSUS and Schedule B commodity numbers. The 
HTSUS numbers and Schedule B commodity numbers shall be stated to at 
least 6 digits.
    (5) Effective date. For imports, HTSUS numbers are required for 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after April 6, 1998. For exports, HTSUS numbers or Schedule B commodity 
numbers are required for exported merchandise or articles exported on 
or after the date 1 year after April 6, 1998.
    (d) Place of filing. For manufacturing drawback, the claimant shall 
file the drawback claim with the drawback office listed, as 
appropriate, in the general manufacturing drawback ruling or the 
specific manufacturing drawback ruling (see Secs. 191.7 and 191.8 of 
this part). For other kinds of drawback, the claimant shall file the 
claim with any drawback office.
    (e) Time of filing. (1) General. A completed drawback claim, with 
all required documents, shall be filed within 3 years after the date of 
exportation or destruction of the merchandise or articles which are the 
subject of the claim. Except for landing certificates (see Sec. 191.76 
of this part), or unless this time is extended as provided in paragraph 
(e)(2) of this section, claims not completed within the 3-year period 
shall be considered abandoned. Except as provided in paragraph (e)(2) 
of this section, no extension will be granted unless it is established 
that Customs was responsible for the untimely filing.
    (2) Major disaster. The 3-year period for filing a completed 
drawback claim provided for in paragraph (e)(1) of this section may be 
extended for a period not to exceed 18 months if:
    (i) The claimant establishes to the satisfaction of Customs that 
the claimant was unable to file the drawback claim because of an event 
declared by the President to be a major disaster, within the meaning 
given to that term in 42 U.S.C. 5122(2), on or after January 1, 1994; 
and
    (ii) The claimant files a request for such extension with Customs 
within 1 year from the last day of the 3-year period referred to in 
paragraph (e)(1) of this section.
    (3) Record retention. If an extension is granted with respect to a 
request filed under paragraph (e)(2)(ii) of this section, the periods 
of time for retaining records under 19 U.S.C. 1508(c)(3) shall be 
extended for an additional 18 months.


Sec. 191.52  Rejecting, perfecting or amending claims.

    (a) Rejecting the claim. Upon review of a drawback claim, if the 
claim is determined to be incomplete (see Sec. 191.51(a)(1)), the claim 
will be rejected and Customs will notify the filer in writing. The 
filer shall then have the opportunity to complete the claim subject to 
the requirement for filing a complete claim within 3 years.
    (b) Perfecting the claim; additional evidence required. If Customs 
determines that the claim is complete according to the requirements of 
Sec. 191.51(a)(1), but that additional evidence or information is 
required, Customs will notify the filer in writing. The claimant shall 
furnish, or have the appropriate party furnish, the evidence or 
information requested within 30 days of the date of notification by 
Customs. Customs may extend this 30 day period for good cause if the 
claimant files a written request for such extension within the 30 day 
period. The evidence or information required under this paragraph may 
be filed more than 3 years after the date of exportation or destruction 
of the articles which are the subject of the claim. Such additional 
evidence or information may include, but is not limited to:
    (1) The export bill of lading or other actual evidence of 
exportation, as provided for in Sec. 191.72(a) of this part, which 
shall show that the articles were shipped by the person filing the 
drawback entry, or a letter of endorsement from the party in whose name 
the articles were shipped which shall be attached to such bill of 
lading,

[[Page 11024]]

showing that the party filing the entry is authorized to claim drawback 
and receive payment (the claimant shall have on file and make available 
to Customs upon request, the endorsement from the exporter assigning 
the right to claim drawback);
    (2) A copy of the import entry and invoice annotated for the 
merchandise identified or designated;
    (3) A copy of the export invoice annotated to indicate the items on 
which drawback is being claimed; and
    (4) Certificate(s) of delivery upon which the claim is based (see 
Sec. 191.10(e) of this part).
    (c) Amending the claim; supplemental filing. Amendments to claims 
for which the drawback entries have not been liquidated must be made 
within three (3) years after the date of exportation or destruction of 
the articles which are the subject of the original drawback claim. 
Liquidated drawback entries may not be amended; however, they may be 
protested as provided for in Sec. 191.84 of this part and part 174 of 
this chapter.


Sec. 191.53  Restructuring of claims.

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

Subpart F--Verification of Claims


Sec. 191.61  Verification of drawback claims.

    (a) Authority. (1) Drawback office. All claims shall be subject to 
verification by the port director where the claim is filed.
    (2) Two or more locations. The port director selecting the claim 
for verification may forward copies of the claim and, as applicable, 
letters of notification and acknowledgement for the general 
manufacturing drawback ruling or application and letter of approval for 
a specific manufacturing drawback ruling, and request for verification, 
to other drawback offices when deemed necessary.
    (b) Method. The verifying office shall verify compliance with the 
law and this part, the accuracy of the related general manufacturing 
drawback ruling or specific manufacturing drawback ruling (as 
applicable), and the selected drawback claims. Verification may include 
an examination of all records relating to the transaction(s).
    (c) Liquidation. When a claim has been selected for verification, 
liquidation will be postponed only on the drawback entries for those 
claims selected for verification. Postponement will continue in effect 
until the verification has been completed and the appropriate port 
director issues a report. In the event that a substantial error is 
revealed during the verification, Customs may postpone liquidation of 
all related product line claims, or, in Customs discretion, all claims 
for that claimant.
    (d) Errors in specific or general manufacturing drawback rulings. 
(1) Specific manufacturing drawback ruling. (i) Action by port 
director. If verification of a drawback claim filed under a specific 
manufacturing drawback ruling (see Sec. 191.8 of this part) reveals 
errors of deficiencies in the drawback ruling or application therefore, 
the port director shall promptly inform Customs Headquarters 
(Attention: Duty and Refund Determination Branch, Office of Regulations 
and Rulings).
    (2) General manufacturing drawback ruling. If verification of a 
drawback claim filed under a general manufacturing drawback ruling (see 
Sec. 191.7 of this part) reveals errors or deficiencies in a general 
manufacturing drawback ruling, the letter of notification of intent to 
operate under the general manufacturing drawback ruling, or the 
acknowledgment of the letter of notification of intent, the port 
director shall promptly inform Customs Headquarters (Attention: Duty 
and Refund Determination Branch, Office of Regulations and Rulings).
    (3) Action by Customs Headquarters. Customs Headquarters shall 
review the stated errors or deficiencies and take appropriate action 
(see 19 U.S.C. 1625; 19 CFR part 177).


Sec. 191.62  Penalties.

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

Subpart G--Exportation and Destruction


Sec. 191.71  Drawback on articles destroyed under Customs supervision.

    (a) Procedure. At least 7 working days before the intended date of 
destruction of merchandise or articles upon which drawback is intended 
to be claimed, a Notice of Intent to Export, Destroy, or Return 
Merchandise for Purposes of Drawback on Customs Form 7553 shall be 
filed by the claimant with the Customs port where the destruction is to 
take place, giving notification of the date and specific location where 
the destruction is to occur. Within 4 working days after receipt of the 
Customs Form 7553, Customs shall advise the filer in writing of its 
determination to witness or not to witness the destruction. If the 
filer of the notice is not so notified within 4 working days, the 
merchandise may be destroyed without delay and will be deemed to have 
been destroyed under Customs supervision. Unless Customs

[[Page 11025]]

determines to witness the destruction, the destruction of the articles 
following timely notification on Customs Form 7553 shall be deemed to 
have occurred under Customs supervision. If Customs attends the 
destruction, it must certify the Notice of Intent to Export, Destroy, 
or Return Merchandise for Purposes of Drawback.
    (b) Evidence of destruction. When Customs does not attend the 
destruction, the claimant must submit evidence that destruction took 
place in accordance with the approved Notice of Intent to Export, 
Destroy, or Return Merchandise for Purposes of Drawback. The evidence 
must be issued by a disinterested third party (for example, a landfill 
operator). The type of evidence depends on the method and place of 
destruction, but must establish that the merchandise was, in fact, 
destroyed within the meaning of ``destruction'' in Sec. 191.2(g) (i.e., 
that no articles of commercial value remained after destruction).
    (c) Completion of drawback entry. After destruction, the claimant 
must provide the Customs Form 7553, certified by the Customs official 
witnessing the destruction in accordance with paragraph (a) of this 
section, to Customs as part of the completed drawback claim based on 
the destruction (see Sec. 191.51(a) of this part). If Customs has not 
attended the destruction, the claimant must provide the evidence that 
destruction took place in accordance with the approved Customs Form 
7553, as provided for in paragraph (b) of this section, as part of the 
completed drawback claim based on the destruction (see Sec. 191.51(a) 
of this part).


Sec. 191.72  Exportation procedures.

    Exportation of articles for drawback purposes shall be established 
by complying with one of the procedures provided for in this section 
(in addition to providing prior notice of intent to export if 
applicable (see Secs. 191.35, 191.36, 191.42, and 191.91 of this 
part)). Supporting documentary evidence shall establish fully the date 
and fact of exportation and the identity of the exporter. The 
procedures for establishing exportation outlined by this section 
include, but are not limited to:
    (a) Actual evidence of exportation consisting of documentary 
evidence, such as an originally signed bill of lading, air waybill, 
freight waybill, Canadian Customs manifest, and/or cargo manifest, or 
certified copies thereof, issued by the exporting carrier;
    (b) Export summary (Sec. 191.73);
    (c) Certified export invoice for mail shipments (Sec. 191.74);
    (d) Notice of lading for supplies on certain vessels or aircraft 
(Sec. 191.112); or
    (e) Notice of transfer for articles manufactured or produced in the 
U.S. which are transferred to a foreign trade zone (Sec. 191.183).


Sec. 191.73  Export summary procedure.

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

Chronological Summary of Exports

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

Period from ________ to ________.

                                                                                                                                                        
                                                                                                                                                        
                                    Exporter if not      Unique export                                            Sched. B com. # or                    
         Date of export                claimant         identifier \1\        Description        Net quantity           HTSUS #           Destination   
(1)                               (2)...............  (3)...............  (4)...............  (5)...............  (6)...............  (7)               
 AAAA\1\ This number is to be used to associate the export transaction presented on the Chronological Summary of Exports to the appropriate documentary 
  evidence of exportation (for example, Bill of Lading, Manifest no., invoice, identification of vessel or aircraft and voyage or aircraft number (see  
  subpart K), etc.).                                                                                                                                    

    (c) Documentary evidence. (1) Records. The claimant, whether or not 
the exporter, shall maintain the Chronological Summary of Exports and 
such additional evidence of exportation required by Customs to 
establish fully the identity of the exported articles and the fact of 
exportation. Actual evidence of exportation, as described in 
Sec. 191.72(a) of this subpart, is the primary evidence of export for 
drawback purposes.
    (2) Maintenance of records. The claimant shall submit as part of 
the claim the Chronological Summary of Exports (see Sec. 191.51). The 
claimant shall retain records supporting the Chronological Summary of 
Exports for 3 years after payment of the related claim, and such 
records are subject to review by Customs.


Sec. 191.74  Certification of exportation by mail.

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


Sec. 191.75  Exportation by the Government.

    (a) Claim by U.S. Government. When a department, branch, agency, or 
instrumentality of the United States Government exports products with 
the intention of claiming drawback, it may establish the exportation in 
the manner provided in Secs. 191.72 and 191.73 of this subpart (see 
Sec. 191.4 of this part).
    (b) Claim by supplier. When a supplier of merchandise to the 
Government or any of the parties specified in Sec. 191.82 of this part 
claims drawback, exportation shall be established under Secs. 191.72 
and 191.73 of this subpart.


Sec. 191.76  Landing certificate.

    (a) Requirement. Prior to the liquidation of the drawback entry, 
Customs may require a landing certificate for every aircraft departing 
from the United States under its own power if drawback is claimed on 
the aircraft or a part thereof, except for the exportation of supplies 
under Sec. 309 of the Act, as amended (19 U.S.C. 1309). The certificate 
shall show the exact time of landing in the foreign destination and 
describe the aircraft or parts subject to drawback in sufficient detail 
to enable Customs officers to identify them with the documentation of 
exportation.
    (b) Written notice of requirement and time for filing. A landing 
certificate shall be filed within one year from the written Customs 
request, unless Customs Headquarters grants an extension.
    (c) Signature. A landing certificate shall be signed by a revenue 
officer of the foreign country of the export's destination, unless the 
embassy of that

[[Page 11026]]

country certifies in writing that there is no Customs administration in 
that country, in which case the landing certificate may be signed by 
the consignee or the carrier's agent at the place of unlading.
    (d) Inability to produce landing certificates. A landing 
certificate shall be waived by the requiring Customs authority if the 
claimant demonstrates inability to obtain a certificate and offers 
other satisfactory evidence of export.

Subpart H--Liquidation and Protest of Drawback Entries


Sec. 191.81  Liquidation.

    (a) Time of liquidation. Drawback entries may be liquidated after:
    (1) Liquidation of the import entry becomes final; or
    (2) Deposit of estimated duties on the imported merchandise and 
before liquidation of the import entry.
    (b) Claims based on estimated duties. (1) Drawback may be paid on 
estimated duties if the import entry has not been liquidated, or the 
liquidation has not become final (because of a protest being filed) 
(see also Sec. 173.4(c) of this chapter), and the drawback claimant and 
any other party responsible for the payment of liquidated import duties 
each file a written request for payment of each drawback claim, waiving 
any right to payment or refund under other provisions of law, to the 
extent that the estimated duties on the unliquidated import entry are 
included in the drawback claim for which drawback on estimated duties 
is requested under this paragraph. The drawback claimant shall, to the 
best of its knowledge, identify each import entry that has been 
protested or that is the subject of a request for reliquidation (19 
U.S.C. 1520(c)(1)) and that is included in the drawback claim. A 
drawback entry, once finally liquidated on the basis of estimated 
duties, shall not be adjusted by reason of a subsequent final 
liquidation of the import entry.
    (2) However, if final liquidation of the import entry discloses 
that the total amount of import duty is different from the total 
estimated duties deposited, except in those cases when drawback is 100% 
of the duty, the party responsible for the payment of liquidated 
duties, as applicable, shall:
    (i) Be liable for 1 percent of all increased duties found to be due 
on that portion of merchandise recorded on the drawback entry; or
    (ii) Be entitled to a refund of 1 percent of all excess duties 
found to be paid on that portion of the merchandise recorded on the 
drawback entry.
    (c) Claims based on voluntary tenders or other payments of duties. 
(1) General. Subject to the requirements in paragraph (c)(2) of this 
section, drawback may be paid on voluntary tenders of the unpaid amount 
of lawful ordinary Customs duties or any other payment of lawful 
ordinary Customs duties for an entry, or withdrawal from warehouse, for 
consumption (see Sec. 191.3(a)(1)(iii) of this part), provided that:
    (i) The tender or payment is specifically identified as duty on a 
specifically identified entry, or withdrawal from warehouse, for 
consumption;
    (ii) Liquidation of the specifically identified entry, or 
withdrawal from warehouse, for consumption became final prior to such 
tender or payment; and
    (iii) Liquidation of the drawback entry in which that specifically 
identified import entry, or withdrawal from warehouse, for consumption 
is designated has not become final.
    (2) Written request and waiver. Drawback may be paid on claims 
based on voluntary tenders or other payments of duties under this 
subsection only if the drawback claimant and any other party 
responsible for the payment of the voluntary tenders or other payments 
of duties each file a written request for payment of each drawback 
claim based on such voluntary tenders or other payments of duties, 
waiving any claim to payment or refund under other provisions of law, 
to the extent that the voluntary tenders or other payment of duties 
under this paragraph are included in the drawback claim for which 
drawback on the voluntary tenders or other payment of duties is 
requested under this paragraph.
    (d) Claims based on liquidated duties. Drawback shall be based on 
the final liquidated duties paid that have been made final by operation 
of law (except in the case of the written request for payment of 
drawback on the basis of estimated duties, voluntary tender of duties, 
and other payments of duty, and waiver, provided for in paragraphs (b) 
and (c) of this section).
    (e) Liquidation procedure. When the drawback claim has been 
completed by the filing of the entry and other required documents, and 
exportation (or destruction) of the articles has been established, the 
drawback office shall determine drawback due on the basis of the 
complete drawback claim, the applicable general manufacturing drawback 
ruling or specific manufacturing drawback ruling, and any other 
relevant evidence or information.
    (f) Relative value; multiple products. (1) Distribution. Where two 
or more products result from the manufacture or production of 
merchandise, drawback shall be distributed to the several products in 
accordance with their relative value at the time of separation.
    (2) Value. The value to be used in computing the distribution of 
drawback where two or more products result from the manufacture or 
production of merchandise under drawback conditions shall be the market 
value (see Sec. 191.2(u) of this part), unless another value is 
approved by Customs.
    (g) Payment. The drawback office shall authorize the amount of the 
refund due as drawback to the claimant.


Sec. 191.82  Person entitled to claim drawback.

    Unless otherwise provided in this part (see Secs. 191.42(b), 
191.162, 191.175(a), 191.186), the exporter (or destroyer) shall be 
entitled to claim drawback, unless the exporter (or destroyer), by 
means of a certification, waives the right to claim drawback and 
assigns such right to the manufacturer, producer, importer, or 
intermediate party (in the case of drawback under 19 U.S.C. 1313(j)(1) 
and (2), see Sec. 191.33(a) and (b)). Such certification shall also 
affirm that the exporter (or destroyer) has not and will not assign the 
right to claim drawback on the particular exportation or destruction to 
any other party. The certification provided for in this section may be 
a blanket certification for a stated period.


Sec. 191.83  Person entitled to receive payment.

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


Sec. 191.84  Protests.

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

Subpart I--Waiver of Prior Notice of Intent To Export; Accelerated 
Payment of Drawback


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

    (a) General. (1) Scope. The requirement in Sec. 191.35 of this part 
for prior notice of intent to export merchandise which may be the 
subject of an unused merchandise drawback claim under Sec. 313(j) of 
the Act, as amended (19 U.S.C. 1313(j)), may be waived under the 
provisions of this section.
    (2) Effective date for claimants with existing approval. For 
claimants approved for waiver of prior notice as of

[[Page 11027]]

April 6, 1998, such approval of waiver of prior notice shall remain in 
effect, under the Customs Regulations in effect as of the time of the 
approval of waiver of prior notice, for a period of 1 year after April 
6, 1998. The previously approved waiver of prior notice shall terminate 
at the end of such 1-year period unless the claimant applies for waiver 
of prior notice under this section. If a claimant approved for waiver 
of prior notice as of April 6, 1998 applies for waiver of prior notice 
under this section within such 1-year period, the claimant may continue 
to operate under its existing waiver of prior notice until Customs 
approves or denies the application for waiver of prior notice under 
this section, subject to the provisions in this section (see, in 
particular, paragraphs (d) and (e) of this section).
    (3) Limited successorship for waiver of prior notice. When a 
claimant (predecessor) is approved for waiver of prior notice under 
this section and all of the rights, privileges, immunities, powers, 
duties and liabilities of the claimant are transferred by written 
agreement, merger, or corporate resolution to a successor, such 
approval of waiver of prior notice shall remain in effect for a period 
of 1 year after such transfer. The approval of waiver of prior notice 
shall terminate at the end of such 1-year period unless the successor 
applies for waiver of prior notice under this section. If such 
successor applies for waiver of prior notice under this section within 
such 1-year period, the successor may continue to operate under the 
predecessor's waiver of prior notice until Customs approves or denies 
the successor's application for waiver of prior notice under this 
section, subject to the provisions in this section (see, in particular, 
paragraphs (d) and (e) of this section).
    (b) Application. (1) Who may apply. A claimant for unused 
merchandise drawback under 19 U.S.C. 1313(j) may apply for a waiver of 
prior notice of intent to export merchandise under this section.
    (2) Contents of application. An applicant for a waiver of prior 
notice under this section must file a written application with the 
drawback office where the claims will be filed. Such application shall 
include the following:
    (i) Required information:
    (A) Name, address, and Internal Revenue Service (IRS) number (with 
suffix) of applicant;
    (B) Name, address, and Internal Revenue Service (IRS) number (with 
suffix) of current exporter(s) (if more than 3 exporters, such 
information is required only for the 3 most frequently used exporters), 
if applicant is not the exporter;
    (C) Export period covered by this application;
    (D) Commodity/product lines of imported and exported merchandise 
covered by this application;
    (E) Origin of merchandise covered by this application;
    (F) Estimated number of export transactions during the next 
calendar year covered by this application;
    (G) Port(s) of exportation to be used during the next calendar year 
covered by this application;
    (H) Estimated dollar value of potential drawback during the next 
calendar year covered by this application; and
    (I) The relationship between the parties involved in the import and 
export transactions;
    (ii) A written declaration whether or not the applicant has 
previously been denied a waiver request, or had an approval of a waiver 
revoked, by any other drawback office, and whether the applicant has 
previously requested a 1-time waiver of prior notice under Sec. 191.36, 
and whether such request was approved or denied; and
    (iii) A certification that the following documentary evidence will 
be made available for Customs review upon request:
    (A) For the purpose of establishing that the imported merchandise 
was not used in the United States (for purposes of drawback under 19 
U.S.C. 1313(j)(1)) or that the exported merchandise was not used in the 
United States and was commercially interchangeable with the imported 
merchandise (for purposes of drawback under 19 U.S.C. 1313(j)(2)), and, 
as applicable:
    (1) Business records prepared in the ordinary course of business;
    (2) Laboratory records prepared in the ordinary course of business; 
and/or
    (3) Inventory records prepared in the ordinary course of business 
tracing all relevant movements and storage of the imported merchandise, 
substituted merchandise, and/or exported merchandise; and
    (B) Any other evidence establishing compliance with other 
applicable drawback requirements, upon Customs request under paragraph 
(b)(2)(iii) of this section.
    (3) Samples of records to accompany application. To expedite the 
processing of applications under this section, the application should 
contain at least one sample of each of the records to be used to 
establish compliance with the applicable requirements (that is, sample 
of import document (for example, Customs Form 7501), sample of export 
document (for example, bill of lading), and samples of business, 
laboratory, and inventory records certified, under paragraph 
(b)(2)(iii)(A)(1) through (3) of this section, to be available to 
Customs upon request).
    (c) Action on application. (1) Customs review. The drawback office 
shall review and verify the information submitted on and with the 
application. Customs will notify the applicant in writing within 90 
days of receipt of the application of its decision to approve or deny 
the application, or of Customs inability to approve, deny, or act on 
the application and the reason therefor. In order for Customs to 
evaluate the application, Customs may request any of the information 
listed in paragraph (b)(2)(iii)(A)(1) through (3) of this section. 
Based on the information submitted on and with the application and any 
information so requested, and based on the applicant's record of 
transactions with Customs, the drawback office will approve or deny the 
application. The criteria to be considered in reviewing the applicant's 
record with Customs include, but are not limited to (as applicable):
    (i) The presence or absence of unresolved Customs charges (duties, 
taxes, or other debts owed Customs);
    (ii) The accuracy of the claimant's past drawback claims;
    (iii) Whether waiver of prior notice was previously revoked or 
suspended; and
    (iv) The presence or absence of any failure to present merchandise 
to Customs for examination after Customs had timely notified the party 
filing a Notice of Intent to Export, Destroy, or Return Merchandise for 
Purposes of Drawback of Customs intent to examine the merchandise (see 
Sec. 191.35 of this part).
    (2) Approval. The approval of an application for waiver of prior 
notice of intent to export, under this section, shall operate 
prospectively, applying only to those export shipments occurring after 
the date of the waiver. It shall be subject to a stay, as provided in 
paragraph (d) of this section.
    (3) Denial. If an application for waiver of prior notice of intent 
to export, under this section, is denied, the applicant shall be given 
written notice, specifying the grounds therefor, together with what 
corrective action may be taken, and informing the applicant that the 
denial may be appealed in the manner prescribed in paragraph (g) of 
this section. The applicant may not reapply for a waiver until the 
reason for the denial is resolved.
    (d) Stay. An approval of waiver of prior notice may be stayed, for 
a specified reasonable period, should

[[Page 11028]]

Customs desire for any reason to examine the merchandise being exported 
with drawback prior to its exportation for purposes of verification. 
Customs shall provide written notice, by registered or certified mail, 
of such a stay to the person for whom waiver of prior notice was 
approved. Customs shall specify the reason(s) for the stay in such 
written notice. The stay shall take effect 2 working days after the 
date the person signs the return post office receipt for the registered 
or certified mail. The stay shall remain in effect for the period 
specified in the written notice, or until such earlier date as Customs 
notifies the person for whom waiver of prior notice was approved in 
writing that the reason for the stay has been satisfied. After the stay 
is lifted, operation under the waiver of prior notice procedure may 
resume for exports on or after the date the stay is lifted.
    (e) Proposed Revocation. Customs may propose to revoke the approval 
of an application for waiver of prior notice of intent to export, under 
this section, for good cause (noncompliance with the drawback law and/
or regulations). Customs shall give written notice of the proposed 
revocation of a waiver of prior notice of intent to export. The notice 
shall specify the reasons for Customs proposed action and provide 
information regarding the procedures for challenging Customs proposed 
revocation action as prescribed in paragraph (g) of this section. The 
written notice of proposed revocation may be included with a notice of 
stay of approval of waiver of prior notice as provided under paragraph 
(d) of this section. The revocation of the approval of waiver of prior 
notice shall take effect 30 days after the date of the proposed 
revocation if not timely challenged under paragraph (g) of this 
section. If timely challenged, the revocation will take effect after 
completion of the challenge procedures in paragraph (g) of this section 
unless the challenge is successful.
    (f) Action by drawback office controlling. Action by the 
appropriate drawback office to approve, deny, stay, or revoke waiver of 
prior notice of intent to export, unless reversed by Customs 
Headquarters, will govern the applicant's eligibility for this 
procedure in all Customs drawback offices. If the application for 
waiver of prior notice of intent to export is approved, the claimant 
shall refer to such approval in the first drawback claim filed after 
such approval in the drawback office approving waiver of prior notice 
and shall submit a copy of the approval letter with the first drawback 
claim filed in any drawback office other than the approving office, 
when the export upon which the claim is based was without prior notice, 
under this section.
    (g) Appeal of denial or challenge to proposed revocation. An appeal 
of a denial of an application under this section, or challenge to the 
proposed revocation of an approved application under this section, may 
be made by letter to the drawback office issuing the denial or proposed 
revocation and must be filed within 30 days of the date of denial or 
proposed revocation. A denial of an appeal or challenge made to the 
drawback office may itself be appealed to Customs Headquarters, Office 
of Field Operations, Office of Trade Operations, and must be filed 
within 30 days of the denial date of the initial appeal or challenge. 
The 30-day period for appeal or challenge to the drawback office or to 
Customs Headquarters may be extended for good cause, upon written 
request by the applicant or holder for such extension filed with the 
appropriate office within the 30-day period.


Sec. 191.92  Accelerated payment.

    (a) General. (1) Scope. Accelerated payment of drawback is 
available under this section on drawback claims under this part, unless 
specifically excepted from such accelerated payment. Accelerated 
payment of drawback consists of the payment of estimated drawback 
before liquidation of the drawback entry. Accelerated payment of 
drawback is only available when Customs review of the request for 
accelerated payment of drawback does not find omissions from, or 
inconsistencies with the requirements of the drawback law and part 191 
(see, especially, subpart E of this part). Accelerated payment of a 
drawback claim does not constitute liquidation of the drawback entry.
    (2) Effective date for claimants with existing approval. For 
claimants approved for accelerated payment of drawback as of April 6, 
1998, such approval of accelerated payment shall remain in effect, 
under the Customs Regulations in effect as of the time of the approval 
of accelerated payment, for a period of 1 year after April 6, 1998. The 
previously approved accelerated payment of drawback shall terminate at 
the end of such 1-year period unless the claimant applies for 
accelerated payment under this section. If a claimant approved for 
accelerated payment of drawback as of April 6, 1998 applies for 
accelerated payment under this section within such 1-year period, the 
claimant may continue to operate under its existing approval of 
accelerated payment until Customs approves or denies the application 
for accelerated payment under this section, subject to the provisions 
in this section (see, in particular, paragraph (f) of this section).
    (3) Limited successorship for approval of accelerated payment. When 
a claimant (predecessor) is approved for accelerated payment of 
drawback under this section and all of the rights, privileges, 
immunities, powers, duties and liabilities of the claimant are 
transferred by written agreement, merger, or corporate resolution to a 
successor, such approval of accelerated payment shall remain in effect 
for a period of 1 year after such transfer. The approval of accelerated 
payment of drawback shall terminate at the end of such 1-year period 
unless the successor applies for accelerated payment of drawback under 
this section. If such successor applies for accelerated payment of 
drawback under this section within such 1-year period, the successor 
may continue to operate under the predecessor's approval of accelerated 
payment until Customs approves or denies the successor's application 
for accelerated payment under this section, subject to the provisions 
in this section (see, in particular, paragraph (f) of this section).
    (b) Application for approval; contents. A person who wishes to 
apply for accelerated payment of drawback must file a written 
application with the drawback office where claims will be filed.
    (1) Required information. The application must contain:
    (i) Company name and address;
    (ii) Internal Revenue Service (IRS) number (with suffix);
    (iii) Identity (by name and title) of the person in claimant's 
organization who will be responsible for the drawback program;
    (iv) Description of the bond coverage the applicant intends to use 
to cover accelerated payments of drawback (see paragraph (d) of this 
section), including:
    (A) Identity of the surety to be used;
    (B) Dollar amount of bond coverage for the first year under the 
accelerated payment procedure; and
    (C) Procedures to ensure that bond coverage remains adequate (that 
is, procedures to alert the applicant when and if its accelerated 
payment potential liability exceeds its bond coverage);
    (v) Description of merchandise and/or articles covered by the 
application;
    (vi) Type(s) of drawback covered by the application; and
    (vii) Estimated dollar value of potential drawback during the next 
12-month period covered by the application.

[[Page 11029]]

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

[[Page 11030]]

denial of an appeal or challenge made to the drawback office may itself 
be appealed to Customs Headquarters, Office of Field Operations, Office 
of Trade Operations, and must be filed within 30 days. The 30-day 
period for appeal or challenge to the drawback office or to Customs 
Headquarters may be extended for good cause, upon written request by 
the applicant or holder for such extension filed with the appropriate 
office within the 30-day period.
    (i) Payment. The drawback office approving a drawback claim in 
which accelerated payment of drawback was requested shall certify the 
drawback claim for payment within 3 weeks after filing, if a component 
for electronic filing of drawback claims, records, or entries which has 
been implemented under the National Customs Automation Program (NCAP) 
(19 U.S.C. 1411-1414) is used, and within 3 months after filing, if the 
claim is filed manually. After liquidation, the drawback office shall 
certify payment of any amount due or demand a refund of any excess 
amount paid. Any excess amount of duty the subject of accelerated 
payment that is not refunded within 30 days after the date of 
liquidation of the related drawback entry shall be considered 
delinquent (see Secs. 24.3a and 113.65(b) of this chapter.)


Sec. 191.93  Combined applications.

    An applicant for the procedures provided for in Secs. 191.91 and 
191.92 of this subpart may apply for only one procedure, both 
procedures separately, or both procedures in one application package 
(see also Sec. 191.195 of this part regarding combined applications for 
certification in the drawback compliance program and waiver of prior 
notice and/or approval of accelerated payment of drawback). In the 
latter instance, the intent to apply for both procedures must be 
clearly stated. In all instances, all of the requirements for the 
procedure(s) applied for must be met (for example, in a combined 
application for both procedures, all of the information required for 
each procedure, all required sample documents for each procedure, and 
all required certifications must be included in and with the 
application).

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


Sec. 191.101  Drawback allowance.

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


Sec. 191.102  Procedure.

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


Sec. 191.103  Additional requirements.

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

[[Page 11031]]

    (vi) Drawback office where the claim will be filed.
    (3) Verification of the statement. The regional regulatory 
administrator, Bureau of Alcohol, Tobacco and Firearms, shall verify 
receipt of this statement, forward the original of the document to the 
drawback office designated, and retain the copy.


Sec. 191.104  Alcohol, Tobacco and Firearms certificates.

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


Sec. 191.105  Liquidation.

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


Sec. 191.106  Amount of drawback.

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

Subpart K--Supplies for Certain Vessels and Aircraft


Sec. 191.111  Drawback allowance.

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


Sec. 191.112  Procedure.

    (a) General. The provisions of this subpart shall override other 
conflicting provisions of this part.
    (b) Customs forms. The drawback claimant shall file with the 
drawback office the drawback entry on Customs Form 7551 annotated for 
19 U.S.C. 1309, and attach thereto a notice of lading on Customs Form 
7514, in quadruplicate, unless the export summary procedure, provided 
for in Sec. 191.73, is used. If the export summary procedure is used, 
the requirements in Sec. 191.73 shall be complied with, as applicable, 
and the requirements in paragraphs (d)(1) and (f)(1) of this section 
shall also be complied with.
    (c) Time of filing notice of lading. In the case of drawback in 
connection with 19 U.S.C. 1309(b), the drawback notice of lading on 
Customs Form 7514 may be filed either before or after the lading of the 
articles. If filed after lading, the notice shall be filed within 3 
years after exportation of the articles.
    (d) Contents of notice. The notice of lading shall show:
    (1) The name of the vessel or identity of the aircraft on which 
articles were or are to be laden;
    (2) The number and kind of packages and their marks and numbers;
    (3) A description of the articles and their weight (net), gauge, 
measure, or number; and
    (4) The name of the exporter.
    (e) Assignment of numbers and return of one copy. The drawback 
office shall assign a number to each notice of lading and return one 
copy to the exporter for delivery to the master or authorized officer 
of the vessel or aircraft.
    (f) Declaration. (1) Requirement. The master or an authorized 
representative of the vessel or aircraft having knowledge of the facts 
shall complete the section of the notice entitled ``Declaration of 
Master or Other Officer''.
    (2) Procedure if notice filed before lading. If the notice is filed 
before lading of the articles, the declaration must be completed on the 
copy of the numbered drawback notice that was filed with the drawback 
office and returned to the exporter for this purpose.
    (3) Procedure if notice filed after lading. If the drawback notice 
is filed after lading of the articles, the drawback claimant may file a 
separate document containing the declaration required on the Drawback 
Notice, Customs Form 7514.
    (4) Filing. The drawback claimant shall file with the drawback 
office both the drawback entry and the drawback notice or separate 
document containing the declaration of the master or other officer or 
representative.
    (g) Information concerning class or trade. Information about the 
class of business or trade of a vessel or aircraft is required to be 
furnished in support of the drawback entry if the vessel or aircraft is 
American.
    (h) Vessel or aircraft not required to clear or obtain a permit to 
proceed. If the vessel or aircraft is not required to clear or obtain a 
permit to proceed to another port, the drawback office shall return to 
the exporter or the person designated by the exporter two copies of the 
notice, noting the absence of a requirement for clearance or permit to 
proceed, for subsequent filing with the drawback claim. The claimant 
shall file with the claim an itinerary of the vessel or aircraft for 
the immediate voyage or flight showing that the vessel or aircraft is 
engaged in a class of business or trade which makes it eligible for 
drawback.
    (i) Articles laden or installed on aircraft as equipment or used in 
the maintenance or repair of aircraft. The drawback office where the 
drawback claim is filed shall require a declaration or other evidence 
showing to its satisfaction that articles have been laden or installed 
on aircraft as equipment or

[[Page 11032]]

used in the maintenance or repair of aircraft.
    (j) Fuel laden on vessels or aircraft as supplies. (1) Composite 
notice of lading. In the case of fuel laden on vessels or aircraft as 
supplies, the drawback claimant may file with the drawback office a 
composite notice of lading on the reverse side of Customs Form 7514, 
for each calendar month. The composite notice of lading shall describe 
all of the drawback claimant's deliveries of fuel supplies during the 
one calendar month at a single port or airport to all vessels or 
airplanes of one vessel owner or operator or airline. This includes 
fuel laden for flights or voyages between the contiguous U.S. and 
Hawaii, Alaska, or any U.S. possessions (see Sec. 10.59 of this 
chapter).
    (2) Contents of composite notice. The composite notice shall show 
for each voyage or flight, either on the reverse side of Customs Form 
7514 or on a continuation sheet:
    (i) The identity of the vessel or aircraft;
    (ii) A description of the fuel supplies laden;
    (iii) The quantity laden; and
    (iv) The date of lading.
    (3) Declaration of owner or operator. An authorized vessel or 
airline representative having knowledge of the facts shall complete the 
section ``Declaration of Master or Other Officer'' on Customs Form 
7514.
    (k) Desire to land articles covered by notice of lading. The master 
of the vessel or commander of the aircraft desiring to land in the 
United States articles covered by a notice of lading shall apply for a 
permit to land those articles under Customs supervision. All articles 
landed, except those transferred under the original notice of lading to 
another vessel or aircraft entitled to drawback, shall be considered 
imported merchandise for the purpose of Sec. 309(c) of the Act, as 
amended (19 U.S.C. 1309(c)).

Subpart L--Meats Cured With Imported Salt


Sec. 191.121  Drawback allowance.

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


Sec. 191.122  Procedure.

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


Sec. 191.123  Refund of duties.

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

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


Sec. 191.131  Drawback allowance.

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


Sec. 191.132  Procedure.

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


Sec. 191.133  Explanation of terms.

    (a) Materials. Section 313(g) of the Act, as amended (19 U.S.C. 
1313(g)), applies only to materials used in the original construction 
and equipment of vessels and aircraft, or to materials used in a 
``major conversion'', as defined in this section, of a vessel or 
aircraft. Section 313(g) does not apply to materials used for 
alteration or repair, or to materials not required for safe operation 
of the vessel or aircraft.
    (b) Foreign account and ownership. Foreign account and ownership, 
as used in Sec. 313(g) of the Act, as amended (19 U.S.C. 1313(g)), 
means only vessels or aircraft built or equipped for the account of an 
owner or owners residing in a foreign country and having a bona fide 
intention that the vessel or aircraft, when completed, shall be owned 
and operated under the flag of a foreign country.
    (c) Major conversion. For purposes of this subpart, a ``major 
conversion'' means a conversion that substantially changes the 
dimensions or carrying capacity of the vessel or aircraft, changes the 
type of the vessel or aircraft, substantially prolongs the life of the 
vessel or aircraft, or otherwise so changes the vessel or aircraft that 
it is essentially a new vessel or aircraft, as determined by Customs 
(see 46 U.S.C. 2101(14a)).

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


Sec. 191.141  Drawback allowance.

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


Sec. 191.142  Procedure.

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


Sec. 191.143  Drawback entry.

    (a) Filing of entry. Drawback entries covering these foreign-built 
jet aircraft engines shall be filed on Customs Form 7551, modified to 
show that the entry covers jet aircraft engines processed under 
Sec. 313(h) of the Act, as amended (19 U.S.C. 1313(h)).
    (b) Contents of entry. The entry shall show the country in which 
each engine was manufactured and describe the processing performed 
thereon in the United States.


Sec. 191.144  Refund of duties.

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

Subpart O--Merchandise Exported From Continuous Customs Custody


Sec. 191.151  Drawback allowance.

    (a) Eligibility of entered or withdrawn merchandise. (1) Under 19 
U.S.C. 1557(a). Section 557(a) of the Act, as amended (19 U.S.C. 
1557(a)), provides for drawback on the exportation to a foreign 
country, or the shipment to the Virgin Islands, American Samoa, Wake 
Island, Midway Islands, Kingman Reef, Johnston Island, or Guam, of 
merchandise upon which duties have been paid which has remained 
continuously in bonded warehouse or otherwise in Customs custody for a 
period not to exceed 5 years from the date of importation.
    (2) Under 19 U.S.C. 1313. Imported merchandise that has not been 
regularly entered or withdrawn for consumption, shall not satisfy any 
requirement for use, importation, exportation or

[[Page 11033]]

destruction, and shall not be available for drawback, under Sec. 313 of 
the Act, as amended (19 U.S.C. 1313) (see 19 U.S.C. 1313(u)).
    (b) Guantanamo Bay. Guantanamo Bay Naval Station shall be 
considered foreign territory for drawback purposes under this subpart 
and merchandise shipped there is eligible for drawback. Imported 
merchandise which has remained continuously in bonded warehouse or 
otherwise in Customs custody since importation is not entitled to 
drawback of duty when shipped to Puerto Rico, Canton Island, Enderbury 
Island, or Palmyra Island.


Sec. 191.152  Merchandise released from Customs custody.

    No remission, refund, abatement, or drawback of duty shall be 
allowed under this subpart because of the exportation or destruction of 
any merchandise after its release from Government custody, except in 
the following cases:
    (a) When articles are exported or destroyed on which drawback is 
expressly provided for by law;
    (b) When prohibited articles have been regularly entered in good 
faith and are subsequently exported or destroyed pursuant to statute 
and regulations prescribed by the Secretary of the Treasury; or
    (c) When articles entered under bond are destroyed within the 
bonded period, as provided in Sec. 557(c) of the Act, as amended (19 
U.S.C. 1557(c)), or destroyed within the bonded period by death, 
accidental fire, or other casualty, and satisfactory evidence of 
destruction is furnished to Customs (see Sec. 191.71), in which case 
any accrued duties shall be remitted or refunded and any condition in 
the bond that the articles shall be exported shall be deemed to have 
been satisfied (see 19 U.S.C. 1558).


Sec. 191.153  Continuous Customs custody.

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


Sec. 191.154  Filing the entry.

    (a) Direct export. At least 6 working hours before lading the 
merchandise on which drawback is claimed under this subpart, the 
importer or the agent designated by him in writing shall file with the 
drawback office a direct export drawback entry on Customs Form 7551 in 
duplicate.
    (b) Merchandise transported to another port for exportation. The 
importer of merchandise to be transported to another port for 
exportation shall file in triplicate with the drawback office an entry 
naming the transporting conveyance, route, and port of exit. The 
drawback office shall certify one copy and forward it to the Customs 
office at the port of exit. A bonded carrier shall transport the 
merchandise in accordance with the applicable regulations. Manifests 
shall be prepared and filed in the manner prescribed in Sec. 144.37 of 
this chapter.


Sec. 191.155  Merchandise withdrawn from warehouse for exportation.

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


Sec. 191.156  Bill of lading.

    (a) Filing. In order to complete the claim for drawback under this 
subpart, a bill of lading covering the merchandise described in the 
drawback entry (Customs Form 7551) shall be filed within 2 years after 
the merchandise is exported.
    (b) Contents. The bill of lading shall either show that the 
merchandise was shipped by the person making the claim or bear an 
endorsement of the person in whose name the merchandise was shipped 
showing that the person making the claim is authorized to do so.
    (c) Limitation of the bill of lading. The terms of the bill of 
lading may limit and define its use by stating that it is for Customs 
purposes only and not negotiable.
    (d) Inability to produce bill of lading. When a required bill of 
lading cannot be produced, the person making the drawback entry may 
request the drawback office, within the time required for the filing of 
the bill of lading, to accept a statement setting forth the cause of 
failure to produce the bill of lading and such evidence of exportation 
and of his right to make the drawback entry as may be available. The 
request shall be granted if the drawback office is satisfied by the 
evidence submitted that the failure to produce the bill of lading is 
justified, that the merchandise has been exported, and that the person 
making the drawback entry has the right to do so. If the drawback 
office is not so satisfied, such office shall transmit the request and 
its accompanying evidence to the Office of Field Operations, Customs 
Headquarters, for final determination.
    (e) Extracts of bills of lading. Drawback offices may issue 
extracts of bills of lading filed with drawback claims.


Sec. 191.157  Landing certificates.

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


Sec. 191.158  Procedures.

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

[[Page 11034]]

Sec. 191.159  Amount of drawback.

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

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


Sec. 191.161  Refund of taxes.

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


Sec. 191.162  Procedure.

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


Sec. 191.163  Documentation.

    (a) Entry. Customs Form 7551 shall be used to claim drawback under 
this subpart.
    (b) Documentation. The drawback entry for unmerchantable 
merchandise shall be accompanied by a certificate of the importer 
setting forth in detail the facts which cause the merchandise to be 
unmerchantable and any additional evidence that the drawback office 
requires to establish that the merchandise is unmerchantable.


Sec. 191.164  Return to Customs custody.

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


Sec. 191.165  No exportation by mail.

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


Sec. 191.166  Destruction of merchandise.

    (a) Action by the importer. A drawback claimant who proposes to 
destroy rather than export the distilled spirits, wine, or beer shall 
state that fact on Customs Form 7551.
    (b) Action by Customs. Distilled spirits, wine, or beer returned to 
Customs custody at the place approved by the drawback office where the 
drawback entry was filed shall be destroyed under the supervision of 
the Customs officer who shall certify the destruction on Customs Form 
7553.


Sec. 191.167  Liquidation.

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


Sec. 191.168  Time limit for exportation or destruction.

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

Subpart Q--Substitution of Finished Petroleum Derivatives


Sec. 191.171  General; Drawback allowance.

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


Sec. 191.172  Definitions.

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


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

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


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

    When the basis for drawback under 19 U.S.C. 1313(p) is petroleum 
derivatives which were manufactured or produced in the United States 
and qualify for drawback under the manufacturing drawback law (19 
U.S.C. 1313(a) or (b)), the requirements for drawback are as follows:
    (a) Merchandise. The merchandise which is the basis for drawback 
under 19 U.S.C. 1313(p) must:
    (1) Have been manufactured or produced as described in 19 U.S.C.

[[Page 11035]]

1313(a) or (b) from crude petroleum or a petroleum derivative; and
    (2) Be a ``qualified article'' as defined in Sec. 191.172(a) of 
this subpart;
    (b) Exported article. The exported article on which drawback is 
claimed must be an ``exported article'' as defined in Sec. 191.172(c) 
of this subpart;
    (c) Exporter. The exporter of the exported article must have 
either:
    (1) Manufactured or produced the qualified article in at least the 
quantity of the exported article; or
    (2) Purchased or exchanged (directly or indirectly) from a 
manufacturer or producer described in 19 U.S.C. 1313(a) or (b) the 
qualified article in at least the quantity of the exported article;
    (d) Manufacture in specific facility. The qualified article must 
have been manufactured or produced in a specific petroleum refinery or 
production facility which must be identified;
    (e) Time of export. The exported article must be exported either:
    (1) During the period provided for in the manufacturer's or 
producer's specific manufacturing drawback ruling (see Sec. 191.8 of 
this part) in which the qualified article is manufactured or produced; 
or
    (2) Within 180 days after the close of the period in which the 
qualified article is manufactured or produced; and
    (f) Amount of drawback. The amount of drawback payable may not 
exceed the amount of drawback which would be attributable to the 
article manufactured or produced under 19 U.S.C. 1313(a) or (b) which 
serves as the basis for drawback.


Sec. 191.175  Drawback claimant; maintenance of records.

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


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

    (a) Applicability. The general procedures for filing drawback 
claims shall be applicable to claims filed under 19 U.S.C. 1313(p) 
unless otherwise specifically provided for in this section.
    (b) Administrative efficiency, frequency of claims, and 
restructuring of claims. The procedures regarding administrative 
efficiency, frequency of claims, and restructuring of claims (as 
applicable, see Sec. 191.53 of this part) shall apply to claims filed 
under this subpart.
    (c) Imported duty-paid derivatives (no manufacture). When the basis 
for drawback under 19 U.S.C. 1313(p) is imported duty-paid petroleum 
(not articles manufactured under 19 U.S.C. 1313(a) or (b)), claims 
under this subpart may be paid and liquidated if:
    (1) The claim is filed on Customs Form 7551; and
    (2) The claimant provides a certification stating the basis (such 
as company records, or customer's written certification), for the 
information contained therein and certifying that:
    (i) The exported merchandise was exported within 180 days of entry 
of the designated, imported merchandise;
    (ii) The qualified article and the exported article are 
commercially interchangeable or both articles are subject to the same 
8-digit HTSUS tariff classification;
    (iii) To the best of the claimant's knowledge, the designated 
imported merchandise, the qualified article and the exported article 
have not and will not serve as the basis of any other drawback claim;
    (iv) Evidence in support of the certification will be retained by 
the person providing the certification for 3 years after payment of the 
claim; and
    (v) Such evidence will be available for verification by Customs.
    (d) Derivatives manufactured under 19 U.S.C. 1313(a) or (b). When 
the basis for drawback under 19 U.S.C. 1313(p) is articles manufactured 
under 19 U.S.C. 1313(a) or (b), claims under this section may be paid 
and liquidated if:
    (1) The claim is filed on Customs Form 7551;
    (2) All documents required to be filed with a manufacturing claim 
under 19 U.S.C. 1313(a) or (b) are filed with the claim;
    (3) The claim identifies the specific refinery or production 
facility at which the derivatives were manufactured or produced;
    (4) The claim states the period of manufacture for the derivatives; 
and
    (5) The claimant provides a certification stating the basis (such 
as company records or a customer's written certification), for the 
information contained therein and certifying that:
    (i) The exported merchandise was exported during the manufacturing 
period for the qualified article or within 180 days after the close of 
that period;
    (ii) The qualified article and the exported article are 
commercially interchangeable or both articles are subject to the same 
8-digit HTSUS tariff classification;
    (iii) To the best of the claimant's knowledge, the designated 
imported merchandise, the qualified article and the exported article 
have not and will not serve as the basis of any other drawback claim;
    (iv) Evidence in support of the certification will be retained by 
the person providing the certification for 3 years after payment of the 
claim; and
    (v) Such evidence will be available for verification by Customs.

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


Sec. 191.181  Drawback allowance.

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


Sec. 191.182  Zone-restricted merchandise.

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


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

    (a) Procedure for filing documents. Except as otherwise provided, 
the drawback procedures prescribed in this part shall be followed as 
applicable to drawback under this subpart on articles manufactured or 
produced in the United States with the use of imported or substituted 
merchandise, and on flavoring extracts or medicinal or toilet 
preparations (including perfumery) manufactured or produced with the 
use of domestic tax-paid alcohol.
    (b) Notice of transfer. (1) Evidence of export. The notice of zone 
transfer on Customs Form 214 shall be in place of the documents under 
subpart G of this part to establish the exportation.
    (2) Filing procedures. The notice of transfer, in triplicate, shall 
be filed with the drawback office where the foreign trade zone is 
located prior to the transfer of the articles to the zone, or within 3

[[Page 11036]]

years after the transfer of the articles to the zone. A notice filed 
after the transfer shall state the foreign trade zone lot number.
    (3) Contents of notice. Each notice of transfer shall show the:
    (i) Number and location of the foreign trade zone;
    (ii) Number and kind of packages and their marks and numbers;
    (iii) Description of the articles, including weight (gross and 
net), gauge, measure, or number; and
    (iv) Name of the transferor.
    (c) Action of foreign trade zone operator. After articles have been 
received in the zone, the zone operator shall certify on a copy of the 
notice of transfer the receipt of the articles (see Sec. 191.184(d)(2)) 
and forward the notice to the transferor or the person designated by 
the transferor, unless the export summary procedure, provided for in 
Sec. 191.73, is used. If the export summary procedure is used, the 
requirements in Sec. 191.73 shall be complied with, as applicable. The 
transferor shall verify that the notice has been certified before 
filing it with the drawback claim.
    (d) Drawback entries. Drawback entries shall be filed on Customs 
Form 7551 to indicate that the merchandise was transferred to a foreign 
trade zone. The ``Declaration of Exportation'' shall be modified as 
follows:

Declaration of Transfer to a Foreign Trade Zone

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

Dated:-----------------------------------------------------------------

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


Sec. 191.184  Merchandise transferred from continuous Customs custody.

    (a) Procedure for filing claims. The procedure described in subpart 
O of this part shall be followed as applicable, for drawback on 
merchandise transferred to a foreign trade zone from continuous Customs 
custody.
    (b) Drawback entry. Before the transfer of merchandise from 
continuous Customs custody to a foreign trade zone, the importer or a 
person designated in writing by the importer for that purpose shall 
file with the drawback office a direct export drawback entry on Customs 
Form 7551 in duplicate. The drawback office shall forward one copy of 
Customs Form 7551 to the zone operator at the zone.
    (c) Certification by zone operator. After the merchandise has been 
received in the zone, the zone operator shall certify on the copy of 
Customs Form 7551 the receipt of the merchandise (see paragraph (d)(2) 
of this section) and forward the form to the transferor or the person 
designated by the transferor, unless the export summary procedure, 
provided for in Sec. 191.73, is used. If the export summary procedure 
is used, the requirements in Sec. 191.73 shall be complied with, as 
applicable. After executing the declaration provided for in paragraph 
(d)(3) of this section, the transferor shall resubmit Customs Form 7551 
to the drawback office in place of the bill of lading required by 
Sec. 191.156.
    (d) Modification of drawback entry. (1) Indication of transfer. 
Customs Form 7551 shall indicate that the merchandise is to be 
transferred to a foreign trade zone.
    (2) Endorsement. The transferor or person designated by the 
transferor shall endorse Customs Form 7551 as follows, for execution by 
the foreign trade zone operator:

Certification of Foreign Trade Zone Operator

    The merchandise described in the entry was received from 
____________ on ____________, 19____________; in Foreign Trade Zone 
No.____________,
(City and State)
Exceptions ____________------------------------------------------------
(Name and title)
By ____________--------------------------------------------------------
(Name of operator)
    (3) Transferor's declaration. The transferor shall declare on 
Customs Form 7551 as follows:

Transferor's Declaration

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

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


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

    (a) Procedure for filing claims. The procedures described in 
subpart C of this part relating to unused merchandise drawback, and in 
subpart D of this part relating to rejected merchandise, shall be 
followed as applicable to drawback under this subpart for unused 
merchandise drawback and merchandise that does not conform to sample or 
specification, is shipped without consent of the consignee, or is found 
to be defective as of the time of importation.
    (b) Drawback entry. Before transfer of the merchandise to a foreign 
trade zone, the importer or a person designated in writing by the 
importer for that purpose shall file with the drawback office an entry 
on Customs Form 7551 in duplicate. The drawback office shall forward 
one copy of Customs Form 7551 to the zone operator at the zone.
    (c) Certification by zone operator. After the merchandise has been 
received in the zone, the zone operator at the zone shall certify on 
the copy of Customs Form 7551 the receipt of the merchandise and 
forward the form to the transferor or the person designated by the 
transferor, unless the export summary procedure, provided for in 
Sec. 191.73, is used. If the export summary procedure is used, the 
requirements in Sec. 191.73 shall be complied with, as applicable. 
After executing the declaration provided for in paragraph (d)(3) of 
this section, the transferor shall resubmit Customs Form 7551 to the 
drawback office in place of the bill of lading required by 
Sec. 191.156.
    (d) Modification of drawback entry. (1) Indication of transfer. 
Customs Form 7551 shall indicate that the merchandise is to be 
transferred to a foreign trade zone.
    (2) Endorsement. The transferor or person designated by the 
transferor shall endorse Customs Form 7551 as follows, for execution by 
the foreign trade zone operator:

Certification of Foreign Trade Zone Operator

    The merchandise described in this entry was received from 
____________ on ____________, 19 ____, in Foreign Trade Zone No. 
____________, ____________ (City and State).
Exceptions:------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(Name of operator)
By---------------------------------------------------------------------
(Name and title)


[[Page 11037]]


    (3) Transferor's declaration. The transferor shall declare on 
Customs Form 7551 as follows:

Transferor's Declaration

I, ____________--------------------------------------------------------
of the firm of ____________, declare that the merchandise described 
in the within entry was duly entered at the customhouse on arrival 
at this port; that the duties thereon have been paid as specified in 
this entry; and that it was transferred to Foreign Trade Zone No. 
____________, located at2/32/32/32/32/32/3
(City and State) for the sole purpose of exportation, destruction, 
or storage, not to be removed from the foreign trade zone for 
domestic consumption. I further declare that to the best of my 
knowledge and belief, said merchandise is the same in quantity, 
quality, value, and package as specified in this entry; that no 
allowance nor reduction in duties has been made; and that no part of 
the duties paid has been refunded by drawback or otherwise.
Dated:-----------------------------------------------------------------
Transferor


Sec. 191.186  Person entitled to claim drawback.

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

Subpart S--Drawback Compliance Program


Sec. 191.191  Purpose.

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


Sec. 191.192  Certification for compliance program.

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


Sec. 191.193  Application procedure for compliance program.

    (a) Who may apply. Claimants and other parties in interest may 
apply for participation in the drawback compliance program. This 
includes any person, corporation or business entity that provides 
supporting information or documentation to one who files drawback 
claims, as well as Customs brokers who assist claimants in filing for 
drawback. Program participants may further consist of importers, 
manufacturers or producers, agent-manufacturers, complementary 
recordkeepers, subcontractors, intermediate parties, and exporters.
    (b) Place of filing. An application in letter format containing the 
information as prescribed in paragraphs (c) and (d) of this section 
shall be submitted to any drawback office. However, in the event the 
applicant is a claimant for drawback, the application shall be 
submitted to the drawback office where the claims will be filed.
    (c) Letter of application; contents. A party requesting 
certification to become a participant in the drawback compliance 
program shall file with the applicable drawback office a written 
application in letter format, signed by an authorized individual (see 
Sec. 191.6(c) of this part). The detail required in the application 
shall take into account the size and nature of the applicant's drawback 
program, the type of drawback claims filed, and the dollar value and 
volume of claims filed. However, the application shall contain at least 
the following information:
    (1) Name of applicant, address, IRS number (with suffix), and the 
type of business in which engaged, as well as the name(s) of the 
individual(s) designated by the applicant to be responsible for 
compliance under the program;
    (2) A description of the nature of the applicant's drawback 
program, including the type of drawback in which involved (such as, 
manufacturing, or unused or rejected merchandise), and the applicant's 
particular role(s) in the drawback claims process (such as claimant 
and/or importer, manufacturer or producer, agent-manufacturer, 
complementary recordkeeper, subcontractor, intermediate party 
(possessor or purchaser), or exporter (destroyer)); and
    (3) Size of applicant's drawback program. (For example, if the 
applicant is a claimant, the number of claims filed over the previous 
12-month period should be included, along with the number estimated to 
be filed over the next 12-month period, and the estimated amount of 
drawback to be

[[Page 11038]]

claimed annually. Other parties should describe the extent to which 
they are involved in drawback activity, based upon their particular 
role(s) in the drawback process; for example, manufacturers should 
explain how much manufacturing they are engaged in for drawback, such 
as the quantity of drawback product produced on an annual basis, as 
established by the certificates of manufacture and delivery they have 
executed.)
    (d) Application package. Along with the letter of application as 
prescribed in paragraph (c) of this section, the application package 
must include a description of how the applicant will ensure compliance 
with statutory and regulatory drawback requirements. This description 
may be in the form of a booklet or set forth otherwise. The description 
must include at least the following:
    (1) The name and title of the official in the applicant's 
organization who is responsible for oversight of the applicant's 
drawback program, and the name and title, with mailing address and, if 
available, fax number and e-mail address, of the person[s] in the 
applicant's organization responsible for the actual maintenance of the 
applicant's drawback program;
    (2) If the applicant is a manufacturer and the drawback involved is 
manufacturing drawback, a copy of the letter of notification of intent 
to operate under a general manufacturing drawback ruling or the 
application for a specific manufacturing drawback ruling (see 
Secs. 191.7 and 191.8 of this part), as appropriate;
    (3) A description of the applicant's drawback record-keeping 
program, including the retention period and method (for example, paper, 
electronic, etc.);
    (4) A list of the records that will be maintained, including at 
least sample import documents, sample export documents, sample 
inventory and transportation documents (if applicable), sample 
laboratory or other documents establishing the qualification of 
merchandise or articles for substitution under the drawback law (if 
applicable), and sample manufacturing documents (if applicable);
    (5) A description of the applicant's specific procedures for:
    (i) How drawback claims are prepared (if the applicant is a 
claimant); and
    (ii) How the applicant will fulfill any requirements under the 
drawback law and regulations applicable to its role in the drawback 
program;
    (6) A description of the applicant's procedures for notifying 
Customs of variances in, or violations of, its drawback compliance 
program or negotiated alternative drawback compliance program, and 
procedures for taking corrective action when notified by Customs of 
violations or other problems in such program; and
    (7) A description of the applicant's procedures for annual review 
to ensure that its drawback compliance program meets the statutory and 
regulatory drawback requirements and that Customs is notified of any 
modifications from the procedures described in this application.


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

    (a) Review by applicable drawback office. (1) General. It is the 
responsibility of the drawback office where the drawback compliance 
application package is filed to coordinate its decision making on the 
package both with Customs Headquarters and with the other field 
drawback offices as appropriate. Customs processing of the package will 
consist of the review of the information contained therein as well as 
any additional information requested (see paragraph (a)(2) of this 
section).
    (2) Criteria for Customs review. The drawback office shall review 
and verify the information submitted in and with the application. In 
order for Customs to evaluate the application, Customs may request 
additional information (including additional sample documents) and/or 
explanations of any of the information provided for in Sec. 191.193(c) 
and (d) of this subpart. Based on the information submitted on and with 
the application and any information so requested, and based on the 
applicant's record of transactions with Customs, the drawback office 
will approve or deny the application. The criteria to be considered in 
reviewing the applicant's record with Customs shall include (as 
applicable):
    (i) The presence or absence of unresolved Customs charges (duties, 
taxes, or other debts owed Customs);
    (ii) The accuracy of the claimant's past drawback claims; and
    (iii) Whether accelerated payment of drawback or waiver of prior 
notice of intent to export was previously revoked or suspended.
    (b) Approval. Certification as a participant in the drawback 
compliance program will be given to applicants whose applications are 
approved under the criteria in paragraph (a)(2) of this section. The 
applicable drawback office will give written notification to an 
applicant of its certification as a participant in the drawback 
compliance program. A Customs broker obtaining certification for a 
drawback claimant will be sent written notification on behalf of such 
claimant, with a copy of the notification also being sent to the 
claimant.
    (c) Benefits of participation in program. When a party that has 
been certified as a participant in the drawback compliance program and 
is generally in compliance with the appropriate procedures and 
requirements of the program commits a violation of 19 U.S.C. 1593a(a) 
(see Sec. 191.62(b) of this part), Customs shall, in the absence of 
fraud or repeated violations, and in lieu of a monetary penalty as 
otherwise provided under Sec. 1593a, issue a written notice of the 
violation to the party. Repeated violations by a participant, including 
a Customs broker, may result in the issuance of penalties and the 
removal of certification under the program until corrective action, 
satisfactory to Customs, is taken.
    (d) Denial. If certification as a participant in the drawback 
compliance program is denied to an applicant, the applicant shall be 
given written notice by the applicable drawback office, specifying the 
grounds for such denial, together with any action that may be taken to 
correct the perceived deficiencies, and informing the applicant that 
such denial may be appealed to the appropriate drawback office and then 
appealed to Customs Headquarters.
    (e) Revocation. If the participant commits repeated violations of 
its drawback compliance program or negotiated alternative drawback 
compliance program, the applicable drawback office, by written notice, 
may propose to revoke certification from the participant, until 
corrective action, satisfactory to Customs, is taken to prevent such 
violations. The written notice will describe the cause for the proposed 
revocation and the corrective actions required. The revocation shall 
take effect 30 days after the date of the proposed revocation if not 
timely challenged under paragraph (f) of this section. If timely 
challenged, the revocation will take effect after completion of the 
challenge procedures in paragraph (f) of this section unless the 
challenge is successful.
    (f) Appeal of denial or challenge to proposed revocation. A party 
may appeal a denial or challenge a proposed revocation of certification 
as a participant in the drawback compliance program by filing a written 
appeal, within 30 days of the date of such denial or proposed 
revocation, with the applicable drawback office. A denial of an appeal 
or challenge to a proposed

[[Page 11039]]

revocation may itself be appealed to Customs Headquarters, Office of 
Field Operations, Office of Trade Operations, within 30 days of receipt 
of the applicable drawback office's decision. The 30-day period for 
appeal or challenge with the applicable drawback office and/or with 
Customs Headquarters may be extended for good cause, upon written 
request by the applicant for such extension filed with the applicable 
drawback office or with Customs Headquarters, as the case may be, 
within the 30-day period.


Sec. 191.195  Combined application for certification in drawback 
compliance program and waiver of prior notice and/or approval of 
accelerated payment of drawback.

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

Appendix A to Part 191--General Manufacturing Drawback Rulings

Table of Contents

I. General Instructions
II. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) 
(T.D. 81-234; T.D. 83-123)
III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) 
or 1313(b) for Agents (T.D. 81-181)
IV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) 
for Burlap or Other Textile Material (T.D. 83-53)
V. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for 
Component Parts (T.D. 81-300)
VI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) 
for Flaxseed (T.D. 83-80)
VII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) 
for Fur Skins or Fur Skin Articles (T.D. 83-77)
VIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Orange Juice (T.D. 85-110)
IX. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Petroleum or Petroleum Derivatives (T.D. 84-49)
X. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for 
Piece Goods (T.D. 83-73)
XI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Raw Sugar (T.D. 83-59)
XII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Steel (T.D. 81-74)
XIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Sugar (T.D. 81-92)
XIV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) 
for Woven Piece Goods (T.D. 83-84)

I. General Instructions

    A. There follow various general manufacturing drawback rulings 
which have been designed to simplify drawback procedures. Any person 
who can comply with the conditions of any one of these rulings may 
notify a Customs drawback office in writing of its intention to 
operate under the ruling (see Sec. 191.7 of this part). Such a 
letter of notification shall include the following information:
    1. Name and address of manufacturer or producer;
    2. IRS (Internal Revenue Service) number (with suffix) of 
manufacturer or producer;
    3. Location[s] of factory[ies] which will operate under the 
general ruling;
    4. If a business entity, names of persons who will sign drawback 
documents (see Sec. 191.6 of this part);
    5. Identity (by T.D. number and title, as stated in this 
Appendix) of general manufacturing drawback ruling under which the 
manufacturer or producer intends to operate;
    6. Description of the merchandise and articles, unless 
specifically described in the general manufacturing drawback ruling;
    7. Only for General Manufacturing Drawback Ruling Under 19 
U.S.C. 1313(b) for Petroleum or Petroleum Derivatives, the name of 
each article to be exported or, if the identity of the product is 
not clearly evident by its name, what the product is, and the 
abstract period to be used for each refinery (monthly or other 
specified period (not to exceed 1 year)), subject to the conditions 
in the General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) 
for Petroleum or Petroleum Derivatives, I. Procedures and Records 
Maintained, 4(a) or (b);
    8. Basis of claim used for calculating drawback; and
    9. Description of the manufacturing or production process, 
unless specifically described in the general manufacturing drawback 
ruling.
    For the General Manufacturing Drawback Ruling under 
Sec. 1313(a), the General Manufacturing Drawback Ruling Under 19 
U.S.C. 1313(b) for Component Parts, and the General Manufacturing 
Drawback Ruling Under 19 U.S.C. 1313(a) or 1313(b) for Agents, if 
the drawback office has doubts as to whether there is a manufacture 
or production, as defined in Sec. 191.2(q) of this part, the 
manufacturer or producer will be asked to provide details of the 
operation purported to be a manufacture or production.
    B. These general manufacturing drawback rulings supersede 
general ``contracts'' previously published under the following 
Treasury Decisions (T.D.'s): 81-74, 81-92, 81-181, 81-234, 81-300, 
83-53, 83-59, 83-73, 83-77, 83-80, 83-123, 84-49, and 85-110.

Anyone currently operating under any of the above-listed Treasury 
Decisions will automatically be covered by the superseding general 
ruling, including all privileges of the previous ``contract''.

II. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) (T.D. 
81-234; T.D. 83-123)

A. Imported Merchandise or Drawback Products \1\ Used

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

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

B. Exported Articles on which Drawback will be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process Of Manufacture Or Production

    The imported merchandise or drawback products will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.

E. Multiple Products

1. Relative Values

    Drawback law mandates the assignment of relative values when two 
or more products necessarily are produced concurrently in the same 
operation. If multiple products are produced records will be 
maintained of the market value of each product at the time it is 
first separated in the manufacturing process.

2. Appearing-in method

    The appearing in basis may not be used if multiple products are 
produced.

F. Loss or Gain

    Records will be maintained showing the extent of any loss or 
gain in net weight or measurement of the imported merchandise,

[[Page 11040]]

caused by atmospheric conditions, chemical reactions, or other 
factors.

G. Tradeoff

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

H. Stock In Process

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

I. Waste

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

J. Procedures And Records Maintained

    Records will be maintained to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise, and
    2. The quantity of imported merchandise \2\ used in producing 
the exported articles.

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

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

K. Inventory Procedures

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

L. Basis of Claim for Drawback

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

M. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this general ruling.

III. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) or 
1313(b) for Agents (T.D. 81-181)

    Manufacturers or producers operating under this general 
manufacturing drawback ruling must comply with T.D.s 55027(2), 
55207(1), and 19 U.S.C. 1313(b), if applicable, as well as 19 CFR 
part 191 (see particularly, Sec. 191.9).

A. Name and Address of Principal

B. Process of Manufacture or Production

    The imported merchandise or drawback products or other 
substituted merchandise will be used to manufacture or produce 
articles in accordance with Sec. 191.2(q) of this part.

C. Procedures and Records Maintained

    Records will be maintained to establish:
    1. Quantity, kind and quality of merchandise transferred from 
the principal to the agent;
    2. Date of transfer of the merchandise from the principal to the 
agent;
    3. Date of manufacturing or production operations performed by 
the agent;
    4. Total quantity and description of merchandise appearing in or 
used in manufacturing or production operations performed by the 
agent;
    5. Total quantity and description of articles produced in 
manufacturing or production operations performed by the agent;
    6. Quantity, kind and quality of articles transferred from the 
agent to the principal; and
    7. Date of transfer of the articles from the agent to the 
principal.

D. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
manufacturing or producing articles for account of the principal 
under the principal's general manufacturing drawback ruling or 
specific manufacturing drawback ruling, as appropriate;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates the claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this general ruling.

IV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for 
Burlap or Other Textile Material (T.D. 83-53)

    Drawback may be allowed under 19 U.S.C. 1313(a) upon the 
exportation of burlap or other textile material manufactured with 
the use of imported burlap or other textile material, subject to the 
following special requirements:

A. Imported Merchandise or Drawback Products \1\ Used

    Imported merchandise or drawback products (burlap or other 
textile material) are used in the manufacture of the exported 
articles upon which drawback claims will be based.
---------------------------------------------------------------------------

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

    B. Exported Articles on Which Drawback Will Be Claimed
    Exported articles on which drawback will be claimed will be 
manufactured in the United States using imported merchandise or 
drawback products.

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer

[[Page 11041]]

or producer for the account of the manufacturer or producer under 
contract within the principal and agency relationship outlined in 
T.D.''s 55027(2) and 55207(1) (see Sec. 191.9 of this part).

D. Process of Manufacture or Production

    The imported merchandise or drawback products will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.

E. Multiple Products

    Not applicable.

F. Loss or Gain

    Not applicable.

G. Waste

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

H. Procedures and Records Maintained

    Records will be maintained to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise; and
    2. The quantity of imported merchandise \2\ used in producing 
the exported articles.
    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after importation of 
the imported merchandise. Records establishing compliance with these 
requirements will be available for audit by Customs during business 
hours. Drawback is not payable without proof of compliance.

I. Inventory Procedures

    The inventory records of the manufacturer or producer will show 
how the drawback recordkeeping requirements set forth in 19 U.S.C. 
1313(a) and part 191 of the Customs Regulations will be met, as 
discussed under the heading ``Procedures and Records Maintained''. 
If those records do not establish satisfaction of those legal 
requirements, drawback cannot be paid.
    Each lot of imported material received by a manufacturer or 
producer shall be given a lot number and kept separate from other 
lots until used. The records of the manufacturer or producer shall 
show, as to each manufacturing lot or period of manufacture, the 
quantity of material used from each import lot and the number of 
each kind and size of bags or meat wrappers obtained. If applicable, 
a certificate of manufacture and delivery shall be filed covering 
each manufacturing lot or period of manufacture.
    All bags or meat wrappers manufactured or produced for the 
account of the same exporter during a specified period may be 
designated as one manufacturing lot and, as applicable, covered by 
one certificate of manufacture and delivery. All exported bags or 
meat wrappers shall be identified by the exporter with the 
certificate of manufacture and delivery covering their manufacture, 
if applicable.

J. Basis of Claim for Drawback

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

K. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation.
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with 19, 
United States Code, Sec. 1313, part 191 of the Customs Regulations 
and this general ruling.

V. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for 
Component Parts (T.D. 81-300)

A. Same Kind and Quality (Parallel Columns)


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

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

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

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

    The components described in the parallel columns will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.

E. Multiple Products

    Not applicable.

F. Waste

[[Page 11042]]

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

G. Tradeoff

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

H. Procedures And Records Maintained

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

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

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the manufacturer or producer used the 
merchandise to produce articles. During the same 3-year period, the 
manufacturer or producer produced \3\ the exported articles. To 
obtain drawback the claimant must establish that the completed 
articles were exported within 5 years after the importation of the 
imported merchandise. Records establishing compliance with these 
requirements will be available for audit by Customs during business 
hours. Drawback is not payable without proof of compliance.
---------------------------------------------------------------------------

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

I. Inventory Procedures

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

J. Basis of Claim for Drawback

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

K. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this general ruling.

VI. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for 
Flaxseed (T.D. 83-80)

    Drawback may be allowed under the provision of 19 U.S.C. 1313(a) 
upon the exportation of linseed oil, linseed oil cake, and linseed 
oil meal, manufactured or produced with the use of imported 
flaxseed, subject to the following special requirements:

A. Imported Merchandise or Drawback Products \1\ Used

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

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

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

    The imported merchandise or drawback products will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.

E. Multiple Products

    Drawback law mandates the assignment of relative values when two 
or more products necessarily are produced concurrently in the same 
operation. If multiple products are produced records will be 
maintained of the market value of each product at the time it is 
first separated in the manufacturing process (when a claim covers a 
manufacturing period, the entire period covered by the claim is the 
time of separation of the products and the value per unit of product 
is the market value for the period (see Secs. 191.2(u), 191.22(e)). 
The ``appearing in'' basis may not be used if multiple products are 
produced.

F. Loss or Gain

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

G. Waste

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

H. Procedures and Records Maintained

    Records will be maintained to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise; and
    2. The quantity of imported merchandise \2\ used in producing 
the exported articles.
---------------------------------------------------------------------------

    \2\ If claims are to be made on an ``appearing in'' basis, the 
remainder of the sentence should read ``appearing in the exported 
articles.'' To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after importation of 
the imported merchandise. Records establishing compliance with these 
requirements will be available for audit by Customs during business 
hours. Drawback is not payable without proof of compliance.
---------------------------------------------------------------------------

I. Inventory Procedures

    The inventory records of the manufacturer or producer will show 
how the drawback recordkeeping requirements set forth in 19 U.S.C. 
1313(a) and part 191 of the Customs Regulations will be met, as 
discussed under the heading ``Procedures and Records Maintained''. 
If those records do not establish satisfaction of those legal 
requirements, drawback cannot be paid.
    The inventory records of the manufacturer or producer shall show 
the inclusive dates of manufacture; the quantity, identity, and 
value of the imported flaxseed or screenings, scalpings, chaff, or 
scourings used; the quantity by actual weight and value, if any, of 
the material removed from the foregoing

[[Page 11043]]

by screening prior to crushing; the quantity and kind of domestic 
merchandise added, if any; the quantity by actual weight or gauge 
and value of the oil, cake, and meal obtained; and the quantity and 
value, if any, of the waste incurred. The quantity of imported 
flaxseed, screenings, scalpings, chaff, or scourings used or of 
material removed shall not be estimated nor computed on the basis of 
the quantity of finished products obtained, but shall be determined 
by actually weighing the said flaxseed, screenings, scalpings, 
chaff, scourings, or other material; or, at the option of the 
crusher, the quantities of imported materials used may be determined 
from Customs weights, as shown by the import entry covering such 
imported materials, and the Government weight certificate of 
analysis issued at the time of entry. The entire period covered by 
an abstract shall be deemed the time of separation of the oil and 
cake covered thereby.
    If the records of the manufacturer or producer do not show the 
quantity of oil cake used in the manufacture or production of the 
exported oil meal and the quantity of oil meal obtained, the net 
weight of the oil meal exported shall be regarded as the weight of 
the oil cake used in the manufacture thereof.
    If various tanks are used for the storage of imported flaxseed, 
the mill records shall establish the tank or tanks in which each lot 
or cargo is stored. If raw or processed oil manufactured or produced 
during different periods of manufacture is intermixed in storage, a 
record shall be maintained showing the quantity, identity, and kind 
of oil so intermixed. Identity of merchandise or articles in either 
instance shall be in accordance with Sec. 191.14 of this part.

J. Basis of Claim for Drawback

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

K. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation.
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with 19, 
United States Code, Sec. 1313, part 191 of the Customs Regulations 
and this general ruling.

VII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for 
Fur Skins or Fur Skin Articles (T.D. 83-77)

    Drawback may be allowed under 19 U.S.C. 1313(a) upon the 
exportation of dressed, redressed, dyed, redyed, bleached, blended, 
or striped fur skins or fur skin articles manufactured or produced 
by any one or a combination of the foregoing processes with the use 
of fur skins or fur skin articles, such as plates, mats, sacs, 
strips, and crosses, imported in a raw, dressed, or dyed condition, 
subject to the following special requirements:

A. Imported Merchandise or Drawback Products \1\ Used

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

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

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

    The imported merchandise or drawback products will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.
    Drawback shall not be allowed under this general manufacturing 
drawback ruling when the process performed results only in the 
restoration of the merchandise to its condition at the time of 
importation.

E. Multiple Products

    Not applicable.

F. Loss or Gain

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

G. Waste

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

H. Procedures and Records Maintained

    Records will be maintained to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise; and
    2. The quantity of imported merchandise \2\ used in producing 
the exported articles.
---------------------------------------------------------------------------

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

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

I. Inventory Procedures

    The inventory records of the manufacturer or producer will show 
how the drawback recordkeeping requirements set forth in 19 U.S.C. 
1313(a) and part 191 of the Customs Regulations will be met, as 
discussed under the heading ``Procedures and Records Maintained''. 
If those records do not establish satisfaction of those legal 
requirements, drawback cannot be paid.
    The records of the manufacturer or producer shall show, as to 
each lot of fur skins and/or fur skin articles used in the 
manufacture or production of articles for exportation with benefit 
of drawback, the lot number and date or inclusive dates of 
manufacture or production, the quantity, identity, and description 
of the imported merchandise used, the condition in which imported, 
the process or processes applied thereto, the quantity and 
description of the finished articles obtained, and the quantity of 
imported pieces rejected, if any, or spoiled in manufacture or 
production.

J. Basis of Claim for Drawback

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

[[Page 11044]]

would replace. (If rejects and/or spoilage are incurred, the 
quantity of imported merchandise used shall be determined by 
deducting from the quantity of fur skins or fur skin articles put 
into manufacture or production the quantity of such rejects and/or 
spoilage.)

K. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation.
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with 19, 
United States Code, Sec. 1313, part 191 of the Customs Regulations 
and this general ruling.

VIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for 
Orange Juice (T.D. 85-110)

A. Same Kind and Quality (Parallel Columns)

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

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

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

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

E. Multiple Products, Waste, Loss or Gain

    Not applicable.

F. Tradeoff

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

G. Procedures and Records Maintained

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

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

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

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

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

H. Inventory Procedures

    The inventory records of the manufacturer or producer will show 
how the drawback recordkeeping requirements set forth in 19 U.S.C. 
1313(b) and part 191 of the Customs Regulations will be met, as 
discussed under the heading ``Procedures And Records Maintained'', 
and will show what components were blended with the concentrated 
orange juice for manufacturing. If those records do not establish 
satisfaction of those legal requirements, drawback cannot be paid.

I. Basis of Claim for Drawback

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

J. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office

[[Page 11045]]

which liquidates its claims any changes in the information required 
by the General Instructions of this Appendix to be included therein 
(I. General Instructions, 1 through 9) or the corporate name or 
corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this general ruling.

IX. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for 
Petroleum or Petroleum Derivatives (T.D. 84-49)

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


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

    The manufacturer or producer will substitute crude petroleum for 
crude petroleum and a petroleum derivative for the same petroleum 
derivative on a class-for-class basis only.

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

    The imported merchandise which the manufacturer or producer will 
designate on its claims will be so similar in quality to the 
merchandise used in producing the exported articles on which 
drawback is claimed that the merchandise used would, if imported, be 
subject to the same rate of duty as the imported designated 
merchandise.

B. Exported Articles Produced From Fractionation

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

C. Exported Articles on Which Drawback Will Be Claimed

    See the General Instructions, I.A.7., for this general drawback 
ruling. Each article to be exported must be named. When the identity 
of the product is not clearly evident by its name, there must be a 
statement as to what the product is, e.g., a herbicide.

D. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

E. Process of Manufacture or Production

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

F. Multiple Products

1. Relative Values

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

2. Producibility

    The manufacturer or producer can vary the proportionate quantity 
of each product. The manufacturer or producer understands that 
drawback is payable on exported products only to the extent that 
these products could have been produced from the designated 
merchandise. The records of the manufacturer or producer will show 
that all of the products exported for which drawback will be claimed 
under this general manufacturing drawback ruling could have been 
produced concurrently on a practical operating basis from the 
designated merchandise.
    The manufacturer or producer agrees to establish the amount to 
be designated by reference to the Industry Standards of Potential 
Production published in T.D. 66-16.\2\
---------------------------------------------------------------------------

    \2\ A manufacturer who proposes to use standards other than 
those in T.D. 66-16 must state the proposed standards and provide 
sufficient information to the Customs Service in order for those 
proposed standards to be verified in accordance with T.D. 84-49.
---------------------------------------------------------------------------

    There are no valuable wastes as a result of the processing.

G. Loss or Gain

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

H. Tradeoff

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

I. Procedures and Records Maintained

    Records will be maintained to establish:
    1. The identity and specifications of the merchandise 
designated;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise used to produce the exported articles.
    3. That, within 3 years after receiving it at its refinery, the 
manufacturer or producer used the designated merchandise to produce 
articles. During the same 3-year period, the manufacturer or 
producer produced the exported articles.
    4(a). The manufacturer or producer agrees to use a 28-31 day 
period (monthly) abstract period for each refinery covered by this 
general manufacturing drawback ruling, or
    (b). The manufacturer or producer agrees to use an abstract 
period (not to exceed 1 year) for each refinery covered by this 
general manufacturing drawback ruling. The manufacturer or producer 
certifies that if it were to file abstracts covering each 
manufacturing period of not less than 28 days and not more than 31 
days (monthly) within the longer period, in no such monthly abstract 
would the quantity of designated merchandise exceed, for the same 
class of designated merchandise, the material introduced into the 
manufacturing process during that monthly period. (Select (a) or 
(b), and state which is selected in the application, and, if (b) is 
selected, specify the length of the particular abstract period

[[Page 11046]]

chosen (not to exceed 1 year (see General Instruction I.A.7.)).)
    5. On each abstract of production the manufacturer or producer 
agrees to show the value per barrel to five decimal places.
    6. The manufacturer or producer agrees to file claims in the 
format set forth in exhibits A through F which are attached to this 
general manufacturing drawback ruling. The manufacturer or producer 
realizes that to obtain drawback the claimant must establish that 
the completed articles were exported within 5 years after 
importation of the imported merchandise. Records establishing 
compliance with these requirements will be available for audit by 
Customs during business hours. It is understood that drawback is not 
payable without proof of compliance. Records will be kept in 
accordance with T.D. 84-49, as amended by T.D. 95-61.

J. Residual Rights

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

K. Inventory Procedures

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

L. Basis of Claim for Drawback

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

M. Agreements

    The manufacturer or producer specifically agrees that it will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its refinery and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
information required by the General Instructions of this Appendix to 
be included therein (I. General Instructions, 1 through 9) or the 
corporate name or corporate organization by succession or 
reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this general ruling.

BILLING CODE 4820-02-P

[[Page 11047]]

[GRAPHIC] [TIFF OMITTED] TR05MR98.000



[[Page 11048]]

[GRAPHIC] [TIFF OMITTED] TR05MR98.001



BILLING CODE 4820-02-C

[[Page 11049]]



            Exhibit C.--Inventory Control Sheet: ABC Oil Co., Inc.; Beaumont, Texas Refinery, Period from January 1, 1995 to January 31, 1995           
                                                    [All quantities exclude non-petroleum additives]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Aviation gasoline       Residual oils       Lubricating oils     Petrochemicals, all
                                                                 ------------------------------------------------------------------         other       
                                                                                                                                   ---------------------
                                                                    Bbls.     Drawback    Bbls.     Drawback    Bbls.     Drawback              Drawback
                                                                               factor                factor                factor     Bbls.      factor 
--------------------------------------------------------------------------------------------------------------------------------------------------------
(10) Opening Inventory..........................................     11,218    1.00126     21,221     .45962      9,242    4.52178        891    1.00244
(11) Production.................................................    108,269    1.01300    308,002     .43642    292,492    4.64041      7,996    1.07895
(11-A) Receipts.................................................  .........  .........  .........  .........  .........  .........  .........  .........
(12) Exports....................................................     11,218    1.00126     21,221     .45962      8,774    4.52178        195    1.00244
                                                                        176    1.01300    104,397     .43642  .........  .........  .........  .........
(13) Drawback Deliveries........................................  .........  .........  .........  .........  .........  .........        696    1.00244
                                                                  .........  .........  .........  .........  .........  .........        319    1.07895
(14) Domestic Shipments.........................................     97,863    1.01300    180.957     .43642        468    4.52178      6,867    1.07895
                                                                    278,286    4.64041  .........  .........  .........  .........  .........  .........
(15) Closing Inventory..........................................     10,230    1.01300     22,648     .43642     14,206    4.64041        810    1.07895
--------------------------------------------------------------------------------------------------------------------------------------------------------
Line (10)--Opening inventory from previous period's closing inventory.                                                                                  
Line (11)--From production period under consideration.                                                                                                  
Line (11-A)--Product received from other sources.                                                                                                       
Line (12)--From earliest on hand (inventory or production). Totals from drawback entry or entries recapitulated (see column 18).                        
Line (13)--Deliveries for export or for designation against further manufacture--earliest on hand after exports are deducted.                           
Line (14)--From earliest on hand after lines (12) and (13) are deducted.                                                                                
Line (15)--Balance on hand.                                                                                                                             


BILLING CODE 4820-02-M

[[Page 11050]]

[GRAPHIC] [TIFF OMITTED] TR05MR98.002



[[Page 11051]]

[GRAPHIC] [TIFF OMITTED] TR05MR98.003



[[Page 11052]]

[GRAPHIC] [TIFF OMITTED] TR05MR98.004



BILLING CODE 4820-02-C

[[Page 11053]]



 Exhibit E (Combination).--Producibility Test for Products Exported (Including Drawback Deliveries) ABC Oil Co.,
                 Inc.; Beaumont, Texas Refinery, Period From January 1, 1995 to January 31, 1995                
                          [Type and Class of Raw Material Designated--Crude, Class III]                         
----------------------------------------------------------------------------------------------------------------
                                                                       (24)  Quantity of                        
                                                                        raw material of                  (20)   
                                                  (22)        (23)       type and class      (19)        Crude  
                (21)  Product                   Quantity    Industry   designated needed   Drawback     allowed 
                                               in barrels   standard       to produce       factor        for   
                                                               (%)        product per                  drawback 
                                                                             barrel                             
----------------------------------------------------------------------------------------------------------------
Aviation Gasoline \1\........................  \1\ 11,218          40             28,485     1.00126      11,232
                                                  \1\ 176          40                440     1.01300         178
Residual Oils \1\............................  \1\ 21,221          83             25,567      .45962       9,754
                                               \1\ 104,39                                                       
                                                        7          83            125,780      .43642      45,561
Lubricating Oils \1\.........................   \1\ 8,774          50             17,548     4.52178      39,674
Petrochemicals, Other \1\....................     \1\ 195          29                672     1.00244         195
Petrochemicals, Other \2\....................     \2\ 696          29              2,400     1.00244         698
Petrochemicals, Other \2\....................     \2\ 319          29              1,100     1.07895         344
                                              ------------------------------------------------------------------
                                                                                                                
      Total..................................     146,996  ..........  .................  ..........     107,636
----------------------------------------------------------------------------------------------------------------
\1\ Exports.                                                                                                    
\2\ Drawback deliveries.                                                                                        
                                                                                                                
A--Crude allowed (column 20: 107,636 bbls. (106,594 for export, plus 1,042 for drawback deliveries)).           
B--Total quantity exported (including drawback deliveries) (column 22): 146,996.                                
C--Largest quantity of raw material needed to produce an individual exported product (see column 24): 151,347.  
D--The excess of raw material over the largest of lines A, B, or C, required to produce concurrently on a       
  practical operating basis, using the most efficient processing equipment existing within the domestic         
  industry, the exported articles (including drawback deliveries) in the quantities exported (or delivered):    
  None.                                                                                                         
E--Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus  
  D, if applicable): 151,347 bbs.                                                                               
                                                                                                                
I hereby certify that all the above drawback deliveries and products exported by the Beaumont refinery of ABC   
  Oil Co., Inc. during the period from January 1, 1995 to January 31, 1995, could have been produced            
  concurrently on a practical operating basis from 151,347 barrels of imported Class III crude against which    
  drawback is claimed.                                                                                          


BILLING CODE 4820-02-M

[[Page 11054]]

[GRAPHIC] [TIFF OMITTED] TR05MR98.005



BILLING CODE 4820-02-C

[[Page 11055]]



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

X. General Manufacturing Drawback Ruling under 19 U.S.C. 1313(b) for 
Piece Goods (T.D. 83-73)

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

    The piece goods used in manufacture will be the same kind and 
quality as the piece goods designated as the basis of claim for 
drawback, and are used interchangeably without change in 
manufacturing processes or resultant products (including, if 
applicable, multiple products), or wastes. Some tolerances between 
imported-designated piece goods and the used-exported piece goods 
will be permitted to accommodate variations which are normally found 
in piece goods. These tolerances are no greater than the tolerances 
generally allowed in the industry for piece goods of the same kind 
and quality as follows:
    1. A 4% weight tolerance so that the piece goods used in 
manufacture will be not more than 4% lighter or heavier than the 
imported piece goods which will be designated;
    2. A tolerance of 4% in the aggregate thread count per square 
inch so that the piece goods used in manufacture will have an 
aggregate thread count within 4%, more or less of the aggregate 
thread count of the imported piece goods which will be designated. 
In each case, the average yarn number of the domestic piece goods 
will be the same or greater than the average yarn number of the 
imported piece goods designated, and in each case, the substitution 
and tolerance will be employed only within the same family of 
fabrics, i.e., print cloth for print cloth, gingham for gingham, 
greige for greige, dyed for dyed, bleached for bleached, etc. The 
piece goods used in manufacture of the exported articles will be 
designated as containing the identical percentage of identical 
fibers as the piece goods designated as the basis for allowance of 
drawback; for example, piece goods containing 65% cotton and 35% 
dacron will be designated against the use of piece goods shown to 
contain 65% cotton and 35% dacron. The actual fiber composition may 
vary slightly from that described on the invoice or other acceptance 
of the fabric as having the composition described on documents in 
accordance with trade practices. The substituted piece goods used in 
the manufacture of articles for exportation with drawback will be so 
similar in quality to the imported piece goods designated for the 
basis of allowance of drawback, that the piece goods used, if 
imported, would have been subject to the same or greater amount of 
duty as was paid on the imported designated piece goods. Differences 
in value resulting from factors other than quality, as for example, 
price fluctuations, will not preclude an allowance of drawback.

B. Exported Articles on Which Drawback Will Be Claimed

    Finished piece goods.

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.'s. 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

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

E. Multiple Products

    Not applicable.

F. Waste

    Rag waste may be incurred. No drawback is payable on any waste 
which results from the manufacturing operation. Unless the claim for 
drawback is based on the quantity of merchandise appearing in the 
exported articles, the records of the manufacturer or producer will 
show the quantity of rag waste, if any, and its value. In instances 
where rag waste occurs and it is impractical to account for the 
actual quantity of rag waste incurred, it may be assumed that such 
rag waste constituted 2% of the piece goods put into the finishing 
processes.

G. Shrinkage, Gain, and Spoilage

    Unless the claim for drawback is based on the quantity of 
merchandise appearing in the exported articles, the records of the 
manufacturer or producer will show the yardage lost by shrinkage or 
gained by stretching during manufacture or production, and the 
quantity of remnants resulting and of spoilage incurred, if any.

H. Tradeoff

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

I. Procedures and Records Maintained

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

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

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

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

    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation

[[Page 11056]]

of the imported merchandise. Records establishing compliance with 
these requirements will be available for audit by Customs during 
business hours. Drawback is not payable without proof of compliance.

J. Inventory Procedures

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

K. Basis of Claim for Drawback

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

L. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

XI. General Manufacturing Drawback Ruling under 19 U.S.C. 1313(b) for 
Raw Sugar (T.D. 83-59)

    Drawback may be allowed under 19 U.S.C. 1313(b) upon the 
exportation of hard or soft refined sugars and sirups manufactured 
from raw sugar, subject to the following special requirements:
    A. The drawback allowance shall not exceed 99 percent of the 
duty paid on a quantity of raw sugar designated by the refiner which 
contains a quantity of sucrose not in excess of the quantity 
required to manufacture the exported sugar or sirup, ascertained as 
provided in this general rule.
    B. The refined sugars and sirups shall have been manufactured 
with the use of duty-paid, duty-free, or domestic sugar, or 
combinations thereof, within 3 years after the date on which 
designated sugar was received by the refiner, and shall have been 
exported within 5 years from the date of importation of the 
designated sugar.
    C. All granulated sugar testing by the polariscope 99.5 deg. and 
over shall be deemed hard refined sugar. All refined sugar testing 
by the polariscope less than 99.5 deg. shall be deemed soft refined 
sugar. All ``blackstrap,'' ``unfiltered sirup,'' and ``final 
molasses'' shall be deemed sirup.
    D. The imported duty-paid sugar selected by the refiner as the 
basis for the drawback claim (designated sugar) shall be of the same 
kind and quality as that used in the manufacture of the exported 
refined sugar or sirup and shall have been used within 3 years after 
the date on which it was received by the refiner. Duty-paid sugar 
which has been used at a plant of a refiner within 3 years after the 
date on which it was received by such refiner may be designated as 
the basis for the allowance of drawback on refined sugars or sirups 
manufactured at another plant of the same refiner.
    E. For the purpose of distributing the drawback, relative values 
shall be established between hard refined (granulated) sugar, soft 
refined (various grades) sugar, and sirups at the time of 
separation. The entire period covered by an abstract shall be deemed 
the time of separation of the sugars and sirups covered by such 
abstract.
    F. The sucrose allowance per pound on hard refined (granulated) 
sugar established by an abstract, as provided for in this general 
ruling, shall be applied to hard refined sugar commercially known as 
loaf, cut loaf, cube, pressed, crushed, or powdered sugar 
manufactured from the granulated sugar covered by the abstract.
    G. The sucrose allowance per gallon on sirup established by an 
abstract, as provided for in this general ruling, shall be applied 
to sirup further advanced in value by filtration or otherwise, 
unless such sirup is the subject of a special manufacturing drawback 
ruling.
    H. As to each lot of imported or domestic sugar used in the 
manufacture of refined sugar or sirup on which drawback is to be 
claimed, the raw stock records shall show the refiner's raw lot 
number, the number and character of the packages, the settlement 
weight in pounds, and the settlement polarization. Such records 
covering imported sugar shall show, in addition to the foregoing, 
the import entry number, date of importation, name of importing 
carrier, country of origin, the Government weight, and the 
Government polarization.
    I. The melt records shall show the date of melting, the number 
of pounds of each lot of raw sugar melted, and the full analysis at 
melting.
    J. There shall be kept a daily record of final products boiled 
showing the date of the melt, the date of boiling, the magma filling 
serial number, the number of the vacuum pan or crystallizer filling, 
the date worked off, and the sirup filling serial number.
    K. The sirup manufacture records shall show the date of boiling, 
the period of the melt, the sirup filling serial number, the number 
of barrels in the filling, the magma filling serial number, the 
quantity of sirup, its disposition in tanks or barrels and the 
refinery serial manufacture number.
    L. The refined sugar stock records shall show the refinery 
serial manufacture number, the period of the melt, the date of 
manufacture, the grade of sugar produced, its polarization, the 
number and kind of packages, and the net weight. When soft sugars 
are manufactured, the commercial grade number and quantity of each 
shall be shown.
    M. Each lot of hard or soft refined sugar and each lot of sirup 
manufactured, regardless of the character of the containers or 
vessels in which it is packed or stored, shall be marked immediately 
with the date of manufacture and the refinery manufacture number 
applied to it in the refinery records provided for and shown in the 
abstract, as provided for in this general ruling, from such records. 
If all the sugar or sirup contained in any lot manufactured is not 
intended for exportation, only such of the packages as are intended 
for exportation need be marked as prescribed above, provided there 
is filed with the drawback office immediately after such marking a 
statement showing the date of manufacture, the refinery manufacture 
number, the number of packages marked, and the quantity of sugar or 
sirup contained therein. No drawback shall be allowed in such case 
on any sugar or sirup in excess of the quantity shown on the 
statement as having been marked. If any packages of sugar or sirup 
so marked are repacked into other containers, the new containers 
shall be marked with the marks which appeared on the original 
containers and a revised statement covering such repacking and 
remarking shall be filed with the drawback office. If sirups from 
more than one lot are stored in the same tank, the refinery records 
shall show the refinery manufacture number and the quantity of sirup 
from each lot contained in such tank.
    N. An abstract from the foregoing records covering manufacturing 
periods of not less than 1 month nor more than 3 months, unless a 
different period shall have been authorized, shall be filed when 
drawback is to be claimed on any part of the refined sugar or sirup 
manufactured during such period. Such abstract shall be filed by 
each refiner with the drawback office where drawback claims are 
filed on the basis of this general ruling. Such abstract shall 
consist of: (1) A raw stock record (accounting for Refiner's raw lot 
No., Import entry No., Packages No. and kind, Pounds, Polarization, 
By whom imported or withdrawn, Date of importation, Date of receipt 
by refiner, Date of melt, Importing carrier, Country of origin); (2) 
A melt record [number of pounds in each lot melted] (accounting for 
Lot No. Pounds, and Polarization degrees and pounds sucrose); (3) 
Sirup stock records (accounting for Date of boiling, Refinery serial 
manufacture No., Quantity of sirup in gallons, and Pounds

[[Page 11057]]

sucrose contained therein); (4) Refined sugar stock record 
(accounting for Refinery serial production No., Date of manufacture, 
Hard or soft refined, Polarization and No., Net weight in pounds); 
(5) Recapitulation (consisting of (in pounds): (a) sucrose in 
process at beginning of period, (b) sucrose melted during period, 
(c) sucrose in process at end of period, (d) sucrose used in 
manufacture, and (e) sucrose contained in manufacture, in which item 
(a) plus item (b), minus item (c), should equal item (d)); and (6) A 
statement as follows:
    I, ________, the ________ refiner at the ________ refinery of 
________, located at ________, do solemnly and truly declare that 
each of the statements contained in the foregoing abstract is true 
to the best of my knowledge and belief and can be verified by the 
refinery records, which have been kept in accordance with Treasury 
Decision 83-59 and Appendix A of 19 CFR Part 191 and which are at 
all times open to the inspection of Customs.

.  Date----------------------------------------------------------------

.  Signature-----------------------------------------------------------
    O. The refiner shall file with each abstract a statement, 
showing the average market values of the products specified in the 
abstract and including a statement as follows:
    I, ________, (Official capacity) of the ________ (Refinery), do 
solemnly and truly declare that the values shown above are true to 
the best of my knowledge and belief, and can be verified by our 
records.

  Date-----------------------------------------------------------------

  Signature------------------------------------------------------------
    P. At the end of each calendar month the refiner shall furnish 
to the drawback office a statement showing the actual sales of sirup 
and the average market values of refined sugars for the calendar 
month.
    Q. The sucrose allowance to be applied to the various products 
based on the abstract and statement provided for in this general 
ruling shall be in accordance with the example set forth in Treasury 
Decision 83-59.
    R. Certificates of manufacture and delivery under this general 
ruling shall be in the following form:
    Certificate of manufacture and delivery--Sugar and Sirup No. 
________
    Certificate of manufacture and delivery of ________ manufactured 
by ________ under abstract No. ________ filed at the port of 
________.

------------------------------------------------------------------------
           Description               Quantity         Polarization      
------------------------------------------------------------------------
                                                                        
                                                                        
                                                                        
------------------------------------------------------------------------


                                                              Designation of Imported Sugar                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    By whom imported or                                                           Quantity of                           
         Import entry No.             withdrawn from       Name of importing       When        Where imported      raw sugar   Polarization    Sucrose  
                                         warehouse              carrier          imported                           (pounds)                   (pounds) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------

    I, ________, the ________ of ________, located at ________, 
declare that the sugar (or sirup) described in the within 
certificate of manufacture and delivery was manufactured by said 
company at its refinery at ________ and is part of the sugar (or 
sirup) covered by abstract No. ____________, filed at the port of 
________ and was delivered to ________ on or about ________, 
____________, and that no other certificate of manufacture and 
delivery has been issued covering the above merchandise; that, 
subject to 19 U.S.C. 1508 and 1313(t), the refinery and other 
records of the company verifying the statements contained in said 
abstract are now and at all times hereafter will be open to 
inspection by Customs.
    I further declare that the above-designated imported sugar (upon 
which the duties have been paid) was received by said company on 
________ and was used in the manufacture of sugar and sirup on 
________.

.  Date----------------------------------------------------------------

.  Signature-----------------------------------------------------------
    S. Drawback entries under this general ruling shall be on 
Customs Form 7551 and, in addition to the information required 
thereon, shall state the polarization in degrees and the sucrose in 
pounds for the designated imported sugar. Drawback claims under this 
general ruling shall include a statement as follows:
    I, ________, the ________ of ________, located at ________ 
declare that the sugar (or sirup) described in this entry, was 
manufactured by said company at its refinery at ________ [or, if the 
claim is based on a certificate of manufacture and delivery, was 
manufactured by ________ at its refinery at ________ for which the 
accompanying certificate of manufacture and delivery was received by 
this company] and is part of the sugar (or sirup) covered by 
abstract No. ________, filed at the port of ________; that, subject 
to 19 U.S.C. 1508 and 1313(t), the refinery and other records of the 
company verifying the statements contained in said abstract are now 
and at all times hereafter will be open to inspection by Customs. I 
further declare that the above-designated imported sugar (upon which 
the duties have been paid) was received by said company on ________ 
and was used in the manufacture of sugar and sirup during the period 
covered by abstract No. ________, Customs No. ________, on file with 
the port director at ________.
    I further declare that the sugar or sirup specified therein was 
exported as stated in the entry.

.  Date----------------------------------------------------------------

.  Signature-----------------------------------------------------------
    T. General Statement. The refiner manufactures or produces for 
its own account. The refiner may manufacture or produce articles for 
the account of another or another manufacturer or producer may 
manufacture or produce for the refiner's account under contract 
within the principal and agency relationship outlined in T.D.'s 
55027(2) and 55207(1) (see Sec. 191.9 of this part).
    U. Waste. No drawback is payable on any waste which results from 
the manufacturing operation. Unless drawback claims are based on the 
``appearing in'' method, records will be maintained to establish the 
value (or the lack of value), the quantity, and the disposition of 
any waste that results from manufacturing the exported articles. If 
no waste results, records to establish that fact will be maintained.
    V. Loss or Gain. The refiner will maintain records showing the 
extent of any loss or gain in net weight or measurement of the sugar 
caused by atmospheric conditions, chemical reactions, or other 
factors.
    W. Tradeoff. The use of any domestic merchandise acquired in 
exchange for imported merchandise that meets the same kind and 
quality requirements provided for in this general ruling shall be 
treated as use of the imported merchandise if no certificate of 
delivery is issued covering the imported merchandise (19 U.S.C. 
1313(k)) upon compliance with the applicable regulations and 
rulings.
    X. Procedures And Records Maintained. Records will be maintained 
to establish:
    1. The identity and specifications of the designated 
merchandise;
    2. The quantity of merchandise of the same kind and quality as 
the designated merchandise \1\ used to produce the exported 
articles.
---------------------------------------------------------------------------

    \1\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles produced.'';
---------------------------------------------------------------------------

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the refiner used the designated 
merchandise to

[[Page 11058]]

produce articles. During the same 3-year period, the refiner 
produced\2\ the exported articles.
    To obtain drawback the claimant must establish that the 
completed articles were exported within 5 years after the 
importation of the imported merchandise. Records establishing 
compliance with these requirements will be available for audit by 
Customs during business hours. Drawback is not payable without proof 
of compliance.
    Y. General requirements. The refiner will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this general ruling.

XII. General Manufacturing Drawback Ruling under 19 U.S.C. 1313(b) for 
Steel (T.D. 81-74)

A. Same Kind and Quality (Parallel Columns)

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

    1. The duty-paid, duty-free, or domestic steel used instead of 
the imported, duty-paid steel (or drawback products) will be 
interchangeable for manufacturing purposes with the duty-paid steel. 
To be interchangeable a steel must be able to be used in place of 
the substituted steel without any additional processing step in the 
manufacture of the article on which drawback is to be claimed.
---------------------------------------------------------------------------

    \2\ The date of production is the date an article is completed.
---------------------------------------------------------------------------

    2. Because the duty-paid steel (or drawback products) that is to 
be designated as the basis for drawback is dutiable according to its 
value, the amount of duty can vary with its size (gauge, width, or 
length) or composition (e.g., chrome content). If such variances 
occur, designation will be by ``price extra'', and in no case will 
drawback be claimed in a greater amount than that which would have 
accrued to that steel used in manufacture of or appearing in the 
exported articles. Price extra is not available for coated or plated 
steel, covered in paragraph 5, infra, insofar as the coating or 
plating is concerned.
    3. The duty-paid steel (or drawback products) will be so similar 
in quality to the steel used to manufacture the articles on which 
drawback will be claimed that the steel so used, if imported, would 
be classifiable in the same tariff subheading number and at the same 
rate of duty as the duty-paid imported steel.
    4. Any fluctuation in market value caused by a factor other than 
quality does not affect drawback.
    5. If the steel is coated or plated with a base metal, in 
addition to meeting the requirements for uncoated or unplated steel 
set forth in the parallel columns, the base-metal coating or plating 
on the duty-paid, duty-free, or domestic steel used in place of the 
duty-paid steel (or drawback products) will have the same 
composition and thickness as the coating or plating on the duty-paid 
steel. If the coated or plated duty-paid steel is within a SAE, 
AISI, ASTM specification, any duty-paid, duty-free, or domestic 
coated or plated steel covered by the same specification and grade 
(if two or more grades are in the specification) is considered to 
meet this criterion for ``same kind and quality.''

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

    The steel described in the parallel columns will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.

E. Multiple Products

    Not applicable.

F. Waste

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

G. Loss or Gain

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

H. Tradeoff

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

I. Procedures and Records Maintained

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

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

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

    \4\ The date of production is the date an article is completed. 
To obtain drawback the claimant must establish that the completed 
articles were exported within 5 years after the importation of the 
imported merchandise. Records establishing compliance with these 
requirements will be available for audit by Customs during business 
hours. Drawback is not payable without proof of compliance.

---------------------------------------------------------------------------

[[Page 11059]]

J. Inventory Procedures

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

K. Basis of Claim for Drawback

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

L. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification to operate under this general 
ruling current by reporting promptly to the drawback office which 
liquidates its claims any changes in the information required by the 
General Instructions of this Appendix to be included therein (I. 
General Instructions, 1 through 9) or the corporate name or 
corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

XIII. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(b) for 
Sugar (T.D. 81-92)

A. Same Kind and Quality (Parallel Columns)


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

    The sugars listed above test within three-tenths of a degree on 
the polariscope. Sugars in each column are completely 
interchangeable with the sugars directly opposite and designation 
will be made on this basis only. The designated sugar on which 
claims for drawback will be based will be so similar in quality to 
the sugar used in manufacture of the products exported with drawback 
that the sugar used in manufacture would, if imported, be subject to 
the same amount of duty paid on a like quantity of designated sugar. 
Differences in value resulting from factors other than quality, such 
as market fluctuation, will not affect the allowance of drawback.

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.'s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

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

E. Multiple Products

    Not applicable.

F. Waste

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

G. Loss or Gain

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

H. Tradeoff

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

I. Procedures And Records Maintained

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

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

    3. That, within 3 years after receiving the designated 
merchandise at its factory, the manufacturer or producer used the 
merchandise to produce articles. During the same 3-year period, the 
manufacturer or producer produced \3\ the exported articles. To 
obtain drawback the claimant must establish that the completed 
articles were exported within 5 years after the importation of the 
imported merchandise. Records establishing compliance with these 
requirements will be available for audit by Customs during business 
hours. Drawback is not payable without proof of compliance.
---------------------------------------------------------------------------

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

J. Inventory Procedures

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

K. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of sugar used in 
producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible sugar that 
appears in the exported articles regardless of whether there is 
waste, and no records of waste need be

[[Page 11060]]

maintained. If there is valuable waste recovered from the 
manufacturing operation and records are kept which show the quantity 
and value of the waste, drawback may be claimed on the quantity of 
eligible material used to produce the exported articles less the 
amount of that sugar which the value of the waste would replace.

L. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation;
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and
    6. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(b), part 191 of the Customs 
Regulations and this general ruling.

XIV. General Manufacturing Drawback Ruling Under 19 U.S.C. 1313(a) for 
Woven Piece Goods (T.D. 83-84)

    Drawback may be allowed under 19 U.S.C. 1313(a) upon the 
exportation of bleached, mercerized, printed, dyed, or redyed piece 
goods manufactured or produced by any one or a combination of the 
foregoing processes with the use of imported woven piece goods, 
subject to the following special requirements:

A. Imported Merchandise or Drawback Products \1\ Used

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

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

B. Exported Articles on Which Drawback Will Be Claimed

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

C. General Statement

    The manufacturer or producer manufactures or produces for its 
own account. The manufacturer or producer may manufacture or produce 
articles for the account of another or another manufacturer or 
producer may manufacture or produce for the account of the 
manufacturer or producer under contract within the principal and 
agency relationship outlined in T.D.s 55027(2) and 55207(1) (see 
Sec. 191.9 of this part).

D. Process of Manufacture or Production

    The imported merchandise or drawback products will be used to 
manufacture or produce articles in accordance with Sec. 191.2(q) of 
this part.
    The piece goods used in manufacture or production under this 
general manufacturing drawback ruling may also be subjected to one 
or more finishing processes. Drawback shall not be allowed under 
this general manufacturing drawback ruling when the process 
performed results only in the restoration of the merchandise to its 
condition at the time of importation.

E. Multiple Products

    Not applicable.

F. Waste

    Rag waste may be incurred. No drawback is payable on any waste 
which results from the manufacturing operation. Unless the claim for 
drawback is based on the quantity of merchandise appearing in the 
exported articles, the records of the manufacturer or producer will 
show the quantity of rag waste, if any, its value, and its 
disposition. If no waste results, records will be maintained to 
establish that fact. In instances where rag waste occurs and it is 
impractical to account for the actual quantity of rag waste 
incurred, it may be assumed that such rag waste constituted 2% of 
the woven piece goods put into process.

G. Shrinkage, Gain, and Spoilage

    Unless the claim for drawback is based on the quantity of 
merchandise appearing in the exported articles, the records of the 
manufacturer or producer will show the yardage lost by shrinkage or 
gained by stretching during manufacture, and the quantity of 
remnants resulting and of spoilage incurred, if any.

H. Procedures and Records Maintained

    Records will be maintained to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise; and
    2. The quantity of imported merchandise \2\ used in producing 
the exported articles.
---------------------------------------------------------------------------

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

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

I. Inventory Procedures

    The inventory records of the manufacturer or producer will show 
how the drawback recordkeeping requirements set forth in 19 U.S.C. 
1313(a) and part 191 of the Customs Regulations will be met, as 
discussed under the heading ``Procedures and Records Maintained''. 
If those records do not establish satisfaction of those legal 
requirements, drawback cannot be paid.
    The records of the manufacturer or producer shall show, as to 
each lot of piece goods manufactured or produced for exportation 
with benefit of drawback, the lot number and the date or inclusive 
dates of manufacture or production, the quantity, identity, and 
value of the imported (or drawback product) piece goods used, the 
condition in which imported or received (whether in the gray, 
bleached, dyed, or mercerized), the working allowance specified in 
the contract under which they are received, the process or processes 
applied thereto, and the quantity and description of the piece goods 
obtained. The records shall also show the yardage lost by shrinkage 
or gained by stretching during manufacture or production, and the 
quantity of remnants resulting and of spoilage incurred.

J. Basis of Claim for Drawback

    Drawback will be claimed on the quantity of merchandise used in 
producing the exported articles only if there is no waste or 
valueless or unrecovered waste in the manufacturing operation. 
Drawback may be claimed on the quantity of eligible merchandise that 
appears in the exported articles, regardless of whether there is 
waste, and no records of waste need be maintained. If there is 
valuable waste recovered from the manufacturing operation and 
records are kept which show the quantity and value of the waste, 
drawback may be claimed on the quantity of eligible material used to 
produce the exported articles, less the amount of that merchandise 
which the value of the waste would replace. (If remnants and/or 
spoilage occur during manufacture or production, the quantity of 
imported merchandise used shall be determined by deducting from the 
quantity of piece goods received and put into manufacture or 
production the quantity of such remnants and/or spoilage. The 
remaining quantity shall be reduced by the quantity thereof which 
the value of the rag waste, if any, would replace.)

K. General Requirements

    The manufacturer or producer will:
    1. Comply fully with the terms of this general ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this general ruling;
    4. Keep its letter of notification of intent to operate under 
this general ruling current by reporting promptly to the drawback 
office which liquidates its claims any changes in the information 
required by the General Instructions of this Appendix to be included 
therein (I. General Instructions, 1 through 9) or the corporate name 
or corporate organization by succession or reincorporation.
    5. Keep a copy of this general ruling on file for ready 
reference by employees and require all officials and employees 
concerned to familiarize themselves with the provisions of this 
general ruling; and

[[Page 11061]]

    6. Issue instructions to insure proper compliance with 19, 
United States Code, Sec. 1313, part 191 of the Customs Regulations 
and this general ruling.

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

Table of Contents

I. General.
II. Format for Application for Specific Manufacturing Drawback 
Ruling Under 19 U.S.C. 1313(a) and 1313(b) (Combination).
III. Format for Application for Specific Manufacturing Drawback 
Ruling Under 19 U.S.C. 1313(b).
IV. Format for Application for Specific Manufacturing Drawback 
Ruling Under 19 U.S.C. 1313(d).
V. Format for Application for Specific Manufacturing Drawback Ruling 
Under 19 U.S.C. 1313(g).

I. General

    These sample formats for applications for specific manufacturing 
drawback rulings must be submitted to and reviewed and approved by 
Customs Headquarters. A specific manufacturing drawback ruling 
consists of the letter of approval that Customs issues to the 
applicant, a synopsis of which is published in the Customs Bulletin, 
as provided in 19 CFR 191.8. In these application formats, remarks 
in parentheses and footnotes are for explanatory purposes only and 
should not be copied. Other material should be quoted directly in 
the applications.

II. Format for Application for Specific Manufacturing Drawback Ruling 
Under 19 U.S.C. 1313(a) and 1313(b) (Combination).

COMPANY LETTERHEAD (Optional)

U.S. Customs Service, Duty and Refund Determination Branch, 1300 
Pennsylvania Avenue, N.W., Washington, D.C. 20229.

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

NAME AND ADDRESS AND IRS NUMBER (WITH SUFFIX) OF APPLICANT

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

LOCATION OF FACTORY

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

PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS

    (List persons legally authorized to bind the corporation who 
will sign drawback documents. Section 191.6 of the Customs 
Regulations permits only the president, vice-president, secretary, 
treasurer, or any employee legally authorized to bind the 
corporation to sign for a corporation. In addition, a person within 
a business entity with a Customs power of attorney for the company 
may sign. A Customs power of attorney may also be given to a 
licensed Customs broker. This heading should be changed to Names of 
Partners or Proprietor in the case of a partnership or sole 
proprietorship, respectively (see footnote at end of this sample 
format for persons who may sign applications for specific 
manufacturing drawback rulings).)

CUSTOMS OFFICE WHERE DRAWBACK CLAIMS WILL BE FILED

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

GENERAL STATEMENT

(The following questions must be answered:)

    1. Who will be the importer of the designated merchandise?

(If the applicant will not always be the importer of the designated 
merchandise, does the applicant understand its obligations to obtain 
the appropriate certificates of delivery (19 CFR 191.10), 
certificates of manufacture and delivery (19 CFR 191.24), or both?)

    2. Will an agent be used to process the designated or the 
substituted merchandise into articles?

(If an agent is to be used, the applicant must state it will comply 
with T.D.'s 55027(2) and 55207(1) and Sec. 191.9, as applicable, and 
that its agent will submit a letter of notification of intent to 
operate under the general manufacturing drawback ruling for agents 
(see Sec. 191.7 and Appendix A) or an application for a specific 
manufacturing drawback ruling (see Sec. 191.8 and this Appendix B).)

    3. Will the applicant be the exporter?

(If the applicant will not be the exporter in every case but will be 
the claimant, the manufacturer must state that it will reserve the 
right to claim drawback with the knowledge and written consent of 
the exporter (19 CFR 191.82).)

(Since the permission to grant use of the accelerated payment 
procedure rests with the Customs office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

PROCEDURES UNDER SECTION 1313(b) (PARALLEL COLUMNS--``SAME KIND AND 
QUALITY'')

                                                                        
                                                                        
                                                                        
IMPORTED MERCHANDISE OR DRAWBACK     DUTY-PAID, DUTY-FREE OR DOMESTIC   
 PRODUCTS \1\ TO BE DESIGNATED AS     MERCHANDISE OF THE SAME KIND AND  
 THE BASIS FOR DRAWBACK ON THE        QUALITY AS THAT DESIGNATED WHICH  
 EXPORTED PRODUCTS                    WILL BE USED IN THE PRODUCTION OF 
                                      THE EXPORTED PRODUCTS.            
1.                                   1.                                 
2.                                   2.                                 
3.                                   3.                                 
                                                                        
\1\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under section 1313(b). They may be designated as the  
  basis for drawback and also may be deemed to be domestic merchandise.)

(Following the items listed in the parallel columns, a statement 
will be made, by the applicant, that affirms the ``same kind and 
quality'' of the merchandise. This statement should be included in 
the application exactly as it is stated below:)

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

(In order to successfully claim drawback it is necessary to prove 
that the duty-paid, duty-free or domestic merchandise which is to be 
substituted for the imported merchandise is the ``same kind and 
quality''. ``Same kind and quality'' does not necessarily mean that 
the merchandise is identical. It does mean that the merchandise is 
of the same nature or character (``same kind'') and that the 
merchandise to be substituted is interchangeable with the imported 
merchandise with little or no change in the manufacturing process to 
produce the same exported article (``same quality''). In order to

[[Page 11062]]

enable Customs to rule on ``same kind and quality'', the application 
must include a detailed description of the designated imported 
merchandise and of the substituted duty-paid, duty-free or domestic 
merchandise to be used to produce the exported articles.)
(It is essential that all the characteristics which determine the 
quality of the merchandise are provided in the application in order 
to substantiate that the merchandise meets the ``same kind and 
quality'' statutory requirement. These characteristics should 
clearly distinguish merchandise of different qualities. For example, 
USDA standards; FDA standards; industry standards, e.g., ASTM; 
concentration; specific gravity; purity; luster; melting point, 
boiling point; odor; color; grade; type; hardness; brittleness; etc. 
Note that these are only a few examples of characteristics and that 
each kind of merchandise has its own set of specifications that 
characterizes its quality. If specifications are given with a 
minimum value, be sure to include a maximum value. The converse is 
also true. Often characteristics are given to Customs on attached 
specification sheets. These specifications should not include 
Material Safety Data sheets or other descriptions of the merchandise 
that do not contribute to the ``same kind and quality'' 
determination. When the merchandise is a chemical, state the 
chemical's generic name as well as its trade name plus any generally 
recognized identifying number, e.g. CAS number; Color Index Number, 
etc.)
(In order to expedite the specific manufacturing drawback ruling 
process, it will be helpful if you provide copies of technical 
standards/specifications (particularly industry standards such as 
ASTM standards) referred to in your application.)
(The descriptions of the ``same kind and quality'' merchandise 
should be formatted in the parallel columns. The left-hand column 
will consist of the name and specifications of the designated 
imported merchandise under the heading set forth above. The right-
hand column will consist of the name and specifications for the 
duty-paid, duty-free or domestic merchandise under the heading set 
forth above.)

EXPORTED ARTICLES ON WHICH DRAWBACK WILL BE CLAIMED

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

PROCESS OF MANUFACTURE OR PRODUCTION

(Drawback under Sec. 1313(b) is not allowable except where a 
manufacture or production exists. Manufacture or production is 
defined, for drawback purposes, in Sec. 191.2(q). In order to obtain 
drawback under Sec. 1313(b), it is essential for the applicant to 
show use in manufacture or production by giving a thorough 
description of the manufacturing process. This description should 
include the name and exact condition of the merchandise listed in 
the Parallel Columns, a complete explanation of the processes to 
which it is subjected in this country, the effect of such processes, 
the name and exact description of the finished article, and the use 
for which the finished article is intended. When applicable, give 
equations of the chemical reactions. The attachment of a flow chart 
in addition to the description showing the manufacturing process is 
an excellent means of illustrating whether or not a manufacture or 
production has occurred. Flow charts can clearly illustrate if and 
at what point during the manufacturing process by-products and 
wastes are generated.)
(This section should contain a description of the process by which 
each item of merchandise listed in the parallel columns above is 
used to make or produce every article that is to be exported.)

MULTIPLE PRODUCTS

1. Relative Values

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

2. Producibility

(Some processes result in the separation of fixed proportions of 
each product, while other processes afford the opportunity to 
increase or decrease the proportion of each product. An example of 
the latter is petroleum refining, where the refiner has the option 
to increase or decrease the production of one or more products 
relative to the others. State under this heading whether you can or 
cannot vary the proportionate quantity of each product.)
(The MULTIPLE PRODUCTS section consists of two sub-sections: 
Relative Values and Producibility. If multiple products do not 
result from your operation state ``Not Applicable'' for the entire 
section. If multiple products do result from your operation Relative 
Values will always apply. However, Producibility may or may not 
apply. If Producibility does not apply to your multiple product 
operation state ``Not Applicable'' for this sub-section.)

WASTE

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

STOCK IN PROCESS

(Some processes result in another type of residual material, namely, 
stock in process,

[[Page 11063]]

which affects the allowance of drawback. Stock in process may exist 
when residual material resulting from a manufacturing or processing 
operation is reintroduced into a subsequent manufacturing or 
processing operation; e.g., trim pieces from a cast article. The 
effect of stock in process on a drawback claim is that the amount of 
drawback for the period in which the stock in process was withdrawn 
from the manufacturing or processing operation (or the manufactured 
article, if manufacturing or processing periods are not used) is 
reduced by the quantity of merchandise or drawback products used to 
produce the stock in process if the ``used in'' or ``used in less 
valuable waste'' methods are used (if the ``appearing in'' method is 
used, there will be no effect on the amount of drawback), and the 
quantity of merchandise or drawback products used to produce the 
stock in process is added to the merchandise or drawback products 
used in the subsequent manufacturing or production period (or the 
subsequently produced article)).

(If stock in process occurs and claims are to be based on stock in 
process, the application must include a statement to that effect. 
The application must also include a statement that merchandise is 
considered to be used in manufacture at the time it was originally 
processed so that the stock in process will not be included twice in 
the computation of the merchandise used to manufacture the finished 
articles on which drawback is claimed.)

TRADEOFF

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

LOSS OR GAIN (Separate and distinct from WASTE)

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

PROCEDURES AND RECORDS MAINTAINED

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

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

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

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

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

INVENTORY PROCEDURES

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

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

(Proof of time frames may be specific or inclusive, e.g. within 120 
days, but specific proof is preferable. Separate storage and 
identification of each article or lot of merchandise usually will 
permit specific proof of exact dates. Proof of inclusive dates of 
use, production or export may be acceptable, but in such cases it is 
well to describe very specifically the data you intend to use to 
establish each legal requirement, thereby avoiding misunderstandings 
at the time of audit.)

(If you do not describe the inventory records that you will use, a 
statement that the legal requirements will be met by your inventory 
procedures is acceptable. However, it should be noted that without a 
detailed description of the inventory procedures set forth in the 
application a judgement as to the adequacy of such a statement 
cannot be made until a drawback claim is verified. Approval of this 
application for a specific manufacturing drawback ruling merely 
constitutes approval of the ruling application as submitted; it does 
not constitute approval of the applicant's record keeping procedures 
if, for example, those procedures are merely described as meeting 
the legal requirements, without specifically stating how the 
requirements will be met. Drawback is not payable without proof of 
compliance.)

BASIS OF CLAIM FOR DRAWBACK

(There are three different bases that may be used to claim drawback: 
(1) Used in; (2) Appearing In; and (3) Used less Valuable Waste.)

(The ``Used In'' basis may be employed only if there is either no 
waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 99 percent of the duty paid on the quantity 
of imported material designated as the basis for the allowance of 
drawback on the exported articles. The designated quantity may not 
exceed the quantity of material actually used in the manufacture of 
the exported articles.)

(For example, if 100 pounds of material, valued at $1.00 per pound, 
were used in manufacture resulting in 10 pounds of irrecoverable or 
valueless waste, the 10 pounds of irrecoverable or valueless waste 
would not reduce the drawback. In this case drawback would be 
payable on 99% of the duty paid on the 100 pounds of designated 
material used to produce the exported articles.)

(The ``Appearing In'' basis may be used regardless of whether there 
is waste. If the ``Appearing in'' basis is used, the claimant does 
not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 99 
percent of the duty paid on the quantity of material designated, 
which may not exceed the quantity of eligible material that appears 
in the exported articles. ``Appearing In'' may not be used if 
multiple products are involved.)

(Based on the previous example, drawback would be payable on the 90 
pounds of merchandise which actually went into the exported product 
(appearing in) rather than the 100 pounds used in as set forth 
previously.)

(The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of merchandise. The value 
of the waste reduces the amount of drawback when claims are based on 
the ``Used Less Valuable Waste'' basis. When valuable waste is 
incurred, the drawback allowance on the exported article is based on 
the duty paid on the quantity of merchandise used in the 
manufacture, reduced by the quantity of such merchandise which the 
value of the waste would replace. Thus in this case, drawback is 
claimed on the quantity of eligible material actually used to 
produce the exported product, less the amount of such material which 
the value of the waste would replace. Note section 191.26(c) of the 
Customs Regulations.)

(Based on the previous examples, if the 10 pounds of waste had a 
value of $.50 per

[[Page 11064]]

pound, then the 10 pounds of waste, having a total value of $5.00, 
would be equivalent in value to 5 pounds of the designated material. 
Thus the value of the waste would replace 5 pounds of the 
merchandise used, and drawback is payable on 99 percent of the duty 
paid on the 95 pounds of imported material designated as the basis 
for the allowance of drawback on the exported article rather than on 
the 100 pounds ``Used In'' or the 90 pounds ``Appearing In'' as set 
forth in the above examples.)

(Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)
(A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)

(An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 7551) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)
(An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by Schedule follows:)

    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.

(Section 191.8(f) of the Customs Regulations requires submission of 
the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)

    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.

(Neither the ``Appearing In'' basis nor the ``schedule'' method for 
claiming drawback may be used where the relative value procedure is 
required.)

PROCEDURES UNDER SECTION 1313(a)

IMPORTED MERCHANDISE OR DRAWBACK PRODUCTS USED UNDER 1313(a)

(List the imported merchandise or drawback products)

EXPORTED ARTICLES ON WHICH DRAWBACK WILL BE CLAIMED

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

PROCEDURES AND RECORDS MAINTAINED

    We will maintain records to establish:
    1. That the exported articles on which drawback is claimed were 
produced with the use of the imported merchandise, and
    2. The quantity of imported merchandise \4\ we used in producing 
the exported articles
---------------------------------------------------------------------------

    \4\ If claims are to be made on an ``appearing In'' basis, the 
remainder of the sentence should read ``appearing in the exported 
articles we produce.''
---------------------------------------------------------------------------

    We realize that to obtain drawback the claimant must establish 
that the completed articles were exported within 5 years after 
importation of the imported merchandise. We understand that drawback 
is not payable without proof of compliance.

INVENTORY PROCEDURES

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

BASIS OF CLAIM FOR DRAWBACK

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

AGREEMENTS

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
the persons who will sign drawback documents, the basis of claim 
used for calculating drawback, the decision to use or not to use an 
agent under Sec. 191.9 or the identity of an agent under that 
section, the drawback office where claims will be filed under the 
ruling, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this application and letter of approval.

DECLARATION OF OFFICIAL

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

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

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

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

(Signature and Title)

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

III. Format for Application for Specific Manufacturing Drawback Ruling 
Under 19 U.S.C. 1313(b)

COMPANY LETTERHEAD (Optional)

U.S. Customs Service, Duty and Refund Determination Branch, 1300 
Pennsylvania Avenue, N.W., Washington, D.C. 20229.

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

[[Page 11065]]

Service authorize drawback on the basis of this application.

NAME AND ADDRESS AND IRS NUMBER (WITH SUFFIX) OF APPLICANT

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

LOCATION OF FACTORY

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

PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS

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

CUSTOMS OFFICE WHERE DRAWBACK CLAIMS WILL BE FILED

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

GENERAL STATEMENT

(The following questions must be answered:

    1. Who will be the importer of the designated merchandise?

(If the applicant will not always be the importer of the designated 
merchandise, does the applicant understand its obligations to obtain 
the appropriate certificates of delivery (19 CFR 191.10), 
certificates of manufacture and delivery (19 CFR 191.24), or both?)

    2. Will an agent be used to process the designated or the 
substituted merchandise into articles?

(If an agent is to be used, the applicant must state it will comply 
with T.D.'s 55027(2) and 55207(1), and Sec. 191.9, as applicable, 
and that its agent will submit a letter of notification of intent to 
operate under the general manufacturing drawback ruling for agents 
(see Sec. 191.7 and Appendix A), or an application for a specific 
manufacturing drawback ruling (see Sec. 191.8 and this Appendix B).)

    3. Will the applicant be the exporter?
(If the applicant will not be the exporter in every case but will be 
the claimant, the manufacturer must state that it will reserve the 
right to claim drawback with the knowledge and written consent of 
the exporter (19 CFR 191.82).)

(Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

(PARALLEL COLUMNS--``SAME KIND AND QUALITY'')

                                                                        
                                                                        
                                                                        
IMPORTED MERCHANDISE OR DRAWBACK     DUTY-PAID, DUTY-FREE OR DOMESTIC   
 PRODUCTS \1\ TO BE DESIGNATED AS     MERCHANDISE OF THE SAME KIND AND  
 THE BASIS FOR DRAWBACK ON THE        QUALITY AS THAT DESIGNATED WHICH  
 EXPORTED PRODUCTS.                   WILL BE USED IN THE PRODUCTION OF 
                                      THE EXPORTED PRODUCTS.            
1.                                   1.                                 
2.                                   2.                                 
3.                                   3.                                 
                                                                        
\1\ Drawback products are those produced in the United States in        
  accordance with the drawback law and regulations. Such products have  
  ``dual status'' under Sec.  1313(b). They may be designated as the    
  basis for drawback and also may be deemed to be domestic merchandise. 

(Following the items listed in the parallel columns, a statement 
will be made, by the applicant, that affirms the ``same kind and 
quality'' of the merchandise. This statement should be included in 
the application exactly as it is stated below:)

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

(In order to successfully claim drawback it is necessary to prove 
that the duty-paid, duty-free or domestic merchandise which is to be 
substituted for the imported merchandise is the ``same kind and 
quality''. ``Same kind and quality'' does not necessarily mean that 
the merchandise is identical. It does mean that the merchandise is 
of the same nature or character (``same kind'') and that the 
merchandise to be substituted is interchangeable with the imported 
merchandise with little or no change in the manufacturing process to 
produce the same exported article (``same quality''). In order to 
enable Customs to rule on ``same kind and quality'', the application 
must include a detailed description of the designated imported 
merchandise and of the substituted duty-paid, duty-free or domestic 
merchandise to be used to produce the exported articles.)

(It is essential that all the characteristics which determine the 
quality of the merchandise are provided in the application in order 
to substantiate that the merchandise meets the ``same kind and 
quality'' statutory requirement. These characteristics should 
clearly distinguish merchandise of different qualities. For example, 
USDA standards; FDA standards; industry standards, e.g., ASTM; 
concentration; specific gravity; purity; luster; melting point, 
boiling point; odor; color; grade; type; hardness; brittleness; etc. 
Note that these are only a few examples of characteristics and that 
each kind of merchandise has its own set of specifications that 
characterizes its quality. If specifications are given with a 
minimum value, be sure to include a maximum value. The converse is 
also true. Often characteristics are given to Customs on attached 
specification sheets. These specifications should not include 
Material Safety Data sheets or other descriptions of the merchandise 
that do not contribute to the ``same kind and quality'' 
determination. When the merchandise is a chemical, state the 
chemical's generic name as well as its trade name plus any generally 
recognized identifying number, e.g. CAS number; Color Index Number, 
etc.)

(In order to expedite the specific manufacturing drawback ruling 
review process, it will be helpful if you provide copies of 
technical standards/specifications (particularly industry standards 
such as ASTM standards) referred to in your application.)

(The descriptions of the ``same kind and quality'' merchandise 
should be formatted in the parallel columns. The left-hand column 
will consist of the name and specifications of the designated 
imported merchandise under the heading set forth above. The right-
hand column will consist of the name and specifications for the 
duty-paid, duty-free or domestic merchandise under the heading set 
forth above.)

EXPORTED ARTICLES ON WHICH DRAWBACK WILL BE CLAIMED

(Name each article to be exported. When the identity of the product 
is not clearly evident by its name state what the product is, e.g.,

[[Page 11066]]

a herbicide. There must be a match between each article described 
under the PROCESS OF MANUFACTURE AND PRODUCTION section below and 
each article listed here.)

PROCESS OF MANUFACTURE OR PRODUCTION

(Drawback under Sec. 1313(b) is not allowable except where a 
manufacture or production exists. Manufacture or production is 
defined, for drawback purposes, in Sec. 191.2(q). In order to obtain 
drawback under Sec. 1313(b), it is essential for the applicant to 
show use in manufacture or production by giving a thorough 
description of the manufacturing process. This description should 
include the name and exact condition of the merchandise listed in 
the Parallel Columns, a complete explanation of the processes to 
which it is subjected in this country, the effect of such processes, 
the name and exact description of the finished article, and the use 
for which the finished article is intended. When applicable, give 
equations of the chemical reactions. The attachment of a flow chart 
in addition to the description showing the manufacturing process is 
an excellent means of illustrating whether or not a manufacture or 
production has occurred. Flow charts can clearly illustrate if and 
at what point during the manufacturing process by-products and 
wastes are generated.)

(This section should contain a description of the process by which 
each item of merchandise listed in the parallel columns above is 
used to make or produce every article that is to be exported.)

MULTIPLE PRODUCTS

1. Relative Values

(Some processes result in the separation of the merchandise used in 
the same operation into two or more products. List all of the 
products. State that you will record the market value of each 
product or by-product at the time it is first separated in the 
manufacturing process. If this section is not applicable to you, 
then state so.)

(Drawback law mandates the assignment of relative values when two or 
more products necessarily are produced concurrently in the same 
operation. For instance, the refining of flaxseed necessarily 
produces linseed oil and linseed husks (animal feed), and drawback 
must be distributed to each product in accordance with its relative 
value. However, the voluntary election of a steel fabricator, for 
instance, to use part of a lot of imported steel to produce 
automobile doors and part of the lot to produce automobile fenders 
does not call for relative value distribution.)

(The relative value of a product is its value divided by the total 
value of all products, whether or not exported. For example, 100 
gallons of drawback merchandise are used to produce 100 gallons of 
products, including 60 gallons of product A, 20 gallons of product 
B, and 20 gallons of product C. At the time of separation, the unit 
values of products A, B, and C are $5, $10, and $50 respectively. 
The relative value of product A is $300 divided by $1500 or \1/5\. 
The relative value of B is \2/15\ and of product C is \2/3\, 
calculated in the same manner. This means that \1/5\ of the drawback 
product payments will be distributed to product A, \2/15\ to product 
B, and \2/3\ to product C.)

(Drawback is allowable on exports of any of multiple products, but 
is not allowable on exports of valuable waste. In making this 
distinction between a product and valuable waste, the applicant 
should address the following significant elements: (1) the nature of 
the material of which the residue is composed; (2) the value of the 
residue as compared to the value of the principal manufactured 
product and the raw material; (3) the use to which it is put; (4) 
its status under the tariff laws, if imported; (5) whether it is a 
commodity recognized in commerce; (6) whether it must be subjected 
to some process to make it saleable.)

2. Producibility

(Some processes result in the separation of fixed proportions of 
each product, while other processes afford the opportunity to 
increase or decrease the proportion of each product. An example of 
the latter is petroleum refining, where the refiner has the option 
to increase or decrease the production of one or more products 
relative to the others. State under this heading whether you can or 
cannot vary the proportionate quantity of each product.)

(The MULTIPLE PRODUCTS section consists of two sub-sections: 
Relative Values and Producibility. If multiple products do not 
result from your operation state ``Not Applicable'' for the entire 
section. If multiple products do result from your operation Relative 
Values will always apply. However, Producibility may or may not 
apply. If Producibility does not apply to your multiple product 
operation state ``Not Applicable'' for this sub-section.)

WASTE

(Many processes result in residue materials which, for drawback 
purposes, are treated as wastes. Describe any residue materials 
which you believe should be so treated. If no waste results, include 
a positive statement to that effect under this heading.)

(If waste occurs, state: (1) whether or not it is recovered, (2) 
whether or not it is valueless, and (3) what you do with it. This 
information is required whether claims are made on a ``used in'' or 
``appearing in'' basis and regardless of the amount of waste 
incurred.)

(Irrecoverable wastes are those consisting of materials which are 
lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of imported material used in manufacturing. If the 
claim is based upon the quantity of imported merchandise appearing 
in the exported article, irrecoverable and valueless waste will 
cause a reduction in the amount of drawback.)

(Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)

(If you recover valuable waste and if you choose to claim on the 
basis of the quantity of imported or substituted merchandise used in 
producing the exported articles less valuable waste, state that you 
will keep records to establish the quantity and value of the waste 
recovered. See ``Basis of Claim for Drawback'' section below.)

STOCK IN PROCESS

(Some processes result in another type of residual material, namely, 
stock in process, which affects the allowance of drawback. Stock in 
process may exist when residual material resulting from a 
manufacturing or processing operation is reintroduced into a 
subsequent manufacturing or processing operation; e.g., trim pieces 
from a cast article. The effect of stock in process on a drawback 
claim is that the amount of drawback for the period in which the 
stock in process was withdrawn from the manufacturing or processing 
operation (or the manufactured article, if manufacturing or 
processing periods are not used) is reduced by the quantity of 
merchandise or drawback products used to produce the stock in 
process if the ``used in'' or ``used in less valuable waste'' 
methods are used (if the ``appearing in'' method is used, there will 
be no effect on the amount of drawback), and the quantity of 
merchandise or drawback products used to produce the stock in 
process is added to the merchandise or drawback products used in the 
subsequent manufacturing or production period (or the subsequently 
produced article)).

(If stock in process occurs and claims are to be based on stock in 
process, the application must include a statement to that effect. 
The application must also include a statement that merchandise is 
considered to be used in manufacture at the time it was originally 
processed so that the stock in process will not be included twice in 
the computation of the merchandise used to manufacture the finished 
articles on which drawback is claimed.)

TRADEOFF

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

LOSS OR GAIN (Separate and distinct from WASTE)

(Some manufacturing processes result in an intangible loss or gain 
of the net weight or measurement of the merchandise used. This loss 
or gain is caused by atmospheric conditions, chemical reactions, or 
other factors. State the approximate usual

[[Page 11067]]

percentage or quantity of such loss or gain. Note that percentage 
values will be considered to be measured ``by weight'' unless 
otherwise specified. Loss or gain does not occur during all 
manufacturing processes. If loss or gain does not apply to your 
manufacturing process, state ``Not Applicable.'')

PROCEDURES AND RECORDS MAINTAINED

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

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

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

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

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

INVENTORY PROCEDURES

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

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

(Proof of time frames may be specific or inclusive, e.g. within 120 
days, but specific proof is preferable. Separate storage and 
identification of each article or lot of merchandise usually will 
permit specific proof of exact dates. Proof of inclusive dates of 
use, production or export may be acceptable, but in such cases it is 
well to describe very specifically the data you intend to use to 
establish each legal requirement, thereby avoiding misunderstandings 
at the time of audit.)

(If you do not describe the inventory records that you will use, a 
statement that the legal requirements will be met by your inventory 
procedures is acceptable. However, it should be noted that without a 
detailed description of the inventory procedures set forth in the 
application a judgement as to the adequacy of such a statement 
cannot be made until a drawback claim is verified. Approval of this 
application for a specific manufacturing drawback ruling merely 
constitutes approval of the ruling application as submitted; it does 
not constitute approval of the applicant's record keeping procedures 
if, for example, those procedures are merely described as meeting 
the legal requirements, without specifically stating how the 
requirements will be met. Drawback is not payable without proof of 
compliance.)

BASIS OF CLAIM FOR DRAWBACK

(There are three different bases that may be used to claim drawback: 
(1) Used in; (2) Appearing In; and (3) Used less Valuable Waste.)

(The ``Used In'' basis may be employed only if there is either no 
waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 99 percent of the duty paid on the quantity 
of imported material designated as the basis for the allowance of 
drawback on the exported articles. The designated quantity may not 
exceed the quantity of material actually used in the manufacture of 
the exported articles.)
(For example, if 100 pounds of material, valued at $1.00 per pound, 
were used in manufacture resulting in 10 pounds of irrecoverable or 
valueless waste, the 10 pounds of irrecoverable or valueless waste 
would not reduce the drawback. In this case drawback would be 
payable on 99% of the duty paid on the 100 pounds of designated 
material used to produce the exported articles.)

(The ``Appearing In'' basis may be used regardless of whether there 
is waste. If the ``Appearing In'' basis is used, the claimant does 
not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 99 
percent of the duty paid on the quantity of material designated, 
which may not exceed the quantity of eligible material that appears 
in the exported articles. ``Appearing In'' may not be used if 
multiple products are involved.)

(Based on the previous example, drawback would be payable on the 90 
pounds of merchandise which actually went into the exported product 
(appearing in) rather than the 100 pounds used in as set forth 
previously.)

(The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of merchandise. The value 
of the waste reduces the amount of drawback when claims are based on 
the ``Used Less Valuable Waste'' basis. When valuable waste is 
incurred, the drawback allowance on the exported article is based on 
the duty paid on the quantity of merchandise used in the 
manufacture, reduced by the quantity of such merchandise which the 
value of the waste would replace. Thus in this case, drawback is 
claimed on the quantity of eligible material actually used to 
produce the exported product, less the amount of such material which 
the value of the waste would replace. Note section 191.26(c) of the 
Customs Regulations.)
(Based on the previous examples, if the 10 pounds of waste had a 
value of $.50 per pound, then the 10 pounds of waste, having a total 
value of $5.00, would be equivalent in value to 5 pounds of the 
designated material. Thus the value of the waste would replace 5 
pounds of the merchandise used, and drawback is payable on 99 
percent of the duty paid on the 95 pounds of imported material 
designated as the basis for the allowance of drawback on the 
exported article rather than on the 100 pounds ``Used In'' or the 90 
pounds ``Appearing In'' as set forth in the above examples.)

(Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)

(A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)

(An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 7551) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)
(An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by Schedule would read:)

    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.

(Section 191.8(f) of the Customs Regulations requires submission of 
the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)

    We request permission to file supplemental schedules with the 
drawback office covering

[[Page 11068]]

changes in the quantities of material used to produce the exported 
articles, or different styles or capacities of containers of such 
exported merchandise.

(Neither the ``Appearing In'' basis nor the ``schedule'' method for 
claiming drawback may be used where the relative value procedure is 
required.)

AGREEMENTS

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
the persons who will sign drawback documents, the basis of claim 
used for calculating drawback, the decision to use or not to use an 
agent under Sec. 191.9 or the identity of an agent under that 
section, the drawback office where claims will be filed under the 
ruling, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this application and letter of approval.

Declaration of Official

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

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

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

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

(Signature and Title)
 ---------------------------------------------------------------------
(Print Name)

IV. Format for Application for Specific Manufacturing Drawback Ruling 
Under 19 U.S.C. 1313(d)

COMPANY LETTERHEAD (Optional)

U.S. Customs Service, Duty and Refund Determination Branch, 1300 
Pennsylvania Avenue, N.W., Washington, D.C. 20229.

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

NAME AND ADDRESS AND IRS NUMBER (WITH SUFFIX) OF APPLICANT

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

LOCATION OF FACTORY

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

PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS

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

CUSTOMS OFFICE WHERE DRAWBACK CLAIMS WILL BE FILED

(The 8 offices where drawback claims can be filed are located at: 
Boston, MA; New York, NY; Miami, FL; New Orleans, LA; Houston, TX; 
Long Beach, CA; Chicago, IL; San Francisco, CA)

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

GENERAL STATEMENT

(The exact material placed under this heading in individual cases 
will vary, but it should include such information as the type of 
business in which the manufacturer is engaged, whether the 
manufacturer is manufacturing for his own account or is performing 
the operation on a toll basis (including commission or conversion 
basis) for the account of others, whether the manufacturer is a 
direct exporter of his products or sells or delivers them to others 
for export, and whether drawback will be claimed by the manufacturer 
or by others.)

(If an agent is to be used, the applicant must state it will comply 
with T.D.'s 55027(2) and 55207(1), and Sec. 191.9, as applicable, 
and that its agent will submit a letter of notification of intent to 
operate under the general manufacturing drawback ruling for agents 
(see Sec. 191.7 and Appendix A), or an application for a specific 
manufacturing drawback ruling (see Sec. 191.8 and this Appendix B).)

(Regarding drawback operations conducted under Sec. 1313(d), the 
data may describe the flavoring extracts, medicinal, or toilet 
preparations (including perfumery) manufactured with the use of 
domestic tax-paid alcohol; and where such alcohol is obtained or 
purchased.)

(Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be 
filed, do not include any reference to that procedure in this 
application.)

TAX-PAID MATERIAL USED UNDER SECTION 1313(d)

(Describe or list the tax-paid material)

EXPORTED ARTICLES ON WHICH DRAWBACK WILL BE CLAIMED

(Name each article to be exported)

PROCESS OF MANUFACTURE OR PRODUCTION

(Drawback under Sec. 1313(d) is not allowable except where a 
manufacture or production exists. ``Manufacture or production'' is 
defined, for drawback purposes, in Sec. 191.2(q). In order to obtain 
drawback under Sec. 1313(d), it is essential for the applicant to 
show use in manufacture or production by giving a thorough 
description of the manufacturing process. Describe how the tax-paid 
material is processed into the export article.)

WASTE

(Many processes result in residue materials which, for drawback 
purposes, are treated as wastes. Describe any residue materials 
which you believe should be so treated. If no waste results, include 
a positive statement to that effect under this heading.) (If waste 
occurs, state: (1) whether or not it is recovered, (2) whether or 
not it is valueless, and (3) what you do with it. This information 
is required

[[Page 11069]]

whether claims are made on a ``used in'' or ``appearing in'' basis 
and regardless of the amount of waste incurred.)
(Irrecoverable wastes are those consisting of materials which are 
lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of domestic tax-paid alcohol used in manufacturing. 
If the claim is based upon the quantity of domestic tax-paid alcohol 
appearing in the exported article, irrecoverable and valueless waste 
will cause a reduction in the amount of drawback.)

(Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation, does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)
(If you recover valuable waste and if you choose to claim on the 
basis of the quantity of domestic tax-paid alcohol used in producing 
the exported articles (less valuable waste), state that you will 
keep records to establish the quantity and value of the waste 
recovered. See ``Basis of Claim for Drawback'' section below.)

STOCK IN PROCESS

(Some processes result in another type of residual material, namely, 
stock in process, which affects the allowance of drawback. Stock in 
process may exist when residual material resulting from a 
manufacturing or processing operation is reintroduced into a 
subsequent manufacturing or processing operation; e.g., trim pieces 
from a cast article. The effect of stock in process on a drawback 
claim is that the amount of drawback for the period in which the 
stock in process was withdrawn from the manufacturing or processing 
operation (or the manufactured article, if manufacturing or 
processing periods are not used) is reduced by the quantity of 
merchandise or drawback products used to produce the stock in 
process if the ``used in'' or ``used in less valuable waste'' 
methods are used (if the ``appearing in'' method is used, there will 
be no effect on the amount of drawback), and the quantity of 
merchandise or drawback products used to produce the stock in 
process is added to the merchandise or drawback products used in the 
subsequent manufacturing or production period (or the subsequently 
produced article)).

(If stock in process occurs and claims are to be based on stock in 
process, the application must include a statement to that effect. 
The application must also include a statement that the domestic tax-
paid alcohol is considered to be used in manufacture at the time it 
was originally processed so that the stock in process will not be 
included twice in the computation of the domestic tax-paid alcohol 
used to manufacture the finished articles on which drawback is 
claimed.)

LOSS OR GAIN (Separate and distinct from WASTE)

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

PROCEDURES AND RECORDS MAINTAINED

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

    \1\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles we produce.''
---------------------------------------------------------------------------

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

Inventory Procedures

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

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

BASIS OF CLAIM FOR DRAWBACK

(There are three different bases that may be used to claim drawback: 
(1) Used in; (2) Appearing In; and (3) Used less Valuable Waste.)

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

(Based on the previous example, drawback would be payable on the 90 
gallons of domestic alcohol which actually went into the exported 
product (appearing in) rather than the 100 gallons used in as set 
forth previously.)

(The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of domestic tax-paid 
alcohol. The value of the waste reduces the amount of drawback when 
claims are based on the ``Used Less Valuable Waste'' basis. When 
valuable waste is incurred, the drawback allowance on the exported 
article is based on the quantity of tax-paid alcohol used to 
manufacture the exported articles, reduced by the quantity of such 
alcohol which the value of the waste would replace.)

(Based on the previous examples, if the 10 gallons of waste had a 
value of $.50 per gallon, then the 10 gallons of waste, having a 
total value of $5.00, would be equivalent in value to 5 gallons of 
the tax-paid alcohol. Thus the value of the waste would replace 5 
gallons of the alcohol used, and drawback is payable on 100% of the 
tax paid on 95 gallons of alcohol rather than on the 100 gallons 
``Used In'' or the 90 gallons ``Appearing In'' as set forth in the 
above examples.)

(Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)

(A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and measurements. A schedule 
determines the amount that will be needed to produce a unit of 
product before the material is actually used in production;)

(An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form

[[Page 11070]]

7551) which shows the total quantity used in producing all products 
during the period covered by the abstract. The abstract looks at a 
duration of time, for instance 3 months, in which the quantity of 
material has been used. An abstract looks back on how much material 
was actually used after a production period has been completed.)

(An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by schedule follows:)
    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.

(Section 191.8(f) of the Customs Regulations requires submission of 
the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)
    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.
(Neither the ``Appearing In'' basis nor the ``schedule'' method for 
claiming drawback may be used where the relative value procedure is 
required.)

AGREEMENTS

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
the persons who will sign drawback documents, the basis of claim 
used for calculating drawback, the decision to use or not to use an 
agent under Sec. 191.9 or the identity of an agent under that 
section, the drawback office where claims will be filed under the 
ruling, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313, part 191 of the Customs 
Regulations and this application and letter of approval.

DECLARATION OF OFFICIAL

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

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

By \2\-----------------------------------------------------------------
(Signature and Title)
---------------------------------------------------------------------------

    \2\ Section 191.6(a) requires that applications for specific 
manufacturing drawback rulings be signed by any individual legally 
authorized to bind the person (or entity) for whom the application 
is signed or the owner of a sole proprietorship, a full partner in a 
partnership, or, if a corporation, the president, a vice president, 
secretary, treasurer or employee legally authorized to bind the 
corporation. In addition, any employee of a business entity with a 
customs power of attorney filed with the Customs port for the 
drawback office which will liquidate your drawback claims may sign 
such an application, as may a licensed Customs broker with a Customs 
power of attorney. You should state in which Customs port your 
Customs power(s) of attorney is/are filed.

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

V. Format for Application for Specific Manufacturing Drawback Ruling 
Under 19 U.S.C. 1313(g).

COMPANY LETTERHEAD (Optional)

U.S. Customs Service, Duty and Refund Determination Branch, 1300 
Pennsylvania Avenue, N.W., Washington, D.C. 20229.

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

NAME AND ADDRESS AND IRS NUMBER (WITH SUFFIX) OF APPLICANT

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

LOCATION OF FACTORY OR SHIPYARD

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

PERSONS WHO WILL SIGN DRAWBACK DOCUMENTS

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

CUSTOMS OFFICE WHERE DRAWBACK CLAIMS WILL BE FILED

(The 8 offices where drawback claims can be filed are located at: 
Boston, MA; New York, NY; Miami, FL; New Orleans, LA; Houston, TX; 
Long Beach, CA; Chicago, IL; San Francisco, CA)

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

GENERAL STATEMENT

(The following questions must be answered:
    1. Who will be the importer of the merchandise?

(If the applicant will not always be the importer, does the 
applicant understand its obligations to obtain the appropriate 
certificates of delivery (19 CFR 191.10), certificates of 
manufacture and delivery (19 CFR 191.24), or both?)

    2. Who is the manufacturer?

(Is the applicant constructing and equipping for his own account or 
merely performing the operation on a toll basis for others?)

(If an agent is to be used, the applicant must state it will comply 
with T.D.s 55027(2) and 55207(1), and Sec. 191.9, as applicable, and 
that its agent will submit a letter of notification of intent to 
operate under the general manufacturing drawback ruling for agents 
(see Sec. 191.7 and Appendix A), or an application for a specific 
manufacturing drawback ruling (see Sec. 191.8 and this Appendix B).)

    3. Will the applicant be the drawback claimant?

(State how the vessel will qualify for drawback under 19 U.S.C. 
1313(g). Who is the foreign person or government for whom the vessel 
is being made or equipped?)
(There shall be included under this heading the following statement:
    We are particularly aware of the terms of Sec. 191.76(a)(1) of 
and subpart M of part 191 of the Customs Regulations, and shall 
comply with these sections where appropriate.)

(Since the permission to grant use of the accelerated payment 
procedure rests with the Drawback office with which claims will be

[[Page 11071]]

filed, do not include any reference to that procedure in this 
application.)

IMPORTED MERCHANDISE OR DRAWBACK PRODUCTS USED

(Describe the imported merchandise or drawback products)

ARTICLES CONSTRUCTED AND EQUIPPED FOR EXPORT

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

PROCESS OF CONSTRUCTION AND EQUIPMENT

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

WASTE

(Many processes result in residue materials which, for drawback 
purposes, are treated as wastes. Describe any residue materials 
which you believe should be so treated. If no waste results, include 
a positive statement to that effect under this heading.)
(If waste occurs, state: (1) whether or not it is recovered, (2) 
whether or not it is valueless, and (3) what you do with it. This 
information is required whether claims are made on a ``used in'' or 
``appearing in'' basis and regardless of the amount of waste 
incurred.)

(Irrecoverable wastes are those consisting of materials which are 
lost in the process. Valueless wastes are those which may be 
recovered but have no value. These irrecoverable and valueless 
wastes do not reduce the drawback claim provided the claim is based 
on the quantity of imported material used in manufacturing. If the 
claim is based upon the quantity of imported merchandise appearing 
in the exported article, irrecoverable and valueless waste will 
cause a reduction in the amount of drawback.)

(Valuable wastes are those recovered wastes which have a value 
either for sale or for use in a different manufacturing process. 
However, it should be noted that this standard applies to the entire 
industry and is not a selection on your part. An option by you not 
to choose to sell or use the waste in some different operation does 
not make it valueless if another manufacturer can use the waste. 
State what you do with the waste. If you have to pay someone to get 
rid of it, or if you have buyers for the waste, you must state so in 
your application regardless of what ``Basis'' you are using.)

(If you recover valuable waste and if you choose to claim on the 
basis of the quantity of imported or substituted merchandise used in 
producing the exported articles (less valuable waste), state that 
you will keep records to establish the quantity and value of the 
waste recovered. See ``Basis of Claim for Drawback'' section below.)

LOSS OR GAIN (Separate and distinct from WASTE)

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

PROCEDURES AND RECORDS MAINTAINED

    We will maintain records to establish:
    1. That the exported article on which drawback is claimed was 
constructed and equipped with the use of a particular lot (or lots) 
of imported material; and
    2. The quantity of imported merchandise \1\ we used in producing 
the exported article.
---------------------------------------------------------------------------

    \1\ If claims are to be made on an ``appearing in'' basis, the 
remainder of this sentence should read ``appearing in the exported 
articles we produce.''
---------------------------------------------------------------------------

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

INVENTORY PROCEDURES

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

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

BASIS OF CLAIM FOR DRAWBACK

(There are three different bases that may be used to claim drawback: 
(1) Used in; (2) Appearing In; and (3) Used less Valuable Waste.)

(The ``Used In'' basis may be employed only if there is either no 
waste or valueless or unrecovered waste in the operation. 
Irrecoverable or valueless waste does not reduce the amount of 
drawback when claims are based on the ``Used In'' basis. Drawback is 
payable in the amount of 99 percent of the duty paid on the quantity 
of imported material used to construct and equip the exported 
article.)

(For example, if 100 pounds of material, valued at $1.00 per pound, 
were used in manufacture resulting in 10 pounds of irrecoverable or 
valueless waste, the 10 pounds of irrecoverable or valueless waste 
would not reduce the drawback. In this case drawback would be 
payable on 99% of the duty paid on the 100 pounds of imported 
material used in constructing and equipping the exported articles.)

(The ``Appearing In'' basis may be used regardless of whether there 
is waste. It the ``Appearing In'' basis is used, the claimant does 
not need to keep records of waste and its value. However, the 
manufacturer must establish the identity and quantity of the 
merchandise appearing in the exported product and provide this 
information. Waste reduces the amount of drawback when claims are 
made on the ``Appearing In'' basis. Drawback is payable on 99 
percent of the duty paid on the quantity of imported material which 
appears in the exported articles. ``Appearing In'' may not be used 
if multiple products are involved.)
(Based on the previous example, drawback would be payable on the 90 
pounds of imported material which actually went into the exported 
product (appearing in) rather than the 100 pounds used in as set 
forth previously.)

(The ``Used Less Valuable Waste'' basis may be employed when the 
manufacturer recovers valuable waste, and keeps records of the 
quantity and value of waste from each lot of merchandise. The value 
of the waste reduces the amount of drawback when claims are based on 
the ``Used Less Valuable Waste'' basis. When valuable waste is 
incurred, the drawback allowance on the exported article is based on 
the duty paid on the quantity of imported material used to construct 
and equip the exported product, reduced by the quantity of such 
material which the value of the waste would replace. Thus in this 
case, drawback is claimed on the quantity of eligible material 
actually used to produce the exported product, less the amount of 
such material which the value of the waste would replace. Note 
section 191.26(c) of the Customs Regulations.)

(Based on the previous examples, if the 10 pounds of waste had a 
value of $.50 per pound, then the 10 pounds of waste, having a total 
value of $5.00, would be equivalent in value to 5 pounds of the 
imported material. Thus the value of the waste would replace 5 
pounds of the merchandise used, and drawback is payable on 99 
percent of the duty paid on the 95 pounds of imported material 
rather than on the 100 pounds ``Used In'' or the 90 pounds 
``Appearing In'' as set forth in the above examples.)
(Two methods exist for the manufacturer to show the quantity of 
material used or appearing in the exported article: (1) Schedule or 
(2) Abstract.)

(A ``schedule'' shows the quantity of material used in producing 
each unit of product. The schedule method is usually employed when a 
standard line of merchandise is being produced according to fixed 
formulas. Some schedules will show the quantity of merchandise used 
to manufacture or produce each article and others will show the 
quantity appearing in each finished article. Schedules may be 
prepared to show the quantity of merchandise either on the basis of 
percentages or by actual weights and

[[Page 11072]]

measurements. A schedule determines the amount that will be needed 
to produce a unit of product before the material is actually used in 
production;)

(An ``abstract'' is the summary of the records (which may be set 
forth on Customs Form 7551) which shows the total quantity used in 
producing all products during the period covered by the abstract. 
The abstract looks at a duration of time, for instance 3 months, in 
which the quantity of material has been used. An abstract looks back 
on how much material was actually used after a production period has 
been completed.)

(An applicant who fails to indicate the ``schedule'' choice must 
base his claims on the ``abstract'' method. State which Basis and 
Method you will use. An example of Used In by Schedule would read:)
    We shall claim drawback on the quantity of (specify material) 
used in manufacturing (exported article) according to the schedule 
set forth below.

(Section 191.8(f) of the Customs Regulations requires submission of 
the schedule with the application for a specific manufacturing 
drawback ruling. An applicant who desires to file supplemental 
schedules with the drawback office whenever there is a change in the 
quantity or material used should state:)

    We request permission to file supplemental schedules with the 
drawback office covering changes in the quantities of material used 
to produce the exported articles, or different styles or capacities 
of containers of such exported merchandise.

(Neither the ``Appearing In'' basis nor the ``schedule'' method for 
claiming drawback may be used where the relative value procedure is 
required.)

AGREEMENTS

    The Applicant specifically agrees that it will:
    1. Operate in full conformance with the terms of this 
application for a specific manufacturing drawback ruling when 
claiming drawback;
    2. Open its factory and records for examination at all 
reasonable hours by authorized Government officers;
    3. Keep its drawback related records and supporting data for at 
least 3 years from the date of payment of any drawback claim 
predicated in whole or in part upon this application;
    4. Keep this application current by reporting promptly to the 
drawback office which liquidates its claims any changes in the 
number or locations of its offices or factories, the corporate name, 
the persons who will sign drawback documents, the basis of claim 
used for calculating drawback, the decision to use or not to use an 
agent under Sec. 191.9 or the identity of an agent under that 
section, the drawback office where claims will be filed under the 
ruling, or the corporate organization by succession or 
reincorporation;
    5. Keep this application current by reporting promptly to the 
Headquarters, U.S. Customs Service all other changes affecting 
information contained in this application;
    6. Keep a copy of this application and the letter of approval by 
Customs Headquarters on file for ready reference by employees and 
require all officials and employees concerned to familiarize 
themselves with the provisions of this application and that letter 
of approval; and
    7. Issue instructions to insure proper compliance with title 19, 
United States Code, section 1313(g), part 191 of the Customs 
Regulations and this application and letter of approval.

DECLARATION OF OFFICIAL

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

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

By\2\------------------------------------------------------------------
(Signature and Title)

    \2\ Section 191.6(a) requires that applications for specific 
manufacturing drawback rulings be signed by any individual legally 
authorized to bind the person (or entity) for whom the application 
is signed or the owner of a sole proprietorship, a full partner in a 
partnership, or, if a corporation, the president, a vice president, 
secretary, treasurer or employee legally authorized to bind the 
corporation. In addition, any employee of a business entity with a 
Customs power of attorney filed with the Customs port for the 
drawback office which will liquidate your drawback claims may sign 
such an application, as may a licensed Customs broker with a Customs 
power of attorney. You should state in which Customs port your 
Customs power(s) of attorney is/are filed.
---------------------------------------------------------------------------

----------------------------------------------------------------------
Samuel H. Banks,
Acting Commissioner of Customs.

    Approved: February 5, 1998.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-5045 Filed 3-4-98; 8:45 am]
BILLING CODE 4820-02-P