[Federal Register Volume 64, Number 8 (Wednesday, January 13, 1999)]
[Notices]
[Pages 2274-2275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-719]


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DEPARTMENT OF THE TREASURY

Customs Service

[T.D. 99-8]


19 U.S.C. 1625(c) Inapplicable to Certain Specific Manufacturing 
Drawback Rulings and General Manufacturing Drawback Notices of 
Acknowledgment

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: Under 19 U.S.C. 1625(c) Customs is required to give notice of 
any proposed interpretive ruling that would modify or revoke a prior 
interpretive ruling. Customs is announcing in this document that it has 
determined that rulings involving no interpretive decision by Customs 
which modify or terminate specific manufacturing drawback rulings or 
terminate general manufacturing drawback notices of acknowledgment fall 
outside the scope of 19 U.S.C. 1625(c). Accordingly, it is Customs 
position that any such modifications or terminations do not require 
prior notice published in the Customs Bulletin.

DATES: January 13, 1999.

FOR FURTHER INFORMATION CONTACT: Bill Rosoff, Duty and Refund 
Determinations Branch, Office of Regulations and Rulings, 1300 
Pennsylvania Avenue, NW, Washington, DC, 20029, Tel. (202) 927-2277.

SUPPLEMENTARY INFORMATION:

Background

    This document concerns a position that Customs is taking that 19 
U.S.C. 1625(c) is not applicable to:
    (1) Factual non-interpretive modifications or terminations of 
specific drawback manufacturing rulings, or;
    (2) Factual non-interpretive terminations of general manufacturing 
drawback notices of acknowledgment.
    It is Customs position that the modification or termination of a 
specific manufacturing drawback ruling which involves no interpretive 
decision by Customs, or the termination for non-interpretive factual 
reasons of a general manufacturing drawback notice of acknowledgment, 
does not require prior notice published in the Customs Bulletin before 
publication of the final ruling.
    Customs considers modifications or terminations which require no 
interpretation of the drawback laws and regulations by Customs as non-
interpretive.

General Manufacturing Drawback Notices of Acknowledgment

    Section 191.7 of the Customs Regulations (19 CFR 191.7) provides 
that applicants for drawback involving certain common manufacturing 
operations may apply for drawback by submitting a letter of 
notification of intent to operate under a general manufacturing 
drawback ruling that is published in Appendix A to Part 191, Customs 
Regulations. The letter of notification of intent contains much factual 
information, such as the name and address of the manufacturer or 
producer, locations of the factories which will operate under the 
letter of notification, description of the merchandise and the 
manufacturing process and the IRS number. The drawback office to which 
the letter of notification of intent to operate under a general 
manufacturing drawback ruling was submitted will review the letter and, 
if the letter complies with certain criteria set forth in 19 CFR 
191.7(c), will issue an acknowledged letter of notification.

Specific Manufacturing Drawback Rulings

    Section 191.8 of the Customs Regulations (19 CFR 191.8) provides 
that each manufacturer or producer of an article intended to be claimed 
for drawback is required to apply for a specific manufacturing drawback 
ruling unless operating under a general manufacturing drawback ruling.
    The contents of an application for a specific manufacturing 
drawback ruling, as with a letter of notification of intent for general 
manufacturing drawback, include much factual, non-interpretive 
information. Examples of some issues which are factual and non-
interpretive include an applicant's name and address, IRS number, 
description of the type of business in which engaged, factory location, 
manufacturer's election of the manner by which it intends to show the 
basis for its entitlement to drawback (i.e, ``used in,'' ``appearing 
in,'' ``used in less valuable waste''), election of whether the claim 
will involve trade-off, and location of the Customs office where claims 
will be filed, etc.
    An application may also raise issues which require Customs to 
interpret the drawback statute and regulations. Such interpretive 
issues may arise in rulings where Customs erroneously concluded that a 
process accurately described in the application was a manufacture or 
production, where Customs erroneously concluded that a process 
accurately described in the application was a major conversion or that 
the materials used were required for the safe operation of the vessel 
or aircraft within the meaning of 19 U.S.C. 1313, or where Customs 
erroneously concluded that accurately described substitute merchandise 
was of the same kind and quality as the designated merchandise, etc.
    If Customs determines that a specific manufacturing drawback 
application is consistent with the drawback law and regulations, a 
letter of approval will be issued to the applicant.

Approved Drawback Applications Are ``Rulings''

    Before the final rule revising the drawback regulations published 
in the Federal Register (63 FR 10970) on March 5, 1998 became 
effective, an approved drawback application was called a drawback 
contract. In that final rule document, Customs affirmed that an 
approved drawback application is now considered a drawback ruling, 
rather than a drawback contract, and subject to the requirements of 19 
CFR Part 177 and 19 U.S.C. 1625. Accordingly, a specific manufacturer's

[[Page 2275]]

statement of its proposed operations under 19 U.S.C. 1313(a), (b), (d) 
and (g) which is approved by Customs now constitutes a ruling.

Modification and Revocation of Rulings Under 19 U.S.C. 1625(c)

    Pursuant to 19 U.S.C. 1625(c), before publishing a final ruling 
which would (1) modify (other than to correct a clerical error) or 
revoke a prior interpretive ruling which has been in effect for at 
least 60 days or; (2) have the effect of modifying the treatment 
previously accorded by Customs to substantially identical transactions, 
Customs shall publish in the Customs Bulletin a proposed interpretive 
ruling on the subject, giving interested parties the opportunity to 
comment.

Termination of Specific Manufacturing Drawback Rulings or General 
Manufacturing Drawback Notices of Acknowlegement

    Under 19 CFR 191.8(h), a specific manufacturing drawback ruling 
remains in effect indefinitely unless it is terminated for one of two 
reasons: (1) it has not been used for five years and notice of 
termination is published in the Customs Bulletin, or: (2) the ruling 
recipient requests termination.
    Under 19 CFR 191.7(d), an acknowledged letter of notification for 
general manufacturing drawback remains in effect indefinitely unless it 
is terminated under the same circumstances set forth in 19 CFR 
191.8(h).
    Termination of the effectiveness of a specific manufacturing 
drawback ruling or general manufacturing drawback notice of 
acknowledgment is equivalent to revocation under 19 U.S.C. 1625(c).

Modification of Specific Manufacturing Drawback Rulings

    A specific manufacturing drawback ruling can be modified under 19 
CFR 191.8(g) upon request of the manufacturer or producer. The Customs 
Regulations do not provide for modification of a general manufacturing 
drawback notice of acknowledgment.

Customs Processing of Approved Specific Manufacturing Drawback 
Rulings and General Manufacturing Drawback Notices of 
Acknowledgment

    A unique computer-generated number is assigned when Customs 
approves a specific manufacturing drawback ruling or acknowledges the 
intent of a person to use a general manufacturing drawback ruling. This 
number must be used when filing drawback claims with Customs. This 
unique computer-generated number helps Customs track manufacturing 
drawback transactions, particularly under the new Drawback Selectivity 
System. The Drawback Selectivity System is intended to evaluate a 
drawback claimant's compliance with the drawback laws and regulations 
by providing a history of the claimant's activity. If a general 
manufacturing drawback notice of acknowledgment or a specific 
manufacturing drawback ruling is terminated, the computer-generated 
number is removed from the active file part of the Drawback Selectivity 
System as Customs intends to concentrate its compliance efforts on 
active claimants. If a specific manufacturing drawback ruling is 
modified, a suffix is added to the computer-generated number of the 
original approved ruling which will continue the ruling as an active 
file. This is important for purposes of the Drawback Selectivity 
Program in that it continues the original specific manufacturing 
drawback ruling as an active drawback selectivity file.
    Independent of the Drawback Selectivity System, individual claims 
of both active or inactive claimants remain subject to verification 
under 19 CFR 191.61. If a verification of a general or specific 
manufacturing claim reveals that the letter of intent for general 
manufacturing drawback or application for specific manufacturing 
drawback inaccurately described the actual operation employed by the 
manufacturer, Customs may deny the claim without effecting a 
modification or termination. In that situation, the failure of the 
applicant to accurately describe the processing steps or the 
specifications of the designated and substituted merchandise in the 
application is the basis of denial of drawback.

Inapplicability of 19 U.S.C. 1625(c) to Factual, Non-Interpretive 
Modifications or Terminations of Specific Manufacturing Drawback 
Rulings or Non-Interpretive Terminations of General Manufacturing 
Drawback Notices of Acknowlegement

    As stated above, there are many factual elements of specific 
manufacturing drawback rulings and letters of notice of intent which 
are acknowledged for general manufacturing drawback. These factual 
elements sometimes change and Customs is generally notified of such 
changes by the recipient of the specific manufacturing drawback ruling 
or the recipient of the notice of acknowledgment for general 
manufacturing drawback. Such factual changes reflect the recipient's 
altered circumstances and involve no interpretation of the drawback 
statute and regulations by Customs. It is Customs position that 
modifications or terminations of specific manufacturing drawback 
rulings or terminations of general manufacturing drawback notices of 
acknowledgment, which are limited to factual changes and involve no 
interpretive decision by Customs, fall outside the scope of 19 U.S.C. 
1625(c) as this section is not triggered absent a proposed 
``interpretive'' ruling or decision. Accordingly, any such proposed 
non-interpretive modification or termination does not require prior 
notice published in the Customs Bulletin before publication of the 
final ruling.
    Furthermore, Customs perceives no benefit, either to the Service or 
to the applicant, in postponing publication of a final ruling pending 
prior publication of a notice which merely details changes to a 
recipient's factual circumstance.
    Of course, any modification or termination based on information 
which requires Customs to interpret the drawback statute and 
regulations will continue to be subject to the procedures of 19 U.S.C. 
1625(c).

    Dated: January 7, 1999.
Stuart P. Seidel,
Assistant Commissioner, Office of Regulations and Rulings.
[FR Doc. 99-719 Filed 1-12-99; 8:45 am]
BILLING CODE 4820-02-P