[Federal Register Volume 64, Number 66 (Wednesday, April 7, 1999)]
[Proposed Rules]
[Pages 16868-16870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8517]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 64, No. 66 / Wednesday, April 7, 1999 / 
Proposed Rules  

[[Page 16868]]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR PART 19

RIN 1515-AC41


Customs Bonded Warehouses

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

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations 
regarding the filing of certain inventory reports by bonded warehouse 
proprietors. Instead of requiring that these reports be filed with 
Customs, the document proposes that bonded warehouse proprietors 
maintain these inventory reports after their preparation. In some 
instances when the inventory report is prepared a letter must be 
submitted to Customs certifying that the report has been prepared. As 
proposed to be amended, the port director would be the Customs officer 
to whom certification letters must be submitted and to whom the annual 
report covering smelting or refining operations should be submitted. 
These proposed changes and other changes proposed in this document are 
intended to simplify inventory recordkeeping procedures for warehouse 
proprietors and are consistent with Customs movement toward a post-
audit environment and the spirit of ``shared responsibility'' embodied 
in the Customs Modernization provisions of the North American Free 
Trade Agreement Implementation Act.

DATES: Comments must be received on or before June 7, 1999.

ADDRESSES: Written comments may be addressed to and inspected at the 
Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, 
NW., 3rd Floor, Washington, D.C. 20229.

FOR FURTHER INFORMATION CONTACT: Edward Bowles, Senior Auditor, 
Regulatory Audit Division, (202-927-0071).

SUPPLEMENTARY INFORMATION:

Background

    This document proposes several amendments to part 19, Customs 
Regulations (19 CFR part 19), concerning the submission to Customs of 
certain inventory reports covering merchandise in a bonded warehouse. 
Instead of requiring that certain reports be filed with Customs, the 
document proposes to amend the Customs Regulations to require that 
bonded warehouse proprietors maintain these inventory reports after 
their preparation. In certain instances, when the inventory report is 
prepared, a letter must be submitted to Customs certifying that the 
report has been prepared. As proposed to be amended, the port director 
would be the Customs officer to whom certification letters must be 
submitted and to whom the annual report covering smelting or refining 
operations should be submitted. These proposed changes and other 
changes proposed in this document are intended to simplify inventory 
recordkeeping procedures for warehouse proprietors and are consistent 
with Customs movement toward a post-audit environment and the spirit of 
``shared responsibility'' embodied in the Customs Modernization 
provisions of the North American Free Trade Agreement Implementation 
Act (Pub. L. 103-182).

Warehouse Proprietor's Submission

    The principal change proposed in this document concerns the 
Warehouse Proprietor's Submission on Customs Form (CF) 300. Currently, 
Sec. 19.12(g) of the Customs Regulations requires certain bonded 
warehouse proprietors to file annually the CF 300 with the field 
director of regulatory audit within 45 days from the end of the 
proprietor's business year. The CF 300 describes all merchandise in the 
beginning and ending inventory and all merchandise covered by entries 
opened and closed during the year which do not appear in the beginning 
or ending inventory.
    Section 19.12(g) also provides that these proprietors may submit an 
alternative format concerning the inventory information required on the 
CF 300 if the field director of regulatory audit first gives written 
approval to use an alternative format.
    Section 19.12(d)(3) requires, with certain exceptions, that duties 
and taxes applicable to any non-extraordinary shortage of, or damage 
to, merchandise in a warehouse be paid when the CF 300 is due, or at 
any time prior to the annual filing of the CF 300 or certified annual 
reconciliation.
    This document proposes to amend Sec. 19.12(g) to no longer require 
the submission of the CF 300 by these warehouse proprietors. The 
proposed amendment would still require these warehouse proprietors to 
prepare the CF 300 within 45 calendar days from the end of these 
proprietors' business years; but instead of requiring these proprietors 
to submit it to Customs within that time frame, the proposed amendment 
would require these proprietors to retain the document and submit to 
the port director within 10 days of the preparation of the CF 300 a 
letter certifying that the CF 300 has been prepared, is available for 
Customs review, and is accurate.
    The document also proposes to amend Sec. 19.12(g) to provide that 
these warehouse proprietors would no longer need Customs permission in 
order to use an alternative format to the CF 300. Of course, under the 
proposed amendment, if an alternative format is used, a similar letter 
would need to be submitted to Customs within 10 days of the preparation 
of the alternate format certifying that the alternate to the CF 300 has 
been prepared, is available for Customs review and is accurate.
    Section 19.12(d)(3) is proposed to be amended to provide that 
duties and taxes applicable to any non-extraordinary shortage of, or 
damage to, merchandise in a warehouse be reported to Customs no later 
than the date the letter is due to Customs certifying that the CF 300 
or alternate has been prepared.

Annual Reconciliation Report

    Section 19.12(h)(1) concerns the requirement of certain other 
warehouse proprietors to prepare an annual reconciliation report, 
rather than the CF 300, and establishes the date by which the report 
must be prepared. Section 19.12(h)(1) currently allows for these 
warehouse proprietors to apply to the field director of regulatory 
audit for an extension of time within which to prepare the report and 
Sec. 19.12(h)(3) requires these proprietors to submit a letter to the 
field director of regulatory

[[Page 16869]]

audit certifying that the annual reconciliation report has been 
prepared.
    This document proposes to amend Sec. 19.12(h)(1) to make port 
directors, rather than field directors of regulatory audit, responsible 
for approving extensions of time within which reconciliation reports 
must be prepared. The document proposes to amend Sec. 19.12(h)(3) to 
require that the certification letter be submitted to the port 
director.

Smelting and Refining Warehouses

    This document also proposes two changes regarding the submission of 
inventory reports by bonded smelting and refining warehouses. One 
proposed change concerns the filing of a monthly report and the other 
concerns the filing of an annual report.
    Section 19.17(g) currently provides that where two or more smelting 
and refining warehouses are included under one blanket smelting and 
refining bond, an overall monthly statement of inventory and bond 
charges must be filed by the principal named in the bond with each 
involved Field Director, Regulatory Audit, showing the inventory at 
each plant covered by the bond. Furthermore, Sec. 19.17(g) provides 
that each port director at whose port a plant or plants are located is 
responsible for determining the correctness of the inventory report 
covering merchandise at those plants under his jurisdiction.
    As proposed to be amended by this document, Sec. 19.17(g) would no 
longer require the proprietor named as principal in the bond to file 
the monthly statement with any Field Director, Regulatory Audit, but 
would instead require the proprietor to maintain the monthly statement 
after its preparation. In addition, Sec. 19.17(g) would be changed to 
make clear, as is currently the case, that if the warehouses covered by 
an overall statement are located in more than one port, each port 
director may choose to verify the accuracy of the inventory report only 
with respect to that portion of the report that relates to amounts held 
at a plant that is located within that port director's jurisdiction.
    Section 19.19(b) currently requires that an annual report covering 
the smelting or refining operations conducted by each manufacturer be 
submitted to the Field Director, Regulatory Audit. As proposed to be 
amended by this document, the regulations would no longer require the 
annual report to be submitted to the Field Director, Regulatory Audit. 
Instead, the annual report would be filed with the port director.

Other Amendments

    Section 19.12(d)(3) currently refers to the filing of the annual 
reconciliation when the filing of the annual reconciliation is not 
required. Accordingly, this document proposes to remove the reference 
to the filing of the annual reconciliation from that paragraph.
    Also, Sec. 19.12(d)(3) currently includes a cross-reference to 
paragraph (f) of that section in relation to the annual reconciliation 
report. However, the annual reconciliation report is dealt with in 
paragraph (h) of that section, not paragraph (f). Accordingly, this 
document proposes to replace the cross-reference to paragraph (f) in 
Sec. 19.12(d)(3) with a cross-reference to paragraph (h).

Comments

    Before adopting the proposal, consideration will be given to any 
written comments that are timely submitted to Customs. Customs 
specifically requests comments on the clarity of this proposed rule and 
how it may be made easier to understand. Comments submitted will be 
available for public inspection in accordance with the Freedom of 
Information Act (5 U.S.C. 552), Sec. 1.4, Treasury Department 
Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19 
CFR 103.11(b)), on regular business days between the hours of 9:00 a.m. 
and 4:30 p.m. at the Regulations Branch, U.S. Customs Service, 1300 
Pennsylvania Avenue, NW., 3rd Floor, Washington, D.C.

The Regulatory Flexibility Act and Executive Order 12866

    The proposed amendments are intended to simplify inventory 
recordkeeping procedures for warehouse proprietors and be consistent 
with Customs movement toward a post-audit environment and the spirit of 
``shared responsibility'' embodied in the Customs Modernization 
provisions of the North American Free Trade Agreement Implementation 
Act. As such, pursuant to the provisions of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.), it is hereby certified that the proposed 
rule, if adopted, will not have a significant economic impact on a 
substantial number of small entities. Accordingly, it is not subject to 
the regulatory analysis or other requirements of 5 U.S.C. 603 and 604. 
Nor does the proposed rule result in a ``significant regulatory 
action'' under E.O. 12866.

Paperwork Reduction Act

    The collections of information contained in this notice of proposed 
rulemaking have been previously reviewed and approved by the Office of 
Management and Budget (OMB) in accordance with the Paperwork Reduction 
Act of 1995 and assigned the following OMB control numbers: 1515-0093 
for bonded warehouse proprietor's submission; 1515-0121 for information 
to be supplied by owner or lessee in support of application to 
establish a bonded warehouse facility; 1515-0127 for application by 
manufacturer to bond (or discontinue a previously bonded) establishment 
engaged in the smelting or refining of metal-bearing materials; and 
1515-0135 for record of smelting or refining operation showing receipt 
and disposition of each shipment of material. This document restates 
the collections of information without substantive change.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by OMB.
    Although this document restates the collections of information 
without substantive change, comments are specifically requested 
concerning: (a) Whether the collections of information are necessary 
for the proper performance of the functions of the agency, including 
whether the information will have practical utility; (b) how to enhance 
the quality, utility, and clarity of the information to be collected; 
(c) how to minimize the burden of complying with the collections of 
information, including through the application of automated collection 
techniques or other forms of information technology; and (d) estimates 
of capital or start-up costs and costs of operation, maintenance, and 
purchase of services to provide information.
    Comments concerning suggestions for reducing the burden of the 
collections of information should be sent to the Regulations Branch, 
Office of Regulations and Rulings, U.S. Customs Service, 1300 
Pennsylvania Avenue, NW., 3rd Floor, Washington, D.C. 20229. A copy 
should also be sent to U.S. Customs Service, Information Services 
Group, Attention: J. Edgar Nichols, Room 3.2-C, 1300 Pennsylvania 
Avenue, NW., Washington, D.C. 20229. Comments should be submitted 
within the same time frame that comments are due regarding the 
substance of the proposal.

[[Page 16870]]

List of Subjects in 19 CFR Part 19

    Customs duties and inspection, Exports, Freight, Imports, Reporting 
and recordkeeping requirements, Warehouses.

Proposed Amendments to the Regulations

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

PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS, AND CONTROL OF 
MERCHANDISE THEREIN

    1. The general authority citation for part 19, and the relevant 
sectional authority citation, would continue to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States), 1624.
* * * * *
    Sections 19.17-19.25 also issued under 19 U.S.C. 1312;
* * * * *
    2. It is proposed to amend Sec. 19.12 by revising the seventh and 
eighth sentences of paragraph (d)(3), by revising the first sentence of 
paragraph (g), adding a sentence thereafter, and revising the last 
sentence of paragraph (g), and by revising the first sentence, 
respectively, of paragraphs (h)(1) and (h)(3), to read as follows:


Sec. 19.12  Inventory control and recordkeeping system.

* * * * *
    (d) Accountability for merchandise in a warehouse. * * *
    (3) Theft, shortage, overage or damage. * * * The proprietor must 
also record all shortages and overages as required in the Customs Form 
300 or annual reconciliation report under paragraph (g) or (h) of this 
section, as appropriate. Duties and taxes applicable to any non-
extraordinary shortage or damage and not required to be paid earlier 
must be reported and submitted to the port director no later than the 
date the certification of preparation of Customs Form 300 is due or at 
the time the certification of preparation of the annual reconciliation 
report is due, as prescribed in paragraph (g) or (h) of this section. * 
* *
* * * * *
    (g) Warehouse proprietor submission. Except as otherwise provided 
in paragraph (h) of this section or Sec. 19.19(b) of this part, the 
warehouse proprietor must prepare a Warehouse Proprietor's Submission 
on Customs Form (CF) 300 within 45 calendar days from the end of the 
business year and maintain the Submission on file for 5 years from the 
end of the business year covered by the Submission. The proprietor must 
submit to the port director, within 10 business days after preparation 
of the CF 300, a letter signed by the proprietor certifying that the CF 
300 has been prepared, is available for Customs review, and is 
accurate. * * * An alternative format may be used for providing the 
information required on the CF 300.
    (h) Annual reconciliation. * * *
    (1) Report. Instead of preparing Customs Form 300 as required under 
paragraph (g) of this section, the proprietor of a class 2, importers' 
private bonded warehouse, and proprietors of classes 4, 5, 6, 7, 8, and 
9 warehouses if the warehouse proprietor and the importer are the same 
party, must prepare a reconciliation report within 90 days after the 
end of the fiscal year unless the port director authorizes an extension 
for reasonable cause. * * *
* * * * *
    (3) Certification. The proprietor must submit to the port director 
within 10 business days after preparation of the annual reconciliation 
report, a letter signed by the proprietor certifying that the annual 
reconciliation has been prepared, is available for Customs review, and 
is accurate. * * *
* * * * *
    3. It is proposed to amend Sec. 19.17 by revising the first and 
second sentences of paragraph (g) to read as follows:


Sec. 19.17  Application to establish warehouse; bond.

* * * * *
    (g) Statement of inventory and bond charges. Where two or more 
smelting or refining warehouses are included under one blanket smelting 
and refining bond, an overall statement must be prepared and maintained 
by the principal named in the bond by the 28th of each month, showing 
the inventory as of the close of the preceding month, of all metals on 
hand at each plant covered by the blanket bond and the total of bonded 
charges for all plants. If the warehouses covered by an overall 
statement are located in more than one port, each port director may 
choose to verify the accuracy of the inventory report only with respect 
to that portion of the report that relates to amounts held at a plant 
that is located within that port director's jurisdiction. * * *
    4. It is proposed to amend Sec. 19.19 by revising the first 
sentence of paragraph (b) to read as follows:


Sec. 19.19  Manufacturers' records; annual statement.

* * * * *
    (b) Every manufacturer engaged in smelting or refining, or both, 
must prepare and submit to the port director at the port nearest which 
the plant is located an annual statement for the fiscal year for the 
plant involved not later than 60 days after the termination of that 
fiscal year. * * *

Raymond W. Kelly,
Commissioner of Customs.
    Approved: March 12, 1999.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 99-8517 Filed 4-6-99; 8:45 am]
BILLING CODE 4820-02-P