[Federal Register Volume 67, Number 143 (Thursday, July 25, 2002)]
[Proposed Rules]
[Pages 48594-48596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18665]



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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 146

RIN 1515-AC74


Expanded Weekly Entry Procedure for Foreign Trade Zones

AGENCY: Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations, in 
conformance with the Trade and Development Act of 2000, to expand the 
weekly entry procedure for foreign trade zones to include merchandise 
involved in activities other than exclusively assembly-line type 
production operations. Under both the expanded procedure as well as the 
existing procedure for assembly-line type production operations, weekly 
entries covering estimated removals of merchandise from a foreign trade 
zone for any consecutive 7-day period, and the associated entry 
summaries, would have to be filed exclusively through the Automated 
Broker Interface, with duties, fees and taxes being scheduled for 
payment through the Automated Clearinghouse. The weekly entry is 
treated as a single entry or release of merchandise for purposes of the 
merchandise processing fee (MPF) that Customs assesses on importers in 
order to offset administrative costs incurred in processing imported 
merchandise that is formally entered or released.

DATES: Comments must be received on or before September 23, 2002.

ADDRESSES: Written comments are to be addressed to the U.S. Customs 
Service, Office of Regulations & Rulings, Attention: Regulations 
Branch, 1300 Pennsylvania Avenue NW., Washington, DC 20229. Submitted 
comments may be inspected at U.S. Customs Service, 799 9th Street, NW., 
Washington, DC during regular business hours. Arrangements to inspect 
submitted comments should be made in advance by calling Mr. Joseph 
Clark at (202) 572-8768.

FOR FURTHER INFORMATION CONTACT: Debbie Scott, Office of Field 
Operations, (202-927-1962).

SUPPLEMENTARY INFORMATION:

Background

    The Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81a-u) 
(the ``FTZA''), provides for the establishment and regulation of 
foreign trade zones. Foreign trade zones are secured areas to which 
foreign and domestic merchandise (except that prohibited by law) may be 
brought for the purposes enumerated in the FTZA without being subject 
to the customs laws of the U.S. Foreign trade zones, by virtue of being 
exempt from the customs laws, are intended to attract and promote 
international trade and commerce. Part 146, Customs Regulations (19 CFR 
part 146), sets forth the documentation and recordkeeping requirements 
governing, among other things, the admission of merchandise into a 
zone, its manipulation, manufacture, storage, destruction, or 
exhibition while in the zone, and its entry or removal from the zone.
    Generally speaking, the FTZA provides that when foreign merchandise 
is sent from a zone into customs territory, it is subject to the laws 
and regulations of the United States affecting imported merchandise (19 
U.S.C. 81c(a)). This would include customs law governing the entry of 
imported merchandise. To this end, section 1484 of the Tariff Act of 
1930, as amended (19 U.S.C. 1484), sets forth the procedures generally 
governing the entry of imported merchandise for customs purposes.
    Under 19 U.S.C. 1484, Customs has permitted a limited weekly entry 
procedure for foreign trade zones since May 12, 1986 (as authorized in 
T.D. 86-16, 51 FR 5040). This limited weekly entry procedure, appearing 
in Sec. 146.63(c)(1), Customs Regulations (19 CFR 146.63(c)(1)), is 
restricted to merchandise that was manufactured or changed into its 
final form just shortly (within 24 hours) before physical transfer from 
the zone.
    It is noted that further general support for the weekly entry 
procedure was furnished when 19 U.S.C. 1484 was subsequently amended by 
section 637 of the Customs Modernization Act (included as Title VI of 
the North American Free Trade Agreement Implementation Act, Pub. L. 
103-182, 107 Stat. 2057, enacted on December 8, 1993).

Expanded Weekly Entry Procedure; Amendment of Section 1484 by Trade and 
Development Act of 2000

    The Customs entry law, 19 U.S.C. 1484, has now been further amended 
by section 410 of the Trade and Development Act of 2000 (Pub. L. 106-
200, 114 Stat. 251, enacted on May 18, 2000). Section 410 of this Act 
adds a new paragraph (i) to section 1484 (19 U.S.C. 1484(i)), that 
specifically provides for an expanded weekly entry procedure for 
foreign trade zones under certain limitations. The expanded weekly 
entry procedure under the statute is inextricably tied, as further 
discussed below, to the assessment of the merchandise processing fee 
which only applies to merchandise entered for consumption; thus, this 
entry procedure is limited to merchandise that is to be removed from a 
zone for consumption.
    Under 19 U.S.C. 1484(i)(1), the expanded weekly entry procedure 
covers all merchandise (including merchandise of different classes, 
types and categories), with the exception of merchandise the entry of 
which is prohibited by law and merchandise for which the filing of an 
entry summary is required before it may be released from customs 
custody. The effect of section 1484(i) is to expand the weekly entry 
system beyond its current coverage, primarily to allow goods stored in 
a zone for the purpose of warehouse and distribution to be removed from 
the zone under a weekly entry process.
    Thus, merchandise falling within the expanded procedure of section 
1484(i)(1) that is to be removed from a zone during any 7-day period 
(not limited to a calendar week) may be the subject of a single 
estimated entry or release.
    In accordance with 19 U.S.C. 1484(i)(2)(A)(i) and (ii), weekly 
entries under the expanded weekly entry program would be required to be 
filed electronically through the Automated Broker Interface (ABI). The 
party making entry who chooses to file a weekly entry from a zone would 
have to do so using ABI, or employ an ABI-qualified Customs broker for 
this purpose.
    The electronic entry would have to contain the data equivalent to 
that required on Customs Form 3461 for the estimated removals of 
merchandise intended to occur during the related 7-day period. As 
provided in section 1484(i)(1), this estimated entry would need to be 
filed on or before the first day of the 7-day period in which the 
merchandise is to be removed from the zone.
    An electronic entry summary containing the data equivalent to that 
required on Customs Form 7501 would be filed within 10 working days 
after the first day of the 7-day period covered by the electronic 
entry, with payment of applicable duties and taxes likewise scheduled 
for no later than 10 working days after the date of entry, using the 
Automated Clearinghouse (ACH) as prescribed in Sec. 24.25, Customs 
Regulations (19 CFR 24.25).
    In addition, under 19 U.S.C. 1484(i)(2)(B), the operator and/or the 
user of the zone, as applicable, would be required to provide 
accounting, transportation, and related controls over

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merchandise subject to the weekly entry procedure that are adequate to 
protect the revenue and meet the requirements of other Federal 
agencies.
    In the case of a general-purpose zone with multiple users, the 
operator of the zone, in compliance with Sec. 146.4, Customs 
Regulations (19 CFR 146.4), would have to supervise and monitor the 
movement of merchandise, and provide for its proper storage and 
handling in the zone. The operator would also be required to maintain 
inventory records that accurately accounted for all transfers of 
merchandise from the zone related to the respective weekly entry of 
each person (zone user) using the procedure and otherwise comply with 
the requirements of Sec. 146.4 and subpart B, Customs Regulations (19 
CFR part 146, subpart B). Also, the person making entry (zone user) 
would have to keep inventory records with respect to the merchandise 
and its handling and/or processing in the zone that, if not 
computerized, would need to be maintained in an organized and readily 
retrievable manner, and be capable of being produced within a 
reasonable time after due notice.

Application of Merchandise Processing Fee to Weekly Entry

    The estimated weekly entry or release is treated under section 
1484(i)(1) as a single entry or release for purposes of the assessment 
of the merchandise processing fee (MPF) under section 13031(a)(9)(A) of 
the Consolidated Budget Reconciliation Act of 1985 (COBRA) (19 U.S.C. 
58c(a)(9)(A)), and all fee exclusions and limitations of section 13031 
of the COBRA also apply to the weekly entry or release, including the 
maximum and minimum fee amounts under section 13031(b)(8)(A)(i) (19 
U.S.C. 58c(b)(8)(A)(i)).
    Under 19 U.S.C. 58c(a)(9)(A), the MPF is the fee that Customs 
assesses on importers in order to offset administrative costs (salaries 
and expenses) that Customs incurs in connection with the processing of 
imported merchandise that is formally entered or released. Except as 
otherwise provided, merchandise that is formally entered or released is 
currently subject to an ad valorem MPF of .21 percent (19 U.S.C. 
58c(a)(9)(A); and Sec. 24.23(b)(1)(i)(A), Customs Regulations (19 CFR 
24.23(b)(1)(i)(A))). However, on any one weekly entry or release, the 
MPF may not exceed the maximum amount of $485, subject to certain 
provisions not here relevant (19 U.S.C. 58c(a)(9)(B)(i); 19 U.S.C. 
58c(b)(8)(A)(i); and Sec. 24.23(b)(1)(i)(B), Customs Regulations (19 
CFR 24.23(b)(1)(i)(B))).
    It should be observed in this regard that, by a document published 
in the Federal Register (62 FR 12129) on March 14, 1997, Customs had 
previously proposed a similar expansion of the weekly entry procedure 
for foreign trade zones, under the then-existing general authority of 
19 U.S.C. 1484; but, by a document published in the Federal Register 
(64 FR 13142) on March 17, 1999, Customs withdrew this proposal.

Conclusion

    Accordingly, based upon the foregoing, this document proposes to 
amend Sec. 146.63(c), Customs Regulations (19 CFR 146.63(c)), to 
implement 19 U.S.C. 1484(i), by adding a provision covering the 
expanded weekly entry procedure for foreign trade zones. The principal 
purpose of this proposed rule is to require electronic entry filing 
under the expanded procedure pursuant to 19 U.S.C. 1484(i)(2)(A). In 
addition, for the sake of consistency and administrative efficiency, 
Customs has determined that the existing weekly entry procedure for 
certain manufactured articles in Sec. 146.63(c)(1) should similarly be 
revised to require electronic entry filing and to provide that a weekly 
entry under Sec. 146.63(c)(1) may cover any 7-day period, and need no 
longer be confined to a calendar week. Also, under the proposed rule, 
if requested by Customs, the electronic data submitted would need to 
include the equivalent of a pro forma invoice or schedule, showing the 
estimated number of units of each type of merchandise to be removed 
during the weekly period and their zone and dutiable values.

Comments

    Before adopting this proposed rule as final, 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 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)), at the U.S. Customs Service, 799 9th Street, NW., 
Washington, DC during regular business hours. Arrangements to inspect 
submitted comments should be made in advance by calling Mr. Joseph 
Clark at (202) 572-8768.

The Regulatory Flexibility Act and Executive Order 12866

    The proposed amendments are essentially intended to conform the 
Customs Regulations with statutory law, including the provision in the 
law that allows a requirement for electronic entry filing. As such, 
pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.), it is certified that, if adopted, the proposed amendments 
will not have a significant economic impact on a substantial number of 
small entities. Accordingly, the proposed amendments are not subject to 
the regulatory analysis or other requirements of 5 U.S.C. 603 and 604. 
Nor do the proposed amendments meet the criteria for a ``significant 
regulatory action'' under E.O. 12866.

Paperwork Reduction Act

    The collections of information contained in this proposed rule have 
already been approved by the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) 
and assigned the following OMB Control Numbers: 1515-0065 (Requirement 
to make entry; Entry summary and continuation sheet); and 1515-0214 
(General recordkeeping and record production requirements). This 
proposed rule would not make any substantive changes to the existing 
approved information collections.
    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.

List of Subjects in 19 CFR Part 146

    Customs duties and inspection, Exports, Foreign trade zones, 
Imports, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Part 146, Customs Regulations (19 CFR part 146), is proposed to be 
amended as set forth below.

PART 146--FOREIGN TRADE ZONES

    1. Revise the authority citation for part 146 to read as follows:

    Authority: 19 U.S.C. 66, 81a-u, 1202 (General Note 23, 
Harmonized Tariff Schedule of the United States), 1484(i), 1623, 
1624.

    2. Amend Sec. 146.63 by revising paragraph (c) to read as set forth 
below:


Sec. 146.63  Entry for consumption.

* * * * *
    (c) Estimated activity.--(1) Weekly manufacturing.--(i) Electronic 
entry

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required. When any merchandise is manufactured or its physical 
condition as entered is otherwise changed (exclusive of packing) in a 
zone within 24 hours before physical transfer from the zone for 
consumption, the person making entry may file an entry for the 
estimated removals of such merchandise during any consecutive 7-day 
period. The 7-day period is not limited to being a calendar week. The 
entry must be filed through the Automated Broker Interface on or before 
the first day of the 7-day period in which the merchandise is to be 
removed from the zone. The electronic entry must contain data 
equivalent to that required on Customs Form 3461 for the estimated 
removals of merchandise intended to occur during the related 7-day 
period.
    (ii) Invoice upon request. If requested by Customs, the electronic 
data submitted must include the equivalent of a pro forma invoice or 
schedule, showing the estimated number of units of each type of 
merchandise to be removed during the weekly period and their zone and 
dutiable values.
    (2) Other weekly entries. (i) Electronic entry required. In 
addition to the merchandise already covered under paragraph (c)(1) of 
this section, the person making entry may file an estimated entry for 
all merchandise, including merchandise of different classes, types, and 
categories, except as provided in paragraph (c)(2)(ii) of this section, 
that is to be removed from a zone during any consecutive 7-day period. 
The weekly period is not limited to being a calendar week. The entry 
must be filed through the Automated Broker Interface on or before the 
first day of the 7-day period in which the merchandise is to be removed 
from the zone. The electronic entry must contain data equivalent to 
that required on Customs Form 3461 for the estimated removals of 
merchandise intended to occur during the related 7-day period.
    (ii) Invoice upon request. If requested by Customs, the electronic 
data submitted must include the equivalent of a pro forma invoice or 
schedule, showing the estimated number of units of each type of 
merchandise to be removed during the weekly period and their zone and 
dutiable values.
    (iii) Excluded merchandise. The following merchandise is excluded 
from the weekly entry procedure in paragraph (c)(2)(i) of this section:
    (A) Merchandise whose entry is prohibited by law; and
    (B) Merchandise for which the filing of an entry summary is 
required before it may be released from Customs custody.
    (3) Electronic entry summary. Under paragraph (c)(1) or (c)(2) of 
this section, an electronic entry summary containing data equivalent to 
that required on Customs Form 7501 must be filed within 10 working days 
after the first day of the 7-day period covered by the electronic 
entry. The entry summary must be filed electronically through the 
Automated Broker Interface, with payment of applicable duties and taxes 
being scheduled, through the Automated Clearinghouse, for no later than 
10 working days after the date of entry (see subpart D, part 143, and 
Sec. 24.25 of this chapter). All merchandise will be dutiable as 
provided in Sec. 146.65 of this subpart.
    (4) Inventory control. The operator and/or user of the zone, as 
applicable, must provide accounting, transportation and related 
controls over merchandise subject to the weekly entry procedures set 
forth in paragraphs (c)(1) and (c)(2) of this section that are adequate 
to protect the revenue and meet the requirements of other Federal 
agencies, as provided in paragraphs (c)(4)(i) and (c)(4)(ii) of this 
section.
    (i) Operator responsibilities; general-purpose zone. In the case of 
a general-purpose zone with multiple users, the operator of the zone, 
in compliance with Sec. 146.4 of this part, must supervise and monitor 
the movement of the merchandise, and provide for its proper storage and 
handling in the zone. The operator must also maintain inventory records 
that accurately account for all transfers of merchandise from the zone 
related to the respective weekly entry of each person (zone user) using 
the procedure and must otherwise comply with the requirements of 
Sec. 146.4 and subpart B of this part.
    (ii) Person making entry (zone user). The person making entry for 
the merchandise (the zone user) must keep inventory records with 
respect to the merchandise and its handling and/or processing in the 
zone. If not computerized, the records must be maintained in an 
organized and readily retrievable manner, and be capable of being 
produced within a reasonable time after due notice (see Sec. 163.6(a) 
of this chapter).
    (5) Acceptance of weekly entry by port director. Merchandise 
covered by an electronic entry made under the provisions of paragraph 
(c)(1) or (c)(2) of this section will be considered to be entered and 
may be removed from the zone only when the port director has accepted 
the entry. The time of entry will be determined as provided in 
Sec. 141.68 of this chapter. If the actual removals will exceed the 
estimate for the related 7-day period, the person making entry will 
file an additional electronic entry as necessary to cover the 
additional units before their removal from the zone. When estimated 
removals exceed actual removals, such excess merchandise will not be 
considered to have been entered or constructively transferred from the 
zone and will not be included in the entry summary for the estimated 
entry or release. After acceptance of the weekly entry, and any 
additional entries as required, individual transfers of merchandise 
covered by the entry may be made from the zone.
    (6) Application of merchandise processing fee to weekly entry. 
Under 19 U.S.C. 1484(i), the estimated weekly entry or release under 
paragraph (c)(1) or (c)(2) of this section is treated as a single entry 
or release for purposes of the assessment of the merchandise processing 
fee (MPF) under 19 U.S.C. 58c(a)(9)(A). All fee exclusions and 
limitations under 19 U.S.C. 58c also apply to the weekly entry or 
release, including the maximum and minimum fee amounts set forth in 19 
U.S.C. 58c(b)(8)(A)(i) (see Sec. 24.23(b)(1)(i) of this chapter).
* * * * *
    3. In Sec. 146.68(a), in the first sentence the reference 
``Sec. 146.63(c)'' is removed, and the reference ``Sec. 146.63(c)(1)'' 
is added in its place.

Robert C. Bonner,
Commissioner of Customs.
    Approved: July 19, 2002.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-18665 Filed 7-24-02; 8:45 am]
BILLING CODE 4820-02-P