[Federal Register Volume 72, Number 65 (Thursday, April 5, 2007)]
[Rules and Regulations]
[Pages 16712-16716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-1578]


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DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE INTERIOR

15 CFR Part 303

[Docket No. 0612243019-7062-02]
RIN: 0625-AA72


Changes in the Insular Possessions Watch, Watch Movement and 
Jewelry Programs 2006

AGENCIES: Import Administration, International Trade Administration, 
Department of Commerce; Office of Insular Affairs, Department of the 
Interior.

ACTION: Final rule.

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SUMMARY: The Departments of Commerce and the Interior (the Departments) 
amend their regulations governing watch duty-exemption allocations and 
the watch and jewelry duty-refund benefits for producers in the United 
States insular possessions (the U.S. Virgin Islands, Guam, American 
Samoa and the Commonwealth of the Northern Mariana Islands). The rule 
amends certain regulations by updating the maximum total value of watch 
components per watch that are eligible for duty-free entry into the 
United States under the insular program, further clarifying the 
definition of creditable and non-creditable wages and fringe benefits, 
providing more details about the calculation of mid-year and annual 
duty-refund and verification process, and making minor editorial 
changes.

DATES: This rule is effective May 7, 2007.

[[Page 16713]]


FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526, same 
address as above.

SUPPLEMENTARY INFORMATION: The Departments of Commerce and the Interior 
(the Departments) issue this rule to amend their regulations governing 
watch duty-exemption allocations and the watch and jewelry duty-refund 
benefits for producers in the United States insular possessions (the 
U.S. Virgin Islands, Guam, American Samoa and the Commonwealth of the 
Northern Mariana Islands). The background information and purpose of 
this rule is found in the preamble to the proposed rule (72 FR 3083, 
January 24, 2007) and is not repeated here.

Amendments

    We amend Sec.  303.14(b)(3) by raising the maximum total value of 
watch components per watch and watch movement that are eligible for 
duty-free entry into the U.S., from $800 to $3,000 per watch and from 
$35 to $300 per watch movement due to recent increases in the price of 
gold.
    The rule amends Sec. Sec.  303.1(c) and 303.15(b) to reflect that 
the duty-refunds may now be obtained on any articles that entered the 
customs territory of the United States duty paid except for any article 
containing a material which is the product of a country to which column 
2 rates of duty apply, pursuant to Public Law 108-429. The rule further 
amends Sec.  303.1(c) by removing the erroneous reference to ``Headnote 
6'' and adding ``additional U.S. note 5 to chapter 91 of the HTSUS'' in 
its place.
    We also amend Sec.  303.2(a)(8) to correct a minor typographical 
error by adding the closing parenthesis at the end of the sentence and 
amend Sec.  303.2(a)(10) by changing ``watch components'' to ``watch 
movements'' to more accurately define the kind of component.
    Further, we amend Sec. Sec.  303.2(a)(13), 303.2(a)(13)(ii), 
303.2(a)(13)(ii)(A), 303.2(a)(13)(ii)(B), 303.2(a)(14), 
303.2(a)(14)(ii), 303.2(a)(14)(ii)(A), 303.2(a)(14)(ii)(B), 
303.16(a)(9), 303.16(a)(9)(ii), 303.16(a)(9)(ii)(A), 
303.16(a)(9)(ii)(B), 303.16(a)(10), 303.16(a)(10)(ii), 
303.16(a)(10)(ii)(A) and 303.16(a)(10)(ii)(B) to further clarify which 
wages, health insurance, life insurance and pension benefits are 
creditable in the Departments' calculation of the duty-refund benefits 
and which are not.
    The rule also amends Sec. Sec.  303.16(a)(9)(i)(C) and 
(a)(10)(i)(D) by clarifying that two program producers may, under 
certain circumstances, work on the same unit of jewelry and receive 
creditable wages and fringe benefits proportionally if both producers 
demonstrate that they have met all the qualifications of the 
regulations and have records sufficient for the Departments' 
verification. However, a non-program jewelry producer may not work 
together with a program jewelry producer on the manufacturing of a 
single article of jewelry and receive creditable wages and benefits.
    Further the rule amends Sec. Sec.  303.12(a)(1), 303.14(c), 
303.19(a)(1) and 303.20(b) to provide further details about the 
calculation of the mid-year duty-refund and annual duty-refund. The 
rule also modifies the criteria for the calculation of the annual duty-
refund to include health insurance, life insurance and pension 
benefits, pursuant to Public Law 108-429 and modifies the criteria for 
the calculation of the mid-year duty refund.
    We amend the heading to Sec.  303.5(b) to reflect that only 
verified data is used in the calculation of the duty-exemptions and 
duty-refunds. Also, we amend Sec. Sec.  303.5(b)(5) and 303.17(b)(6) to 
clarify that the payroll information that should be available for use 
in the verification includes time cards for each employee. The rule 
amends Sec. Sec.  303.5(c) and 303.17(c) to specify that all data must 
be available at the time of the annual verification and that the 
Departments will not consider further data after the verification for 
the particular year has been completed.
    The rule amends Sec. Sec.  303.13(b) and 303.21(b) by changing 
``post office address'' to ``address'' because some producers might not 
have post office addresses and express mail carriers often will not 
deliver to a post office address.
    Finally, the rule amends Sec. Sec.  303.2(b)(5) and 303.16(b)(3) by 
adding ``duty paid'' so it will be clearer that the refund of duties is 
specifically on items that entered into the Customs territory of the 
United States ``duty paid''.
    ITA received three comments in response to the proposed rule and 
request for comments. The commenters supported the provisions that were 
proposed and suggested no changes. As a result we are adopting the 
proposed regulations without change.

Administrative Law Requirements

    Regulatory Flexibility Act. In accordance with the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., the Chief Counsel for Regulation 
at the Department of Commerce has certified to the Chief Counsel for 
Advocacy, Small Business Administration, that this rule would not have 
a significant economic impact on a substantial number of small 
entities. The factual basis for this certification was published in the 
proposed rule and is not repeated here. No comments were received 
regarding the economic impact of this rule on small entities. As a 
result, a final regulatory flexibility analysis is not required and has 
not been prepared.
    Paperwork Reduction Act. This rulemaking does not contain revised 
collection of information requirements subject to review and approval 
by the Office of Management and Budget (OMB) under the Paperwork 
Reduction Act of 1995. Collection activities are currently approved by 
the Office of Management and Budget under control numbers 0625-0040 and 
0625-0134.
    Not withstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with a collection of information unless it 
displays a currently valid OMB control number.
    E.O. 12866. It has been determined that the rulemaking is not 
significant for purposes of Executive Order 12866.

List of Subjects in 15 CFR Part 303

    Administrative practice and procedure, American Samoa, Customs 
duties and inspection, Guam, Imports, Marketing quotas, Northern 
Mariana Islands, Reporting and record keeping requirements, Virgin 
Islands, Watches and Jewelry.


0
For reasons set forth above, the Departments amend 15 CFR Part 303 as 
follows:

PART 303--WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAMS

0
1. The authority citation for 15 CFR Part 303 continues to read as 
follows:

    Authority: Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); 
Pub. L. 103-465, 108 Stat. 4991; Pub. L. 94-241, 90 Stat. 263 (48 
U.S.C. 1681, note); Pub. L. 106-36, 113 Stat. 167; Pub. L. 108-429, 
118 Stat. 2582.


Sec.  303.1  [Amended]

0
2. Section 303.1 is amended as follows:
0
A. Remove ``on watches and watch movements and parts (except discrete 
watch cases) imported into the customs territory of the United 
States.'' from the first sentence of paragraph (c) and add ``on any 
article imported into the customs territory of the United States duty 
paid except for any article containing a material which is the product 
of a country to which column 2 rates of duty apply.'' in its place.
0
B. Remove ``Headnote 6'' from the last sentence in paragraph (c) and 
add ``additional U.S. note 5 to chapter 91 of

[[Page 16714]]

the Harmonized Tariff Schedule of the United States, HTSUS'' in its 
place.

0
3. Section 303.2 is amended as follows:
0
A. Remove ``American Samoa) and the Northern Mariana Islands.'' from 
the only sentence in paragraph (a)(8) and add ``American Samoa and the 
Northern Mariana Islands).'' in its place.
0
B. Remove ``watch components'' from the only sentence in paragraph 
(a)(10) and add ``watch movements'' in its place.
0
C. Amend paragraph (a)(13) introductory text by removing ``wages'' and 
adding ``wages and associated'' in its place.
0
D. Add one new sentence at the end of paragraph (a)(13)(ii) 
introductory text as set forth below.
0
E. Add one new sentence at the end of paragraph (a)(13)(ii)(A) as set 
forth below.
0
F. Add one new sentence at the end of paragraph (a)(13)(ii)(B) as set 
forth below.
0
G. Revise paragraph (a)(14) introductory text as set forth below.
0
H. Add one new sentence at the end of paragraph (a)(14)(ii) 
introductory text as set forth below.
0
I. Add one new sentence at the end of paragraph (a)(14)(ii)(A) as set 
forth below.
0
J. Add one new sentence at the beginning of paragraph (a)(14)(ii)(B) as 
set forth below.
0
K. Remove ``United States during'' from the second sentence of 
paragraph (b)(5) and add ``United States duty paid during'' in its 
place.


Sec.  303.2  Definitions and forms.

    (a) * * *
    (13) * * *
    (ii) * * * Only during the time employees are earning creditable 
wages are they entitled to health and life insurance duty refund 
benefits under the program.
    (A) * * * Only during the time employees are earning creditable 
wages are they entitled to health and life insurance duty refund 
benefits under the program.
    (B) * * * Only during the time employees are earning creditable 
wages are they entitled to pension duty refund benefits under the 
program.
* * * * *
    (14) Non-creditable wages and associated non-creditable fringe 
benefits ineligible for the duty refund benefit include, but are not 
limited to, the following:
* * * * *
    (ii) * * * Any health and life insurance costs during the time an 
employee is not earning creditable wages.
    (A) * * * Any health and life insurance costs during the time an 
employee is not earning creditable wages.
    (B) Any pension benefits that were not based on associated 
creditable wages. * * *
* * * * *

0
4. Section 303.5 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. Remove ``allocation shall'' from the first sentence of paragraph (b) 
introductory text and add ``allocation or duty-refund certificate 
shall'' in its place.
0
C. Remove ``payroll, production records'' from paragraph (b)(5) and add 
``payroll, including time cards, production records'' in its place.
0
D. Remove the last sentence of paragraph (c) and add two sentences in 
its place as set forth below.


Sec.  303.5  Application for annual allocations of duty-exemptions and 
duty-refunds.

* * * * *
    (c) * * * It is the responsibility of each program producer to make 
the appropriate data available to the Departments' officials for the 
calendar year for which the annual verification is being performed and 
no further data, from the calendar year for which the audit is being 
completed, will be considered for benefits at any time after the audit 
has been completed. In the event of discrepancies between the 
application and substantiating data before the audit is complete, the 
Secretaries shall determine which data will be used in the calculation 
of the duty refund and allocations.
* * * * *


Sec.  303.12  [Amended]

0
5. Section 303.12 is amended as follows:
0
A. Remove ``creditable wages paid during'' from the second sentence in 
paragraph (a)(1) and add ``creditable wages, determined from the wages 
as reported on the employer's first two quarterly federal tax returns 
(941-SS), paid during'' in its place.
0
B. Remove ``duty refund will remain the same.'' from the fifth sentence 
in paragraph (a)(1) and add ``duty refund will be based on verified 
creditable wages, duty-free shipments into the customs territory of the 
United States, creditable health insurance, life insurance and pension 
benefits and the duty differential, if watch tariffs have been reduced 
during the calendar year.'' in its place.


Sec.  303.13  [Amended]

0
6. Section 303.13 is amended by removing ``post office address'' from 
the first sentence of paragraph (b) introductory text and adding 
``address'' in its place.

0
7. Section 303.14 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. In paragraph (b)(3), remove ``35'' and add ``300'' in its place; and 
remove ``800'' and add ``3,000'' in its place.
0
C. Revise paragraph (c) to read as follows.


Sec.  303.14  Allocation factors, duty refund calculations and 
miscellaneous provisions.

* * * * *
    (c) Calculation of the value of the mid-year production incentive 
certificates. (1) The value of each producer's certificate shall equal 
the producer's average creditable wage per unit shipped during the 
first six months of the calendar year multiplied by the sum of:
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor 
of 85%; plus
    (iii) Incremental units shipped up to 600,000 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 750,000 units times a factor 
of 75%.
    (2) Calculation of the value of the annual production incentive 
certificates. The value of each producer's certificate shall equal the 
producer's average creditable benefit per unit based on creditable 
wages, health insurance, life insurance and pension benefits plus any 
duty differential, if applicable, averaged from the amount of duty free 
units shipped during the calendar year multiplied by the sum of the 
following to obtain the total verified amount of the annual duty-refund 
per company. This amount would then be adjusted by deducting the amount 
of the mid-year duty-refund already issued.
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor 
of 85%; plus
    (iii) Incremental units shipped up to 600,000 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 750,000 units times a factor 
of 75%.
    (3) The Departments may make adjustments for these data in the 
manner set forth in Sec.  303.5(c).
* * * * *

[[Page 16715]]

Sec.  303.15  [Amended]

0
8. Section 303.15 is amended by removing ``on watches and watch 
movements and parts (except discrete watch cases) imported into the 
customs territory of the United States.'' from the first sentence of 
paragraph (b) and adding ``on any article imported into the customs 
territory of the United States duty paid except for any article 
containing a material which is the product of a country to which column 
2 rates of duty apply.'' in its place.

0
9. Section 303.16 is amended as follows:
0
A. Amend paragraph (a)(9) introductory text by removing ``wages and 
creditable fringe benefits'' and adding ``wages and associated 
creditable fringe benefits and creditable duty differentials'' in its 
place.
0
B. Remove ``two producers'' from the first sentence of paragraph 
(a)(9)(i)(C) and add ``two program producers'' in its place.
0
C. Add one new sentence at the end of paragraph (a)(9)(ii) introductory 
text as set forth below.
0
D. Add one new sentence at the end of paragraph (a)(9)(ii)(A) as set 
forth below.
0
E. Add one new sentence at the end of paragraph (a)(9)(ii)(B) as set 
forth below.
0
F. Revise paragraph (a)(10) introductory text as set forth below.
0
G. Add one new sentence at the end of paragraph (a)(10)(ii) 
introductory text as set forth below.
0
H. Add one new sentence at the end of paragraph (a)(10)(ii)(A) as set 
forth below.
0
I. Add one new sentence at the beginning of paragraph (a)(10)(ii)(B) as 
set forth below.
0
J. Remove ``working on the premises of the company office and'' from 
the first sentence of paragraph (a)(10)(i)(D) and add ``working on the 
premises of the company office; wages paid to employees working with a 
non-program producer to create a single piece of HTSUS heading 7113 
jewelry whether or not it entered the United States free of duty; and'' 
in its place.
0
K. Remove ``United States during'' from the second sentence of 
paragraph (b)(3) and add ``United States duty paid during'' in its 
place.


Sec.  303.16  Definitions and forms.

    (a) * * *
    (9) * * *
    (ii) * * * Only during the time employees are earning creditable 
wages are they entitled to health and life insurance duty refund 
benefits under the program.
    (A) * * * Only during the time employees are earning creditable 
wages are they entitled to health and life insurance duty refund 
benefits under the program.
    (B) * * * Only during the time employees are earning creditable 
wages are they entitled to pension duty refund benefits under the 
program.
* * * * *
    (10) Non-creditable wages and associated non-creditable fringe 
benefits ineligible for the duty refund benefit include, but are not 
limited to, the following:
* * * * *
    (ii) * * * Any health and life insurance costs during the time an 
employee is not earning creditable wages.
    (A) * * * Any health and life insurance costs during the time an 
employee is not earning creditable wages.
    (B) Any pension benefits that were not based on associated 
creditable wages. * * *
* * * * *

0
10. Section 303.17 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. Remove ``payroll, production records'' from paragraph (b)(6) and add 
``payroll, including time cards, production records'' in its place.
0
D. Remove the last sentence of paragraph (c) and add two sentences in 
its place as set forth below.


Sec.  303.17  Application for annual duty-refunds.

* * * * *
    (c) * * * It is the responsibility of each program producer to make 
the appropriate data available to the Departments' officials for the 
calendar year for which the annual verification is being performed and 
no further data, from the calendar year for which the audit is being 
completed, will be considered for benefits at any time after the audit 
has been completed. In the event of discrepancies between the 
application and substantiating data before the audit is complete, the 
Secretaries shall determine which data will be used in the calculation 
of the duty refund and allocations.
* * * * *


Sec.  303.19  [Amended]

0
11. Section 303.19 is amended as follows:
0
A. Remove ``creditable wages paid during'' from the second sentence in 
paragraph (a)(1) and add ``creditable wages, determined from the wages 
as reported on the employer's first two quarterly federal tax returns 
(941-SS), paid during'' in its place.
0
B. Remove ``duty refund will remain the same.'' from the fifth sentence 
in paragraph (a)(1) and add ``duty refund will be based on verified 
creditable wages, duty-free shipments into the customs territory of the 
United States, creditable health insurance, life insurance and pension 
benefits and the duty differential, if watch tariffs have been reduced 
during the calendar year.'' in its place

0
12. Section 303.20 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. Revise paragraph (b) to read as follows.


Sec.  303.20  Duty refund calculations and miscellaneous provisions.

* * * * *
    (b) Calculation of the value of the mid-year production incentive 
certificates. (1) The value of each producer's certificate shall equal 
the producer's average creditable wage per unit shipped during the 
first six months of the calendar year multiplied by the sum of:
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor 
of 85%; plus
    (iii) Incremental units shipped up to 600,000 units times a factor 
of 80%; plus
    (iv) Incremental units shipped up to 750,000 units times a factor 
of 75%.
    (2) Calculation of the value of the annual production incentive 
certificates. The value of each producer's certificate shall equal the 
producer's average creditable benefit per unit based on creditable 
wages, health insurance, life insurance and pension benefits plus any 
duty differential, if applicable, averaged from the amount of duty free 
units shipped during the calendar year multiplied by the sum of the 
following to obtain the total verified amount of the annual duty-refund 
per company. This amount would then be adjusted by deducting the amount 
of the mid-year duty-refund already issued.
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor 
of 85%; plus
    (iii) Incremental units shipped up to 600,000 units times a factor 
of 80%; plus

[[Page 16716]]

    (iv) Incremental units shipped up to 750,000 units times a factor 
of 75%.
    (3) The Departments may make adjustments for these data in the 
manner set forth in Sec.  303.17(c).
* * * * *


Sec.  303.21  [Amended]

0
13. Section 303.21 is amended by removing ``post office address'' from 
the first sentence of paragraph (b) and adding ``address'' in its 
place.

    Dated: March 26, 2007.
David Spooner,
Assistant Secretary for Import Administration, Department of Commerce.
    Dated: March 22, 2007.
Edgar Johnson,
Acting Director for Insular Affairs, Department of the Interior.
[FR Doc. 07-1578 Filed 4-4-07; 8:45 am]
BILLING CODE 3510-DS-P and 4310-93-P