DEPARTMENT OF THE TREASURY
Customs Service
AGENCY: Customs Service, Treasury.
19 CFR Part 146
Admission Into Foreign-Trade Zone of Merchandise From
Customs Bonded Warehouse
47 FR 20627
May 13, 1982
ACTION: Proposed rule.
SUMMARY: This document proposes to amend the Customs Regulations to allow
imported merchandise withdrawn from a Customs bonded warehouse to be
admitted into a foreign-trade zone without restriction for use in
manufacturing operations. At present, that merchandise is restricted and
must be exported from the United States, destroyed, or merely stored in a
foreign-trade zone.
The proposed amendment would remove a restriction on commerce and allow
greater utilization of foreign-trade zones by increasing manufacturing
operations in the zones.
DATE: Comments must be received on or before July 12, 1982.
ADDRESS: Comments (preferably in triplicate) should be addressed to the
Commissioner of Customs, Attention: Regulations Control Branch, U.S.
Customs Service, 1301 Constitution Avenue, NW., Room 2426, Washington,
D.C. 20229.
FOR FURTHER INFORMATION CONTACT:
Russell A. Berger, Carriers,
Drawback and Bonds Division,
U.S. Customs Service,
1301 Constitution Avenue, NW.,
Washington, D.C. 20229 (202-566-5856).
TEXT: SUPPLEMENTARY INFORMATION:
Background
Foreign-trade zones ("zones") are established under the Foreign-Trade
Zones Act of 1934, as amended (FTZA) (19 U.S.C. 81a-81u) and the general
regulations and rules of procedure of the Foreign-Trade Zones Board
contained in 15 CFR Part 400. Part 146, Customs Reguations (19 CFR Part
146), governs the admission of merchandise into a zone; manipulation,
manufacture, or exhibition of merchandise in a zone; exportation of
merchandise from a zone; and transfer of merchandise from a zone into the
customs territory of the United States ("customs territory").
Foreign or domestic merchandise may be admitted into a zone for, among
other things, manipulation, manufacture, assembly, or other processing, or
for storage or exhibition, provided these operations are not otherwise
prohibited by law. Normal customs entry procedures and payment of duty
are not required for merchandise located in a zone unless and until the
merchandise is removed from a zone and entered into the customs territory.
As presently written, @ 146.25(d), Customs Regulations, specifies that
merchandise entered for warehousing under section 557(a), Tariff Act of
1930, as amended (19 U.S.C. 1557(a)), and thereafter transferred to a zone
shall have the status of "zone-restricted merchandise". This means that
the merchandise may be taken into the zone only for the purpose of
exportation, storage, or destruction. Consequently, such merchandise may
not be used in the zone in manufacturing operations. Customs believes
that @ 146.25(d) is unduly restrictive basically because the underlying
statutory authority, 19 U.S.C. 1557(a), does not make specific provision
for the transfer of warehoused merchandise to a zone.
In 1938, when 19 U.S.C. 1557(a) was amended to provide that warehoused
merchandise might be withdrawn "for transportation and rewarehousing at
another port or elsewhere," there were only one or two zones in existence
pursuant to the authority of the FTZA. Under these circumstances, it appears
that the Congress did not specifically consider the transfer of warehoused
merchandise to a zone when it amended 19 U.S.C. 1557(a). Hence, while the
Congress did not specifically include zones in 19 U.S.C. 1557(a), neither
did it intend to exclude them from that section.
Customs believes that the meaning of 19 U.S.C. 1557(a) is open to
reasonable interpretation. The lack of a specific provision for zones in
19 U.S.C. 1557(a) should not be construed to restrict any otherwise
permissible use of the merchandise while in the zone. In this regard,
manufacturing operations have been permitted in zones since amendment of
the FTZA in 1950.
Under present @ 146.25(d), as noted above, merchandise withdrawn from a
warehouse and transferred to a zone may not be used in manufacturing.
However, merchandise placed directly in a zone may be so used. Customs
believes this unequal treatment unnecessarily restricts commerce and
results in decreased utilization of manufacturing capabilities in zones.
Therefore, in light of current commercial realities -- the existence of
over 60 zones, a number of which are engaged in extensive manufacturing
operations -- Customs has determined that @ 146.25(d) should be amended
as indicated below to remove the zone-restricted status of foreign
merchandise withdrawn from a bonded warehouse and transferred to a zone.
If this proposed amendment is adopted, it is anticipated that
merchandise to be admitted with nonprivileged or privileged foreign status
would be withdrawn from a bonded warehouse under an entry for immediate
transportation ("I.T. entry") and transported in-bond to a zone. Upon
admission to the zone, the original warehouse entry would be liquidated,
and the documentation from the I.T. entry would be attached to the
required zone documentation to provide sufficient information for Customs
and other purposes. Present procedures applicable to merchandise admitted
with zone-restricted status would not be changed.
Likewise, adoption of the proposal would modify all prior Headquarters
decisions, whether published or unpublished, including Customs Service
Decisions (C.S.D.) 79-204 and 81-88, to the extent that they are
inconsistent with the proposal. C.S.D. 79-204 and 81-88 held that
merchandise in a Customs bonded warehouse may be withdrawn from that
warehouse and admitted into a zone only with zone-restricted status.
Comments
Before adopting this proposal, consideration will be given to any
written comments submitted to the Commissioner of Customs. Comments
submitted will be available for public inspection in accordance with @
103.11(b), Customs Regulations (19 CFR 103.11(b)), on normal business days
between the hours of 9:00 a.m. to 4:30 p.m. at the Regulations Control
Branch, Room 2426, Headquarters, U.S. Customs Service, 1301 Constitution
Avenue, NW., Washington, D.C. 20229.
Executive Order 12291
The proposed regulation is not a major regulation as defined in section
1(b) of E.O. 12291. Accordingly, a regulatory impact analysis is not
required.
Regulatory Flexibility Act
The provisions of the Regulatory Flexibility Act relating to an initial
and final regulatory flexibility analysis (5 U.S.C. 603, 604) are not
applicable to this proposal because the rule, if promulgated, will not have
a significant economic impact on a substantial number of small entities.
Customs Office of Economic Analysis has concluded that, contrary to having
any adverse economic impact on small entities, the proposal would
facilitate commerce and have an overall bneficial economic impact. The
proposal is not expected to have a significant secondary or incidental
effect on a substantial number of small entities; impose, or otherwise
cause, a significant increase in the reporting, recordkeeping, or other
compliance burdens on a substantial number of small entities; or generate
significant interest or attention from entities through comments, either
formal or informal.
Accordingly, the Secretary of the Treasury hereby certifies under the
provisions of section 3 of the Regulatory Flexibility Act (5 U.S.C.
605(b)) that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities.
Drafting Information
The principal author of this document was Todd J. Schneider,
Regulations Control Branch, Office of Regulations and Rulings, U.S.
Customs Service. However, personnel from other Customs offices
participated in its development.
List of Subjects in 19 CFR Part 146
Customs duties and inspection, Foreign trade zones, Imports, Exports.
Authority
This document is issued under authority of R.S. 251, as amended, section
3, 48 Stat. 999, as amended, section 8, 48 Stat. 1000, section 624, 46
Stat. 759 (19 U.S.C. 66, 81c, 81h, 1624).
Proposed Amendment
PART 146 -- FOREIGN-TRADE ZONES
It is proposed to amend Part 146, Customs Regulations (19 CFR Part 146),
as set forth below:
It is proposed to amend @ 146.25 by revising paragraph (d) to read as
follows:
@ 146.25 Zones-restricted merchandise.
* * * * *
(d) Merchandise entered for warehousing transferred to a zone.
Merchandise entered for warehousing and transferred to a zone, other than
temporarily for manipulation and return to customs territory as provided
for in section 146.13, may be admitted to a zone in zone-restricted,
nonprivileged foreign, or privileged foreign status. The warehouse entry
shall be liquidated when the merchandise is admitted into the zone.
William von Raab,
Commissioner of Customs.
Approved: April 16, 1982.
John M. Walker, Jr.,
Assistant Secretary of the Treasury.
[FR Doc. 82-13077 Filed 5-12-82; 8:45 am]
BILLING CODE 4820-02-M