DEPARTMENT OF THE TREASURY
Customs Service
AGENCY: Customs Service, Treasury.
19 CFR Part 146
Customs Regulations Amendments Relating to the Transfer of
Merchandise From a Foreign-Trade Zone to a Customs Bonded
Warehouse
[T.D. 83-139]
48 FR 27536
June 16, 1983
ACTION: Final rule.
SUMMARY: This document amends the Customs Regulations to permit the transfer
of zone-restricted merchandise from a foreign-trade zone to a Customs bonded
warehouse pending exportation, without obtaining approval of the Foreign-
Trade Zones Board, Department of Commerce. This change is being made because
elimination of this unnecessary requirement will expedite the transfer
process.
EFFECTIVE DATE: July 18, 1983.
FOR FURTHER INFORMATION CONTACT: Legal Aspects: William D. Lawlor, Carriers,
Drawback and Bonds Division (202-566-5856); Operational Aspects: John R.
Holl, Office of Cargo Enforcement and Facilitation (202-566-8151); U.S.
Customs Service, 1301 Constitution Avenue, NW., Washington, D.C. 20229.
TEXT: SUPPLEMENTARY INFORMATION:
Background
Foreign-trade zones (zones) are areas within the United States (but
outside of the "Customs territory" of the United States, as defined in @
146.1, Customs Regulations (19 CFR 146.1)), where foreign or domestic
merchandise may be brought for manipulation, manufacture, assembly, or
other processing, or for storage or exhibition, provided that these
operations are not otherwise prohibited by law. Foreign merchandise may be
brought into a zone without being subject to the usual Customs entry
procedures and payment of duty. Foreign or domestic merchandise may be
exported or entered into the Customs territory from a zone.
Zones are established under the Foreign-Trade Zone Act of 1934, as
amended (19 U.S.C. 81a-81u), and the general regulations and rules of
procedure of the Foreign-Trade Zones Board (the Board), Department of
Commerce (15 CFR Part 400). Part 146, Customs Regulations (19 CFR Part
146), governs the admission of merchandise into a zone; the manipulation,
manufacture, or exhibition in a zone; the exportation of merchandise from
a zone; and the transfer of merchandise from a zone into the Customs
territory.
Articles taken into a zone from the Customs territory for the sole
purpose of exportation, destruction (except destruction of distilled
spirits, wines, and fermented malt liquors), or storage are given "zone-
restricted" status upon proper application. (Certain shipments of zone-
restricted merchandise which have been placed in a zone to obtain the
benefit of drawback or cancellation of a temporary importation bond are
subject to footnote 3 of @ 22.2, Customs Regulations (19 CFR 22.2) and T.D.
55819(11).)
Upon receiving zone-restricted status, merchandise is considered
exported and may be returned to the Customs territory for domestic
consumption only after the Board has determined that the transfer is in
the public interest.
Because obtaining Board approval may be a time-consuming process and
may result in lost sales to merchants who wish to transfer zone-restricted
merchandise to a Customs bonded warehouse pending exportation, the question
has arisen whether zone-restricted merchandise may be transferred to a
Customs bonded warehouse pending exportation, without Board approval. While
19 U.S.C. 81c prohibits the return of merchandise to Customs territory
from a zone for domestic consumption without Board approval, it does not
prohibit the return of merchandise to Customs territory for warehousing
prior to exportation. It is noted that section 557, Tariff Act of 1930, as
amended (19 U.S.C. 1557), provides, in part, that the total period of time
that merchandise may remain in a bonded warehouse shall not exceed five
years from the date of importation.
Customs published a notice in the Federal Register on August 27, 1982
(47 FR 37927), proposing to amend @ 146.47, Customs Regulations (19 CFR
146.47), to permit the transfer of zone-restricted merchandise from a zone
to a Customs bonded warehouse pending exportation, without obtaining
approval of the Board.
Discussion of Comments
Two of the three comments received in response to the notice support the
change.
The third commenter opposes the change. He contends: (1) that there is
no need to remove merchandise from a zone prior to actual exportation since
an immediate export or a transportation and exportation movement can be
arranged to take the merchandise directly from the zone to the exporting
carrier without the involvement of the Board; (2) that the change creates
a means of circumventing the prohibition against retail trade in a zone by
allowing the merchandise to move from a zone to a warehouse, and eventually
to a duty-free shop; and (3) that the change can only enhance the
possibility that Customs may lose complete control of zone-restricted
merchandise, in view of an historic control problem with warehouse entries
and immediate export and transportation for exportation bonded movements,
and in view of the new warehouse procedures.
As the commenter notes, an immediate export or a transportation and
exportation movement can be arranged without approval of the Board. However,
commercial realities sometimes require the movement of zone-restricted
merchandise to the port of exportation before there is a firm commitment
with an exporting carrier. The amendment will simply permit such
merchandise to be held in a bonded warehouse pending exportation. Approval
of the Board will still be necessary where the goods are to be entered into
the Customs territory for consumption or into a warehouse for any purpose
other than exportation.
With respect to the commenter's second contention, Customs notes that
there is no prohibition against retail trade in a Customs bonded warehouse
operated as a duty-free shop. Merchandise sold from a duty-free shop is
for export, and not for domestic consumption. Retail trade in a duty-free
shop is not in derogation of the Foreign-Trade Zones Act of 1934 or the
Customs Regulations.
Customs believes that the new warehouse audit/inspection approach
provided for by T.D. 82-204 (see Federal Register of November 1, 1982
(47 FR 49355)), provides for adequate control over merchandise in
warehouses, including zone-restricted merchandise transferred to warehouses.
Pursuant to @ 146.47(e)(4), Customs will maintain "paper control" over
zone-restricted merchandise.
After analysis of the comments and further review of this matter, the
proposal to amend section 146.47 is adopted. Language has been added to
proposed section 146.47(e)(4) to provide that zone-restricted merchandise
transferred from a zone to a Customs bonded warehouse may not be
manipulated, except packing or unpacking incidental to exportation.
Further, pursuant to 19 U.S.C. 1557, the total period of time that
merchandise may remain in a Customs bonded warehouse may not exceed five
years from the date of importation.
List of Subjects in 19 CFR Part 146
Customs duties and inspection, Exports, Imports, Foreign-trade zones.
Amendments to the Regulations
Part 146, Customs Regulations (19 CFR Part 146), is amended as set forth
below.
PART 146 -- FOREIGN-TRADE ZONES
1. Section 146.47(a) is revised to read as follows:
@ 146.47 Transfer of zone-restricted merchandise into Customs territory.
(a) Types of entry. If the return of zone-restricted merchandise to
Customs territory for domestic consumption has been ruled by the Board to
be in the public interest, it may be entered for consumption, for
warehousing, or for immediate transportation without appraisement, unless
the Board has specified which of these forms of entry shall be made.
Otherwise, zone-restricted merchandise may be returned to Customs territory
only for entry for exportation, for Customs bonded warehousing at the
same or a different port prior to exportation, for entry for transportation
and exportation, for destruction (except destruction of distilled spirits,
wines, and fermented malt liquors), for transfer from one zone to another,
or for delivery to a qualified vessel or aircraft or as ground equipment of
a qualified aircraft under sections 309 or 317 of the Tariff Act of 1930,
as amended.
* * * * *
2. Section 146.47 is further amended by adding a new paragraph (e)(4) to
read as follows:
* * * * *
(e) * * *
(4) Zone-restricted merchandise may be transferred from a foreign-trade
zone to a Customs bonded warehouse for storage pending exportation. The
warehouse entry, Customs Form 7502, shall be endorsed by the district
director to show that the merchandise may not be withdrawn for consumption.
In the case of zone-restricted merchandise transported in bond to another
port for warehousing and exportation, Customs Form 7512 shall be endorsed
by the district director to show that the merchandise is foreign-trade zone
merchandise in zone-restricted status, which shall be entered for warehouse,
with proper endorsement on Customs Form 7502, and which may not be withdrawn
for consumption. Zone-restricted merchandise transferred from a foreign-
trade zone to a Customs bonded warehouse may not be manipulated, except
packing or unpacking incidental to exportation. Pursuant to section 557,
Tariff Act of 1930, as amended (19 U.S.C. 1557), any merchandise placed in
a Customs bonded warehouse may not remain in the warehouse after five years
from the date of importation and no merchandise may be placed in a Customs
bonded warehouse after five years from the date of importation.
(R.S. 251, as amended; section 1, 48 Stat. 998, et seq., as amended;
section 624, 46 Stat. 759 (19 U.S.C 66, 81a-81u, 1624)).
Regulatory Flexibility Act
Pursuant to section 3 of the Regulatory Flexibility Act (5 U.S.C.
605(b)), it is certified that the regulations set forth in the document
will not have a significant economic impact on a substantial number of
small entities.
Executive Order 12291
Because this document does not meet the criteria for a "major rule" as
defined in section 1(b) of E.O. 12291, a regulatory impact analysis as
prescribed by section 3 of the E.O. is not required.
Drafting Information
The principal author of this document was Gerard J. O'Brien, Jr.,
Regulations Control Branch, Office of Regulations and Rulings, U.S. Customs
Service. However, personnel from other Customs offices participated in its
development.
Alfred R. De Angelus,
Acting Commissioner of Customs.
Approved: May 26, 1983.
John M. Walker, Jr.,
Assistant Secretary of the Treasury.
[FR Doc. 83-16171 Filed 6-15-83; 8:45 am]
BILLING CODE 4820-02-M