DEPARTMENT OF THE TREASURY
Customs Service
AGENCY: Customs Service, Treasury.
19 CFR Parts 10 and 147
Drawback of Internal Revenue Tax and Transfer of Merchandise
Entered for a Trade Fair From a Foreign-Trade Zone
[T.D. 83-240]
48 FR 53097
November 25, 1983
ACTION: Final rule.
SUMMARY: This document amends the Customs Regulations relating to drawback
of internal revenue tax and transfer of merchandise entered for a trade fair
from a foreign-trade zone, to substitute current references to Tariff
Schedules of the United States item numbers. The foregoing changes are
necessary to conform the regulations to statutory provisions. The document
also amends the Customs Regulations to clarify that the transfer of
articles entered for a trade fair from a foreign-trade zone status of "zone
restricted", and afterwards entered for consumption from a trade fair, can
only be accomplished after the Foreign-Trade Zones Board of the Department
of Commerce has approved such a transfer as being in the public interest.
This nonsubstantive change is necessary to avoid possible misinterpretation
of the regulations and clearly state statutory requirements.
EFFECTIVE DATE: This rule is effective on December 27, 1983.
FOR FURTHER INFORMATION CONTACT:
Legal aspects of Part 147, Customs Regulations: Donald Beach, Carriers,
Drawback and Bonds Division (202-566-5865)
Legal aspects of Part 10, Customs Regulations: Russell X. Arnold,
Classification and Value Division (202-566-5727)
Operational aspects: Herbert Geller, Duty Assessment Division
(202-566-5307).
U.S. Customs Service, 1301 Constitution Avenue NW., Washington, D.C. 20229.
TEXT: SUPPLEMENTARY INFORMATION:
Background
This document implements Pub. L. 91-692 by amending the following two
sections of the Customs Regulations: Section 10.3, Customs Regulations
(19 CFR 10.3), and footnote 2 to that section relating to drawback of
internal revenue taxes; and @ 147.45, Customs Regulations (19 CFR 147.45),
relating to the transfer of merchandise entered for a trade fair from a
foreign-trade zone, to delete the reference to item 804.00, Tariff
Schedules of the United States, (TSUS) (19 U.S.C. 1202) and substitute
TSUS items 804.10 and/or 804.20, as appropriate.
Before Public Law 91-692, articles produced in the United States with
the use of foreign articles imported under bond were excluded from entry
under the provisions of TSUS item 804.00 as "American goods returned."
Such articles would have to be entered and duty paid under another
applicable provision of the TSUS. However, articles produced in the United
States with the use of foreign articles and exported with the benefit of
drawback (the refund of a duty or tax lawfully collected because of a
particular use of the merchandise on which the duty or tax was collected
(section 313(a))), Tariff Act of 1930, as amended (19 U.S.C. 1313(a)) could
be imported under TSUS item 804.00 as "American goods returned" upon
repayment of the drawback.
In the manufacture of aircraft in the United States, it is fairly
common practice to use some foreign articles or materials. Export sales
of aircraft produced in the United States are significant, and normally,
the duty paid on the foreign articles used in the manufacture of such
aircraft is subject to the drawback procedure set forth in Part 22, Customs
Regulations (19 CFR Part 22), under which 99 percent of the duty paid on
the foreign articles or materials is refunded upon exportation of the
completed aircraft. In some instances, foreign articles for use in
aircraft are temporarily entered to be repaired or altered under TSUS
item 864.05, free of duty under bond (see @@ 10.38, and 10.39, Customs
Regulations (19 CFR 10.38, 10.39)). Such temporary duty-free entry
arrangement is preferred by some manufacturers since no large amount of
capital is committed to duty payment for the period between the original
entry of the foreign component and the drawback of the duty upon
exportation of the aircraft.
Over the years both provisions, i.e., drawback and temporary
importation under bond, have been used with respect to eliminating the
cost of U.S. duty on foreign articles used in the domestic manufacture of
aircraft which are subsequently sold abroad.
Competition in the sales of new aircraft in world markets is rising.
Very often the "trade in" allowance for old aircraft is an important
factor in obtaining contracts for sales of new aircraft abroad. Under
these circumstances, the dutiable status of the old aircraft being "traded
in" and returned to the United States becomes important.
In view of the importance of the "trade in" of old aircraft to sales
of new aircraft abroad, Congress believed it important to provide similar
Customs treatment to aircraft produced in the United States which are
sold abroad and returned, whether the drawback or temporary importation
bond procedure was used with respect to foreign components. Pub. L. 91-692
provided such Customs treatment for aircraft by amending the TSUS to
delete item 804.00, which provided for articles previously exported from
the United States which are excepted from free entry under any of several
other provisions of Schedule 8, Part 1, TSUS, and are not otherwise free
of duty, and inserting in its place (a) TSUS item 804.10, relating to
aircraft exported from the United States with benefit of drawback or TSUS
item 864.05, and (b) TSUS item 804.20, relating to other articles. In light
of the foregoing, Customs published a notice in the Federal Register on
June 17, 1983 (48 FR 27776), which proposed to amend section 10.3 and
footnote 2 to that section and @ 147.45 to delete the reference to TSUS
item 804.00 and substitute a reference to TSUS items 804.10 and/or 804.20,
as appropriate.
In addition to the above, the notice proposed to amend @ 147.45 to
clarify that the transfer of articles entered for a trade fair from a
foreign-trade zone status of "zone restricted" and afterwards entered for
consumption from a trade fair can only be accomplished after the
Foreign-Trade Zones Board ("Board") of the Department of Commerce has
approved such a transfer as being in the public interest.
Section 147.45 does not, in its present form, make it clear that the
transfer of articles entered for a trade fair from a foreign-trade zone
status of "zone restricted" and afterwards entered for consumption from a
trade fair can only be accomplished after the Board has approved such a
transfer as being in the public interest.
No comments were received in response to the notice. Further review of
the matter within Customs has not revealed any reason why the amendments
should not be adopted as proposed. Accordingly, the amendments set forth
below are adopted without change from the June 17, 1983, Federal Register
notice.
Executive Order 12291
These amendments will not result in a regulation which is a "major
rule" as defined by section 1(b) of Executive Order 12291.
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 these amendments because the rule will not have a
significant economic impact on a substantial number of small entities. They
are technical conforming amendments which clarify existing regulatory
requirements without making any substantive change.
Accordingly, it is certified under the provisions of section 3,
Regulatory Flexibility Act (5 U.S.C. 605(b)) that the rule will not have a
significant economic impact on a substantial number of small entities.
Drafting Information
The principal author of this document was John E. Elkins, Regulations
Control Branch, U.S. Customs Service. However, personnel from other
Customs offices participated in its development.
List of Subjects
19 CFR Part 10
Customs duties and inspection, Imports.
19 CFR Part 147
Customs duties and inspection, Fairs and expositions, Imports.
Amendments to the Regulations
Parts 10 and 147, Customs Regulations (19 CFR Parts 10, 147), are
amended as set forth below.
Alfred R. DeAngelus,
Acting Commissioner of Customs.
Approved:
November 3, 1983.
John M. Walker, Jr.,
Assistant Secretary of the Treasury.
PART 10 -- ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC.
Section 10.3 is amended/by removing (a) the reference to footnote 2 in
paragraph (a) and footnote 2, (b) the words "item 804.00" wherever they
appear in paragraph (c)(3) and inserting in their place the words "items
804.10 or 804.20" and (c) the words "item 804.00" in paragraph (f) and
inserting in their place the words "item 804.20."
(R.S. 251, as amended, 77A Stat. 14, sec. 624, 46 Stat. 759 (19 U.S.C. 66,
1202 (Gen. Hdnt. 11) 1624))
PART 147 -- TRADE FAIRS
Section 147.45 is revised to read as follows:
@ 147.45 Merchandise from a foreign-trade zone.
Articles entered for a trade fair from a foreign-trade zone in the
status of "zone-restricted merchandise" can afterwards be entered for
consumption from a fair if the Foreign-Trade Zones Board has approved the
entry for consumption as being in the public interest. Articles entered in
the above manner are subject to the provisions of item 804.10, if aircraft,
or item 804.20, if not aircraft, unless excluded by headnote 1(c). Subpart
A, Part 1, Schedule 8, Tariff Schedules of the United States.
(R.S. 251, as amended, sections 1-21, 48 Stat. 998, 999, as amended, 1000,
1002, as amended, 1003, 77A Stat. 14, sec. 624, 46 Stat. 759 (19 U.S.C.
66, 81a-81u, 1202 (Gen. Hdnt. 11)1624))
[FR Doc. 83-31608 Filed 11-23-83; 8:45 am]
BILLING CODE 4820-20-M