Sec. 146.53  Shortages and overages.

    (a) Report required. The operator shall report, in writing, to the 
port director upon identification, as such, of any:
    (1) Theft or suspected theft of merchandise;
    (2) Merchandise not properly admitted to the zone; or
    (3) Shortage of one percent (1%) or more of the quantity of 
merchandise in a lot or covered by a unique identifier, if the missing 
merchandise would have been subject to duties and taxes of $100 or more 
upon entry into the Customs territory. The operator shall record upon 
identification all shortages and overages, whether or not they are 
required to be reported to the port director at that time, in its 
inventory control and recordkeeping system. The operator shall record 
all shortages and overages as required in the annual reconciliation 
report under Sec. 146.25.
    (b) Certain domestic merchandise. Except in a case of theft or 
suspected theft, the operator need not file a report with the port 
director, or note in the annual reconciliation report, any shortage or 
overage concerning domestic status merchandise for which no permit is 
required.
    (c) Shortage--(1) Operator responsibility. The operator is 
responsible under its Foreign Trade Zone Operator's Bond for any loss of 
merchandise or for any merchandise which cannot be located or otherwise 
accounted for (except domestic status merchandise for which no permit is 
required), unless the port director is satisfied that the merchandise 
was:
    (i) Never received in the zone;
    (ii) Removed from the zone under proper permit;

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    (iii) Not removed from the zone; or
    (iv) Lost or destroyed in the zone through fire or other casualty, 
evaporation, spillage, leakage, absorption, or similar cause, and did 
not enter the commerce of the U.S.
    (2) Liability for duty and taxes. Upon demand of the port director, 
the operator shall make entry for and pay duties and taxes applicable to 
merchandise which is missing or otherwise not accounted for.
    (d) Overage. The person with the right to make entry shall file, 
within 5 days after identification of an overage, an application for 
admission of the merchandise to the zone on Customs Form 214 or file a 
Customs entry for the merchandise. If a Customs Form 214 or a Customs 
entry is not timely filed, and the port director has not granted an 
extension of the time provided, the merchandise shall be sent to general 
order.
    (e) Damage. The liability of the operator under its Foreign Trade 
Zone Operator's Bond may be adjusted for the loss of value resulting 
from damage to merchandise occurring in the zone. The operator shall 
segregate, mark, and otherwise secure damaged merchandise to preserve 
its identity as damaged merchandise.