[Code of Federal Regulations]
[Title 19, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 19CFR181.53]
[Page 369-374]
TITLE 19--CUSTOMS DUTIES
CHAPTER I--BUREAU OF CUSTOMS AND BORDER PROTECTION, DEPARTMENT OF
HOMELAND SECURITY; DEPARTMENT OF THE TREASURY (CONTINUED)
PART 181_NORTH AMERICAN FREE TRADE AGREEMENT--Table of Contents
Subpart E_Restrictions on Drawback and Duty-Deferral Programs
Sec. 181.53 Collection and waiver or reduction of duty under duty-deferral
programs.
(a) General--(1) Definitions. The following definitions shall apply
for purposes of this section:
(i) Date of exportation. ``Date of exportation'' means the date of
importation into Canada or Mexico as reflected on the applicable
Canadian or Mexican
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entry document (see Sec. 181.47(c) (1) and (2)).
(ii) Duty-deferral program. A ``duty-deferral program'' means any
measure which postpones duty payment upon arrival of a good in the
United States until withdrawn or removed for exportation to Canada or
Mexico or for entry into a Canadian or Mexican duty-deferral program.
Such measures govern manipulation warehouses, manufacturing warehouses,
smelting and refining warehouses, foreign trade zones, and those
temporary importations under bond that are specified in paragraph (b)(5)
of this section.
(2) Treatment as entered or withdrawn for consumption--(i) General.
(A) Where a good is imported into the United States pursuant to a duty-
deferral program and is subsequently withdrawn from the duty-deferral
program for exportation to Canada or Mexico or is used as a material in
the production of another good that is subsequently withdrawn from the
duty-deferral program for exportation to Canada or Mexico, and provided
that the good is a ``good subject to NAFTA drawback'' within the meaning
of 19 U.S.C. 3333 and is not described in Sec. 181.45 of this part, the
documentation required to be filed under this section in connection with
the exportation of the good shall, for purposes of this chapter,
constitute an entry or withdrawal for consumption and the exported good
shall be subject to duty which shall be assessed in accordance with
paragraph (b) of this section.
(B) Where a good is imported into the United States pursuant to a
duty-deferral program and is subsequently withdrawn from the duty-
deferral program and entered into a duty-deferral program in Canada or
Mexico or is used as a material in the production of another good that
is subsequently withdrawn from the duty-deferral program and entered
into a duty-deferral program in Canada or Mexico, and provided that the
good is a ``good subject to NAFTA drawback'' within the meaning of 19
U.S.C. 3333 and is not described in Sec. 181.45, the documentation
required to be filed under this section in connection with the
withdrawal of the good from the U.S. duty-deferral program shall, for
purposes of this chapter, constitute an entry or withdrawal for
consumption and the withdrawn good shall be subject to duty which shall
be assessed in accordance with paragraph (b) of this section.
(C) Any assessment of duty under this section shall include the
duties and fees referred to in Sec. 181.42 (a) through (c) and the fees
provided for in Sec. 24.23 of this chapter; these inclusions shall not
be subject to refund, waiver, reduction or drawback.
(ii) Bond requirements. The provisions of Sec. 142.4 of this
chapter shall apply to each withdrawal and exportation transaction
described in paragraph (a)(2)(i) of this section. However, in applying
the provisions of Sec. 142.4 of this chapter in the context of this
section, any reference to release from Customs custody in Sec. 142.4 of
this chapter shall be taken to mean exportation to Canada or Mexico.
(iii) Documentation filing and duty payment procedures.
(A) Persons required to file. In the circumstances described in
paragraph (a)(2)(i) of this section, the documentation described in
paragraph (a)(2)(iii)(B) of this section must be filed by one of the
following persons:
(1) In the case of a withdrawal of the goods from a warehouse, the
person who has the right to withdraw the goods;
(2) In the case of a temporary importation under bond (TIB)
specified in paragraph (b)(5) of this section, the TIB importer whether
or not he sells the goods for export to Canada or Mexico unless Sec.
10.31(h) of this chapter applies; or
(3) In the case of a withdrawal from a foreign trade zone, the
person who has the right to make entry. However, if a zone operator is
not the person with the right to make entry of the good, the zone
operator shall be responsible for the payment of any duty due in the
event the zone operator permits such other person to remove the goods
from the zone and such other person fails to comply with Sec. Sec.
146.67 and 146.68 of this chapter.
(B) Documentation required to be filed and required filing date. The
person required to file shall file Customs Form 7501 no later than 10
working days after the date of exportation to Canada or
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Mexico or 10 working days after being entered into a duty-deferral
program in Canada or Mexico. Except where the context otherwise requires
and except as otherwise specifically provided in this paragraph, the
procedures for completing and filing Customs Form 7501 in connection
with the entry of merchandise under this chapter shall apply for
purposes of this paragraph. For purposes of completing Customs Form 7501
under this paragraph, any reference on the form to the entry date shall
be taken to refer to the date of exportation of the good or the date the
goods are entered into a duty-deferral program in Canada or Mexico. The
Customs Form 7501 required under this paragraph may be transmitted
electronically.
(C) Duty payment. The duty estimated to be due under paragraph (b)
of this section shall be deposited with Customs 60 calendar days after
the date of exportation of the good. If a good is entered into a duty-
deferral program in Canada or Mexico, the duty estimated to be due under
paragraph (b) of this section, but without any waiver or reduction
provided for in that paragraph, shall be deposited with Customs 60
calendar days after the date the good is entered into such duty-deferral
program. Nothing shall preclude the deposit of such estimated duty at
the time of filing the Customs Form 7501 under paragraph (a)(2)(iii)(B)
of this section or at any other time within the 60-day period prescribed
in this paragraph. However, any interest calculation shall run from the
date the duties are required to be deposited.
(3) Waiver or reduction of duties--(i) General. Except in the case
of duties and fees referred to in Sec. Sec. 181.42(a) through (c) and
fees provided for in Sec. 24.23 of this chapter, Customs shall waive or
reduce the duties paid or owed under paragraph (a)(2) of this section by
the person who is required to file the Customs Form 7501 (see paragraph
(a)(2)(iii)(A) of this section) in accordance with paragraph (b) of this
section, provided that a claim for waiver or reduction of the duties is
filed with Customs within the appropriate 60-day time frame. The claim
shall be based on evidence of exportation or entry into a Canadian or
Mexican duty-deferral program and satisfactory evidence of duties paid
in Canada or Mexico (see Sec. 181.47(c)).
(ii) Filing of claim and payment of reduced duties. A claim for a
waiver or reduction of duties under paragraph (a)(3)(i) of this section
shall be made on Customs Form 7501 which shall set forth, in addition to
the information required under paragraph (a)(2)(iii)(B) of this section,
a description of the good exported to Canada or Mexico and the Canadian
or Mexican import entry number, date of importation, tariff
classification number, rate of duty and amount of duty paid. If a claim
for reduction of duties is filed under this paragraph, the reduced
duties shall be deposited with Customs when the claim is filed.
(iii) Drawback on goods entered into a duty-deferral program in
Canada or Mexico. After goods in a duty-deferral program in the United
States which have been sent from the United States and entered into a
duty-deferral program in Canada or Mexico are then withdrawn from that
Canadian or Mexican duty-deferral program either for entry into Canada
or Mexico or for export to a non-NAFTA country, the person who filed the
Customs Form 7501 (see paragraph (a)(2)(iii)(A) of this section) may
file a claim for drawback if the goods are withdrawn within 5 years from
the date of the original importation of the good into the United States.
If the goods are entered for consumption in Canada or Mexico, drawback
will be calculated in accordance with Sec. 181.44 of this part.
(4) Liquidation of entry--(i) If no claim is filed. If no claim for
a waiver or reduction of duties is filed in accordance with paragraph
(a)(3) of this section, Customs shall determine the final duties due
under paragraph (a)(2)(i) of this section and shall post a bulletin
notice of liquidation of the entry filed under this section in
accordance with Sec. 159.9 of this chapter. Where no claim was filed in
accordance with this section and Customs fails to liquidate, or extend
liquidation of, the entry filed under this section within 1 year from
the date of the entry, upon the date of expiration of that 1-year period
the entry shall be deemed liquidated by operation of law in the amount
asserted
[[Page 372]]
by the exporter on the Customs Form 7501 filed under paragraph
(a)(2)(iii)(A) of this section. A protest under section 514, Tariff Act
of 1930, as amended (19 U.S.C. 1514), and part 174 of this chapter shall
be filed within 90 days from the date of posting of the notice of
liquidation under this section.
(ii) If a claim is filed. If a claim for a waiver or reduction of
duties is filed in accordance with paragraph (a)(3) of this section, an
extension of liquidation of the entry filed under this section shall
take effect for a period not to exceed 3 years from the date the entry
was filed. Before the close of the extension period, Customs shall
liquidate the entry filed under this section and shall post a bulletin
notice of liquidation in accordance with Sec. 159.9 of this chapter. If
Customs fails to liquidate the entry filed under this section within 4
years from the date of the entry, upon the date of expiration of that 4-
year period the entry shall be deemed liquidated by operation of law in
the amount asserted by the exporter on the Customs Form 7501 filed under
paragraph (a)(3)(ii) of this section. A protest under section 514,
Tariff Act of 1930, as amended (19 U.S.C. 1514), and part 174 of this
chapter shall be filed within 90 days from the date of posting of the
notice of liquidation under this section.
(b) Assessment and waiver or reduction of duty--(1) Manipulation in
warehouse. Where a good subject to NAFTA drawback under this subpart is
withdrawn from a bonded warehouse (19 U.S.C. 1562) after manipulation
for exportation to Canada or Mexico or for entry into a duty-deferral
program in Canada or Mexico, duty shall be assessed on the good in its
condition and quantity, and at its weight, at the time of such
withdrawal from the warehouse and with such additions to, or deductions
from, the final appraised value as may be necessary by reason of its
change in condition. Such duty shall be paid no later than 60 calendar
days after the date of exportation or of entry into the duty-deferral
program of Canada or Mexico, except that, upon filing of a proper claim
under paragraph (a)(3) of this section, the duty shall be waived or
reduced in an amount that does not exceed the lesser of the total amount
of duty payable on the good under this section or the total amount of
customs duties paid to Canada or Mexico.
(2) Bonded manufacturing warehouse. Where a good is manufactured in
a bonded warehouse (19 U.S.C. 1311) with imported materials and is then
withdrawn for exportation to Canada or Mexico or for entry into a duty-
deferral program in Canada or Mexico, duty shall be assessed on the
materials in their condition and quantity, and at their weight, at the
time of their importation into the United States. Such duty shall be
paid no later than 60 calendar days after either the date of exportation
or of entry into a duty-deferral program of Canada or Mexico, except
that, upon filing of a proper claim under paragraph (a)(3) of this
section, the duty shall be waived or reduced in an amount that does not
exceed the lesser of the total amount of duty payable on the materials
under this section or the total amount of customs duties paid to Canada
or Mexico.
Example Company N imports tea into the United States and makes a
Class 6 warehouse entry. Company N manufactures sweetened ice tea mix by
combining the imported tea with refined cane sugar and other flavorings
and packaging it in retail size canisters. Upon withdrawal of the ice
tea mix from the warehouse for exportation to Canada, a Customs Form
7501 is filed showing $900 in estimated U.S. duties on the basis of the
unmanufactured tea. Upon entry into Canada, the equivalent of US$800 is
assessed on the exported ice tea mix. Company N submits to Customs a
proper claim under paragraph (a)(3) of this section showing payment of
the US$800 equivalent in duties to Canada. Company N will only be
required to pay $100 in U.S. duties out of the $900 amount reflected on
the Customs Form 7501.
(3) Bonded smelting or refining warehouse. For any qualifying
imported metal-bearing materials (19 U.S.C. 1312), duty shall be
assessed on the imported materials and the charges against the bond
canceled no later than 60 calendar days after either the date of
exportation of the treated materials to Canada or Mexico or the date of
entry of the treated materials into a duty-deferral program of Canada or
Mexico, either from the bonded smelting or refining warehouse or from
such other customs bonded warehouse after the transfer of the same
quantity of
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material from a bonded smelting or refining warehouse. However, upon
filing of a proper claim under paragraph (a)(3) of this section, the
duty on the imported materials shall be waived or reduced in an amount
that does not exceed the lesser of the total amount of duty payable on
the imported materials under this section or the total amount of customs
duties paid to Canada or Mexico.
Example Company Z imports 47 million pounds of electrolytic zinc
which is entered into a bonded smelting and refining warehouse (Class 7)
for processing. Thereafter, Company Z withdraws the merchandise for
exportation to Canada and files a Customs Form 7501 showing $90,000 in
estimated U.S. duty on the dutiable quantity of metal contained in the
imported metal-bearing materials. Upon entry of the processed zinc into
Canada, the equivalent of US$50,000 in duties are assessed. Within 60
days of exportation Company Z files a proper claim under paragraph
(a)(3) of this section and Customs liquidates the entry with duty due in
the amount of $40,000.
(4) Foreign trade zone. For a good that is manufactured or otherwise
changed in condition in a foreign trade zone (19 U.S.C. 81c(a)) and then
withdrawn from the zone for exportation to Canada or Mexico or for entry
into a Canadian or Mexican duty-deferral program, the duty assessed, as
calculated under paragraph (b)(4)(i) or (b)(4)(ii) of this section,
shall be paid no later than 60 calendar days after either the date of
exportation of the good to Canada or Mexico or the date of entry of the
good into a duty-deferral program of Canada or Mexico, except that, upon
filing of a proper claim under paragraph (a)(3) of this section, the
duty shall be waived or reduced in an amount that does not exceed the
lesser of the total amount of duty payable on the good under this
section or the total amount of customs duties paid to Canada or Mexico.
(i) Nonprivileged foreign status. In the case of a nonprivileged
foreign status good, duty is assessed on the good in its condition and
quantity, and at its weight, at the time of its exportation from the
zone to Canada or Mexico or its entry into a duty-deferral program of
Canada or Mexico.
Example CMG imports $1,000,000 worth of auto parts from Korea and
admits them into Foreign-Trade Subzone number 00, claiming nonprivileged
foreign status. (If the auto parts had been regularly entered they would
have been dutiable at 4 percent, or $40,000.) CMG manufactures
subcompact automobiles. Automobiles are dutiable at 2.5 percent
($25,000) if entered for consumption in the United States. CMG withdraws
the automobiles from the zone and exports them to Mexico. Upon entry of
the automobiles in Mexico, CMG pays the equivalent of US$20,000 in duty.
Before the expiration of 60 calendar days from the date of exportation,
CMG files a proper claim under paragraph (a)(3) of this section and pays
$5,000 in duty to Customs representing the difference between the
$25,000 which would have been paid if the automobiles had been entered
for consumption from the zone and the US$20,000 equivalent paid to
Mexico.
(ii) Privileged foreign status. In the case of a privileged foreign
status good, duty is assessed on the good in its condition and quantity,
and at its weight, at the time privileged status is granted in the zone.
Example O&G, Inc. admits Kuwaiti crude petroleum into its zone and
requests, one month later, privileged foreign status on the crude before
refining the crude into motor gasoline and kerosene. Upon withdrawal of
the refined goods from the zone by O&G, Inc. for exportation to Canada,
a Customs Form 7501 is filed showing $700 in estimated duties on the
imported crude petroleum (rather than on the refined goods which would
have been assessed $1,200). D&O is the consignee in Canada and pays the
Canadian customs duty assessment of the equivalent of US$1,500 on the
goods. O&G, Inc. is entitled to a waiver of the full $700 in duties upon
filing of a proper claim under paragraph (a)(3) of this section.
(5) Temporary importation under bond. Except in the case of a good
imported from Canada or Mexico for repair or alteration, where a good,
regardless of its origin, was imported temporarily free of duty for
repair, alteration or processing (subheading 9813.00.05, Harmonized
Tariff Schedule of the United States) and is subsequently exported to
Canada or Mexico, duty shall be assessed on the good on the basis of its
condition at the time of its importation into the United States. Such
duty shall be paid no later than 60 calendar days after either the date
of exportation or the date of entry into a duty-deferral program of
Canada or Mexico, except that, upon filing of a proper claim under
paragraph (a)(3) of this
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section, the duty shall be waived or reduced in an amount that does not
exceed the lesser of the total amount of duty payable on the good under
this section or the total amount of customs duties paid to Canada or
Mexico.
Example Company A imports glassware under subheading 9813.00.05,
HTSUS. The glassware is from France and would be dutiable under a
regular consumption entry at $6,000. Company A alters the glassware by
etching hotel logos on the glassware. Two weeks later, Company A sells
the glassware to Company B, a Mexican company, and ships the glassware
to Mexico. Company B enters the glassware and is assessed duties in an
amount equivalent to US$6,200 and claims NAFTA preferential tariff
treatment. Company B provides a copy of the Mexican landing certificate
to Company A showing that the US$6,200 equivalent in duties was assessed
but not yet paid to Mexico. If Mexico ultimately denies Company B's
NAFTA claim and the Mexican duty payment becomes final, Company A, upon
submission to Customs of a proper claim under paragraph (a)(3) of this
section, is entitled to a waiver of the full $6,000 in U.S. duty.
(c) Recordkeeping requirements. If a person intends to claim a
waiver or reduction of duty on goods under this section, that person
shall maintain records concerning the value of all involved goods or
materials at the time of their importation into the United States and
concerning the value of the goods at the time of their exportation to
Canada or Mexico or entry into a duty-deferral program of Canada or
Mexico, and if a person files a claim under this section for a waiver or
reduction of duty on goods exported to Canada or Mexico or entered into
a Canadian or Mexican duty-deferral program, that person shall maintain
evidence of exportation or entry into a Canadian or Mexican duty-
deferral program and satisfactory evidence of the amount of any customs
duties paid to Canada or Mexico on the good (see Sec. 181.47(c)).
Failure to maintain adequate records will result in denial of the claim
for waiver or reduction of duty.
(d) Failure to file proper claim. If the person identified in
paragraph (a)(2)(iii)(A) of this section fails to file a proper claim
within the 60-day period specified in this section, that person, or the
FTZ operator pursuant to paragraph (a)(2)(iii)(A)(3) of this section,
will be liable for payment of the full duties assessed under this
section and without any waiver or reduction thereof.
(e) Subsequent claims for preferential tariff treatment. If a claim
for a refund of duties is allowed by the Canadian or Mexican customs
administration under Article 502(3) of the NAFTA or under any other
circumstance after duties have been waived or reduced under this
section, Customs may reliquidate the entry filed under this section
pursuant to 19 U.S.C. 1508(b)(2)(B)(iii) even after liquidation of the
entry has become final.
[T.D. 96-14, 61 FR 2911, Jan. 30, 1996; T.D. 96-14, 61 FR 6111, Feb. 16,
1996]
File Type | application/msword |
File Title | WAIS Document Retrieval |
Author | Authorized User |
Last Modified By | Authorized User |
File Modified | 2008-04-04 |
File Created | 2008-04-04 |