19 Cfr 146.52

§ 146.44

ehiers on DSK2VPTVN1PROD with CFR

§ 146.44

19 CFR Ch. I (4–1–14 Edition)
Zone-restricted status.

(a) General. Merchandise taken into a
zone for the sole purpose of exportation, destruction (except destruction
of distilled spirits, wines, and fermented malt liquors), or storage will
be given zone-restricted status on proper application. That status may be requested at any time the merchandise is
located in a zone, but cannot be abandoned once granted. Merchandise in
zone-restricted status may not be removed to Customs territory for domestic consumption except where the
Board determines the return to be in
the public interest.
(b) Application. Application for zonerestricted status will be made on Customs Form 214.
(c) Merchandise considered exported—
(1) For Customs purposes. If the applicant desires a zone-restricted status in
order that the merchandise may be
considered exported for the purpose of
any Customs law, all pertinent Customs requirements relating to an actual exportation shall be complied with
as though the admission of the merchandise into zone constituted a lading
on an exporting carrier at a port of
final exit from the U.S. Any declaration or form required for actual exportation will be modified to show the
merchandise has been deposited in a
zone in lieu of actual exportation, and
a copy of the approved Customs Form
214 may be accepted in lieu of any proof
of shipment required in cases of actual
exportation.
(2) For other purposes. If the merchandise is to be considered exported for the
purpose of any Federal law other than
the Customs laws, the port director
shall be satisfied that all pertinent
laws, regulations, and rules administered by the Federal agency concerned
have been complied with before the
Customs Form 214 is approved.
(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
§ 146.33, will have the status of zone-restricted merchandise when admitted
into the zone. The application on Customs Form 214 will state that zone-re-

stricted status is desired for the merchandise.

Subpart E—Handling of
Merchandise in a Zone
§ 146.51 Customs control of merchandise.
No merchandise, other than domestic
status merchandise provided for in
§ 146.43, will be manipulated, manufactured, exhibited, destroyed, or transferred from a zone in any manner or for
any purpose, except under Customs
permit as provided for in this part. The
port director may require segregation
of any zone status merchandise whenever necessary to protect the revenue
or properly administer U.S. laws or
regulations.
§ 146.52 Manipulation,
manufacture,
exhibition or destruction; Customs
Form 216.
(a) Application. Prior to any action,
the operator shall file with the port director an application (or blanket application) on Customs Form 216 for permission to manipulate, manufacture,
exhibit, or destroy merchandise in a
zone. After Customs approves the application (or blanket application), the
operator will retain in his recordkeeping system the approved application.
(b) Approval. (1) The port director
shall approve the application unless (i)
the proposed operation would be in violation of law or regulation; (ii) the
place designated for its performance is
not suitable for preventing confusion of
the identity or status of the merchandise, or for safeguarding the revenue;
(iii) the port director is not satisfied
that the destruction will be effective;
or (iv) the Executive Secretary of the
Board has not granted approval of a
new manufacturing operation.
(2) The port director is authorized to
approve a blanket application for a period of up to one year for a continuous
or repetitive operation. The port director may disapprove or revoke approval
of any application, or may require the
operator to file an individual application.
(c) Appeal of adverse ruling. If an approved application is subsequently rescinded by the port director for any

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U.S. Customs and Border Protection, DHS; Treasury
reason, the applicant or grantee may
appeal the adverse ruling pursuant to
the hearing provisions of § 146.82(b)(2).
The rescission shall remain in effect
pending the decision on the appeal.
(d) Report results—(1) Separate application. The operator shall report on Customs Form 216 the results of an approved manipulation, manufacture, exhibition, or certification of destruction
(other than by a blanket application),
unless the port director chooses physically to supervise the operation.
(2) Blanket application. The operator
shall maintain a record of an approved
manipulation,
manufacture,
exhibition, or certification of destruction,
in its inventory control and recordkeeping system so as to provide an accounting and audit trail of the merchandise through the approved operation.
(e) Destruction. The port director may
permit destruction to be done outside
the zone, in whole or in part and at the
risk and expense of the applicant, and
under such conditions as are necessary
to protect the revenue, if proper destruction cannot be accomplished within the zone. Any residue from the destruction within a zone, which is determined to be without commercial value,
may be removed to Customs territory
for disposal.

ehiers on DSK2VPTVN1PROD with CFR

§ 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 § 146.25.

§ 146.53

(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;
(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.

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