[Federal Register: October 7, 2004 (Volume 69, Number 194)]
[Rules and Regulations]
[Page 60082-60083]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07oc04-4]
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DEPARTMENT OF HOMELAND SECURITY
Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Part 191
[CBP Dec. 04--33]
RIN 1505-AB44
Merchandise Processing Fees Eligible To Be Claimed as Certain
Types of Drawback Based on Substitution of Finished Petroleum
Derivatives
AGENCY: Customs and Border Protection, Homeland Security; Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs and Border Protection (CBP)
Regulations to provide that merchandise processing fees are eligible to
be claimed, in limited circumstances, as drawback based on substitution
of finished petroleum derivatives. The changes implemented by this
document are consistent with a court decision in which merchandise
processing fees were found to be eligible to be claimed as unused
merchandise drawback. As drawback based on substitution of finished
petroleum derivatives is, in limited circumstances, treated in the same
manner as unused merchandise drawback, this amendment reflects that
merchandise processing fees are also eligible to be claimed as drawback
in these circumstances.
DATES: Effective November 8, 2004.
FOR FURTHER INFORMATION CONTACT: William G. Rosoff, Chief, Duty and
Refund Determinations Branch, Office of Regulations and Rulings, U.S.
Customs Service, Tel. (202) 572-8807.
SUPPLEMENTARY INFORMATION:
Background
Merchandise Processing Fees
Merchandise processing fees are fees the Secretary of the Treasury
charges and collects for the processing of merchandise that is formally
entered or released into the United States. See 19 U.S.C. 58c(a)(9)(A).
Merchandise processing fees are assessed as a percentage of the value
of the imported merchandise, as determined under 19 U.S.C. 1401a.
Merchandise Processing Fees Eligible To Be Claimed as Drawback
Section 313 of the Tariff Act of 1930, as amended, (19 U.S.C.
1313), concerns drawback and refunds. Drawback is a refund of certain
duties, taxes and fees paid by the importer of record and granted to a
drawback claimant under specific conditions.
In Texport Oil v. United States, 185 F.3d 1291 (Fed. Cir. 1999),
the Court of Appeals for the Federal Circuit (CAFC) held that
merchandise processing fees were assessed under Federal law and imposed
by reason of importation and therefore eligible to be claimed as unused
merchandise drawback pursuant to 19 U.S.C. 1313(j).
Subsection (p) of 19 U.S.C. 1313 authorizes drawback that is based
on ``substitution of finished petroleum derivatives.'' Subsection
(p)(4)(B) of 19 U.S.C. 1313, in pertinent part, limits the amount of
drawback payable under this subsection to the amount of drawback that
would be attributable to the article ``if imported under [subsection
1313(p)(2)(A)(iii) or (iv)] had the claim qualified for drawback under
subsection (j).'' [emphasis added]
Subsection 1313(p)(2)(A)(iii) requires that the exporter of the
exported article imported the qualified article in a quantity equal to
or greater than the quantity of the exported article. Subsection
1313(p)(2)(A)(iv) requires that the exporter of the exported article
purchased or exchanged, directly or indirectly, an imported qualified
article from an importer in a quantity equal to or greater than the
quantity of the exported article.
The language ``had the claim qualified for drawback under
subsection (j)'' reflects that drawback is payable under
1313(p)(2)(A)(iii) or (iv) pursuant to the same formula set forth in
subsection 1313(j), i.e., the amount of drawback payable under 19
U.S.C. 1313(j) is not to exceed 99 percent of any duty, tax, or fee
imposed under Federal law because of the imported article's
importation. The term ``drawback payable'' under 19 U.S.C.
1313(p)(2)(A)(iii) and (iv) includes the merchandise processing fee.
Consistent with the determination of the CAFC that merchandise
processing fees are eligible to be claimed as drawback pursuant to 19
U.S.C. 1313(j), such fees are also eligible to be claimed as drawback
when drawback is based on substitution of finished petroleum
derivatives pursuant to 19 U.S.C. 1313(p)(2)(A)(iii) or (iv).
Amendment to CBP Regulations To Reflect the Texport Oil Decision
The Texport Oil decision is reflected in the CBP Regulations at
Sec. Sec. 191.3 and 191.51. See 67 FR 48547 (July 25, 2002), in which
a final rule was published amending the CBP Regulations to reflect that
merchandise processing fees are eligible to be claimed as unused
merchandise drawback pursuant to 19 U.S.C. 1313(j).
On October 2, 2003, CBP published in the Federal Register (68 FR
56804) a proposal to amend Sec. Sec. 191.3, 191.51 and 191.171 to
reflect that the Texport Oil decision is applicable, in limited
circumstances, to drawback based on substitution of finished petroleum
derivatives.
Comments were solicited on the proposal.
Discussion of Comment
One comment was received in response to the solicitation of public
comment in 68 FR 56804. The commenter supported CBP's proposal to
reflect the Texport Oil court decision in part 191 of the CBP
Regulations as regards drawback based on substitution of finished
petroleum derivatives. The commenter noted that the proposed amendments
contribute to the goal of offsetting the cost of raw materials.
Conclusion
After review of the one comment received, and upon consideration,
CBP has decided to adopt as final the proposed rule published in the
Federal Register (68 FR 56804) on October 2, 2003.
The Regulatory Flexibility Act and Executive Order 12866
Because these regulations serve to conform the CBP Regulations to
reflect the full scope of a recent decision by the Court of Appeals for
the Federal Circuit whereby, in limited circumstances, merchandise
processing fees are eligible to be claimed as drawback, it is certified
pursuant to the provisions of the Regulatory Flexibility Act, 5 U.S.C.
601 et seq. that this amendment will not have a significant impact on a
substantial number of small entities. Further, this amendment does not
meet the criteria for a ``significant regulatory action'' as specified
in Executive Order 12866.
Signing Authority
This document is being issued in accordance with 19 CFR 0.1(a)(1).
Drafting Information
The principal author of this document was Ms. Suzanne Kingsbury,
[[Page 60083]]
Regulations Branch, Office of Regulations and Rulings, U.S. Customs and
Border Protection. However, personnel from other offices participated
in its development.
List of Subjects in 19 CFR Part 191
Claims, Commerce, CBP duties and inspection, Drawback.
Amendments to the Regulations
0
For the reasons stated above, part 191 of the CBP Regulations (19 CFR
part 191) is amended as follows:
PART 191 -- DRAWBACK
0
1. The general authority citation for part 191 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 23,
Harmonized Tariff Schedule of the United States), 1313, 1624.
0
2. Section 191.3(a)(4) and (b)(2) are revised as follows:
Sec. 191.3 Duties and fees subject or not subject to drawback.
(a) Duties and fees subject to drawback include:
* * * * *
(4) Merchandise processing fees (see Sec. 24.23 of this chapter)
for unused merchandise drawback pursuant to 19 U.S.C. 1313(j), and
drawback for substitution of finished petroleum derivatives pursuant to
19 U.S.C. 1313(p)(2)(A)(iii) or (iv).
(b) * * *
(2) Merchandise processing fees (see Sec. 24.23 of this chapter),
except where unused merchandise drawback pursuant to 19 U.S.C. 1313(j)
or drawback for substitution of finished petroleum derivatives pursuant
to 19 U.S.C. 1313(p)(2)(A)(iii) or (iv) is claimed; and
* * * * *
0
3. In Sec. 191.51, paragraph (b)(2) introductory text is revised to
read as follows:
Sec. 191.51 Completion of drawback claims.
* * * * *
(b) * * *
(2) Merchandise processing fee apportionment calculation. Where a
drawback claimant seeks unused merchandise drawback pursuant to 19
U.S.C. 1313(j), or drawback for substitution of finished petroleum
derivatives pursuant to 19 U.S.C. 1313(p)(2)(A)(iii) or (iv), for a
merchandise processing fee paid pursuant to 19 U.S.C. 58c(a)(9)(A), the
claimant is required to correctly apportion the fee to that merchandise
that provides the basis for drawback when calculating the amount of
drawback requested on the drawback entry. This is determined as
follows:
* * * * *
0
4. In Sec. 191.171, a new paragraph (c) is added to read as follows:
Sec. 191.171 General; drawback allowance.
* * * * *
(c) Merchandise processing fees. In cases where the requirements of
paragraph (b)(1) of this section have been met, merchandise processing
fees will be eligible for drawback.
Approved: October 4, 2004.
Robert C. Bonner,
Commissioner, U.S. Customs and Border Protection.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 04-22599 Filed 10-6-04; 8:45 am]
BILLING CODE 4820-02-P