[Code of Federal Regulations]
[Title 19, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 19CFR191.22]

[Page 534-535]
 
                        TITLE 19--CUSTOMS DUTIES
 
  CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY
 
PART 191--DRAWBACK--Table of Contents
 
                    Subpart B--Manufacturing Drawback
 
Sec. 191.22  Substitution drawback.

    (a) General. If imported, duty-paid, merchandise and any other 
merchandise (whether imported or domestic) of the same kind and quality 
are used in the manufacture or production of articles within a period 
not to exceed 3 years from the receipt of the imported merchandise by 
the manufacturer or producer of the articles, then upon the exportation, 
or destruction under Customs supervision, of any such articles, without 
their having been used in the United States prior to such exportation or 
destruction, drawback is provided for in Sec. 313(b) of the Act, as 
amended (19 U.S.C. 1313(b)), even though none of the imported, duty-paid 
merchandise may have been used in the manufacture or production of the 
exported or destroyed

[[Page 535]]

articles. The amount of drawback allowable cannot exceed that which 
would have been allowable had the merchandise used therein been the 
imported, duty-paid merchandise.
    (b) Use by same manufacturer or producer at different factory. Duty-
paid merchandise or drawback products used at one factory of a 
manufacturer or producer within 3 years after the date on which the 
material was received by the manufacturer or producer may be designated 
as the basis for drawback on articles manufactured or produced in 
accordance with these regulations at other factories of the same 
manufacturer or producer.
    (c) Designation. A manufacturer or producer may designate any 
eligible imported merchandise or drawback product which it has used in 
manufacture or production.
    (d) Designation by successor; 19 U.S.C. 1313(s). (1) General rule. 
Upon compliance with the requirements in this section and under 19 
U.S.C. 1313(s), a drawback successor as defined in paragraph (d)(2) of 
this section may designate merchandise or drawback product used by a 
predecessor before the date of succession as the basis for drawback on 
articles manufactured or produced by the successor after the date of 
succession.
    (2) Drawback successor. A ``drawback successor'' is a manufacturer 
or producer to whom another entity (predecessor) has transferred, by 
written agreement, merger, or corporate resolution:
    (i) All or substantially all of the rights, privileges, immunities, 
powers, duties, and liabilities of the predecessor; or
    (ii) The assets and other business interests of a division, plant, 
or other business unit of such predecessor, provided that the value of 
the transferred assets and interests (realty, personalty, and 
intangibles, exclusive of the drawback rights) exceeds the value of such 
drawback rights, whether vested or contingent.
    (3) Certifications and required evidence. (i) Records of 
predecessor. The predecessor or successor must certify that the 
successor is in possession of the predecessor's records which are 
necessary to establish the right to drawback under the law and 
regulations with respect to the merchandise or drawback product.
    (ii) Merchandise not otherwise designated. The predecessor or 
successor must certify in an attachment to the claim, that the 
predecessor has not designated and will not designate, nor enable any 
other person to designate, such merchandise or product as the basis for 
drawback.
    (iii) Value of transferred property. In instances in which assets 
and other business interests of a division, plant, or other business 
unit of a predecessor are transferred, the predecessor or successor must 
specify, and maintain supporting records to establish, the value of the 
drawback rights and the value of all other transferred property.
    (iv) Review by Customs. The written agreement, merger, or corporate 
resolution, provided for in paragraph (d)(2) of this section, and the 
records and evidence provided for in paragraph (d)(3) (i) through (iii) 
of this section, must be retained by the appropriate party(s) for 3 
years from the date of payment of the related claim and are subject to 
review by Customs upon request.
    (e) Multiple products. (1) General. Where two or more products are 
produced concurrently in a substitution manufacturing operation, 
drawback shall be distributed to each product in accordance with its 
relative value (see Sec. 191.2(u)) at the time of separation.
    (2) Claims covering a manufacturing period. Where the claim covers a 
manufacturing period rather than a manufacturing lot, the entire period 
covered by the claim is the time of separation of the products and the 
value per unit of product is the market value for the period (see 
Sec. 191.2(u) of this part). Manufacturing periods in excess of one 
month may not be used without specific approval of Customs.
    (3) Recordkeeping. Records shall be maintained showing the relative 
value of each product at the time of separation.