[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: 19CFR191.9]

[Page 526-527]
 
                        TITLE 19--CUSTOMS DUTIES
 
  CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY
 
PART 191--DRAWBACK--Table of Contents
 
                      Subpart A--General Provisions
 
Sec. 191.9  Agency.

    (a) General. An owner of the identified merchandise, the designated 
imported merchandise and/or the substituted other merchandise that is 
used to produce the exported articles may employ another person to do 
part, or all, of the manufacture or production under 19 U.S.C. 1313(a) 
or (b) and Sec. 191.2(q) of this subpart. For purposes of this section, 
such owner is the principal and such other person is the agent. Under 19 
U.S.C. 1313(b), the principal shall be treated as the manufacturer or 
producer of merchandise used in manufacture or production by the agent. 
The principal must be able to establish by its manufacturing records, 
the manufacturing records of its agent(s), or the manufacturing records 
of both (or all) parties, compliance with all requirements of this part 
(see, in particular, Sec. 191.26 of this part).
    (b) Requirements. (1) Contract. The manufacturer must establish that 
it is the principal in a contract between it and its agent who actually 
does the work on either the designated or substituted merchandise, or 
both, for the principal. The contract must include:
    (i) Terms of compensation to show that the relationship is an agency 
rather than a sale;
    (ii) How transfers of merchandise and articles will be recorded by 
the principal and its agent;
    (iii) The work to be performed on the merchandise by the agent for 
the principal;
    (iv) The degree of control that is to be exercised by the principal 
over the agent's performance of work;
    (v) The party who is to bear the risk of loss on the merchandise 
while it is in the agent's custody; and
    (vi) The period that the contract is in effect.
    (2) Ownership of the merchandise by the principal. The records of 
the principal and/or the agent must establish that the principal had 
legal and equitable title to the merchandise before receipt by the 
agent. The right of the agent to assert a lien on the merchandise for 
work performed does not derogate the principal's ownership interest 
under this section.
    (3) Sales prohibited. The relationship between the principal and 
agent must not be that of a seller and buyer. If the parties' records 
show that, with respect to the merchandise that is the subject of the 
principal-agent contract, the merchandise is sold to the agent by the 
principal, or the articles manufactured by the agent are sold to the 
principal by the agent, those records are inadequate to establish 
existence of a principal-agency relationship under this section.
    (c) Specific manufacturing drawback rulings; general manufacturing 
drawback rulings. (1) Owner. An owner who intends to operate under the 
principal-agent procedures of this section must state that intent in any 
letter of notification of intent to operate under a general 
manufacturing drawback ruling filed under Sec. 191.7 of this subpart or 
in any application for a specific manufacturing drawback ruling filed 
under Sec. 191.8 of this subpart.
    (2) Agent. Each agent operating under this section must have filed a 
letter of notification of intent to operate under a general 
manufacturing drawback ruling (see Sec. 191.7), for an agent, covering 
the articles manufactured or produced, or have obtained a specific 
manufacturing drawback ruling (see Sec. 191.8), as appropriate.
    (d) Certificate; Drawback entry; Certificate of manufacture and 
delivery. (1) Contents of certificate; when filing not required. 
Principals and agents operating under this section are not required to 
file a certificate of delivery (for the merchandise transferred from the 
principal to the agent) or a certificate of manufacture and delivery 
(for the articles transferred from the agent to the

[[Page 527]]

principal). The principal for whom processing is conducted under this 
section shall file, with any drawback claim or certificate of 
manufacture and delivery based on an article manufactured or produced 
under the principal-agent procedures in this section, a certificate, 
subject to the recordkeeping requirements of Secs. 191.15 of this 
subpart and 191.26 of this part, certifying that upon request by Customs 
it can establish the following:
    (i) Quantity, kind and quality of merchandise transferred from the 
principal to the agent;
    (ii) Date of transfer of the merchandise from the principal to the 
agent;
    (iii) Date of manufacturing or production operations performed by 
the agent;
    (iv) Total quantity and description of merchandise appearing in or 
used in manufacturing or production operations performed by the agent;
    (v) Total quantity and description of articles produced in 
manufacturing or production operations performed by the agent;
    (vi) Quantity, kind and quality of articles transferred from the 
agent to the principal; and
    (vii) Date of transfer of the articles from the agent to the 
principal.
    (2) Blanket certificate. The certificate required under paragraph 
(d)(1) of this section may be a blanket certificate for a particular 
kind and quality of merchandise for a stated period.