[Code of Federal Regulations]
[Title 19, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 19CFR19.35]

[Page 324-325]
 
                        TITLE 19--CUSTOMS DUTIES
 
  CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY
 
PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS AND CONTROL OF MERCHANDISE THEREIN--Table of Contents
 
Sec. 19.35  Establishment of duty-free stores (Class 9 warehouses).

    (a) General. A class 9 warehouse (duty-free store) may be 
established for exportation of conditionally duty-free merchandise by 
individuals departing the Customs territory, inclusive of foreign trade 
zones, by aircraft, vessel, or departing directly by vehicle or on foot 
to a contiguous country. Such articles must accompany the individual on 
his person or in the same aircraft, vessel, or vehicle in which the 
individual departs. ``Conditionally duty-free merchandise'' means 
merchandise sold by a duty-free store on which duties and/or internal 
revenue taxes (where applicable) have not been paid. Except insofar as 
the provisions of this section and Secs. 19.36-19.39 are more specific, 
the procedures for bonded warehouses apply to duty-free stores (Class 9 
warehouses).
    (b) Location. A duty-free store (class 9 warehouse) may be 
established or located only:
    (1) Within the same port of entry from which a purchaser of duty-
free store merchandise departs the Customs territory;
    (2) Within 25 statute miles from the exit point through which a 
purchaser of duty-free store merchandise departs the Customs territory; 
or
    (3) In the case of an airport store, within any staffed port of 
entry, or within 25 statute miles from any staffed port of entry.
    (c) Integrated locations. A Class 9 warehouse with multiple 
noncontiguous sales and crib locations (see Sec. 19.37(a) of this part) 
containing conditionally duty-free merchandise and requested by the 
proprietor may be treated by Customs as one location if:
    (1) The proprietor can provide Customs upon demand with the proper 
on-hand balance of each inventory item in

[[Page 325]]

each storage location, sales room, crib, mobile crib, delivery cart, or 
other conveyance or noncontiguous location; and
    (2) The recordkeeping system is centralized up to the point where a 
sale is made so as to automatically reduce the sale quantity by location 
from centralized inventory or inventory records must be updated no less 
frequently than at the end of each business day to reflect that day's 
activity.
    (d) Exit point. The exit point referred to in paragraph (b) of this 
section means an area in close proximity to an actual exit for departing 
from the Customs territory, including the gate holding area in the case 
of an airport, but only if there is reasonable assurance that 
conditionally duty-free merchandise delivered in the gate holding area 
will be exported from the Customs territory. The exit point in the case 
of a land border or seaport duty-free store is the point at which a 
departing individual has no practical alternative to continuing on to a 
foreign country or to returning to Customs territory by passing through 
a U.S. Customs inspection facility. The port director's decision as to 
what constitutes the exit point or reasonable assurance of exportation 
in a given situation is final.
    (e) Notice to customers. Class 9 warehouse proprietors shall display 
in prominent places where they will be noticed and read by customers 
signs which state clearly that any conditionally duty-free merchandise 
purchased from the store:
    (1) Has not been subjected to any U.S. Federal duty or tax;
    (2) If brought back to the United States must be declared and is 
subject to U.S. Federal duty and tax with personal exemption; and,
    (3) Is subject to the customs laws and regulations, including 
possible duties and taxes, of any foreign country to which it is taken.
    (f) Security of sales rooms and cribs. The physical and procedural 
security requirements of Sec. 19.4(b)(6) of this part shall be applied 
to the security of the sales rooms and cribs by the port director. The 
proprietor shall establish procedures to safeguard the merchandise so as 
to accommodate the movement of purchasers and prospective purchasers of 
conditionally duty-free merchandise contained in duty-free sales rooms 
and cribs.
    (g) Approval of governmental authority. If a state or local or other 
governmental authority, incident to its jurisdiction over any airport, 
seaport, or other exit point facility, requires that a concession or 
other form of approval be obtained from that authority with respect to 
the operation of a duty-free store under which merchandise is delivered 
to or through such facility for exportation, merchandise incident to 
such operation may not be withdrawn for exportation and transferred to 
or through such facility unless the operator of the duty-free store 
demonstrates to the port director that the concession or approval 
required for the enterprise has been obtained.

[T.D. 92-81, 57 FR 37698, Aug. 20, 1992, as amended by T.D. 97-19, 62 FR 
15839, Apr. 3, 1997; T.D. 00-33, 65 FR 31261, May 17, 2000]