[Code of Federal Regulations]

[Title 19, Volume 2]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 19CFR181.45]



[Page 365-366]

 

                        TITLE 19--CUSTOMS DUTIES

 

   CHAPTER I--BUREAU OF CUSTOMS AND BORDER PROTECTION, DEPARTMENT OF 

        HOMELAND SECURITY; DEPARTMENT OF THE TREASURY (CONTINUED)

 

PART 181_NORTH AMERICAN FREE TRADE AGREEMENT--Table of Contents

 

      Subpart E_Restrictions on Drawback and Duty-Deferral Programs

 

Sec.  181.45  Goods eligible for full drawback.



    (a) Goods originating in Canada or Mexico. A Canadian or Mexican 

originating good that is dutiable and is imported into the United States 

is eligible for drawback without regard to the limitation on drawback 

set forth in Sec.  181.44 of this part if that originating good is:

    (1) Subsequently exported to Canada or Mexico;

    (2) Used as a material in the production of another good that is 

subsequently exported to Canada or Mexico; or

    (3) Substituted by a good of the same kind and quality and used as a 

material in the production of another good that is subsequently exported 

to Canada or Mexico.



    Example. Company A imports a dutiable (3 percent rate) Canadian 

originating good. During Company A's manufacturing process, Company A 

substitutes a German good of the same kind and quality (on which duty 

was paid at a 2.5 percent rate) in the production of another good that 

is subsequently exported to Canada. Company A may designate the dutiable 

Canadian entry and claim full drawback (99 percent) on the 3 percent 

duty paid under 19 U.S.C. 1313(b). (Note: NAFTA originating goods will 

continue to receive full drawback as they cross NAFTA borders for 

successive stages of production until NAFTA tariffs are fully phased 

out.)



    (b) Claims under 19 U.S.C 1313(j)(1) for goods in same condition. A 

good imported into the United States and subsequently exported to Canada 

or Mexico in the same condition is eligible for drawback under 19 U.S.C. 

1313(j)(1) without regard to the limitation on drawback set forth in 

Sec.  181.44 of this part.



    Example. X imports a desk into the United States from England and 

pays $25.00 in duty. X immediately exports the desk to Z in Mexico and Z 

pays the equivalent of US$10.00 in Mexican duties. X can obtain a refund 

of 99 percent of the $25.00 paid upon importation of the desk into the 

United States.



    (1) Same condition defined. For purposes of this subpart, a 

reference to a good in the ``same condition'' includes a good that has 

been subjected to any of the following operations provided that no such 

operation materially alters the characteristics of the good:

    (i) Mere dilution with water or another substance;

    (ii) Cleaning, including removal of rust, grease, paint or other 

coatings;

    (iii) Application of preservative, including lubricants, protective 

encapsulation, or preservation paint;

    (iv) Trimming, filing, slitting or cutting;

    (v) Putting up in measured doses, or packing, repacking, packaging 

or repackaging; or

    (vi) Testing, marking, labelling, sorting or grading.

    (2) Commingling of fungible goods--(i) General--(A) Inventory of 

other than all non-originating goods. Commingling of fungible 

originating and non-originating goods in inventory is permissable 

provided that the origin of the goods and the identification of entries 

for designation for same condition drawback are on the basis of an 

approved inventory method set forth in the appendix to this part.

    (B) Inventory of the non-originating goods. If all goods in a 

particular inventory are non-originating goods, identification of 

entries for designation for same condition drawback shall be on the 

basis of one of the accounting methods in Sec.  191.14 of this chapter, 

as provided therein.

    (ii) Exception. Agricultural goods imported from Mexico may not be 

commingled with fungible agricultural goods in the United States for 

purposes of same condition drawback under this subpart.



[[Page 366]]



    (c) Goods not conforming to sample or specifications or shipped 

without consent of consignee under 19 U.S.C. 1313(c). An imported good 

exported to Canada or Mexico by reason of failure of the good to conform 

to sample or specification or by reason of shipment of the good without 

the consent of the consignee is eligible for drawback under 19 U.S.C. 

1313(c) without regard to the limitation on drawback set forth in Sec.  

181.44 of this part. Such a good must be returned to Customs custody for 

exportation under Customs supervision within three years after the 

release from Customs custody.



    Example. X orders, after seeing a sample in the ABC Company's 

catalog, a certain quantity of 2-by-4 lumber from ABC Company located in 

Honduras. ABC Company, having run out of the specific lumber, ships 

instead a different kind of lumber. X rejects the lumber because it did 

not conform to the sample and is asked to send it to a customer of ABC 

in Canada. X exports it within 90 days of its release from Customs 

custody. X may recover 99 percent of the $500 duties it paid to U.S. 

Customs upon the exportation of the lumber, or $495.00.



    (d) Certain goods exported to Canada. Goods identified in Annex 

303.6 of the NAFTA and in sections 203(a) (7) and (8) of the North 

American Free Trade Agreement Implementation Act, if exported to Canada, 

are eligible for drawback without regard to the limitation on drawback 

set forth in Sec.  181.44 of this part.



[T.D. 95-68, 60 FR 46364, Sept. 6, 1995, as amended by T.D. 98-16, 63 FR 

11005, Mar. 5, 1998]