[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: 19CFR191.22]



[Page 539-540]

 

                        TITLE 19--CUSTOMS DUTIES

 

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

        HOMELAND SECURITY; DEPARTMENT OF THE TREASURY (CONTINUED)

 

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 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



[[Page 540]]



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.