[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: 19CFR191.26]



[Page 541-544]

 

                        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.  191.26  Recordkeeping for manufacturing drawback.



    (a) Direct identification manufacturing--(1) Records required. Each 

manufacturer or producer under 19 U.S.C. 1313(a) shall keep records to 

allow the verifying Customs official to trace all articles manufactured 

or produced for exportation or destruction with drawback, from 

importation, through production, to exportation or destruction. To this 

end, these records shall specifically establish:

    (i) The date or inclusive dates of manufacture or production;



[[Page 542]]



    (ii) The quantity and identity of the imported duty-paid merchandise 

or drawback products used in or appearing in (see Sec.  191.23) the 

articles manufactured or produced;

    (iii) The quantity, if any, of the nondrawback merchandise used, 

when these records are necessary to determine the quantity of imported 

duty-paid merchandise or drawback product used in the manufacture or 

production of the exported or destroyed articles or appearing in them;

    (iv) The quantity and description of the articles manufactured or 

produced;

    (v) The quantity of waste incurred, if applicable; and

    (vi) That the finished articles on which drawback is claimed were 

exported or destroyed within 5 years after the importation of the duty-

paid merchandise, without having been used in the United States prior to 

such exportation or destruction. (If the completed articles were 

commingled after manufacture, their identity may be maintained in the 

manner prescribed in Sec.  191.14 of this part.)

    (2) Accounting. The merchandise and articles to be exported or 

destroyed shall be accounted for in a manner which will enable the 

manufacturer, producer, or claimant:

    (i) To determine, and the Customs official to verify, the applicable 

import entry, certificate of delivery, and/or certificate of manufacture 

and delivery associated with the claim; and

    (ii) To identify with respect to that import entry, certificate of 

delivery, and/or certificate of manufacture and delivery, the imported 

duty-paid merchandise or drawback products used in manufacture or 

production.

    (b) Substitution manufacturing. The records of the manufacturer or 

producer of articles manufactured or produced in accordance with 19 

U.S.C. 1313(b) shall establish the facts in paragraph (a)(1)(i), (iv) 

through (vi) of this section, and:

    (1) The quantity, identity, and specifications of the merchandise 

designated (imported duty-paid, or drawback product);

    (2) The quantity, identity, and specifications of merchandise of the 

same kind and quality as the designated merchandise before its use to 

manufacture or produce (or appearing in) the exported or destroyed 

articles;

    (3) That, within 3 years after receiving the designated merchandise 

at its plant, the manufacturer or producer used it in manufacturing or 

production and that during the same 3-year period it manufactured or 

produced the exported or destroyed articles; and

    (4) If the designated merchandise is a chemical element that was 

contained in imported material that was subject to an ad valorem rate of 

duty, and a substitution drawback claim is made based on that chemical 

element:

    (i) The duty paid on the imported material must be apportioned among 

its constituent components. The claim on the chemical element that is 

the designated merchandise must be limited to the duty apportioned to 

that element on a unit-for-unit attribution using the unit of measure 

set forth in the Harmonized Tariff Schedule of the United States (HTSUS) 

that is applicable to the imported material. If the material is a 

compound with other constituents, including impurities, and the purity 

of the compound in the imported material is shown by satisfactory 

analysis, that purity, converted to a decimal equivalent of the 

percentage, is multiplied against the entered amount of the material to 

establish the amount of pure compound. The amount of the element in the 

pure compound is to be determined by use of the atomic weights of the 

constituent elements and converting to the decimal equivalent of their 

respective percentages and multiplying that decimal equivalent against 

the above-determined amount of pure compound.

    (ii) The amount claimed as drawback based on the chemical element 

must be deducted from the duty paid on the imported material that may be 

claimed on any other drawback claim.



    Example to paragraph (b)(4): Synthetic rutile that is shown by 

appropriate analysis in the entry papers to be 91.7% pure titanium 

dioxide is imported and dutiable at a 5% ad valorem duty rate. The 

amount of imported synthetic rutile is 30,000 pounds with an entered 

value of $12,000. The total duty paid is $600. Titanium in the synthetic 

rutile is designated as the basis for a drawback claim under 19 U.S.C. 

1313(b). The amount of titanium dioxide in the synthetic rutile is 

determined by converting the purity percentage



[[Page 543]]



(91.7%) to its decimal equivalent (.917) and multiplying the entered 

amount of synthetic rutile (30,000 pounds) by that decimal equivalent 

(.917 x 30,000 = 27,510 pounds of titanium dioxide contained in the 

30,000 pounds of imported synthetic rutile). The titanium, based on 

atomic weight, represents 59.93% of the constituents in titanium 

dioxide. Multiplying that percentage, converted to its decimal 

equivalent, by the amount of titanium dioxide determines the titanium 

content of the imported synthetic rutile (.5993 x 27,510 pounds of 

titanium dioxide = 16,486.7 pounds of titanium contained in the imported 

synthetic rutile). Therefore, up to 16,486.7 pounds of titanium is 

available to be designated as the basis for drawback. As the per-unit 

duty paid on the synthetic rutile is calculated by dividing the duty 

paid ($600) by the amount of imported synthetic rutile (30,000 pounds), 

the per-unit duty is two cents of duty per pound of the imported 

synthetic rutile ($600 / 30,000 = $0.02). The duty on the titanium is 

calculated by multiplying the amount of titanium contained in the 

imported synthetic rutile by two cents of duty per pound (16,486.7 x 

$0.02 = $329.73 duty apportioned to the titanium). The product is then 

multiplied by 99% to determine the maximum amount of drawback available 

($329.73 x .99=$326.44). If an exported titanium alloy ingot weighs 

17,000 pounds, in which 16,000 pounds of titanium was used to make the 

ingot, drawback is determined by multiplying the duty per pound ($0.02) 

by the weight of the titanium contained in the ingot (16,000 pounds) to 

calculate the duty available for drawback ($0.02 x 16,000 = $320.00). 

Because only 99% of the duty can be claimed, drawback is determined by 

multiplying this available duty amount by 99% (.99 x $320.00 = $316.80). 

As the oxygen content of the titanium dioxide is 45% of the synthetic 

rutile, if oxygen is the designated merchandise on another drawback 

claim, 45% of the duty claimed on the synthetic rutile would be 

available for drawback based on the substitution of oxygen.



    (c) Valuable waste records. When waste has a value and the 

manufacturer, producer, or claimant, has not limited the claims based on 

the quantity of imported or substituted merchandise appearing in the 

articles exported or destroyed, the manufacturer or producer shall keep 

records to show the market value of the merchandise used to manufacture 

or produce the exported or destroyed article, as well as the quantity 

and market value of the waste incurred (see Sec.  191.2(u) of this 

part). In such records, the quantity of merchandise identified or 

designated for drawback, under 19 U.S.C. 1313(a) or 1313(b), 

respectively, shall be based on the quantity of merchandise actually 

used to manufacture or produce the exported or destroyed articles. The 

waste replacement reduction will be determined by reducing from the 

quantity of merchandise actually used the amount of merchandise which 

the value of the waste would replace.

    (d) Purchase of manufactured articles for exportation. Where the 

claimant purchases articles from the manufacturer and exports them, the 

claimant shall file the related certificate of manufacture and delivery 

as part of the claim (see Sec.  191.51(a)(1) of this part).

    (e) Multiple claimants--(1) General. Multiple claimants may file for 

drawback with respect to the same export (for example, if an automobile 

is exported, where different parts of the automobile have been produced 

by different manufacturers under drawback conditions and the exporter 

waives the right to claim drawback and assigns such right to the 

manufacturers under Sec.  191.82 of this part).

    (2) Procedures--(i) Submission of letter. Each drawback claimant 

shall file a separate letter, as part of the claim, describing the 

component article on the export bill of lading to which each claim will 

relate. Each letter shall show the name of the claimant and bear a 

statement that the claim shall be limited to its respective component 

article. The exporter shall endorse the letters, as required, to show 

the respective interests of the claimants.

    (ii) Blanket waivers and assignments of drawback rights. Exporters 

may waive and assign their drawback rights for all, or any portion, of 

their exportations with respect to a particular commodity for a given 

period to a drawback claimant.

    (iii) Use of export summary procedure. If the parties elect to use 

the export summary procedure (Sec.  191.73 of this part) each drawback 

claimant shall complete a chronological summary of exports for the 

respective component product to which each claim will relate. Each 

claimant shall identify in the chronological summary the name of the 

other claimant(s) and the component product for which each will 

independently claim drawback, if known at the time the drawback claim



[[Page 544]]



is filed. The exporter shall endorse the summaries, as required, to show 

the respective interests of the claimants. Each claimant shall have on 

file and make available to Customs upon request, the endorsement from 

the exporter assigning the right to claim drawback.

    (f) Retention of records. Pursuant to 19 U.S.C. 1508(c)(3), all 

records required to be kept by the manufacturer, producer, or claimant 

with respect to drawback claims, and records kept by others to 

complement the records of the manufacturer, producer, or claimant with 

respect to drawback claims shall be retained for 3 years after the date 

of payment of the related claims (under 19 U.S.C. 1508, the same records 

may be subject to a different retention period for different purposes).



[T.D. 98-16, 63 FR 11006, Mar. 5, 1998, as amended by T.D. 02-38, 67 FR 

48370, July 24, 2002; CBP Dec. 03-23, 68 FR 50703, Aug. 22, 2003]