[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: 19CFR191.32]



[Page 545-546]

 

                        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 C_Unused Merchandise Drawback

 

Sec.  191.32  Substitution drawback.



    (a) General. Section 313(j)(2) of the Act, as amended (19 U.S.C. 

1313(j)(2)), provides for drawback on merchandise which is commercially 

interchangeable with imported merchandise if the commercially 

interchangeable merchandise is exported, or destroyed under Customs 

supervision, before the close of the 3-year period beginning on the date 

of importation of the imported merchandise, and before such exportation 

or destruction, the commercially interchangeable merchandise is not used 

in the United States (see paragraph (e) of this section) and is in the 

possession of the party claiming drawback.

    (b) Requirements. (1) The claimant must have possessed the 

substituted merchandise that was exported or destroyed, as provided in 

paragraph (d)(1) of this section;

    (2) The substituted merchandise must be commercially interchangeable 

with the imported merchandise that is designated for drawback; and

    (3) The substituted merchandise exported or destroyed must not have 

been used in the United States before its exportation or destruction 

(see paragraph (e) of this section).

    (c) Determination of commercial interchangeability. In determining 

commercial interchangeability, Customs shall evaluate the critical 

properties of the substituted merchandise and in that evaluation factors 

to be considered include, but are not limited to, Governmental and 

recognized industrial standards, part numbers, tariff classification and 

value. A party may seek a nonbinding predetermination of commercial 

interchangeability directly from the appropriate drawback office. A 

determination of commercial interchangeability can be obtained in one of 

two ways:

    (1) A formal ruling from the Duty and Refund Determination Branch, 

Office of Regulations and Rulings; or

    (2) A submission of all the required documentation necessary to make 

a commercial interchangeability determination with each individual 

drawback claim filed.

    (d) Time limitations. For substitution unused merchandise drawback:

    (1) The claimant must have had possession of the exported or 

destroyed merchandise at some time during the 3-year period following 

the date of importation of the imported designated merchandise; and

    (2) The merchandise to be exported or destroyed to qualify for 

drawback must be exported, or destroyed under Customs supervision, 

before the close of the 3-year period beginning on the date of 

importation of the imported designated merchandise.

    (e) Operations performed on substituted merchandise. In cases in 

which an operation or operations is or are performed on the substituted 

merchandise, the performing of any operation or combination of 

operations, not amounting to manufacture or production under the 

provisions of the manufacturing drawback law, on the commercially 

interchangeable substituted merchandise is not a use of that merchandise 

for purposes of this section.

    (f) Designation by successor; 19 U.S.C. 1313(s)--(1) General rule. 

Upon compliance with the requirements of this section and under 19 

U.S.C. 1313(s), a drawback successor as defined in paragraph (f)(2) of 

this section may designate either of the following as the basis for 

drawback on merchandise possessed by the successor after the date of 

succession:

    (i) Imported merchandise which the predecessor, before the date of 

succession, imported; or

    (ii) Imported and/or commercially interchangeable merchandise which 

was transferred to the predecessor and for which the predecessor 

received, before the date of succession, a certificate of delivery from 

the person who imported and paid duty on the imported merchandise.



[[Page 546]]



    (2) Drawback successor. A ``drawback successor'' is an entity to 

which 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, personality, 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 in an attachment 

to the drawback claim 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 imported and/

or commercially interchangeable merchandise.

    (ii) Merchandise not otherwise designated. The predecessor or 

successor must certify in an attachment to the drawback claim, that the 

predecessor has not and will not designate, nor enable any other person 

to designate, the imported and/or commercially interchangeable 

merchandise 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 (f)(2) of this section, and the 

records and evidence provided for in paragraph (f)(3)(i) through (iii) 

of this section, must be retained by the appropriate party(ies) for 3 

years from the date of payment of the related claim and are subject to 

review by Customs upon request.



[T.D. 98-16, 63 FR 11006, Mar. 5, 1998; 63 FR 15288, Mar. 31, 1998]