[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: 19CFR191.9]



[Page 530-531]

 

                        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 A_General Provisions

 

Sec.  191.9  Agency.



    (a) General. An owner of the identified merchandise, the designated 

imported merchandise and/or the substituted other merchandise that is 

used to produce the exported articles may employ another person to do 

part, or all, of the manufacture or production under 19 U.S.C. 1313(a) 

or (b) and Sec.  191.2(q) of this subpart. For purposes of this section, 

such owner is the principal and such other person is the agent. Under 19 

U.S.C. 1313(b), the principal shall be treated as the manufacturer or 

producer of merchandise used in manufacture or production by the agent. 

The principal must be able to establish by its manufacturing records, 

the manufacturing records of its agent(s), or the manufacturing records 

of both (or all) parties, compliance with all requirements of this part 

(see, in particular, Sec.  191.26 of this part).

    (b) Requirements--(1) Contract. The manufacturer must establish that 

it is the principal in a contract between it and its agent who actually 

does the work on either the designated or substituted merchandise, or 

both, for the principal. The contract must include:

    (i) Terms of compensation to show that the relationship is an agency 

rather than a sale;

    (ii) How transfers of merchandise and articles will be recorded by 

the principal and its agent;

    (iii) The work to be performed on the merchandise by the agent for 

the principal;

    (iv) The degree of control that is to be exercised by the principal 

over the agent's performance of work;

    (v) The party who is to bear the risk of loss on the merchandise 

while it is in the agent's custody; and

    (vi) The period that the contract is in effect.

    (2) Ownership of the merchandise by the principal. The records of 

the principal and/or the agent must establish that the principal had 

legal and equitable title to the merchandise before receipt by the 

agent. The right of the agent to assert a lien on the merchandise for 

work performed does not derogate the principal's ownership interest 

under this section.

    (3) Sales prohibited. The relationship between the principal and 

agent must not be that of a seller and buyer. If the parties' records 

show that, with respect to the merchandise that is the subject of the 

principal-agent contract, the merchandise is sold to the agent by the 

principal, or the articles manufactured by the agent are sold to the 

principal by the agent, those records are inadequate to establish 

existence of a principal-agency relationship under this section.

    (c) Specific manufacturing drawback rulings; general manufacturing 

drawback rulings--(1) Owner. An owner who intends to operate under the 

principal-agent procedures of this section must state that intent in any 

letter of notification of intent to operate under a general 

manufacturing drawback ruling filed under Sec.  191.7 of this subpart or 

in any application for a specific manufacturing drawback ruling filed 

under Sec.  191.8 of this subpart.

    (2) Agent. Each agent operating under this section must have filed a 

letter of notification of intent to operate under a general 

manufacturing drawback ruling (see Sec.  191.7), for an agent, covering



[[Page 531]]



the articles manufactured or produced, or have obtained a specific 

manufacturing drawback ruling (see Sec.  191.8), as appropriate.

    (d) Certificate; Drawback entry; Certificate of manufacture and 

delivery--(1) Contents of certificate; when filing not required. 

Principals and agents operating under this section are not required to 

file a certificate of delivery (for the merchandise transferred from the 

principal to the agent) or a certificate of manufacture and delivery 

(for the articles transferred from the agent to the principal). The 

principal for whom processing is conducted under this section shall 

file, with any drawback claim or certificate of manufacture and delivery 

based on an article manufactured or produced under the principal-agent 

procedures in this section, a certificate, subject to the recordkeeping 

requirements of Sec. Sec.  191.15 of this subpart and 191.26 of this 

part, certifying that upon request by Customs it can establish the 

following:

    (i) Quantity, kind and quality of merchandise transferred from the 

principal to the agent;

    (ii) Date of transfer of the merchandise from the principal to the 

agent;

    (iii) Date of manufacturing or production operations performed by 

the agent;

    (iv) Total quantity and description of merchandise appearing in or 

used in manufacturing or production operations performed by the agent;

    (v) Total quantity and description of articles produced in 

manufacturing or production operations performed by the agent;

    (vi) Quantity, kind and quality of articles transferred from the 

agent to the principal; and

    (vii) Date of transfer of the articles from the agent to the 

principal.

    (2) Blanket certificate. The certificate required under paragraph 

(d)(1) of this section may be a blanket certificate for a particular 

kind and quality of merchandise for a stated period.