Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 76127 

DEPARTMENT OF HOMELAND 

SECURITY 

Bureau of Customs and Border 

Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Parts 10 and 191 

[CBP Dec. 06–39] 

RIN 1505–AB47 

United States-Chile Free Trade 

Agreement 

AGENCIES: Customs and Border 

Protection, Depart of Homeland 

Security; Department of the Treasury. 

ACTION: Final rule. 

SUMMARY: This document adopts as a 

final rule, with some changes, interim 

amendments to title 19 of the Code of 

Federal Regulations (‘‘CFR’’) which 

were published in the Federal Register 

on March 7, 2005, as CBP Dec. 05–07 to 

implement the preferential tariff 

treatment and other customs-related 

provisions of the United States-Chile 

Free Trade Agreement signed by the 

United States and the Republic of Chile. 

DATES: Final rule effective January 19, 

2007. 

FOR FURTHER INFORMATION CONTACT:

Textile Operational Aspects: Robert 

Abels, Office of Field Operations, (202) 

344–1959. 

Other Operational Aspects: Lori 

Whitehurst, Office of Field Operations, 

(202) 344–2722. 

Audit Aspects: Mark Hanson, Office 

of Regulatory Audit, (202) 344–2877. 

Legal Aspects: Edward Leigh, Office 

of International Trade, (202) 572–8827. 

SUPPLEMENTARY INFORMATION: 

Background 

On June 6, 2003, the United States 

and the Republic of Chile (the ‘‘Parties’’) 

signed the U.S.-Chile Free Trade 

Agreement (‘‘US–CFTA’’). The 

provisions of the US–CFTA were 

adopted by the United States with the 

enactment of the United States-Chile 

Free Trade Agreement Implementation 

Act (the ‘‘Act’’), Public Law 108–77, 117 

Stat. 909 (19 U.S.C. 3805 note), on 

September 3, 2003. Section 210 of the 

Act requires that regulations be 

prescribed as necessary. 

Those customs-related US–CFTA 

provisions which require 

implementation through regulation 

include certain tariff and non-tariff 

provisions within Chapter Three 

(National Treatment and Market Access 

for Goods) and the provisions of Chapter 

Four (Rules of Origin and Origin 

Procedures) and Chapter Five (Customs 

Administration). 

The tariff-related provisions within 

US–CFTA Chapter Three which require 

regulatory action by CBP are Article 3.7 

(Temporary Admission of Goods), 

Article 3.9 (Goods Re-Entered after 

Repair or Alteration), and Article 3.20 

(Rules of Origin and Related Matters). 

Chapter Four of the US–CFTA sets 

forth the rules for determining whether 

an imported good qualifies as an 

originating good of the United States or 

Chile (US–CFTA Party) and, as such, is 

therefore eligible for preferential tariff 

(duty-free or reduced duty) treatment as 

provided for under Article 4.1 and 

Annex 4.1 of the US–CFTA. Under 

Article 4.1 within that Chapter, 

originating goods may be grouped in 

three broad categories: (1) Goods which 

are wholly obtained or produced 

entirely in one or both of the Parties; (2) 

goods which are produced entirely in 

one or both of the Parties and which 

satisfy the specific rules of origin in US–

CFTA Annex 4.1 (change in tariff 

classification requirement and/or 

regional value content requirement); 

and (3) goods which are produced 

entirely in one or both of the Parties 

exclusively from materials that originate 

in those countries. Article 4.2 sets forth 

the methods for calculating the regional 

value content of a good. Article 4.3 sets 

forth the rules for determining the value 

of materials for purposes of calculating 

the regional value content of a good and 

applying the de minimis rule. Article 

4.4 sets forth the rules for determining 

whether accessories, spare parts, or 

tools delivered with a good qualify as 

material used in the production of such 

good. Article 4.6 provides for 

accumulation of production by two or 

more producers. Article 4.7 provides a 

de minimis criterion. The remaining 

Articles within Section A of Chapter 

Four consist of additional sub-rules, 

applicable to the originating good 

concept, involving fungible materials, 

packaging materials, packing materials, 

transshipment, and non-qualifying 

operations. The basic rules of origin in 

Chapter Four of the US–CFTA are set 

forth in General Note 26, Harmonized 

Tariff Schedule of the United States 

(HTSUS). In addition, Section B of 

Chapter Four sets forth the procedural 

requirements which apply under the 

US–CFTA, in particular with regard to 

claims for preferential tariff treatment. 

Chapter Five sets forth the customs 

operational provisions related to the 

implementation and continued 

administration of the US–CFTA. 

On March 7, 2005, Customs and 

Border Protection (‘‘CBP’’) published 

CBP Dec. 05–07 in the Federal Register 

(70 FR 10868) setting forth interim 

amendments to implement the 

preferential tariff treatment and other 

customs-related provisions of the US–

CFTA. In order to provide transparency 

and facilitate their use, the majority of 

the US–CFTA implementing regulations 

set forth in CBP Dec. 05–07 were 

included within new Subpart H in Part 

10 of title 19 of the Code of Federal 

Regulations (19 CFR Subpart H, Part 10). 

However, in those cases in which US–

CFTA implementation was more 

appropriate in the context of an existing 

regulatory provision, the US–CFTA 

regulatory text was incorporated in an 

existing part within the CBP regulations. 

CBP Dec. 05–07 also set forth a number 

of cross-references and other 

consequential changes to existing 

regulatory provisions to clarify the 

relationship between those existing 

provisions and the new US–CFTA 

implementing regulations. 

Although the interim regulatory 

amendments were promulgated without 

prior public notice and comment 

procedures and took effect on March 7, 

2005, CBP Dec. 05–07 provided for the 

submission of public comments which 

would be considered before adoption of 

the interim regulations as a final rule, 

and the prescribed public comment 

period closed on June 6, 2005. A 

discussion of the comments received by 

CBP is set forth below. 

Discussion of Comments 

A total of three commenters 

responded to the solicitation of 

comments on the interim regulations set 

forth in CBP Dec. 05–07. The comments 

are discussed below. 

Comment: 

One commenter stated that §§ 10.412 

and 10.415, which concern importer 

obligations and maintenance of records, 

respectively, should make clear that 

importers are required to retain records 

and documents related to the 

production of goods for which 

preferential tariff treatment is claimed 

only to the extent that they possess such 

records in the normal course of 

business. The commenter explained 

that, in many cases involving unrelated 

parties, Chilean producers may be 

unwilling to share their production 

information and costs with the U.S. 

importer. 

CBP’s Response: 

CBP recognizes that, under certain 

circumstances, Chilean producers may 

be reluctant to provide production 

information and costs to U.S. importers 

due to business confidentiality 

concerns. In these cases, CBP has no 

objection to the direct submission to the 

port director of such information from 


rwilkins on PROD1PC63 with RULES
76128 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 

the exporter or producer. To clarify this 

point, CBP is amending § 10.412 in this 

final rule by adding a sentence at the 

end of paragraph (a) stating that CBP 

will allow for the direct submission by 

the exporter or producer of business 

confidential or other sensitive 

information, including cost and 

sourcing information. Regarding 

§ 10.415, CBP notes that paragraph (a) of 

that section provides, in pertinent part, 

that an importer claiming preferential 

tariff treatment must maintain for five 

years after the date of importation of the 

good ‘‘* * * any records and 

documents that the importer has 

relating to the origin of the good * * *.’’

[Emphasis added.] CBP submits that the 

current language of the regulation 

adequately addresses the commenters’s 

concerns. 

Comment: 

One commenter noted that §§ 10.441 

and 10.442, concerning procedures for 

the filing and processing of postimportation duty-refund claims, set 

forth several references to the words 

‘‘petition or request for reliquidation.’’

The commenter asks whether these 

references are necessary in view of the 

fact that 19 U.S.C. 1520(c) was repealed 

by section 2105 of the Miscellaneous 

Trade and Technical Corrections Act of 

2004 (Pub. L. 108–429, 118 Stat. 2434). 

CBP’s Response: 

Section 1520(c), which authorized the 

reliquidation of an entry under certain 

circumstances, was repealed effective 

December 18, 2004 (see § 2108 of the 

Miscellaneous Trade and Technical 

Corrections Act of 2004). As a result, 

CBP agrees with the commenter that the 

references to ‘‘petition or request for 

reliquidation’’ in §§ 10.441(b)(4) and 

10.442(b), (c)(2), and (d)(3) are no longer 

necessary. These references have been 

removed in this final rule document. 

Comment: 

One commenter stated that 

§ 10.455(a)(3), concerning the value of 

materials, is too broad because ‘‘it 

would preclude transaction value as the 

value of a material where the material 

is provided to the producer at a price 

reflecting any discount or reduction in 

price,’’ including quantity discounts. 

[Emphasis by commenter.] The 

commenter suggested that the wording 

of this paragraph should parallel the 

definition of assists in § 152.102(a) of 

the CBP regulations; e.g., ‘‘In the case of 

a material provided to the producer free 

of charge or at reduced cost * * *.’’

CBP’s Response: 

First, CBP assumes that, by using the 

term ‘‘transaction value,’’ the 

commenter meant to refer to ‘‘adjusted 

value’’ or ‘‘the price actually paid or 

payable,’’ as those terms are used in 

paragraphs (a)(1) and (a)(2) of § 10.455. 

Second, the language ‘‘* * * or at a 

price reflecting a discount or similar 

reduction * * *.’’ in § 10.455(a)(3) was 

taken verbatim from Article 4.3 of the 

US–CFTA and section 202(e) of the Act. 

CBP is bound by this statutory language 

and cannot make the substantive change 

suggested by the commenter. CBP notes 

that the effect of this provision is to 

prevent the value of originating 

materials from being understated for 

purposes of origin determination by the 

type of common discounts to which the 

commenter has referred. 

Comment: 

One commenter stated that 

§ 10.483(c)(2), relating to voluntary 

corrections of declarations, should be 

revised to clarify that the affected 

import transactions should be identified 

‘‘to the extent possible.’’ According to 

the commenter, in some cases, unrelated 

exporters will not have details (such as 

the date and port of importation) on the 

import transactions that were affected 

by the incorrect declaration. 

CBP’s Response: 

Section 10.410(b) states that it is the 

responsibility of the U.S. importer (not 

the exporter) to make a corrected 

declaration. The importer clearly should 

be able to identify from its records the 

import transactions affected by the 

incorrect declaration, including the port 

and approximate date of each 

importation. For this reason, CBP 

declines to make the change to 

§ 10.483(c)(2) suggested by the 

commenter. 

Comment: 

Two commenters noted that CBP Dec. 

05–07 amended the scope 

section(§ 191.0) in Part 191 of the CBP 

regulations, relating to drawback, to 

provide a cross-reference to the US–

CFTA drawback provisions contained in 

new Subpart H of Part 10. However, the 

commenters stated that they were 

unable to find any provisions in Subpart 

H which discuss the subject of 

drawback. 

CBP’s Response: 

Although CBP originally intended to 

include regulations which address the 

subject of drawback in new Subpart H 

of Part 10, it was subsequently 

determined that no such regulations 

were necessary as the drawback 

provisions in Part 191 were sufficient 

for purposes of the US–CFTA. However, 

CBP neglected to delete the amendment 

to § 191.0 set forth in CBP Dec. 05–07, 

as noted by the commenter. That error 

has been corrected in this final rule 

document. 

Additional Changes to the Regulations 

In addition to the regulatory changes 

identified and discussed above in 

connection with the discussion of 

public comments received in response 

to CBP Dec. 05–07, the final rulemaking 

text set forth below incorporates the 

following additional changes which 

CBP believes are necessary based on 

further internal review of the interim 

regulatory text: 

1. In § 10.401, relating to the scope of 

Subpart H: 

a. The words ‘‘entered into’’ in the 

first sentence have been replaced by the 

word ‘‘signed’’ to avoid any potential 

confusion between the date that the US–

CFTA was signed (June 6, 2003) and the 

date that it entered into force (January 

1, 2004); and 

b. The reference to Part 191 in the 

third sentence has been removed 

consistent with the removal of the crossreference to Subpart H, Part 10 in 

§ 191.0, as discussed in the comment 

discussion above; 

2. In § 10.402, which sets forth general 

definitions: 

a. The definition of ‘‘claim for 

preferential tariff treatment’’ in 

paragraph (c) has been revised to add 

the words ‘‘and to an exemption from 

the merchandise processing fee’’ at the 

end of the definition to clarify that the 

term encompasses a claim that a good is 

entitled to an exemption from the 

merchandise processing fee (see 

§ 24.23(c)(7) of the CBP regulations); 

b. The definition of ‘‘national’’

(formerly paragraph (o)) has been 

removed as that term is not used in 

Subpart H of Part 10; 

c. A definition of ‘‘identical goods’’

has been added as new paragraph (n). 

This definition was set forth in 

§§ 10.411(d)(2) and 10.422(d)(2) of the 

interim regulatory text but has been 

removed from those provisions and 

inserted into the general definitions 

section for the reason that the term also 

appears in § 10.474, and the definition 

is equally applicable to all three 

provisions. In addition, the definition 

has been modified slightly by replacing 

the word ‘‘production’’ with the words 

‘‘particular rule of origin,’’ which CBP 

believes more accurately describe the 

means by which a good is determined 

to qualify as originating; 

d. As a result of the removal of the 

definition of ‘‘national’’ and the 

addition of a definition for ‘‘identical 

goods’’ discussed above, current 

paragraph (n), setting forth the 

definition of ‘‘indirect material,’’ has 

been re-designated as paragraph (o), and 

a conforming change has been made to 

§ 10.460 to reflect the re-designation of 

this paragraph; and 


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 76129 

e. The definition of ‘‘preferential tariff 

treatment’’ in paragraph (s) has been 

revised to add the words ‘‘, and an 

exemption from the merchandise 

processing fee’’ at the end of the 

definition to clarify that the term 

includes an exemption from the 

merchandise processing fee. 

3. In § 10.410, relating to the filing of 

a claim for preferential tariff treatment: 

a. Paragraph (a) has been revised to 

add the words ‘‘including an exemption 

from the merchandise processing fee,’’

immediately following the words 

‘‘under the US–CFTA,’’ in the first 

sentence to clarify that a claim for 

preferential tariff treatment for an 

originating good under the US–CFTA 

includes a claim that the good is 

entitled to an exemption from the 

merchandise processing fee; 

b. Paragraph (b) has been revised to 

add the words ‘‘or other information’’

immediately following the word 

‘‘certification’’, consistent with the 

wording in the corresponding provision 

in the US–CFTA (see Article 4.12.1(c)); 

and 

c. Paragraph (b) has been further 

revised to provide that a corrected 

declaration may be effected by 

submission of a statement ‘‘via an 

authorized electronic data interchange 

system,’’ as an alternative to submission 

of a written statement, consistent with 

CBP’s movement toward a paperless 

environment; 

4. In § 10.411, relating to the 

certification of origin: 

a. The heading to § 10.411 and the 

paragraph (a) introductory text have 

been revised to add the words ‘‘or other 

information’’ after ‘‘certification’’ and 

‘‘certification of origin’’ to conform to 

the wording in Articles 4.12.1(b) and 

4.14.1 of the US–CFTA, which reference 

the importer’s obligation to submit a 

certificate of origin or other information 

demonstrating that the good qualifies as 

originating; 

b. Paragraph (a)(2)(iv) has been 

modified to add the words ‘‘for which 

preferential tariff treatment is claimed’’

immediately following the word ‘‘good’’

for clarification purposes; 

c. Paragraph (a)(2)(vii), relating to 

multiple shipments of identical goods, 

has been removed and incorporated (in 

slightly revised form) into re-designated 

paragraph (e)(2) (formerly paragraph 

(d)(2)) to clarify that this provision 

applies to certifications but not to 

‘‘other information’’ submitted pursuant 

to § 10.411(a); 

d. Paragraph (a)(3), which sets forth 

the certifying statement to be included 

on the certification of origin, has been 

removed and re-designated as new 

paragraph (b) and a heading has been 

added. This change clarifies that the 

statement is required on the certification 

but not when ‘‘other information’’ is 

submitted pursuant to § 10.411(a); 

e. As a result of the insertion of new 

paragraph (b), as discussed above, 

paragraphs (b) through (e) of the interim 

regulatory text have been re-designated 

as paragraphs (c) through (f), 

respectively; 

f. Re-designated paragraph (c) 

(formerly paragraph (b)), which 

concerns who may sign the certification, 

has been revised to require that the 

certification of origin include the legal 

name and address of the responsible 

official or authorized agent signing the 

certification, and also to ask for the 

telephone and e-mail address when 

available. This information is necessary 

in the event that the person signing the 

certification is not identified pursuant 

to paragraphs (a)(2)(i) through (a)(2)(iii) 

of § 10.411; and 

g. Re-designated paragraphs (d) and (f) 

(formerly paragraphs (c) and (e), 

respectively) have been revised to add 

the words ‘‘or other information’’

immediately following the word 

‘‘certification,’’ consistent with the 

changes to paragraph (a) discussed 

above; 

5. In § 10.412, relating to importer 

obligations: 

a. Paragraph (a) has been revised to 

add the words ‘‘or other information 

submitted to CBP under § 10.411(a) of 

this subpart’’ immediately following the 

word ‘‘certification’’, consistent with the 

change to the § 10.411(a) introductory 

text discussed above; 

b. The paragraph (b) introductory text 

and paragraph (b)(1) have been revised 

to add the word ‘‘tariff’’ between the 

words ‘‘preferential’’ and ‘‘treatment’’

each place they appear for clarification 

purposes and consistent with other 

references to these words throughout 

Subpart H. Paragraph (b)(1) has been 

further revised to add the words ‘‘or 

other information’’ immediately 

following the word ‘‘certification’’, 

consistent with the change to the 

§ 10.411(a) introductory text discussed 

above; and 

c. Paragraph (d), which stated that 

‘‘* * * importers are expected to 

establish and implement internal 

controls which provide for the periodic 

review of the accuracy of the 

certifications or other records referred to 

in paragraph (b)(1) of this section,’’ has 

been removed as there is no basis of 

authority for this provision in the US–

CFTA or the Act; 

6. In § 10.413, concerning the validity 

of the certification, the words ‘‘of this 

subpart’’ have been added immediately 

following the reference to ‘‘§ 10.411’’

each place it appears for clarification 

purposes; 

7. In § 10.414, which sets forth the 

circumstances under which a 

certification is not required: 

a. The section heading, paragraph (a) 

introductory text, and paragraph (b) 

have been revised to add the words ‘‘or 

other information’’ immediately 

following the word ‘‘certification’’ each 

place it appears, consistent with the 

change to the § 10.411(a) introductory 

text discussed above; and 

b. The paragraph (a) introductory text 

has been further revised to replace the 

words ‘‘for preferential tariff treatment’’

with the words ‘‘as originating under 

§ 10.411(a),’’ consistent with the 

wording in § 10.411(a); 

8. In § 10.415, concerning 

maintenance of records, the paragraph 

(a) introductory text has been revised: 

a. To add the word ‘‘tariff’’ between 

the words ‘‘preferential’’ and treatment’’

for clarification purposes and consistent 

with other references to these words 

throughout Subpart H; 

b. To add the words ‘‘or other 

information’’ immediately following the 

word ‘‘certification’’, consistent with the 

change to the § 10.411(a) introductory 

text discussed above; and 

c. To remove the words ‘‘in the 

United States’’ to conform to the 

corresponding provision in the US–

CFTA (see Article 4.14.3), which 

includes no restriction on where the 

records referenced in that provision 

must be maintained; 

9. In § 10.416, relating to the 

consequences of failing to comply with 

the requirements of Subpart H: 

a. Paragraph (a) has been revised to 

add the words ‘‘or other information 

demonstrating that the good qualifies as 

originating’’ immediately following the 

word ‘‘certification’’, consistent with the 

change to the § 10.411(a) introductory 

text discussed above; and 

b. Paragraph (b) has been revised to 

add the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§ 10.463’’ for clarification purposes; 

10. In § 10.420, relating to the filing of 

a tariff preference level (TPL) claim, the 

words ‘‘of this subpart’’ have been 

added immediately following each of 

the references to ‘‘§ 10.421’’, ‘‘§ 10.451’’, 

‘‘§ 10.421(a) or (b)’’, and ‘‘§ 10.421(c)’’

for clarification purposes; 

11. In § 10.421, concerning goods 

eligible for TPL claims: 

a. The words ‘‘of this subpart’’ have 

been added immediately following the 

reference to ‘‘§ 10.420’’ in the 

introductory text for clarification 

purposes; and 

b. The term ‘‘HTS’’ has been replaced 

each place it appears (including the 


rwilkins on PROD1PC63 with RULES
76130 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 

footnote) with the correct term 

‘‘HTSUS’’ (see § 10.402(m)); 

12. In § 10.422, relating to the TPL 

certificate of eligibility: 

a. The paragraph (a) introductory text 

has been revised to add the words ‘‘of 

this subpart’’ immediately following the 

reference to ‘‘§ 10.421’’ for clarification 

purposes; 

b. Paragraph (a)(2), which sets forth 

the information to be included on the 

certificate of eligibility, has been 

modified to require (in new paragraph 

(a)(2)(ii)) that the certificate include the 

legal name and address of the 

responsible official or authorized agent 

of the importer signing the certificate (if 

different from the importer of record), 

and also to ask for the telephone and email address when available. Similar to 

the change to § 10.411(c) discussed 

above, this change is necessary in the 

event that the person signing the 

certificate of eligibility is not identified 

pursuant to § 10.422(a)(2)(i); 

c. As a result of the addition of new 

paragraph (a)(2)(ii), as discussed above, 

paragraphs (a)(2)(ii) through (a)(2)(vii) of 

the interim regulatory text have been redesignated as paragraphs (a)(2)(iii) 

through (a)(2)(viii), respectively; and 

d. The reference to ‘‘certification’’ in 

paragraph (d)(2) has been replaced with 

the correct word ‘‘certificate;’’

13. In § 10.424, concerning the effect 

of noncompliance with applicable TPL 

requirements, the words ‘‘of this 

subpart’’ have been added immediately 

following the reference to ‘‘§ 10.422’’ in 

paragraph (a) and the reference to 

‘‘§ 10.425’’ in paragraph (b) for 

clarification purposes; 

14. In § 10.440, relating to the right to 

make post-importation duty refund 

claims, the word ‘‘part’’ has been 

replaced each place it appears with the 

correct word ‘‘subpart’’; 

15. In § 10.441, relating to the 

procedures for filing post-importation 

claims: 

a. Paragraphs (a) and (b)(2) have been 

revised to replace the word ‘‘part’’ each 

place it appears with the correct word 

‘‘subpart’’; and 

b. Paragraph (b)(2) has been further 

revised to add the words ‘‘or other 

information demonstrating’’

immediately following the word 

‘‘certification’’, consistent with the 

change to the § 10.411(a) introductory 

text discussed above; 

16. In § 10.442, relating to CBP 

processing procedures for postimportation claims: 

a. The word ‘‘part’’ in paragraphs (a) 

and (d)(1) has been replaced each place 

it appears with the correct word 

‘‘subpart’’; 

b. The words ‘‘for refund’’ have been 

added immediately following the word 

‘‘claim’’ in the first and second 

sentences of paragraph (b) for 

clarification purposes; and 

c. Paragraphs (d)((2) and (d)(3) have 

been revised to provide that notice of a 

denial of a claim for a refund may be 

made ‘‘via an authorized electronic data 

interchange system,’’ as an alternative to 

the issuance of a written notice, 

consistent with CBP’s movement toward 

a paperless environment; 

17. In § 10.450, which sets forth 

definitions regarding the rules of origin, 

the words ‘‘of this subpart’’ have been 

added immediately following the 

reference to ‘‘§§ 10.450 through 10.463’’

in the introductory text for clarification 

purposes: 

18. In § 10.455, relating to the value 

of materials: 

a. Paragraph (a)(1) has been revised to 

add the words ‘‘with respect to that 

importation’’ at the end of the paragraph 

to conform to the wording in the 

corresponding statutory provision (see 

§ 202(e)(1)(A) of the Act); 

b. The heading to paragraph (b) 

(‘‘Adjustments to value’’) has been 

changed to read ‘‘Permissible additions 

to, and deductions from, the value of 

materials’’ to avoid any potential 

confusion between the heading to this 

paragraph and the term ‘‘adjusted 

value;’’

c. Paragraphs (b)(1)(i) and (b)(2)(i) 

have been revised to delete the words 

‘‘within or between the territory of 

Chile, the United States, or both’’ to 

conform these paragraphs to the 

wording in the corresponding statutory 

provisions (see § 202(e)(2)(A)(i) and 

(B)(i) of the Act), respectively; and 

d. Paragraph (c) has been modified to 

replace the term ‘‘country,’’ which is not 

defined in Subpart H, with the more 

appropriate term ‘‘Party,’’ which is 

defined in § 10.402(q); 

19. In §§ 10.457(a) and 10.458(a), 

concerning fungible goods and 

materials, and accumulation, 

respectively, the term ‘‘country’’ has 

been replaced each place it appears with 

the more appropriate term ‘‘Party;’’

20. In § 10.461, relating to indirect 

materials, Example 1 has been revised to 

add the words ‘‘of this subpart’’ at the 

end of the parenthetical phrase ‘‘see 

§ 10.454(a)’’ in the third sentence; 

21. In § 10.470, relating to verification 

of claims for preferential tariff 

treatment: 

a. The section heading has been 

revised to add the word ‘‘tariff’’ between 

the words ‘‘preferential’’ and 

‘‘treatment’’; 

b. The heading to paragraph (a) has 

been revised to remove the words ‘‘by 

CBP’’ to allow for the possibility that 

another U.S. Government agency may 

assist in a verification; and 

c. The first sentence of the paragraph 

(a) introductory text has been revised to 

add the word ‘‘tariff’’ between the words 

‘‘preferential’’ and ‘‘treatment’’ and to 

add the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§ 10.410’’. 

d. The second sentence of the 

paragraph (a) introductory text has been 

revised to replace the words ‘‘for any 

reason is prevented from verifying’’

with the words ‘‘is provided with 

insufficient information to verify or 

substantiate’’, and to add the word 

‘‘tariff’’ between the words 

‘‘preferential’’ and ‘‘treatment’’. The 

former change recognizes that the words 

‘‘for any reason’’ may be interpreted too 

broadly and result in the denial of a 

claim for reasons beyond the control of 

the parties to an import transaction. 

This new wording more accurately 

reflects the circumstances under which 

a verification may result in the denial of 

a claim—the failure to provide sufficient 

information to verify or substantiate the 

claim for preferential tariff treatment; 

22. In § 10.473, concerning notice of 

a negative origin determination: 

a. The incorrect reference to 

‘‘section’’‘ in the introductory text has 

been replaced with the correct word 

‘‘subpart’’; 

b. The introductory text has been 

further revised to provide for the 

issuance of a negative origin 

determination ‘‘via an authorized 

electronic data interchange system,’’ as 

an alternative to the issuance of a 

written determination, consistent with 

CBP’s movement toward a paperless 

environment; and 

c. Paragraph (c) has been revised to 

replace the words ‘‘the ‘Rules of Origin’

heading under this subpart’’ with the 

words ‘‘§§ 10.450 through 10.463 of this 

subpart’’ to provide more clarity 

regarding the regulatory provisions to 

which this paragraph is referring; 

23. In § 10.474, relating to repeated 

false or unsupported preference claims, 

the words ‘‘CBP finds’’ have been 

replaced with the words ‘‘verification or 

other information reveals’’ to more 

accurately reflect the wording in 

§ 205(g) of the Act, which provides, in 

pertinent part, that ‘‘[i]f the Bureau of 

Customs and Border Protection or the 

Bureau of Immigration and Customs 

Enforcement finds indications of a 

pattern of conduct * * *.’’ [Emphasis 

added.]; 

24. In § 10.483, concerning the 

framework for correcting declarations 

and certifications: 


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 76131 

a. The incorrect reference to ‘‘part’’ in 

paragraph (a)(2) has been replaced by 

the correct word ‘‘chapter’’; and 

b. Paragraph (c) has been revised to 

remove the word ‘‘Written’’ in the 

heading and by providing in the 

introductory text for the submission of 

a statement ‘‘via an authorized 

electronic data interchange system,’’ as 

an alternative to the submission of a 

written statement, consistent with the 

change described above in regard to 

§ 10.410(b); 

Conclusion 

Accordingly, based on the comments 

received and the analysis of those 

comments as set forth above, and based 

on the additional considerations 

discussed above, CBP believes that the 

interim regulations published as CBP 

Dec. 05–07 should be adopted as a final 

rule with certain changes as discussed 

above and as set forth below. 

Executive Order 12866 

CBP has determined that this 

document is not a regulation or rule 

subject to the provisions of Executive 

Order 12866 of September 30, 1993 (58 

FR 51735, October 1993), because it 

pertains to a foreign affairs function of 

the United States and implements an 

international agreement and, therefore, 

is specifically exempted by section 

3(d)(2) of Executive Order 12866. 

Regulatory Flexibility Act 

The regulations to implement the 

preferential tariff treatment and other 

customs-related provisions of the US–

CFTA were previously published in 

CBP Dec. 05–07 as interim regulations. 

CBP issued the regulations as an interim 

rule because it had determined that: (1) 

They involve the foreign affairs function 

of the United States pursuant to section 

553(a)(1) of the Administrative 

Procedure Act (APA); and (2) prior 

public notice and comment procedures 

on these regulations were impracticable, 

unnecessary, and contrary to the public 

interest pursuant to section 553(b)(B) of 

the APA. Because no notice of proposed 

rulemaking was required, the provisions 

of the Regulatory Flexibility Act, as 

amended (5 U.S.C. 601 et seq.), do not 

apply. Accordingly, this final rule is not 

subject to the regulatory analysis 

requirements or other requirements of 5 

U.S.C. 603 and 604. 

Paperwork Reduction Act 

The collection of information 

contained in this final rule has 

previously been reviewed and approved 

by the Office of Management and 

Budget in accordance with the 

requirements of the Paperwork 

Reduction Act (44 U.S.C. 3507) under 

control number 1651–0117. The 

collection of information in these 

regulations is in §§ 10.410 and 10.411. 

This information is used by CBP to 

determine eligibility for a tariff 

preference or other rights or benefits 

under the US–CFTA and the Act. The 

likely respondents are business 

organizations including importers, 

exporters and manufacturers. 

The estimated average annual burden 

associated with the collection of 

information in this final rule is 0.2 

hours per respondent or recordkeeper. 

Comments concerning the accuracy of 

this burden estimate and suggestions for 

reducing this burden should be directed 

to the Office of Management and 

Budget, Attention: Desk Officer for the 

Department of the Treasury, Office of 

Information and Regulatory Affairs, 

Washington, DC 20503. A copy should 

also be sent to the Trade and 

Commercial Regulations Branch, 

Regulations and Rulings, Bureau of 

Customs and Border Protection, 1300 

Pennsylvania Avenue, NW. (Mint 

Annex), Washington, DC 20229. 

Signing Authority 

This document is being issued in 

accordance with § 0.1(a)(1) of the CBP 

regulations (19 CFR 0.1(a)(1)) pertaining 

to the authority of the Secretary of the 

Treasury (or his/her delegate) to 

approve regulations related to certain 

customs revenue functions. 

List of Subjects 

19 CFR Part 10 

Alterations, Bonds, Customs duties 

and inspection, Exports, Imports, 

Preference programs, Repairs, Reporting 

and recordkeeping requirements, Trade 

agreements (United States-Chile Free 

Trade Agreement). 

19 CFR Part 191 

Commerce, Customs duties and 

inspection, Drawback, Reporting and 

recordkeeping requirements, Trade 

agreements. 

Amendments to the Regulations 

■ Accordingly, the interim rule 

amending parts 10, 24, 162, 163, 178, 

and 191 of the CBP regulations (19 CFR 

parts 10, 24, 162, 163, 178, and 191), 

which was published at 70 FR 10868 on 

March 7, 2005, is adopted as a final rule 

with certain changes as discussed above 

and set forth below. 

PART 10—ARTICLES CONDITIONALLY 

FREE, SUBJECT TO A REDUCED 

RATE, ETC. 

■ 1. The general authority citation for 

part 10 and the specific authority for 

subpart H continue to read as follows: 

Authority: 19 U.S.C. 66, 1202 (General 

Note 3(i), Harmonized Tariff Schedule of the 

United States), 1321, 1481, 1484, 1498, 1508, 

1623, 1624, 3314; 

* * * * * 

Sections 10.401 through 10.490 also issued 

under Pub. L. 108–77, 117 Stat. 909 (19 

U.S.C. 3805 note). 

§ 10.401 [Amended] 

■ 2. Section 10.401 is amended by 

removing the words ‘‘entered into’’ in 

the first sentence and adding, in their 

place, the word ‘‘signed’’, by adding the 

word ‘‘and’’ immediately prior to the 

number ‘‘163’’ in the third sentence, and 

by removing the words ‘‘and 191’’ in the 

third sentence; 

■ 3. Section 10.402 is amended by 

revising paragraph (c), removing current 

paragraph (o), re-designating current 

paragraph (n) as paragraph (o), adding a 

new paragraph (n), and revising 

paragraph (s). The revisions and 

addition to § 10.402 read as follows: 

§ 10.402 General definitions. 

* * * * * 

(c) Claim for preferential tariff 

treatment. ‘‘Claim for preferential tariff 

treatment’’ means a claim that a good is 

entitled to the duty rate applicable 

under the US–CFTA and to an 

exemption from the merchandise 

processing fee; 

* * * * * 

(n) Identical goods. ‘‘Identical goods’’

means goods that are the same in all 

respects relevant to the particular rule of 

origin that qualifies the goods as 

originating; 

* * * * * 

(s) Preferential tariff treatment. 

‘‘Preferential tariff treatment’’ means the 

duty rate applicable to an originating 

good under the US–CFTA, and an 

exemption from the merchandise 

processing fee. 

* * * * * 

■ 4. Section 10.410 is amended by 

adding the words ‘‘including an 

exemption from the merchandise 

processing fee,’’ immediately following 

the words ‘‘under the US–CFTA,’’ in the 

first sentence of paragraph (a) and by 

revising paragraph (b). Revised 

paragraph (b) reads as follows: 

§ 10.410 Filing of claim for preferential 

tariff treatment upon importation. 

* * * * * 


rwilkins on PROD1PC63 with RULES
76132 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 

(b) Corrected declaration. If, after 

making the declaration required under 

paragraph (a) of this section, the U.S. 

importer has reason to believe that the 

declaration or the certification or other 

information on which the declaration 

was based contains information that is 

not correct, the importer must, within 

30 calendar days after the date of 

discovery of the error, make a corrected 

declaration and pay any duties that may 

be due. A corrected declaration will be 

effected by submission of a letter or 

other statement either in writing or via 

an authorized electronic data 

interchange system to the CBP office 

where the original declaration was filed 

specifying the correction (see §§ 10.482 

and 10.483 of this subpart); 

■ 5. In § 10.411: 

■ a. The section heading is revised; 

■ b. Paragraph (a) is amended by 

revising the introductory text and 

paragraph (a)(2)(iv) and by removing 

paragraphs (a)(2)(vii) and (a)(3); 

■ c. Current paragraphs (b), (c), (d), and 

(e) are re-designated as paragraphs (c), 

(d), (e), and (f), respectively; 

■ d. A new paragraph (b) is added; 

■ e. The introductory text of redesignated paragraph (c) is revised; 

■ f. Re-designated paragraphs (d) and 

(e)(2) and the introductory text to redesignated paragraph (f) are revised. 

The additions and revisions to 

§ 10.411 read as follows: 

§ 10.411 Certification of origin or other 

information. 

(a) Contents. An importer who claims 

preferential tariff treatment on a good 

must submit, at the request of the port 

director, a certification of origin or other 

information demonstrating that the good 

qualifies as originating. A certification 

or other information submitted to CBP 

under this paragraph: 

* * * * * 

(2) * * * 

(iv) A description of the good for 

which preferential tariff treatment is 

claimed, which must be sufficiently 

detailed to relate it to the invoice and 

the HS nonmenclature; 

* * * * * 

(b) Statement. A certification 

submitted to CBP under paragraph (a) of 

this section must include a statement, in 

substantially the following form: 

‘‘I Certify that: 

The information on this document is 

true and accurate and I assume the 

responsibility for proving such 

representations. I understand that I am 

liable for any false statements or 

material omissions made on or in 

connection with this document; 

I agree to maintain, and present upon 

request, documentation necessary to 

support this certification, and to inform, 

in writing, all persons to whom the 

certification was given of any changes 

that could affect the accuracy or validity 

of this certification; and 

The goods originated in the territory 

of one or more of the parties, and 

comply with the origin requirements 

specified for those goods in the United 

States-Chile Free Trade Agreement; 

there has been no further production or 

any other operation outside the 

territories of the parties, other than 

unloading, reloading, or any other 

operation necessary to preserve it in 

good condition or to transport the good 

to the United States; and 

This document consists of ll pages, 

including all attachments.’’

(c) Responsible official or agent. A 

certification submitted under paragraph 

(a) of this section must be signed and 

dated by a responsible official of the 

importer; exporter; or producer; or by 

the importer’s, exporter’s, or producer’s 

authorized agent having knowledge of 

the relevant facts. The certification must 

include the legal name and address of 

the responsible official or authorized 

agent signing the certification, and 

should include that person’s telephone 

and e-mail address, if available. If the 

person making the certification is not 

the producer of the good, or the 

producer’s authorized agent, the person 

may sign the certification of origin 

based on: 

* * * * * 

(d) Language. The certification or 

other information submitted under 

paragraph 

(a) of this section must be completed 

either in the English or Spanish 

language. If the certification or other 

information is completed in Spanish, 

the importer must also provide to the 

port director, upon request, a written 

English translation of the certification or 

other information. 

(e) * * * 

(2) Multiple importations of identical 

goods into the United States that occur 

within a specified blanket period, not 

exceeding 12 months. In the case of 

multiple shipments of identical goods, 

the certification must specify the 

blanket period in ‘‘mm/dd/yyyy to mm/ 

dd/yyyy’’ format. 

(f) Preference criteria. The preference 

criterion to be included on the 

certification or other information as 

required in paragraph (a)(2)(vi) of this 

section is as follows: 

* * * * * 

■ 6. Section 10.412 is amended by 

revising paragraphs (a) and (b)(1) and by 

removing paragraph (d). The revisions 

to paragraphs (a) and (b)(1) read as 

follows: 

§ 10.412 Importer obligations. 

(a) General. An importer who makes 

a declaration under § 10.410(a) of this 

subpart is responsible for the 

truthfulness of the declaration and of all 

the information and data contained in 

the certification or other information 

submitted to CBP under § 10.411(a) of 

this subpart, for submitting any 

supporting documents requested by 

CBP, and for the truthfulness of the 

information contained in those 

documents. CBP will allow for the 

direct submission by the exporter or 

producer of business confidential or 

other sensitive information, including 

cost and sourcing information. 

(b) * * * 

(1) Must have records that explain 

how the importer came to the 

conclusion that the good qualifies for 

preferential tariff treatment. Those 

records must include documents that 

support a claim that the article in 

question qualifies for preferential tariff 

treatment because it meets the 

applicable rules of origin set forth in 

General Note 26, HTSUS, and in this 

subpart. Those records may include a 

properly completed certification or 

other information as set forth in § 10.411 

of this subpart; and 

* * * * * 

§ 10.413 [Amended] 

■ 7. Section 10.413 is amended by 

adding the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§ 10.411’’ each place it appears; 

■ 8. Section 10.414 is amended by 

revising the section heading, paragraph 

(a) introductory text, and paragraph (b) 

to read as follows: 

§ 10.414 Certification or other information 

not required. 

(a) General. Except as otherwise 

provided in paragraph (b) of this 

section, an importer will not be required 

to submit a certification or other 

information demonstrating that the good 

qualifies as originating under § 10.411(a) 

of this subpart for: 

* * * * * 

(b) Exception. If the port director 

determines that an importation 

described in paragraph (a) of this 

section may reasonably be considered to 

have been carried out or planned for the 

purpose of evading compliance with the 

rules and procedures governing claims 

for preference under the US-CFTA, the 

port director will notify the importer in 

writing that for that importation the 

importer must submit to CBP a valid 

certification or other information 


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 76133 

demonstrating that the good qualifies as 

originating. The importer must submit 

such a certification or other information 

within 30 calendar days from the date 

of the written notice. Failure to timely 

submit the certification or other 

information will result in denial of the 

claim for preferential tariff treatment. 

■ 9. Section 10.415 is amended by 

revising the paragraph (a) introductory 

text to read as follows: 

§ 10.415 Maintenance of records. 

(a) General. An importer claiming 

preferential tariff treatment for a good 

imported into the United States must 

maintain, for five years after the date of 

importation of the good, a certification 

(or a copy thereof) or other information 

demonstrating that the good qualifies as 

originating, and any records and 

documents that the importer has 

relating to the origin of the good, 

including records and documents 

associated with: 

* * * * * 

■ 10. Section 10.416 is amended by 

revising paragraph (a) and by adding the 

words ‘‘of this subpart’’ immediately 

following the reference to ‘‘§ 10.463’’ in 

paragraph (b). Revised paragraph (a) 

reads as follows: 

§ 10.416 Effect of noncompliance; failure 

to provide documentation regarding 

transshipment. 

(a) Effect of noncompliance. If the 

importer fails to comply with any 

requirement under this subpart, 

including submission of a certification 

of origin or other information 

demonstrating that the good qualifies as 

originating under § 10.411(a) of this 

subpart or submission of a corrected 

certification under § 10.413 of this 

subpart, the port director may deny 

preferential tariff treatment to the 

imported good. 

* * * * * 

§ 10.420 [Amended] 

■ 11. Section 10.420 is amended by 

adding the words ‘‘of this subpart’’

immediately following each of the 

references in the section to ‘‘§ 10.421,’’

‘‘§ 10.451,’’ ‘‘§ 10.421(a) or (b),’’ and 

‘‘§ 10.421(c)’’; 

§ 10.421 [Amended] 

■ 12. Section § 10.421 is amended by 

adding the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§ 10.420’’ in the introductory text and 

by removing the term ‘‘HTS’’ each place 

it appears in the section (and footnote) 

and adding, in its place, the term 

‘‘HTSUS’’; 

■ 13. Section 10.422 is amended by 

adding the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§ 10.421’’ in the paragraph (a) 

introductory text, by re-designating 

current paragraphs (a)(2)(ii) through 

(a)(2)(vii) as paragraphs (a)(2)(iii) 

through (a)(2)(viii), respectively, by 

adding a new paragraph (a)(2)(ii), and 

by revising paragraph (d)(2). New 

paragraph (a)(2)(ii) and revised 

paragraph (d)(2) read as follows: 

§ 10.422 Submission of certificate of 

eligibility. 

(a) * * * 

(2) * * * 

(ii) The legal name and address of the 

responsible official or authorized agent 

of the importer signing the certificate (if 

different from the importer of record), 

and that person’s telephone and e-mail 

address, if available; 

* * * * * 

(d) * * * 

(2) Multiple importations of identical 

goods into the United States that occur 

within a specified blanket period, not 

exceeding 12 months, set out in the 

certificate. 

§ 10.424 [Amended] 

■ 14. Section 10.424 is amended by 

adding the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§ 10.422’’ in paragraph (a) and 

immediately following the reference to 

‘‘§ 10.425’’ in paragraph (b); 

§ 10.440 [Amended] 

■ 15. Section 10.440 is amended by 

removing the word ‘‘part’’ each place it 

appears and adding, in its place, the 

word ‘‘subpart’’; 

■ 16. Section 10.441 is amended by 

removing the word ‘‘part’’ in paragraph 

(a) and adding, in its place, the word 

‘‘subpart’’, and by revising paragraphs 

(b)(2) and (b)(4) to read as follows: 

§ 10.441 Filing procedures. 

* * * * * 

(b) * * * 

(2) Subject to § 10.413 of this subpart, 

a copy of a certification of origin or 

other information demonstrating that 

the good qualifies for preferential tariff 

treatment; 

* * * * * 

(4) A written statement indicating 

whether or not any person has filed a 

protest relating to the good under any 

provision of law; and if any such protest 

has been filed, the statement must 

identify the protest by number and date. 

■ 17. Section 10.442 is amended by 

removing the word ‘‘part’’ each place it 

appears in paragraphs (a) and (d)(1) and 

adding, in its place, the word ‘‘subpart’’, 

and by revising the heading and text of 

paragraph (b), the second sentence of 

paragraph (c)(2), paragraph (d)(2), and 

the second and third sentences of 

paragraph (d)(3). The revisions to 

paragraphs (b), (c)(2), (d)(2) and (d)(3) 

read as follows: 

§ 10.442 CBP processing procedures. 

* * * * * 

(b) Pending protest or judicial review. 

If the port director determines that any 

protest relating to the good has not been 

finally decided, the port director will 

suspend action on the claim for refund 

filed under this subpart until the 

decision on the protest becomes final. If 

a summons involving the tariff 

classification or dutiability of the good 

is filed in the Court of International 

Trade, the port director will suspend 

action on the claim for refund filed 

under this subpart until judicial review 

has been completed. 

(c) * * * 

(2) * * * If the entry is otherwise to 

be reliquidated based on administrative 

review of a protest or as a result of 

judicial review, the port director will 

reliquidate the entry taking into account 

the claim for refund under this subpart. 

(d) * * * 

(2) Unliquidated entry. If the port 

director determines that a claim for a 

refund filed under this subpart should 

be denied and the entry covering the 

good has not been liquidated, the port 

director will deny the claim in 

connection with the liquidation of the 

entry, and notice of the denial and the 

reason for the denial will be provided to 

the importer in writing or via an 

authorized electronic data interchange 

system. 

(3) * * * If the entry is otherwise to 

be reliquidated based on administrative 

review of a protest or as a result of 

judicial review, such reliquidation may 

include denial of the claim filed under 

this subpart. In either case, the port 

director will give the importer notice of 

the denial and the reason for the denial 

in writing or via an authorized 

electronic data interchange system. 

§ 10.450 [Amended] 

■ 18. Section 10.450 is amended by 

adding the words ‘‘of this subpart’’

immediately following the reference to 

‘‘§§ 10.450 through 10.463’’ in the 

introductory text. 

■ 19. Section 10.455 is amended by 

revising paragraph (a)(1), the heading to 

paragraph (b), and paragraphs (b)(1)(i), 

(b)(2)(i), and (c) to read as follows: 

§ 10.455 Value of materials. 

(a) * * * 


rwilkins on PROD1PC63 with RULES
76134 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Rules and Regulations 

(1) In the case of a material imported 

by the producer of the good, the 

adjusted value of the material with 

respect to that importation; 

* * * * * 

(b) Permissible additions to, and 

deductions from, the value of materials. 

* * * * * 

(1) * * * 

(i) The costs of freight, insurance, 

packing and all other costs incurred in 

transporting the material to the location 

of the producer; 

* * * * * 

(2) * * * 

(i) The costs of freight, insurance, 

packing and all other costs incurred in 

transporting the material to the location 

of the producer; 

(c) Accounting method. Any cost or 

value referenced in General Note 26(n), 

HTSUS, and this subpart, must be 

recorded and maintained in accordance 

with the generally accepted accounting 

principles applicable in the territory of 

the Party in which the good is produced 

(whether Chile or the United States). 

§ 10.457 [Amended] 

■ 20. In § 10.457, paragraph (a)(4) is 

amended by removing the word 

‘‘country’’ each place it appears and 

adding, in its place, the word ‘‘Party’’. 

§ 10.458 [Amended] 

■ 21. In § 10.458, paragraph (a) is 

amended by removing the word 

‘‘country’’ each it appears and adding, 

in its place, the word ‘‘Party’’. 

§ 10.460 [Amended] 

■ 22. Section 10.460 is amended by 

removing the term ‘‘§ 10.402(n)’’ and 

adding, in its place, the term 

‘‘§ 10.402(o)’’. 

§ 10.461 [Amended] 

■ 23. Section 10.461 is amended by 

adding in Example 1 the words ‘‘of this 

subpart’’ at the end of the parenthetical 

phrase ‘‘see § 10.454(a)’’ in the third 

sentence. 

■ 24. In § 10.470, paragraph (a) is 

amended by revising the heading and 

the first two sentences of the 

introductory text, to read as follows: 

§ 10.470 Verification and justification of 

claim for preferential tariff treatment. 

(a) Verification. A claim for 

preferential tariff treatment made under 

§ 10.410 of this subpart, including any 

statements or other information 

submitted to CBP in support of the 

claim, will be subject to such 

verification as the port director deems 

necessary. In the event that the port 

director is provided with insufficient 

information to verify or substantiate the 

claim, the port director may deny the 

claim for preferential tariff treatment. 

* * * 

* * * * * 

■ 25. Section 10.473 is amended by 

revising the introductory text and 

paragraph (c) to read as follows: 

§ 10.473 Issuance of negative origin 

determinations. 

If CBP determines, as a result of an 

origin verification initiated under this 

subpart, that the good which is the 

subject of the verification does not 

qualify as an originating good, it will 

issue a determination in writing or via 

an authorized electronic data 

interchange system to the importer that 

sets forth the following: 

* * * * * 

(c) With specific reference to the rules 

applicable to originating goods as set 

forth in General Note 26, HTSUS, and 

in §§ 10.450 through 10.463 of this 

subpart, the legal basis for the 

determination; and 

* * * * * 

§ 10.474 [Amended] 

■ 26. Section 10.474 is amended by 

removing the words ‘‘CBP finds’’ and 

adding, in their place, the words 

‘‘verification or other information 

reveals’’; 

■ 27. In § 10.483, paragraph (a)(2) is 

amended by removing the word ‘‘part’’

and adding, in its place, the word 

‘‘chapter,’’ and paragraph (c) 

introductory text is revised to read as 

follows: 

§ 10.483 Framework for correcting 

declarations and certifications. 

* * * * * 

(c) Statement. For purposes of this 

subpart, each corrected declaration or 

notification of an incorrect certification 

must be accompanied by a statement, 

submitted in writing or via an 

authorized electronic data interchange 

system, which: 

* * * * * 

PART 191—DRAWBACK 

■ 28. The general authority citation for 

part 191 continues to read as follows: 

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 

(General Note 3(i), Harmonized Tariff 

Schedule of the United States), 1313, 1624. 

* * * * * 

§ 191.0 [Amended] 

■ 29. Section 191.0 is amended by 

removing the last sentence. 

Deborah J. Spero, 

Acting Commissioner, Customs and Border 

Protection. 

Approved: December 15, 2006. 

Timothy E. Skud, 

Deputy Assistant Secretary of the Treasury. 

[FR Doc. 06–9780 Filed 12–19–06; 8:45 am] 

BILLING CODE 9111–14–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9302] 

RIN 1545–BC34 

Prohibited Allocations of Securities in 

an S Corporation 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations that provide guidance 

concerning requirements under section 

409(p) of the Internal Revenue Code for 

employee stock ownership plans 

(ESOPs) holding stock of Subchapter S 

corporations. These final regulations 

generally affect plan sponsors of, and 

participants in, ESOPs holding stock of 

Subchapter S corporations. 

DATES: Effective Date: These regulations 

are effective December 20, 2006. 

Applicability Dates: These regulations 

are generally applicable with respect to 

plan years beginning on or after January 

1, 2006. See the Effective Date section 

of the preamble for specific information. 

FOR FURTHER INFORMATION CONTACT: John 

T. Ricotta or Veronica A. Rouse at (202) 

622–6090 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains final 

regulations (26 CFR Part 1) under 

section 409(p) of the Internal Revenue 

Code (Code). 

Section 409(p)(1) requires an ESOP 

holding employer securities consisting 

of stock in an S corporation to provide 

that, during an allocation year, no 

portion of the assets of the plan 

attributable to, or allocable in lieu of, 

the employer securities may accrue (or 

be allocated directly or indirectly under 

any plan of the employer meeting the 


rwilkins on PROD1PC63 with RULES