Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations 46433

Area Includes

Per day charge

Half day Whole day

Damages .................... Damages to plants, grounds, facilities or equipment will be assessed on a value based on replacement cost (including

labor) plus 10% (administrative fee).

§ 500.23 Fee schedule for photography and cinematography on grounds.

The USNA will charge a fee for the use of the facility or grounds for purposes of commercial photography or

cinematography. Facilities and grounds are available for use for commercial photography or cinematography at the

discretion of the USNA Director. Requests for use should be made a minimum of two weeks in advance of the required

date. In addition to the fees listed below, supervision costs of $25.00 per hour will be charged. The USNA Director

may waive fees for photography or cinematography conducted for the purpose of disseminating information to the

public regarding the USNA and its mission or for the purpose of other noncommercial, First Amendment activity.

Category Type Notes

Per day charge

Half day Whole day

Still Photography ......... Individual ................. For personal use only. Includes hand-held

cameras, recorders, small non-commercial tripods.

No Charge ........ No Charge

Commercial ............. Includes all photography which uses professional photographer and/or involves

receiving a fee for the use or production

of the photography. Note: This includes

5 people or less with carry on (video)

equipment.

$250 plus Supervisor.$500 plus Supervisor

Cinematography .......... Set Preparation ....... Set up sets; no filming performed ............... N/A ................... $250 plus Supervision

Filming ..................... Sliding scale based on number of people in

cast and crew and number of pieces of

equipment. 45 people and 6 pieces of

equipment=$1,500. 200 people=$3,900.

Note: 5 people with carry on

equipment=same as still photography.

........................... $1,200 to $3,900

Strike Set ................. Take down sets, remove equipment; no

filming.

N/A ................... $250 plus Supervision

Music Videos ........... No sound involved; smaller operation ......... N/A ................... $1,000 plus Supervision

Slide Production .......... .................................. Providing USNA photos/slides for use in

promotions/advertisements. Fee is for

one-time rights.

........................... $100 per image to reproduce

Damages ..................... All ............................. Damages to plants, grounds, facilities or

equipment will be assessed on a value

based on replacement cost (Including

labor) plus 10% (administrative fee). Half

Day=4 hours or less. Full Day=more

than 4 hours.

...........................

§ 500.24 Payment of fees.

Payment for use of tram will be made

by cash or money order (in U.S. funds)

and is due at the time of ticket purchase.

Fee payments for use of facilities or

grounds or for photography and

cinematography must be made in

advance of services being rendered.

These payments are to the made in the

form of a check or money order. Checks

and money orders are to be made

payable, in U.S. funds, to the ‘‘U.S.

National Arboretum.’’ The National

Arboretum will provide receipts to

requestors for their records or billing

purposes.

Done at Washington, DC, this 26th day of

August, 1997.

Edward B. Knipling,

Acting Administrator, Agricultural Research

Service.

[FR Doc. 97–23217 Filed 9–2–97; 8:45 am]

BILLING CODE 3410–03–M

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 7, 10, 148 and 178

[T.D. 97–75]

RIN 1515–AB14

Duty-Free Treatment of Articles

Imported From U.S. Insular

Possessions

AGENCY: U.S. Customs Service,

Department of the Treasury.

ACTION: Final rule.

SUMMARY: This document adopts as a

final rule, with some modifications,

proposed amendments to the Customs

Regulations to clarify and update the

legal requirements and procedures that

apply for purposes of obtaining dutyfree treatment on articles imported from
46434 Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations

insular possessions of the United States

other than Puerto Rico. The final

regulatory amendments include certain

organizational changes to improve the

layout of the regulations and also clarify

and update the personal exemption

provisions applicable to returning

residents.

EFFECTIVE DATE: October 3, 1997.

FOR FURTHER INFORMATION CONTACT:

Monika Rice, Office of Regulations and

Rulings (202–482–7049).

SUPPLEMENTARY INFORMATION:

Background

On July 27, 1993, Customs published

in the Federal Register (58 FR 40095) a

notice of proposed rulemaking to amend

parts 7, 10 and 148 of the Customs

Regulations (19 CFR parts 7, 10 and 148)

as regards duty-free treatment of articles

imported from insular possessions of

the United States other than Puerto

Rico. The proposed amendments to part

7 included replacement of present § 7.8

by two new §§ 7.2 and 7.3, the latter

section representing an update and

elaboration of the substantive

requirements and procedures for

obtaining duty-free treatment on

products of U.S. insular possessions

under General Note 3(a)(iv) of the

Harmonized Tariff Schedule of the

United States (HTSUS). The proposed

Part 10 amendments involved primarily

the transfer to part 7 of a section of the

regulations dealing with watches and

watch movements from U.S. insular

possessions. The proposed Part 148

amendments involved an updating of

the regulations that implement the

personal duty exemption or reduction

provisions applicable to returning

residents and other persons arriving

from certain U.S. insular possessions or

from Caribbean Basin Initiative (CBI)

beneficiary countries as provided for in

Subchapters IV and XVI of Chapter 98,

HTSUS.

With particular regard to the

requirements and procedures for

obtaining duty-free treatment under

General Note 3(a)(iv), HTSUS, the July

27, 1993, notice pointed out that, as

compared to the regulations

implementing the Generalized System

of Preferences (GSP), set forth as

§§ 10.171–10.178, Customs Regulations

(19 CFR 10.171–10.178), and the

regulations implementing the CBI, set

forth as §§ 10.191–10.198, Customs

Regulations (19 CFR 10.191–10.198),

§ 7.8 did not reflect all of the provisions

of General Note 3(a)(iv), HTSUS, and

did not provide adequate guidance

concerning the legal effect of those

provisions, particularly as to the

determination of the origin of goods

imported from insular possessions, the

meaning of direct shipment to or from

an insular possession, and the

application of the maximum foreign

materials content limitation. Thus,

subject to variances to reflect a General

Note 3(a)(iv) insular possession context,

the proposed § 7.3 text adopted the

more detailed approach used in the GSP

and CBI regulations in setting forth,

among other things, specific origin

determination language (for example,

‘‘growth or product’’, ‘‘substantially

transformed’’, ‘‘new and different article

of commerce’’) applicable to goods from

insular possessions and materials

incorporated in such goods (paragraphs

(b) and (c)) as well as a specific rule

regarding direct shipment to or from an

insular possession (paragraph (e)).

Discussion of Comments

A total of seven comments were

submitted in response to the notice. All

of the commenters generally favored the

proposed regulatory changes,

particularly with regard to the reduced

documentary burden and the inclusion

of the Commonwealth of the Northern

Mariana Islands. However, some

commenters suggested certain changes

to the proposed § 7.3 texts which are

discussed in detail below.

Comment: Several commenters

indicated that the words ‘‘may be

eligible’’ in proposed § 7.3(a) should be

replaced with the words ‘‘shall be

eligible.’’ Otherwise, despite

compliance with the provisions of

General Note 3(a)(iv), HTSUS, Customs

would have impermissible discretion in

allowing duty-free treatment.

Customs response: Customs disagrees.

While goods imported from U.S. insular

possessions which satisfy the

requirements and conditions set forth in

General Note 3(a)(iv), HTSUS, ‘‘are

exempt from duty’’, and even though

proposed §§ 7.3(a) (1) and (2) state

which goods are eligible for duty-free

treatment, documentary requirements

were included in proposed § 7.3(f) for

the specific purpose of demonstrating

that the imported goods meet the

statutory requirements for duty-free

entry. See Maple Leaf Petroleum, Ltd. v.

United States, 25 C.C.P.A. 5, 8, 9, T.D.

48976 (1937), for the proposition that it

has long been the sound policy of our

Government that when such grants and

privileges as those involved here were

allowed in customs matters, they were

granted only upon the condition that

there should be a compliance with

regulations to be prescribed by the

Secretary of the Treasury. See also

McDonnell Douglas Corp. v. United

States, 75 Cust. Ct. 6 (1975), C.D. 4604,

and General Note 20, HTSUS.

Accordingly, § 7.3(a) should not be

revised by substituting the word ‘‘may’’

with ‘‘shall.’’

Comment: Proposed § 7.3(b)(2)

provides that goods shall be considered

the product of an insular possession if

they ‘‘became a new and different article

of commerce as a result of processing

performed in the insular possession.’’

Two comments suggested including ‘‘a

change in name, character, or use, as a

result of an operation including, but not

limited to, assembly, manufacturing,

and processing, performed in the insular

possession.’’ It was claimed that such a

revision would clarify that a change in

any one or more of the three criteria is

sufficient to produce a new and

different article of commerce. This

revision would also clarify any

ambiguity concerning the meaning of

the word ‘‘processing’’, by using the

word ‘‘operation’’ and providing three

non-exhaustive examples (i.e.,

assembly, manufacturing, and

processing) to indicate that various

methods can be used to bring about a

substantial transformation.

Customs response: Proposed

§ 7.3(b)(2) sets forth the basic substantial

transformation rule. Customs does not

believe that specific exemplars are

necessary to establish how a new and

different article of commerce is created

because there are ample court cases and

Customs rulings that explain the

substantial transformation rule.

Therefore, it is the opinion of Customs

that specific exemplars are not

appropriate for § 7.3(b)(2). However, for

the sake of clarity, Customs believes that

the word ‘‘processing’’ in § 7.3(b)(2)

should be replaced with the words

‘‘production or manufacture’’ which

more closely reflect the terminology

used in General Note 3(a)(iv), HTSUS,

and in proposed § 7.3(c)(2). Section

7.3(b)(2) as set forth below has been

modified accordingly.

Comment: Proposed § 7.3(b) should be

revised to recognize that duty-free

treatment under General Note 3(a)(iv) is

to be afforded to products deemed to be

products of an insular possession

pursuant to U.S. Note 2, Subchapter II,

Chapter 98, HTSUS (under which

products of the United States returned

to the United States after having been

advanced in value or improved in

condition abroad by any process of

manufacture or other means, and

imported articles assembled abroad in

whole or in part from U.S. products, are

to be treated as foreign articles), and

which otherwise meet the requirements

of General Note 3(a)(iv) (but are not

necessarily substantially transformed in

the insular possession). Specifically,

this commenter recommended inclusion
Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations 46435

of the following as a third origin

standard:

(3) The goods were a product of the United

States which were returned to the United

States after having been advanced in value or

improved in condition in an insular

possession, or assembled in an insular

possession, pursuant to U.S. Note 2,

Subchapter II, Chapter 98, HTSUS.

The commenter argued that this

revision would clarify that goods which

are not ‘‘wholly obtained or produced’’

or ‘‘substantially transformed’’ may still

become a product of an insular

possession and be eligible for duty-free

treatment under General Note 3(a)(iv),

as determined in Headquarters Ruling

Letter (HRL) 557481 dated September

24, 1993, which reconsidered HRL

556381 dated March 2, 1991. In HRL

556381, Customs ruled that certain

garments, produced on the U.S.

mainland and screen printed or

embroidered in the Virgin Islands using

printing or embroidery materials

produced on the U.S. mainland or

Puerto Rico, were not eligible for dutyfree treatment under General Note

3(a)(iv). Although no foreign-origin

materials were employed in these

operations, Customs held that the

printed or embroidered garments were

not eligible for duty-free treatment

under General Note 3(a)(iv) because

they were not ‘‘products of’’ the Virgin

Islands and had not undergone a

substantial transformation.

In HRL 557481, Customs reconsidered

HRL 556381 and determined that, under

the facts, the garments in question were

products of the Virgin Islands and thus

eligible for duty-free treatment under

General Note 3(a)(iv). Specifically,

Customs ruled that under 19 CFR

12.130(c) and U.S. Note 2, Subchapter

II, Chapter 98, HTSUS, the U.S. good

returned must be deemed a product of

the non-U.S. jurisdiction in which they

were advanced in value (i.e., the U.S.

Virgin Islands). Because the goods were

a product of the Virgin Islands and

otherwise met the requirements of

General Note 3(a)(iv), they were entitled

to duty-free treatment under that

provision.

Customs response: Customs cannot

agree to the regulatory text change

suggested by this commenter. Pursuant

to T.D. 90–17, paragraph (c) of § 12.130,

Customs Regulations (19 CFR 12.130),

supersedes all other provisions of

§ 12.130 with regard to determining the

origin of textile goods. This position,

however, has not been extended to other

goods on a general basis. See the May

5, 1995, notice of proposed rulemaking

(discussed below in this document

under the Other Changes to the

Regulatory Texts section) in which

Customs noted that it has reconsidered

its previously stated position that U.S.

Note 2(a), Subchapter II, Chapter 98,

HTSUS, has application for general

country of origin purposes. Therefore,

the regulatory text change suggested by

this commenter would have an

impermissibly broad effect since it

would apply to all goods rather than

only to textile goods.

Comment: It was suggested that

§ 7.3(c)(2), which twice uses the phrase

‘‘new and different article of commerce’’

to establish the principle of double

substantial transformation, should be

followed by the phrase ‘‘that is, one

which underwent a change in name,

character, or use.’’ This would ensure a

consistent meaning of the term ‘‘new

and different article of commerce’’

throughout § 7.3.

Customs response: Customs disagrees,

for the same reasons stated above in

response to the comment regarding the

use of exemplars to explain the creation

of a new and different article. Customs

also notes that the use of the words

‘‘new and different article of commerce’’

in § 7.3(c)(2), without further

explanation, is consistent with the

approach used in the GSP and CBI

regulations (see 19 CFR 10.177(a)(2) and

19 CFR 10.195(a), respectively) which

have not given rise to interpretive

problems in this regard.

Comment: General Note 3(a)(iv)(A)

provides for the duty-free entry of goods

from an insular possession containing

foreign material up to 70 percent of their

value, unless they are among the

products not eligible for duty-free entry

under the CBI, in which case duty-free

entry is only allowed if the foreign

materials do not exceed 50 percent of

the value of the goods. General Note

3(a)(iv)(B) sets forth rules for identifying

materials not to be considered as foreign

(specifically, certain duty-free materials)

for purposes of determining whether

goods produced or manufactured in any

such insular possession contain ‘‘foreign

materials to the value of more than 70

percent’’.

One commenter suggested that

§ 7.3(c)(3), which defines certain

materials which are not considered as

‘‘foreign materials’’ in determining the

70 percent foreign content limitation, is

contrary to the legislative history of

General Note 3(a)(iv) and its predecessor

provisions and is contrary to

longstanding practice, since it is not

equally applicable to the 50 percent

limitation. This commenter

acknowledged that § 7.3(c)(3) is limited

because General Note 3(a)(iv)(B) only

refers to the ‘‘70 percent’’ value

mentioned in paragraph (A); however,

notwithstanding the strict language of

paragraph (B), the commenter suggested

that Congress intended that the rule

regarding the use of duty-free foreign

materials be equally applicable to

products to which the 50 percent

limitation applies. The commenter set

forth the following analysis in support

of this position:

Section 3 of the Act of March 3, 1917,

Pub. L. 64–389, 39 Stat. 1133 (1917)

(‘‘the 1917 Act’’), accorded duty-free

treatment to products from the U.S.

Virgin Islands as long as the value of the

foreign materials did not exceed 20

percent. In 1950, the 1917 Act was

amended to exclude from ‘‘foreign

material’’ any material which could be

entered into the United States free of

duty. Pub. L. 81–766, 64 Stat. 784

(1950). The purpose of the legislation

was to encourage the establishment of

new industries in the U.S. Virgin

Islands, thereby providing increased

employment and revenues. S. Rep. No.

2368, 81st Cong., 2d Sess. 2 (1950). In

1954, the Customs Simplification Act,

Pub. L. 83–768, title IV, section 401, 68

Stat. 1139 (1954), increased the foreign

content limitation to 50 percent and

continued the treatment of materials as

not ‘‘foreign’’ if they could be entered

into the United States free of duty.

General Headnote 3(a), Tariff

Schedules of the United States (TSUS),

effective August 31, 1963, continued the

50 percent foreign material limitation

and the treatment of a material as not

foreign if the material could be entered

into the United States free of duty.

Section 214 of the Caribbean Basin

Economic Recovery Act (the CBI

statute), Pub. L. 98–67 (1983), amended

General Headnote 3(a), TSUS, by

increasing the foreign materials value

allowable in insular possession goods

from 50 percent to 70 percent. However,

for those goods that were not entitled to

CBI preferential duty treatment, General

Headnote 3(a), TSUS, was further

amended to specify a 50 percent foreign

materials value limitation for such

products. In amending General

Headnote 3(a), TSUS, to include the 70

percent foreign materials value

limitation, Congress stated that it

intended to ‘‘maintain the competitive

position of Puerto Rico and the U.S.

insular possessions which might

otherwise be adversely affected by the

Caribbean Basin Initiative.’’ However,

since CBI-exempt products ‘‘are

excluded from duty-free treatment . . .,

it is not necessary to increase the foreign

content potential under general

headnote 3(a) as an equalizing measure

for the insular possessions. . . .’’ H.R.

Rep. No. 266, 98th Cong., 1st Sess. 22

(1983), reprinted in 1983 U.S. Code

Cong. & Admin. News 645, 663.
46436 Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations

Based on the above, this commenter

suggested that under proposed

§ 7.3(c)(3), materials should also not be

considered foreign materials for

purposes of calculating the 50 percent

foreign materials value limitation (in

addition to the 70 percent value

provision) if the materials may be

entered into the U.S. free of duty.

Therefore, despite the lack of any

reference to the 50 percent value

limitation in paragraph (B) of the

present statutory provision, the only

logical reading of paragraph (B),

consistent with the congressional intent

and longstanding practice, is to include

in § 7.3(c)(3) the 50 percent foreign

materials value reference contained in

paragraph (A) of the statute.

This commenter further suggested

that liberally construing this remedial

statute will carry out the congressional

intent. See Atchison, Topeka and Santa

Fe Railroad Co. v. Buell, 480 U.S. 557,

561 (1987) (with a remedial statute,

Congress adopts a ‘‘standard of liberal

construction in order to accomplish

[Congress’] objects.’’); see also United

States v. Carolina Transformer Co., 978

F.2d 832, 838 (4th Cir. 1992) (the

provision of a remedial statute ‘‘should

be construed broadly to avoid

frustrating the legislative purpose.’’).

Furthermore, where the literal

interpretation of a statute is inconsistent

with the legislative intent, the words of

the statute should give way to the

legislative intent. Florida Department of

Banking v. Board of Governors, 760 F.2d

1135, 1139 (11th Cir. 1985).

Therefore, this commenter suggested

that § 7.3(c)(3) be revised to read as

follows:

(3) In the case of imported goods to which

the 70 percent or 50 percent foreign materials

value limitation applies as set forth in

paragraph (a)(1)(i) of this section, a material

which may be imported into the customs

territory of the United States from a foreign

country and entered free of duty either:

Customs response: Customs agrees

with the commenter’s suggestion to fill

a gap in General Note 3(a)(iv)(B) by

these regulations. Although paragraph

(B) of General Note 3(a)(iv), HTSUS,

clearly states that in regard to the 70

percent value, a material shall not be

considered a ‘‘foreign material’’ if it may

be imported into the United States and

entered free of duty, that statutory

provision does not address whether the

same ‘‘foreign material’’ definition is

applicable in the case of the 50 percent

value limitation that applies to CBIexcluded goods under paragraph (A).

However, based on a reading of General

Note 3(a)(iv), HTSUS, and its

predecessor provisions and the

legislative history relating thereto, it

appears that a material which could be

entered into the United States free of

duty has never been intended to be

considered ‘‘foreign material’’ since the

1950 amendment of the 1917 Act.

As pointed out by the commenter and

for the reasons stated in the comment,

section 214(a) of the CBI statute

amended General Headnote 3(a)(i),

TSUS, by increasing the foreign

materials value limitation from 50

percent to 70 percent for most goods

and by retaining the 50 percent foreign

materials value limitation for articles

not eligible for CBI preferential

treatment. However, while section

214(a) of the CBI statute also amended

General Headnote 3(a)(ii), TSUS, (which

referred to materials not considered

foreign if they could be entered into the

United States free of duty) by replacing

the 50 percent value reference with a

reference to 70 percent value, a

reference to 50 percent value (to cover

CBI-excluded goods) was not retained in

this context for reasons that are not

apparent from a reading of the

applicable legislative history.

The above-mentioned Congressional

intention of maintaining the competitive

viability of the insular possessions is

also consistent with the intent behind

paragraphs (C), (D), and (E) of General

Note 3(a)(iv), HTSUS, which were

added when the GSP and CBI statutes

and the Andean Trade Preference Act

(ATPA) were enacted. The legislative

history of what is now General Note

3(a)(iv)(C), HTSUS, indicates that the

designation of beneficiary developing

countries under section 502 of the GSP

statute (19 U.S.C. 2462) was not

intended to impair any benefits that

insular possessions receive by reason of

(former) General Headnote 3(a), TSUS.

S. Rep. 93–1298, reprinted in 1974 U.S.

Code Cong. Admin. New. 7186, 7352.

‘‘The Committee strongly believes that

the products of U.S. insular possessions

should under no circumstances be

treated less advantageously than those

of foreign countries. To the extent that

such products would be entitled to

better treatment under headnote 3(a),

than under this title, they should

receive treatment under 3(a).’’ Id.

If the ‘‘foreign material’’ definition in

General Note 3(a)(iv)(B), HTSUS, is not

applied to the 50 percent value

limitation, the insular possessions will

receive ‘‘no less favorable’’ treatment

than CBI countries since the CBIexcluded goods are dutiable. However,

before the enactment of the CBI, most

goods from the insular possessions,

including the ‘‘CBI-excluded’’ goods,

received duty-free treatment if the 50

percent value was satisfied, to which

the ‘‘foreign material’’ definition

applied at that time. Therefore, it would

seem that if Congress had intended to

remove a benefit existing prior to the

CBI, it would have indicated such

intent.

Prior to the amendment of General

Headnote 3(a), TSUS, by section 214 of

the CBI statute, another noteworthy

amendment to this provision was added

by Pub. L. 94–88, title I, section 1, 2, 89

Stat. 433 (1975), which increased the 50

percent foreign materials value

limitation to 70 percent with respect to

watches and watch movements because

of a setback in both production and

employment in the insular possessions.

When this 70 percent value for watches

was inserted into subparagraph (i) of

General Headnote 3(a), subparagraph (ii)

thereof remained the same. Therefore,

for purposes of applying the 50 percent

value then in effect, materials were not

considered foreign if they could be

entered into the United States free of

duty, but no reference was made to the

increased 70 percent value limitation for

watches. However, § 7.8(d) of the

Customs Regulations (19 CFR 7.8(d))

was amended to refer both to the 50

percent value and to the 70 percent

value for watches in the context of

determining whether a material was a

foreign material.

Therefore, it is the opinion of

Customs that since the legislative

history of General Note 3(a)(iv), HTSUS,

does not discuss the omission of a

reference to the 50 percent foreign

materials value limitation for CBIexcluded products from paragraph (B),

and because it is apparent that since

1950 materials were not considered

‘‘foreign materials’’ in all respects if

they could be entered into the United

States free of duty, the 50 percent

foreign materials value limitation

should be referred to in § 7.3(c)(3).

Thus, Customs has determined it

appropriate to amend the regulations

not because General Note 3 is

‘‘remedial’’ legislation which must be

liberally construed, as the commenter

suggested, but rather because a strict

construction of this special exemption

leads Customs to conclude there is an

inadvertent ‘‘gap’’ in that note which

Congress did not clearly intend to result

in a preclusion of favorable treatment.

See, e.g., United States v. Allen, 163

U.S. 499, 503 (1896) (duty exemptions

must be strictly construed as a general

principle). The omission of the 50

percent value reference appears to have

been an oversight stemming from the

addition of the 70 percent value

reference for watches rather than from a

clear intention to remove a benefit in

existence since 1950. There is also

nothing in the legislative history
Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations 46437

relating to these amendments which

specifically precludes more favorable

treatment for an insular possession good

under General Note 3(a)(iv), HTSUS, as

compared to the GSP, CBI, or ATPA. In

order to reflect this position and also

simplify the text, § 7.3(c)(3) as set forth

below has been modified by removing

the ‘‘[I]n the case of * * *’’ clause

which is no longer necessary in this

regulatory context.

Comment: The ‘‘direct shipment’’

standard on goods from U.S. insular

possessions in proposed § 7.3(e) should

be the same as in the case of the CBI,

GSP, or ATPA, which allow goods to be

transshipped through third countries

under certain conditions. Otherwise,

§ 7.3(e) is contrary to the statutory

mandate of General Note 3(a)(iv) (C), (D)

and (E), HTSUS, that goods from insular

possessions receive no less favorable

duty treatment than GSP-, CBI-, or

ATPA-eligible articles. The Customs

rationale not to allow exceptions to

direct movement to or from an insular

possession through a foreign territory or

country is not compelling since goods

from all CBI countries may be shipped

to the United States either by water or

air without passing through intervening

countries.

Customs response: Customs agrees

with the commenter on both points.

First, none of the CBI countries are landlocked and thus shipment to the United

States would not necessarily require

transshipment through a foreign

territory or country. Second, although

General Note 3(a)(iv), HTSUS, is a more

liberal provision than the GSP or CBI

statutes or the ATPA, as already noted

in this comment discussion, General

Note 3(a)(iv) (C), (D) and (E) provide

that, subject to the provisions of

sections 503(b) and 504(c) of the GSP

statute, section 213 of the CBI statute,

and section 204 of the ATPA, goods

imported from an insular possession of

the United States shall receive duty

treatment no less favorable than the

treatment afforded such goods when

they are imported from a beneficiary

country under the GSP, CBI or ATPA.

The GSP and CBI statutes and the ATPA

require that the goods, in order to

receive preferential duty treatment,

meet certain qualifications including

direct shipment from the beneficiary

country into the United States. Sections

10.175 and 10.193 of the Customs

Regulations (19 CFR 10.175 and 10.193)

allow certain exceptions to the direct

movement standard. Therefore, it

appears that not allowing any

exceptions to the strict direct shipment

standard in the case of goods from

insular possessions would be contrary

to General Note 3(a)(iv) (C), (D), and (E),

HTSUS.

Accordingly, § 7.3(e) as set forth

below has been modified to include

exceptions to the strict direct shipment

standard and to provide for evidence of

direct shipment. The modified text is

based on the corresponding CBI

regulatory provisions which appear to

be more appropriate in an insular

possession context than are the

corresponding GSP regulations, but no

reference is made to a waiver of

evidence of direct shipment since

simply having provision for not

requiring submission of such evidence

is a less burdensome approach.

Comment: One comment concerned

the use of the Certificate of Origin

(Customs Form 3229) in the case of

goods which incorporate a material

described in General Note 3(a)(iv)(B)(2),

HTSUS, which requires ‘‘adequate

documentation * * * to show that the

material has been incorporated into

such goods during the 18-month period

after the date on which such material is

imported into the insular possession.’’

The commenter noted that the

Certificate of Origin would require

modification because it does not

currently establish the use of the

material within the 18-month period.

The commenter also suggested that the

district director be given discretion to

waive the Certificate of Origin or to

accept other documentation including a

blanket statement that applies to several

entries, since General Note

3(a)(iv)(B)(2), HTSUS, does not describe

‘‘adequate documentation’’ or

specifically require a Certificate of

Origin with each shipment.

Customs response: Customs disagrees.

While it was recognized in the notice of

proposed rulemaking that the Certificate

of Origin must be revised to reflect all

current legal requirements under

General Note 3(a)(iv), HTSUS, it is

General Note 3(a)(iv)(B)(2), HTSUS, and

not the Certificate of Origin that

specifically establishes the requirement

for submission of adequate

documentation to show that the material

was incorporated into the goods during

the 18-month period after the date on

which it was imported into the insular

possession. While General Note

3(a)(iv)(B)(2), HTSUS, does not define

‘‘adequate documentation’’, it is the

position of Customs that the use of the

Certificate of Origin with which

importers are already familiar,

combined with the Customs officer’s

verification at the port of shipment,

provide adequate assurance that the

material described in General Note

3(a)(iv)(B)(2), HTSUS, was, in fact,

incorporated in the goods within the

specified 18-month period.

Comment: One comment concerned

proposed § 7.3(g) which, in accordance

with existing law, allows warehouse

withdrawals of goods for shipment to

any insular possession without the

payment of duty, or with a refund of

duty if duties have been paid, but

denies drawback of duties or internal

revenue taxes on goods produced in the

United States and shipped to any

insular possession. This commenter

suggested that § 7.3(g) should include

the restrictions on shipments from

foreign trade zones to insular

possessions as specified in HRL 223828

dated July 1, 1992. That ruling held that

merchandise transferred from a foreign

trade zone for shipment to an insular

possession is dutiable when transferred

from the zone and that shipments from

such a zone to an insular possession do

not meet the exportation requirement of

19 U.S.C. 81c(a).

Customs response: Customs disagrees.

In Rothschild & Co. v. United States, 16

Ct. Cust. App. 422 (1929), it was held

that the term ‘‘exportation’’ in section

557, Tariff Act of 1922 (the predecessor

provision of section 557, Tariff Act of

1930), did not include shipments to

Guam. As a result of this determination,

hearings before the Ways and Means

Committee of the House of

Representatives in 1929 resulted in a

recommendation that section 557 be

amended to provide that merchandise

may be withdrawn for shipment to

insular possessions without the

payment of duties. See Mitsubishi

International Corp. v. United States, 55

Cust. Ct. 319, C.D. 2597 (1965).

Accordingly, section 557, Tariff Act of

1930, as amended (19 U.S.C. 1557),

which permits merchandise to be

entered for warehouse and withdrawn

for shipment to Guam and other named

possessions without payment of duties

or, if duties have been paid, with a

refund thereof, was the basis for 19 CFR

7.8(f) (the provision which was the basis

for proposed § 7.3(g)).

The term ‘‘exportation’’ as defined by

§ 101.1 of the Customs Regulations (19

CFR 101.1), and as interpreted by the

courts, is linked to a foreign country

rather than to the Customs territory of

the United States. Thus, shipments from

the United States to a U.S. insular

possession are not exports. Customs is

of the opinion that there is no need to

repeat this position in the regulatory

provision at issue with respect to

shipments to a U.S. insular possession

from a foreign trade zone located within

the United States.

Comment: General Note 3(a)(iv),

HTSUS, contains provisions (i.e.,
46438 Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations

paragraphs (C), (D) and (E)), which

guarantee no less favorable duty

treatment for goods from the insular

possessions than for goods imported

from GSP, CBI or ATPA beneficiary

countries. It was suggested these

paragraphs should at least be replicated

in the regulations.

Customs response: Customs disagrees.

There is little use in simply duplicating

General Notes 3(a)(iv) (C), (D), and (E),

HTSUS, in the regulations where there

is no need for an interpretation or other

explanation of the statutory provision. It

is clear that the statute, which controls,

requires that goods from insular

possessions be granted no less favorable

duty treatment than goods imported

from GSP, CBI, or ATPA beneficiary

countries and the regulations set forth in

this document reflect that resultoriented statutory principle.

Comment: One comment questioned

the conclusion in the notice of proposed

rulemaking under the heading

‘‘Regulatory Flexibility Act’’ that there

is no ‘‘major rule’’ since a substantial

number of small entities may have

significant economic impacts as a result

of these amendments.

Customs response: The regulatory

amendments will not have a significant

economic impact on a substantial

number of small entities because these

regulations primarily reflect statutory

requirements and administrative

practices that have been in place for

many years for purposes of duty-free

treatment of articles imported from

insular possessions of the United States.

Other Changes to the Regulatory Texts

In addition to the changes to the

proposed regulatory texts discussed

above in connection with the public

comments, Customs has determined that

a number of other changes to the

proposed texts should be reflected in

this final rule document.

Two of these changes involve

proposed §§ 7.3 (b)(1) and (c)(1) which

referred, respectively, to goods and

materials that were ‘‘wholly obtained or

produced * * * within the meaning of

§ 102.1(e) of this chapter’’. These

provisions were included in the

proposed texts based on, and were

identified in the document as being

subject to final adoption of, an earlier

proposal published in the Federal

Register on September 25, 1991 (56 FR

48448) to set forth, in a new Part 102 of

the Customs Regulations (19 CFR Part

102), uniform rules governing the

determination of the country of origin of

imported merchandise. Subsequently,

on January 3, 1994, Customs published

two documents in the Federal Register.

The first document, published at 59 FR

110, consisted of T.D. 94–4 which

amended the Customs Regulations on an

interim basis to implement Annex 311

of the North American Free Trade

Agreement (NAFTA); the majority of the

T.D. 94–4 regulatory amendments

involved the adoption of a new Part 102

of the Customs Regulations setting forth

the NAFTA Marking Rules. The second

document published on January 4, 1994

(at 59 FR 141) consisted of a notice of

proposed rulemaking setting forth

proposed amendments to the scope of

interim Part 102, as well as to other

provisions of the Customs Regulations,

in order to establish within Part 102

uniform rules governing the

determination of the country of origin of

imported merchandise. The latter

document replaced the September 25,

1991, uniform origin rules proposal and

thus included, among other things,

proposed conforming changes to the

GSP and CBI regulations involving

appropriate cross-references to the

uniform rules that would be reflected in

the amended Part 102 texts, but no

proposed conforming changes to the

Part 7 insular possession regulations

were included since final action had not

been taken on the regulatory proposals

that are the subject of this document. On

May 5, 1995, Customs published a

document in the Federal Register (60

FR 22312) which set forth proposed

changes to the interim regulatory

amendments contained in T.D. 94–4 and

which republished, with some changes,

the January 4, 1994, uniform origin rule

regulatory proposals, for purposes of

further public comment.

On June 6, 1996, Customs published

in the Federal Register (61 FR 28932)

T.D. 96–48 which adopted as a final

rule, with some modifications, the

NAFTA Marking Rules and other

interim regulatory amendments

published as T.D. 94–4 on January 3,

1994, but which did not adopt as a final

rule the May 5, 1995, proposals

regarding the uniform origin rule

concept (including the proposed

amendments to the GSP and CBI

regulations). The Background portion of

T.D. 96–48 stated (at 61 FR 28933) that

Customs had decided that the proposal

to extend the Part 102 regulations to all

trade ‘‘should remain under

consideration for implementation at a

later date.’’ In the light of this deferral

of the decision on whether to apply a

uniform method of determining origin

to all trade, it would not be appropriate

in this document to adopt the texts of

§§ 7.3 (b)(1) and (c)(1) as proposed.

Accordingly, §§ 7.3 (b)(1) and (c)(1) as

set forth below have been modified to

remove the references to the Part 102

regulation and, similar to the present

GSP and CBI regulatory approach, to

refer instead to goods and materials that

are ‘‘wholly the growth or product’’ of

the insular possession. If in the future

a final decision is taken to adopt the

proposed uniform method of

determining origin for all trade, the

necessary regulatory amendments will

include appropriate changes to the text

of § 7.3.

Finally, in order to align on technical

corrections made to the Customs

Regulations in T.D. 95–78 (published in

the Federal Register on September 27,

1995, at 60 FR 50020) to reflect the new

organizational structure of Customs,

§ 7.3 as set forth below has been

modified by inserting ‘‘port director’’ in

place of each reference to ‘‘district

director’’.

Conclusion

Accordingly, based on the comments

received and the analysis of those

comments as set forth above, and after

further review of this matter, Customs

believes that the proposed regulatory

amendments should be adopted as a

final rule with certain changes thereto

as discussed above and as set forth

below. This document also includes an

appropriate update of the list of

information collection approvals

contained in § 178.2 of the Customs

Regulations (19 CFR 178.2).

Executive Order 12866

This document does not meet the

criteria for a ‘‘significant regulatory

action’’ as specified in E.O. 12866.

Regulatory Flexibility Act

Pursuant to the provisions of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.), it is certified that the

amendments will not have a significant

economic impact on a substantial

number of small entities. The

amendments primarily reflect statutory

requirements and administrative

practices that have been in place for

many years and, thus, any economic

impact arising out of these amendments

would be negligible at best.

Accordingly, they are not subject to the

regulatory analysis or other

requirements of 5 U.S.C. 603 and 604.

Paperwork Reduction Act

The collection of information

contained in this final rule has been

reviewed and approved by the Office of

Management and Budget (OMB) in

accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C.

3507(d)) under control number 1515–

0200. An agency may not conduct or

sponsor, and a person is not required to
Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations 46439

respond to, a collection of information

unless it displays a valid control

number assigned by OMB.

The collection of information in this

final rule is in § 7.3. This information is

required in connection with claims for

duty-free treatment under General Note

3(a)(iv), HTSUS. This information will

be used by Customs to determine

whether goods imported from insular

possessions are entitled to duty-free

entry under that General Note. The

collection of information is required to

obtain a benefit. The likely respondents

are business organizations including

importers, exporters, and

manufacturers.

The estimated average burden

associated with the collection of

information in this final rule is 11.3

hours per respondent or recordkeeper.

Comments concerning the accuracy of

this burden estimate and suggestions for

reducing this burden should be directed

to the U.S. Customs Service, Paperwork

Management Branch, Room 6316, 1301

Constitution Avenue, N.W.,

Washington, D.C. 20229, and to OMB,

Attention: Desk Officer for the

Department of the Treasury, Office of

Information and Regulatory Affairs,

Washington, D.C. 20503.

Drafting Information

The principal author of this document

was Francis W. Foote, Office of

Regulations and Rulings, U.S. Customs

Service. However, personnel from other

offices participated in its development.

List of Subjects

19 CFR Part 7

Customs duties and inspection,

Imports, Insular possessions.

19 CFR Part 10

Customs duties and inspection,

Imports.

19 CFR Part 148

Customs duties and inspection,

Imports, Personal exemptions.

19 CFR Part 178

Administrative practice and

procedure, Exports, Imports, Reporting

and recordkeeping requirements.

Amendments to the Regulations

Accordingly, for the reasons stated in

the preamble, parts 7, 10, 148 and 178,

Customs Regulations (19 CFR parts 7,

10, 148 and 178), are amended as set

forth below:

PART 7—CUSTOMS RELATIONS WITH

INSULAR POSSESSIONS AND

GUANTANAMO BAY NAVAL STATION

1. The authority citation for part 7 is

revised to read as follows:

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

Note 20, Harmonized Tariff Schedule of the

United States), 1623, 1624; 48 U.S.C. 1406i.

2. Sections 7.2 and 7.3 are added to

read as follows:

§ 7.2 Insular possessions of the United

States other than Puerto Rico.

(a) Insular possessions of the United

States other than Puerto Rico are also

American territory but, because those

insular possessions are outside the

customs territory of the United States,

goods imported therefrom are subject to

the rates of duty set forth in column 1

of the Harmonized Tariff Schedule of

the United States (HTSUS) except as

otherwise provided in § 7.3 or in part

148 of this chapter. The principal such

insular possessions are the U.S. Virgin

Islands, Guam, American Samoa, Wake

Island, Midway Islands, and Johnston

Atoll. Pursuant to section 603(c) of the

Covenant to Establish a Commonwealth

of the Northern Mariana Islands in

Political Union With the United States

of America, Public Law 94–241, 90 Stat.

263, 270, goods imported from the

Commonwealth of the Northern Mariana

Islands are entitled to the same tariff

treatment as imports from Guam and

thus are also subject to the provisions of

§ 7.3 and of part 148 of this chapter.

(b) Importations into Guam, American

Samoa, Wake Island, Midway Islands,

Johnston Atoll, and the Commonwealth

of the Northern Mariana Islands are not

governed by the Tariff Act of 1930, as

amended, or the regulations contained

in this chapter. The customs

administration of Guam is under the

Government of Guam. The customs

administration of American Samoa is

under the Government of American

Samoa. The customs administration of

Wake Island is under the jurisdiction of

the Department of the Air Force

(General Counsel). The customs

administration of Midway Islands is

under the jurisdiction of the Department

of the Navy. There is no customs

authority on Johnston Atoll, which is

under the operational control of the

Defense Nuclear Agency. The customs

administration of the Commonwealth of

the Northern Mariana Islands is under

the Government of the Commonwealth.

(c) The Secretary of the Treasury

administers the customs laws of the U.S.

Virgin Islands through the United States

Customs Service. The importation of

goods into the U.S. Virgin Islands is

governed by Virgin Islands law;

however, in situations where there is no

applicable Virgin Islands law or no U.S.

law specifically made applicable to the

Virgin Islands, U.S. laws and

regulations shall be used as a guide and

be complied with as nearly as possible.

Tariff classification of, and rates of duty

applicable to, goods imported into the

U.S. Virgin Islands are established by

the Virgin Islands legislature.

§ 7.3 Duty-free treatment of goods

imported from insular possessions of the

United States other than Puerto Rico.

(a) General. Under the provisions of

General Note 3(a)(iv), Harmonized Tariff

Schedule of the United States (HTSUS),

the following goods may be eligible for

duty-free treatment when imported into

the customs territory of the United

States from an insular possession of the

United States:

(1) Except as provided in Additional

U.S. Note 5 to Chapter 91, HTSUS, and

except as provided in Additional U.S.

Note 2 to Chapter 96, HTSUS, and

except as provided in section 423 of the

Tax Reform Act of 1986, as amended (19

U.S.C. 2703 note), goods which are the

growth or product of any such insular

possession, and goods which were

manufactured or produced in any such

insular possession from materials that

were the growth, product or

manufacture of any such insular

possession or of the customs territory of

the United States, or of both, provided

that such goods:

(i) Do not contain foreign materials

valued at either more than 70 percent of

the total value of the goods or, in the

case of goods described in section

213(b) of the Caribbean Basin Economic

Recovery Act (19 U.S.C. 2703(b)), more

than 50 percent of the total value of the

goods; and

(ii) Come to the customs territory of

the United States directly from any such

insular possession; and

(2) Goods previously imported into

the customs territory of the United

States with payment of all applicable

duties and taxes imposed upon or by

reason of importation, provided that:

(i) The goods were shipped from the

United States directly to the insular

possession and are returned from the

insular possession to the United States

by direct shipment; and

(ii) There was no remission, refund or

drawback of such duties or taxes in

connection with the shipment of the

goods from the United States to the

insular possession.

(b) Origin of goods. For purposes of

this section, goods shall be considered

to be the growth or product of, or

manufactured or produced in, an insular

possession if:
46440 Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations

(1) The goods are wholly the growth

or product of the insular possession; or

(2) The goods became a new and

different article of commerce as a result

of production or manufacture performed

in the insular possession.

(c) Foreign materials. For purposes of

this section, the term ‘‘foreign

materials’’ covers any material

incorporated in goods described in

paragraph (b)(2) of this section other

than:

(1) A material which was wholly the

growth or product of an insular

possession or of the customs territory of

the United States;

(2) A material which was

substantially transformed in an insular

possession or in the customs territory of

the United States into a new and

different article of commerce which was

then used in an insular possession in

the production or manufacture of a new

and different article which is shipped

directly to the United States; or

(3) A material which may be imported

into the customs territory of the United

States from a foreign country and

entered free of duty either:

(i) At the time the goods which

incorporate the material are entered; or

(ii) At the time the material is

imported into the insular possession,

provided that the material was

incorporated into the goods during the

18-month period after the date on which

the material was imported into the

insular possession.

(d) Foreign materials value limitation.

For purposes of this section, the

determination of whether goods contain

foreign materials valued at more than 70

or 50 percent of the total value of the

goods shall be made based on a

comparison between:

(1) The landed cost of the foreign

materials, consisting of:

(i) The manufacturer’s actual cost for

the materials or, where a material is

provided to the manufacturer without

charge or at less than fair market value,

the sum of all expenses incurred in the

growth, production, or manufacture of

the material, including general

expenses, plus an amount for profit; and

(ii) The cost of transporting those

materials to the insular possession, but

excluding any duties or taxes assessed

on the materials by the insular

possession and any charges which may

accrue after landing; and

(2) The final appraised value of the

goods imported into the customs

territory of the United States, as

determined in accordance with section

402 of the Tariff Act of 1930, as

amended (19 U.S.C. 1401a).

(e) Direct shipment—(1) General. For

purposes of this section, goods shall be

considered to come to the United States

directly from an insular possession, or

to be shipped from the United States

directly to an insular possession and

returned from the insular possession to

the United States by direct shipment,

only if:

(i) The goods proceed directly to or

from the insular possession without

passing through any foreign territory or

country;

(ii) The goods proceed to or from the

insular possession through a foreign

territory or country, the goods do not

enter into the commerce of the foreign

territory or country while en route to the

insular possession or the United States,

and the invoices, bills of lading, and

other shipping documents show the

insular possession or the United States

as the final destination; or

(iii) The goods proceed to or from the

insular possession through a foreign

territory or country, the invoices and

other shipping documents do not show

the insular possession or the United

States as the final destination, and the

goods:

(A) Remained under the control of the

customs authority of the foreign

territory or country;

(B) Did not enter into the commerce

of the foreign territory or country except

for the purpose of sale other than at

retail, and the port director is satisfied

that the importation into the insular

possession or the United States results

from the original commercial

transaction between the importer and

the producer or the latter’s sales agent;

and

(C) Were not subjected to operations

in the foreign territory or country other

than loading and unloading and other

activities necessary to preserve the

goods in good condition.

(2) Evidence of direct shipment. The

port director may require that

appropriate shipping papers, invoices,

or other documents be submitted within

60 days of the date of entry as evidence

that the goods were shipped to the

United States directly from an insular

possession or shipped from the United

States directly to an insular possession

and returned from the insular

possession to the United States by direct

shipment within the meaning of

paragraph (e)(1) of this section, and

such evidence of direct shipment shall

be subject to such verification as

deemed necessary by the port director.

Evidence of direct shipment shall not be

required when the port director is

otherwise satisfied, taking into

consideration the kind and value of the

merchandise, that the goods qualify for

duty-free treatment under General Note

3(a)(iv), HTSUS, and paragraph (a) of

this section.

(f) Documentation. (1) When goods

are sought to be admitted free of duty

as provided in paragraph (a)(1) of this

section, there shall be filed with the

entry/entry summary a properly

completed certificate of origin on

Customs Form 3229, signed by the chief

or assistant chief customs officer or

other official responsible for customs

administration at the port of shipment,

showing that the goods comply with the

requirements for duty-free entry set

forth in paragraph (a)(1) of this section.

Except in the case of goods which

incorporate a material described in

paragraph (c)(3)(ii) of this section, a

certificate of origin shall not be required

for any shipment eligible for informal

entry under § 143.21 of this chapter or

in any case where the port director is

otherwise satisfied that the goods

qualify for duty-free treatment under

paragraph (a)(1) of this section.

(2) When goods in a shipment not

eligible for informal entry under

§ 143.21 of this chapter are sought to be

admitted free of duty as provided in

paragraph (a)(2) of this section, the

following declarations shall be filed

with the entry/entry summary unless

the port director is satisfied by reason of

the nature of the goods or otherwise that

the goods qualify for such duty-free

entry:

(i) A declaration by the shipper in the

insular possession in substantially the

following form:

I, llllllllll (name) of

llllllllll (organization) do

hereby declare that to the best of my

knowledge and belief the goods identified

below were sent directly from the United

States on llllll, 19ll, to

llllllllll (name) of

llllllllll (organization) on

llllllllll (insular possession)

via the llllllllll (name of

carrier) and that the goods remained in said

insular possession until shipped by me

directly to the United States via the

llllllllll (name of carrier) on

llllll, 19ll.
Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations 46441

Marks Numbers Quantity Description Value

Dated at llllllll, this llll

day of llllll, 19ll.

Signature: lllllllllllllll

(ii) A declaration by the importer in the

United States in substantially the following

form:

I, llllllllll (name), of

llllllllll (organization) declare

that the (above) (attached) declaration by the

shipper in the insular possession is true and

correct to the best of my knowledge and

belief, that the goods in question were

previously imported into the customs

territory of the United States and were

shipped to the insular possession from the

United States without remission, refund or

drawback of any duties or taxes paid in

connection with that prior importation, and

that the goods arrived in the United States

directly from the insular possession via the

llllllllll (name of carrier) on

llllll, 19ll.

lllllllllllllllllllll

(Date)

lllllllllllllllllllll

(Signature)

(g) Warehouse withdrawals;

drawback. Merchandise may be

withdrawn from a bonded warehouse

under section 557 of the Tariff Act of

1930, as amended (19 U.S.C. 1557), for

shipment to any insular possession of

the United States other than Puerto Rico

without payment of duty, or with a

refund of duty if the duties have been

paid, in like manner as for exportation

to foreign countries. No drawback may

be allowed under section 313 of the

Tariff Act of 1930, as amended (19

U.S.C. 1313), on goods manufactured or

produced in the United States and

shipped to any insular possession. No

drawback of internal-revenue tax is

allowable under 19 U.S.C. 1313 on

goods manufactured or produced in the

United States with the use of domestic

tax-paid alcohol and shipped to Wake

Island, Midway Islands or Johnston

Atoll.

3. Section 7.8 and footnote 5 thereto

are removed.

PART 10—ARTICLES CONDITIONALLY

FREE, SUBJECT TO A REDUCED

RATE, ETC.

1. The general authority citation for

part 10 is revised to read as follows:

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

Note 20, Harmonized Tariff Schedule of the

United States (HTSUS)), 1321, 1481, 1484,

1498, 1508, 1623, 1624, 3314.

* * * * *

2. Section 10.181 is redesignated as

§ 7.4, and newly redesignated § 7.4 is

amended as follows:

a. Paragraph (b) is amended by adding

the word ‘‘the’’ before the words

‘‘Department of Commerce’’.

b. Paragraph (g), second sentence, is

amended by removing the words ‘‘Form

ITA–360’’ and adding, in their place, the

words ‘‘Form ITA–361’’.

c. Paragraph (h) is amended by

removing the word ‘‘Department’’ and

adding, in its place, the word

‘‘Departments’’.

PART 148—PERSONAL

DECLARATIONS AND EXEMPTIONS

1. The authority citation for part 148

continues to read in part as follows:

Authority: 19 U.S.C. 66, 1496, 1498, 1624.

The provisions of this part, except for subpart

C, are also issued under 19 U.S.C. 1202

(General Note 20, Harmonized Tariff

Schedule of the United States);

* * * * *

Sections 148.43, 148.51, 148.63, 148.64,

148.74 also issued under 19 U.S.C. 1321;

* * * * *

§ 148.2 [Amended]

2. Section 148.2(b), first sentence, is

amended by adding after ‘‘Guam,’’ the

words ‘‘the Commonwealth of the

Northern Mariana Islands,’’.

3. Section 148.12(b)(1)(i) is revised to

read as follows:

§ 148.12 Oral declarations.

* * * * *

(b) * * *

(1) * * *

(i) The aggregate fair retail value in

the country of acquisition of all

accompanying articles acquired abroad

by him and of alterations and dutiable

repairs made abroad to personal and

household effects taken out and brought

back by him does not exceed:

(A) $400; or

(B) $600 in the case of a direct arrival

from a beneficiary country as defined in

§ 10.191(b)(1) of this chapter, not more

than $400 of which shall have been

acquired elsewhere than in beneficiary

countries; or

(C) $1,200 in the case of a direct or

indirect arrival from American Samoa,

Guam, the Commonwealth of the

Northern Mariana Islands, or the Virgin

Islands of the United States, not more

than $400 of which shall have been

acquired elsewhere than in such

locations except that up to $600 of

which may have been acquired in one

or more beneficiary countries as defined

in § 10.191(b)(1) of this chapter;

* * * * *

§ 148.17 [Amended]

4. Sections 148.17(b) and (c) are

amended by removing the words ‘‘$400

or $800’’ and adding, in their place, the

words ‘‘$400, $600 or $1,200’’.

§ 148.31 [Amended]

5. Section 148.31(a), first sentence, is

amended by adding after ‘‘Guam,’’ the

words ‘‘the Commonwealth of the

Northern Mariana Islands,’’.

6. Section 148.31(b) is amended by

removing the words ‘‘$400 or $800’’ and

adding, in their place, the words ‘‘$400,

$600 or $1,200’’.

§ 148.32 [Amended]

7. Section 148.32(d)(2) is amended by

removing the words ‘‘$400 or $800’’ and

adding, in their place, the words ‘‘$400,

$600 or $1,200’’.

8. Section 148.33 is amended by

revising paragraphs (a), (b), (d) and (f) to

read as follows:

§ 148.33 Articles acquired abroad.

(a) Exemption. Each returning

resident is entitled to bring in free of

duty and internal revenue tax under

subheadings 9804.00.65, 9804.00.70 and

9804.00.72, and Chapter 98, U.S. Note 3,

Harmonized Tariff Schedule of the

United States (19 U.S.C. 1202), articles

for his personal or household use which

were purchased or otherwise acquired

abroad merely as an incident of the

foreign journey from which he is

returning, subject to the limitations and

conditions set forth in this section and

§§ 148.34–148.38. The aggregate fair

retail value in the country of acquisition

of such articles for personal and

household use shall not exceed:

(1) $400, and provided that the

articles accompany the returning

resident;

(2) Whether or not the articles

accompany the returning resident, $600

in the case of a direct arrival from a
46442 Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations

beneficiary country as defined in

§ 10.191(b)(1) of this chapter, not more

than $400 of which shall have been

acquired elsewhere than in beneficiary

countries; or

(3) Whether or not the articles

accompany the returning resident,

$1,200 in the case of a direct or indirect

arrival from American Samoa, Guam,

the Commonwealth of the Northern

Mariana Islands, or the Virgin Islands of

the United States, not more than $400

of which shall have been acquired

elsewhere than in such locations except

that up to $600 of which may have been

acquired in one or more beneficiary

countries as defined in § 10.191(b)(1) of

this chapter.

(b) Application to articles of highest

rate of duty. The $400, $600 or $1,200

exemption shall be applied to the

aggregate fair retail value in the country

of acquisition of the articles acquired

abroad which are subject to the highest

rates of duty. If an internal revenue tax

is applicable, it shall be combined with

the duty in determining which rates are

highest.

* * * * *

(d) Tobacco products and alcoholic

beverages. Cigars, cigarettes,

manufactured tobacco, and alcoholic

beverages may be included in the

exemption to which a returning resident

is entitled, with the following limits:

(1) No more than 200 cigarettes and

100 cigars may be included, except that

in the case of American Samoa, Guam,

the Commonwealth of the Northern

Mariana Islands and the Virgin Islands

of the United States the cigarette limit

is 1,000, not more than 200 of which

shall have been acquired elsewhere than

in such locations;

(2) No alcoholic beverages shall be

included in the case of an individual

who has not attained the age of 21; and

(3) No more than 1 liter of alcoholic

beverages may be included, except that:

(i) An individual returning directly or

indirectly from American Samoa, Guam,

the Commonwealth of the Northern

Mariana Islands or the Virgin Islands of

the United States may include in the

exemption not more than 5 liters of

alcoholic beverages, not more than 1

liter of which shall have been acquired

elsewhere than in such locations and

not more than 4 liters of which shall

have been produced elsewhere than in

such locations; and

(ii) An individual returning directly

from a beneficiary country as defined in

§ 10.191(b)(1) of this chapter may

include in the exemption not more than

2 liters of alcoholic beverages if at least

1 liter is the product of one or more

beneficiary countries.

* * * * *

(f) Remainder not applicable to

subsequent journey. A returning

resident who has received a total

exemption of less than the $400, $600

or $1,200 maximum in connection with

his return from one journey is not

entitled to apply the unused portion of

that maximum amount to articles

acquired abroad on a subsequent

journey.

§ 148.34 [Amended]

9. Section 148.34(a) is amended by

removing the words ‘‘$400 or $800’’

wherever they appear and adding, in

their place, the words ‘‘$400, $600 or

$1,200’’.

10. Section 148.35 is amended by

revising paragraphs (a) and (b) to read

as follows:

§ 148.35 Length of stay for exemption of

articles acquired abroad.

(a) Required for allowance of $400,

$600 or $1,200 exemption. Except as

otherwise provided in this paragraph or

in paragraph (b) of this section, the

$400, $600 or $1,200 exemption for

articles acquired abroad shall not be

allowed unless the returning resident

has remained beyond the territorial

limits of the United States for a period

of not less than 48 hours. The $400

exemption may be allowed on articles

acquired abroad by a returning resident

arriving directly from Mexico without

regard to the length of time the person

has remained outside the territorial

limits of the United States.

(b) Not required for allowance of

$1,200 exemption on return from Virgin

Islands. The $1,200 exemption

applicable in the case of the arrival of

a returning resident directly or

indirectly from the Virgin Islands of the

United States may be allowed without

regard to the length of time such person

has remained outside the territorial

limits of the United States.

* * * * *

§ 148.36 [Amended]

11. Section 148.36 is amended by

removing the words ‘‘$400 or $800’’

wherever they appear and adding, in

their place, the words ‘‘$400, $600 or

$1,200’’.

§ 148.37 [Amended]

12. Section 148.37 is amended by

removing the words ‘‘$400 or $800’’

wherever they appear and adding, in

their place, the words ‘‘$400, $600 or

$1,200’’.

§ 148.38 [Amended]

13. Section 148.38 is amended by

removing the words ‘‘$400 or $800’’ and

adding, in their place, the words ‘‘$400,

$600 or $1,200’’.

14. Section 148.51 is amended by

revising paragraph (a)(2) to read as

follows:

§ 148.51 Special exemption for personal or

household articles.

(a) * * *

(2) A returning resident who is not

entitled to the $400, $600 or $1,200

exemption for articles acquired abroad

under subheading 9804.00.65,

9804.00.70 or 9804.00.72, HTSUS (see

Subpart D of this part).

* * * * *

§ 148.64 [Amended]

15. Section 148.64(a), first sentence, is

amended by removing the words

‘‘subheadings 9804.00.30 or

9804.00.70,’’ and adding, in their place,

the words ‘‘subheading 9804.00.30,

9804.00.65, 9804.00.70 or 9804.00.72,’’.

§ 148.74 [Amended]

16. Section 148.74(c)(3) is amended

by removing the words ‘‘subheading

9804.00.65 and 9804.00.70,’’ and

adding, in their place, the words

‘‘subheading 9804.00.65, 9804.00.70 or

9804.00.72,’’.

§ 148.101 [Amended]

17. In § 148.101, the sixth sentence is

amended by adding after ‘‘Guam,’’ the

words ‘‘the Commonwealth of the

Northern Mariana Islands,’’; and

example 2 is amended by removing the

figure ‘‘$2,900’’ in the example text and

adding, in its place, the figure ‘‘$4,900’’,

by removing the figure ‘‘$800’’ wherever

it appears in the example text and table

and adding, in its place, the figure

‘‘$1,200’’, by removing the figure

‘‘$1,600’’ in the table column headed

‘‘Fair retail value’’ and adding, in its

place, the figure ‘‘$2,400’’, by removing

the figure ‘‘$4,100’’ in the table column

headed ‘‘Fair retail value’’ and adding,

in its place, the figure ‘‘$4,900’’, and by

removing the figure ‘‘$1,00’’ in the table

column headed ‘‘Duty’’ and adding, in

its place, the figure ‘‘$100’’.

18. Section 148.102 is amended by

revising paragraphs (a) and (b) to read

as follows:

§ 148.102 Flat rate of duty.

(a) Generally. The rate of duty on

articles accompanying any person,

including a crewmember, arriving in the

United States (exclusive of duty-free

articles and articles acquired in Canada,

American Samoa, Guam, the

Commonwealth of the Northern Mariana

Islands, or the Virgin Islands of the

United States) shall be 10 percent of the

fair retail value in the country of

acquisition.

(b) American Samoa, Guam, the

Northern Mariana Islands, and the
Federal Register / Vol. 62, No. 170 / Wednesday, September 3, 1997 / Rules and Regulations 46443

Virgin Islands. The rate of duty on

articles accompanying any person,

including a crewmember, arriving in the

United States directly or indirectly from

American Samoa, Guam, the

Commonwealth of the Northern Mariana

Islands or the Virgin Islands of the

United States (exclusive of duty-free

articles), acquired in these locations as

an incident of the person’s physical

presence there, shall be 5 percent of the

fair retail value in the location in which

acquired.

* * * * *

§ 148.104 [Amended]

19. Section 148.104(c) is amended by

removing the figure ‘‘$800’’ and adding,

in its place, the figure ‘‘$1,000’’.

Subpart K [Amended]

20. The heading to Subpart K is

amended by adding after ‘‘Guam,’’ the

words ‘‘the Commonwealth of the

Northern Mariana Islands,’’.

§ 148.110 [Amended]

21. In § 148.110, the first paragraph is

amended by adding after ‘‘Guam,’’ the

words ‘‘the Commonwealth of the

Northern Mariana Islands,’’; and the

second paragraph is amended by adding

after ‘‘Guam’’ the words ‘‘, the

Commonwealth of the Northern Mariana

Islands,’’.

§ 148.111 [Amended]

22. In § 148.111, the introductory text

is amended by adding after ‘‘Guam,’’ the

words ‘‘the Commonwealth of the

Northern Mariana Islands,’’; and

paragraph (a) is amended by removing

the figure ‘‘$800’’ and adding, in its

place, the figure ‘‘$1,200’’.

§ 148.113 [Amended]

23. Section 148.113(a), first sentence,

is amended by removing the figure

‘‘$800’’ and adding, in its place, the

figure ‘‘$1,200’’.

PART 178—APPROVAL OF

INFORMATION COLLECTION

REQUIREMENTS

1. The authority citation for part 178

continues to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44

U.S.C. 3501 et seq.

2. Section 178.2 is amended by

adding a new listing to the table in

numerical order to read as follows:

§ 178.2 Listing of OMB control numbers.

19 CFR section Description OMB control No.

* * * * * * *

§ 7.3 ............................................................................................... Claim for duty-free entry of goods imported from U.S. insular

possessions.

1515–0055

* * * * * * *

Approved: May 27, 1997.

George J. Weise,

Commissioner of Customs.

[FR Doc. 97–23308 Filed 9–2–97; 8:45 am]

BILLING CODE 4820–02–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 558

New Animal Drugs For Use In Animal

Feeds; Pyrantel Tartrate

AGENCY: Food and Drug Administration,

HHS.

ACTION: Final rule.

SUMMARY: The Food and Drug

Administration (FDA) is amending the

animal drug regulations to reflect

approval of an abbreviated new animal

drug applications (ANADA) filed by

Equi Aid Products, Inc. The ANADA

provides for using pyrantel tartrate Type

A medicated articles to make Type B

medicated feeds used as equine

anthelmintics.

EFFECTIVE DATE: September 3, 1997.

FOR FURTHER INFORMATION CONTACT:

Lonnie W. Luther, Center for Veterinary

Medicine (HFV–102), Food and Drug

Administration, 7500 Standish Pl.,

Rockville, MD 20855, 301–827–0209.

SUPPLEMENTARY INFORMATION: Equi Aid

Products, Inc., 1517 West Knudsen Dr.,

Phoenix, AZ 85027, filed ANADA 200–

168, which provides for using pyrantel

tartrate Type A medicated articles to

make Type B medicated feeds for horses

for prevention of Strongylus vulgaris

larval infections and control of the

following parasites in horses: (1) Large

strongyles (adults) S. vulgaris, S.

edentatus, Triodontophorus spp.; (2)

small strongyles (adults and fourth-stage

larvae) Cyathostomum spp.,

Cylicocyclus spp., Cylicostephanus spp.,

Cylicodontophorus spp., Poteriostomum

spp.; (3) pinworm (adults and fourthstage larvae) Oxyuris equi; and (4)

ascarids (adults and fourth-stage larvae)

Parascaris equorum.

Equi Aid’s ANADA 200–168 is

approved as a generic copy of Pfizer’s

NADA 140–819. The ANADA is

approved as of September 3, 1997 and

21 CFR 558.485(a) is amended to reflect

the approval. The basis for approval is

discussed in the freedom of information

summary.

In accordance with the freedom of

information provisions of 21 CFR part

20 and 514.11(e)(2)(ii), a summary of

safety and effectiveness data and

information submitted to support

approval of this application may be seen

in the Dockets Management Branch

(HFA–305), Food and Drug

Administration, 12420 Parklawn Dr.,

rm. 1–23, Rockville, MD 20857, between

9 a.m. and 4 p.m., Monday through

Friday.

The agency has determined under 21

CFR 25.24(d)(1)(i) that this action is of

a type that does not individually or

cumulatively have a significant effect on

the human environment. Therefore,

neither an environmental assessment

nor an environmental impact statement

is required.

List of Subjects in 21 CFR Part 558

Animal drugs, Animal feeds.

Therefore, under the Federal Food,

Drug, and Cosmetic Act and under the

authority delegated to the Commissioner

of Food and Drugs and redelegated to

the Center for Veterinary Medicine, 21

CFR part 558 is amended as follows:

PART 558—NEW ANIMAL DRUGS FOR

USE IN ANIMAL FEEDS

1. The authority citation for 21 CFR

part 558 continues to read as follows:

Authority: Secs. 512, 701 of the Federal

Food, Drug, and Cosmetic Act (21 U.S.C.

360b, 371).

2. Section 558.485 is amended by

adding new paragraph (a)(28) to read as

follows: