37886 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

1For purposes of this document, ‘‘TFTEADrawback’’ is the term generally used to refer to 

drawback under section 1313, as amended by the 

Trade Facilitation and Trade Enforcement Act of 

2015. 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Parts 113, 181, 190, and 191 

[USCBP–2018–0029] 

RIN 1515–AE23 

Modernized Drawback 

AGENCY: U.S. Customs and Border 

Protection, Department of Homeland 

Security; Department of the Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document proposes to 

amend U.S. Customs and Border 

Protection (CBP) regulations to 

implement changes to the drawback 

regulations as directed by the Trade 

Facilitation and Trade Enforcement Act 

of 2015 (TFTEA). These proposed 

regulations establish a new process for 

drawback pursuant to TFTEA which 

liberalizes the merchandise substitution 

standard, simplifies recordkeeping 

requirements, extends and standardizes 

timelines for filing drawback claims, 

and requires the electronic filing of 

drawback claims. TFTEA allows a 

transition period wherein drawback 

claimants will have the choice between 

filing claims under the existing process 

detailed in the current regulations or 

filing claims under the proposed new 

process. This document explains how 

filings during the transition period will 

work, discusses the interim policy 

guidance procedures for filing claims 

prior to these regulations becoming 

final, and proposes to make TFTEArelated changes, dealing with bonds, 

regarding joint and several liability for 

the importer of the goods and the 

drawback claimant, and technical 

corrections and conforming changes to 

CBP regulations. This document also 

proposes to clarify the prohibition on 

the filing of a substitution drawback 

claim for internal revenue excise tax 

paid on imported merchandise in 

situations where no excise tax was paid 

upon the substituted merchandise; or 

the substituted merchandise is the 

subject of a different claim for refund or 

drawback of tax under any provision of 

the Internal Revenue Code. CBP is 

proposing these amendments regarding 

excise taxes to protect the revenue by 

clarifying the relationship between 

drawback claims and Federal excise tax 

liability. Further, CBP proposes to add 

a basic importation and entry bond 

condition to foster compliance. 

DATES: Comments must be received on 

or before September 17, 2018. 

ADDRESSES: You may submit comments, 

identified by docket number USCBP– 

2018–0029, by one of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Trade and Commercial 

Regulations Branch, Regulations and 

Rulings, Office of Trade, U.S. Customs 

and Border Protection, 90 K Street NE, 

10th Floor, Washington, DC 20229– 

1177. 

Instructions: All submissions received 

must include the agency name and 

docket title for this rulemaking, and 

must reference docket number USCBP– 

2018–0029 . All comments received will 

be posted without change to http://

www.regulations.gov, including any 

personal information provided. For 

detailed instructions on submitting 

comments and additional information 

on the rulemaking process, see the 

‘‘Public Participation’’ heading of the 

SUPPLEMENTARY INFORMATION section of 

the document. 

Docket: For access to the docket or to 

read background documents or 

comments received, go to http://

www.regulations.gov. Submitted 

comments may also be inspected during 

business days between the hours of 9:00 

a.m. and 4:30 p.m. at the Office of 

Trade, Regulations and Rulings, U.S. 

Customs and Border Protection, 90 K 

Street NE, 10th Floor, Washington, DC. 

Arrangements to inspect submitted 

comments should be made in advance 

by calling Mr. Joseph Clark at (202) 325– 

0118. 

FOR FURTHER INFORMATION CONTACT: 

Randy Mitchell, U.S. Customs and 

Border Protection, Office of Trade, 

Trade Policy and Programs, 202–863– 

6532, randy.mitchell@cbp.dhs.gov. 

SUPPLEMENTARY INFORMATION: 

Public Participation 

Interested persons are invited to 

participate in this rulemaking by 

submitting written data, views, or 

arguments on all aspects of the 

proposed rule. CBP also invites 

comments that relate to the economic, 

environmental, or federalism effects that 

might result from this proposed 

rulemaking. Comments that will provide 

the most assistance to CBP will 

reference a specific portion of the 

proposed rulemaking, explain the 

reason for any recommended change, 

and include data, information, or 

authority to support such recommended 

change. See ADDRESSES above for 

information on how to submit 

comments. 

Background 

Table of Contents 

I. Authority 

II. Modernized Drawback 

A. TFTEA-Drawback Modernization 

Overview 1

1. Transition Period (February 24, 2018– 

February 23, 2019) 

(a) Claims may be filed under the existing 

drawback process or the TFTEADrawback process during the transition 

period. 

(b) TFTEA-Drawback substitution claims 

cannot designate imported merchandise 

if the associated entry summary was 

already included on a drawback claim 

filed prior to February 24, 2018. 

2. Filing Requirements and Deadline 

(a) All TFTEA-Drawback claims are 

required to be submitted electronically 

in ACE. 

(b) The import entry summary line item 

must be identified for all imported 

merchandise for TFTEA-Drawback 

claims. 

(c) TFTEA-Drawback claims have a 

uniform five-year filing deadline from 

the date of importation of the designated 

imported merchandise. 

3. HTSUS-Based Substitution Standards 

(a) TFTEA-Drawback substitution claims 

for most manufacturing and unused 

merchandise have new standards based 

on HTSUS classification. 

(b) The new standards do not apply to 

certain claims if substitution is based 

upon alternative rules (source material 

for sought chemical elements, wine, and 

finished petroleum derivatives) or if 

pursuant to NAFTA drawback. 

4. ‘‘Lesser of’’ Rule for Substitution Claims 

(a) TFTEA-Drawback substitution claims 

are generally subject to a ‘‘lesser of’’ rule 

regarding the amount of duties, taxes, 

and fees to be refunded where the 

amount to be refunded will be equal to 

99 percent of the lesser of (1) the amount 

of duties, taxes, and fees paid with 

respect to the imported merchandise; or 

(2) the amount of duties, taxes, and fees 

that would apply to the substituted 

merchandise if the substituted 

merchandise were imported. 

(b) The TFTEA-Drawback ‘‘lesser of’’ rule 

does not apply to certain claims if 

substitution is based upon alternative 

rules (wine and finished petroleum 

derivatives) or if pursuant to NAFTA 

drawback. 

5. Expanded Scope and Calculation 

Methods for Refunds 

(a) The scope of refunds for direct 

identification and substitution 

manufacturing drawback claims will be 

expanded from duties to also include 

taxes and fees. 


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(b) TFTEA-Drawback direct identification 

claim refunds will be calculated based 

on the invoice value of the designated 

imported merchandise, which is 

unchanged from the current 

requirements. 

(c) TFTEA-Drawback substitution claim 

refunds will be calculated based on the 

per unit average value reported on the 

line from the entry summary that 

covered the designated imported 

merchandise. 

(d) The imported merchandise reported on 

a single entry summary line item may 

not be the basis of a direct identification 

and a substitution claim under TFTEADrawback. 

6. Recordkeeping and Proof of Export 

(a) Congress, through TFTEA, changed the 

starting date for the three-year time 

period for maintaining supporting 

records for drawback claims from the 

date of payment to the date of 

liquidation. 

(b) Claimants for manufacturing drawback 

must provide a certification that they are 

in possession of the relevant bill of 

materials or formula for the 

manufactured goods, in lieu of actual 

submission thereof, for each claim filed. 

(c) Congress, through TFTEA, permits the 

future use of an electronic export system 

as automated proof of export for 

drawback claims, but no system will be 

reliable for this purpose on February 24, 

2018; and, proof of export must be 

documented in records that are 

summarized for the drawback claim. 

7. Transfers of Merchandise and Liability 

(a) Specific formats for certificates of 

delivery and specific formats for 

certificates of manufacture and delivery 

are no longer required when drawback 

products or other drawback-eligible 

goods are transferred between parties, 

although records of manufacture and 

transfer must be provided and 

maintained to support the drawback 

claim. 

(b) The first drawback claim to be filed that 

designates any portion of imported 

merchandise from a given entry 

summary line item will determine the 

type of drawback eligibility for all other 

imported merchandise covered by that 

entry summary line item. 

(c) Importers are now jointly and severally 

liable with drawback claimants for 

refunds associated with their imported 

merchandise, when designated on a 

drawback claim. 

B. Filing a TFTEA-Drawback Claim 

C. Required TFTEA-Drawback 

Certifications for Existing Manufacturing 

Rulings and Privileges 

D. Federal Excise Tax and Substitution 

Drawback Claims 

III. Explanation of Proposed Amendments 

A. Proposed New Part 190 

B. Other Conforming Amendments 

C. Amendments Regarding Federal Excise 

Tax and Substitution Drawback Claims 

IV. Statutory and Regulatory Requirements 

A. Executive Order 13563 (Improving 

Regulation and Regulatory Review) and 

Executive Order 12866 (Regulatory 

Planning and Review) 

B. Executive Order 13771 (Reducing 

Regulation and Controlling Regulatory 

Costs) 

C. Regulatory Flexibility Act 

D. Paperwork Reduction Act 

V. Proposed Effective/Applicability Dates 

VI. Signing Authority 

List of Subjects 

Proposed Amendments to the Regulations 

I. Authority 

Drawback, as provided for in section 

313 of the Tariff Act of 1930, as 

amended (19 U.S.C. 1313), is the refund 

or remission, in whole or in part, of 

duties, taxes, and fees imposed and paid 

under Federal law upon importation or 

entry and due on the imported 

merchandise. Drawback is a privilege, 

not a right, subject to compliance with 

prescribed rules and regulations 

administered by U.S. Customs and 

Border Protection (CBP). See 19 U.S.C. 

1313(l). Currently, the implementing 

regulations regarding drawback are 

contained in part 191 of the CBP 

Regulations (title 19 of the Code of 

Federal Regulations (CFR) (19 CFR part 

191)) and part 181 of the CBP 

Regulations (19 CFR part 181, subpart E, 

which pertains to drawback claims 

under the North American Free Trade 

Agreement (NAFTA)). Additionally, the 

Internal Revenue Code (IRC) of 1986, as 

amended (IRC), codified as title 26 of 

the United States Code (26 U.S.C.), is 

the main body of domestic statutory tax 

law of the United States and includes, 

inter alia, laws covering Federal excise 

taxes. Federal excise taxes are imposed 

on the manufacture and distribution of 

certain consumer goods, such as 

distilled spirits, wines, beer, tobacco 

products, imported taxable fuel and 

petroleum products. These Federal 

excise taxes, and certain limitations 

regarding drawback claims, are 

discussed below in the section titled 

Federal Excise Tax and Substitution 

Drawback Claims. 

In essence, a drawback claim is a 

request for a refund or remission of 

certain duties, taxes, and fees imposed 

upon importation which is filed with 

CBP after the merchandise or articles 

have been exported or destroyed. There 

are three main categories of drawback: 

Manufacturing drawback, rejected 

merchandise drawback, and unused 

merchandise drawback. Each main 

category of drawback is discussed, in 

turn, below. 

Manufacturing drawback may be 

claimed on exported articles that have 

been manufactured or produced in the 

United States with imported duty-paid 

merchandise (direct identification 

manufacturing drawback), as well as on 

exported articles that have been 

manufactured or produced in the United 

States using domestic merchandise 

substituted for imported duty-paid 

merchandise meeting the statutory 

criteria (substitution manufacturing 

drawback). See 19 U.S.C. 1313(a) and 

(b). 

Rejected merchandise drawback may 

be available upon the exportation or 

destruction of imported duty-paid 

merchandise entered or withdrawn for 

consumption meeting the statutory 

criteria (i.e., not conforming to sample 

or specifications, shipped without 

consent, determined to be defective at 

the time of import, or ultimately sold at 

retail and returned). See 19 U.S.C. 

1313(c). 

Unused merchandise drawback may 

be claimed on imported merchandise 

that was exported or destroyed without 

having been used within the United 

States (direct identification unused 

merchandise drawback) as well as on 

goods that were exported or destroyed 

without being used that were 

substituted for imported merchandise 

meeting the appropriate criteria 

(substitution unused merchandise 

drawback). See 19 U.S.C. 1313(j)(1) and 

(2). 

Originally, as provided for in section 

3 of the second Act of Congress, the 

Tariff Act of July 4, 1789, drawback of 

99% of duties paid on imported 

merchandise (except distilled spirits) 

was permitted if the merchandise was 

exported within a year. However, 

drawback expanded over time to, among 

other things, provide for refunds of 

taxes and fees in some situations, allow 

for merchandise to be destroyed as an 

alternative to exportation, allow for the 

substitution of goods on which 

drawback could be claimed, and 

provide more than just a single year 

within which goods must be exported or 

destroyed. 

Historically, drawback claims were 

submitted entirely on paper. While 

filing a claim entirely on paper is 

currently still an option, most drawback 

claims consist of two portions: The 

electronic transmission of the entry 

summary data for the designated 

imported merchandise via the CBPauthorized electronic data interchange 

(EDI); and the physical delivery of the 

CBP Form 7551 (Drawback Entry) and 

all required documents supporting the 

claim. For TFTEA-Drawback claims, 

filers will electronically transmit the 

drawback entry summary data and the 

entry summary data for the designated 

imported merchandise to CBP and will 

upload all documents required to 

support the claim. CBP has programmed 

the Automated Commercial 

Environment (ACE) for receiving 


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2On February 9, 2018, in anticipation of delays 

regarding the proposal and finalization of the 

TFTEA-Drawback regulations, CBP posted interim 

policy guidance for filing TFTEA-Drawback claims 

in ACE during the transition period, available at: 

https://www.cbp.gov/trade/programsadministration/entry-summary/ace-process-andpolicy. This interim policy guidance is discussed in 

detail below in section B, Filing a TFTEA-Drawback 

Claim. 

electronic drawback claims.2 An 

electronically submitted drawback 

claim will not be complete until the 

claim has been successfully transmitted 

with all required documents uploaded. 

Information for filing a drawback entry 

is contained in the relevant CBP and 

Trade Automated Interface 

Requirements (CATAIR) document, 

which is available at: https://

www.cbp.gov/trade/ace/catair. 

Upon receipt of a claim, CBP 

conducts an initial review, which 

allows CBP the opportunity to work 

with claimants to ensure that the claim 

is complete and timely. Once a 

complete claim is timely filed, 

drawback specialists review the 

supporting documentation to ensure 

that the claim is properly documented 

and the amount of the drawback is 

correctly calculated. In many instances, 

it is necessary for CBP to contact 

claimants to obtain additional 

supporting documentation, such as 

when there are questions regarding the 

identity of the merchandise in transfer 

scenarios or to confirm the actual date 

and fact of exportation. If additional 

information is required, CBP will send 

a request for information (CBP Form 28) 

to the claimant through the ACE portal 

or through the end of the transition 

period by physically transmitting the 

request, depending upon the method 

used to file the claim was filed. 

Claimants generally respond via the 

method by which they were contacted. 

The increased use of electronic filing 

and correspondence will expedite claim 

processing and payment. 

Requests for information do not toll 

the deadlines for timely filing. In any 

event, claimants are bound by the 

deadlines for claims with respect to 

filing, amending, and perfecting. 

II. Modernized Drawback 

A. TFTEA-Drawback Overview 

On February 24, 2016, the Trade 

Facilitation and Trade Enforcement Act 

of 2015 (TFTEA) (Pub. L. 114–125, 130 

Stat. 122, February 24, 2016) was signed 

into law. Section 906 of TFTEA, 

Drawback and Refunds, made 

significant changes to the drawback 

laws which generally liberalize the 

standards for substituting merchandise, 

ease documentation requirements, 

extend and standardize timelines for 

filing drawback claims, and require 

electronic filing. However, while the 

changes are significant, on balance, 

section 906 of TFTEA left most of 19 

U.S.C. 1313 unchanged. In other words, 

except for the significant changes 

brought about by Section 906 of TFTEA 

which are discussed below, most of the 

underlying processes involved in 

drawback remain unchanged. CBP also 

notes that additional steps to further 

automate or simplify the drawback 

claims process (which may or may not 

require regulatory changes) are 

anticipated to be announced subsequent 

to the implementation of the changes 

proposed in this document. 

1. Transition Period (February 24, 2018– 

February 23, 2019) 

(a) Claims may be filed under the 

existing drawback process or the 

TFTEA-Drawback process during the 

transition period. 

Section 906(q)(3) of TFTEA provides 

for a transition period, beginning 

February 24, 2018, and ending February 

23, 2019, during which claimants may 

file claims under the current drawback 

process and regulations detailed in part 

191 (and under section 313 of the Tariff 

Act of 1930 as in effect on the day 

before TFTEA was signed into law) or 

under the amended statute and the 

implementing regulations (proposed 

part 190). February 23, 2019, is the last 

day of the transition period. During the 

transition period, claimants may choose 

which process to file on a claim-byclaim basis, meaning that claimants may 

file some claims under the old drawback 

process and some claims under the 

TFTEA-Drawback process throughout 

the entirety of the transition period. For 

purposes of this document, ‘‘TFTEADrawback’’ is the term generally used to 

refer to drawback under section 1313, as 

amended by TFTEA, and the 

implementing regulations contained in 

proposed Part 190. 

While TFTEA-Drawback claims have 

been accepted in ACE since February 

24, 2018, it is not until February 24, 

2019, that all claims must be filed in 

compliance with the amended statute. 

Section II.B, Filing a TFTEA-Drawback 

Claim, below, contains information on 

how to file claims, including during the 

transition period under the interim 

policy guidance procedures announced 

February 8, 2018, in anticipation of the 

delay in finalizing these proposed 

regulations. Accordingly, the changes 

proposed in this document have no 

immediate effect on the drawback 

processes and requirements contained 

in part 191 of the CBP regulations. The 

transition period allows claimants the 

opportunity to choose which drawback 

regime to operate under while providing 

additional time, if needed, to complete 

any programming requirements for 

transmitting claims in ACE. 

(b) TFTEA-Drawback substitution 

claims cannot designate imported 

merchandise if the associated entry 

summary was included on a drawback 

claim filed under part 191(and vice 

versa). 

Claimants are precluded from filing 

TFTEA-Drawback substitution claims 

for imported merchandise associated 

with an entry summary if any other 

merchandise covered on that entry 

summary has been designated as the 

basis of a claim under part 191, 

including during the transition period. 

Nevertheless, claimants may continue to 

make claims (including substitution 

claims) under part 191 for these entries 

through the end of the transition period 

on February 23, 2019. Similarly, 

claimants are precluded from filing any 

drawback claims under part 191 for 

imported merchandise associated with 

an entry summary if any other 

merchandise covered on that entry 

summary has been designated as the 

basis of a TFTEA-Drawback substitution 

claim, including during the transition 

period. These limitations exist because 

drawback refund amounts are claimed 

at the entry summary header level (i.e., 

the aggregate of all lines for which 

drawback was claimed on an entry) for 

claims under part 191 and CBP is 

unable to trace whether merchandise 

from a specific line on an entry 

summary was designated as the basis for 

a drawback claim under part 191. 

2. New Filing Requirements and 

Deadline 

(a) All TFTEA-Drawback claims are 

required to be submitted electronically 

in ACE. 

While all TFTEA-Drawback claims 

must be filed electronically, it is not 

until February 24, 2019 (the first day 

after the end of the transition period), 

that all drawback claims must be filed 

electronically. See 19 U.S.C. 

1313(r)(3)(B). Consequently, claims filed 

under part 191 do not have to be filed 

electronically. Drawback claims must be 

filed electronically through a 

combination of transmitting certain 

information to the system and 

uploading supporting documentation. 

By moving to a fully electronic 

environment as of February 24, 2019, 

CBP will be able to better validate all 

drawback claims based upon certain 

criteria specific to the type of drawback 

claim, including (but not limited to) the 

timeliness of the claim, the amount of 

refund claimed, and the suitability of 


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the merchandise involved. As a result, 

drawback claimants should benefit from 

expedited processing, review, and 

payment of claims. 

(b) The import entry summary line 

item must be identified for all imported 

merchandise for TFTEA-Drawback 

claims. 

Many of the benefits for drawback 

claim processing noted above are made 

possible by systematic enhancements in 

ACE concerning line item reporting. 

Line item reporting, which is required 

for all TFTEA-Drawback claims, 

requires claimants to provide certain 

relevant information for the designated 

imported merchandise on a drawback 

claim associated with the line item on 

an entry summary, including the tariff 

classification, quantity, and value, as 

well as the duties, taxes, and fees 

assessed thereon. Line item reporting 

will enable more system validations at 

the line level and will help ensure that 

CBP does not overpay refunds. 

(c) TFTEA-Drawback claims have a 

uniform five-year filing deadline from 

the date of importation of the 

designated imported merchandise. 

All TFTEA-Drawback claims must be 

filed not later than 5 years after the date 

the merchandise on which drawback is 

claimed was imported. See 19 U.S.C. 

1313(r)(1). Previously, section 1313 

provided three-year filing deadlines 

beginning from different starting points 

for various types of claims (e.g., three 

years from the receipt of imported 

merchandise or three years after the date 

of importation or withdrawal). This fiveyear deadline does not apply to claims 

filed under the existing drawback laws 

provided for in part 191 during the 

transition period. 

3. HTSUS-Based Substitution Standards 

(a) TFTEA-Drawback substitution 

claims for most manufacturing and 

unused merchandise have new 

standards based on HTSUS 

classification. 

Section 906(b) provides a new 

standard for determining which 

merchandise may be substituted for 

imported merchandise as the basis for a 

substitution claim. This standard 

generally requires that both the 

imported merchandise and the exported 

merchandise be classified or classifiable 

within the same the 8-digit number in 

the Harmonized Tariff Schedule of the 

United States (HTSUS) classification. 

This standard replaces the ‘‘same kind 

and quality’’ and ‘‘commercially 

interchangeable’’ standards that were 

applied, respectively, to substitution 

manufacturing drawback claims (19 

U.S.C. 1313(b)) and substitution unused 

merchandise drawback claims (19 

U.S.C. 1313(j)(2)). Prior to TFTEA, 

determining whether goods were of the 

same kind and quality or were 

commercially interchangeable was a 

commodity-specific question that 

imposed burdens on claimants (to prove 

that the merchandise met the applicable 

standard) and on CBP (to research and 

rule on the eligibility of the goods to be 

substituted). The new standards will 

reduce much of the above-cited burdens 

by generally eliminating uncertainty as 

to the whether the standard for 

substitution has been met. 

Substitution under 19 U.S.C. 1313(b), 

for manufacturing drawback claims, is 

subject to a new standard that requires 

the substituted merchandise used in 

manufacturing to be classifiable under 

the same 8-digit HTSUS subheading 

number as the designated imported 

merchandise. Similarly, substitution 

under 19 U.S.C. 1313(j)(2), for unused 

merchandise drawback claims, is 

subject to a new standard that requires 

the substituted merchandise to be 

classifiable under the same 8-digit 

HTSUS subheading number as the 

imported merchandise, except that there 

are restrictions with respect to HTSUS 

basket provisions (i.e., subheadings with 

descriptions that begin with the term 

‘‘other’’). Specifically, and only for 

unused merchandise drawback claims, 

merchandise cannot be substituted if the 

8-digit HTSUS subheading number 

begins with the term ‘‘other’’, unless the 

imported merchandise and the 

substituted merchandise are both 

classifiable under the same 10-digit 

HTSUS statistical reporting number and 

the description for that 10-digit HTSUS 

statistical reporting number does not 

begin with the term ‘‘other’’. See 19 

U.S.C. 1313(j)(5). In lieu of the HTSUS 

classification for unused merchandise 

drawback claims, substitution may also 

be based on the first 8 digits of the 10- 

digit Department of Commerce Schedule 

B number (the code for exporting goods 

from the United States). See 19 U.S.C. 

1313(j)(6). 

Under the new substitution standards, 

the correct HTSUS classification is a 

critical aspect of the exercise of 

reasonable care. Accordingly, importers 

and drawback claimants should take 

note that prospective rulings on 

classification may be requested 

pursuant to 19 CFR 177.1(a)(1). 

(b) The new standards do not apply to 

certain claims if substitution is based 

upon alternative rules (source material 

for sought chemical elements, wine, and 

finished petroleum derivatives) or if 

pursuant to NAFTA drawback. 

Certain types of merchandise are 

exempt from the new substitution 

standards discussed above. Substitution 

manufacturing claims for sought 

chemical elements have a special rule 

for source material regardless of the 8- 

digit HTSUS subheading number. See 

19 U.S.C. 1313(b)(4) (which defines a 

sought chemical element as either an 

element from the Periodic Table of 

Elements or a chemical compound 

consisting of such elements). Unused 

merchandise claims involving wine 

have a distinct standard involving price 

variations and color. See 19 U.S.C. 

1313(j)(2). Both manufacturing and 

unused merchandise drawback claims 

for finished petroleum products, if filed 

under 19 U.S.C. 1313(p), are already 

subject to more specific HTSUS-based 

substitution standards. Substitution 

manufacturing claims for NAFTA 

drawback remain subject to the ‘‘same 

kind and quality’’ standard in part 181, 

consistent with 19 U.S.C. 3333(a)(3). 

4. ‘‘Lesser of’’ Rule for Substitution 

Claims 

(a) TFTEA-Drawback substitution 

claims are generally subject to a ‘‘lesser 

of’’ rule regarding the amount of duties, 

taxes, and fees to be refunded where the 

amount to be refunded will be equal to 

99 percent of the lesser of (1) the 

amount of duties, taxes, and fees paid 

with respect to the imported 

merchandise; or (2) the amount of 

duties, taxes, and fees that would apply 

to the substituted merchandise if the 

substituted merchandise were imported. 

Section 906(g) of TFTEA provides for 

a ‘‘lesser of’’ rule, as a safeguard, to 

ensure that the revenue is protected in 

light of the liberalization and 

simplification of the standards for 

substitution drawback claims. The 

‘‘lesser of’’ rule provides that the refund 

will be equal to 99 percent of the lesser 

of the amount of duties, taxes, and fees 

paid with respect to the imported 

merchandise and/or that would have 

been paid on the substituted 

merchandise had it been imported. In 

all claims subject to the ‘‘lesser of’’ rule, 

it is incumbent on the claimant to 

properly calculate the proper amount of 

the claimed refund. 

For manufacturing drawback claims, 

the substituted merchandise is that 

which was used in manufacturing, in 

lieu of the designated imported 

merchandise, and the ‘‘lesser of’’ 

comparison is based upon the amount of 

duties, taxes, and fees that would apply 

to the substituted merchandise if it were 

imported (with this amount reduced by 

the value of the materials recovered 

during destruction, if applicable). See 

19 U.S.C. 1313(l)(2)(C). For unused 

merchandise drawback claims, the 

substituted merchandise is the exported 

or destroyed merchandise and the 


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‘‘lesser of’’ comparison is based upon 

the amount of duties, taxes, and fees 

that would apply to the exported or 

destroyed merchandise if it were 

imported (with this amount reduced by 

the value of the materials recovered 

during destruction, if applicable). See 

19 U.S.C. 1313(l)(2)(B). TFTEADrawback claimants must provide the 

comparative value (i.e., the ‘‘lesser of’’ 

comparison for either manufacturing 

drawback claims or for unused 

merchandise drawback claims), as part 

of a substitution claim. 

(b) The TFTEA-Drawback ‘‘lesser of’’ 

rule does not apply to certain claims if 

substitution is based upon alternative 

rules (wine and finished petroleum 

derivatives) or if pursuant to NAFTA 

drawback. 

The ‘‘lesser of’’ rule does not apply to 

claims for wine based on 19 U.S.C. 

1313(j)(2) or to claims for finished 

petroleum products under 19 U.S.C. 

1313(p). See 19 U.S.C. 1313(l)(2)(D). 

Claims under these provisions are 

subject to other specific limitations. It is 

important to note that sought chemical 

elements are not exempt from the 

‘‘lesser of’’ rule, even though there is a 

special rule for the substitution of 

source material. See 19 U.S.C. 

1313(b)(4). NAFTA drawback allows for 

substitution manufacturing claims 

(under certain conditions) and these 

claims are not subject to the ‘‘lesser of’’ 

rule discussed herein, but they remain 

subject to the discrete NAFTA drawback 

‘‘lesser of duty’’ rule regarding the 

amount of duty owed as compared 

between the relevant countries. See 19 

U.S.C. 3333 and 19 CFR 181.44. 

5. Expanded Scope and Calculation 

Methods for Refunds 

(a) The scope of refunds for direct 

identification and substitution 

manufacturing drawback claims will be 

expanded from duties to also include 

taxes and fees. 

Section 906(g) of TFTEA provides for 

the refund of taxes and fees, along with 

duties, for manufacturing drawback 

claims. See 19 U.S.C. 1313(l)(2)(C). This 

is an expansion of the scope of refunds 

available for manufacturing drawback 

claims (19 U.S.C. 1313(a) and (b)). 

Previously, the statutory provisions for 

direct identification and substitution 

manufacturing drawback specified only 

the refund of duties. This expansion is 

specifically provided for claims with 

respect to manufactured articles in 

paragraph (l)(2)(C) of 19 U.S.C. 1313. 

However, this expansion is not 

applicable to all drawback claim 

provisions. Refunds of duties, taxes, and 

fees were already allowed for in claims 

involving unused merchandise prior to 

the new language provided for by 

TFTEA. See 19 U.S.C. 1313(l)(2)(B). In 

contrast, there was neither any preexisting authority for refunds of taxes 

and fees for claims involving rejected 

merchandise nor did TFTEA otherwise 

expand the scope of refunds beyond 

duties by generally referencing 19 

U.S.C. 1313(l). The provisions that 

provide for refunds of duties, taxes, and 

fees are limited to unused merchandise 

and manufacturing drawback claims in 

19 U.S.C. 1313(l)(2)(B) and (C), 

respectively. 

There is also a noteworthy difference 

regarding the statutory provisions for 

substitution manufacturing drawback 

claims whereby the merchandise must 

be imported duty-paid. See 19 U.S.C. 

1313(b)(1). No such requirement exists 

for direct identification manufacturing 

claims. See 19 U.S.C. 1313(a). The result 

of this difference is that imported 

merchandise that is duty-free may be 

designated as the basis for a direct 

identification manufacturing drawback 

claim, but not for a substitution 

manufacturing drawback claim. 

(b) TFTEA-Drawback direct 

identification claim refunds will be 

calculated based on the invoice value of 

the designated imported merchandise, 

which is unchanged from the current 

requirements. 

CBP currently requires all drawback 

claimants, regardless of the type of 

claim, to calculate drawback refunds 

based on the invoice value of the 

designated imported merchandise. 

TFTEA-Drawback direct identification 

claims will continue to be calculated 

based on the invoice value of the 

designated imported merchandise. This 

includes all drawback claims that are 

based upon direct identification (e.g., 

manufacturing, rejected merchandise, 

and unused merchandise drawback 

claims). It should also be noted that all 

NAFTA drawback claims will continue 

to be calculated based on the invoice 

value of the designated imported 

merchandise. See 19 U.S.C. 3333 and 19 

CFR 181.44. 

(c) TFTEA-Drawback substitution 

claim refunds will be calculated based 

on the per unit average value reported 

on the line from the entry summary that 

covered the designated imported 

merchandise. 

Section 906(g) of TFTEA authorized 

CBP to calculate refunds based upon the 

per unit average of the duties, taxes, and 

fees reported on the entry summary line 

item that covered the designated 

imported merchandise if this method 

would result in simplification of the 

drawback claims process for CBP 

without posing a risk to the revenue of 

the United States. Per unit averaging 

requires that the drawback claimant 

calculate the per unit average value of 

the designated imported merchandise 

(i.e., the entered value for the applicable 

entry summary line item apportioned 

equally over each unit covered by the 

line item) and request a refund 99% of 

the amount of duties, taxes and fees 

applicable thereto. The legislative 

history for Section 906(g) clarifies that 

CBP is authorized to utilize per unit 

averaging solely to allow for the 

simplification of drawback claims and 

CBP is not to allow for the 

‘‘manipulation of claims in order to 

maximize refunds to the detriment of 

the revenue of the United States.’’ See 

H.R. Rep. no. 114–376, at 221 (2015). 

Accordingly, CBP is proposing in these 

regulations to allow the use of per unit 

averaging in the context of substitution 

manufacturing drawback claims (19 

U.S.C. 1313(b)) and substitution unused 

merchandise drawback claims (19 

U.S.C. 1313(j)(2)), but not for direct 

identification manufacturing drawback 

claims (19 U.S.C. 1313(a)), rejected 

merchandise drawback claims (19 

U.S.C. 1313(c)), or direct identification 

unused merchandise drawback claims 

(19 U.S.C. 1313(j)(1)). 

This determination was made only 

after much internal consideration as 

well as outreach to various trade 

stakeholders. A significant justification 

for the use of per unit averaging 

exclusively for substitution claims is 

that TFTEA imposed a ‘‘lesser of’’ rule 

for drawback claims involving 

substitution that safeguards against risks 

to the revenue. Simply put, by 

importing high and low value goods 

together on a single line, the claimant 

could manipulate the drawback claim 

through per-unit averaging by 

strategically exporting or destroying the 

low value goods, where the per-unit 

average of duties, taxes, and fees to be 

refunded was greater than that 

associated with the low value goods. 

The lesser of rule prevents this type of 

manipulation. No ‘‘lesser of’’ rule was 

authorized under TFTEA for direct 

identification claims. 

The application of per unit averaging 

method of calculating drawback refunds 

requires the equal apportionment of the 

amount of duties, taxes, and fees eligible 

for drawback for all units covered by a 

single line item on an entry summary to 

each unit of merchandise (and is 

required for certain substitution 

drawback claims). In this method, the 

ratio of the total value of imported units 

as reported on a line item divided by the 

total quantity of imported units reported 

on a line item is to be multiplied by the 

quantity of units designated as the basis 

for the drawback claim to determine the 


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3 It is noteworthy that the value of the exported 

(or destroyed) finished article is not germane to the 

application of the ‘‘lesser of’’ rule for substitution 

manufacturing drawback claims. The comparison in 

value is between the value of the designated 

imported merchandise and the substituted 

merchandise. 

average per unit value. The refund per 

unit of the designated imported 

merchandise is to be 99% of the duties, 

taxes, and fees applicable to the average 

per unit value and this amount is 

calculated to two decimal places (and 

subject to the ‘‘lesser of’’ rule). 

Example 1. Substitution Unused 

Merchandise TFTEA-Drawback Claim 

A substitution unused merchandise 

drawback claim is filed for 500 exported 

articles with a value of $110 per unit. 

The 500 units of designated imported 

merchandise were reported on an entry 

summary line item that covered 1000 

units with an entered value of $100,000 

and a duty rate of 2.5%. Therefore, 

regarding the amount of duties to be 

refunded pursuant to the ‘‘lesser of’’ 

methodology, the calculation of 

drawback will be based on the per unit 

value of $100 for the designated 

imported merchandise rather than the 

value of $110 for the exported 

merchandise. 

The designated imported merchandise 

has a per unit value of $100. This 

applicable duty rate (2.5%) is applied to 

the average per unit value ($100) to 

determine the amount of duties 

apportioned to each unit at $2.50. 

The amount available for a drawback 

refund is 99% of the duties paid per 

unit ($2.50), which is $2.48. This 

amount of refundable duties per unit 

($2.48) is multiplied by the quantity of 

designated imported merchandise (500 

units) to calculate the total amount 

available for the drawback refund, 

which is $1,240. Similar calculations 

must be completed for applicable taxes 

and fees as well. 

Example 2. Substitution Manufacturing 

TFTEA-Drawback Claim 

A substitution manufacturing 

drawback claim is filed for 200 exported 

finished articles with a value of $400 

per unit.3 The designated imported 

merchandise was reported on an entry 

summary line item that covered 800 

units with an entered value of $160,000 

(averaging $200 per unit) and a duty rate 

of 3.1%. To manufacture the finished 

articles, the manufacturer actually used 

600 units of substituted domestically 

sourced merchandise that is classifiable 

under the same 10-digit tariff provision. 

The domestically sourced merchandise 

has a substituted value of $180 per unit. 

Therefore, regarding the amount of 

duties to be refunded pursuant to the 

‘‘lesser of’’ methodology, the calculation 

of drawback will be based on the per 

unit value of $180 for the substituted 

merchandise rather than the value of 

$200 for the designated imported 

merchandise. 

The substituted merchandise has a 

per unit value of $180. This applicable 

duty rate (3.1%) is applied to the 

average per unit value ($180) to 

determine the amount of duties 

apportioned to each unit at $5.58. 

The amount available for a drawback 

refund is 99% of the duties paid per 

unit ($5.58), which is $5.52. This 

amount of refundable duties per unit 

($5.52) is multiplied by the quantity of 

designated imported merchandise (600 

units) to calculate the total amount 

available for the drawback refund, 

which is $3,312. Similar calculations 

must be completed for applicable taxes 

and fees as well. 

Per unit averaging facilitates 

verification of the amounts of drawback 

refunds claimed. CBP does not receive 

invoice data that is usefully searchable 

electronically. By moving to the per unit 

averaging calculation methodology for 

substitution claims that is based on 

entry summary line data, CBP will gain 

the ability to automate validations of 

refund calculations made by the 

claimant. This should lead to faster and 

more efficient processing of claims, 

which will benefit both drawback 

claimants and CBP. These efficiencies 

are gained through the use of entry 

summary line item data, which is 

required for all TFTEA-Drawback 

claims, and will enable the per unit 

averaging calculation to take place as an 

automated verification rather than a 

manual process. 

(d) The imported merchandise 

reported on a single entry summary line 

item may not be the basis of a direct 

identification and a substitution claim 

under TFTEA-Drawback. 

A consequence of using per unit 

averaging for substitution claims under 

TFTEA-Drawback is that a single entry 

summary line item cannot be used for 

both direct identification and 

substitution drawback claims. 

Consequently, CBP proposes to limit 

each line on an entry summary to 

designation as the basis for either direct 

identification or substitution claims, but 

never both. Therefore, all associated 

imported merchandise on that line may 

only be designated as the basis for either 

direct identification or substitution 

claims under TFTEA-Drawback. If both 

types of claims were allowed on a single 

line on an entry summary, CBP would 

be unable to issue full refunds for all 

drawback claims that could lawfully be 

made against a specific entry summary 

line item in some situations. For 

example, in some situations where 

substitution claims using the per unit 

average of the line item were to be 

claimed prior to a direct identification 

claim, the total amount of drawback 

remaining on the line may not be 

sufficient to pay the proper amount of 

drawback tied to the high value goods. 

CBP has also chosen this proposed 

policy in expectation of the efficiencies 

to be gained by both claimants and CBP 

regarding calculating and verifying 

refunds. Accordingly, importers and 

drawback claimants need to be aware of 

the limitation on line item designations 

prior to importing merchandise or 

receiving transferred merchandise, 

because the first-filed claim on a line 

will dictate the type of claim available 

for any remaining merchandise of the 

same line. 

6. Recordkeeping and Proof of Export 

(a) Congress, through TFTEA, 

changed the starting date for the threeyear time period for maintaining 

supporting records for drawback claims 

from the date of payment to the date of 

liquidation. 

For all TFTEA-Drawback claims, 

section 906(o) replaced the previous 

requirement to maintain supporting 

records for three years from the date of 

payment of the claim with the new 

requirement to maintain records for 

three years from the date of liquidation 

of the claim. See 19 U.S.C. 1508(c)(3). 

This extension of the recordkeeping 

time period provides CBP with more 

time to request documents needed to 

verify or audit claims. This new 

timeframe requires claimants with 

accelerated payment privileges to 

maintain supporting records longer than 

before TFTEA (because claims are paid 

prior to liquidation for claimants that 

obtain the privilege of accelerated 

payment). 

(b) Claimants for manufacturing 

drawback must provide a certification 

that they are in possession of the 

relevant bill of materials or formula for 

the manufactured goods, in lieu of 

actual submission thereof, for each 

claim filed. 

Currently, claimants for 

manufacturing drawback are required to 

provide a bill of materials or formula to 

CBP upon request, for any claim filed. 

CBP has and will continue to request 

these records for review in the context 

of verifications, audits, and other 

administrative actions. The purpose of 

this requirement is to ensure that the 

claims are consistent with the 

applicable bill(s) of materials or 

formula(s) that accompanied the 


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claimant’s application to operate under 

the applicable general or specific 

manufacturing drawback ruling. TFTEA 

expressly added a requirement for 

substitution manufacturing drawback 

claims that the person making the claim 

must submit the bill of materials or 

formula identifying the drawbackeligible merchandise and manufactured 

article(s) by the 8-digit HTSUS 

subheading numbers and the quantities 

of merchandise with each claim. See 19 

U.S.C. 1313(b)(3)(A). For administrative 

efficiency and consistency with how 

drawback claims are reviewed and 

verified, rather than requiring the actual 

submission of these records with each 

claim, CBP will require a certification in 

ACE as to possession of these records. 

This certification requirement applies to 

both direct identification and 

substitution manufacturing claims. 

(c) Congress, through TFTEA, permits 

the future use of an electronic export 

system as automated proof of export for 

drawback claims, but no system will be 

reliable for this purpose on February 24, 

2018; and, proof of export must be 

documented in records that are 

summarized for the drawback claim. 

Claimants whose exported goods are 

the basis for a claim of drawback must 

provide proof that establishes fully the 

date and fact of exportation and the 

identity of the exporter. These 

requirements are provided for in 

proposed § 190.72. Under TFTEADrawback, proof of exportation is 

required in the form of export summary 

data that is provided as part of a 

complete drawback claim filed with 

CBP. However, the underlying 

supporting records must fully prove the 

exportation through records kept in the 

normal course of business. TFTEA also 

provides for proof of export to be 

established via an electronic export 

system of the United States, as 

determined by the Commissioner of 

CBP. See 19 U.S.C. 1313(i). Currently, 

the Automated Export System (AES) is 

not able to fully establish the required 

elements. Accordingly, until such time 

as the Commissioner of CBP announces 

the availability of a capable electronic 

system through a general notice in the 

Customs Bulletin, records kept in the 

normal course of business shall be used 

to establish fully the date and fact of 

exportation and the identity of the 

exporter, and such records must be 

maintained by claimants whose 

exported goods are the basis for a claim 

of drawback. 

7. Transfers of Merchandise and 

Liability 

(a) Specific formats for certificates of 

delivery and specific formats for 

certificates of manufacture and delivery 

are no longer required when drawback 

products or other drawback-eligible 

goods are transferred between parties, 

although records of manufacture and 

transfer must be provided and 

maintained to support the drawback 

claim. 

Section 906 removed the longstanding 

requirements for the submission of 

Certificates of Delivery (CDs) and 

Certificates of Manufacture and Delivery 

(CMDs) by stating that no additional 

certificates of transfer or manufacture 

shall be required 19 U.S.C. 1313(b), and 

by stating that no additional certificates 

of transfer are required in 19 U.S.C. 

1313(c), (j), and (p). Section 906(l), 

Drawback Certificates, removed the 

recordkeeping requirements relating to 

these certificates for drawback claims by 

striking 19 U.S.C. 1313(t). Instead of 

CDs and CMDs, parties involved in 

transfers of drawback products or other 

drawback-eligible goods must maintain 

records, which may include records 

kept in the normal course of business, 

to evidence the transfers. 

(b) The first drawback claim to be 

filed that designates any portion of 

imported merchandise from a given 

entry summary line item will determine 

the type of drawback eligibility for all 

other imported merchandise covered by 

that entry summary line item. 

As previously explained in part 5(d), 

above, there is a limitation that 

imported merchandise on a single entry 

summary line item cannot be designated 

as the basis for both direct identification 

and substitution drawback claims under 

TFTEA, due to the different methods of 

calculating refund amounts. Because the 

transferor can transfer the merchandise 

covered by a specific line item to 

different transferees, the transferees 

might unwittingly attempt to file 

different types of claims, which is not 

permitted. In an effort to best inform 

transferees of the possible limitation, if 

a transferor has already filed a certain 

type of drawback claim designating a 

portion of merchandise from an entry 

summary line item, or otherwise has 

knowledge of an already-filed claim that 

does likewise, then the transferor must 

designate whether the merchandise is 

eligible for substitution or direct 

identification claims and notify the 

transferee of that designation at the time 

of transfer. This should help transferees 

to avoid attempting to make drawback 

claims for the transferred merchandise 

under the mutually exclusive bases of 

direct identification and substitution. If, 

at the time of transfer, the transferor is 

not aware of a particular type of 

drawback claim already filed relating to 

the entry summary line item, then the 

designation shall so indicate to the 

transferee. Notification of the 

designation from the transferor to the 

transferee must be documented in 

records, which may include records 

kept in the normal course of business. 

Notwithstanding the designation made, 

however, the type of the first drawback 

claim to be filed relating to that entry 

summary line item will dictate the type 

of any subsequent claims relating to that 

same entry summary line item. 

Because this notification requirement 

is not effective until February 24, 2018, 

parties who anticipate making 

substitution-based claims under TFTEADrawback designating imported 

merchandise that was entered and 

transferred prior to this date, should 

consult with the transferor about 

whether the transferred merchandise 

potentially is eligible for substitutionbased claims under TFTEA-Drawback. 

Such eligibility only exists if the 

transferred merchandise was not 

previously used as the basis for any 

non-TFTEA drawback claim, because all 

types of non-TFTEA drawback claims 

must be calculated based on invoice 

values, which conflicts with the use of 

per unit averaging when determining 

refunds for imported merchandise on a 

single entry summary line item. 

It is important to note, again, that this 

notification of designation requirement 

is proposed in an effort to better inform 

claimants of possible limitations on the 

type of drawback claim that can be filed 

in situations involving transferred 

merchandise. The designation, however, 

is not a guarantee of the type of claim 

that can be filed. Drawback claimants 

must remain aware that the first 

drawback claim to be filed on a given 

entry summary line item will control 

the type of claim that subsequently can 

be filed in the case of transferred 

merchandise. 

(c) Importers are now jointly and 

severally liable with drawback 

claimants for refunds associated with 

their imported merchandise, when 

designated on a drawback claim. 

Section 906(f) established joint and 

several liability for the drawback 

claimant and the importer of the 

imported merchandise that is 

designated as the basis of the claim. See 

19 U.S.C. 1313(k). Accordingly, 

importers should be aware of this 

liability when transferring imported 

merchandise to other parties for 

purposes of drawback. Therefore, it is 

proposed to amend § 113.62 to reflect 

this liability in the import entry bond 

conditions. 


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B. Filing a TFTEA-Drawback Claim 

TFTEA-Drawback claims must be 

filed electronically. A complete TFTEADrawback claim will consist of the 

successful transmission of the data 

required for the TFTEA-Drawback entry 

and the upload of all required 

documents supporting the claim. When 

submitting the claim, the filer must 

provide, among other things, the 

drawback entry number, filing port 

code, claimant ID number, drawback 

provision, total drawback claim amount 

requested, the import entry summary(s) 

and line item number(s) for the 

designated imported merchandise, other 

required line item data including the 

HTSUS subheading number at the 10- 

digit level, information on exportation 

or destruction, and, if applicable, the 

NAFTA coding sheet. Proposed section 

190.51 provides detailed information 

about specific data elements, 

certifications, and supporting 

documents that may be required 

depending on the particular type of 

drawback claim. 

After transmission, the filer will 

receive an automated message 

indicating either that the electronic 

transmission has been accepted or 

rejected. In the case of a rejection, the 

automated message will inform the filer 

regarding the reason(s) for the rejection. 

Uploads of required forms, and any 

other supporting documentation should 

be submitted through ACE, Document 

Image System, after the successful 

electronic transmission. Further, related 

to filing claims electronically, as noted 

below in the section explaining the 

proposed regulations, a definition for 

‘‘drawback office’’ has been added to 

§ 190.2 clarifying that CBP has the 

authority to share or transfer work 

between drawback offices at its 

discretion. 

For the interim period between 

February 24, 2018 and the date on 

which the new TFTEA-Drawback 

regulations will become effective, CBP 

developed interim procedures for 

accepting electronically filed TFTEADrawback claims. Specifically, to enable 

ACE to recognize and accept such 

claims, notwithstanding the absence of 

the necessary regulatory requirements 

for a complete TFTEA-Drawback claim, 

ACE was programed with provisional 

placeholder requirements, modeled on 

the draft regulatory package then under 

development. Corresponding 

provisional Customs and Trade 

Automated Interface Requirements 

(CATAIR) Guidelines were provided to 

enable claimants to program their 

systems to interface with these 

provisional placeholder requirements in 

ACE. And on February 9, 2018, CBP 

posted on its website a document 

entitled Drawback: Interim Guidance for 

Filing TFTEA Drawback Claims (Interim 

Guidance), to further inform and 

provide guidance to the trading 

community regarding the temporary 

procedures for electronically filing 

TFTEA-Drawback claims during the 

interim period until the implementing 

regulations are finalized and 

operational. This Interim Guidance was 

subsequently twice updated, to provide 

additional clarity. 

The Interim Guidance explained that 

the provisional requirements for 

electronically-filed TFTEA-Drawback 

claims that are reflected in the 

provisional CATAIR and described in 

the Interim Guidance document are 

placeholders only, and will not be used 

to process the claims beyond their 

initial acceptance in ACE. The actual 

final requirements for such claims will 

be established once the rulemaking 

process is complete and the new 

regulations are implemented and 

effective. To the extent that the final 

requirements established through 

rulemaking ultimately differ from the 

provisional placeholders used to accept 

TFTEA-Drawback claims in ACE prior 

to the effective date of the final rule, the 

Interim Guidance explained that 

claimants will be permitted to perfect 

their claims in accordance with the new 

requirements before the claims are 

processed for payment. 

The interim procedures outlined and 

explained in the Interim Guidance will 

remain in place until this rulemaking is 

complete and the final rule to 

implement the regulatory changes 

pending for TFTEA-Drawback claims is 

implemented and effective. 

The programming specifics for 

electronic transmission are explained in 

more detail in the TFTEA-Drawback 

CATAIR Guidelines, which can be 

accessed at: https://www.cbp.gov/trade/ 

ace/catair. Specific questions related to 

filing TFTEA-Drawback claims may be 

directed to a client representative or the 

ACE Account Service Desk at 1–866– 

530–4172 or ACE.Support@cbp.dhs.gov. 

Filers should be aware that a delay of 

more than 24 hours in uploading all 

required accompanying documentation 

after the transmission of the claim data 

will mean that the filing date will be 

tied to the uploading of documents 

rather than the date of transmitting the 

claim data. In some instances, this later 

official date of filing could affect the 

timeliness of a claim. 

C. Required TFTEA-Drawback 

Certifications for Existing 

Manufacturing Rulings and Privileges 

While the processes regarding general 

and specific manufacturing rulings 

detailed in appendices A and B of the 

proposed part 190 will be largely 

unchanged from those described in the 

appendices of part 191, TFTEA does 

have some impact on existing rulings. 

The existing rulings were issued based 

on the requirements of 19 CFR part 191, 

which do not comport with the TFTEADrawback requirements (e.g., the new 

substitution standard and timeframes). 

Accordingly, in order to continue 

operating under an existing 

manufacturing ruling, a manufacturer or 

producer must file a supplemental 

application for a limited modification to 

that ruling. To ensure compliance with 

the TFTEA-Drawback requirements, the 

limited application must include 

revised parallel columns and a bill of 

materials or formula, which must be 

annotated with the applicable HTSUS 

subheading numbers. In addition, a 

certification must be provided to 

confirm that all TFTEA-Drawback 

claims made under the subject 

manufacturing ruling will be in 

conformity with all of the applicable 

statutory and regulatory requirements. 

Any supplemental application to 

modify a ruling issued under 19 CFR 

part 191 (so that it remains viable for 

TFTEA-Drawback claims) must be 

submitted to CBP no later than February 

23, 2019, which is the close of the 

transition period for drawback 

claimants. Any ruling issued under 19 

CFR part 191 that is not modified by 

this deadline will not apply to TFTEADrawback claims; and, manufacturers 

and producers would need to apply for 

a new ruling under 19 CFR part 190. 

Similar to manufacturing rulings, 

drawback privileges granted under 19 

CFR part 191 will not comport with 

TFTEA-Drawback. The privileges are 

the waiver of prior notice of intent to 

export or destroy and accelerated 

payment. With each claim that is filed 

under 19 CFR part 190, a certification of 

conformity with TFTEA-Drawback is 

required for claimants to continue to 

operate under one or both privileges if 

granted pursuant to 19 CFR part 191. 

Unlike for manufacturing rulings, these 

certifications will be made 

electronically with each TFTEADrawback claim. These certifications are 

limited to the drawback provisions 

under which they were originally 

granted in accordance with 19 CFR part 

191, except that privileges granted 

under 19 U.S.C. 1313(j)(1) and 19 CFR 

191 may be applied to TFTEA-Drawback 


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claims made under 1313(j)(1) or 

1313(j)(2). 

The certification processes described 

above are designed to ease the 

administrative burden on CBP while 

minimizing the disruption to those 

operating under existing manufacturing 

rulings and/or privileges. However, 

claimants are responsible for performing 

the requisite due diligence prior to filing 

any TFTEA-Drawback claims; and, the 

consequences of false or inaccurate 

claims include, but are not limited to, 

the denial of drawback refunds and the 

associated privileges, noted above. 

D. Federal Excise Tax and Substitution 

Drawback Claims 

The Internal Revenue Code (IRC) of 

1986, as amended, codified as title 26 of 

the United States Code (26 U.S.C.), is 

the main body of domestic statutory tax 

law of the United States and includes 

laws covering Federal excise taxes. 

Federal excise taxes are imposed on the 

manufacture and distribution of certain 

consumer goods, including upon the 

importation of distilled spirits, wines, 

beer, tobacco products, and certain 

imported taxable fuel and petroleum 

products. While there are also excise 

taxes on other products, it is these taxes, 

because of the structure of the tax and 

the manner in which they are collected, 

that are eligible for drawback under 19 

U.S.C. 1313. 

1. Distilled Spirits, Wines, and Beer: 

Imposition of Federal Excise Tax and 

Exemptions 

Chapter 51 of the IRC sets forth excise 

tax collection and related provisions 

applicable to distilled spirits, wines, 

and beer. In general, this chapter 

provides that a Federal excise tax is 

imposed on all wines, distilled spirits, 

and beer produced in or imported into 

the United States. 26 U.S.C. 5001, 5041, 

5051. 

Statutory exceptions to the required 

payment of Federal excise tax exist. For 

example, when wine, distilled spirits, or 

beer are exported after payment or 

determination of tax, the IRC provides 

for ‘‘drawback’’ in an amount equal to 

the tax paid. 26 U.S.C. 5055, 5062. 

Under these provisions, the excise taxes 

are refunded upon exportation. 

Similarly, drawback is also available 

when wine, distilled spirits, or beer are 

exported from bonded premises 

regulated by the Alcohol and Tobacco 

Tax and Trade Bureau (TTB), where no 

tax has been paid, although tax liability 

attached at the time of production or 

import. While tax must ordinarily be 

paid upon removal of wine, distilled 

spirits, or beer from TTB-bonded 

premises, the removal may occur 

‘‘without payment of tax’’ for the 

purpose of export. 26 U.S.C. 5214(a), 

5362(c), 5053(a). Although removed 

from a TTB-bonded facility, the product 

is still subject to bond and still carries 

a tax liability until the product is 

exported. 26 U.S.C. 5053, 5175, 5362. 

Similarly, Title 19 also provides for 

‘‘drawback equal in amount to the tax 

found to have been paid or determined 

on . . . bottled spirits and wines 

manufactured or produced in the United 

States’’ upon exportation. 19 U.S.C. 

1313(d). Under these drawback 

provisions, a refund is made upon 

exportation if tax has already been paid, 

or if an unpaid tax liability exists, it is 

extinguished upon exportation. The net 

economic effect is identical. 

2. Tobacco: Imposition of Federal Excise 

Tax and Exemptions 

Under Chapter 52 of the IRC, a 

Federal excise tax is imposed on all 

tobacco products and cigarette papers 

and tubes manufactured in or imported 

into the United States. 26 U.S.C. 5701. 

The tax on domestically-produced 

tobacco products and cigarette papers 

and tubes is imposed at the time of 

manufacture but generally is not paid or 

determined until the products are 

removed from TTB-bonded premises. 26 

U.S.C. 5702, 5703. Upon exportation of 

tobacco products and cigarette papers 

and tubes upon which the tax has been 

paid, the IRC permits drawback of the 

tax paid. 26 U.S.C. 5706. In addition, 

tobacco products and cigarette papers 

and tubes may be removed from TTBbonded premises, without the payment 

of Federal excise tax, for export. 26 

U.S.C. 5704. Under these provisions, the 

excise tax liability is extinguished upon 

exportation. The net economic effect is 

identical. 

3. Other Excise Taxes 

Chapter 32 of the IRC imposes various 

excise taxes, including taxes on 

gasoline, diesel fuel, and kerosene 

(taxable fuel). For example, 26 U.S.C. 

4081 imposes tax on the removal of 

taxable fuel from any refinery or 

terminal and on entry into the United 

States for consumption, use, or 

warehousing. The IRC permits the 

refund of this tax when taxable fuel is 

exported. 26 U.S.C. 6416, 6427. When 

the taxable fuel is imported into an IRSregistered facility, it is taxed upon 

removal from the facility and is not 

eligible for drawback under 19 U.S.C. 

1313. Some taxable fuel, however, is not 

imported into an IRS-registered facility, 

in which case the tax is due upon 

importation and may be eligible for 

drawback under 19 U.S.C. 1313. 

4. Federal Excise Taxes Have Been 

Improperly Refunded 

Under customs law, a form of 

drawback known as ‘‘substitution 

drawback’’ also occurs when products 

are imported into the United States and 

sufficiently similar products are 

exported or destroyed. 19 U.S.C. 

1313(j)(2). Treasury Department audits 

and analyses have revealed that for a 

number of years, CBP has received and 

approved claims for substitution 

drawback under 19 U.S.C. 1313(j)(2) for 

imported bottled and bulk wine, even in 

circumstances in which no excise tax 

was paid on the substituted exported 

merchandise. CBP has not identified a 

record of the first time it granted a 

section 1313(j)(2) drawback claim for 

wine based on exported merchandise on 

which tax had not been paid—a claim 

for ‘‘double drawback,’’ drawback of the 

excise tax on both the imported product 

and the exported product. 

An example of a claim for ‘‘double 

drawback’’ of wine proceeds as follows: 

A domestic winery imports 100 liters of 

wine, pays Federal excise tax on the wine, 

and sells the imported wine in the United 

States. The domestic winery then exports 100 

liters of its domestically-produced wine from 

TTB-bonded premises without payment of 

Federal excise tax. The domestic winery files 

a § 1313(j)(2) drawback claim with CBP on 

the basis that the 100 liters of domesticallyproduced wine are commercially 

interchangeable with the to the 100 liters of 

imported wine. The domestic winery 

receives a refund of 99 percent of the Federal 

excise taxes that it paid on the 100 liters of 

imported wine. 

In this example, imported products 

are introduced into the U.S. market, in 

net effect, free of 99 percent of Federal 

excise tax. As a result, in this example, 

the U.S. Treasury ultimately receives 

only one percent of the Federal excise 

tax on the imported products that are 

consumed in the United States. By 

contrast, domestically-produced wine 

consumed in the United States is fully 

taxed. This practice results in revenue 

loss from having untaxed goods 

circulating in commerce. It also has the 

effect of giving imported wine a clear 

tax advantage in the domestic market 

over domestically produced wine. 

Because the revenue loss (or tax break) 

comes in the form of a reduction of tax 

on imported product, it puts 

domestically produced products at a 

disadvantage as compared to imports in 

the U.S. market. 

This result is inconsistent with the 

broader statutory excise tax regime, 

which (on net) generally imposes excise 

taxes on all subject goods consumed in 

the United States, whether produced 

domestically or imported for domestic 


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4 In 2006, the U.S. Department of Agriculture 

estimated that that the cost of production of neutral 

grain spirits at about $0.53 per proof gallon. See 

‘‘Economic Feasibility of Ethanol Production from 

Sugar in the United States,’’ available at https://

www.usda.gov/oce/reports/energy/EthanolSugar

FeasibilityReport3.pdf. The excise tax on distilled 

spirits is $13.50 per proof gallon (see 26 U.S.C. 

5001(a)(1)), or more than 25 times the cost of 

production. 

consumption. In the above example, by 

contrast, the importer/exporter winery 

has (on net) paid no Federal excise tax 

on the exported wine and virtually no 

Federal excise tax on the imported 

wine. In net effect, the winery has 

introduced imported wine 99% free of 

excise tax to compete with domestically 

produced wine that is fully taxed. 

CBP currently permits this practice 

only with respect to wine. But as 

explained, the IRC imposes excise tax 

and provides exemptions from such tax 

for other goods, including distilled 

spirits, beer, tobacco products, and 

certain taxable fuel. Some producers 

have already requested that CBP extend 

its current treatment of wine to distilled 

spirits, and it is possible that firms 

dealing in these other goods may seek 

similar treatment. 

5. Statutory Prohibition on Double 

Drawback 

The allowance of substitution 

drawback claims in circumstances 

where internal revenue taxes have not 

been paid on the substituted product 

results in imported product being 

introduced into commerce with no net 

payment of excise tax—a ‘‘double 

drawback’’ that is at odds with the 

broader statutory schemes of both 

customs drawback and excise taxation. 

As noted above, the IRC generally 

imposes excise taxes upon all covered 

domestic products and products 

imported for domestic consumption. 

The Customs Modernization and 

Informed Compliance Act (Mod Act), 

Public Law 103–182, 632, 107 Stat. 2057 

(1993) (enacted as Title VI of the North 

American Free Trade Agreement 

Implementation Act), added a clause to 

19 U.S.C. 1313(v) providing in relevant 

part that ‘‘[m]erchandise that is 

exported or destroyed to satisfy any 

claim for drawback shall not be the 

basis of any other claim for drawback.’’ 

This provision is best read to preclude, 

among other things, exported or 

destroyed merchandise from being used 

as the basis for both a substitution 

drawback claim and a drawback of 

internal revenue taxes upon exportation 

or destruction. In other words, exported 

merchandise on which excise taxes have 

been paid can form the basis of a 

substitution drawback claim, but 

exported products on which no excise 

tax has been paid cannot be used to 

erase existing tax liability on imported 

products. 

While Congress did not specifically 

define the term ‘‘drawback’’ in 

§ 1313(v), its meaning is clear in context 

and within the broader statutory scheme 

governing drawback and excise taxes. In 

context, drawback encompasses the 

refund or remission of an excise tax that 

was paid, determined, or otherwise 

imposed by Federal law. The term is 

often used to refer to the refund of taxes 

that have been paid previously. See, 

e.g., 19 U.S.C. 1313(a), (c)(1), (j)(1), (j)(2) 

(providing for taxes to be ‘‘refunded as 

drawback’’). But it is not limited to 

refunds, as other provisions use the 

term more broadly to refer to an unpaid 

tax liability that is extinguished. See, 

e.g., § 1313(d) (‘‘there shall be allowed 

. . . a drawback equal in amount to the 

tax found to have been paid or 

determined’’) (emphasis added); 

sections 1313(n)(2), (n)(4), (o)(3) (using 

the phrase ‘‘refunded, waived, or 

reduced’’ to refer to the extinguishing of 

tax liability under subsections (a), (b), 

(f), (h), (p), and (q), each of which uses 

the phrase ‘‘drawback’’). Nor is section 

1313(v)’s use of the term ‘‘drawback’’ 

limited to drawback of taxes imposed 

upon importation. Section 1313(v) refers 

to ‘‘any’’ claim for drawback. That broad 

and inclusive language contrasts with 

the language Congress used when it 

referred to only specific types of 

drawback. See, e.g., sections 1313(j), 

(k)(1), and (1)(2)(A), (B), and (C) 

(referring to drawback ‘‘under this 

section’’); section 1313(n)(2) (referring 

to ‘‘NAFTA drawback’’); section 

1313(n)(4) (referring to ‘‘Chile FTA 

drawback’’). The fact that Congress 

expressly limited ‘‘drawback’’ in certain 

subsections of section 1313 but did not 

do so when it referred to ‘‘any’’ 

drawback in subsection (v) indicates 

that ‘‘drawback’’ is not so limited for 

purposes of this subsection. 

Accordingly, when wine, distilled 

spirits, beer, tobacco products, or other 

products subject to excise tax are 

exported from TTB-bonded premises 

‘‘without payment of tax,’’ pursuant to 

26 U.S.C. 5214, 5362, 5053, or 5704, the 

extinguishment of tax liability upon 

export is best understood as a form of 

drawback within the broad prohibition 

of 19 U.S.C. 1313(v). 

This interpretation is further 

supported by the broader statutory 

scheme, which operates (in net effect) to 

subject all wine, distilled spirits, and 

beer consumed in the United States, 

whether produced domestically or 

imported, to an excise tax. The evident 

purpose of section 1313(v) is to advance 

that objective by preventing excessive 

revenue loss through multiple claims for 

drawback based on a single export. And 

to the same end, the statutes that govern 

withdrawal of wine, distilled spirits, 

beer, or tobacco products from TTBbonded premises authorize regulations 

that may be necessary to protect 

revenue. See 26 U.S.C. 5175, 5214(a)(4), 

5362(c), 5053(a), and 5704(b). 

A contrary interpretation would 

undermine the statutory scheme of 

excise taxes that applies to imports and 

cause undue revenue loss. As just one 

example, a contrary reading of the 

statutory scheme would appear to 

permit an importer of distilled spirits to 

manufacture inexpensive liquor and 

destroy it, without having paid the 

excise tax imposed on domesticallyproduced liquor under 26 U.S.C. 5001. 

The importer in this scenario could then 

use the destruction of that domesticallyproduced liquor to seek a drawback 

under 19 U.S.C. 1313(j)(2) of the excise 

tax on liquor they import. Because the 

excise tax per gallon may far exceed the 

marginal cost of production of some 

types of liquor,4 these manufacturers 

would receive a significant economic 

benefit, despite having never paid 

excise taxes on the domesticallyproduced liquor. They would also have 

avoided excise tax payment not once 

but twice—on both the domestically 

produced liquor and the imported 

liquor—without, on net, increasing 

domestic production for consumption or 

export. The statutory framework that 

imposes excise tax on the domestic 

consumption of alcohol would have 

been almost wholly subverted. 

A contrary interpretation would also 

seem to permit the following 

hypothetical transaction: 

A distilled spirits importer imports 200 

gallons of liquor into a TTB-bonded facility. 

It pays excise tax on 100 gallons and sells 

those in the United States. It then exports the 

remaining 100 gallons without payment of 

Federal excise tax. The importer files a 

§ 1313(j)(2) drawback claim with CBP on the 

basis that the 100 gallons of imported liquor 

sold in the United States is commercially 

interchangeable with the 100 gallons of 

imported liquor exported without payment of 

excise tax. The importer receives a refund of 

99 percent of the Federal excise taxes that it 

paid on the 100 imported gallons sold in the 

United States. 

In this hypothetical, too, imported 

products would be introduced into the 

U.S. market, in net effect, free of 99 

percent of Federal excise tax. As a 

result, the U.S. Treasury would receive 

only one percent of the Federal excise 

tax on the imported products that are 

consumed in the United States. Such 

essentially tax-free treatment of 

domestically-consumed imported 


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5For most imported wine, the tax is $0.282 per 

liter. 26 U.S.C. 5041(b). On a percentage of unit 

value basis, the tax is larger for bulk wine than for 

bottled wine, because the average value of bulk 

wine is less. The average value of imports of bulk 

wine hovered around $1.10 per liter in the years 

2001 to 2016—much less than the average value per 

liter of imported bottled wines, which was about 

five times as great during the same period. See 

Table E. 

6CBP believes the practice of double drawback 

began in or around 2004. For that reason, this 

analysis addresses trade statistics beginning in 

2004. 

alcohol does not comport with the 

statutory drawback scheme in the IRC or 

Title 19. 

Because drawback under 19 U.S.C. 

1313 does not require CBP to verify 

whether substitute exported 

merchandise is tax paid, CBP does not 

have records that would identify 

instances of double drawback at issue 

here. Treasury Department audits and 

analyses have revealed that CBP began 

refunding excise taxes on wine under 19 

U.S.C. 1313(j)(2) in approximately 2004 

when the San Francisco office permitted 

drawback for such a claim. Some of 

these drawback claims may have 

included a double refund. It is possible 

that this change took place due to a 

misunderstanding of a 2004 amendment 

to the drawback statute designed to 

provide for drawback of the Harbor 

Maintenance Tax. See Miscellaneous 

Trade and Technical Corrections Act of 

2003, Public Law 108–429, 118 Stat. 

2433, 2579 at section 1557(a)(1) (2004). 

CBP has never issued a ruling or 

regulation authorizing the current 

treatment with respect to wine. 

Nevertheless, because CBP has 

approved substitution unused drawback 

claims based on wine exports for which 

no excise tax has been paid, its 

treatment of this issue must be changed 

through a notice and comment process. 

See 19 U.S.C. 1625(c). 

Because of the concern that the 

statutory scheme was being subverted 

and because of concerns with revenue 

losses both realized and potential, on 

October 15, 2009, CBP proposed 

amending title 19 of the Code of Federal 

Regulations to preclude the filing of 

substitution drawback claims for 

internal revenue excise tax paid on 

imported merchandise in situations 

where no excise tax was paid upon the 

substituted merchandise or where the 

substituted merchandise had been the 

subject of a different claim for refund or 

drawback of excise tax under any 

provision of the IRC. See Drawback of 

Internal Revenue Excise Tax, 74 FR 

52928. The Alcohol and Tobacco Tax 

and Trade Bureau (TTB) within the 

Department of the Treasury published a 

related proposed rulemaking in the 

same October 15, 2009, edition of the 

Federal Register (Drawback of Internal 

Revenue Taxes, 74 FR 52937). Both 

notices solicited public comments on 

the proposed amendments. 

Subsequently, the notices of proposed 

rulemaking were withdrawn as 

announced in the Federal Register (75 

FR 9359) on March 2, 2010. 

A number of importers of distilled 

spirits have since sought the same 

treatment for their products that wine 

currently receives. Consistent with the 

analysis in this document, CBP has 

denied these requests, but has not 

corrected the treatment of wine through 

a notice and comment process, as 

required by 19 U.S.C. 1625(c). 

6. Impact of Failing To Curtail Double 

Drawback 

For the reasons explained above, CBP 

believes that the phrase ‘‘any other 

claim for drawback’’ in section 1313(v), 

read in context of the broader statutory 

scheme, encompasses the refund or 

remission of an excise tax that was paid, 

determined, or otherwise imposed by 

Federal law. To the extent section 

1313(v) can be considered ambiguous, 

however, CBP has determined that there 

are compelling economic and fiscal 

reasons to resolve any ambiguity to 

preclude substitution drawback claims 

for excise tax paid on imported 

merchandise where no excise tax was 

paid on the substituted merchandise. 

As explained below, firms dealing in 

distilled spirits, beer, tobacco products, 

and certain taxable fuels have a strong 

economic incentive to seek the same 

double drawback treatment currently 

afforded to wine. If CBP fails to adopt 

a uniform interpretation and application 

of section 1313(v), firms dealing in other 

products subject to Federal excise tax 

could also pursue substitution drawback 

claims similar to those that have been 

made for wine under section 1313(j)(2). 

The statutory provisions governing 

excise tax on other goods—beer, 

distilled spirits, tobacco products, and 

certain fuels—are substantially similar 

(and in many material respects, 

identical) to those governing excise tax 

on wine. Maintaining the current 

treatment of drawback claims for wine 

risks a growth in future revenue loss 

attributable to double drawback. 

While proponents of the double 

drawback practice argue that it 

promotes exports, the observed 

economic effects of the practice do not 

support the view that it is an effective 

or efficient export promotion measure. 

Double drawback also places domestic 

products made for domestic 

consumption, which are subject to 

excise tax across the board, at a relative 

disadvantage to products imported for 

domestic consumption, for which 99 

percent of the excise tax may be 

refunded based on a double drawback 

claim. The interpretation of section 

1313(v) reflected in this proposed rule 

would avoid such market-distorting 

disparities. 

A more detailed analysis follows in 

two parts. First, the available trade data 

suggest that double drawback promotes 

imports. In contrast, the trade data 

provide little evidence that total wine 

exports increased in response to double 

drawback. Second, a revenue analysis 

elucidates the incentives that double 

drawback creates for firms that deal in 

goods other than wine and provides 

initial projections of U.S. Government 

revenue loss that could result if these 

firms were provided the same double 

drawback treatment currently available 

only for substituted wine. 

7. Analysis of Trade Statistics 

Imported wine that benefits from 

double drawback enters the U.S. market 

with a substantial tax advantage over 

domestically produced wine. While this 

tax advantage exists for all imported 

wine benefiting from double drawback, 

it is largest for imported bulk wine. 

Because the customs value of imported 

bulk wine is lower than the value for 

bottled wine, excise tax levied by 

volume comprises a greater percentage 

of its average price, meaning that 

producers have a stronger economic 

incentive to claim double drawback on 

bulk wine.5

U.S. import statistics are consistent 

with these incentives. Import volumes 

of wine have grown rapidly during the 

period double drawback has been 

available. In 2004, total U.S. imports of 

wine, either bottled or bulk, were 576 

million liters by volume.6 See Table B. 

By 2016, that figure had grown to 880 

million liters, an increase of over 50 

percent. Id. Much of this increase in 

imports has been driven by bulk wine, 

which has made rapid gains in U.S. 

market share. In 2004, imported bulk 

wine accounted for 0.9 percent of 

domestic wine consumption. By 2016, 

imported bulk wine accounted for 6.2 

percent of domestic wine consumption. 

See Table A. By volume, imports of bulk 

wine grew by 875 percent over that 

period. See Table B. Of course, other 

factors affecting wine trade unrelated to 

drawback may also have affected this 

growth. 

In contrast to the rapid growth of 

imports, the U.S. trade statistics provide 

little evidence that total wine exports by 

volume increased from 2004 to 2016. 

The total volume of wine exports only 

grew by 5.5 percent over that period. 


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7See U.S. International Trade Commission 

Interactive DataWeb, available at https://

dataweb.usitc.gov/ (trade data by product 

classification, volume, value, and country of origin, 

retrieved from the U.S. Census Bureau). 8See IRS Statistics of Income Tax Stats—Excise 

Tax Statistics, available at https://www.irs.gov/ 

statistics/soi-tax-stats-excise-tax-statistics/. 9 26 U.S.C. 5041(b). 

10For example, the average customs value of 

exported grain alcohol is $2.78 per proof gallon 

(USITC DataWeb, supra note 7) while the tax is 

$13.50 per proof gallon (26 U.S.C. 5001(a)(1)). The 

customs value includes profits and other expenses 

in addition to the cost of production. In 2006, the 

U.S. Department of Agriculture estimated the cost 

of production of neutral grain spirits at about $0.53 

per proof gallon. See ‘‘Economic Feasibility of 

Ethanol Production from Sugar in the United 

States,’’ supra note 1. 

11See Table E; infra note 19. 

See Table B. Disaggregating exports into 

those eligible for drawback and those 

ineligible for drawback casts further 

doubt on the effect of drawback on total 

exports. Exports from the United States 

to NAFTA countries, Canada and 

Mexico, are not eligible for substitution 

drawback. Therefore, they are not 

subsidized through the double 

drawback mechanism. Yet the volume 

of U.S. wine exports to these countries 

experienced a compound annual growth 

rate (CAGR) of 3.3 percent, while export 

volumes to countries for which 

substitution drawback was available 

experienced a 0.01 percent CAGR over 

the same period. See Table D. 

Although the value of U.S. bottled 

wine exports has risen from 2004 to 

2016 (from $600 million to $1.05 

billion), the average unit value of the 

exports also increased during that 

period (from $2.30 to $6.10). See Table 

B and Table E. At the same time, 

volumes of bottled wine exports fell by 

a third. See Table B. U.S. wine export 

values grew substantially faster (5.2 

percent CAGR) than did export volumes 

(0.4 percent CAGR) from 2004 to 2016. 

See Table B and Table C. This suggests 

that the increase in bottled wine exports 

by value was driven by price increases 

in the average unit value of the exports, 

not by an increase in export volumes. 

Because the excise tax on wine is levied 

by volume and not by value, this 

suggests that the increase in the value of 

exports is not directly connected to the 

availability of double drawback and is 

due to other factors. 

While U.S. trade statistics do not 

indicate a significant increase in total 

wine exports, they do indicate a change 

in the composition of exports while 

double drawback has been available. 

From 2004 to 2016, the share of 

exported wine in bulk containers rose 

from 20.8 percent to 50.6 percent by 

volume, consistent with the shift in 

composition of imports discussed 

above. See Table B. This growth in the 

share of bulk exports is only evident for 

exports to non-NAFTA countries, which 

rose from 16.2 percent to 55.2 percent. 

See Table D. Exports to NAFTA 

countries, which are not eligible for 

double drawback, show no shift toward 

bulk exports over that period. See id. In 

addition, while U.S. exports of bulk 

wine have grown during the period from 

2004 to 2016, growth in the volume of 

bulk wine imports has been much 

greater. Overall, during the same period, 

there has been an increase in the U.S. 

trade deficit for wine—including for 

bulk wine. See Table C. 

In short, while it is not possible to say 

that double drawback is the primary 

driver of the wine trade trends, available 

trade data are consistent with the view 

that double drawback may have 

promoted wine imports but that it has 

not been an effective export promotion 

measure. 

8. Revenue Loss Analysis 

Maintaining the current double 

drawback treatment of wine and 

extending that treatment to other 

products subject to excise tax—distilled 

spirits, beer, tobacco products, and 

certain taxable fuels—would cause 

significant revenue loss to the U.S. 

Government. 

(a) Data 

Because drawback claims have not 

previously captured the tax-paid status 

on substituted exports, the exact amount 

of revenue lost to double drawback 

involving imported wine is not certain. 

Nevertheless, analysis of CBP import 

data and individual drawback claims at 

the firm level permit a reasonable 

estimate of the historical revenue loss 

from double drawback treatment of 

wine imports.7 Because CBP has not 

kept drawback summary statistics based 

on tariff category and type of tax, this 

estimate with respect to wine is based 

on an analysis of individual drawback 

claims made by firms involved in wine 

trade and comparing the ratios of 

drawback claimed for duties with those 

claimed for taxes to differentiate 

between shipments of bulk and bottled 

wine. These firm-level data are 

statutorily-protected from public 

disclosure. See 26 U.S.C. 6103 

(confidentiality of tax return 

information); 18 U.S.C. 1905 (Trade 

Secrets Act). With respect to other 

products, Treasury’s estimates are based 

on current excise tax revenue for each 

product.8 The estimated rate at which 

firms are projected to take advantage of 

double drawback (‘‘takeup rate’’) is 

informed by the economic incentives 

and data described below—chiefly, 

excise tax as a share of product value, 

and the potential growth in exports 

resulting from the expansion of double 

drawback treatment. 

(b) Theory, Assumptions, and Estimate 

Excise taxes on most products 

addressed in this rule are applied based 

on volume, not as a percentage of value. 

For example, the standard excise tax on 

wine is $1.07 per wine gallon.9 The 

greater the ratio of excise tax to product 

value, the greater the incentive to avoid 

payment of the tax through means such 

as double drawback. The historical 

experience with respect to wine bears 

this out: Excise tax as a share of customs 

value has been about 5 percent for 

bottled wine and 25 percent for bulk 

wine in recent years. See Table E. Based 

on differences in the tariff rates for 

bottled and bulk wine that are reflected 

in the amounts of individual drawback 

transactions, Treasury estimates the 

takeup rate for double drawback of wine 

to be 13 percent for bottled imports and 

24 percent for bulk imports. The 

difference in these rates indicates that 

tax as a share of value is an important 

determinant of takeup rate. For some 

products, such as beer, tax as a share of 

customs value is similar to that of wine. 

For other products subject to excise tax, 

tax as a share of value is much higher 

than it is for wine—sometimes 

exceeding 100 percent. Indeed, for some 

distilled spirits, excise tax can be many 

multiples the cost of production.10

Excise tax as a share of tobacco 

products’ value is also much higher 

than it is as a share of the value of 

wine.11 This dynamic creates a strong 

incentive for firms that deal in these 

other products to seek double drawback 

of excise taxes paid on imports by 

inexpensively manufacturing domestic 

products for either export or 

destruction. Because of the strength of 

this incentive, firms dealing in these 

products likely would take advantage of 

double drawback at higher rates than 

the wine industry has historically if it 

were available to them. 

A second factor of particular concern 

is the market-distorting incentive for rerouting shipments that an expansion of 

double drawback would create. Double 

drawback creates an incentive for firms 

that both import and export to route a 

shipment destined for another country 

through the United States to claim 

excise tax relief on imports into the 

United States. Under this approach, 

first, a firm imports 200 units of, for 

example, distilled spirits. It removes 

100 units from customs custody for 

domestic sale and pays excise tax for 

their import. It then imports the second 

100 units into TTB bond, without 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37898 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

12Excise Tax Statistics, supra note 8. From 2010 

to 2016, excise tax revenue for imported beer, wine, 

and distilled spirits grew much more quickly than 

revenue for tobacco products or taxable fuels. See 

id. 

13These estimates are in nominal U.S. dollars, 

whereas the figures in the Executive Orders 13563 

and 12866 analysis are in undiscounted and 

discounted 2016 U.S. dollars. Because of this 

difference, only a rough estimate of the total 

transfers from the rule and this alternate analysis 

can be determined. This estimate can be determined 

by adding the revenue losses of extending double 

drawback to the rule’s undiscounted net transfers 

from the U.S. Government to trade members. 

14See id. Refunds or drawback paid in any given 

year may be paid for imports made in previous 

years. The $54.9 million figure is a summation of 

individual drawback claims from CBP data that are 

statutorily-protected from public disclosure. TTB 

publishes the $335 million figure. See TTB 

Statistical Release, ‘‘Tax Collections Cumulative 

Summary, FY 2015,’’ available at https://

www.ttb.gov/statistics/final15.pdf. 

15These estimates are slightly different from the 

wine double drawback estimates shown in Table 49 

of the Executive Orders 13563 and 12866 analysis. 

This is because these estimates are in nominal U.S. 

dollars, whereas the figures in Table 49 are in 

undiscounted 2016 U.S. dollars. 

16Accessed through the USITC DataWeb, supra 

note 7. 

17 26 U.S.C. 5001(a)(1). The CBMA reduces the 

excise tax on a portion of imported goods. The 

estimates reported in this analysis assume the 

CBMA is extended indefinitely, reducing the 

revenue loss by roughly 7 percent. 

18See supra note 10. 

19For the years 2014–2016, vodka, gin, and grain 

alcohol imports represented 34% of total spirits 

imports. Because the cost of production for these 

spirits is so low relative to the tax, we expect a 

strong behavioral response, including increased 

exports, trade re-routing, and destruction, such that 

all imports could qualify for duty drawback. In 

contrast, brandy, liqueurs, and cordials are 

relatively high value spirits, making destruction 

and increased exports less feasible. For these 

products, we assume that opportunities to claim 

double drawback are limited by current exports, 

which amount to 2 percent of current spirits 

imports. Finally, we assume that all spirits exports 

from Canada and Mexico to non-NAFTA countries 

could be re-routed through the United States to take 

advantage of double drawback. Using United 

Nations International Trade Statistics data for 

2014–2016, we estimate that, at current trade levels, 

this re-routing would generate double drawback 

claims for up to 8 percent of US spirits imports. 

Adding these shares of imports together, without 

rounding, sums to 45 percent of US imports. 

20 In 2016, the average customs value of imported 

beer was $145.98 per barrel while the average free 

alongside ship (FAS) value of exports was $116.06 

per barrel. See USITC DataWeb, supra note 7. The 

U.S. Census Bureau defines ‘‘customs value’’ and 

‘‘FAS export value’’ in their Guide to Foreign Trade 

Statistics, § 8, available at https://www.census.gov/ 

foreign-trade/guide/sec2.html#customs_value. 

Treasury uses customs value and FAS value, 

because data on cost of production are not 

available. 

having paid excise tax on their import 

and then exports the product from bond, 

and also uses that exportation to seek 

drawback under 19 U.S.C. 1313(j)(2) of 

the import tax paid on the first 100 

units. The first 100 units of distilled 

spirits would then have been consumed 

domestically at 1 percent of the normal 

tax rate, without increasing domestic 

production or net exports. Depending 

on the cost of shipping, firms would 

have an incentive to route shipments 

destined for other countries through the 

United States—without increasing 

domestic production or exports—to 

claim double drawback on their U.S. 

imports. In the analysis, we assume 

trade re-routing of all distilled spirits 

from Canada and Mexico bound for nonNAFTA countries is feasible. We also 

assume that trade re-routing of gin, 

vodka, and grain alcohol worldwide is 

feasible, though the analysis does not 

rely on substantial rerouting of these 

products. 

The following estimates also assume a 

7 percent reduction in revenue loss by 

comparison to the historical data 

concerning wine due to the Craft 

Beverage Modernization Act (CBMA), 

Public Law 115–97, § 13801–13808 

(2017). The CBMA provides lower 

overall effective tax rates for smaller 

producers than for larger producers. 

This assessment of the effects of the 

CBMA is based on the assumption that 

most double drawback claims would be 

taken by large multinational firms 

paying the full rate on marginal imports 

above the limit identified in the CBMA. 

The transaction costs involved in 

drawback support the view that 

drawback most benefits larger firms that 

are involved in both exporting and 

importing. 

The following estimates further 

assume that double drawback of wine, 

distilled spirits, and beer would grow 

with real GDP. That is, Treasury 

assumes that consumption of excisetaxed beverages, and drawback on those 

taxes, would grow with the overall 

economy. Treasury uses the 

Administration’s forecast of taxable fuel 

and tobacco excise tax revenue to 

estimate change over time. Both of these 

forecasts decrease slightly over time, 

consistent with recent trends in excise 

revenue.12

In total, the incentives for firms that 

deal in distilled spirits, beer, tobacco 

products, and certain fuels—in addition 

to the continued double drawback 

treatment of wine—could cause a 

revenue loss of $674 million to $3.3 

billion on an average annual basis over 

the next ten years, if double drawback 

treatment were extended to 

commodities other than wine and not 

eliminated.13

(c) Wine 

In fiscal year 2015, CBP paid $54.9 

million in excise tax refunds and had 

initial tax collections from wine imports 

of $335 million, according to CBP 

data.14 As noted above, the tax as a 

share of customs value is 5 percent for 

bottled wine and 25 percent for bulk 

wine. The estimated takeup rate—that 

is, the rate of double drawback claims— 

is 13 percent for bottled imports and 25 

percent for bulk imports, demonstrating 

that tax as a share of value is an 

important determinant of the takeup 

rate. Assuming that double drawback 

continues to grow with real GDP, the 

current treatment of wine is estimated to 

cause between $51 million and $69 

million in revenue loss to the U.S. 

Government annually over the next ten 

years.15

(d) Distilled Spirits 

With respect to distilled spirits, fiscal 

year 2016 excise tax revenue from 

imports was $1.5 billion, according to 

TTB collections data. A large portion of 

imports are, however, imported into 

TTB bond and then are treated as 

domestic collections. U.S. Census 

Bureau data suggest actual import excise 

tax revenue is closer to $2.6 billion.16

The tax as a share of customs value for 

distilled spirits—currently $13.50 per 

proof gallon 17—is 5 to 8 times higher 

than it is for wine, creating a 

significantly greater incentive to export 

to take advantage of double drawback. 

Further, as noted above, the tax is much 

higher than the cost of production for 

inexpensive distilled spirits.18 For this 

reason, Treasury expects strong 

behavioral responses to generate 

substitution drawback claims if distilled 

spirits become eligible for double 

drawback, including purposeful 

destruction of inexpensive distilled 

spirits and routing of goods destined for 

other countries through the United 

States when feasible. We estimate that 

up to 45 percent of imported spirits 

would be commercially viable 

predicates for double drawback 

claims.19 Varying the projected takeup 

rate between 25 percent and 75 percent 

for these claims, annual U.S. 

Government revenue loss from allowing 

double drawback on distilled spirits is 

estimated to range from $312 million to 

$937 million annually over ten years. 

(e) Beer 

With respect to beer, fiscal year 2016 

excise tax revenue from imports was 

$542 million, according to TTB 

collections data. The tax of $18 per 

barrel is 12.3 percent of the value of 

imports and 15.5 percent of the value of 

exports,20 suggesting firms have a 

stronger incentive to claim double 

drawback on beer than bottled wine. 

However, qualifying, non-NAFTA 

exports of beer amount to only 4 percent 

of imports, suggesting limited scope for 


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Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37899 

21 In 2016, the average customs value of 1,000 

imported cigarettes was $25.335 while the average 

FAS value of 1,000 exported cigarettes was $12.345. 

See USITC DataWeb, supra note 6. The Federal 

excise tax on 1,000 cigarettes is $50.33. 26 U.S.C. 

5701(b)(1). 

22The range of possible outcomes is large, 

primarily due to uncertainty in the timing of firm 

responses rather than the magnitude of response. 

Specifically, Treasury does not know how quickly 

tobacco companies might set up new or use existing 

overseas production operations to serve the U.S. 

market. 

23Retrieved from USITC DataWeb, supra note 7. 

takeup of double drawback. Varying the 

projected takeup rate between 10 

percent and 30 percent on existing 

imports and exports, and varying the 

increase in qualifying exports between 

10 percent and 30 percent, annual U.S. 

Government revenue loss from 

extending double drawback to beer is 

estimated to range from $9 million to 

$28 million annually over ten years. 

(f) Tobacco Products 

With respect to tobacco products, 

fiscal year 2016 excise tax revenue on 

imports was $829 million according to 

TTB collections data. The tax incentives 

to claim double drawback are especially 

strong for tobacco products. For 

instance, in 2016, the Federal excise tax 

on a carton of cigarettes was 199 percent 

of the average customs value of a carton 

of imported cigarettes and 408 percent 

of the average export value of a carton 

of cigarettes exported from the United 

States based on U.S. Census Bureau 

trade data.21 The tax rate by value is 

about 40 times larger for cigarettes than 

that for bottled wine, suggesting the 

incentive to claim drawback on 

cigarettes is considerably larger than the 

incentive to claim drawback on wine. 

Extending the double drawback 

treatment to tobacco products would 

create significant incentives to shift 

production of tobacco products 

overseas. It would also create a great 

incentive for importers to contract with 

domestic producers to match imports 

and exports for drawback; the incentive 

would be to import products for 

domestic sale and export domestically 

produced cigarettes. Because 

domestically produced tobacco products 

account for 95 percent of domestic 

tobacco consumption, Treasury assumes 

that tobacco firms would gradually 

respond by contracting with importers 

and setting up foreign production 

facilities. Accounting for this slow 

ramp-up in drawback claims, Treasury 

estimates that between 3 percent and 18 

percent of excise revenue on tobacco 

products would be lost due to an 

extension of double drawback to 

tobacco products over the next 10 years, 

or between $332 million and $2.2 

billion annually.22 In the long run, 

Treasury estimates that U.S. 

Government revenue losses would be 

substantially higher, with increasing 

shifts of domestic production overseas. 

(g) Taxable Fuels 

Finally, with respect to taxable fuels, 

current annual excise tax revenue on 

imports is roughly $2 billion according 

to U.S. Census Bureau data on imports 

of gasoline and diesel fuel.23 Due to the 

lack of detailed data on fuel imports, 

differentiating between those 

importations eligible for drawback 

under 19 U.S.C. 1313 and those that are 

not, it is quite difficult to estimate the 

takeup rate on substitution drawback for 

taxable fuels. Even a small takeup rate, 

however, could have a significant 

economic impact. Assuming, for 

example, that 1 percent to 5 percent of 

imported fuel receives double drawback 

of excise taxes, the U.S. Government 

revenue loss would range between $20 

million and $98 million annually over 

ten years. 

9. Conclusion 

This proposed rule would protect the 

integrity of excise tax revenue 

collections by ensuring that 19 U.S.C. 

1313(j)(2) substitution drawback is not 

employed to evade the statutory 

prohibition on using a single 

exportation as the basis for two 

drawback claims. It would preclude the 

filing of substitution drawback claims 

for excise tax paid on imported 

merchandise in situations where no 

excise tax was paid upon the substituted 

merchandise or limit the amount of 

drawback allowable to the amount of 

taxes paid (and not returned by refund, 

credit, or drawback) on the substituted 

merchandise, and thus eliminate double 

drawback. CBP invites comments from 

interested members of the public on this 

proposal. 

TABLE A—IMPORT SHARES BY VOLUME OF TOTAL U.S. TABLE WINE CONSUMPTION 1

Year 

Imported wine container size 2

Imported sum Two liters or 

less (bottles) 

Over four liters 

(bulk) 3

2004 ............................................................................................................................................. 26.0 0.9 26.9 

2005 ............................................................................................................................................. 26.8 1.8 28.6 

2006 ............................................................................................................................................. 26.5 3.6 30.1 

2007 ............................................................................................................................................. 27.2 3.8 30.9 

2008 ............................................................................................................................................. 25.4 4.6 30.0 

2009 ............................................................................................................................................. 24.5 8.7 33.2 

2010 ............................................................................................................................................. 25.7 6.5 32.2 

2011 ............................................................................................................................................. 24.6 7.7 32.3 

2012 ............................................................................................................................................. 22.8 12.7 35.5 

2013 ............................................................................................................................................. 23.5 8.9 32.4 

2014 ............................................................................................................................................. 21.9 7.3 29.2 

2015 ............................................................................................................................................. 22.9 6.6 29.5 

2016 ............................................................................................................................................. 21.9 6.2 28.1 

2004–2016: 

CAGR 4 (Pct) ........................................................................................................................ ¥1.4 17.1 0.4 

Total growth (Pct) ................................................................................................................. ¥15.7 567.2 4.5 

Sources: 

U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 2, 2018. 

Alcohol and Tobacco Tax and Trade Bureau, ‘‘Tax Collections,’’ accessed March 2, 2018. 

1. Total U.S. wine consumption is estimated using gross excise tax collections and tax rates for wine. 

2. The ITC website explains that: ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such 

merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade 

Zones.’’ 

3. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37900 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

4. CAGR is compound annual growth rate. 

Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit imports codes 2204215005, 2204215015, 2204215015, 

2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 2204215050, 2204215055, 2204215060, and 2204296000. 

TABLE B—VOLUME OF U.S. TOTAL WINE EXPORTS AND GENERAL IMPORTS BY CONTAINER SIZE (ALL COUNTRIES) 

[Millions of liters of wine with not over 14 percent alcohol by volume] 

Year 

Total exports 1

Exported 

sum 

Pct share 

in large 

containers 

General imports 2

Imported 

sum 

Pct share 

in large 

containers 

Container Size Container Size 

Two liters 

or less 

(bottles) 

Over two 

liters 

(bulk) 

Two liters 

or less 

(bottles) 

Over 

four liters 

(bulk) 3

2004 ................................. 259 68 327 20.8 556 20 576 3.5 

2005 ................................. 177 100 278 36.2 602 40 642 6.2 

2006 ................................. 189 138 327 42.3 615 84 699 12.0 

2007 ................................. 207 169 376 45.0 661 92 753 12.2 

2008 ................................. 209 201 410 49.0 623 112 735 15.2 

2009 ................................. 177 171 349 49.2 612 218 830 26.3 

2010 ................................. 171 196 368 53.4 658 168 826 20.3 

2011 ................................. 185 190 375 50.8 673 211 884 23.9 

2012 ................................. 196 167 364 46.1 659 365 1024 35.6 

2013 ................................. 207 172 379 45.4 671 255 926 27.5 

2014 ................................. 195 176 371 47.5 655 219 874 25.1 

2015 ................................. 205 180 385 46.7 685 197 882 22.3 

2016 ................................. 171 175 345 50.6 685 195 880 22.2 

2004–2016: 

CAGR 4 (Pct) ............. ¥3.4 8.2 0.4 7.7 1.8 20.9 3.6 16.7 

Total growth (Pct) ..... ¥34.1 156.6 5.5 143.2 23.2 875.0 52.8 538.2 

Source: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 2, 2018. 

1. The ITC describes total exports as ‘‘Domestic exports plus foreign exports’’ on their website. 

2. The ITC website explains that ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such 

merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade 

Zones.’’ 

3. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 

4. CAGR is compound annual growth rate. 

Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. HTS imports codes used include 2204215005, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 

2204215050, 2204215055, 2204215060, and 2204296000. 

TABLE C—VALUE OF U.S. TOTAL WINE EXPORTS AND GENERAL IMPORTS BY CONTAINER SIZE (ALL COUNTRIES) 

[Millions of U.S. dollars of wine with not over 14 percent alcohol by volume] 

Year 

Total exports, free 

alongside ship (FAS) 1

Exported 

sum 

Pct share 

in large 

containers 

General imports, 

general customs value 2

Imported 

sum 

Pct share 

in large 

containers 

Container Size Container Size 

Two liters 

or less 

(bottles) 

Over two 

liters 

(bulk) 

Two liters 

or less 

(bottles) 

Over four 

liters 

(bulk) 3

2004 ................................. 600 82 682 12.0 2,658 19 2,677 0.7 

2005 ................................. 452 91 543 16.8 2,891 35 2,926 1.2 

2006 ................................. 616 121 737 16.4 3,153 67 3,220 2.1 

2007 ................................. 635 151 786 19.2 3,494 77 3,571 2.2 

2008 ................................. 645 182 827 22.0 3,511 114 3,625 3.1 

2009 ................................. 549 202 751 26.9 3,029 157 3,186 4.9 

2010 ................................. 702 212 914 23.2 3,143 149 3,292 4.5 

2011 ................................. 869 213 1,082 19.7 3,420 225 3,645 6.2 

2012 ................................. 905 199 1,104 18.0 3,458 400 3,858 10.4 

2013 ................................. 1,037 235 1,272 18.5 3,652 281 3,933 7.1 

2014 ................................. 921 240 1,161 20.7 3,708 242 3,950 6.1 

2015 ................................. 1,035 227 1,262 18.0 3,709 202 3,911 5.2 

2016 ................................. 1,050 205 1,255 16.3 3,779 217 3,996 5.4 

2004–2016: 

CAGR 4 (Pct) ............. 4.8 7.9 5.2 2.6 3.0 22.5 3.4 18.5 

Total growth (Pct) ..... 75.0 150.0 84.0 35.9 42.2 1,042.1 49.3 665.1 

Source: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 15, 2018. 

The ITC describes total exports as ‘‘Domestic exports plus foreign exports’’ on their website. The U.S. Census Bureau provides definitions of 

FAS export value and customs value in their Guide to Foreign Trade Statistics, § 8, available at https://www.census.gov/foreign-trade/guide/ 

sec2.html#customs_value. 

1. The ITC website explains that ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such 

merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade 

Zones.’’ 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37901 

2. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 

3. CAGR is compound annual growth rate. 

Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. HTS imports codes used include 2204215005, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 

2204215050, 2204215055, 2204215060, and 2204296000. 

TABLE D—VOLUME OF U.S. TOTAL WINE EXPORTS 1 BY DESTINATION

[Millions of liters of wine with not over 14 percent alcohol by volume] 

Year 

Exports to 

NAFTA 

countries 

Pct share in 

large 

containers 2

Exports to 

non-NAFTA 

countries 

Pct share in 

large 

containers 

2004 ................................................................................................................. 37 56.7 290 16.2 

2005 ................................................................................................................. 35 50.7 243 34.1 

2006 ................................................................................................................. 40 38.0 287 42.9 

2007 ................................................................................................................. 50 37.2 325 46.2 

2008 ................................................................................................................. 55 39.8 354 50.5 

2009 ................................................................................................................. 48 29.4 301 52.3 

2010 ................................................................................................................. 42 33.3 325 56.0 

2011 ................................................................................................................. 46 33.4 329 53.2 

2012 ................................................................................................................. 53 30.9 311 48.6 

2013 ................................................................................................................. 50 18.0 330 49.6 

2014 ................................................................................................................. 57 22.6 314 52.0 

2015 ................................................................................................................. 61 27.0 324 50.4 

2016 ................................................................................................................. 55 25.6 291 55.2 

2004–2016: 

CAGR 3 (Pct) ............................................................................................. 3.3 ¥6.4 0.0 10.8 

Total growth (Pct) ..................................................................................... 47.6 ¥54.8 0.2 240.6 

Source: Treasury calculations based on import data from U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ 

accessed March 2, 2018. 

1. The ITC website describes total exports as ‘‘Domestic exports plus foreign exports.’’ 

2. Large containers is defined here as containers over 2 liters in size. 

3. CAGR is compound annual growth rate. 

Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. 

TABLE E—AVERAGE VALUE OF U.S. TOTAL WINE EXPORTS AND GENERAL IMPORTS AND EFFECTIVE TAX RATES BY

CONTAINER SIZE (ALL COUNTRIES) 

[U.S. dollars per liter of wine with not over 14 percent alcohol by volume] 

Year 

Average value per liter of total exports 1 Average value per liter of general imports 2

Two liters or less 

(bottles) 

Over two liters 

(bulk) 

Two liters or less 

(bottles) 

Over four liters 

(bulk) 3

Value per 

liter 4

Tax/value 

(pct) 

Value per 

liter 

Tax/value 

(pct) 

Value per 

liter 

Tax/value 

(pct) 

Value per 

liter 

Tax/value 

(pct) 

2004 ................................. 2.3 12.2 1.2 23.5 4.8 5.9 1.0 29.8 

2005 ................................. 2.5 11.1 0.9 31.2 4.8 5.9 0.9 32.3 

2006 ................................. 3.3 8.7 0.9 32.2 5.1 5.5 0.8 35.4 

2007 ................................. 3.1 9.2 0.9 31.6 5.3 5.3 0.8 33.8 

2008 ................................. 3.1 9.1 0.9 31.2 5.6 5.0 1.0 27.8 

2009 ................................. 3.1 9.1 1.2 24.0 4.9 5.7 0.7 39.2 

2010 ................................. 4.1 6.9 1.1 26.2 4.8 5.9 0.9 31.9 

2011 ................................. 4.7 6.0 1.1 25.3 5.1 5.6 1.1 26.5 

2012 ................................. 4.6 6.1 1.2 23.8 5.2 5.4 1.1 25.8 

2013 ................................. 5.0 5.6 1.4 20.7 5.4 5.2 1.1 25.7 

2014 ................................. 4.7 6.0 1.4 20.7 5.7 5.0 1.1 25.6 

2015 ................................. 5.0 5.6 1.3 22.4 5.4 5.2 1.0 27.6 

2016 ................................. 6.1 4.6 1.2 24.1 5.5 5.1 1.1 25.4 

2004–2016: 

CAGR 5 (Pct) ............. 8.5 ¥7.8 ¥0.2 0.2 1.2 ¥1.2 1.3 ¥1.3 

Total growth (Pct) ..... 165.7 ¥62.4 ¥2.6 2.6 15.4 ¥13.3 17.1 ¥14.6 

Source: U.S. International Trade Commission, ‘‘Interactive Tariff and Trade DataWeb,’’ accessed February 2–15, 2018. 

1. The ITC describes total exports as ‘‘Domestic exports plus foreign exports’’ on their website. 

2. The ITC website explains that ‘‘General Imports measure the total physical arrivals of merchandise from foreign countries, whether such 

merchandise enters consumption channels immediately or is entered into bonded warehouses under Customs custody or from Foreign Trade 

Zones.’’ 

3. The amount of imported wine in containers between 2 and 4 liters in size is negligible and is omitted from the table. 

4. The tax as a share of value is approximated by dividing the most common tax rate (28.266 cents per liter) by the average customs value 

per liter. 

5. CAGR is compound annual growth rate. 

Note: Wine trade data in the table include Harmonized Tariff Schedule (HTS) 10-digit exports codes 2204214000 and 2204290020. HTS imports codes used include 2204215005, 2204215015, 2204215025, 2204215030, 2204215035, 2204215040, 2204215045, 2204215046, 

2204215050, 2204215055, 2204215060, and 2204296000. 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37902 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

24Title 19 of the Code of Federal Regulations may 

also refer to the harbor maintenance tax as the 

harbor maintenance fee (HMF). 

III. Explanation of Proposed 

Regulations 

The following proposed regulatory 

amendments are generally based on 19 

U.S.C. 1313, including the new 

requirements, timeframes, and related 

operational decisions necessitated by 

TFTEA. When proposed regulatory 

language is based, at least in part, on 

authority other than 19 U.S.C. 1313, 

these instances are noted below. 

A. Proposed New Part 190 

CBP based the regulatory structure of 

the proposed new part 190 on the 

current part 191 in order to ease the 

transition for drawback practitioners by 

attempting to ensure, wherever possible, 

that the numerical regulations in each 

part correspond with each other. In 

some regulations, while the name of a 

section has changed, the content of the 

proposed section generally aligns with 

the content of the corresponding section 

in part 191. For example, § 191.10, 

Certificate of delivery, deals with 

transfers of merchandise and 

requirements related to certificates of 

delivery as evidence of the transfers. 

However, proposed § 190.10, Transfer of 

merchandise, also deals with transfers 

of merchandise but it is not called 

‘‘certificate of delivery’’ because TFTEA 

eliminated certificates of delivery (as 

well as certificates of manufacture and 

delivery). In other instances, it was 

necessary to reserve a section (e.g., 

§ 190.76, Landing certificate) if the 

corresponding section in part 191 was 

no longer required or to add a new 

section (e.g., § 190.63, Liability for 

drawback claims) if there was no 

corresponding section in part 191. 

However, for the most part, the 

regulations in proposed part 190 

directly correspond with those in part 

191. Accordingly, when describing the 

proposed regulations, comparisons to 

the corresponding section in part 191 

are included to facilitate the transition 

to TFTEA-Drawback. Generally, these 

comparisons will note the major 

differences between the proposed 

regulation and the corresponding 

regulation in part 191 (such as in 

regulations dealing with substitution 

which is now generally based on the 

HTSUS), or, in many cases, will indicate 

that there are no differences (other than 

the references being to sections in part 

191) or that the differences are minor. 

These minor differences will usually 

include grammatical or stylistic edits 

(for example, changing ‘‘shall’’ to ‘‘will’’ 

or ‘‘must’’) or nomenclature changes (for 

example, changing ‘‘Customs’’ to ‘‘CBP’’ 

such as in ‘‘CBP custody’’ or ‘‘CBP 

supervision’’). 

New part 190 is drafted with a scope 

section and a section regarding claims 

filed under NAFTA followed by 19 

subparts: General Provisions; 

Manufacturing Drawback; Unused 

Merchandise Drawback; Rejected 

Merchandise; Completion of Drawback 

Claims; Verification of Claims; 

Exportation and Destruction; 

Liquidation and Protest of Drawback 

Entries; Waiver of Prior Notice of Intent 

to Export; Accelerated Payment of 

Drawback; Internal Revenue Tax on 

Flavoring Extracts and Medicinal or 

Toilet Preparations (Including 

Perfumery) Manufactured From 

Domestic Tax-Paid Alcohol; Supplies 

for Certain Vessels and Aircraft; Meats 

Cured With Imported Salt; Materials for 

Construction and Equipment of Vessels 

and Aircraft Built for Foreign 

Ownership and Account; Foreign-Built 

Jet Aircraft Engines Processed in the 

United States; Merchandise Exported 

From Continuous CBP Custody; 

Distilled Spirits, Wines, or Beer Which 

Are Unmerchantable or Do Not Conform 

to Sample or Specifications; 

Substitution of Finished Petroleum 

Derivatives; Merchandise Transferred to 

a Foreign Trade Zone From CBP 

Custody; Drawback Compliance 

Program. 

Section 190.0 briefly describes the 

scope of the new proposed part 190 

dealing with drawback as amended by 

TFTEA. 

Section 190.0a states that claims 

involving NAFTA are provided for in 

part 181. This section contains only 

grammatical changes from the 

corresponding section in part 190. 

Subpart A—General Provisions 

Section 190.1 briefly describes the 

authority of the Commissioner of CBP to 

prescribe, and of the Secretary of the 

Treasury to approve, rules and 

regulations regarding drawback. It is 

proposed to amend the corresponding 

section in part 191 as well as to identify 

Treasury Department Order Number 

100–16 and DHS Delegation Order 

7010.3 as sources of authority. See 19 

CFR part 0. 

Section 190.2 lists definitions used 

throughout the proposed part 190. This 

section differs from the corresponding 

section in part 191 in that the 

definitions for certificate of delivery, 

certificate of manufacture and delivery, 

and commercially interchangeable 

merchandise have been removed and 

the definitions for the following terms 

were added: Bill of materials; document; 

drawback office; formula; intermediate 

party; per unit averaging; schedule B; 

sought chemical element; and wine. 

Section 190.3 provides information 

regarding the duties, taxes, and fees 

subject or not subject to drawback. This 

proposed regulation differs from the 

corresponding regulation in part 191 in 

that it generally provides for refunds of 

duties, taxes, and fees based on the 

changes to 19 U.S.C. 1313(l) stemming 

from TFTEA. This proposed regulation 

differs from the current corresponding 

regulation in part 191 by allowing 

drawback on the merchandise 

processing fee (MPF) generally, whereas 

19 CFR 191.3(a)(4) limits drawback on 

MPF to situations only involving claims 

under 19 U.S.C. 1313(j) and 19 U.S.C. 

1313(p)(2)(A)(iii) or (iv). Consistent with 

the Miscellaneous Trade and Technical 

Corrections Act of 2004 (Pub. L. 108– 

429), which amended 19 U.S.C. 1313 to 

allow, inter alia, harbor maintenance 

taxes (HMT) refunds, this proposed 

regulation also allows drawback on 

HMT for claims under the provisions 

which provide for drawback of tax.24

Similarly, but subject to the 

limitations under 19 U.S.C. 1313 prior 

to being amended by TFTEA, this 

document proposes to update 19 CFR 

191.3 by creating a new paragraph (a)(5) 

to allow drawback on HMT, but limited 

to situations involving only claims 

under 19 U.S.C. 1313(j) and 19 U.S.C. 

1313(p)(2)(A)(iii) or (iv). In addition, 19 

CFR 191.3(b)(1) is revised to otherwise 

prohibit HMT refunds except under the 

provisions specified in proposed new 

paragraph (a)(5). Relatedly, section 

191.3 is retitled as ‘‘duties, taxes, and 

fees subject or not subject to drawback’’ 

for clarifying purposes. 

Section 190.4 provides information 

regarding drawback and merchandise in 

which the U.S. Government has an 

interest. This section replicates the 

corresponding section in part 191. 

Section 190.5 states that drawback is 

available on goods shipped to 

Guantanamo Bay and that drawback 

under 1313(j)(1) is permitted on 

merchandise shipped to certain insular 

possessions and trust territories. This 

section differs from the corresponding 

section in the current part 191 because 

the Miscellaneous Trade and Technical 

Corrections Act of 2004 (Pub. L. 108– 

429), amended 19 U.S.C. 1313 by adding 

paragraph (y) to allow drawback under 

19 U.S.C. 1313(j)(1) on entries shipped 

from the customs territory of the United 

States to the U.S. Virgin Islands, 

American Samoa, Wake Island, Midway 

Islands, Kingman Reef, Guam, Canton 

Island, Enderbury Island, Johnston 

Island, and Palmyra Island. 


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Accordingly, while this 2004 change 

was not previously made in part 191, 

this document proposes to clarify this 

modification in proposed § 190.5 and in 

existing § 191.5. Further, consistent 

with proposed § 190.5, it is proposed to 

amend § 191.5 to clarify that drawback 

is not allowable on merchandise 

shipped to Puerto Rico from elsewhere 

in the customs territory of the United 

States because Puerto Rico is part of the 

customs territory of the United States 

(see 19 CFR 101.1). 

Section 190.6 specifies who has the 

authority to sign or electronically certify 

drawback documents. This section 

differs from the corresponding section 

in part 191 in that it provides for 

electronic signatures, removes 

references to Certificates of Delivery and 

Certificates of Manufacture and 

Delivery, and includes additional 

references to bill of materials and 

formulas. 

Section 190.7 provides information on 

general manufacturing drawback 

rulings, states that the process to modify 

these rulings is the same as provided for 

in § 190.8, and also clarifies the 

longstanding CBP procedures for the 

modification of these rulings. This 

section differs from the corresponding 

section in part 191 in that it makes 

TFTEA-conforming changes, such as 

adding the requirement to provide the 8- 

digit HTSUS number, and it contains 

grammatical and nomenclature changes. 

Section 190.8 provides information on 

specific manufacturing drawback 

rulings and establishes a process to 

modify these rulings to comply with 

TFTEA-Drawback requirements by 

providing the ability to annotate the 

ruling with the 8-digit HTSUS numbers 

for rulings issued prior to February 24, 

2018, if accompanied by the relevant 

certification. This section differs from 

the corresponding section in part 191 in 

that it makes TFTEA-conforming 

changes, such as adding the requirement 

to provide the 8-digit HTSUS number, 

and it contains grammatical and 

nomenclature changes. 

Section 190.9 provides information 

regarding agency relationships detailing 

how the owner of the identified 

merchandise, the designated imported 

merchandise, and/or the substituted 

merchandise used to produce an 

exported article may employ another 

person to do part, or all, of the 

manufacture or production under 19 

U.S.C. 1313(a) or (b). This section is 

similar to the corresponding section in 

part 191; however, it updates the 

language by removing references to 

Certificates of Delivery and includes the 

requirement to provide the 10-digit 

HTSUS number. 

Section 190.10 provides information 

regarding documenting and maintaining 

records regarding transfers of 

merchandise. This section contains 

significant differences specific to 

TFTEA-Drawback, from the 

corresponding section in part 191. 

Section 190.11 provides information 

on the valuation of the designated 

imported merchandise for drawback 

claims, as well as for the application of 

the ‘‘lesser of’’ rules for substitution 

claims (i.e., for exported or destroyed 

merchandise and articles, as well as 

substituted merchandise used in 

manufacturing). The corresponding 

regulation in part 191 deals with 

tradeoff, which was provided for in 19 

U.S.C. 1313(k) prior to the TFTEA 

amendments. TFTEA deleted the 

provision that authorized tradeoff in 19 

U.S.C. 1313(k) and replaced it with an 

unrelated new provision establishing 

joint and several liability for drawback 

claims. 

Section 190.12 provides information 

regarding situations when a claimant 

files under an incorrect provision and 

this section states that the claim may be 

deemed filed pursuant to any other 

provision if it is determined that 

drawback is allowable under that 

provision but not under the provision as 

originally filed. With the exception of 

cross-references, this section is 

generally unchanged from the 

corresponding section in part 191. 

Section 190.13 states that drawback is 

available under 19 U.S.C. 1313(q) on 

imported packaging material when used 

to package or repackage merchandise or 

articles exported or destroyed pursuant 

to certain other provisions. This section 

differs from the corresponding section 

in part 191 due to grammatical changes. 

Section 190.14 provides for 

identification of merchandise or articles 

through accounting methods in 

situations not involving substitution, 

which remain the same as in part 191 

and are based on a standard of 

fungibility. This section differs from the 

corresponding section in part 191 

regarding the five-year time period and 

generally due to minor clarifying edits 

as well as grammatical and 

nomenclature changes. 

Section 190.15 provides general 

information regarding recordkeeping 

requirements. With the exception of the 

recordkeeping time period, this section 

is unchanged from the corresponding 

section in part 191. 

Subpart B Contains Requirements 

Specific to Manufacturing Drawback 

Claims 

Section 190.21 provides the general 

rule regarding direct identification 

manufacturing drawback claims. This 

section differs from the corresponding 

regulation in part 191 in that it 

incorporates changes such as the 

amount of drawback provided for and 

the limitation of drawback of duties 

regarding flour or by-products of 

imported wheat. 

Section 190.22 provides the general 

rule regarding substitution 

manufacturing drawback claims. This 

section differs from the corresponding 

regulation in part 191 in that it 

incorporates changes to 19 U.S.C. 

1313(b) brought about in Section 906 of 

TFTEA such as the 8-digit HTSUS 

substitution standard and provides for 

the ‘‘lesser of’’ rule as it applies to 

TFTEA-Drawback and also contains 

grammatical and nomenclature changes. 

This section also includes language 

regarding the preclusion of claiming 

Federal excise taxes discussed in detail 

in the section titled Federal Excise Tax 

and Substitution Drawback Claims. 

Section 190.23 details the methods 

and requirements for claiming drawback 

specific to manufacturing claims. This 

section differs significantly from the 

corresponding section in part 191 in 

that it is titled differently, it provides for 

a different methodology for claiming 

drawback (relative value) and it is 

slightly reordered. 

Section 190.24 directs parties 

involved in drawback-related 

transactions to § 190.10, the general 

section dealing with transfers of 

merchandise. This section differs from 

the corresponding section in part 191 by 

referencing the appropriate section in 

the proposed part dealing with transfers 

of merchandise. 

Section 190.25 directs parties 

involved in the destruction of 

merchandise for drawback-related 

transactions to § 190.71, which contains 

the procedures for destroying 

merchandise under CBP supervision. 

This section is nearly identical to the 

corresponding section in part 191. 

Section 190.26 provides information 

regarding recordkeeping requirements 

generally and specifically requires 

documents enabling CBP to trace the 

articles manufactured or produced from 

importation, through any transfers, to 

exportation or destruction. This section 

is substantially similar to the 

corresponding section in part 191 but it 

differs due to certain grammatical and 

nomenclature changes and it contains 

TFTEA-based modifications such as 

requiring the 8-digit HTSUS number 

rather than referencing same kind and 

quality. 

Section 190.27 provides general 

information on the time limitations 

regarding manufacturing drawback. This 


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section is substantially similar to the 

corresponding section in part 191 but it 

differs in that it contains certain 

grammatical and nomenclature changes 

and TFTEA-based modifications such as 

changing the time period to 5 years after 

importation, from the 3-year time period 

after date of receipt by the manufacturer 

or producer at the factory in § 191.27. 

Section 190.28 details the parties 

entitled to file a claim in situations 

involving manufacturing drawback. 

This section differs from the 

corresponding section in part 191 due 

only to a few grammatical changes. 

Section 190.29 requires a claimant 

filing a manufacturing drawback claim 

to make certifications regarding the 

availability of the applicable bill of 

materials or formula including the 

HTSUS subheading number(s) and the 

quantities of merchandise. This 

regulation is new and does not have a 

corresponding regulation in part 191; 

however, the type of documentation 

covered by this certification has 

generally been required by CBP as part 

of a manufacturing drawback claim. 

Subpart C Provides Specific 

Requirements Dealing With Unused 

Merchandise Drawback 

Section 190.31 provides the general 

rule regarding direct identification 

unused merchandise drawback claims. 

This section differs from the 

corresponding regulation in part 191 in 

that it incorporates TFTEA-based 

changes to 19 U.S.C. 1313(j)(1) such as 

the 5-year period for filing a claim and 

it contains grammatical and 

nomenclature changes. 

Section 190.32 provides the general 

rule regarding substitution unused 

merchandise drawback claims. This 

section differs from the corresponding 

regulation in part 191 in that it 

incorporates TFTEA-based changes to 

19 U.S.C. 1313(j)(2) such as the 5-year 

period for filing a claim and HTSUSbased substitution determinations, 

provides for the ‘‘lesser of’’ rule 

regarding allowable refunds, and 

contains grammatical and nomenclature 

changes. This section also explains the 

special substitution rule for wine, which 

is not provided for in the corresponding 

section of part 191, and includes 

language regarding the preclusion of 

claiming Federal excise taxes discussed 

in detail in the section titled Federal 

Excise Tax and Substitution Drawback 

Claims. As discussed further below in 

the section titled Amendments 

Regarding Federal Excise Tax and 

Substitution Drawback Claims, this 

preclusion is also proposed as an 

amendment to § 191.32. 

Section 190.33 details the parties 

entitled to claim in situations regarding 

unused merchandise drawback. This 

section differs from the corresponding 

regulation in part 191 in that it 

incorporates TFTEA-based changes such 

as referencing records kept in the 

normal course of business; it does not 

reference terms such as commercially 

interchangeable and certificate of 

delivery, which were eliminated for 

TFTEA-Drawback; and it contains 

grammatical and nomenclature changes. 

Section 190.34 directs parties 

involved in drawback-related 

transactions to § 190.10, the general 

section dealing with transfers of 

merchandise. This section differs from 

the corresponding section in part 191 in 

that it merely directs to the general 

section dealing with transfers of 

merchandise rather than detailing 

specifics. 

Section 190.35 contains specific 

instructions regarding the required 

notice of intent to export, destroy, or 

return merchandise, and the process 

regarding CBP’s determination to 

examine merchandise. The process 

described in this section replicates the 

process as laid out in the corresponding 

section in part 191, with only 

grammatical and nomenclature changes. 

Section 190.36 contains information 

regarding obtaining a one-time waiver of 

the requirement to provide notice of 

intent to export. The process described 

in this section replicates the process as 

laid out in the corresponding section in 

part 191. 

Section 190.37 directs parties 

involved in the destruction of 

merchandise for drawback claims to 

§ 190.71, which contains the procedures 

for destroying merchandise under CBP 

supervision. The process described in 

this section replicates the process as 

laid out in the corresponding section in 

part 191 and contains only one 

nomenclature change. 

Section 190.38 provides information 

regarding recordkeeping requirements 

generally and specifically requires 

documents enabling CBP to trace the 

merchandise from importation, through 

any transfers, to exportation or 

destruction. This section is substantially 

similar to the process as laid out in the 

corresponding section in part 191 and 

contains grammatical and nomenclature 

changes. 

Subpart D Provides Specific 

Requirements Regarding Rejected 

Merchandise Drawback Under 19 U.S.C. 

1313(c) 

Section 190.41 provides for drawback 

claims under 19 U.S.C. 1313(c) 

regarding rejected merchandise 

involving goods that do not conform to 

sample or specifications, were shipped 

without consent of the consignee, or 

determined to be defective at the time 

of importation. This section differs from 

the corresponding section in part 191 in 

that it contains nomenclature changes 

and includes additional language 

regarding goods sold at retail and 

returned, removes certain language 

regarding satisfactory evidence and 

includes language regarding the amount 

of drawback allowable. 

Section 190.42 sets forth the general 

procedures for filing, documenting, and 

certifying claims under rejected 

merchandise drawback. This regulation 

differs from the corresponding 

regulation in part 191 in that it includes 

the expanded time frame of 5 years from 

the date of importation for filing claims 

and directs claimants to § 190.71 for 

procedures regarding the destruction of 

merchandise under CBP supervision. 

This regulation also differs from the 

current corresponding regulation in part 

191 (at § 191.42(a)), which requires that 

the merchandise be in CBP custody 

prior to exportation or destruction. This 

was rendered obsolete by the 

Miscellaneous Trade and Technical 

Corrections Act of 2004 (Pub. L. 108– 

429), which removed the requirement 

that the merchandise be in CBP custody 

prior to exportation or destruction. 

Accordingly, it is proposed to update 

§ 191.42(a) as well. 

Section 190.43 informs claimants of 

the possibility of filing a direct 

identification unused merchandise 

claim under 19 U.S.C. 1313(j)(1) in lieu 

of a rejected merchandise claim, to the 

extent that the merchandise qualifies. 

This section replicates the 

corresponding section in part 191; 

however, the section title, unused 

merchandise drawback claim, differs 

from the corresponding section title in 

part 191, which is unused merchandise 

claim. 

Section 190.44 is reserved. The 

corresponding regulation in part 191 

directs claimants to § 191.71 for the 

procedures for destroying merchandise 

under CBP supervision. This section is 

unnecessary as a stand-alone regulation 

because the citation to § 190.71, dealing 

with destruction under CBP 

supervision, is included in § 190.42, as 

discussed above. 

Section 190.45 is a new regulation 

regarding the special rule for 

substitution for returned retail 

merchandise, a subset of rejected 

merchandise provided for in 19 U.S.C. 

1313(c). This section includes 

requirements that have been in effect 

since 2004, when the Miscellaneous 

Trade and Technical Corrections Act of 


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2004 (Pub. L. 108–429), amended 19 

U.S.C. 1313(c) regarding drawback on 

returned items sold at the retail level. 

Specifically, this regulation provides for 

a special rule going beyond mere 

HTSUS interchangeability for 

substitution involving returned retail 

merchandise by requiring the specific 

product identifier to be the same for 

both the returned retail merchandise 

and the substituted exported or 

destroyed merchandise (e.g., SKU or 

part number). Therefore, it is proposed 

to add a new § 191.45 as well. 

Subpart E Deals With the Completion of 

Drawback Claims 

Section 190.51 provides information 

regarding what constitutes a complete 

drawback claim and delineates those 

supporting documents that must be 

uploaded to complete a claim. This 

proposed section explains the 

requirement that the successful 

electronic transmission of drawback 

claims in the CBP-authorized EDI 

system includes upload of supporting 

documentation. This section, at 

190.51(a)(4), includes the prohibition 

against designating imported 

merchandise from a line item on an 

entry summary as part of a TFTEADrawback substitution claim under part 

190 if any other merchandise covered 

on that entry summary has been 

designated as the basis of a claim under 

part 191 (and the corresponding 

regulation in part 191 is similarly 

amended at 191.51(a)(3)). This section 

also provides information regarding the 

official date of filing, calculation of 

refunds relative to drawback-eligible 

duties, taxes, and fees, as well as 

information regarding the reporting of 

the HTSUS classifications and 

Department of Commerce Schedule B 

commodity numbers applicable to 

imported, substituted, exported, and 

destroyed merchandise and articles. 

This section also differs from the 

corresponding section in part 191 due to 

corrections of clerical errors in (b)(2)(i) 

regarding the mathematical calculations 

included in the example. 

Section 190.52 concerns rejecting, 

perfecting, or amending drawback 

claims, including the applicable 

timeframes and limitations. This section 

differs from the corresponding section 

in part 191 in that it includes the 

TFTEA-based 5-year deadline and 

includes certain grammatical and 

nomenclature changes. 

Section 190.53 details CBP’s authority 

to require claimants to restructure 

claims if necessary to foster 

administrative efficiency. This section 

differs from the corresponding section 

in part 191 due only to nomenclature 

changes. 

Subpart F Deals With the Verification of 

Drawback Claims 

Section 190.61 provides information 

regarding the verification of drawback 

claims, including how verification is 

done and its impact on liquidation. This 

section differs from the corresponding 

section in part 191 slightly due to 

simplification of the language related to 

the electronic environment for TFTEADrawback claims and grammatical and 

nomenclature changes. 

Section 190.62 provides information 

regarding criminal and civil penalties 

related to drawback claims. This section 

replicates the corresponding section in 

part 191. 

Section 190.63 is a new regulation 

detailing the joint and several liability 

of the importer of the merchandise 

designated as the basis of a drawback 

claim and the party claiming drawback. 

Subpart G Deals With the Exportation 

and Destruction of Articles Involved in 

Drawback Claims 

Section 190.71 provides procedures 

and requirements regarding obtaining 

drawback on articles destroyed under 

CBP supervision. This section differs 

from the corresponding section in part 

191 due to grammatical and 

nomenclature changes. 

Section 190.72 provides requirements 

regarding proof of export in drawback 

claims. This section differs from the 

corresponding section in part 191 in 

that it lists the required summary data 

for establishing exportation and 

references certain supporting 

documents to prove export. 

Section 190.73 states that records kept 

through an electronic export system of 

the United States Government may be 

considered as actual proof of 

exportation only if CBP has officially 

approved the use of that electronic 

export system as proof of compliance. 

The corresponding regulation in part 

191 provided information regarding 

export summary procedures. 

Section 190.74 provides information 

regarding exportation by mail and how 

to claim drawback. This section differs 

from the corresponding section in part 

191 due to grammatical and 

nomenclature changes. 

Section 190.75 provides information 

regarding exportation by the U.S. 

Government and how to claim 

drawback. This section differs slightly 

from the corresponding section in part 

191 due to grammatical changes and it 

does not contain the reference to section 

191.73, which in part 191 provided 

detailed information on export summary 

procedures (the relevant data elements 

from the export summary are now 

incorporated into the drawback entry 

summary, as provided for in 19 CFR 

190.51(a)). 

Section 190.76 is reserved as 

corresponding section 191.76 provides 

information regarding landing 

certificates, which are now obsolete. 

Subpart H Deals With the Liquidation 

and Protest of Drawback Entries 

Section 190.81 provides information 

regarding the liquidation of drawback 

claims. The Miscellaneous Trade and 

Technical Corrections Act of 2004 (Pub. 

L. 108–429), amended 19 U.S.C. 1504 to 

expressly impose limitations on the 

liquidation of drawback entries. 

Pursuant to this 2004 amendment, 

unless a claim for drawback is extended 

or suspended, an entry or claim for 

drawback not liquidated within 1 year 

from the date of entry or claim will be 

deemed liquidated at the drawback 

amount asserted at the time of entry or 

claim. Accordingly, this document in 

§ 190.81 and in § 191.81 proposes to 

clarify this 2004 modification regarding 

drawback claims and deemed 

liquidations. 

Section 190.82 specifies who is 

entitled to claim drawback. This section 

differs from the corresponding section 

in part 191 due only to grammatical 

changes. 

Section 190.83 specifies who is 

entitled to receive drawback payments. 

This section replicates the 

corresponding section in part 191. 

Section 190.84 provides information 

regarding protest procedures involving 

drawback claims. This section differs 

from the corresponding section in part 

191 due only to a grammatical change. 

Subpart I Deals With Applications for 

Privileges Involving Drawback 

Section 190.91 provides procedures 

regarding applying for and obtaining the 

privilege of waiver of prior notice of 

intent to export. This section differs 

from the corresponding section in part 

191 in that it references the need to 

meet the standard for substitution rather 

than using the term commercially 

interchangeable, it discusses 

grandfathering in existing privilege 

holders relative to TFTEA-based 

changes, and it contains grammatical 

and nomenclature changes. 

Section 190.92 provides procedures 

regarding applying for and obtaining the 

privilege of accelerated payment in 

which payment of drawback claims may 

be obtained prior to liquidation. This 

section differs from the corresponding 

section in part 191 due to grammatical 

and nomenclature changes. 


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Section 190.93 provides for the 

combined privileges of waiver of prior 

notice and accelerated payment and 

states that applications may be for one 

privilege, both privileges separately, or 

both privileges in a combined 

application. This section replicates the 

corresponding section in part 191. 

Subpart J Deals With Internal Revenue 

Taxes on Flavoring Extracts and 

Medicinal or Toilet Preparations. 

In addition to the proposed 

regulations described immediately 

below in subpart J (§§ 190.101— 

190.106), the Department of the 

Treasury and CBP are also considering 

transferring the administration of 

drawback refunds provided for in 

subpart J from CBP to the Alcohol and 

Tobacco Tax and Trade Bureau (TTB). 

This part of the law solely involves 

drawback for the export of domestic 

products, and such a transfer would 

place with the agency with 

responsibility for taxation of domestic 

products. It would also enable exporters 

of flavoring extracts and medicinal or 

toilet preparations to claim the full 

amount of drawback available at a single 

agency. CBP and TTB would greatly 

appreciate comments on this proposal. 

Section 190.101 states that 19 U.S.C. 

1313(d) provides for drawback for the 

refund of internal revenue tax upon the 

exportation of flavoring extracts and 

medicinal or toilet preparations 

(including perfumery) manufactured or 

produced in the United States in part 

from the domestic tax-paid alcohol. This 

section differs from the corresponding 

section in part 191 due only to 

grammatical changes. 

Section 190.102 provides that 

provisions relating to direct 

identification drawback (contained in 

subpart B of this part) will apply to 

claims for drawback filed upon the 

exportation of flavoring extracts and 

medicinal or toilet preparations 

(including perfumery) manufactured or 

produced in the United States in part 

from the domestic tax-paid alcohol. This 

section differs from the corresponding 

section in part 191 due to grammatical 

and nomenclature changes and in 

paragraph (e), which states that the time 

period for completing claims is three 

years from the date of export. 

Section 190.103 details additional 

requirements in situations where a 

declaration of the manufacturer showing 

whether a claim has been or will be 

filed by the manufacturer with the 

regional Director, National Review 

Center, TTB, is necessary. TTB was 

previously referred to as the Bureau of 

Alcohol, Tobacco and Firearms. This 

regulation has been updated throughout 

for accuracy, including updating the 

statutory citations to 26 U.S.C. 5111– 

5114, dealing with the Internal Revenue 

Code. This section also differs from the 

current corresponding section in part 

191 due to grammatical and 

nomenclature changes. For the same 

reasons detailed here, it is proposed to 

update § 191.103 as well. 

Section 190.104 provides information 

regarding required certificates involving 

drawback and TTB. This regulation has 

been updated for accuracy because, 

among other things, the relevant TTB 

Form (5100.4), was updated in 

November of 2015. This section also 

differs from the current corresponding 

section in part 191 due to grammatical 

and nomenclature changes. It is 

proposed to update that section, 

§ 191.104, as well. 

Section 190.105 provides that the 

drawback office must ascertain the final 

amount of drawback due by reference to 

the specific manufacturing ruling under 

which drawback was claimed. This 

section differs from the corresponding 

section in part 191, which requires that 

the final amount be made in reference 

to the certificate of manufacture and 

delivery, which is no longer required in 

TFTEA-Drawback. 

Section 190.106 provides for the 

limitation of drawback available in 

situations in which the declaration 

required by § 190.103 of this subpart 

shows that a claim has been or will be 

filed and it states that drawback may not 

be granted absent receipt from TTB of a 

copy of TTB Form 5100.4 (Certificate of 

Tax-Paid Alcohol). This section also 

differs from the current corresponding 

section in part 191 due to grammatical 

and nomenclature changes regarding 

TTB. It is proposed to update that 

section, § 191.106, as well. 

Subpart K Deals With Supplies for 

Certain Vessels and Aircraft 

Section 190.111 states that 19 U.S.C. 

1309 provides for drawback on articles 

laden as supplies on certain vessels or 

aircraft of the United States or as 

supplies including equipment upon, or 

used in the maintenance or repair of, 

certain foreign vessels or aircraft. This 

section replicates the corresponding 

section in part 191. 

Section 190.112 provides procedures 

regarding obtaining drawback in 

situations involving supplies for certain 

vessels and aircraft and states that the 

provisions of this subpart will override 

other conflicting provisions of this part. 

This section differs from the 

corresponding section in part 191 due to 

TFTEA-based changes, such as the 5- 

year time period for filing claims, and 

due to grammatical and nomenclature 

changes. 

Subpart L Deals With Meats Cured With 

Imported Salt 

Section 190.121 states that 19 U.S.C. 

1313(f) provides for drawback 

allowance on meats cured with 

imported salt. This section replicates 

the corresponding section in part 191. 

Section 190.122 provides procedures 

regarding obtaining drawback in 

situations involving meats cured with 

imported salt. This section differs from 

the corresponding section in part 191 in 

that the organizational structure was 

changed because paragraph (b), 

regarding modifying a paper form, was 

removed, and grammatical changes have 

been made. 

Section 190.123 provides that 

drawback will be refunded in aggregate 

amounts of not less than $100 and will 

not be subject to the retention of 1 

percent of duties paid for claims 

involving meats cured with imported 

salt. This section differs from the 

corresponding section in part 191 due to 

grammatical changes. 

Subpart M Deals With Materials for 

Construction and Equipment for Vessels 

and Aircraft for Foreign Ownership and 

Account 

Section 190.131 states that 19 U.S.C. 

1313(g) provides for drawback on 

materials for construction and 

equipment for vessels and aircraft for 

foreign ownership and account. This 

section replicates the corresponding 

section in part 191. 

Section 190.132 states that other 

provisions of this part relating to direct 

identification manufacturing drawback 

will apply to claims for drawback filed 

under 19 U.S.C. 1313(g) and this subpart 

insofar as applicable to and not 

inconsistent with the provisions of this 

subpart. This section differs from the 

corresponding section in part 191 due to 

grammatical changes. 

Section 190.133 provides an 

explanation of terms specific to this 

subpart dealing with drawback on 

materials for construction and 

equipment for vessels and aircraft for 

foreign ownership and account. This 

section differs from the corresponding 

section in part 191 due to grammatical 

and nomenclature changes. 

Subpart N Deals With Foreign-Built Jet 

Aircraft Engines Processed in the United 

States 

Section 190.141 states that 19 U.S.C. 

1313(h) provides for drawback on the 

exportation of jet aircraft engines 

manufactured or produced abroad that 

have been overhauled, repaired, rebuilt, 


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or reconditioned in the United States 

with the use of imported merchandise, 

including parts. This section replicates 

the corresponding section in part 191. 

Section 190.142 states that other 

provisions of this part relating to direct 

identification manufacturing drawback 

will apply to claims for drawback filed 

under 19 U.S.C. 1313(h) and this 

subpart insofar as applicable to and not 

inconsistent with the provisions of this 

subpart. This section differs from the 

corresponding section in part 191 due to 

a grammatical change. 

Section 190.143 provides specifics 

relating to the filing of entry and the 

contents of the entry regarding claims 

filed under this subpart. This section 

differs from the corresponding section 

in part 191 by removing the reference to 

CBP Form 7551 (as this data will be 

submitted through ACE) and due to 

grammatical changes. 

Section 190.144 states that drawback 

under this subpart will be refunded in 

aggregate amounts of not less than $100 

and will not be subject to the deduction 

of 1 percent of duties paid. This section 

differs from the corresponding section 

in part 191 due to grammatical changes. 

Subpart O Deals With Merchandise 

Exported From Continuous CBP 

Custody 

Section 190.151 states that 19 U.S.C. 

1557(a) provides for drawback on 

merchandise upon which duties have 

been paid and which has remained 

continuously in bonded warehouse or 

otherwise in CBP custody for a specified 

period of time, when exported to certain 

locations. This section differs from the 

corresponding section in part 191 due to 

grammatical and nomenclature changes. 

Section 190.152 provides specified 

exceptions for when drawback will be 

allowed on merchandise released from 

CBP custody. This section differs from 

the corresponding section in part 191 

due to grammatical and nomenclature 

changes. 

Section 190.153 provides information 

regarding when merchandise is 

considered in continuous CBP custody 

in certain scenarios. This section differs 

from the corresponding section in part 

191 due to grammatical and 

nomenclature changes. 

Section 190.154 provides information 

regarding filing a direct export entry or 

entry for merchandise transported to 

another port for exportation. This 

section differs from the corresponding 

section in part 191 by not requiring the 

filing of CBP Form 7551 (as the data will 

be transmitted through ACE) and due to 

grammatical and nomenclature changes. 

Section 190.155 states that the 

regulations in 19 CFR part 18 will be 

followed to the extent possible when 

merchandise is withdrawn from a 

warehouse for exportation. This section 

differs from the corresponding section 

in part 191 due to grammatical changes. 

Section 190.156 provides information 

regarding the filing of a bill of lading 

and applicable timeframes. This section 

differs from the corresponding section 

in part 191 due to grammatical and 

nomenclature changes. 

Section 190.157 is reserved as the 

corresponding section in part 191 

directed readers to section 191.76 

regarding landing certificates, which are 

now obsolete. 

Section 190.158 provides for 

procedures of liquidation for a complete 

drawback claim in accordance with 

§ 190.81. This section differs from the 

corresponding section in part 191 due to 

grammatical changes. 

Section 190.159 states that drawback 

due under this subpart will not be 

subject to the deduction of 1 percent of 

duties paid. This section differs from 

the corresponding section in part 191 

due to grammatical changes. 

Subpart P Deals With Distilled Spirits, 

Wines, or Beer Which are 

Unmerchantable or do not Conform to 

Sample or Specifications 

Section 190.161 provides for the 

refund, remission, abatement or credit 

regarding imported distilled spirits, 

wines, or beer found after entry to be 

unmerchantable or not to conform to 

sample or specifications and which are 

returned to CBP custody. This section 

differs from the corresponding section 

in part 191 due to nomenclature 

changes. 

Section 190.162 states that export 

procedures as provided for at § 190.42 

apply, except that the claimant must be 

the importer. This section differs from 

the corresponding section in part 191 

due to grammatical changes. 

Section 190.163 provides for the 

required documentation in claims 

setting forth in detail the facts which 

cause the merchandise to be 

unmerchantable and any additional 

evidence that the drawback office 

requires to establish that the 

merchandise is unmerchantable. This 

section differs from the corresponding 

section in part 191 due to grammatical 

and nomenclature changes. 

Section 190.164 states that there is no 

time limit for the return to CBP custody 

for merchandise covered under this 

subpart. This section differs from the 

corresponding section in part 191 due 

only to nomenclature changes. 

Section 190.165 states that 

exportations by mail are not permitted 

for merchandise covered in this subpart. 

This section differs from the 

corresponding section in part 191 due 

only to grammatical changes. 

Section 190.166 provides information 

regarding the destruction of 

merchandise under this subpart. This 

section differs from the corresponding 

section in part 191 due only to 

grammatical and nomenclature changes. 

Section 190.167 states that no 

deduction of 1 percent of the internal 

revenue taxes paid or determined will 

be made in allowing entries under 26 

U.S.C. 5062(c), as amended. This 

section differs from the corresponding 

section in part 191 due only to 

grammatical changes. 

Section 190.168 is reserved because 

the 90-day time limit for exportation or 

destruction from the date of notification 

of acceptance of the drawback entry it 

is contrary to the statutory requirement 

that a claim be filed after exportation or 

destruction. Accordingly, this section 

differs from the corresponding section 

in part 191. 

Subpart Q Deals With the Substitution 

of Finished Petroleum Derivatives 

Section 190.171 states that 19 U.S.C. 

1313(p) provides for drawback on the 

basis of qualified articles including 

petroleum derivatives imported or 

manufactured or produced in the United 

States (and qualified under 19 U.S.C. 

1313(a) or (b)). TFTEA permits MPF 

refunds for all claims under 19 U.S.C. 

1313(p), therefore there is no limitation 

on MPF refunds as there was in 

paragraph (c) in part 191. Additionally, 

there is a new paragraph (c) that 

explains the calculation of drawback for 

claims on petroleum derivatives. This 

paragraph requires per unit averaging 

for refunds, but clarifies that the refunds 

are not subject to the ‘‘lesser of’’ rule. 

Finally, this paragraph includes the 

preclusion of claiming Federal excise 

taxes discussed in detail in the section 

titled Federal Excise Tax and 

Substitution Drawback Claims. 

Section 190.172 provides relevant 

definitions for purposes of this subpart. 

This section replicates the 

corresponding section in part 191. 

Section 190.173 provides specific 

requirements for drawback when the 

basis is 19 U.S.C. 1313(p) with no 

manufacture. This section replicates the 

corresponding section in part 191. 

Section 190.174 provides specific 

requirements for drawback when the 

basis is 19 U.S.C. 1313(p) with a 

manufacture under 19 U.S.C. 1313(a) or 

(b). This section replicates the 

corresponding section in part 191. 

Section 190.175 provides specific 

requirements regarding the identity of 

drawback claimants and maintenance of 


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records under this subpart. This section 

differs from the corresponding section 

in part 191 due to TFTEA-based changes 

removing requirements related to 

certificates of delivery and certificates of 

manufacture and delivery. 

Section 190.176 states that the general 

procedures for filing claims are 

applicable to claims filed under 19 

U.S.C. 1313(p) unless otherwise 

specified in this section. This section 

differs from the corresponding section 

in part 191 due to the timeframe for 

recordkeeping being changed to 3 years 

from the date of liquidation (rather than 

from the date of payment) and due to 

grammatical and nomenclature changes. 

Subpart R Deals With Merchandise 

Transferred to a Foreign Trade Zone 

From Customs Territory 

Section 190.181 states that drawback 

is provided under 19 U.S.C. 81c for 

merchandise transferred to a foreign 

trade zone for the sole purpose of 

exportation, storage, or destruction, 

with certain exceptions. This section 

replicates the corresponding section in 

part 191. 

Section 190.182 states that 

merchandise in a foreign trade zone for 

purposes specified in § 190.181 will be 

given status as zone-restricted 

merchandise on proper application as 

provided for in 19 CFR 146.44. This 

section differs from the corresponding 

section in part 191 due only to 

grammatical changes. 

Section 190.183 provides filing 

procedures for certain articles 

manufactured or produced in the United 

States, including transfers to a foreign 

trade zone. This section differs from the 

corresponding section in part 191 due to 

grammatical and nomenclature changes, 

and due to changes related to the 

electronic filing provisions of section 

906 of TFTEA. 

Section 190.184 states that the 

procedure described in subpart O of this 

part will be followed, as applicable, for 

drawback on merchandise transferred to 

a foreign trade zone from continuous 

CBP custody and provides information 

on the drawback entry, required 

certifications, modifications, and 

endorsement. This section differs from 

the corresponding section in part 191 

due to grammatical and nomenclature 

changes, and due to changes related to 

the electronic filing environment of 

TFTEA-Drawback. 

Section 190.185 states that the 

procedure described in subparts C and 

D of this part will be followed, as 

applicable, for drawback on 

merchandise under this subpart and 

provides information on the drawback 

entry, required certifications, 

modifications, and endorsement. This 

section differs from the corresponding 

section in part 191 due to grammatical 

and nomenclature changes, and to the 

electronic filing environment provisions 

of section 906 of TFTEA. 

Section 190.186 provides information 

regarding which person may be 

considered the transferor and states that 

drawback may be claimed by, and paid 

to, the transferor. This section differs 

from the corresponding section in part 

191 due only to grammatical changes. 

Subpart S Deals With the Drawback 

Compliance Program 

Section 190.191 provides general 

information regarding the CBP 

drawback compliance program. This 

section differs from the corresponding 

section in part 191 due only to 

nomenclature changes. 

Section 190.192 provides information 

regarding obtaining certification for the 

compliance program. This section 

differs from the corresponding section 

in part 191 due only to grammatical and 

nomenclature changes. 

Section 190.193 provides the 

application procedure for the 

compliance program. This section 

differs from the corresponding section 

in part 191 due only to grammatical and 

nomenclature changes. 

Section 190.194 describes the actions 

taken on the application to participate 

in the compliance program. This section 

differs from the corresponding section 

in part 191 due only to grammatical and 

nomenclature changes. 

Section 190.195 relates to combined 

applications for certification in the 

drawback compliance program and 

privileges regarding the waiver of prior 

notice and/or accelerated payment of 

drawback. This section replicates the 

corresponding section in Part 191. 

Appendices A and B Deal With 

Manufacturing Drawback Rulings 

Appendix A to Part 190 sets forth the 

general manufacturing drawback 

rulings, accompanied by instructions for 

how to submit a letter of notification to 

operate thereunder. This appendix 

differs from Appendix A to part 191 due 

to grammatical and nomenclature 

changes as well as changes to conform 

to TFTEA-Drawback requirements. 

Appendix B to Part 190 provides the 

sample formats for applications for 

specific manufacturing drawback 

rulings. This appendix differs from 

Appendix B to part 191 due to 

grammatical and nomenclature changes 

as well as changes to conform to 

TFTEA-Drawback requirements. 

B. Other Conforming Amendments 

NAFTA drawback, which is 

separately provided for in subpart E of 

part 181 of the CBP regulations (19 CFR 

part 181), provides for special 

provisions in situations where goods 

were imported into the United States 

and then subsequently exported to 

either Canada or Mexico. While TFTEA 

left NAFTA drawback unchanged, 

minor conforming edits to part 181 are 

necessary to correct certain errors or to 

allow for interaction with both the 

proposed part 190 and existing part 191 

during the transition period. For 

example, 19 CFR 181.50(a) includes an 

inaccurate reference to subpart G of part 

191, stating that it is for liquidation 

procedures. However, it is subpart H of 

part 191 that deals with liquidation (and 

protest) procedures while subpart G of 

part 191 deals with exportation and 

destruction. Accordingly, it is proposed 

to amend § 181.50(a) to update the 

reference so it accurately cites to 

subpart H of part 191 and to include an 

accompanying reference to subpart H of 

part 190. Further, § 181.50(c) includes a 

specific reference to § 191.92 addressing 

accelerated payment. Accordingly, it is 

proposed to amend this regulation to 

also include a reference to the 

corresponding section of the proposed 

new part 190, i.e., § 190.92. CBP is 

amending sections 181.45, 181.46, 

181.47, 181.49, and 181.50 to conform 

with proposed part 190 and existing 

part 191. 

As stated above, the existing 

regulations in part 191 are mostly 

unchanged with this rulemaking. 

However, it is proposed to amend the 

scope section of part 191, § 191.0, to 

make reference to the drawback 

provisions in proposed part 190 and to 

note that claims cannot be filed under 

part 191 on or after February 24, 2019. 

Additionally, as noted above in the 

section detailing the differences 

between the sections in part 190 and the 

corresponding sections in part 191, 

some sections in part 191 are outdated 

for reasons other than TFTEA, such as 

those affected by the Miscellaneous 

Trade and Technical Corrections Act of 

2004. Therefore, as noted above in the 

section detailing the proposed changes 

to part 190, where changes were 

required due to non-TFTEA reasons, it 

is proposed to amend §§ 191.0, 191.1, 

191.3, 191.5, 191.42, 191.51, 191.81, 

191.103, 191.104, and 191.106 and new 

§ 191.45 to address returned retail 

merchandise. 

Finally, it is important to note that it 

is CBP’s intention to remove part 191 at 

a future date, but not until after the 

completion of the transition period. The 


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25The amendment referenced here to § 113.62 of 

this chapter is in addition to the previously 

discussed proposed amendment to § 113.62, 

proposing to add a new paragraph (a)(4) regarding 

the joint and several liability provisions of the 

importer’s bond. 

26See 82 FR 9339 (February 3, 2017). 

27See OMB’s memorandum titled, ‘‘Guidance 

Implementing Executive Order 13771, Titled 

‘Reducing Regulation and Controlling Regulatory 

Costs’ ’’ (April 5, 2017). 

28For more detailed information on the impacts 

of this rule, see CBP and Treasury’s economic 

Continued 

part 191 regulations will continue to be 

applicable for claims filed under that 

part before February 24, 2019, but will 

become increasingly less relevant over 

time; CBP will assess at what point in 

time removal will be most appropriate 

to lessen burdens or confusion. This 

removal will be announced in the 

Federal Register. 

C. Amendments Regarding Federal 

Excise Tax and Substitution Claims 

For the reasons outlined above in the 

section titled Federal Excise Tax and 

Substitution Drawback Claims, this 

document proposes to amend: § 191.22 

by adding a new last sentence to 

paragraph (a); § 191.32 by adding a new 

paragraph (b)(4); and, § 191.171 by 

adding a new paragraph (d). These 

amendments preclude drawback of 

internal revenue tax imposed under the 

IRC in connection with a substitution 

drawback claim if no excise tax was 

paid on the substituted exported 

merchandise or if that merchandise was 

subject to a claim for refund or 

drawback of tax under any provision of 

the IRC. In addition, this document 

proposes to amend § 113.62, which sets 

forth basic importation and entry bond 

conditions, to add a new condition 

under which the principal agrees not to 

file, or transfer the right to file, a 

substitution drawback claim that would 

be inconsistent with the terms of new 

§ 191.32(b)(4). The consequences of 

default specified in newly re-designated 

paragraph (n) of § 113.62 would apply 

in the case of a breach of this bond 

condition.25

These changes are intended to 

preclude the filing of substitution 

drawback claims under 19 U.S.C. 

1313(b), 19 U.S.C. 1313(j)(2), and 19 

U.S.C. 1313(p) in circumstances in 

which internal revenue taxes have not 

been paid on the substituted domestic 

product, or where that merchandise is 

subject to a different claim for refund or 

drawback of IRC taxes. The proposed 

amendments still allow for the return of 

99 percent of the duties, taxes, and fees 

paid on the imported merchandise upon 

export, or when IRC taxes have been 

paid on substituted domestic product 

and the substituted merchandise is not 

the subject of a separate claim for refund 

or drawback of such taxes. 

IV. Statutory and Regulatory 

Requirements 

A. Executive Order 13563 (Improving 

Regulation and Regulatory Review) and 

Executive Order 12866 (Regulatory 

Planning and Review) 

Executive Orders 13563 and 12866 

direct agencies to assess costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule is 

an ‘‘economically significant regulatory 

action’’ under section 3(f) of Executive 

Order 12866. Accordingly, this 

proposed rule has been reviewed by the 

Office of Management and Budget 

(‘‘OMB’’). CBP and Treasury have 

prepared an economic analysis of the 

potential impacts of this rule for public 

awareness. The analysis can be found in 

the public docket for this rulemaking at 

www.regulations.gov. 

B. Executive Order 13771 (Reducing 

Regulation and Controlling Regulatory 

Costs) 

Executive Order 13771 directs 

agencies to reduce regulation and 

control regulatory costs, and provides 

that ‘‘for every one new regulation 

issued, at least two prior regulations be 

identified for elimination, and that the 

cost of planned regulations be prudently 

managed and controlled through a 

budgeting process.’’ 26 These 

requirements only apply to rules 

designated as ‘‘significant regulatory 

actions’’ under section 3(f) of Executive 

Order 12866. OMB’s implementation 

guidance explains that ‘‘Federal 

spending regulatory actions that cause 

only income transfers between 

taxpayers and program beneficiaries 

. . . . are considered ‘transfer rules’ and 

are not covered by E.O. [Executive 

Order] 13771 . . . However . . . such 

regulatory actions may impose 

requirements apart from transfers . . . 

In those cases, the actions would need 

to be offset to the extent they impose 

more than de minimis costs.’’ 27

This rule is a significant regulatory 

action under section 3(f) of Executive 

Order 12866, and is hence subject to the 

requirements of Executive Order 13771. 

Most of the regulatory amendments 

proposed in this rule are the result of 

the Trade Facilitation and Trade 

Enforcement Act of 2015 (P.L. 114–125), 

which amended 19 U.S.C. 1313, the 

statute guiding CBP drawback 

regulations, and required CBP to 

promulgate regulations implementing 

these changes by February 24, 2018. 

This rule includes both a regulatory 

action and a deregulatory action that 

implement TFTEA’s requirements. 

Because these actions are related to 

drawback, CBP chose to include both 

actions in this rule instead of 

promulgating two separate rules. On 

net, this rule imposes a regulatory 

burden (and is thus a regulatory action) 

because its regulatory impacts exceed its 

deregulatory impacts. This rule’s 

regulatory impacts (i.e., costs) would 

measure $8.3 million on an annualized 

basis, while its deregulatory impacts 

(i.e., cost savings) would measure $1.3 

million on an annualized basis (in 2016 

U.S. dollars, using a 7 percent discount 

rate). Together, these impacts would 

introduce an annualized net regulatory 

cost of $7.0 million. 

C. Regulatory Flexibility Act 

This section examines the impact of 

this proposed rule on small entities per 

the requirements of the Regulatory 

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

seq.)(RFA), as amended by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA). A small 

entity may be a small business (defined 

as any independently owned and 

operated business not dominant in its 

field that qualifies as a small business 

per the Small Business Act); a small notfor-profit organization; or a small 

governmental jurisdiction (locality with 

fewer than 50,000 people). 

Under the RFA and SBREFA, if an 

agency can certify (typically through a 

screening analysis) that a rule will not 

have a ‘‘significant economic impact on 

a substantial number of small entities,’’ 

a detailed assessment of the rule’s 

impact on small entities is not required. 

Otherwise, an agency must complete an 

initial regulatory flexibility analysis 

(IRFA) exploring the impact of the 

proposed rulemaking on small entities. 

Screening Analysis 

The proposed Modernized Drawback 

rule would fundamentally change the 

drawback process and consequently 

affect all trade members eligible for 

drawback (i.e., drawback claimants).28


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analysis in the public docket for this rulemaking at 

www.regulations.gov. 

29Only 13 of the entities researched (12 percent) 

did not have market data available. 

30Out of a total population of 9,017 unique 

drawback claimants who filed claims between 2007 

and 2016, CBP used a sample of 100 claimants with 

market data to inform this screening analysis. This 

sample size resulted in a statistically significant 

sample using a 95 percent confidence level with a 

10 percent margin of error. 

31The SBA’s calculation methods for average 

annual receipts and average employment of a firm 

can be found in 13 CFR 121.104 and 13 CFR 

121.106, respectively. 

These trade members can include 

importers, exporters, manufacturers, 

producers, and intermediate parties 

representing a diverse array of 

industries. CBP does not assess the 

rule’s impact on customs brokers who 

file claims for trade members eligible for 

drawback in this RFA analysis because 

they would presumably charge their 

clients a fee for any costs introduced 

with the rule (and thus not be affected 

themselves). 

Because the Small Business 

Administration’s (SBA) guidelines on 

small entities under the RFA do not 

explicitly define small entity standards 

for the importers, exporters, 

manufacturers, producers, and 

intermediate parties potentially affected 

by the rule, CBP used data on the 

industries in which these parties 

operate to determine the number of 

small entities potentially affected by 

this rule. CBP began by compiling a list 

of all 9,017 unique drawback claimants 

who filed claims between 2007 and 

2016 and matching the claimant 

identification number (‘‘claimant ID’’) to 

the operator/owner name and address 

listed in internal CBP databases. Next, 

CBP assigned a random number to each 

of the claimants in that list and sorted 

the data in ascending order by the 

random number assigned. Using public 

and proprietary databases, CBP then 

pulled information like the entity type 

(subsidiary or parent company), primary 

line of business, employee size, and 

revenue on the claimants in ascending 

order until the agency had market data 

for 100 unique entities.29 30

Table 1 shows the industries, 

according to their North American 

Industrial Classification System 

(NAICS) code, in the sample of entities 

affected by this rule and the SBA’s small 

entity size standards for these 

industries. For the most part, the SBA’s 

size standards are the average annual 

receipts or the average employment of a 

firm.31 As shown, CBP finds that 69 

percent (69) of the drawback claimants 

sampled are considered ‘‘small’’ 

according to the SBA’s size standards, 

including one non-profit organization. 

CBP did not identify any small 

governmental jurisdictions affected by 

the proposed rule in this sample. 

According to these findings, CBP 

assumes that the proposed rule would 

affect a substantial number of small 

entities. CBP recognizes that this 

screening analysis may have excluded 

some less established, potentially small 

entities due to market data availability. 

To the extent that those excluded are 

small, the portion of small entities 

affected by the rule would be higher 

than estimated. 

Of the small drawback claimants 

sampled and included in Table 1, the 

average number of employees at these 

entities ranged from 1 to 1,000 and their 

annual revenue measured from less than 

$0.5 million to $391.0 million (see Table 

2 and Table 3). Table 2 compares the 

low range average number of employees 

at the small entities sampled and the 

overall average for the corresponding 

NAICS industry. Table 3 shows the 

average annual revenue of the small 

entities sampled by NAICS industry 

using the low range of annual revenue 

data available as well as the average 

annual revenue for all U.S. entities in 

each industry. 

TABLE 1—SUMMARY STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE

NAICS code NAICS description 

Number of 

entities in 

sample 

Percent of 

entities in 

sample 

SBA size 

standard 

Number of 

small 

entities 

in sample 

Percent 

of small 

entities 

in sample 

311211 ............ Flour Milling ...................................... 1 1 1,000 Employees 1 1 

311421 ............ Fruit and Vegetable Canning ........... 1 1 1,000 Employees 1 1 

312140 ............ Distilleries ......................................... 1 1 1,000 Employees 1 1 

313210 ............ Broadwoven Fabric Mills .................. 1 1 1,000 Employees 0 0 

315220 ............ Men’s and Boys’ Cut and Sew Apparel Manufacturing.2 2 750 Employees ... 2 2 

315240 ............ Women’s, Girls’, and Infants’ Cut 

and Sew Apparel Manufacturing.

1 1 750 Employees ... 1 1 

321911 ............ Wood Window and Door Manufacturing.1 1 1,000 Employees 1 1 

325180 ............ Other Basic Inorganic Chemical 

Manufacturing.

2 2 1,000 Employees 2 2 

325194 ............ Cyclic Crude, Intermediate, and 

Gum and Wood Chemical Manufacturing.

1 1 1,250 Employees 1 1 

325199 ............ All Other Basic Organic Chemical 

Manufacturing.

1 1 1,250 Employees 0 0 

325998 ............ All Other Miscellaneous Chemical 

Product and Preparation Manufacturing.

1 1 500 Employees ... 1 1 

326199 ............ All Other Plastics Product Manufacturing.1 1 750 Employees ... 1 1 

331410 ............ Nonferrous Metal (except Aluminum) 

Smelting and Refining.

1 1 1,000 Employees 1 1 

331491 ............ Nonferrous Metal (except Copper 

and Aluminum) Rolling, Drawing, 

and Extruding.

1 1 750 Employees ... 1 1 

332999 ............ All Other Miscellaneous Fabricated 

Metal Product Manufacturing.

1 1 750 Employees ... 1 1 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37911 

TABLE 1—SUMMARY STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE—Continued 

NAICS code NAICS description 

Number of 

entities in 

sample 

Percent of 

entities in 

sample 

SBA size 

standard 

Number of 

small 

entities 

in sample 

Percent 

of small 

entities 

in sample 

334118 ............ Computer Terminal and Other Computer Peripheral Equipment Manufacturing.1 1 1,000 Employees 0 0 

334310 ............ Audio and Video Equipment Manufacturing.1 1 750 Employees ... 1 1 

334513 ............ Instruments and Related Products 

Manufacturing for Measuring, Displaying, and Controlling Industrial 

Process Variables.

1 1 750 Employees ... 0 0 

335221 ............ Household Cooking Appliance Manufacturing.1 1 1,500 Employees 1 1 

336612 ............ Boat Building .................................... 1 1 1,000 Employees 1 1 

336991 ............ Motorcycle, Bicycle, and Parts Manufacturing.1 1 1,000 Employees 0 0 

337920 ............ Blind and Shade Manufacturing ....... 1 1 1,000 Employees 0 0 

339112 ............ Surgical and Medical Instrument 

Manufacturing.

2 2 1,000 Employees 1 1 

339920 ............ Sporting and Athletic Goods Manufacturing.1 1 750 Employees ... 0 0 

339992 ............ Musical Instrument Manufacturing ... 1 1 1,000 Employees 1 1 

339999 ............ All Other Miscellaneous Manufacturing.1 1 500 Employees ... 1 1 

423210 ............ Furniture Merchant Wholesalers ...... 1 1 100 Employees ... 1 1 

423220 ............ Home Furnishing Merchant Wholesalers.2 2 100 Employees ... 1 1 

423510 ............ Metal Service Centers and Other 

Metal Merchant Wholesalers.

2 2 200 Employees ... 2 2 

423620 ............ Household Appliances, Electric 

Housewares, and Consumer Electronics Merchant Wholesalers.

1 1 200 Employees ... 1 1 

423690 ............ Other Electronic Parts and Equipment Merchant Wholesalers.1 1 250 Employees ... 0 0 

423910 ............ Sporting and Recreational Goods 

and Supplies Merchant Wholesalers.

3 3 100 Employees ... 3 3 

423920 ............ Toy and Hobby Goods and Supplies 

Merchant Wholesalers.

1 1 150 Employees ... 1 1 

423940 ............ Jewelry, Watch, Precious Stone, and 

Precious Metal Merchant Wholesalers.

3 3 100 Employees ... 3 3 

423990 ............ Other Miscellaneous Durable Goods 

Merchant Wholesalers.

1 1 100 Employees ... 1 1 

424310 ............ Piece Goods, Notions, and Other 

Dry Goods Merchant Wholesalers.

2 2 100 Employees ... 2 2 

424330 ............ Women’s, Children’s, and Infants’ 

Clothing and Accessories Merchant Wholesalers.

1 1 100 Employees ... 0 0 

424340 ............ Footwear Merchant Wholesalers ...... 3 3 200 Employees ... 2 2 

424490 ............ Other Grocery and Related Products 

Merchant Wholesalers.

1 1 250 Employees ... 1 1 

424610 ............ Plastics Materials and Basic Forms 

and Shapes Merchant Wholesalers.

2 2 150 Employees ... 2 2 

424720 ............ Petroleum and Petroleum Products 

Merchant Wholesalers (except 

Bulk Stations and Terminals).

1 1 200 Employees ... 1 1 

424910 ............ Farm Supplies Merchant Wholesalers.3 3 200 Employees ... 3 3 

424990 ............ Other Miscellaneous Nondurable 

Goods Merchant Wholesalers.

1 1 100 Employees ... 1 1 

441120 ............ Used Car Dealers ............................. 1 1 $25.0 Million ........ 1 1 

448120 ............ Women’s Clothing Stores ................. 2 2 $27.5 Million ........ 2 2 

448130 ............ Children’s and Infants’ Clothing 

Stores.

1 1 $32.5 Million ........ 0 0 

448190 ............ Other Clothing Stores ....................... 2 2 $20.5 Million ........ 2 2 

451110 ............ Sporting Goods Stores ..................... 1 1 $15.0 Million ........ 1 1 

451130 ............ Sewing, Needlework, and Piece 

Goods Stores.

1 1 $27.5 Million ........ 1 1 

452112 ............ Discount Department Stores ............ 1 1 $29.5 Million ........ 1 1 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37912 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

TABLE 1—SUMMARY STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE—Continued 

NAICS code NAICS description 

Number of 

entities in 

sample 

Percent of 

entities in 

sample 

SBA size 

standard 

Number of 

small 

entities 

in sample 

Percent 

of small 

entities 

in sample 

453998 ............ All Other Miscellaneous Store Retailers (except Tobacco Stores).1 1 $7.5 Million .......... 1 1 

454113 ............ Mail-Order Houses ........................... 1 1 $38.5 Million ........ 0 0 

483112 ............ Deep Sea Passenger Transportation 1 1 1,500 Employees 0 0 

493110 ............ General Warehousing and Storage .. 1 1 $27.5 Million ........ 1 1 

525990 ............ Other Financial Vehicles .................. 1 1 $32.5 Million ........ 1 1 

541380 ............ Testing Laboratories ......................... 1 1 $15.0 Million ........ 0 0 

541690 ............ Other Scientific and Technical Consulting Services.1 1 $15.0 Million ........ 0 0 

541990 ............ All Other Professional, Scientific, 

and Technical Services.

1 1 $15.0 Million ........ 1 1 

561499 ............ All Other Business Support Services 2 2 $15.0 Million ........ 2 2 

561621 ............ Security Systems Services (except 

Locksmiths).

1 1 $20.5 Million ........ 0 0 

561990 ............ All Other Support Services ............... 5 5 $11.0 Million ........ 5 5 

624110 ............ Child and Youth Services * ............... 1 1 $11.0 Million ........ 1 1 

711510 ............ Independent Artists, Writers, and 

Performers.

1 1 $7.5 Million .......... 1 1 

811310 ............ Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and 

Maintenance.

1 1 $7.5 Million .......... 1 1 

811490 ............ Other Personal and Household 

Goods Repair and Maintenance.

1 1 $7.5 Million .......... 1 1 

......................... Foreign Entity ................................... 13 13 N/A ...................... N/A N/A 

Total ......... ........................................................... 100 100 ............................. 69 69 

* This sample corresponds to a non-profit organization. 

Source of drawback claimants sample: Internal CBP database; gathered through email correspondence with CBP’s Office of Trade on March 

2, 2017. 

Source of descriptive entity information: Hoover’s. Online company reports. Available at http://www.hoovers.com/. Accessed April 20, 2017 and 

April 24, 2017; Manta. Online company reports. Available at http://www.manta.com/. Accessed April 20, 2017 and April 24, 2017. 

Source of SBA size standard information: U.S. Small Business Administration, ‘‘Table of Small Business Size Standards Matched to North 

American Industry Classification System Codes.’’ February 26, 2016. Available at https://www.sba.gov/sites/default/files/files/Size_Standards_

Table.pdf. Accessed April 17, 2017. 

TABLE 2—EMPLOYMENT STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY

AVERAGES

NAICS code NAICS description 

Number 

of small 

entities in 

sample 

Average 

number of 

employees at 

small entities 

in sample-low 

range value 

Average 

number of 

employees at 

all U.S. 

entities in industry 

311211 ............ Flour Milling .................................................................................................... 1 20 66 

311421 ............ Fruit and Vegetable Canning .......................................................................... 1 540 74

312140 ............ Distilleries ........................................................................................................ 1 15 30 

315220 ............ Men’s and Boys’ Cut and Sew Apparel Manufacturing ................................. 2 40 31 

315240 ............ Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing .............. 1 6 15 

321911 ............ Wood Window and Door Manufacturing ........................................................ 1 250 46 

325180 ............ Other Basic Inorganic Chemical Manufacturing ............................................. 2 502 100 

325194 ............ Cyclic Crude, Intermediate, and Gum and Wood Chemical Manufacturing .. 1 1,000 92 

325998 ............ All Other Miscellaneous Chemical Product and Preparation Manufacturing 1 3 34 

326199 ............ All Other Plastics Product Manufacturing ....................................................... 1 2 60 

331410 ............ Nonferrous Metal (except Aluminum) Smelting and Refining ........................ 1 700 66 

331491 ............ Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and 

Extruding.

1 65 69 

332999 ............ All Other Miscellaneous Fabricated Metal Product Manufacturing ................ 1 65 20 

334310 ............ Audio and Video Equipment Manufacturing ................................................... 1 350 19 

335221 ............ Household Cooking Appliance Manufacturing ............................................... 1 67 110 

336612 ............ Boat Building ................................................................................................... 1 35 34 

339112 ............ Surgical and Medical Instrument Manufacturing ............................................ 1 52 94 

339992 ............ Musical Instrument Manufacturing .................................................................. 1 625 20 

339999 ............ All Other Miscellaneous Manufacturing .......................................................... 1 20 10 

423210 ............ Furniture Merchant Wholesalers .................................................................... 1 5 12 

423220 ............ Home Furnishing Merchant Wholesalers ....................................................... 1 17 14 

423510 ............ Metal Service Centers and Other Metal Merchant Wholesalers .................... 2 3 20 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37913 

TABLE 2—EMPLOYMENT STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY

AVERAGES—Continued 

NAICS code NAICS description 

Number 

of small 

entities in 

sample 

Average 

number of 

employees at 

small entities 

in sample-low 

range value 

Average 

number of 

employees at 

all U.S. 

entities in industry 

423620 ............ Household Appliances, Electric Housewares, and Consumer Electronics 

Merchant Wholesalers.

1 80 21 

423910 ............ Sporting and Recreational Goods and Supplies Merchant Wholesalers ....... 3 18 11 

423920 ............ Toy and Hobby Goods and Supplies Merchant Wholesalers ........................ 1 12 15 

423940 ............ Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers.3 7 7 

423990 ............ Other Miscellaneous Durable Goods Merchant Wholesalers ........................ 1 20 10 

424310 ............ Piece Goods, Notions, and Other Dry Goods Merchant Wholesalers ........... 2 2 9 

424340 ............ Footwear Merchant Wholesalers .................................................................... 2 17 17 

424490 ............ Other Grocery and Related Products Merchant Wholesalers ........................ 1 11 28 

424610 ............ Plastics Materials and Basic Forms and Shapes Merchant Wholesalers ..... 2 14 13 

424720 ............ Petroleum and Petroleum Products Merchant Wholesalers (except Bulk 

Stations and Terminals).

1 7 15 

424910 ............ Farm Supplies Merchant Wholesalers ........................................................... 3 26 21 

424990 ............ Other Miscellaneous Nondurable Goods Merchant Wholesalers .................. 1 1 7 

441120 ............ Used Car Dealers ........................................................................................... 1 1 6 

448120 ............ Women’s Clothing Stores ............................................................................... 2 12 31

448190 ............ Other Clothing Stores ..................................................................................... 2 23 14 

451110 ............ Sporting Goods Stores ................................................................................... 1 1 14 

451130 ............ Sewing, Needlework, and Piece Goods Stores ............................................. 1 7 11 

452112 ............ Discount Department Stores .......................................................................... 1 20 15,091 

453998 ............ All Other Miscellaneous Store Retailers (except Tobacco Stores) ................ 1 5 6 

493110 ............ General Warehousing and Storage ................................................................ 1 20 118 

525990 ............ Other Financial Vehicles ................................................................................. 1 2 6 

541990 ............ All Other Professional, Scientific, and Technical Services ............................ 1 2 6 

561499 ............ All Other Business Support Services ............................................................. 2 29 17 

561990 ............ All Other Support Services ............................................................................. 5 3 13

624110 ............ Child and Youth Services * ............................................................................. 1 20 21

711510 ............ Independent Artists, Writers, and Performers ................................................ 1 2 2 

811310 ............ Commercial and Industrial Machinery and Equipment (except Automotive 

and Electronic) Repair and Maintenance.

1 28 10 

811490 ............ Other Personal and Household Goods Repair and Maintenance ................. 1 18 3 

* This sample corresponds to a non-profit organization. 

Source of drawback claimants sample: Internal CBP database; gathered through email correspondence with CBP’s Office of Trade on March 

2, 2017. 

Source of small entity employment information: Hoover’s. Online company reports. Available at http://www.hoovers.com/. Accessed April 20, 

2017 and April 24, 2017; Manta. Online company reports. Available at http://www.manta.com/. Accessed April 20, 2017 and April 24, 2017. 

Source of industry employment information: U.S. Census Bureau. 2012 SUSB Annual Data Tables by Establishment Industry, ‘‘Number of 

Firms, Number of Establishments, Employment, Annual Payroll, and Estimated Receipts by Enterprise Employment Size for the United States, 

All Industries: 2012.’’ June 22, 2015. Available at https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html. Accessed May 30, 

2018. 

TABLE 3—REVENUE STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY

AVERAGES

NAICS code NAICS description 

Number of 

small 

entities in 

sample 

Average annual 

revenue of 

small 

entities in 

sample-low 

range value 

(in millions) 

Average annual 

revenue of all 

U.S. 

entities in industry 

(in millions) 

311211 ............ Flour Milling .................................................................................................... 1 $5.0 $93.7 

311421 ............ Fruit and Vegetable Canning .......................................................................... 1 178.1 41.7 

312140 ............ Distilleries ........................................................................................................ 1 Unknown 39.6 

315220 ............ Men’s and Boys’ Cut and Sew Apparel Manufacturing ................................. 2 6.4 3.8 

315240 ............ Women’s, Girls’, and Infants’ Cut and Sew Apparel Manufacturing .............. 1 1.1 2.8 

321911 ............ Wood Window and Door Manufacturing ........................................................ 1 48.0 9.2 

325180 ............ Other Basic Inorganic Chemical Manufacturing ............................................. 2 90.7 94.2 

325194 ............ Cyclic Crude, Intermediate, and Gum and Wood Chemical Manufacturing .. 1 391.0 161.8 

325998 ............ All Other Miscellaneous Chemical Product and Preparation Manufacturing 1 5.0 22.2 

326199 ............ All Other Plastics Product Manufacturing ....................................................... 1 0.3 14.7 

331410 ............ Nonferrous Metal (except Aluminum) Smelting and Refining ........................ 1 228.9 93.2 

331491 ............ Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and 

Extruding.

1 17.2 30.9 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37914 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

32CBP based the estimate of drawback claimants 

required to modify their ACE drawback systems 

consistent with this rule’s changes on the projected 

number of unique drawback claimants with this 

rule in 2018 (9,919) minus the 4,129 trade members 

TABLE 3—REVENUE STATISTICS OF SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM SAMPLE AND INDUSTRY

AVERAGES—Continued 

NAICS code NAICS description 

Number of 

small 

entities in 

sample 

Average annual 

revenue of 

small 

entities in 

sample-low 

range value 

(in millions) 

Average annual 

revenue of all 

U.S. 

entities in industry 

(in millions) 

332999 ............ All Other Miscellaneous Fabricated Metal Product Manufacturing ................ 1 13.5 4.2 

334310 ............ Audio and Video Equipment Manufacturing ................................................... 1 29.0 6.1 

335221 ............ Household Cooking Appliance Manufacturing ............................................... 1 9.4 47.2 

336612 ............ Boat Building ................................................................................................... 1 5.1 8.4 

339112 ............ Surgical and Medical Instrument Manufacturing ............................................ 1 17.0 35.3 

339992 ............ Musical Instrument Manufacturing .................................................................. 1 115.1 3.2

339999 ............ All Other Miscellaneous Manufacturing .......................................................... 1 4.3 2.4 

423210 ............ Furniture Merchant Wholesalers .................................................................... 1 1.6 7.4 

423220 ............ Home Furnishing Merchant Wholesalers ....................................................... 1 4.2 8.1 

423510 ............ Metal Service Centers and Other Metal Merchant Wholesalers .................... 2 0.8 27.8 

423620 ............ Household Appliances, Electric Housewares, and Consumer Electronics 

Merchant Wholesalers.

1 23.0 40.2 

423910 ............ Sporting and Recreational Goods and Supplies Merchant Wholesalers ....... 3 3.2 7.3 

423920 ............ Toy and Hobby Goods and Supplies Merchant Wholesalers ........................ 1 2.9 11.0 

423940 ............ Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers.3 1.2 8.3 

423990 ............ Other Miscellaneous Durable Goods Merchant Wholesalers ........................ 1 50.0 5.1 

424310 ............ Piece Goods, Notions, and Other Dry Goods Merchant Wholesalers ........... 2 1.4 5.0 

424340 ............ Footwear Merchant Wholesalers .................................................................... 2 8.0 20.3 

424490 ............ Other Grocery and Related Products Merchant Wholesalers ........................ 1 14.6 28.4 

424610 ............ Plastics Materials and Basic Forms and Shapes Merchant Wholesalers ..... 2 7.5 17.2 

424720 ............ Petroleum and Petroleum Products Merchant Wholesalers (except Bulk 

Stations and Terminals).

1 11.4 289.0 

424910 ............ Farm Supplies Merchant Wholesalers ........................................................... 3 49.2 29.2 

424990 ............ Other Miscellaneous Nondurable Goods Merchant Wholesalers .................. 1 0.1 4.1 

441120 ............ Used Car Dealers ........................................................................................... 1 0.1 3.0 

448120 ............ Women’s Clothing Stores ............................................................................... 2 1.9 3.5 

448190 ............ Other Clothing Stores ..................................................................................... 2 7.3 1.8 

451110 ............ Sporting Goods Stores ................................................................................... 1 0.6 2.5 

451130 ............ Sewing, Needlework, and Piece Goods Stores ............................................. 1 0.6 1.1 

452112 ............ Discount Department Stores .......................................................................... 1 2.5 2,899.3 

453998 ............ All Other Miscellaneous Store Retailers (except Tobacco Stores) ................ 1 0.5 1.2 

493110 ............ General Warehousing and Storage ................................................................ 1 0.5 6.0 

525990 ............ Other Financial Vehicles ................................................................................. 1 0.2 2.8 

541990 ............ All Other Professional, Scientific, and Technical Services ............................ 1 0.2 1.0 

561499 ............ All Other Business Support Services ............................................................. 2 2.0 2.8 

561990 ............ All Other Support Services ............................................................................. 5 0.2 1.9 

624110 ............ Child and Youth Services * ............................................................................. 1 5.3 1.5 

711510 ............ Independent Artists, Writers, and Performers ................................................ 1 0.3 0.7 

811310 ............ Commercial and Industrial Machinery and Equipment (except Automotive 

and Electronic) Repair and Maintenance.

1 7.4 1.7 

811490 ............ Other Personal and Household Goods Repair and Maintenance ................. 1 2.0 0.3 

* This sample corresponds to a non-profit organization. 

Source of drawback claimants sample: Internal CBP database; gathered through email correspondence with CBP’s Office of Trade on March 

2, 2017. 

Source of small entity revenue information: Hoover’s. Online company reports. Available at http://www.hoovers.com/. Accessed April 20, 2017 

and April 24, 2017; Manta. Online company reports. Available at http://www.manta.com/. Accessed April 20, 2017 and April 24, 2017. 

Source of industry revenue information: U.S. Census Bureau. 2012 SUSB Annual Data Tables by Establishment Industry, ‘‘Number of Firms, 

Number of Establishments, Employment, Annual Payroll, and Estimated Receipts by Enterprise Employment Size for the United States, All Industries: 2012.’’ June 22, 2015. Available at https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html. Accessed May 30, 2018. 

Based on the share of drawback 

claimants sampled, CBP assumes that 69 

percent of drawback claimants affected 

by this rule over the 2018 to 2027 period 

of analysis, or 6,844 claimants, would 

be small entities. These drawback 

claimants would incur costs related to 

ACE system modifications, electronic 

claim submission requirements, 

additional full desk reviews, and 

expanded recordkeeping requirements; 

however, these costs would differ 

depending on their filing preferences 

and claim review. 

Each unique drawback claimant 

would need to either modify its existing 

drawback system, acquire add-on 

drawback software, or hire a customs 

broker to comply with this rule’s new 

drawback regulations outlined in 19 

CFR part 190. CBP estimates that 

approximately 200 small entity 

drawback claimants (69 percent of the 

estimated 290 total claimants) would 

modify their ACE filing systems in 2018 

to comply with all of the new drawback 

regulations outlined in 19 CFR part 

190.32 These claimants could incur an 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37915 

estimated to file by paper under the current 19 CFR 

part 191 regulations in 2018 (and thus exempt from 

an ACE drawback system modification cost), 

multiplied by the 5 percent share of claimants 

anticipated to modify their ACE drawback systems 

consistent with this rule’s changes: (9,919 unique 

drawback claimants in 2018—4,129 paper-based 

filers in 2018) x 5 percent anticipated to modify 

their ACE drawback systems = 290 (rounded) trade 

members. 

33Such regulatory changes would include 

providing line-item drawback claim data at the 10- 

digit HTSUS subheading level; consistent units of 

measurement for claimed imports, exports, and 

destructions; exported, destroyed, or substituted 

merchandise values for substitution claims filed 

under 19 U.S.C. 1313(b) and 19 U.S.C. 1313(j)(2); 

accounting methodologies used for direct 

identification drawback claims (if applicable); 

unique identifiers linking imports to exports or 

destructions on each drawback claim; per-unit 

averages for substitution claims; and ‘‘lesser of’’ 

rule calculations for substitution claims. 34From 2018 to 2027, CBP projects under its 

primary estimation method that 4,129 unique trade 

members would file 101,642 drawback claims 

electronically instead of by paper as a result of this 

rule, averaging about 3 claims per unique trade 

member each year over the 10-year period: 101,642 

drawback claims filed electronically instead of by 

paper over 10-year period/4,129 unique trade 

members = 25 (rounded) claims per unique trade 

member over the 10-year period; 25 claims over 10- 

year period/10 years = 3 (rounded) claims per 

unique trade member each year. 

35 $59.99 electronic recordkeeping cost per year × 

7-year period of recordkeeping = $419 (rounded) 

total electronic recordkeeping cost over 7-year 

period; $419 storage cost over 7-year period of 

recordkeeping/10-year period of analysis = $42 

(rounded) electronic recordkeeping cost per year of 

the 10-year period of analysis; $42 (rounded) 

storage cost per year × 10 percent of unique 

claimants incurring electronic recordkeeping cost 

per year = $4 (rounded) electronic recordkeeping 

cost per unique trade member each year. 

estimated one-time cost of $90,000 that 

would translate to $9,000 per year of the 

analysis.33 However, because of the high 

cost of ACE system modifications, these 

small claimants are more likely to 

choose a lower-cost option like 

purchasing add-on drawback software 

or hiring a customs broker to meet this 

rule’s requirements while lessening its 

impact on their revenue. CBP projects 

that an additional 3,795 small drawback 

claimants (69 percent of the estimated 

5,500 total claimants) would acquire 

add-on drawback software consistent 

with all of this rule’s requirements for 

a one-time cost of $1,500, or $150 over 

the 10-year period of analysis. CBP 

presumes that rather than acquire and 

learn the software necessary to file a 

drawback claim electronically and meet 

the other submission requirements of 

this rule, an estimated 2,849 small 

paper-based drawback claimants (69 

percent of the estimated 4,129 total 

claimants) would hire a customs broker 

to file their claim as a result of the rule. 

These claimants would likely file an 

average of three drawback claims per 

year, at an annual cost of $921 

according to the $307 customs broker 

filing fee.34

All drawback claimants must also 

retain drawback records for an extended 

period of time with this rule. CBP finds 

that all 6,844 small drawback claimants 

would sustain $59.99 in expenses 

between 2021 and 2027, or 

approximately $4 each year over the 10- 

year period of analysis, to electronically 

store drawback claim documentation.35

In addition to these requirements, some 

drawback claimants may be subject to 

this rule’s additional full desk reviews. 

CBP estimates that this rule would affect 

an estimated 355 small drawback 

claimants (69 percent of the estimated 

515 total claimants) over the 10-year 

period of analysis, introducing an 

average cost of $18 per year to these 

claimants. CBP assumes that these 355 

claimants would each complete one full 

desk review over the 10-year period, at 

a cost of $181 per review (or $18 over 

10 years). Besides these monetized 

costs, this rule would introduce nonmonetized, non-quantified costs to trade 

members, including the possibility of 

decreased use of the United States as a 

home base for a distribution facility 

when coupled with other 

considerations, less third-party 

drawback, and less time to file 

drawback claims as compared to the 

current process. 

Table 4 outlines the rule’s different 

costs to small entities, while Table 5 

shows this rule’s potential range of costs 

to small entities. As shown, small 

entities could incur undiscounted 

annual costs from this rule as low as 

$154 if a small claimant only incurs an 

added recordkeeping cost and add-on 

drawback software cost and up to 

$9,022 if a small claimant experiences 

the rule’s high ACE drawback system 

modification cost, full desk review cost 

(once over the 10-year analysis), and 

added recordkeeping cost. About 97 

percent of small drawback claimants 

would likely sustain a cost of $943 (Cost 

C + Cost D + Cost E in Table 5) or less 

per year from this rule, while the 

remaining 3 percent could incur higher 

annual cost measuring up to $9,022. 

TABLE 4—COST OF RULE TO SMALL ENTITIES

[Undiscounted 2016 U.S. dollars] 

Cost category 

Number 

of small 

entities 

affected 

Share of small 

entities 

affected 

Annual cost 

per claimant 

(undiscounted) 

A ....... ACE Drawback System Modification ............................................................................ 200 3 9,000

B ....... Add-On Drawback Software ......................................................................................... 3,795 55 150 

C ....... Customs Broker Claim Filing ........................................................................................ 2,849 42 921 

D ....... Added Recordkeeping ................................................................................................... 6,844 100 4 

E ....... Full Desk Review .......................................................................................................... 355 5 18 

Note:Estimates may not sum to total due to rounding. 

TABLE 5—RANGE OF ANNUAL COSTS OF RULE TO SMALL ENTITIES

[Undiscounted 2016 U.S. dollars] 

Cost per claimant by category 

Cost range 

ACE drawback 

system modification 

[A] 

Add-on 

drawback 

software 

[B] 

Customs 

broker claim 

filing 

[C] 

Added 

recordkeeping 

[D] 

Full desk 

review 

[E] 

Total 

Low ........................................................... ........................ $150 ........................ $4 ........................ $154 

Medium .................................................... ........................ ........................ 921 4 18 943 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37916 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

36One of the small entities sampled did not have 

revenue data available, so CBP excluded this entity 

from the revenue impact calculation. 

TABLE 5—RANGE OF ANNUAL COSTS OF RULE TO SMALL ENTITIES—Continued 

[Undiscounted 2016 U.S. dollars] 

Cost per claimant by category 

Cost range 

ACE drawback 

system modification 

[A] 

Add-on 

drawback 

software 

[B] 

Customs 

broker claim 

filing 

[C] 

Added 

recordkeeping 

[D] 

Full desk 

review 

[E] 

Total 

High .......................................................... 9,000 ........................ ........................ 4 18 9,022 

Note:Estimates may not sum to total due to rounding. 

CBP compares the rule’s low ($154), 

medium ($943), and high ($9,022) range 

of monetized costs per year to the 

annual revenue of the small drawback 

claimants sampled. At the low range, 

this rule’s $154 monetized cost would 

represent less than 1 percent of annual 

revenue for 100 percent (68) of the small 

entities sampled with revenue data 

available,36 as shown in Table 6. At the 

medium range, this rule’s $943 

monetized cost would represent less 

than 1 percent of annual revenue for 97 

percent (66) of the small entities 

sampled with revenue data available. 

This rule’s $943 monetized cost would 

represent between 1 percent and 3 

percent of annual revenue for the 

remaining 3 percent (2) of the small 

entities, as Table 7 illustrates. Finally, at 

the high range, this rule’s $9,022 

monetized cost would represent less 

than 1 percent of the annual revenue for 

66 percent (45) of the small entities 

sampled with revenue data available 

(see Table 8). The share of this rule’s 

$9,022 monetized cost on annual 

revenue would measure between: 1 

percent and 3 percent for about 16 

percent (11) of the remaining small 

entities, 3 percent and 5 percent for 4 

percent (3) of the small entities 

sampled, 5 percent and 10 percent for 

10 percent (7) percent of small entities 

sampled, and 10 percent or more for 3 

percent (2) of the small entities sampled 

(see Table 8). Note that because of the 

high cost of ACE system modifications 

included in the high range cost estimate, 

only a nominal number of small 

claimants would likely incur this rule’s 

high annual cost of $9,022. Instead, 

most claimants would probably choose 

lower-cost options like purchasing addon drawback software or hiring a 

customs broker to meet this rule’s 

requirements that would have minimal 

impacts on their annual revenue, as 

assumed under the low- and mediumcost scenarios shown in Table 6 and 

Table 7. 

Under all three ranges, the share of 

this rule’s costs on the annual revenue 

of small entities is less than 1 percent 

for the vast majority of entities sampled. 

Small entities would experience an 

impact of 3 percent or more only under 

the high cost range of $9,022. Assuming 

that the share of this rule’s total 

annualized cost to small entities is equal 

to the estimated share of drawback 

claimants affected by this rule over the 

2018 to 2027 period of analysis (69 

percent), the total annualized cost of 

this rule to all small entities would 

equal $5.0 million under the primary 

estimation method. 

TABLE 6—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM

SAMPLE—ASSUMING ANNUAL COST OF $154 PER UNIQUE DRAWBACK CLAIMANT

Cost as a share of revenue range 

Number of 

small entities 

affected 

Percent of 

small entities 

affected 

0% ≤ Impact < 1% ................................................................................................................................................... 68 100% 

1% ≤ Impact < 3% ................................................................................................................................................... 0 0 

3% ≤ Impact < 5% ................................................................................................................................................... 0 0 

5% ≤ Impact < 10% ................................................................................................................................................. 0 0 

10% or More ............................................................................................................................................................ 0 0 

Total .................................................................................................................................................................. 68 100 

Note:Estimates may not sum to total due to rounding. 

TABLE 7—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM

SAMPLE- ASSUMING ANNUALIZED COST OF $943 PER UNIQUE DRAWBACK CLAIMANT

Cost as a share of revenue range 

Number of 

small entities 

affected 

Percent of 

small entities 

affected 

0% ≤ Impact < 1% ................................................................................................................................................... 66 97% 

1% ≤ Impact < 3% ................................................................................................................................................... 2 3 

3% ≤ Impact < 5% ................................................................................................................................................... 0 0 

5% ≤ Impact < 10% ................................................................................................................................................. 0 0 

10% or More ............................................................................................................................................................ 0 0 


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37From 2018 to 2027, CBP projects under its 

primary estimation method that 4,129 unique trade 

members would file 101,642 drawback claims 

electronically instead of by paper as a result of this 

rule, averaging about 3 claims per unique trade 

member each year over the 10-year period: 101,642 

drawback claims filed electronically instead of by 

paper over 10-year period/4,129 unique trade 

members = 25 (rounded) claims per unique trade 

member over the 10-year period; 25 claims over 10- 

year period/10 years = 3 (rounded) claims per 

unique trade member each year. 

38From 2018 to 2027, CBP projects under its 

primary estimation method that 9,919 unique trade 

members would forgo 392,000 CBP Form 7552 

submissions as a result of this rule, averaging about 

4 forms per unique trade member each year over the 

10-year period: 392,000 CBP Form 7552 

submissions forgone over 10-year period/9,919 

unique trade members = 40 (rounded) forms per 

unique trade member over the 10-year period; 40 

claims over 10-year period/10 years = 4 (rounded) 

forms per unique trade member each year. 

39SBA publishes small business size standards 

for a variety of, though not all, economic activities 

and industries. SBA does not explicitly define size 

standards for the importers, exporters, 

manufacturers, producers, and intermediate parties 

potentially affected by this rule. See 13 CFR 

121.101–13 CFR 121.201 for information on SBA’s 

size standards. 

TABLE 7—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM

SAMPLE- ASSUMING ANNUALIZED COST OF $943 PER UNIQUE DRAWBACK CLAIMANT—Continued 

Cost as a share of revenue range 

Number of 

small entities 

affected 

Percent of 

small entities 

affected 

Total .................................................................................................................................................................. 68 100 

Note:Estimates may not sum to total due to rounding. 

TABLE 8—COST IMPACTS AS A SHARE OF REVENUE FOR SMALL ENTITIES AFFECTED BY RULE FROM THE RANDOM

SAMPLE- ASSUMING ANNUALIZED COST OF $9,022 PER UNIQUE DRAWBACK CLAIMANT

Cost as a share of revenue range 

Number of 

small entities 

affected 

Percent of 

small entities 

affected 

0% ≤ Impact < 1% ................................................................................................................................................... 45 66 

1% ≤ Impact < 3% ................................................................................................................................................... 11 16 

3% ≤ Impact < 5% ................................................................................................................................................... 3 4 

5% ≤ Impact < 10% ................................................................................................................................................. 7 10 

10% or More ............................................................................................................................................................ 2 3 

Total .................................................................................................................................................................. 68 100 

Note:Estimates may not sum to total due to rounding. 

This rule would also result in benefits 

as well as net monetary transfers to 

drawback claimants. This rule would 

provide time and resource savings from 

forgone paper-based drawback claims, 

form submissions, and ruling and 

predetermination requests that offset 

some of the rule’s costs to small entities. 

CBP estimates that 2,849 small paperbased drawback claimants (69 percent of 

the estimated 4,129 total claimants) 

would enjoy $8 in cost savings for each 

paper claim avoided. These claimants 

would likely file an average of three 

drawback claims per year, at an annual 

cost saving of $24.37 CBP finds that all 

6,844 small drawback claimants would 

save $17 in printing and mailing costs 

related to forgone CBP Form 7552 

submissions beginning in 2019. Before 

2019, the estimated 2,849 small paperbased claimants would not gain this 

benefit because they would still submit 

paper CBP Form 7552s. Based on the 

total number of CBP Form 7552s 

avoided over the period of analysis and 

the total number of unique drawback 

claimants, CBP estimates that each 

claimant would forgo about four CBP 

Form 7552 submissions each year of the 

analysis, saving a total of $68 per year.38

Lastly, only a small number of claimants 

would sustain benefits from forgone 

ruling and predetermination requests. 

CBP estimates that 645 requests would 

be avoided during the period of analysis 

due to the rule and assumes that each 

forgone request corresponds to a unique 

drawback claimant. By applying the 

previously discussed assumption that 

69 percent of drawback claimants 

affected by this rule over the 2018 to 

2027 period of analysis are small 

entities, CBP finds that 445 small 

drawback claimants would each save 

$189 in costs related to ruling and 

predeterminations requests. This would 

translate to about $19 per year over the 

10-year period of analysis. 

This rule’s share of net monetary 

transfers to small entities is unknown. 

This rule would introduce $35.3 million 

to $42.4 million in annualized net 

transfers from the U.S. Government to 

drawback claimants (using a 7 percent 

discount rate). These transfers would 

average between $3,600 and $4,300 per 

claimant based on the projected 9,919 

unique drawback claimants affected by 

this rule. Some small entities may 

receive more or less than this average, 

and potentially even negative net 

transfers if they make net payments to 

the U.S. Government. 

According to the results from this 

screening analysis, CBP believes that a 

substantial number of trade members 

who could be considered ‘‘small’’ may 

be affected by this proposed rule.39 CBP 

cannot determine whether the economic 

impact on these entities may be 

considered significant under the RFA. 

For these reasons, CBP cannot currently 

certify that the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

CBP has prepared the following IRFA 

assessing the rule’s potential effect on 

small entities. CBP welcomes public 

comments on the data and findings 

included in this RFA analysis. 

Comments that will provide the most 

assistance to CBP will reference a 

specific portion of the RFA analysis, 

explain the reason for any 

recommended change, and include data, 

information, or authority that supports a 

recommended change. 

Initial Regulatory Flexibility Analysis 

This IRFA includes the following: 

1. A description of the reasons why 

the action by the agency is being 

considered; 

2. A succinct statement of the 

objectives of, and legal basis for, the 

proposed rule; 


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40Some drawback documentation constituting a 

complete drawback claim, such as privilege and 

ruling applications, would remain paper-based. 

41Based on input from CBP and trade community 

representative. Sources: Email correspondence with 

CBP’s Office of Field Operations on April 5, 2017 

and email correspondence with trade community 

representative on February 22, 2017. 

42See 19 CFR 190.2. 

3. A description—and, where feasible, 

an estimate of the number—of small 

entities to which the proposed rule 

would apply; 

4. A description of the projected 

reporting, recordkeeping, and other 

compliance requirements of the 

proposed rule, including an estimate of 

the classes of small entities that would 

be subject to the requirement and the 

types of professional skills necessary for 

preparation of the report or record; 

5. An identification, to the extent 

practicable, of all relevant federal rules 

that may duplicate, overlap, or conflict 

with the proposed rule; and 

6. A description of any significant 

alternatives to the proposed rule which 

accomplish the stated objectives of 

applicable statutes and which minimize 

any significant economic impact of the 

proposed rule on small entities. 

1. A description of the reasons why 

the action by the agency is being 

considered. 

Section 906 of the Trade Facilitation 

and Trade Enforcement Act of 2015 

(P.L. 114–125) (TFTEA), signed into law 

on February 24, 2016, seeks to simplify 

and modernize the current drawback 

procedures through amendments to 19 

U.S.C. 1313, the statute guiding CBP 

drawback regulations. Section 906(q) of 

TFTEA requires CBP to promulgate 

regulations implementing these changes 

and allows for a one-year transition 

period (February 24, 2018–February 23, 

2019) in which trade members can 

follow either the old drawback statute 

and corresponding regulations as 

written prior to TFTEA or the amended 

statute. 

To fulfill TFTEA’s requirements, CBP, 

through this rulemaking, proposes to 

add an entirely new part of drawback 

regulations in proposed 19 CFR part 190 

that would replace the current drawback 

regulations contained in 19 CFR part 

191. Proposed 19 CFR part 190 would 

directly reflect the following major 

amendments made by TFTEA, as well as 

another amendment required to protect 

U.S. Government revenue: (1) Require 

the electronic filing of drawback claims; 

(2) liberalize the standard for 

substituting merchandise for drawback; 

(3) generally require per-unit averaging 

calculation for substitution drawback; 

(4) generally require substitution 

drawback claims to be calculated on a 

‘‘lesser of’’ basis; (5) expand the scope 

of drawback refunds; (6) establish joint 

and several liability for drawback 

claims; (7) modify the rulings process; 

(8) standardize the timeframe for 

eligibility to claim drawback; (9) modify 

recordkeeping requirements; and (10) 

eliminate ‘‘double drawback’’ of excise 

taxes. The proposed rule would also 

make minor amendments to the 

drawback regulations in accordance 

with TFTEA. 

2. A succinct statement of the 

objectives of, and legal basis for, the 

proposed rule. 

TFTEA requires CBP to prescribe 

drawback regulations in accordance 

with the new statute and allows for a 

one-year transition period in which 

trade members can follow either the old 

drawback statute and corresponding 

regulations as written prior to TFTEA or 

the amended statute until February 23, 

2019. CBP proposes to implement new 

drawback regulations consistent with 

TFTEA in 2018. These new regulations 

aim to modernize the current drawback 

process. 

3. A description—and, where feasible, 

an estimate of the number—of small 

entities to which the proposed rule 

would apply. 

As discussed in the screening analysis 

above, the proposed Modernized 

Drawback rule would fundamentally 

change the drawback process and 

consequently affect all trade members 

eligible for drawback (i.e., drawback 

claimants). These trade members can 

include importers, exporters, 

manufacturers, producers, and 

intermediate parties representing a 

diverse array of industries. CBP 

estimates that 69 percent of drawback 

claimants affected by this rule over the 

2018 to 2027 period of analysis, or 6,844 

claimants, would be small entities. 

4. A description of the projected 

reporting, recordkeeping, and other 

compliance requirements of the 

proposed rule, including an estimate of 

the classes of small entities that would 

be subject to the requirement and the 

types of professional skills necessary for 

preparation of the report or record. 

This rule proposes several new 

reporting, recordkeeping, and other 

compliance requirements for all 

drawback claimants, including those 

considered small. Among these changes, 

CBP proposes to require drawback 

claimants filing under the new 

drawback regulations outlined in 19 

CFR part 190 to: 

• Submit new data elements with 

their claims, including Form 7551: 

Drawback Entry summary data at the 

line, rather than header, level; claimed 

merchandise data at the 10-digit HTSUS 

subheading level; line designations; and 

consistent units of measurement for 

claimed import, export, or destruction 

data beginning in 2018. 

• File their complete drawback 

claims electronically using ACE and 

DIS, thus not allowing for manual, 

paper-based claims.40

• Submit additional data, including 

exported, destroyed, or substituted 

merchandise values for substitution 

claims filed under 19 U.S.C. 1313(b) and 

19 U.S.C. 1313(j)(2); accounting 

methodologies used for direct 

identification drawback claims (if 

applicable); unique identifiers linking 

imports to exports or destructions; perunit averages for substitution claims; 

and ‘‘lesser of’’ rule calculations for 

substitution claims. 

Along with these reporting 

requirements, CBP would change the 

recordkeeping standards for all 

drawback claimants filing under the 

new regulations in 19 CFR part 190. 

Consistent with TFTEA, this rule would 

change the drawback recordkeeping 

timeframe for all drawback claimants 

from three years from CBP’s date of 

payment of the drawback claim to three 

years from the liquidation of the claim. 

CBP estimates that drawback claimants 

would generally have to retain records 

for one extra year with this rule’s new 

recordkeeping requirement than under 

the current three-year recordkeeping 

period, though some trade members 

may need to retain records for up to four 

more years under this rule.41

This rule would also require parties 

that split entry summary line items 

when transferring merchandise 

(transferors) to provide notification to 

the recipients (transferees) as to whether 

that merchandise is eligible for 

substitution or direct identification 

drawback. Notification of this 

designation from the transferor to the 

transferee must be documented in 

records, which may include records 

kept in the normal course of business. 

Furthermore, this rule would require 

all drawback claimants filing 

manufacturing drawback claims under 

the new regulations in 19 CFR part 190 

(which would account for about 20 

percent of all claims filed with this rule) 

to maintain applicable BOMs and/or 

formula records 42 identifying the 

imported and/or substituted 

merchandise and the exported or 

destroyed article(s) in their normal 

course of business. When filing a 

manufacturing drawback claim, trade 

members must also certify that they 

have these BOMs and/or formula 


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43 $8,000,000/9,919 unique drawback claimants = 

$810 (rounded); $7,600,000/9,919 unique drawback 

claimants = $770 (rounded). 

44See Section 906 of the Trade Facilitation and 

Trade Enforcement Act of 2015 (P.L. 114–125). 

45 $7,600,000/9,017 unique drawback claimants = 

$840 (rounded); $7,600,000/9,919 unique drawback 

claimants = $770 (rounded). 

46See Section 906 of the Trade Facilitation and 

Trade Enforcement Act of 2015 (P.L. 114–125). 

records by checking a box on their 

electronic drawback claim, and provide 

the documentation to CBP upon request. 

5. An identification, to the extent 

practicable, of all relevant federal rules 

that may duplicate, overlap, or conflict 

with the proposed rule. 

CBP does not believe that any federal 

rule duplicates, overlaps, or conflicts 

with the proposed rule. 

6. A description of any significant 

alternatives to the proposed rule which 

accomplish the stated objectives of 

applicable statutes and which minimize 

any significant economic impact of the 

proposed rule on small entities. 

CBP considered two other alternatives 

in addition to the proposed rule. 

a. Alternative 1 

The first regulatory alternative CBP 

considered would implement all of the 

proposed rule’s changes in 2018 rather 

than in 2019, offering no transition 

period. With this alternative, paperbased filers must begin filing their 

drawback claims electronically in 2018, 

but they would receive the benefits of 

drawback modernization in 2018 and 

beyond. With this alternative, paperbased filers, including those considered 

small, would begin to incur electronic 

filing costs in 2018 rather than 2019 like 

under the rule. This alternative would 

also lead to relatively more full desk 

reviews for claimants, including those 

considering small, than under the rule. 

Drawback claimants, including those 

considered small, would sustain an 

annualized cost of $8.0 million from 

this alternative under the primary 

estimation method, which is slightly 

higher than the proposed rule’s $7.6 

million annualized cost to trade 

members (using a 7 percent discount 

rate). On a per-claimant basis, 

Alternative 1 would cost $810 annually 

over the period of analysis compared to 

the rule’s nearly $770 cost per unique 

claimant.43 Alternative 1 would also 

result in an annualized net transfer 

measuring between $42.8 million and 

$49.9 million from the U.S. Government 

to drawback claimants, which would 

average from $4,300 to $5,000 per 

unique claimant based on the 9,919 

unique drawback claimants projected 

under this alternative (using a 7 percent 

discount rate). Like the proposed rule, 

Alternative 1 would introduce benefits 

to drawback claimants. These benefits to 

claimants, including those considered 

small, would be greater than the rule’s 

cost savings due to the relatively higher 

number of CBP Form 7552s (and 

corresponding time, printing, and 

mailing costs) avoided. CBP did not 

choose Alternative 1 because TFTEA 

statutorily allows a one-year transition 

period (February 24, 2018–February 23, 

2019) in which drawback claimants can 

follow either the old drawback statute 

and corresponding regulations in 19 

CFR part 191 as written prior to TFTEA 

or the amended statute.44

b. Alternative 2 

The second regulatory alternative CBP 

considered would implement all of the 

proposed rule’s changes, except it 

would not change the current regulatory 

standard for substituting merchandise 

for drawback (i.e., no implementation of 

Major Amendment 2). Under this 

alternative, CBP estimates that the 

number of substitution drawback claim 

submissions and the number of 

drawback claimants would be lower 

than under the proposed rule over the 

period of analysis because this 

alternative would offer relatively fewer 

new opportunities to claim drawback. In 

fact, drawback claims would measure 

about 548,000 from 2018 to 2027 under 

Alternative 2’s primary estimation 

method and the number of unique 

drawback claimants would equal 

approximately 9,017. Because of its 

narrower scope, Alternative 2 would 

introduce slightly lower costs to 

drawback claimants, including those 

considered small, than the proposed 

rule’s cost. In particular, claimants 

would incur relatively fewer full desk 

reviews and associated costs with this 

alternative. Drawback claimants, 

including those considered small, 

would incur an annualized cost of $7.6 

million from this alternative under the 

primary estimation method, compared 

to the proposed rule’s annualized cost of 

$7.6 million (using a 7 percent discount 

rate). On a per-claimant basis, 

Alternative 2 would cost nearly $840 

annually over the period of analysis, 

while the proposed rule would 

introduce an average cost of almost $770 

cost per unique claimant.45 Alternative 

2 would also result in annualized net 

transfers between $56.3 million and 

$63.4 million from drawback claimants 

to the U.S. Government, which would 

average $6,200 to $7,000 per unique 

claimant based on the 9,017 unique 

drawback claimants projected under 

this alternative (using a 7 percent 

discount rate). Like the proposed rule, 

Alternative 2 would introduce benefits 

to drawback claimants. These benefits 

would be slightly lower than the rule’s 

benefits because drawback claimants 

would continue to submit ruling and 

predeterminations requests for 

substitution drawback claims with this 

alternative. CBP did not choose this 

Alternative 2 because TFTEA statutorily 

requires CBP to liberalize the standard 

for substituting merchandise for 

drawback by generally basing it on 

goods classifiable under the same 8-digit 

HTSUS (or Schedule B) subheading.46

Conclusion 

In conclusion, because the proposed 

Modernized Drawback rule would 

presumably affect all drawback 

claimants, it would likely impact a 

substantial number of small entities in 

each industry submitting such claims. 

CBP cannot certify whether the rule’s 

(negative) impact on these small entities 

would be significant. CBP welcomes 

public comments on the data and 

findings included in this RFA analysis. 

Comments that will provide the most 

assistance to CBP will reference a 

specific portion of the RFA analysis, 

explain the reason for any 

recommended change, and include data, 

information, or authority that supports a 

recommended change. If CBP does not 

receive comments contradicting the 

RFA analysis findings, CBP may certify 

that this rule would not have a 

significant economic impact on a 

substantial number of small entities at 

the final rule stage. 

D. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3507), 

an agency may not conduct, and a 

person is not required to respond to, a 

collection of information unless the 

collection of information displays a 

valid control number assigned by OMB. 

The collections of information for this 

notice of proposed rulemaking are 

included in an existing collection for 

CBP Forms 7551, 7552, and 7553 (OMB 

control number 1651–0075). 

This rule proposes, among other 

things, to eliminate the submission 

requirement for CBP Form 7552 for 

drawback claimants who file 

electronically under the new, proposed 

drawback regulations in 19 CFR part 

190. Drawback claimants filing by paper 

under the current drawback regulations 

in 19 CFR part 191 would still be 

required to submit the paper CBP Form 

7552 until this rule’s requirements 

become mandatory in 2019. Based on 

this change, CBP estimates a decrease in 


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CBP Form 7552 responses and burden 

hours. Additionally, CBP Form 7551 has 

a decrease in burden hours based on 

changes in the agency estimate. CBP 

will submit to OMB for review the 

following adjustments to the previously 

approved Information Collection under 

OMB control number 1651–0075 to 

account for the changes proposed in this 

rule. Furthermore, CBP expects to 

submit a request to eliminate CBP Form 

7552 to OMB in 2019 prior to this rule’s 

mandatory requirement date. 

CBP Form 7551, Drawback Entry 

(reduction in burden hours due to 

change in agency estimate) 

Estimated Number of Respondents: 

2,516 

Estimated Number of Responses per 

Respondent: 22.2 

Estimated Number of Total Annual 

Responses: 55,772 

Estimated Time per Response: 35 

minutes 

Estimated Total Annual Burden 

Hours: 32,532 

CBP Form 7552, Delivery Certificate for 

Drawback (reduction in burden 

hours due to regulation) 

Estimated Number of Respondents: 

400 

Estimated Number of Responses per 

Respondent: 20 

Estimated Number of Total Annual 

Responses: 8,000 

Estimated Time per Response: 33 

minutes 

Estimated Total Annual Burden 

Hours: 4,400 

CBP Form 7553, Notice of Intent to 

Export, Destroy or Return 

Merchandise for Purposes of 

Drawback (no change) 

Estimated Number of Respondents: 

150 

Estimated Number of Responses per 

Respondent: 20 

Estimated Number of Total Annual 

Responses: 3,000 

Estimated Time per Response: 33 

minutes 

Estimated Total Annual Burden 

Hours: 1,650 

V. Proposed Effective/Applicability 

Dates 

To allow stakeholders immediate 

benefit from these proposed regulations 

(see 5 U.S.C. 553(d) and 808), they are 

proposed to be effective upon 

publication of a rule adopting them as 

final, except that the regulations 

proposed in §§ 190.22(a)(1)(C), 

190.32(b)(3), 191.22(a), 191.32(b)(4), and 

191.171(d) regarding the drawback of 

excise taxes are proposed to become 

applicable for drawback claims filed on 

or after 60 days from the date of 

publication of the final rule. 

CBP and Treasury invite interested 

members of the public to comment on 

these proposed effective and 

applicability dates. 

VI. Signing Authority 

This proposed regulation is being 

issued in accordance with 19 CFR 

0.1(a)(1) pertaining to the authority of 

the Secretary of the Treasury (or that of 

his or her delegate) to approve 

regulations pertaining to certain 

customs revenue functions. 

List of Subjects 

19 CFR Part 113 

Bonds, Copyrights, Counterfeit goods, 

Customs duties and inspection, Imports, 

Reporting and recordkeeping 

requirements, Restricted merchandise, 

Seizures and forfeitures. 

19 CFR Part 181 

Administrative practice and 

procedure, Canada, Customs duties and 

inspection, Exports, Mexico, Reporting 

and recordkeeping requirements, Trade 

agreements. 

19 CFR Part 190 

Alcohol and alcoholic beverages, 

Claims, Customs duties and inspection, 

Exports, Foreign trade zones, 

Guantanamo Bay Naval Station, Cuba, 

Packaging and containers, Reporting 

and recordkeeping requirements, Trade 

agreements. 

19 CFR Part 191 

Alcohol and alcoholic beverages, 

Claims, Customs duties and inspection, 

Exports, Foreign trade zones, 

Guantanamo Bay Naval Station, Cuba, 

Packaging and containers, Reporting 

and recordkeeping requirements, Trade 

agreements. 

Proposed Amendments to the 

Regulations 

For the reasons given above, it is 

proposed to amend 19 CFR chapter I as 

set forth below: 

PART 113—CUSTOMS BONDS 

■ 1. The general authority citations for 

part 113 continue and the specific 

authority for § 113.62 is added in 

numerical order to read as follows: 

Authority: 19 U.S.C. 66, 1623, 1624. 

* * * * * 

Section 113.62 is also issued under 19 

U.S.C. 1313(k). 

* * * * * 

■ 2. In § 113.62, redesignate paragraphs 

(m) and (n) as paragraphs (o) and (p) and 

add paragraphs (a)(4) and (m) to read as 

follows: 

§ 113.62 Basic importation and entry bond 

conditions. 

* * * * * 

(a) * * * 

(4) If a person who is not the principal 

makes a drawback claim with respect to 

merchandise imported by the principal 

(see part 190 of this chapter), the 

principal and surety (jointly and 

severally) agree to pay, as demanded by 

CBP, any erroneous drawback payment 

in an amount not to exceed the lesser of: 

(i) The amount of duties, taxes, and 

fees that the person claimed with 

respect to the imported merchandise; or 

(ii) The amount of duties, taxes, and 

fees that the importer authorized the 

other person to claim with respect to the 

imported merchandise. 

(iii) The amount of the erroneous 

drawback payment. 

* * * * * 

(m) Agreement to comply with CBP 

regulations applicable to substitution 

drawback claims. In the case of 

imported merchandise that is subject to 

internal revenue tax imposed under the 

Internal Revenue Code of 1986, as 

amended (IRC), the principal agrees not 

to file, or to transfer to a successor the 

right to file, a substitution drawback 

claim involving such tax if the 

substituted merchandise has been, or 

will be, the subject of a removal from 

bonded premises without payment of 

tax, or the subject of a claim for refund 

or drawback of tax, under any provision 

of the IRC. 

* * * * * 

PART 181—NORTH AMERICAN FREE 

TRADE AGREEMENT 

■ 3. The general authority citations for 

part 181 continue to read as follows: 

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

Note 3(i), Harmonized Tariff Schedule of the 

United States), 1624, 3314; 

* * * * * 

§ § 181.45, 181.46, 181.47, 181.49, and 181.50 

[Amended] 

■ 4. In the table below, for each section 

indicated in the left column, remove the 

words indicated in the middle column, 

and add, in their place, the words 

indicated in the right column. 


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Section Remove Add 

181.45(b)(2)(i)(B) ................. § 191.14 of this chapter, as provided therein ................. §§ 190.14 or 191.14 of this chapter, as appropriate. 

181.45(c) .............................. Such a good must be returned to Customs custody for 

exportation under Customs supervision within three 

years after the release from Customs custody.

Such a good must be exported or destroyed within the 

statutory 5-year time period and in compliance with 

the requirements set forth in subpart D of part 190 of 

this chapter or within the 3-year time period and in 

compliance with the requirements set forth in subpart 

D of part 191 of this chapter, as applicable. 

181.46(b) .............................. (see § 191.141(b)(3) (ii) and (iii) of this chapter) ............ (see §§ 190.35 or 191.35 of this chapter, as appropriate). 

181.47(a) .............................. part 191 of this chapter; .................................................. part 190 or 191 of this chapter, as appropriate 

181.49 .................................. (see § 191.15 (see also §§ 191.26(f), 191.38, 

191.175(c)) of this chapter).

(see § 190.15 (see also §§ 190.26(f), 190.38, 

190.175(c)) or § 191.15 (see also §§ 191.26(f), 

191.38, 191.175(c)) of this chapter, as appropriate) 

181.50(a) .............................. subpart G of part 190 of this chapter ............................. subpart H of part 190 or subpart H of part 191 of this 

chapter, as appropriate 

181.50(c) .............................. § 191.92 of this chapter ................................................... §§ 190.92 or 191.92 of this chapter, as appropriate. 

■ 5. Add part 190 to read as follows: 

PART 190—MODERNIZED DRAWBACK 

Sec. 

190.0 Scope. 

190.0a Claims filed under NAFTA. 

Subpart A—General Provisions 

190.1 Authority of the Commissioner of 

CBP. 

190.2 Definitions. 

190.3 Duties, taxes, and fees subject or not 

subject to drawback. 

190.4 Merchandise in which a U.S. 

Government interest exists. 

190.5 Guantanamo Bay, insular 

possessions, trust territories. 

190.6 Authority to sign drawback 

documents. 

190.7 General manufacturing drawback 

ruling. 

190.8 Specific manufacturing drawback 

ruling. 

190.9 Agency. 

190.10 Transfer of merchandise. 

190.11 Valuation of merchandise. 

190.12 Claim filed under incorrect 

provision. 

190.13 Packaging materials. 

190.14 Identification of merchandise or 

articles by accounting method. 

190.15 Recordkeeping. 

Subpart B—Manufacturing Drawback 

190.21 Direct identification drawback. 

190.22 Substitution drawback. 

190.23 Methods and requirements for 

claiming drawback. 

190.24 Transfer of merchandise. 

190.25 Destruction under CBP supervision. 

190.26 Recordkeeping for manufacturing 

drawback. 

190.27 Time limitations. 

190.28 Person entitled to claim 

manufacturing drawback. 

Subpart C—Unused Merchandise Drawback 

190.31 Direct identification drawback. 

190.32 Substitution unused merchandise 

drawback. 

190.33 Person entitled to claim unused 

merchandise drawback. 

190.34 Transfer of merchandise. 

190.35 Notice of intent to export; 

examination of merchandise. 

190.36 Failure to file Notice of Intent to 

Export, Destroy, or Return Merchandise 

for Purposes of Drawback. 

190.37 Destruction under CBP supervision. 

190.38 Recordkeeping for unused 

merchandise drawback. 

Subpart D—Rejected Merchandise 

190.41 Rejected merchandise drawback. 

190.42 Procedures and supporting 

documentation. 

190.43 Unused merchandise claim. 

190.44 [Reserved] 

190.45 Returned retail merchandise. 

Subpart E—Completion of Drawback Claims 

190.51 Completion of drawback claims. 

190.52 Rejecting, perfecting or amending 

claims. 

190.53 Restructuring of claims. 

Subpart F—Verification of Claims 

190.61 Verification of drawback claims. 

190.62 Penalties. 

190.63 Liability for drawback claims. 

Subpart G—Exportation and Destruction 

190.71 Drawback on articles destroyed 

under CBP supervision. 

190.72 Exportation procedures. 

190.73 Electronic proof of exportation. 

190.74 Exportation by mail. 

190.75 Exportation by the Government. 

190.76 [Reserved] 

Subpart H—Liquidation and Protest of 

Drawback Entries 

190.81 Liquidation. 

190.82 Person entitled to claim drawback. 

190.83 Person entitled to receive payment. 

190.84 Protests. 

Subpart I—Waiver of Prior Notice of Intent 

To Export; Accelerated Payment of 

Drawback 

190.91 Waiver of prior notice of intent to 

export. 

190.92 Accelerated payment. 

190.93 Combined applications. 

Subpart J—Internal Revenue Tax on 

Flavoring Extracts and Medicinal or Toilet 

Preparations Including Perfumery) 

Manufactured From Domestic Tax-Paid 

Alcohol 

190.101 Drawback allowance. 

190.102 Procedure. 

190.103 Additional requirements. 

190.104 Alcohol and Tobacco Tax and 

Trade Bureau certificates. 

190.105 Liquidation. 

190.106 Amount of drawback. 

Subpart K—Supplies for Certain Vessels 

and Aircraft 

190.111 Drawback allowance. 

190.112 Procedure. 

Subpart L—Meats Cured With Imported Salt 

190.121 Drawback allowance. 

190.122 Procedure. 

190.123 Refund of duties. 

Subpart M—Materials for Construction and 

Equipment of Vessels and Aircraft Built for 

Foreign Ownership and Account 

190.131 Drawback allowance. 

190.132 Procedure. 

190.133 Explanation of terms. 

Subpart N—Foreign-Built Jet Aircraft 

Engines Processed in the United States 

190.141 Drawback allowance. 

190.142 Procedure. 

190.143 Drawback entry. 

190.144 Refund of duties. 

Subpart O—Merchandise Exported From 

Continuous CBP Custody 

190.151 Drawback allowance. 

190.152 Merchandise released from CBP 

custody. 

190.153 Continuous CBP custody. 

190.154 Filing the entry. 

190.155 Merchandise withdrawn from 

warehouse for exportation. 

190.156 Bill of lading. 

190.157 [Reserved] 

190.158 Procedures. 

190.159 Amount of drawback. 


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Subpart P—Distilled Spirits, Wines, or Beer 

Which Are Unmerchantable or Do Not 

Conform to Sample or Specifications 

190.161 Refund of taxes. 

190.162 Procedure. 

190.163 Documentation. 

190.164 Return to CBP custody. 

190.165 No exportation by mail. 

190.166 Destruction of merchandise. 

190.167 Liquidation. 

190.168 [Reserved] 

Subpart Q—Substitution of Finished 

Petroleum Derivatives 

190.171 General; drawback allowance. 

190.172 Definitions. 

190.173 Imported duty-paid derivatives (no 

manufacture). 

190.174 Derivatives manufactured under 19 

U.S.C. 1313(a) or (b). 

190.175 Drawback claimant; maintenance 

of records. 

190.176 Procedures for claims filed under 

19 U.S.C. 1313(p). 

Subpart R—Merchandise Transferred to a 

Foreign Trade Zone From Customs 

Territory 

190.181 Drawback allowance. 

190.182 Zone-restricted merchandise. 

190.183 Articles manufactured or produced 

in the United States. 

190.184 Merchandise transferred from 

continuous CBP custody. 

190.185 Unused merchandise drawback 

and merchandise not conforming to 

sample or specification, shipped without 

consent of the consignee, found to be 

defective as of the time of importation, 

or returned after retail sale. 

190.186 Person entitled to claim drawback. 

Subpart S—Drawback Compliance Program 

190.191 Purpose. 

190.192 Certification for compliance 

program. 

190.193 Application procedure for 

compliance program. 

190.194 Action on application to 

participate in compliance program. 

190.195 Combined application for 

certification in drawback compliance 

program and waiver of prior notice and/ 

or approval of accelerated payment of 

drawback. 

Appendix A to Part 190—General 

Manufacturing Drawback Rulings 

Appendix B to Part 190—Sample Formats 

For Applications For Specific 

Manufacturing Drawback Rulings 

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; 

§§ 190.2, 190.10, 190.15, 190.23, 190.38, 

190.51 issued under 19 U.S.C. 1508; § 190.84 

also issued under 19 U.S.C. 1514; §§ 190.111, 

190.112 also issued under 19 U.S.C. 1309; 

§§ 190.151(a)(1), 190.153, 190.157, 190.159 

also issued under 19 U.S.C. 1557; 

§§ 190.182–190.186 also issued under 19 

U.S.C. 81c; §§ 190.191–190.195 also issued 

under 19 U.S.C. 1593a. 

§ 190.0 Scope. 

This part sets forth general provisions 

applicable to all drawback claims and 

specialized provisions applicable to 

specific types of drawback claims filed 

under 19 U.S.C. 1313, as amended. For 

drawback claims and specialized 

provisions applicable to specific types 

of drawback claims filed pursuant to 19 

U.S.C. 1313, as it was in effect on or 

before February 24, 2016, please see part 

191 of this title. Additional drawback 

provisions relating to the North 

American Free Trade Agreement 

(NAFTA) are contained in subpart E of 

part 181 of this chapter. 

§ 190.0a Claims filed under NAFTA. 

Claims for drawback filed under the 

provisions of part 181 of this chapter 

must be filed separately from claims 

filed under the provisions of this part. 

Subpart A—General Provisions 

§ 190.1 Authority of the Commissioner of 

CBP. 

Pursuant to DHS Delegation number 

7010.3, the Commissioner of CBP has 

the authority to prescribe, and pursuant 

to Treasury Order No. 100–16 (set forth 

in the appendix to part 0 of this 

chapter), the Secretary of the Treasury 

has the sole authority to approve, rules 

and regulations regarding drawback. 

§ 190.2 Definitions. 

For the purposes of this part: 

Abstract. Abstract means the 

summary of the actual production 

records of the manufacturer. 

Act. Act, unless indicated otherwise, 

means the Tariff Act of 1930, as 

amended. 

Bill of materials. Bill of materials 

refers to a record that identifies each 

component incorporated into a 

manufactured or produced article. This 

may include a record kept in the normal 

course of business. 

Designated merchandise. Designated 

merchandise means either eligible 

imported duty-paid merchandise or 

drawback products selected by the 

drawback claimant as the basis for a 

drawback claim under 19 U.S.C. 1313(b) 

or (j)(2), as applicable, or qualified 

articles selected by the claimant as the 

basis for drawback under 19 U.S.C. 

1313(p). 

Destruction. Destruction means the 

destruction of articles or merchandise to 

the extent that they have no commercial 

value. For purposes of 19 U.S.C. 

1313(a), (b), (c), and (j), destruction also 

includes a process by which materials 

are recovered from imported 

merchandise or from an article 

manufactured from imported 

merchandise, as provided for in 19 

U.S.C. 1313(x). 

Direct identification drawback. Direct 

identification drawback includes 

drawback authorized pursuant to 

section 313(j)(1) of the Act, as amended 

(19 U.S.C. 1313(j)(1)), on imported 

merchandise exported, or destroyed 

under CBP supervision, without having 

been used in the United States (see also 

sections 313(c), (e), (f), (g), (h), and (q)). 

Direct identification is involved in 

manufacturing drawback pursuant to 

section 313(a) of the Act, as amended 

(19 U.S.C. 1313(a)), on imported 

merchandise used to manufacture or 

produce an article which is either 

exported or destroyed. Merchandise or 

articles may be identified for purposes 

of direct identification drawback by use 

of the accounting methods provided for 

in § 190.14. 

Document. In this part, document has 

its normal meaning and includes 

information input to and contained 

within an electronic data field, and 

electronic versions of hard-copy 

documents. 

Drawback. Drawback, as authorized 

under 19 U.S.C. 1313, means the refund 

or remission, in whole or in part, of the 

duties, taxes, and/or fees paid on 

merchandise which were imposed 

under Federal law. It includes drawback 

paid upon the entry or importation of 

the imported merchandise and the 

refund or remission of internal revenue 

taxes paid on domestic alcohol as 

prescribed in 19 U.S.C. 1313(d) (see also 

§ 190.3). 

Drawback claim. Drawback claim 

means the drawback entry and related 

documents required by regulation 

which together constitute the request for 

drawback payment. All drawback 

claims must be filed electronically 

through a CBP-authorized EDI system. 

Drawback entry. Drawback entry 

means the document containing a 

description of, and other required 

information concerning, the exported or 

destroyed article upon which a 

drawback claim is based and the 

designated imported merchandise for 

which drawback of the duties, taxes, 

and fees paid upon importation is 

claimed. Drawback entries must be filed 

electronically. 

Drawback office. Drawback office 

means any of the locations where 

drawback claims and related 

applications or requests may be 

submitted. CBP may, in its discretion, 

transfer or share work between the 

different drawback offices even though 

that the submission may have been to a 

particular office. 

Drawback product. A drawback 

product means a finished or partially 

finished product manufactured in the 

United States under the procedures in 

this part for manufacturing drawback. A 

drawback product may be exported, or 


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destroyed under CBP supervision with a 

claim for drawback, or it may be used 

in the further manufacture of other 

drawback products by manufacturers or 

producers operating under the 

procedures in this part for 

manufacturing drawback, in which case 

drawback may be claimed upon 

exportation or destruction of the 

ultimate product. Products 

manufactured or produced from 

substituted merchandise (imported or 

domestic) also become ‘‘drawback 

products’’ when applicable substitution 

requirements of the Act are met. For 

purposes of section 313(b) of the Act, as 

amended (19 U.S.C. 1313(b)), drawback 

products may be designated as the basis 

for drawback or deemed to be 

substituted merchandise (see 19 U.S.C. 

1313(b)). For a drawback product to be 

designated as the basis for a drawback 

claim, any transfer of the product must 

be properly documented (see § 190.24). 

Exportation. Exportation means the 

severance of goods from the mass of 

goods belonging to this country, with 

the intention of uniting them with the 

mass of goods belonging to some foreign 

country. An exportation may be deemed 

to have occurred when goods subject to 

drawback are admitted into a foreign 

trade zone in zone-restricted status, or 

are laden upon qualifying aircraft or 

vessels as aircraft or vessel supplies in 

accordance with section 309(b) of the 

Act, as amended (19 U.S.C. 1309(b)) (see 

§§ 10.59 through 10.65 of this chapter). 

Exporter. Exporter means that person 

who, as the principal party in interest in 

the export transaction, has the power 

and responsibility for determining and 

controlling the sending of the items out 

of the United States. In the case of 

‘‘deemed exportations’’ (see definition 

of exportation in this section), exporter 

means that person who, as the principal 

party in interest in the transaction 

deemed to be an exportation, has the 

power and responsibility for 

determining and controlling the 

transaction. In the case of aircraft or 

vessel supplies under 19 U.S.C. 1309(b), 

exporter means the party who has the 

power and responsibility for lading 

supplies on the qualifying aircraft or 

vessel. 

Filing. Filing means the electronic 

delivery to CBP of any document or 

documentation, as provided for in this 

part. 

Formula. Formula refers to records 

that identify the quantity of each 

element, material, chemical, mixture, or 

other substance incorporated into a 

manufactured article. This includes 

records kept in the normal course of 

business. 

Fungible merchandise or articles. 

Fungible merchandise or articles means 

merchandise or articles which for 

commercial purposes are identical and 

interchangeable in all situations. 

General manufacturing drawback 

ruling. A general manufacturing 

drawback ruling means a description of 

a manufacturing or production 

operation for drawback and the 

regulatory requirements and 

interpretations applicable to that 

operation (see § 190.7). 

Intermediate party. Intermediate party 

means any party in the chain of 

commerce leading to the exporter from 

the importer and who has acquired, 

purchased, or possessed the imported 

merchandise (or any intermediate or 

finished article, in the case of 

manufacturing drawback) as allowed 

under the applicable regulations for the 

type of drawback claimed, which 

authorize the transfer of the imported or 

other drawback eligible merchandise by 

that intermediate party to another party. 

Manufacture or production. 

Manufacture or production means a 

process, including, but not limited to, 

an assembly, by which merchandise is 

either made into a new and different 

article having a distinctive name, 

character or use; or is made fit for a 

particular use even though it is not 

made into a new and different article. 

Multiple products. Multiple products 

mean two or more products produced 

concurrently by a manufacture or 

production operation or operations. 

Per unit averaging. Per unit averaging 

means the equal apportionment of the 

amount of duties, taxes, and fees eligible 

for drawback for all units covered by a 

single line item on an entry summary to 

each unit of merchandise (and is 

required for certain substitution 

drawback claims) (see § 190.51(b)). The 

value of the imported merchandise for 

which a claim is approved may not 

exceed the total value of the exported 

merchandise which forms the basis for 

the claim (‘‘lesser of’’ rule) (see 

§ 190.22(a)(1)(ii) and 190.32(b)). 

Possession. Possession, for purposes 

of substitution unused merchandise 

drawback (19 U.S.C. 1313(j)(2)), means 

physical or operational control of the 

merchandise, including ownership 

while in bailment, in leased facilities, in 

transit to, or in any other manner under 

the operational control of, the party 

claiming drawback. 

Records. Records include, but are not 

limited to, written or electronic business 

records, statements, declarations, 

documents and electronically generated 

or machine readable data which pertain 

to a drawback claim or to the 

information contained in the records 

required by Chapter 4 of Title 19, 

United States Code, in connection with 

the filing of a drawback claim and 

which may include records normally 

kept in the ordinary course of business 

(see 19 U.S.C. 1508). 

Relative value. Relative value means, 

except for purposes of § 190.51(b), the 

value of a product divided by the total 

value of all products which are 

necessarily manufactured or produced 

concurrently in the same operation. 

Relative value is based on the market 

value, or other value approved by CBP, 

of each such product determined as of 

the time it is first separated in the 

manufacturing or production process. 

Market value is generally measured by 

the selling price, not including any 

packaging, transportation, or other 

identifiable costs, which accrue after the 

product itself is processed. Drawback 

must be apportioned to each such 

product based on its relative value at the 

time of separation. 

Schedule. A schedule means a 

document filed by a drawback claimant, 

under section 313(a) or (b), as amended 

(19 U.S.C. 1313(a) or (b)), showing the 

quantity of imported or substituted 

merchandise used in or appearing in 

each article exported or destroyed that 

justifies a claim for drawback. 

Schedule B. Schedule B means the 

Department of Commerce Schedule B, 

Statistical Classification of Domestic 

and Foreign Commodities Exported 

from the United States. 

Sought chemical element. A sought 

chemical element, under section 313(b), 

means an element listed in the Periodic 

Table of Elements that is imported into 

the United States or a chemical 

compound (a distinct substance formed 

by a chemical union of two or more 

elements in definite proportion by 

weight) consisting of those elements, 

either separately in elemental form or 

contained in source material. 

Specific manufacturing drawback 

ruling. A specific manufacturing 

drawback ruling means a letter of 

approval (or its electronic equivalent) 

issued by CBP Headquarters in response 

to an application filed by a 

manufacturer or producer for a ruling on 

a specific manufacturing or production 

operation for drawback, as described in 

the format in Appendix B of this part. 

Synopses of approved specific 

manufacturing drawback rulings are 

published in the Customs Bulletin with 

each synopsis being published under an 

identifying CBP Decision. Specific 

manufacturing drawback rulings are 

subject to the provisions in part 177 of 

this chapter. 

Substituted merchandise or articles. 

Substituted merchandise or articles 


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means merchandise or articles that may 

be substituted as follows: 

(1) For manufacturing drawback 

pursuant to section 1313(b), substituted 

merchandise must be classifiable under 

the same 8-digit HTSUS subheading 

number as the imported designated 

merchandise; 

(2) For direct identification drawback 

pursuant to section 1313(c)(2), 

substituted merchandise must be 

classifiable under the same 8-digit 

HTSUS subheading number and have 

the same specific product identifier 

(such as part number, SKU, or product 

code) as the imported designated 

merchandise; 

(3) For direct identification drawback 

pursuant to section 1313(j)(2), 

substituted merchandise must be 

classifiable under the same 8-digit 

HTSUS subheading number as the 

imported designated merchandise 

except for wine which may also qualify 

pursuant to § 190.32(d), but when the 8- 

digit HTSUS subheading number under 

which the imported merchandise is 

classified begins with the term ‘‘other,’’ 

then the other merchandise may be 

substituted for imported merchandise 

for drawback purposes if the other 

merchandise and such imported 

merchandise are classifiable under the 

same 10-digit HTSUS statistical 

reporting number and the article 

description for that 10-digit HTSUS 

statistical reporting number does not 

begin with the term ‘‘other’’; and 

(4) For substitution drawback of 

finished petroleum derivatives pursuant 

to section 1313(p), a substituted article 

must be of the same kind and quality as 

the qualified article for which it is 

substituted, that is, the articles must be 

commercially interchangeable or 

described in the same 8-digit HTSUS 

subheading number (see § 190.172(b)). 

Verification. Verification means the 

examination of any and all records, 

maintained by the claimant, or any 

party involved in the drawback process, 

which are required by the appropriate 

CBP officer to render a meaningful 

recommendation concerning the 

drawback claimant’s conformity to the 

law and regulations and the 

determination of supportability, 

correctness, and validity of the specific 

claim or groups of claims being verified. 

Wine. Wine, for purposes of 

substitution unused merchandise 

drawback under 19 U.S.C. 1313(j)(2) and 

pursuant to the alternative standard for 

substitution (see 19 CFR 190.32(d)), 

refers to table wine. Consistent with 

Alcohol and Tobacco Tax and Trade 

Bureau (TTB) regulations, table wine is 

a ‘‘Class 1 grape wine’’ that satisfies the 

requirements of 27 CFR 4.21(a)(1) and 

having an alcoholic content not in 

excess of 14 percent by volume 

pursuant to 27 CFR 4.21(a)(2)). 

§ 190.3 Duties, taxes, and fees subject or 

not subject to drawback. 

(a) Drawback is allowable pursuant to 

19 U.S.C. 1313 of on duties, taxes, and 

fees paid on imported merchandise 

which were imposed under Federal law 

upon entry or importation, including: 

(1) Ordinary customs duties, 

including: 

(i) Duties paid on an entry, or 

withdrawal from warehouse, for 

consumption for which liquidation has 

become final; 

(ii) Estimated duties paid on an entry, 

or withdrawal from warehouse, for 

consumption, for which liquidation has 

not become final, subject to the 

conditions and requirements of 

§ 190.81(b); and 

(iii) Tenders of duties after liquidation 

of the entry, or withdrawal from 

warehouse, for consumption for which 

the duties are paid, subject to the 

conditions and requirements of 

§ 190.81(c), including: 

(A) Voluntary tenders (for purposes of 

this section, a ‘‘voluntary tender’’ is a 

payment of duties on imported 

merchandise in excess of duties 

included in the liquidation of the entry, 

or withdrawal from warehouse, for 

consumption, provided that the 

liquidation has become final and that 

the other conditions of this section and 

§ 190.81 are met); 

(B) Tenders of duties in connection 

with notices of prior disclosure under 

19 U.S.C. 1592(c)(4); and 

(C) Duties restored under 19 U.S.C. 

1592(d). 

(2) Marking duties assessed under 

section 304(c), Tariff Act of 1930, as 

amended (19 U.S.C. 1304(c)); 

(3) Internal revenue taxes which 

attach upon importation (see § 101.1 of 

this chapter); 

(4) Merchandise processing fees (see 

§ 24.23 of this chapter); and 

(5) Harbor maintenance taxes (see 

§ 24.24 of this chapter). 

(b) Drawback is not allowable on 

antidumping and countervailing duties 

which were imposed on any 

merchandise entered, or withdrawn 

from warehouse, for consumption (see 

19 U.S.C. 1677h). 

(c) Drawback is not allowed when the 

identified merchandise, the designated 

imported merchandise, or the 

substituted merchandise (when 

applicable), consists of an agricultural 

product which is duty-paid at the overquota rate of duty established under a 

tariff-rate quota, except that: 

(1) Agricultural products as described 

in this paragraph are eligible for 

drawback under 19 U.S.C. 1313(j)(1); 

and 

(2) Tobacco otherwise meeting the 

description of agricultural products in 

this paragraph is eligible for drawback 

under 19 U.S.C. 1313(j)(1) or 19 U.S.C. 

1313(a). 

§ 190.4 Merchandise in which a U.S. 

Government interest exists. 

(a) Restricted meaning of Government. 

A U.S. Government instrumentality 

operating with nonappropriated funds is 

considered a Government entity within 

the meaning of this section. 

(b) Allowance of drawback. If the 

merchandise is sold to the U.S. 

Government, drawback will be available 

only to the: 

(1) Department, branch, agency, or 

instrumentality of the U.S. Government 

which purchased it; or 

(2) Supplier, or any of the parties 

specified in § 190.82, provided the 

claim is supported by documentation 

signed by a proper officer of the 

department, branch, agency, or 

instrumentality concerned certifying 

that the right to drawback was reserved 

by the supplier or other parties with the 

knowledge and consent of the 

department, branch, agency, or 

instrumentality. 

(c) Bond. No bond will be required 

when a U.S. Government entity claims 

drawback. 

§ 190.5 Guantanamo Bay, insular 

possessions, trust territories. 

Guantanamo Bay Naval Station is 

considered foreign territory for 

drawback purposes and, accordingly, 

drawback may be permitted on articles 

shipped there from the customs territory 

of the United States. Drawback is not 

allowed, except on claims made under 

19 U.S.C. 1313(j)(1), on articles shipped 

from the customs territory of the United 

States to the U.S. Virgin Islands, 

American Samoa, Wake Island, Midway 

Islands, Kingman Reef, Guam, Canton 

Island, Enderbury Island, Johnston 

Island, or Palmyra Island. See 19 U.S.C. 

1313(y). Puerto Rico, which is part of 

the customs territory of the United 

States, is not considered foreign 

territory for drawback purposes and, 

accordingly, drawback may not be 

permitted on articles shipped there from 

elsewhere in the customs territory of the 

United States. For refunds of duties, 

taxes, or fees paid on merchandise 

imported into Puerto Rico and exported 

outside of the customs territory of the 

United States, claims must be filed 

separately from other claims filed under 

the provisions of this part. 


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§ 190.6 Authority to sign or electronically 

certify drawback documents. 

(a) Documents listed in paragraph (b) 

of this section must be signed or 

electronically certified only by one of 

the following: 

(1) The president, a vice president, 

secretary, treasurer, or any other 

employee legally authorized to bind the 

corporation; 

(2) A full partner of a partnership; 

(3) The owner of a sole 

proprietorship; 

(4) Any employee of the business 

entity with a power of attorney; 

(5) An individual acting on his or her 

own behalf; or 

(6) A licensed customs broker with a 

power of attorney to sign the applicable 

drawback document. 

(b) The following documents require 

execution in accordance with paragraph 

(a) of this section: 

(1) Drawback entries; 

(2) Notices of Intent to Export, 

Destroy, or Return Merchandise for 

Purposes of Drawback; 

(3) Certifications of exporters on bills 

of lading or evidence of exportation (see 

§§ 190.28 and 190.82); and 

(4) Abstracts, schedules and extracts 

from monthly abstracts, and bills of 

materials and formulas, if not included 

as part of a drawback claim. 

(c) The following documents (see also 

part 177 of this chapter) may be 

executed by one of the persons 

described in paragraph (a) of this 

section or by any other individual 

legally authorized to bind the person (or 

entity) for whom the document is 

executed: 

(1) A letter of notification of intent to 

operate under a general manufacturing 

drawback ruling under § 190.7; 

(2) An application for a specific 

manufacturing drawback ruling under 

§ 190.8; 

(3) An application for waiver of prior 

notice under § 190.91; 

(4) An application for approval of 

accelerated payment of drawback under 

§ 190.92; and 

(5) An application for certification in 

the Drawback Compliance Program 

under § 190.193. 

§ 190.7 General manufacturing drawback 

ruling. 

(a) Purpose; eligibility. General 

manufacturing drawback rulings are 

designed to simplify drawback for 

certain common manufacturing 

operations but do not preclude or limit 

the use of applications for specific 

manufacturing drawback rulings (see 

§ 190.8). A manufacturer or producer 

engaged in an operation that falls within 

a published general manufacturing 

drawback ruling may submit a letter of 

notification of intent to operate under 

that general ruling. Where a separatelyincorporated subsidiary of a parent 

corporation is engaged in manufacture 

or production for drawback, the 

subsidiary is the proper party to submit 

the letter of notification, and cannot 

operate under a letter of notification 

submitted by the parent corporation. 

(b) Procedures—(1) Publication. 

General manufacturing drawback 

rulings are contained in Appendix A to 

this part. As deemed necessary by CBP, 

new general manufacturing drawback 

rulings will be issued as CBP Decisions 

and added to the appendix thereafter. 

(2) Submission. Letters of notification 

of intent to operate under a general 

manufacturing drawback ruling must be 

submitted to any drawback office where 

drawback entries will be filed, 

concurrent with or prior to filing a 

claim, provided that the general 

manufacturing drawback ruling will be 

followed without variation. If there is 

any variation from the general 

manufacturing drawback ruling, the 

manufacturer or producer must apply 

for a specific manufacturing drawback 

ruling under § 190.8. 

(3) Information required. Each 

manufacturer or producer submitting a 

letter of notification of intent to operate 

under a general manufacturing 

drawback ruling under this section must 

provide the following specific detailed 

information: 

(i) Name and address of manufacturer 

or producer (if the manufacturer or 

producer is a separately-incorporated 

subsidiary of a corporation, the 

subsidiary corporation must submit a 

letter of notification in its own name); 

(ii) In the case of a business entity, the 

names of the persons listed in 

§ 190.6(a)(1) through (6) who will sign 

drawback documents; 

(iii) Locations of the factories which 

will operate under the letter of 

notification; 

(iv) Identity (by T.D. or CBP Decision 

number and title) of the general 

manufacturing drawback ruling under 

which the manufacturer or producer 

will operate; 

(v) Description of the merchandise 

and articles, unless specifically 

described in the general manufacturing 

drawback ruling, and the applicable 8- 

digit HTSUS subheading number(s); 

(vi) Description of the manufacturing 

or production process, unless 

specifically described in the general 

manufacturing drawback ruling; 

(vii) Basis of claim used for 

calculating drawback; and 

(viii) IRS (Internal Revenue Service) 

number (with suffix) of the 

manufacturer or producer. 

(c) Review and action by CBP. The 

drawback office to which the letter of 

notification of intent to operate under a 

general manufacturing drawback ruling 

was submitted will review the letter of 

notification of intent. 

(1) Acknowledgment. The drawback 

office will promptly issue a letter 

acknowledging receipt of the letter of 

intent and authorizing the person to 

operate under the identified general 

manufacturing drawback ruling, subject 

to the requirements and conditions of 

that general manufacturing drawback 

ruling and the law and regulations, to 

the person who submitted the letter of 

notification if: 

(i) The letter of notification is 

complete (i.e., contains the information 

required in paragraph (b)(3) of this 

section); 

(ii) The general manufacturing 

drawback ruling identified by the 

manufacturer or producer is applicable 

to the manufacturing or production 

process; 

(iii) The general manufacturing 

drawback ruling identified by the 

manufacturer or producer will be 

followed without variation; and 

(iv) The described manufacturing or 

production process is a manufacture or 

production as defined in § 190.2 of this 

subpart. 

(2) Computer-generated number. With 

the letter of acknowledgment the 

drawback office will include the unique 

computer-generated number assigned to 

the acknowledgment of the letter of 

notification of intent to operate. This 

number must be stated when the person 

files manufacturing drawback claims 

with CBP under the general 

manufacturing drawback ruling. 

(3) Non-conforming letters of 

notification of intent. If the letter of 

notification of intent to operate does not 

meet the requirements of paragraph 

(c)(1) of this section in any respect, the 

drawback office will promptly and in 

writing specifically advise the person of 

this fact and why this is so. A letter of 

notification of intent to operate which is 

not acknowledged may be resubmitted 

to the drawback office to which it was 

initially submitted with modifications 

and/or explanations addressing the 

reasons CBP may have given for nonacknowledgment, or the matter may be 

referred (by letter from the manufacturer 

or producer) to CBP Headquarters 

(Attention: Entry Process and Duty 

Refunds Branch, Regulations and 

Rulings, Office of Trade). 

(d) Procedure to modify a general 

manufacturing drawback ruling. 


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Modifications are allowed under the 

same procedure terms as provided for in 

§ 190.8(g) for specific manufacturing 

drawback rulings. 

(e) Duration. Acknowledged letters of 

notification under this section will 

remain in effect under the same terms 

as provided for in § 190.8(h) for specific 

manufacturing drawback rulings. 

§ 190.8 Specific manufacturing drawback 

ruling. 

(a) Applicant. Unless operating under 

a general manufacturing drawback 

ruling (see § 190.7), each manufacturer 

or producer of articles intended to be 

claimed for drawback must apply for a 

specific manufacturing drawback ruling. 

Where a separately-incorporated 

subsidiary of a parent corporation is 

engaged in manufacture or production 

for drawback, the subsidiary is the 

proper party to apply for a specific 

manufacturing drawback ruling, and 

cannot operate under any specific 

manufacturing drawback ruling 

approved in favor of the parent 

corporation. 

(b) Sample application. Sample 

formats for applications for specific 

manufacturing drawback rulings are 

contained in Appendix B to this part. 

(c) Content of application. The 

application of each manufacturer or 

producer must include the following 

information as applicable: 

(1) Name and address of the 

applicant; 

(2) Internal Revenue Service (IRS) 

number (with suffix) of the applicant; 

(3) Description of the type of business 

in which engaged; 

(4) Description of the manufacturing 

or production process, which shows 

how the designated and substituted 

merchandise is used to make the article 

that is to be exported or destroyed; 

(5) In the case of a business entity, the 

names of persons listed in § 190.6(a)(1) 

through (6) who will sign drawback 

documents; 

(6) Description of the imported 

merchandise including specifications 

and applicable 8-digit HTSUS 

subheading(s); 

(7) Description of the exported article 

and applicable 8-digit HTSUS 

subheadings; 

(8) How manufacturing drawback is 

calculated; 

(9) Summary of the records kept to 

support claims for drawback; and 

(10) Identity and address of the 

recordkeeper if other than the claimant. 

(d) Submission of Application. An 

application for a specific manufacturing 

drawback ruling must be submitted to 

CBP Headquarters (Attention: Entry 

Process and Duty Refunds Branch, 

Regulations and Rulings, Office of 

Trade). Applications may be physically 

delivered (in triplicate) or submitted via 

email. Claimants must indicate if 

drawback claims are to be filed under 

the ruling at more than one drawback 

office. 

(e) Review and action by CBP. CBP 

Headquarters will review each 

application for a specific manufacturing 

drawback ruling. 

(1) Approval. If the application is 

consistent with the drawback law and 

regulations, CBP Headquarters will 

issue a letter of approval to the 

applicant and will forward 1 copy of the 

application for the specific 

manufacturing drawback ruling to the 

appropriate drawback office(s) with a 

copy of the letter of approval. Each 

specific manufacturing drawback ruling 

will be assigned a unique manufacturing 

number which will be included in the 

letter of approval to the applicant from 

CBP Headquarters, which must be used 

when filing manufacturing drawback 

claims. 

(2) Disapproval. If the application is 

not consistent with the drawback law 

and regulations, CBP Headquarters will 

promptly and in writing inform the 

applicant that the application cannot be 

approved and will specifically advise 

the applicant why this is so. A 

disapproved application may be 

resubmitted with modifications and/or 

explanations addressing the reasons 

given for disapproval, a disapproval 

may be appealed to CBP Headquarters 

(Attention: Entry Process and Duty 

Refunds Branch, Regulations and 

Rulings, Office of Trade). 

(f) Schedules and supplemental 

schedules. When an application for a 

specific manufacturing drawback ruling 

states that drawback is to be based upon 

a schedule, as defined in 190.2, filed by 

the manufacturer or producer, the 

schedule will be reviewed by CBP 

Headquarters. The application may 

include a request for authorization for 

the filing of supplemental schedules 

with the drawback office where claims 

are filed. 

(g) Procedure to modify a specific 

manufacturing drawback ruling—(1) 

Supplemental application. Except as 

provided for limited modifications in 

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

manufacturer or producer desiring to 

modify an existing specific 

manufacturing drawback ruling may 

submit a supplemental application for 

such modification to CBP Headquarters 

(Attention: Entry Process and Duty 

Refunds Branch, Regulations and 

Rulings, Office of Trade). Such a 

supplemental application may, at the 

discretion of the manufacturer or 

producer, be in the form of the original 

application, or it may identify the 

specific manufacturing drawback ruling 

to be modified (by T.D. or CBP Decision 

number, if applicable, and unique 

computer-generated number) and 

include only those paragraphs of the 

application that are to be modified, with 

a statement that all other paragraphs are 

unchanged and are incorporated by 

reference in the supplemental 

application. 

(2) Limited modifications. (i) A 

supplemental application for a specific 

manufacturing drawback ruling must be 

submitted to the drawback office where 

the original claims was filed if the 

modifications are limited to: 

(A) The location of a factory, or the 

addition of one or more factories where 

the methods followed and records 

maintained are the same as those at 

another factory operating under the 

existing specific manufacturing 

drawback ruling of the manufacturer or 

producer; 

(B) The succession of a sole 

proprietorship, partnership or 

corporation to the operations of a 

manufacturer or producer; 

(C) A change in name of the 

manufacturer or producer; 

(D) A change in the persons who will 

sign drawback documents in the case of 

a business entity; 

(E) A change in the basis of claim 

used for calculating drawback; 

(F) A change in the decision to use or 

not to use an agent under § 190.9 of this 

chapter, or a change in the identity of 

an agent under that section; 

(G) A change in the drawback office 

where claims will be filed under the 

ruling (see paragraph (g)(2)(iii) of this 

section); 

(H) An authorization to continue 

operating under a ruling approved 

under 19 CFR part 191 (see paragraph 

(g)(2)(iv) of this section); or 

(I) Any combination of the foregoing 

changes. 

(ii) A limited modification, as 

provided for in this paragraph (g)(2), 

must contain only the modifications to 

be made, in addition to identifying the 

specific manufacturing drawback ruling 

and being signed by an authorized 

person. To effect a limited modification, 

the manufacturer or producer must file 

with the drawback office(s) where 

claims were originally filed a letter 

stating the modifications to be made. 

The drawback office will promptly 

acknowledge acceptance of the limited 

modifications. 

(iii) To transfer a claim to another 

drawback office, the manufacturer or 

producer must file with the second 

drawback office where claims will be 


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filed, a written application to file claims 

at that office, with a copy of the 

application and approval letter under 

which claims are currently filed. The 

manufacturer or producer must provide 

a copy of the written application to file 

claims at the new drawback office to the 

drawback office where claims are 

currently filed. 

(iv) To file a claim under this part 

based on a ruling approved under 19 

CFR part 191, the manufacturer or 

producer must file a supplemental 

application for a limited modification 

no later than February 23, 2019, which 

provides the following: 

(A) Revised parallel columns with the 

required annotations for the applicable 

8-digit HTSUS subheading number(s); 

(B) Revised bill of materials or 

formula with the required annotations 

for the applicable 8-digit HTSUS 

subheading number(s); and 

(C) A certification of continued 

compliance, which states: ‘‘The 

undersigned acknowledges the current 

statutory requirements under 19 U.S.C. 

1313 and the regulatory requirements in 

19 CFR part 190, and hereby certifies its 

continuing eligibility for operating 

under the manufacturing drawback 

ruling in compliance therewith.’’ 

(h) Duration. Subject to 19 U.S.C. 

1625 and part 177 of this chapter, a 

specific manufacturing drawback ruling 

under this section will remain in effect 

indefinitely unless: 

(1) No drawback claim is filed under 

the ruling for a period of 5 years and 

notice of termination is published in the 

Customs Bulletin; or 

(2) The manufacturer or producer to 

whom approval of the ruling was issued 

files a request to terminate the ruling, in 

writing, with CBP Headquarters 

(Attention: Entry Process and Duty 

Refunds Branch, Regulations and 

Rulings, Office of Trade). 

§ 190.9 Agency. 

(a) General. An owner of the 

identified merchandise, the designated 

imported merchandise and/or the 

substituted merchandise that is used to 

produce the exported articles may 

employ another person to do part, or all, 

of the manufacture or production under 

19 U.S.C. 1313(a) or (b) and as defined 

in § 190.2 of this subpart. For purposes 

of this section, such owner is the 

principal and such other person is the 

agent. Under 19 U.S.C. 1313(b), the 

principal will be treated as the 

manufacturer or producer of 

merchandise used in manufacture or 

production by the agent. The principal 

must be able to establish by its 

manufacturing records, the 

manufacturing records of its agent(s), or 

the manufacturing records of both (or 

all) parties, compliance with all 

requirements of this part (see, in 

particular, § 190.26). 

(b) Requirements—(1) Contract. The 

manufacturer must establish that it is 

the principal in a contract between it 

and its agent who actually does the 

work on either the designated or 

substituted merchandise, or both, for the 

principal. The contract must include: 

(i) Terms of compensation to show 

that the relationship is an agency rather 

than a sale; 

(ii) How transfers of merchandise and 

articles will be recorded by the 

principal and its agent; 

(iii) The work to be performed on the 

merchandise by the agent for the 

principal; 

(iv) The degree of control that is to be 

exercised by the principal over the 

agent’s performance of work; 

(v) The party who is to bear the risk 

of loss on the merchandise while it is in 

the agent’s custody; and 

(vi) The period that the contract is in 

effect. 

(2) Ownership of the merchandise by 

the principal. The records of the 

principal and/or the agent must 

establish that the principal had legal 

and equitable title to the merchandise 

before receipt by the agent. The right of 

the agent to assert a lien on the 

merchandise for work performed does 

not derogate the principal’s ownership 

interest under this section. 

(3) Sales prohibited. The relationship 

between the principal and agent must 

not be that of a seller and buyer. If the 

parties’ records show that, with respect 

to the merchandise that is the subject of 

the principal-agent contract, the 

merchandise is sold to the agent by the 

principal, or the articles manufactured 

by the agent are sold to the principal by 

the agent, those records are inadequate 

to establish existence of a principalagency relationship under this section. 

(c) Specific manufacturing drawback 

rulings; general manufacturing 

drawback rulings—(1) Owner. An owner 

who intends to operate under the 

principal-agent procedures of this 

section must state that intent in any 

letter of notification of intent to operate 

under a general manufacturing 

drawback ruling filed under § 190.7 or 

in any application for a specific 

manufacturing drawback ruling filed 

under § 190.8. 

(2) Agent. Each agent operating under 

this section must have filed a letter of 

notification of intent to operate under a 

general manufacturing drawback ruling 

(see § 190.7), for an agent, covering the 

articles manufactured or produced, or 

have obtained a specific manufacturing 

drawback ruling (see § 190.8), as 

appropriate. 

(d) Certificate—(1) Contents of 

certificate. The principal for whom 

processing is conducted under this 

section must file, with any drawback 

claim, a certificate, subject to the 

recordkeeping requirements of §§ 190.15 

and 190.26, certifying that upon request 

by CBP it can establish the following: 

(i) Quantity of merchandise 

transferred from the principal to the 

agent; 

(ii) Date of transfer of the merchandise 

from the principal to the agent; 

(iii) Date of manufacturing or 

production operations performed by the 

agent; 

(iv) Total quantity, description, and 

10-digit HTSUS classification of 

merchandise appearing in or used in 

manufacturing or production operations 

performed by the agent; 

(v) Total quantity, description, and 

10-digit HTSUS classification of articles 

produced in manufacturing or 

production operations performed by the 

agent; 

(vi) Quantity and 10-digit HTSUS 

classification of articles transferred from 

the agent to the principal; and 

(vii) Date of transfer of the articles 

from the agent to the principal. 

(2) Blanket certificate. The certificate 

required under paragraph (d)(1) of this 

section may be a blanket certificate for 

a stated period. 

§ 190.10 Transfer of merchandise. 

(a) Ability to transfer merchandise. (1) 

A party may transfer drawback eligible 

merchandise or articles to another party, 

provided that the transferring party: 

(i) Imports and pays duties, taxes, 

and/or fees on such imported 

merchandise; 

(ii) Receives such imported 

merchandise; 

(iii) In the case of 19 U.S.C. 1313(j)(2), 

receives such imported merchandise, 

substituted merchandise, or any 

combination of such imported and 

substituted merchandise; or 

(iv) Receives an article manufactured 

or produced under 19 U.S.C. 1313(a) 

and/or (b). 

(2) The transferring party must 

maintain records that: 

(i) Document the transfer of that 

merchandise or article; 

(ii) Identify such merchandise or 

article as being that to which a potential 

right to drawback exists; and 

(iii) Assign such right to the transferee 

(see § 190.82). 

(b) Required records. The records that 

support the transfer must include the 

following information: 

(1) The party to whom the 

merchandise or articles are delivered; 


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(2) Date of physical delivery; 

(3) Import entry number and entry 

line item number; 

(4) Quantity delivered and, for 

substitution claims, total quantity 

attributable to the relevant import entry 

line item number; 

(5) Total duties, taxes, and fees paid 

on, or attributable to, the delivered 

merchandise, and, for substitution 

claims, total duties, taxes, and fees paid 

on, or attributable to, the relevant 

import entry line item number; 

(6) Date of importation; 

(7) Port where import entry filed; 

(8) Person from whom received; 

(9) Description of the merchandise 

delivered; 

(10) The 10-digit HTSUS 

classification for the designated 

imported merchandise (such HTSUS 

number must be from the entry 

summary line item and other entry 

documentation for the merchandise); 

and 

(11) If the merchandise transferred is 

substituted for the designated imported 

merchandise under 19 U.S.C. 1313(j)(2), 

the 10-digit HTSUS classification of the 

substituted merchandise (as if it had 

been imported). 

(c) Transferor notification for line 

item designation. (1) Pursuant to 

§ 190.51(a)(3) and for transfers that do 

not cover the entire quantity of the 

merchandise reported on a specific line 

item from an entry summary, the 

transferring party (transferor) must 

provide notice to the transferee(s) of the 

following: 

(i) Whether the transferor has claimed 

or will claim drawback relating to any 

merchandise reported on the entry 

summary line item (specifying either 

direct identification or substitution as 

the basis for the claim); 

(ii) Whether the transferor has 

previously transferred any merchandise 

reported on the entry summary line item 

and whether the transferor has 

knowledge regarding a drawback claim 

being filed relating that transferred 

merchandise (specifying either direct 

identification or substitution); and 

(iii) Whether the transferor has not 

previously transferred any merchandise 

reported on the entry summary line 

item. 

(2) Notification of this designation 

from the transferor to the transferee(s) 

must be documented in records. 

(3) Notwithstanding the designation 

made, the basis for the first-filed claim 

relating to merchandise reported on that 

entry summary line item (either direct 

identification or substitution) will be 

the exclusive basis for any subsequent 

claims for any other merchandise 

reported on that same entry summary 

line item. 

(d) Retention period. The records 

listed in paragraph (b) of this section 

must be retained by the issuing party for 

3 years from the date of liquidation of 

the related claim or longer period if 

required by law (see 19 U.S.C. 

1508(c)(3)). 

(e) Submission to CBP. If the records 

required under paragraph (b) of this 

section or additional records requested 

by CBP are not provided by the 

claimant, the part of the drawback claim 

dependent on those records will be 

denied. 

(f) Warehouse transfer and 

withdrawals. The person in whose name 

merchandise is withdrawn from a 

bonded warehouse will be considered 

the importer for drawback purposes. No 

records are required to document prior 

transfers of merchandise while in a 

bonded warehouse. 

§ 190.11 Valuation of merchandise. 

The values declared to CBP as part of 

a complete drawback claim pursuant to 

§ 190.51 must be established as 

provided below. If the drawback eligible 

merchandise or articles are destroyed, 

then the value of the imported 

merchandise and any substituted 

merchandise must be reduced by the 

value of materials recovered during 

destruction in accordance with 19 

U.S.C. 1313(x). 

(a) Designated imported merchandise. 

The value of the imported merchandise 

is determined as follows: 

(1) Direct identification claims. The 

value of the imported merchandise is 

the customs value of the imported 

merchandise upon entry into the United 

States (see subpart E of part 152 of this 

chapter); or, if the merchandise is 

identified pursuant to an approved 

accounting method, then the value of 

the imported merchandise is the 

customs value that is properly 

attributable to the imported 

merchandise as identified by the 

appropriate recordkeeping (see § 190.14, 

varies by accounting method). 

(2) Substitution claims. The value of 

the designated imported merchandise is 

the per unit average value, which is the 

entered value for the applicable entry 

summary line item apportioned equally 

over each unit covered by the line item. 

(b) Exported merchandise or articles. 

The value of the exported merchandise 

or articles eligible for drawback is the 

selling price as declared for the 

Electronic Export Information (EEI), 

including any adjustments and 

exclusions required by 15 CFR 30.6(a)). 

If there is no selling price for the EEI, 

then the value is the other value as 

declared for the EEI including any 

adjustments and exclusions required by 

15 CFR 30.6(a) (e.g., the market price, if 

the goods are shipped on consignment). 

(For special types of transactions where 

certain unusual conditions are involved, 

the value for the EEI is determined 

pursuant to 15 CFR part 30 subpart C.) 

If no EEI is required (see, 15 CFR part 

30 subpart D for a complete list of 

exemptions), then the claimant must 

provide the value that would have been 

set forth on the EEI when the 

exportation took place, but for the 

exemption from the requirement for an 

EEI. 

(c) Destroyed merchandise or articles. 

The value of the destroyed merchandise 

or articles eligible for drawback is the 

value at the time of destruction, 

determined as if the merchandise had 

been exported in its condition at the 

time of its destruction and an EEI had 

been required. 

(d) Substituted merchandise for 

manufacturing drawback claims. The 

value of the substituted merchandise for 

manufacturing drawback claims 

pursuant to 19 U.S.C. 1313(b) is the cost 

of acquisition or production for the 

manufacturer or producer who used the 

substituted merchandise in 

manufacturing or production. 

§ 190.12 Claim filed under incorrect 

provision. 

A drawback claim filed pursuant to 

any provision of section 313 of the Act, 

as amended (19 U.S.C. 1313) may be 

deemed filed pursuant to any other 

provision thereof should the drawback 

office determine that drawback is not 

allowable under the provision as 

originally filed, but that it is allowable 

under such other provision. To be 

allowable under such other provision, 

the claim must meet each of the 

requirements of such provision. The 

claimant may raise alternative 

provisions prior to liquidation and by 

protest (see part 174 of this chapter). 

§ 190.13 Packaging materials. 

(a) Imported packaging material. 

Drawback of duties is provided in 

section 313(q)(1) of the Act, as amended 

(19 U.S.C. 1313(q)(1)), on imported 

packaging material used to package or 

repackage merchandise or articles 

exported or destroyed pursuant to 

section 313(a), (b), (c), or (j) of the Act, 

as amended (19 U.S.C. 1313(a), (b), (c), 

or (j)). The amount of drawback payable 

on the packaging material is determined 

pursuant to the particular drawback 

provision to which the packaged goods 

themselves are subject. The packaging 

material must be separately identified 

on the claim, and all other information 


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and documents required for the 

particular drawback provision under 

which the claim is made must be 

provided for the packaging material. 

(b) Packaging material manufactured 

in United States from imported 

materials. Drawback of duties is 

provided in section 313(q)(2) of the Act, 

as amended (19 U.S.C. 1313(q)(2)), on 

packaging material that is manufactured 

or produced in the United States from 

imported materials and used to package 

or repackage articles that are exported or 

destroyed under section 313(a) or (b) of 

the Act, as amended (19 U.S.C. 1313(a) 

or (b)). The amount of drawback payable 

on the packaging material is determined 

pursuant to the particular 

manufacturing drawback provision to 

which the packaged articles themselves 

are subject, either 19 U.S.C. 1313(a) or 

(b), as applicable. The packaging 

material and the imported merchandise 

used in the manufacture or production 

of the packaging material must be 

separately identified on the claim, and 

all other information and documents 

required for the particular drawback 

provision under which the claim is 

made must be provided for the 

packaging material as well as the 

imported merchandise used in its 

manufacture or production, for purposes 

of determining the applicable drawback 

payable. 

§ 190.14 Identification of merchandise or 

articles by accounting method. 

(a) General. This section provides for 

the identification of merchandise or 

articles for drawback purposes by the 

use of accounting methods. This section 

applies to identification of merchandise 

or articles in inventory or storage, as 

well as identification of merchandise 

used in manufacture or production, as 

defined in § 190.2. This section is not 

applicable to situations in which the 

drawback law authorizes substitution 

(substitution is allowed in specified 

situations under 19 U.S.C. 1313(b), 

1313(j)(2), 1313(k), and 1313(p); this 

section does apply to situations in these 

subsections in which substitution is not 

allowed, as well as to the subsections of 

the drawback law under which no 

substitution is allowed). When 

substitution is authorized, merchandise 

or articles may be substituted without 

reference to this section, under the 

criteria and conditions specifically 

authorized in the statutory and 

regulatory provisions providing for the 

substitution. 

(b) Conditions and criteria for 

identification by accounting method. 

Manufacturers, producers, claimants, or 

other appropriate persons may identify 

for drawback purposes lots of 

merchandise or articles under this 

section, subject to each of the following 

conditions and criteria: 

(1) The lots of merchandise or articles 

to be so identified must be fungible as 

defined in § 190.2; 

(2) The person using the identification 

method must be able to establish that 

inventory records (for example, material 

control records), prepared and used in 

the ordinary course of business, account 

for the lots of merchandise or articles to 

be identified as being received into and 

withdrawn from the same inventory. 

Even if merchandise or articles are 

received or withdrawn at different 

geographical locations, if such inventory 

records treat receipts or withdrawals as 

being from the same inventory, those 

inventory records may be used to 

identify the merchandise or articles 

under this section, subject to the 

conditions of this section. If any such 

inventory records (that is, inventory 

records prepared and used in the 

ordinary course of business) treat 

receipts and withdrawals as being from 

different inventories, those inventory 

records must be used and receipts into 

or withdrawals from the different 

inventories may not be accounted for 

together. If units of merchandise or 

articles can be specifically identified 

(for example, by serial number), the 

merchandise or articles must be 

specifically identified and may not be 

identified by accounting method, unless 

it is established that inventory records, 

prepared and used in the ordinary 

course of business, treat the 

merchandise or articles to be identified 

as being received into and withdrawn 

from the same inventory (subject to the 

above conditions); 

(3) Unless otherwise provided in this 

section or specifically approved by CBP 

(by a binding ruling under part 177 of 

this chapter), all receipts (or inputs) into 

and all withdrawals from the inventory 

must be recorded in the accounting 

record; 

(4) The records which support any 

identification method under this section 

are subject to verification by CBP (see 

§ 190.61). If CBP requests such 

verification, the person using the 

identification method must be able to 

demonstrate how, under Generally 

Accepted Accounting Procedures 

(GAAP), the records which support the 

identification method used account for 

all merchandise or articles in, and all 

receipts into and withdrawals from, the 

inventory, and the drawback per unit for 

each receipt and withdrawal; and 

(5) Any accounting method which is 

used by a person for drawback purposes 

under this section must be used 

exclusively, without using other 

methods for a period of at least one year, 

unless approval is given by CBP for a 

shorter period. 

(c) Approved accounting methods. 

The following accounting methods are 

approved for use in the identification of 

merchandise or articles for drawback 

purposes under this section. If a claim 

is eligible for the use of any accounting 

method, the claimant must indicate on 

the drawback entry whether an 

accounting method was used, and if so, 

which accounting method was used, to 

identify the merchandise as part of the 

complete claim (see § 190.51). 

(1) First-in, first-out (FIFO)—(i) 

General. The FIFO method is the 

method by which fungible merchandise 

or articles are identified by 

recordkeeping on the basis of the first 

merchandise or articles received into 

the inventory. Under this method, 

withdrawals are from the oldest (first-in) 

merchandise or articles in the inventory 

at the time of withdrawal. 

(ii) Example. If the beginning 

inventory is zero, 100 units with $1 

drawback attributable per unit are 

received in inventory on the 2nd of the 

month, 50 units with no drawback 

attributable per unit are received into 

inventory on the 5th of the month, 75 

units are withdrawn for domestic (nonexport) shipment on the 10th of the 

month, 75 units with $2 drawback 

attributable per unit are received in 

inventory on the 15th of the month, 100 

units are withdrawn for export on the 

20th of the month, and no other receipts 

or withdrawals occurred in the month, 

the drawback attributable to the 100 

units withdrawn for export on the 20th 

is a total of $75 (25 units from the 

receipt on the 2nd with $1 drawback 

attributable per unit, 50 units from the 

receipt on the 5th with no drawback 

attributable per unit, and 25 units from 

the receipt on the 15th with $2 

drawback attributable per unit). The 

basis of the foregoing and the effects on 

the inventory of the receipts and 

withdrawals, and balance in the 

inventory thereafter are as follows: On 

the 2nd of the month the receipt of 100 

units ($1 drawback/unit) results in a 

balance of that amount; the receipt of 50 

units ($0 drawback/unit) on the 5th 

results in a balance of 150 units (100 

with $1 drawback/unit and 50 with $0 

drawback/unit); the withdrawal on the 

10th of 75 units ($1 drawback/unit) 

results in a balance of 75 units (25 with 

$1 drawback/unit and 50 with $0 

drawback/unit); the receipt of 75 units 

($2 drawback/unit) on the 15th results 

in a balance of 150 units (25 with $1 

drawback/unit, 50 with $0 drawback/ 

unit, and 75 with $2 drawback/unit); the 

withdrawal on the 20th of 100 units (25 


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with $1 drawback/unit, 50 with $0 

drawback/unit, and 25 with $2 

drawback unit) results in a balance of 50 

units (all 50 with $2 drawback/unit). 

(2) Last-in, first out (LIFO)—(i) 

General. The LIFO method is the 

method by which fungible merchandise 

or articles are identified by 

recordkeeping on the basis of the last 

merchandise or articles received into 

the inventory. Under this method, 

withdrawals are from the newest (lastin) merchandise or articles in the 

inventory at the time of withdrawal. 

(ii) Example. In the example in 

paragraph (c)(1)(ii) of this section, the 

drawback attributable to the 100 units 

withdrawn for export on the 20th is a 

total of $175 (75 units from the receipt 

on the 15th with $2 drawback 

attributable per unit and 25 units from 

the receipt on the 2nd with $1 drawback 

attributable per unit). The basis of the 

foregoing and the effects on the 

inventory of the receipts and 

withdrawals, and balance in the 

inventory thereafter are as follows: On 

the 2nd of the month the receipt of 100 

units ($1 drawback/unit) results in a 

balance of that amount; the receipt of 50 

units ($0 drawback/unit) on the 5th 

results in a balance of 150 units (100 

with $1 drawback/unit and 50 with $0 

drawback/unit); the withdrawal on the 

10th of 75 units (50 with $0 drawback/ 

unit and 25 with $1 drawback/unit) 

results in a balance of 75 units (all with 

$1 drawback/unit); the receipt of 75 

units ($2 drawback/unit) on the 15th 

results in a balance of 150 units (75 with 

$1 drawback/unit and 75 with $2 

drawback/unit); the withdrawal on the 

20th of 100 units (75 with $2 drawback/ 

unit and 25 with $1 drawback/unit) 

results in a balance of 50 units (all 50 

with $1 drawback/unit). 

(3) Low-to-high—(i) General. The lowto-high method is the method by which 

fungible merchandise or articles are 

identified by recordkeeping on the basis 

of the lowest drawback amount per unit 

of the merchandise or articles in 

inventory. Merchandise or articles with 

no drawback attributable to them (for 

example, domestic merchandise or 

duty-free merchandise) must be 

accounted for and are treated as having 

the lowest drawback attributable to 

them. Under this method, withdrawals 

are from the merchandise or articles 

with the least amount of drawback 

attributable to them, then those with the 

next higher amount, and so forth. If the 

same amount of drawback is attributable 

to more than one lot of merchandise or 

articles, withdrawals are from the oldest 

(first-in) merchandise or articles among 

those lots with the same amount of 

drawback attributable. Drawback 

requirements are applicable to 

withdrawn merchandise or articles as 

identified (for example, if the 

merchandise or articles identified were 

attributable to an import more than 5 

years before the claimed export, no 

drawback could be granted). 

(ii) Ordinary Low–to-High—(A) 

Method. Under the ordinary low-to-high 

method, all receipts into and all 

withdrawals from the inventory are 

recorded in the accounting record and 

accounted for so that each withdrawal, 

whether for export or domestic 

shipment, is identified by recordkeeping 

on the basis of the lowest drawback 

amount per unit of the merchandise or 

articles available in the inventory. 

(B) Example. (1) In this example, the 

beginning inventory is zero, and 

receipts into and withdrawals from the 

inventory are as follows: 

Date Receipt 

($ per unit) Withdrawals 

Jan. 2 ..... 100 (zero).

Jan. 5 ..... 50 ($1.00).

Jan. 15 ... ......................... 50 (export). 

Jan. 20 ... 50 ($1.01).

Jan. 25 ... 50 ($1.02).

Jan. 28 ... ......................... 50 (domestic). 

Jan. 31 ... 50 ($1.03).

Feb. 5 ..... ......................... 100 (export). 

Feb. 10 ... 50 ($.95).

Feb. 15 ... ......................... 50 (export). 

Feb. 20 ... 50 (zero).

Feb. 23 ... ......................... 50 (domestic). 

Feb. 25 ... 50 ($1.05).

Feb. 28 ... ......................... 100 (export). 

Mar. 5 ..... 50 ($1.06).

Mar. 10 ... 50 ($.85).

Mar. 15 ... ......................... 50 (export). 

Mar. 21 ... ......................... 50 (domestic). 

Mar. 20 ... 50 ($1.08).

Mar. 25 ... 50 ($.90).

Mar. 31 ... ......................... 100 (export). 

(2) The drawback attributable to the 

January 15 withdrawal for export is zero 

(the available receipt with the lowest 

drawback amount per unit is the 

January 2 receipt), the drawback 

attributable to the January 28 

withdrawal for domestic shipment (no 

drawback) is zero (the remainder of the 

January 2 receipt), the drawback 

attributable to the February 5 

withdrawal for export is $100.50 (the 

January 5 and January 20 receipts), the 

drawback attributable to the February 15 

withdrawal for export is $47.50 (the 

February 10 receipt), the drawback 

attributable to the February 23 

withdrawal for domestic shipment (no 

drawback) is zero (the February 20 

receipt), the drawback attributable to the 

February 28 withdrawal for export is 

$102.50 (the January 25 and January 31 

receipts), the drawback attributable to 

the March 15 withdrawal for export is 

$42.50 (the March 10 receipt), the 

drawback attributable to the March 21 

withdrawal for domestic shipment (no 

drawback) is $52.50 (the February 25 

receipt), and the drawback attributable 

to the March 31 withdrawal for export 

is $98.00 (the March 25 and March 5 

receipts). Remaining in inventory is the 

March 20 receipt of 50 units ($1.08 

drawback/unit). Total drawback 

attributable to withdrawals for export in 

this example would be $391.00. 

(iii) Low-to-high method with 

established average inventory turn-over 

period—(A) Method. Under the low-tohigh method with established average 

inventory turn-over period, all receipts 

into and all withdrawals for export are 

recorded in the accounting record and 

accounted for so that each withdrawal is 

identified by recordkeeping on the basis 

of the lowest drawback amount per 

available unit of the merchandise or 

articles received into the inventory in 

the established average inventory turnover period preceding the withdrawal. 

(B) Accounting for withdrawals (for 

domestic shipments and for export). 

Under the low to-high method with 

established average inventory turn-over 

period, domestic withdrawals 

(withdrawals for domestic shipment) are 

not accounted for and do not affect the 

available units of merchandise or 

articles. All withdrawals for export must 

be accounted for whether or not 

drawback is available or claimed on the 

withdrawals. Once a withdrawal for 

export is made and accounted for under 

this method, the merchandise or articles 

withdrawn are no longer available for 

identification. 

(C) Establishment of inventory turnover period. For purposes of the low tohigh method with established average 

inventory turn-over period, the average 

inventory turn-over period is based on 

the rate of withdrawal from inventory 

and represents the time in which all of 

the merchandise or articles in the 

inventory at a given time must have 

been withdrawn based on that rate. To 

establish an average of this time, at least 

1 year, or 3 turn-over periods (if 

inventory turns over fewer than 3 times 

per year), must be averaged. The 

inventory turn-over period must be that 

for the merchandise or articles to be 

identified, except that if the person 

using the method has more than one 

kind of merchandise or articles with 

different inventory turn-over periods, 

the longest average turn-over period 

established under this section may be 

used (instead of using a different 

inventory turn-over period for each kind 

of merchandise or article). 

(D) Example. In the example in 

paragraph (c)(3)(ii)(B) of this section 


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(but, as required for this method, 

without accounting for domestic 

withdrawals, and with an established 

average inventory turn-over period of 30 

days), the drawback attributable to the 

January 15 withdrawal for export is zero 

(the available receipt in the preceding 

30 days with the lowest amount of 

drawback is the January 2 receipt, of 

which 50 units will remain after the 

withdrawal), the drawback attributable 

to the February 5 withdrawal for export 

is $101.50 (the January 20 and January 

25 receipts), the drawback attributable 

to the February 15 withdrawal for 

export is $47.50 (the February 10 

receipt), the drawback attributable to the 

February 28 withdrawal for export is 

$51.50 (the February 20 and January 31 

receipts), the drawback attributable to 

the March 15 withdrawal for export is 

$42.50 (the March 10 receipt), and the 

drawback attributable to the March 31 

withdrawal for export is $98.00 (the 

March 25 and March 5 receipts). No 

drawback may be claimed on the basis 

of the January 5 receipt or the February 

25 receipt because in the case of each, 

there were insufficient withdrawals for 

export within the established average 

inventory turn-over period; the 50 units 

remaining from the January 2 receipt 

after the January 15 withdrawal are not 

identified for a withdrawal for export 

because there is no other withdrawal for 

export (other than the January 15 

withdrawal) within the established 

average inventory turn-over period; the 

March 20 receipt (50 units at $1.08) is 

not yet attributed to withdrawals for 

export. Total drawback attributable to 

withdrawals for export in this example 

would be $341.00. 

(iv) Low-to-high blanket method—(A) 

Method. Under the low-to-high blanket 

method, all receipts into and all 

withdrawals for export are recorded in 

the accounting record and accounted 

for. Each withdrawal is identified on the 

basis of the lowest drawback amount 

per available unit of the merchandise or 

articles received into inventory in the 

applicable statutory period for export 

preceding the withdrawal (e.g., 180 days 

under 19 U.S.C. 1313(p) and 5 years for 

other types of drawback claims pursuant 

to 19 U.S.C. 1313(r)). Drawback 

requirements are applicable to 

withdrawn merchandise or articles as 

identified (for example, no drawback 

could be granted generally if the 

merchandise or articles identified were 

attributable to an import made more 

than 5 years before the claimed export; 

and, for claims pursuant to 19 U.S.C. 

1313(p), no drawback could be granted 

if the merchandise or articles identified 

were attributable to an import that was 

entered more than 180 days after the 

date of the claimed export or if the 

claimed export was more than 180 days 

after the close of the manufacturing 

period attributable to an import). 

(B) Accounting for withdrawals (for 

domestic shipments and for export). 

Under the low-to-high blanket method, 

domestic withdrawals (withdrawals for 

domestic shipment) are not accounted 

for and do not affect the available units 

of merchandise or articles. All 

withdrawals for export must be 

accounted for whether or not drawback 

is available or claimed on the 

withdrawals. Once a withdrawal for 

export is made and accounted for under 

this method, the merchandise or articles 

withdrawn are no longer available for 

identification. 

(C) Example. In the example in 

paragraph (c)(3)(ii)(B) of this section 

(but, as required for this method, 

without accounting for domestic 

withdrawals), the drawback attributable 

to the January 15 withdrawal for export 

is zero (the available receipt in the 

inventory with the lowest amount of 

drawback is the January 2 receipt, of 

which 50 units will remain after the 

withdrawal), the drawback attributable 

to the February 5 withdrawal for export 

is $50.00 (the remainder of the January 

2 receipt and the January 5 receipt), the 

drawback attributable to the February 15 

withdrawal for export is $47.50 (the 

February 10 receipt), the drawback 

attributable to the February 28 

withdrawal for export is $50.50 (the 

February 20 and January 20 receipts), 

the drawback attributable to the March 

15 withdrawal for export is $42.50 (the 

March 10 receipt), and the drawback 

attributable to the March 31 withdrawal 

for export is $96.00 (the March 25 and 

January 25 receipts). Receipts not 

attributed to withdrawals for export are 

the January 31 (50 units at $1.03), 

February 25 (50 units at $1.05), March 

5 (50 units at $1.06), and March 20 (50 

units at $1.08) receipts. Total drawback 

attributable to withdrawals for export in 

this example would be $286.50. 

(4) Average—(i) General. The average 

method is the method by which fungible 

merchandise or articles are identified on 

the basis of the calculation by 

recordkeeping of the amount of 

drawback that may be attributed to each 

unit of merchandise or articles in the 

inventory. In this method, the ratio of: 

(A) The total units of a particular 

receipt of the fungible merchandise in 

the inventory at the time of a 

withdrawal to; 

(B) The total units of all receipts of 

the fungible merchandise (including 

each receipt into inventory) at the time 

of the withdrawal; 

(C) Is applied to the withdrawal, so 

that the withdrawal consists of a 

proportionate quantity of units from 

each particular receipt and each receipt 

is correspondingly decreased. 

Withdrawals and corresponding 

decreases to receipts are rounded to the 

nearest whole number. 

(ii) Example. In the example in 

paragraph (c)(1)(ii) of this section, the 

drawback attributable to the 100 units 

withdrawn for export on the 20th is a 

total of $133 (50 units from the receipt 

on the 15th with $2 drawback 

attributable per unit, 33 units from the 

receipt on the 2nd with $1 drawback 

attributable per unit, and 17 units from 

the receipt on the 5th with $0 drawback 

attributable per unit). The basis of the 

foregoing and the effects on the 

inventory of the receipts and 

withdrawals, and balance in the 

inventory thereafter are as follows: On 

the 2nd of the month the receipt of 100 

units ($1 drawback/unit) results in a 

balance of that amount; the receipt of 50 

units ($0 drawback/unit) on the 5th 

results in a balance of 150 units (100 

with $1 drawback/unit and 50 with $0 

drawback/unit); the withdrawal on the 

10th of 75 units (50 with $1 drawback/ 

unit (applying the ratio of 100 units 

from the receipt on the 2nd to the total 

of 150 units at the time of withdrawal) 

and 25 with $0 drawback/unit (applying 

the ratio of 50 units from the receipt on 

the 5th to the total of 150 units at the 

time of withdrawal)) results in a balance 

of 75 units (with 50 with $1 drawback/ 

unit and 25 with $0 drawback/unit, on 

the basis of the same ratios); the receipt 

of 75 units ($2 drawback/unit) on the 

15th results in a balance of 150 units (50 

with $1 drawback/unit, 25 with $0 

drawback/unit, and 75 with $2 

drawback/unit); the withdrawal on the 

20th of 100 units (50 with $2 drawback/ 

unit (applying the ratio of the 75 units 

from the receipt on the 15th to the total 

of 150 units at the time of withdrawal), 

33 with $1 drawback/unit (applying the 

ratio of the 50 units remaining from the 

receipt on the 2nd to the total of 150 

units at the time of withdrawal, and 17 

with $0 drawback/unit (applying the 

ratio of the 25 units remaining from the 

receipt on the 5th to the total of 150 

units at the time of withdrawal)) results 

in a balance of 50 units (25 with $2 

drawback/unit, 17 with $1 drawback/ 

unit, and 8 with $0 drawback/unit, on 

the basis of the same ratios). 

(5) Inventory turn-over for limited 

purposes. A properly established 

average inventory turn-over period, as 

provided for in paragraph (c)(3)(iii)(C) of 

this section, may be used to determine: 

(i) The fact and date(s) of use in 

manufacture or production of the 


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imported designated merchandise and 

other (substituted) merchandise (see 19 

U.S.C. 1313(b)); or 

(ii) The fact and date(s) of 

manufacture or production of the 

exported or destroyed articles (see 19 

U.S.C. 1313(a) and (b)). 

(d) Approval of other accounting 

methods. (1) Persons proposing to use 

an accounting method for identification 

of merchandise or articles for drawback 

purposes which has not been previously 

approved for such use (see paragraph (c) 

of this section), or which includes 

modifications from the methods listed 

in paragraph (c) of this section, may 

seek approval by CBP of the proposed 

accounting method under the provisions 

for obtaining an administrative ruling 

(see part 177 of this chapter). The 

conditions applied and the criteria used 

by CBP in approving such an alternative 

accounting method, or a modification of 

one of the approved accounting 

methods, will be the criteria in 

paragraph (b) of this section, as well as 

those in paragraph (d)(2) of this section. 

(2) In order for a proposed accounting 

method to be approved by CBP for 

purposes of this section, it must meet 

the following criteria: 

(i) For purposes of calculations of 

drawback, the proposed accounting 

method must be either revenue neutral 

or favorable to the Government; and 

(ii) The proposed accounting method 

should be: 

(A) Generally consistent with 

commercial accounting procedures, as 

applicable for purposes of drawback; 

(B) Consistent with inventory or 

material control records used in the 

ordinary course of business by the 

person proposing the method; and 

(C) Easily administered by CBP. 

§ 190.15 Recordkeeping. 

Pursuant to 19 U.S.C. 1508(c)(3), all 

records which pertain to the filing of a 

drawback claim or to the information 

contained in the records required by 19 

U.S.C. 1313 in connection with the 

filing of a drawback claim must be 

retained for 3 years after liquidation of 

such claims or longer period if required 

by law (under 19 U.S.C. 1508, the same 

records may be subject to a different 

period for different purposes). 

Subpart B—Manufacturing Drawback 

§ 190.21 Direct identification 

manufacturing drawback. 

Section 313(a) of the Act, as amended 

(19 U.S.C. 1313(a)), provides for 

drawback upon the exportation, or 

destruction under CBP supervision, of 

articles manufactured or produced in 

the United States with the use of 

imported merchandise, provided that 

those articles have not been used in the 

United States prior to such exportation 

or destruction. The amount of drawback 

allowable shall not exceed 99 percent of 

the amount of duties, taxes, and fees 

paid with respect to the imported 

merchandise. However, duties may not 

be refunded upon the exportation or 

destruction of flour or by-products 

produced from imported wheat. Where 

two or more products result, drawback 

must be distributed among the products 

in accordance with their relative values, 

as defined in § 190.2, at the time of 

separation. Merchandise may be 

identified for drawback purposes under 

19 U.S.C. 1313(a) in the manner 

provided for and prescribed in § 190.14. 

§ 190.22 Substitution manufacturing 

drawback. 

(a)(1) General—(i) Substitution 

standard. If imported, duty-paid 

merchandise or merchandise classifiable 

under the same 8-digit HTSUS 

subheading number as the imported 

merchandise is used in the manufacture 

or production of articles within a period 

not to exceed 5 years from the date of 

importation of such imported 

merchandise, then upon the 

exportation, or destruction under CBP 

supervision, of any such articles, 

without their having been used in the 

United States prior to such exportation 

or destruction, drawback is provided for 

in section 313(b) of the Act, as amended 

(19 U.S.C. 1313(b)). Drawback is 

allowable even though none of the 

imported, duty-paid merchandise may 

actually have been used in the 

manufacture or production of the 

exported or destroyed articles. 

(ii) Allowable refund—(A) 

Exportation. In the case of an article that 

is exported, the amount of drawback 

allowable will not exceed 99 percent of 

the lesser of: 

(1) The amount of duties, taxes, and 

fees paid with respect to the imported 

merchandise; or 

(2) The amount of duties, taxes, and 

fees that would apply to the substituted 

merchandise if the substituted 

merchandise were imported. 

(B) Destruction. In the case of an 

article that is destroyed, the amount of 

drawback allowable will not exceed 99 

percent of the lesser of: 

(1) The amount of duties, taxes, and 

fees paid with respect to the imported 

merchandise (reduced by the value of 

materials recovered during destruction 

as provided in 19 U.S.C. 1313(x)); or 

(2) The amount of duties, taxes, and 

fees that would apply to the substituted 

merchandise if the substituted 

merchandise were imported (reduced by 

the value of materials recovered during 

destruction as provided in 19 U.S.C. 

1313(x)). 

(C) Federal excise tax. For purposes of 

drawback of internal revenue tax 

imposed under Chapters 32, 38, 51, and 

52 of the Internal Revenue Code of 1986, 

as amended (IRC), drawback granted on 

the export or destruction of substituted 

merchandise will be limited to the 

amount of taxes paid (and not returned 

by refund, credit, or drawback) on the 

substituted merchandise. 

(2) Special rule for sought chemical 

elements—(i) Substitution standard. A 

sought chemical element, as defined in 

§ 190.2, may be considered imported 

merchandise, or merchandise 

classifiable under the same 8-digit 

HTSUS subheading number as such 

imported merchandise, used in the 

manufacture or production of an article 

as described in paragraph (a)(1)(i) of this 

section, and it may be substituted for 

source material containing that sought 

chemical element, without regard to 

whether the sought chemical element 

and the source material are classifiable 

under the same 8-digit HTSUS 

subheading number, and apportioned 

quantitatively, as appropriate (see 

§ 190.26(b)(4)). 

(ii) Allowable refund. The amount of 

drawback allowable will be determined 

in accordance with paragraph (a)(1)(ii) 

of this section. The value of the 

substituted source material must be 

determined based on the quantity of the 

sought chemical element present in the 

source material, as calculated per 

§ 190.26(b)(4). 

(b) Use by same manufacturer or 

producer at different factory. Duty-paid 

merchandise or drawback products used 

at one factory of a manufacturer or 

producer within 5 years after the date 

on which the material was imported 

may be designated as the basis for 

drawback on articles manufactured or 

produced in accordance with these 

regulations at other factories of the same 

manufacturer or producer. 

(c) Designation. A manufacturer or 

producer may designate any eligible 

imported merchandise or drawback 

product which it has used in 

manufacture or production. 

(d) Designation by successor—(1) 

General rule. Upon compliance with the 

requirements in this section and under 

19 U.S.C. 1313(s), a drawback successor 

as defined in paragraph (d)(2) of this 

section may designate merchandise or 

drawback product used by a predecessor 

before the date of succession as the basis 

for drawback on articles manufactured 

or produced by the successor after the 

date of succession. 


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(2) Drawback successor. A ‘‘drawback 

successor’’ is a manufacturer or 

producer to whom another entity 

(predecessor) has transferred, by written 

agreement, merger, or corporate 

resolution: 

(i) All or substantially all of the rights, 

privileges, immunities, powers, duties, 

and liabilities of the predecessor; or 

(ii) The assets and other business 

interests of a division, plant, or other 

business unit of such predecessor, 

provided that the value of the 

transferred assets and interests (realty, 

personalty, and intangibles, exclusive of 

the drawback rights) exceeds the value 

of such drawback rights, whether vested 

or contingent. 

(3) Certifications and required 

evidence—(i) Records of predecessor. 

The predecessor or successor must 

certify that the successor is in 

possession of the predecessor’s records 

which are necessary to establish the 

right to drawback under the law and 

regulations with respect to the 

merchandise or drawback product. 

(ii) Merchandise not otherwise 

designated. The predecessor or 

successor must certify in an attachment 

to the claim, that the predecessor has 

not designated and will not designate, 

nor enable any other person to 

designate, such merchandise or product 

as the basis for drawback. 

(iii) Value of transferred property. In 

instances in which assets and other 

business interests of a division, plant, or 

other business unit of a predecessor are 

transferred, the predecessor or successor 

must specify, and maintain supporting 

records to establish, the value of the 

drawback rights and the value of all 

other transferred property. 

(iv) Review by CBP. The written 

agreement, merger, or corporate 

resolution, provided for in paragraph 

(d)(2) of this section, and the records 

and evidence provided for in paragraph 

(d)(3)(i) through (iii) of this section, 

must be retained by the appropriate 

party(s) for 3 years from the date of 

liquidation of the related claim and are 

subject to review by CBP upon request. 

(e) Multiple products—(1) General. 

Where two or more products are 

produced concurrently in a substitution 

manufacturing operation, drawback will 

be distributed to each product in 

accordance with its relative value (see 

§ 190.2) at the time of separation. 

(2) Claims covering a manufacturing 

period. Where the claim covers a 

manufacturing period rather than a 

manufacturing lot, the entire period 

covered by the claim is the time of 

separation of the products and the value 

per unit of product is the market value 

for the period (as provided for in the 

definition of relative value in § 190.2). 

Manufacturing periods in excess of one 

month may not be used without specific 

approval of CBP. 

(3) Recordkeeping. Records must be 

maintained showing the relative value 

of each product at the time of 

separation. 

§ 190.23 Methods and requirements for 

claiming drawback. 

Claims must be based on one or more 

of the methods specified in paragraph 

(a) of this section and comply with all 

other requirements specified in this 

section. 

(a) Method of claiming drawback.—(1) 

Used in. Drawback may be paid based 

on the amount of the imported or 

substituted merchandise used in the 

manufacture of the exported article, 

where there is no waste or the waste is 

valueless or unrecoverable. This method 

must be used when multiple products 

also necessarily and concurrently result 

from the manufacturing process, and 

there is no valuable waste (see 

paragraph (a)(2) of this section). 

(2) Used in less valuable waste. 

Drawback is allowable under this 

method based on the quantity of 

merchandise or drawback products used 

to manufacture the exported or 

destroyed article, reduced by an amount 

equal to the quantity of this 

merchandise that the value of the waste 

would replace. This method must be 

used when multiple products also 

necessarily and concurrently result from 

the manufacturing process, and there is 

valuable waste. 

(3) Relative value. Drawback is also 

allowable under this method when two 

or more products result from 

manufacturing or production. The 

relative value method must be used 

when multiple products also necessarily 

and concurrently result from the 

manufacturing process, and drawback 

must be distributed among the products 

in accordance with their relative values 

(as defined in § 190.2) at the time of 

separation. 

(4) Appearing in. Drawback is 

allowable under this method based only 

on the amount of imported or 

substituted merchandise that appears in 

(is contained in) the exported articles. 

The appearing in method may not be 

used if there are multiple products also 

necessarily and concurrently resulting 

from the manufacturing process. 

(b) Abstract or schedule. A drawback 

claimant may use either the abstract or 

schedule method to show the quantity 

of material used or appearing in the 

exported or destroyed article. An 

abstract is the summary of records 

which shows the total quantity used in 

or appearing in all articles produced 

during the period covered by the 

abstract. A schedule shows the quantity 

of material actually used in producing, 

or appearing in, each unit of product. 

Manufacturers or producers submitting 

letters of notification of intent to operate 

under a general manufacturing 

drawback ruling (see § 190.7) and 

applicants for approval of specific 

manufacturing drawback rulings (see 

§ 190.8) must state whether the abstract 

or schedule method is used; if no such 

statement is made, drawback claims 

must be based upon the abstract 

method. 

(c) Claim for waste.—(1) Valuable 

waste. When the waste has a value and 

the drawback claim is not limited to the 

quantity of imported or substituted 

merchandise or drawback products 

appearing in the exported or destroyed 

articles claimed for drawback, the 

manufacturer or producer must keep 

records to show the market value of the 

merchandise or drawback products used 

to manufacture or produce the exported 

or destroyed articles, as well as the 

market value of the resulting waste, 

under the used in less valuable waste 

method (as provided for in the 

definition of relative value in § 190.2). 

(2) If claim for waste is waived. If 

claim for waste is waived, only the 

‘‘appearing in’’ basis may be used (see 

paragraph (a)(4) of this section). Waste 

records need not be kept unless required 

to establish the quantity of imported 

duty-paid merchandise or drawback 

products appearing in the exported or 

destroyed articles claimed for drawback. 

§ 190.24 Transfer of merchandise. 

Evidence of any transfers of 

merchandise (see § 190.10) must be 

evidenced by records, as defined in 

§ 190.2. 

§ 190.25 Destruction under CBP 

supervision. 

A claimant may destroy merchandise 

and obtain drawback by complying with 

the procedures set forth in § 190.71 

relating to destruction. 

§ 190.26 Recordkeeping. 

(a) Direct identification. (1) Records 

required. Each manufacturer or 

producer under 19 U.S.C. 1313(a) must 

keep records to allow the verifying CBP 

official to trace all articles manufactured 

or produced for exportation or 

destruction with drawback, from 

importation, through manufacture or 

production, to exportation or 

destruction. To this end, these records 

must specifically establish: 

(i) The date or inclusive dates of 

manufacture or production; 


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(ii) The quantity, identity, and 8-digit 

HTSUS subheading number(s) of the 

imported duty-paid merchandise or 

drawback products used in or appearing 

in (see § 190.23) the articles 

manufactured or produced; 

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

these records are necessary to determine 

the quantity of imported duty-paid 

merchandise or drawback product used 

in the manufacture or production of the 

exported or destroyed articles or 

appearing in them; 

(iv) The quantity and description of 

the articles manufactured or produced; 

(v) The quantity of waste incurred, if 

applicable; and 

(vi) That the articles on which 

drawback is claimed were exported or 

destroyed within 5 years after the 

importation of the duty-paid 

merchandise, without having been used 

in the United States prior to such 

exportation or destruction. (If the 

articles were commingled after 

manufacture or production, their 

identity may be maintained in the 

manner prescribed in § 190.14.) 

(2) Accounting. The merchandise and 

articles to be exported or destroyed will 

be accounted for in a manner which will 

enable the manufacturer, producer, or 

claimant: 

(i) To determine, and the CBP official 

to verify, the applicable import entry 

and any transfers of the merchandise 

associated with the claim; and 

(ii) To identify with respect to that 

import entry, and any transfers of the 

merchandise, the imported merchandise 

or drawback products used in 

manufacture or production. 

(b) Substitution. The records of the 

manufacturer or producer of articles 

manufactured or produced in 

accordance with 19 U.S.C. 1313(b) must 

establish the facts in paragraph (a)(1)(i), 

(iv) through (vi) of this section, and: 

(1) The quantity, identity, and 

specifications of the merchandise 

designated (imported duty-paid, or 

drawback product); 

(2) The quantity, identity, and 

specifications of the substituted 

merchandise before its use to 

manufacture or produce (or appearing 

in) the exported or destroyed articles; 

(3) That, within 5 years after the date 

of importation of the imported dutypaid merchandise, the manufacturer or 

producer used the designated 

merchandise in manufacturing or 

production and that during the same 5- 

year period it manufactured or 

produced the exported or destroyed 

articles; and 

(4) If the designated merchandise is a 

sought chemical element, as defined in 

§ 190.2, that was contained in imported 

material and a substitution drawback 

claim is made based on that chemical 

element: 

(i) The duty paid on the imported 

material must be apportioned among its 

constituent components. The claim on 

the chemical element that is the 

designated merchandise must be limited 

to the duty apportioned to that element 

on a unit-for-unit attribution using the 

unit of measure set forth in the HTSUS 

that is applicable to the imported 

material. If the material is a compound 

with other constituents, including 

impurities, and the purity of the 

compound in the imported material is 

shown by satisfactory analysis, that 

purity, converted to a decimal 

equivalent of the percentage, is 

multiplied against the entered amount 

of the material to establish the amount 

of pure compound. The amount of the 

element in the pure compound is to be 

determined by use of the atomic weights 

of the constituent elements and 

converting to the decimal equivalent of 

their respective percentages and 

multiplying that decimal equivalent 

against the above-determined amount of 

pure compound. 

(ii) The amount claimed as drawback 

based on the sought chemical element 

must be deducted from the duty paid on 

the imported material that may be 

claimed on any other drawback claim. 

Example to paragraph (b)(4): 

Synthetic rutile that is shown by 

appropriate analysis in the entry papers 

to be 91.7% pure titanium dioxide is 

imported and dutiable at a 5% ad 

valorem duty rate. The amount of 

imported synthetic rutile is 30,000 

pounds with an entered value of 

$12,000. The total duty paid is $600. 

Titanium in the synthetic rutile is 

designated as the basis for a drawback 

claim under 19 U.S.C. 1313(b). The 

amount of titanium dioxide in the 

synthetic rutile is determined by 

converting the purity percentage 

(91.7%) to its decimal equivalent (.917) 

and multiplying the entered amount of 

synthetic rutile (30,000 pounds) by that 

decimal equivalent (.917 × 30,000 = 

27,510 pounds of titanium dioxide 

contained in the 30,000 pounds of 

imported synthetic rutile). The titanium, 

based on atomic weight, represents 

59.93% of the constituents in titanium 

dioxide. Multiplying that percentage, 

converted to its decimal equivalent, by 

the amount of titanium dioxide 

determines the titanium content of the 

imported synthetic rutile (.5993 × 

27,510 pounds of titanium dioxide = 

16,486.7 pounds of titanium contained 

in the imported synthetic rutile). 

Therefore, up to 16,486.7 pounds of 

titanium is available to be designated as 

the basis for drawback. As the per unit 

duty paid on the synthetic rutile is 

calculated by dividing the duty paid 

($600) by the amount of imported 

synthetic rutile (30,000 pounds), the per 

unit duty is two cents of duty per pound 

of the imported synthetic rutile ($600 ÷ 

30,000 = $0.02). The duty on the 

titanium is calculated by multiplying 

the amount of titanium contained in the 

imported synthetic rutile by two cents 

of duty per pound (16,486.7 × $0.02 = 

$329.73 duty apportioned to the 

titanium). The product is then 

multiplied by 99% to determine the 

maximum amount of drawback 

available ($329.73 × .99 = $326.44). If an 

exported titanium alloy ingot weighs 

17,000 pounds, in which 16,000 pounds 

of titanium was used to make the ingot, 

drawback is determined by multiplying 

the duty per pound ($0.02) by the 

weight of the titanium contained in the 

ingot (16,000 pounds) to calculate the 

duty available for drawback ($0.02 × 

16,000 = $320.00). Because only 99% of 

the duty can be claimed, drawback is 

determined by multiplying this 

available duty amount by 99% (.99 × 

$320.00 = $316.80). As the oxygen 

content of the titanium dioxide is 45% 

of the synthetic rutile, if oxygen is the 

designated merchandise on another 

drawback claim, 45% of the duty 

claimed on the synthetic rutile would be 

available for drawback based on the 

substitution of oxygen. 

(c) Valuable waste records. When 

waste has a value and the manufacturer, 

producer, or claimant, has not limited 

the claims based on the quantity of 

imported or substituted merchandise 

appearing in the articles exported or 

destroyed, the manufacturer or producer 

must keep records to show the market 

value of the merchandise used to 

manufacture or produce the exported or 

destroyed article, as well as the quantity 

and market value of the waste incurred 

(as provided for in the definition of 

relative value in § 190.2). In such 

records, the quantity of merchandise 

identified or designated for drawback, 

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

respectively, must be based on the 

quantity of merchandise actually used 

to manufacture or produce the exported 

or destroyed articles. The waste 

replacement reduction will be 

determined by reducing from the 

quantity of merchandise actually used 

by the amount of merchandise which 

the value of the waste would replace. 

(d) Purchase of manufactured or 

produced articles for exportation. 

Where the claimant purchases articles 

from the manufacturer or producer and 

exports them, the claimant must 


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maintain records to document the 

manufacture or production and transfer 

of those articles (see § 190.51(a)(1)). 

(e) Multiple claimants—(1) General. 

Multiple claimants may file for 

drawback with respect to the same 

export (for example, if an automobile is 

exported, where different parts of the 

automobile have been produced by 

different manufacturers under drawback 

conditions and the exporter waives the 

right to claim drawback and assigns 

such right to the manufacturers under 

§ 190.82). 

(2) Procedures—(i) Submission of 

letter. Each drawback claimant must file 

a separate letter, as part of the claim, 

describing the component article on the 

export bill of lading to which each claim 

will relate. Each letter must show the 

name of the claimant and bear a 

statement that the claim will be limited 

to its respective component article. The 

exporter must endorse the letters, as 

required, to show the respective 

interests of the claimants. 

(ii) Blanket waivers and assignments 

of drawback rights. Exporters may waive 

and assign their drawback rights for all, 

or any portion, of their exportations 

with respect to a particular commodity 

for a given period to a drawback 

claimant. 

(f) Retention of records. Pursuant to 

19 U.S.C. 1508(c)(3), all records 

required to be kept by the manufacturer, 

producer, or claimant with respect to 

drawback claims, and records kept by 

others to complement the records of the 

manufacturer, producer, or claimant 

with respect to drawback claims must 

be retained for 3 years after the date of 

liquidation of the related claims (under 

19 U.S.C. 1508, the same records may be 

subject to a different retention period for 

different purposes). 

§ 190.27 Time limitations for 

manufacturing drawback. 

(a) Direct identification. Drawback 

will be allowed on imported 

merchandise used to manufacture or 

produce articles that are exported or 

destroyed under CBP supervision 

within 5 years after importation of the 

merchandise identified to support the 

claim. 

(b) Substitution. Drawback will be 

allowed on the imported merchandise if 

the following conditions are met: 

(1) The designated merchandise is 

used in manufacture or production 

within 5 years after importation; 

(2) Within the 5-year period described 

in paragraph (b)(1) of this section, the 

exported or destroyed articles, or 

drawback products, were manufactured 

or produced; and 

(3) The completed articles must be 

exported or destroyed under CBP 

supervision within 5 years of the date of 

importation of the designated 

merchandise, or within 5 years of the 

earliest date of importation associated 

with a drawback product. 

(c) Drawback claims filed before 

specific or general manufacturing 

drawback ruling approved or 

acknowledged. Drawback claims may be 

filed before the letter of notification of 

intent to operate under a general 

manufacturing drawback ruling 

covering the claims is acknowledged 

(§ 190.7), or before the specific 

manufacturing drawback ruling 

covering the claims is approved 

(§ 190.8), but no drawback will be paid 

until such acknowledgement or 

approval, as appropriate. 

§ 190.28 Person entitled to claim 

manufacturing drawback. 

The exporter (or destroyer) will be 

entitled to claim drawback, unless the 

exporter (or destroyer), by means of a 

certification, assigns the right to claim 

drawback to the manufacturer, 

producer, importer, or intermediate 

party. Such certification must also 

affirm that the exporter (or destroyer) 

has not and will not itself claim 

drawback or assign the right to claim 

drawback on the particular exportation 

or destruction to any other party. The 

certification provided for under this 

section may be a blanket certification for 

a stated period. Drawback is paid to the 

claimant, who may be the manufacturer, 

producer, intermediate party, importer, 

or exporter (or destroyer). 

§ 190.29 Certification of bill of materials or 

formula. 

At the time of filing a claim under 19 

U.S.C. 1313(a) or (b), the claimant must 

certify the following: 

(a) The claimant is in possession of 

the applicable bill of materials or 

formula for the exported or destroyed 

article(s), which will be promptly 

provided upon request; 

(b) The bill of materials or formula 

identifies the imported and/or 

substituted merchandise and the 

exported or destroyed article(s) by their 

8-digit HTSUS subheading numbers; 

and 

(c) The bill of materials or formula 

identifies the manufactured quantities 

of the imported and/or substituted 

merchandise and the exported or 

destroyed article(s). 

Subpart C—Unused Merchandise 

Drawback 

§ 190.31 Direct identification unused 

merchandise drawback. 

(a) General. Section 313(j)(1) of the 

Act, as amended (19 U.S.C. 1313(j)(1)), 

provides for drawback upon the 

exportation or destruction under CBP 

supervision of imported merchandise 

upon which was paid any duty, tax, or 

fee imposed under Federal law upon 

entry or importation, if the merchandise 

has not been used within the United 

States before such exportation or 

destruction. The total amount of 

drawback allowable will not exceed 99 

percent of the amount of duties, taxes, 

and fees paid with respect to the 

imported merchandise. 

(b) Time of exportation or destruction. 

Drawback will be allowable on imported 

merchandise if, before the close of the 

5-year period beginning on the date of 

importation and before the drawback 

claim is filed, the merchandise is 

exported from the United States or 

destroyed under CBP supervision. 

(c) Operations performed on imported 

merchandise. The performing of any 

operation or combination of operations, 

not amounting to manufacture or 

production under the provisions of the 

manufacturing drawback law as 

provided for in 19 U.S.C. 1313(j)(3)(A), 

on imported merchandise is not a use of 

that merchandise for purposes of this 

section. 

§ 190.32 Substitution unused merchandise 

drawback. 

(a) General. Section 313(j)(2) of the 

Act, as amended (19 U.S.C. 1313(j)(2)), 

provides for drawback of duties, taxes, 

and fees paid on imported merchandise 

based on the export or destruction 

under CBP supervision of substituted 

merchandise (as defined in § 190.2, 

pursuant to 19 U.S.C. 1313(j)(2)), before 

the close of the 5-year period beginning 

on the date of importation of the 

imported merchandise and before the 

drawback claim is filed, and before such 

exportation or destruction the 

substituted merchandise is not used in 

the United States (see paragraph (e) of 

this section) and is in the possession of 

the party claiming drawback. 

(b) Allowable refund. (1) Exportation. 

In the case of an article that is exported, 

subject to paragraph (3) below, the total 

amount of drawback allowable will not 

exceed 99 percent of the lesser of: 

(i) The amount of duties, taxes, and 

fees paid with respect to the imported 

merchandise; or 

(ii) The amount of duties, taxes, and 

fees that would apply to the exported 


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article if the exported article were 

imported. 

(2) Destruction. In the case of an 

article that is destroyed, subject to 

paragraph (3) below, the total amount of 

drawback allowable will not exceed 99 

percent of the lesser of: 

(i) The amount of duties, taxes, and 

fees paid with respect to the imported 

merchandise (reduced by the value of 

materials recovered during destruction 

as provided in 19 U.S.C. 1313(x)); or 

(ii) The amount of duties, taxes, and 

fees that would apply to the destroyed 

article if the destroyed article had been 

imported (reduced by the value of 

materials recovered during destruction 

as provided in 19 U.S.C. 1313(x)). 

(3) Federal excise tax. For purposes of 

drawback of internal revenue tax 

imposed under Chapters 32, 38, 51, and 

52 of the Internal Revenue Code of 1986, 

as amended (IRC), drawback granted on 

the export or destruction of substituted 

merchandise will be limited to the 

amount of taxes paid (and not returned 

by refund, credit, or drawback) on the 

substituted merchandise. 

(c) Determination of HTSUS 

classification for substituted 

merchandise. Requests for binding 

rulings on the classification of imported, 

substituted, or exported merchandise 

may be submitted to CBP pursuant to 

the procedures set forth in part 177. 

(d) Claims for wine. (1) Alternative 

substitution standard. In addition to 8- 

digit HTSUS substitution standard in 

§ 190.2, drawback of duties, taxes, and 

fees, paid on imported wine as defined 

in § 190.2 may be allowable under 19 

U.S.C. 1313(j)(2) with respect to wine if 

the imported wine and the exported 

wine are of the same color and the price 

variation between the imported wine 

and the exported wine does not exceed 

50 percent. 

(2) Allowable refund. For any 

drawback claim for wine (as defined in 

§ 190.2) based on subsection (j)(2), the 

total amount of drawback allowable will 

be equal to 99 percent of the duties, 

taxes, and fees paid with respect to the 

imported merchandise, without regard 

to the limitations in paragraph (b). 

(3) Required certification. When the 

basis for substitution for wine drawback 

claims under 19 U.S.C. 1313(j)(2) is the 

alternative substitution standard rule set 

forth in (d)(1), claims under this subpart 

may be paid and liquidated if: 

(i) The claimant specifies on the 

drawback entry that the basis for 

substitution is the alternative 

substitution standard for wine; and 

(ii) The claimant provides a 

certification, as part of the complete 

claim (see 190.51(a)), stating that: 

(A) The imported wine and the 

exported wine are a Class 1 grape wine 

(as defined in 27 CFR 4.21(a)(1)) of the 

same color (i.e., red, white, or rose ́); 

(B) The imported wine and the 

exported wine are table wines (as 

defined in 27 CFR 4.21(a)(2)) and the 

alcoholic content does not exceed 14 

percent by volume; and 

(C) The price variation between the 

imported wine and the exported wine 

does not exceed 50 percent. 

(e) Operations performed on 

substituted merchandise. The 

performing of any operation or 

combination of operations, not 

amounting to manufacture or 

production as provided for in 19 U.S.C. 

1313(j)(3)(B), on the substituted 

merchandise is not a use of that 

merchandise for purposes of this 

section. 

(f) Designation by successor; 19 U.S.C. 

1313(s). (1) General rule. Upon 

compliance with the requirements of 

this section and under 19 U.S.C. 

1313(s), a drawback successor as 

defined in paragraph (f)(2) of this 

section may designate either of the 

following as the basis for drawback on 

merchandise possessed by the successor 

after the date of succession: 

(i) Imported merchandise which the 

predecessor, before the date of 

succession, imported; or 

(ii) Imported and/or substituted 

merchandise that was transferred to the 

predecessor from the person who 

imported and paid duty on the imported 

merchandise. 

(2) Drawback successor. A ‘‘drawback 

successor’’ is an entity to which another 

entity (predecessor) has transferred, by 

written agreement, merger, or corporate 

resolution: 

(i) All or substantially all of the rights, 

privileges, immunities, powers, duties, 

and liabilities of the predecessor; or 

(ii) The assets and other business 

interests of a division, plant, or other 

business unit of such predecessor, 

provided that the value of the 

transferred assets and interests (realty, 

personalty, and intangibles, exclusive of 

the drawback rights) exceeds the value 

of such drawback rights, whether vested 

or contingent. 

(3) Certifications and required 

evidence—(i) Records of predecessor. 

The predecessor or successor must 

certify in an attachment to the drawback 

claim that the successor is in possession 

of the predecessor’s records which are 

necessary to establish the right to 

drawback under the law and regulations 

with respect to the imported and/or 

substituted merchandise. 

(ii) Merchandise not otherwise 

designated. The predecessor or 

successor must certify in an attachment 

to the drawback claim, that the 

predecessor has not and will not 

designate, nor enable any other person 

to designate, the imported and/or 

substituted merchandise as the basis for 

drawback. 

(iii) Value of transferred property. In 

instances in which assets and other 

business interests of a division, plant, or 

other business unit of a predecessor are 

transferred, the predecessor or successor 

must specify, and maintain supporting 

records to establish, the value of the 

drawback rights and the value of all 

other transferred property. 

(iv) Review by CBP. The written 

agreement, merger, or corporate 

resolution, provided for in paragraph 

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

evidence provided for in paragraph 

(f)(3)(i) through (iii) of this section, must 

be retained by the appropriate party(s) 

for 3 years from the date of liquidation 

of the related claim and are subject to 

review by CBP upon request. 

§ 190.33 Person entitled to claim unused 

merchandise drawback. 

(a) Direct identification. (1) Under 19 

U.S.C. 1313(j)(1), as amended, the 

exporter or destroyer will be entitled to 

claim drawback. 

(2) The exporter or destroyer may 

waive the right to claim drawback and 

assign such right to the importer or any 

intermediate party. A drawback 

claimant under 19 U.S.C. 1313(j)(1) 

other than the exporter or destroyer 

must secure and retain a certification 

signed by the exporter or destroyer 

waiving the right to claim drawback, 

and did not and will not authorize any 

other party to claim the exportation or 

destruction for drawback (see § 190.82 

of this part). The certification provided 

for under this section may be a blanket 

certification for a stated period. The 

claimant must file such certification at 

the time of, or prior to, the filing of the 

claim(s) covered by the certification. 

(b) Substitution. (1) Under 19 U.S.C. 

1313(j)(2), as amended, the following 

parties may claim drawback: 

(i) In situations where the exporter or 

destroyer of the substituted 

merchandise is also the importer of the 

imported merchandise, that party will 

be entitled to claim drawback. 

(ii) In situations where the person 

who imported and paid the duty on the 

imported merchandise transfers the 

imported merchandise, substituted 

merchandise, or any combination of 

imported and substituted merchandise 

to the person who exports or destroys 

that merchandise, the exporter or 

destroyer will be entitled to claim 

drawback. (Any such transferred 


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merchandise, regardless of its origin, 

will be treated as imported merchandise 

for purposes of drawback under 19 

U.S.C. 1313(j)(2), and any retained 

merchandise will be treated as domestic 

merchandise.) 

(iii) In situations where the 

transferred merchandise described in 

paragraph (b)(1)(ii) of this section is the 

subject of further transfer(s), such 

transfer(s) must be documented by 

records, including records kept in the 

normal course of business, and the 

exporter or destroyer will be entitled to 

claim drawback (multiple substitutions 

are not permitted). 

(2) The exporter or destroyer may 

waive the right to claim drawback and 

assign such right to the importer or to 

any intermediate party, provided that 

the claimant had possession of the 

substituted merchandise prior to its 

exportation or destruction. A drawback 

claimant under 19 U.S.C. 1313(j)(2) 

other than the exporter or destroyer 

must secure and retain a certification 

signed by the exporter or destroyer that 

such party waived the right to claim 

drawback, and did not and will not 

authorize any other party to claim the 

exportation or destruction for drawback 

(see § 190.82). The certification 

provided for under this section may be 

a blanket certification for a stated 

period. The claimant must file such 

certification at the time of, or prior to, 

the filing of the claim(s) covered by the 

certification. 

§ 190.34 Transfer of merchandise. 

Any transfer of merchandise (see 

§ 190.10) must be recorded in records, 

which may include records kept in the 

normal course of business, as defined in 

§ 190.2. 

§ 190.35 Notice of intent to export; 

examination of merchandise. 

(a) Notice. A notice of intent to export 

merchandise which may be the subject 

of an unused merchandise drawback 

claim (19 U.S.C. 1313(j)) must be 

provided to CBP to give CBP the 

opportunity to examine the 

merchandise. The claimant, or the 

exporter, must file at the port of 

intended examination a Notice of Intent 

to Export, Destroy, or Return 

Merchandise for Purposes of Drawback 

on CBP Form 7553 at least 2 working 

days prior to the date of intended 

exportation unless CBP approves 

another filing period or the claimant has 

been granted a waiver of prior notice 

(see § 190.91). 

(b) Required information. The notice 

must certify that the merchandise has 

not been used in the United States 

before exportation. In addition, the 

notice must provide the bill of lading 

number, if known, the name and 

telephone number, mailing address, 

and, if available, fax number and email 

address of a contact person, and the 

location of the merchandise. 

(c) Decision to examine or to waive 

examination. Within 2 working days 

after receipt of the Notice of Intent to 

Export, Destroy, or Return Merchandise 

for Purposes of Drawback (see paragraph 

(a) of this section), CBP will notify the 

party designated on the Notice in 

writing of CBP’s decision to either 

examine the merchandise to be 

exported, or to waive examination. If 

CBP timely notifies the designated 

party, in writing, of its decision to 

examine the merchandise (see 

paragraph (d) of this section), but the 

merchandise is exported without having 

been presented to CBP for examination, 

any drawback claim, or part thereof, 

based on the Notice will be denied. If 

CBP notifies the designated party, in 

writing, of its decision to waive 

examination of the merchandise, or, if 

timely notification of a decision by CBP 

to examine or to waive examination has 

not been received, the merchandise may 

be exported without delay. 

(d) Time and place of examination. If 

CBP gives timely notice of its decision 

to examine the export merchandise, the 

merchandise to be examined must be 

promptly presented to CBP. CBP must 

examine the merchandise within 5 

working days after presentation of the 

merchandise. The merchandise may be 

exported without examination if CBP 

fails to timely examine the merchandise 

after presentation to CBP. If the 

examination is completed at a port other 

than the port of actual exportation, the 

merchandise must be transported inbond to the port of exportation. 

(e) Extent of examination. The 

appropriate CBP office may permit 

release of merchandise without 

examination, or may examine, to the 

extent determined to be necessary, the 

items exported or destroyed. 

§ 190.36 Failure to file Notice of Intent to 

Export, Destroy, or Return Merchandise for 

Purposes of Drawback. 

(a) General; application. Merchandise 

which has been exported without 

complying with the requirements of 

§ 190.35(a) or § 190.91 may be eligible 

for unused merchandise drawback 

under 19 U.S.C. 1313(j) subject to the 

following conditions: 

(1) Application. The claimant must 

file a written application with the 

drawback office where the drawback 

claims will be filed. Such application 

must include the following: 

(i) Required information. 

(A) Name, address, and Internal 

Revenue Service (IRS) number (with 

suffix) of applicant; 

(B) Name, address, and IRS number(s) 

(with suffix(es)) of exporter(s), if 

applicant is not the exporter; 

(C) Export period covered by this 

application; 

(D) Commodity/product lines of 

imported and exported merchandise 

covered in this application (and the 

applicable HTSUS numbers); 

(E) The origin of the above 

merchandise; 

(F) Estimated number of export 

transactions covered in this application; 

(G) Estimated number of drawback 

claims and estimated time of filing those 

claims to be covered in this application; 

(H) The port(s) of exportation; 

(I) Estimated dollar value of potential 

drawback claims to be covered in this 

application; 

(J) The relationship between the 

parties involved in the import and 

export transactions; and 

(K) Provision(s) of drawback covered 

under the application; 

(ii) Written declarations regarding: 

(A) The reason(s) that CBP was not 

notified of the intent to export; and 

(B) Whether the applicant, to the best 

of its knowledge, will have future 

exportations on which unused 

merchandise drawback might be 

claimed; and 

(iii) A certification that the following 

documentary evidence will be made 

available for CBP to review upon 

request: 

(A) For the purpose of establishing 

that the imported merchandise was not 

used in the United States (for purposes 

of drawback under 19 U.S.C. 1313(j)(1)) 

or that the exported merchandise was 

not used in the United States and 

satisfied the requirements for 

substitution with the imported 

merchandise (for purposes of drawback 

under 19 U.S.C. 1313(j)(2)), and, as 

applicable: 

(1) Records; 

(2) Any laboratory records prepared in 

the ordinary course of business; and/or 

(3) Inventory records prepared in the 

ordinary course of business tracing all 

relevant movements and storage of the 

imported merchandise, substituted 

merchandise, and/or exported 

merchandise; and 

(B) Evidence establishing compliance 

with all other applicable drawback 

requirements. 

(2) One-Time Use. The procedure 

provided for in this section may be used 

by a claimant only once, unless good 

cause is shown (for example, 

successorship). 

(3) Claims filed pending disposition of 

application. Drawback claims may be 


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filed under this section pending 

disposition of the application. However, 

those drawback claims will not be 

processed or paid until the application 

is approved by CBP. 

(b) CBP action. In order for CBP to 

evaluate the application under this 

section, CBP may request, and the 

applicant must provide, any of the 

information listed in paragraph 

(a)(1)(iii)(A)(1) through (3) of this 

section. In making its decision to 

approve or deny the application under 

this section, CBP will consider factors 

such as, but not limited to, the 

following: 

(1) Information provided by the 

claimant in the written application; 

(2) Any of the information listed in 

paragraphs (a)(1)(iii)(A)(1) through (3) of 

this section and requested by CBP under 

paragraph (b); and 

(3) The applicant’s prior record with 

CBP. 

(c) Time for CBP action. CBP will 

notify the applicant in writing within 90 

days after receipt of the application of 

its decision to approve or deny the 

application, or of CBP’s inability to 

approve, deny or act on the application 

and the reason therefor. 

(d) Appeal of denial of application. If 

CBP denies the application, the 

applicant may file a written appeal with 

the drawback office which issued the 

denial, provided that the applicant files 

this appeal within 30 days of the date 

of denial. If CBP denies this initial 

appeal, the applicant may file a further 

written appeal with CBP Headquarters, 

Office of Trade, Trade Policy and 

Programs, provided that the applicant 

files this further appeal within 30 days 

of the denial date of the initial appeal. 

CBP may extend the 30-day period for 

appeal to the drawback office or to CBP 

Headquarters, for good cause, if the 

applicant applies in writing for such 

extension within the appropriate 30-day 

period above. 

(e) Future intent to export unused 

merchandise. If an applicant states it 

will have future exportations on which 

unused merchandise drawback may be 

claimed (see paragraph (a)(1)(ii)(B) of 

this section), the applicant will be 

informed of the procedures for waiver of 

prior notice (see § 190.91). If the 

applicant seeks waiver of prior notice 

under § 190.91, any documentation 

submitted to CBP to comply with this 

section will be included in the request 

under § 190.91. An applicant that states 

that it will have future exportations on 

which unused merchandise drawback 

may be claimed (see paragraph 

(a)(1)(ii)(B) of this section) and which 

does not obtain waiver of prior notice 

must notify CBP of its intent to export 

prior to each such exportation, in 

accordance with § 190.35. 

§ 190.37 Destruction under CBP 

supervision. 

A claimant may destroy merchandise 

and obtain unused merchandise 

drawback by complying with the 

procedures set forth in § 190.71 relating 

to destruction. 

§ 190.38 Recordkeeping. 

(a) Maintained by claimant; by others. 

Pursuant to 19 U.S.C. 1508(c)(3), all 

records which are necessary to be 

maintained by the claimant under this 

part with respect to drawback claims, 

and records kept by others to 

complement the records of the claimant, 

which are essential to establish 

compliance with the legal requirements 

of 19 U.S.C. 1313(j)(1) or (j)(2), as 

applicable, and this part with respect to 

drawback claims, must be retained for 3 

years after liquidation of such claims 

(under 19 U.S.C. 1508, the same records 

may be subject to a different retention 

period for different purposes). 

(b) Accounting for the merchandise. 

Merchandise subject to drawback under 

19 U.S.C. 1313(j)(1) and (j)(2) must be 

accounted for in a manner which will 

enable the claimant: 

(1) To determine, and CBP to verify, 

the applicable import entry or transfer(s) 

of drawback-eligible merchandise; 

(2) To determine, and CBP to verify, 

the applicable exportation or 

destruction; and 

(3) To identify, with respect to the 

import entry or any transfer(s) of 

drawback-eligible merchandise, the 

imported merchandise designated as the 

basis for the drawback claim. 

Subpart D—Rejected Merchandise 

§ 190.41 Rejected merchandise drawback. 

Section 313(c) of the Act, as amended 

(19 U.S.C. 1313(c)), provides for 

drawback upon the exportation or 

destruction under CBP supervision of 

imported merchandise which has been 

entered, or withdrawn from warehouse, 

for consumption, duty-paid, and which: 

Does not conform to sample or 

specifications; has been shipped 

without the consent of the consignee; or 

has been determined to be defective as 

of the time of importation; or ultimately 

sold at retail by the importer or the 

person who received the merchandise 

from the importer, and for any reason 

returned to and accepted by the 

importer or the person who received the 

merchandise from the importer. The 

total amount of drawback allowable will 

be 99 percent of the amount of duties 

paid with respect to the imported, dutypaid merchandise. See subpart P for 

drawback of internal revenue taxes for 

unmerchantable or nonconforming 

distilled spirits, wines, or beer. 

§ 190.42 Procedures and supporting 

documentation. 

(a) Time limit for exportation or 

destruction. Drawback will be denied on 

merchandise that is exported or 

destroyed after the statutory 5-year time 

period. 

(b) Required documentation. The 

claimant must submit documentation to 

CBP as part of the complete drawback 

claim (see § 190.51) to establish that the 

merchandise did not conform to sample 

or specification, was shipped without 

the consent of the consignee, or was 

defective as of the time of importation 

(see § 190.45 for additional 

requirements for claims made on 

rejected retail merchandise under 19 

U.S.C. 1313(c)(1)(C)(ii)). If the claimant 

was not the importer, the claimant must 

also: 

(1) Submit a statement signed by the 

importer and every other person, other 

than the ultimate purchaser, that owned 

the goods, that no other claim for 

drawback was made on the goods by 

any other person; and 

(2) Certify that records are available to 

support the statement required in 

paragraph (b)(1) of this section. 

(c) Notice. A notice of intent to export 

or destroy merchandise which may be 

the subject of a rejected merchandise 

drawback claim (19 U.S.C. 1313(c)) 

must be provided to CBP to give CBP 

the opportunity to examine the 

merchandise. The claimant, or the 

exporter (for destruction under CBP 

supervision, see § 190.71), must file at 

the port of intended redelivery to CBP 

custody a Notice of Intent to Export, 

Destroy, or Return Merchandise for 

Purposes of Drawback on CBP Form 

7553 at least 5 working days prior to the 

date of intended return to CBP custody. 

Waiver of prior notice for exportations 

under 19 U.S.C. 1313(j) (see § 190.91) is 

inapplicable to exportations under 19 

U.S.C. 1313(c). 

(d) Required information. The notice 

must provide the bill of lading number, 

if known, the name and telephone 

number, mailing address, and, if 

available, fax number and email address 

of a contact person, and the location of 

the merchandise. 

(e) Decision to waive examination. 

Within 2 working days after receipt of 

the Notice of Intent to Export, Destroy, 

or Return Merchandise for Purposes of 

Drawback (see paragraph (c) of this 

section), CBP will notify, in writing, the 

party designated on the Notice of CBP’s 

decision to either examine the 

merchandise to be exported or 


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destroyed, or to waive examination. If 

CBP timely notifies the designated 

party, in writing, of its decision to 

examine the merchandise (see 

paragraph (f) of this section), but the 

merchandise is exported or destroyed 

without having been presented to CBP 

for such examination, any drawback 

claim, or part thereof, based on the 

Notice of Intent to Export, Destroy, or 

Return Merchandise for Purposes of 

Drawback, must be denied. If CBP 

notifies the designated party, in writing, 

of its decision to waive examination of 

the merchandise, or, if timely 

notification of a decision by CBP to 

examine or to waive examination is 

absent, the merchandise may be 

exported or destroyed without delay 

and will be deemed to have been 

returned to CBP custody. 

(f) Time and place of examination. If 

CBP gives timely notice of its decision 

to examine the merchandise to be 

exported or destroyed, the merchandise 

to be examined must be promptly 

presented to CBP. CBP must examine 

the merchandise within 5 working days 

after presentation of the merchandise. 

The merchandise may be exported or 

destroyed without examination if CBP 

fails to timely examine the merchandise 

after presentation to CBP, and in such 

case the merchandise will be deemed to 

have been returned to CBP custody. If 

the examination is completed at a port 

other than the port of actual exportation 

or destruction, the merchandise must be 

transported in-bond to the port of 

exportation or destruction. 

(g) Extent of examination. The 

appropriate CBP office may permit 

release of merchandise without 

examination, or may examine, to the 

extent determined to be necessary, the 

items exported or destroyed. 

(h) Drawback claim. When filing the 

drawback claim, the drawback claimant 

must correctly calculate the amount of 

drawback due (see § 190.51(b)). The 

procedures for restructuring a claim (see 

§ 190.53) apply to rejected merchandise 

drawback if the claimant has an ongoing 

export program which qualifies for this 

type of drawback. 

(i) Exportation. Claimants must 

provide documentary evidence of 

exportation (see subpart G of this part). 

The claimant may establish exportation 

by mail as set out in § 190.74o. 

§ 190.43 Unused merchandise drawback 

claim. 

Rejected merchandise may be the 

subject of an unused merchandise 

drawback claim under 19 U.S.C. 

1313(j)(1), in accordance with subpart C 

of this part, to the extent that the 

merchandise qualifies therefor. 

§ 190.44 [Reserved] 

§ 190.45 Returned retail merchandise. 

(a) Special rule for substitution. 

Section 313(c)(1)(C)(ii) of the Tariff Act 

of 1930, as amended (19 U.S.C. 

1313(c)(1)(C)(ii)), provides for drawback 

upon the exportation or destruction 

under CBP supervision of imported 

merchandise which has been entered, or 

withdrawn from warehouse, for 

consumption, duty-paid and ultimately 

sold at retail by the importer, or the 

person who received the merchandise 

from the importer, and for any reason 

returned to and accepted by the 

importer, or the person who received 

the merchandise from the importer. 

(b) Eligibility requirements. (1) 

Drawback is allowable pursuant to 

compliance with all requirements set 

forth in this subpart; and 

(2) The claimant must also show by 

evidence satisfactory to CBP that 

drawback may be claimed by— 

(i) Designating an entry of 

merchandise that was imported within 

1 year before the date of exportation or 

destruction of the merchandise 

described in paragraph (a) under CBP 

supervision. 

(ii) Certifying that the same 8-digit 

HTSUS subheading number and specific 

product identifier (such as part number, 

SKU, or product code) apply to both the 

merchandise designated for drawback 

(in the import documentation) and the 

returned merchandise. 

(c) Allowable refund. The total 

amount of drawback allowable will not 

exceed 99 percent of the amount of 

duties paid with respect to the imported 

merchandise. 

(d) Denial of claims. No drawback 

will be refunded if CBP is not satisfied 

that the claimant has provided, upon 

request, the documentation necessary to 

support the certification required in 

paragraph (b)(2)(ii). 

Subpart E—Completion of Drawback 

Claims 

§ 190.51 Completion of drawback claims. 

(a) General—(1) Complete claim. 

Unless otherwise specified, a complete 

drawback claim under this part will 

consist of the successful electronic 

transmission to CBP of the drawback 

entry (as described in subparagraph (2)), 

applicable Notice(s) of Intent to Export, 

Destroy, or Return Merchandise for 

Purposes of Drawback on CBP Form 

7553, applicable import entry data, and 

evidence of exportation or destruction 

as provided for under subpart G of this 

part. 

(2) Drawback entry. The drawback 

entry is to be filed through a CBPauthorized electronic system and must 

include the following: 

(i) Claimant identification number, 

name, and address; 

(ii) Broker identification number, 

name, and address (if applicable); 

(iii) Surety code, bond type, and 

amount of bond; 

(iv) Port code for the drawback office 

that will review the claim; 

(v) Drawback entry number and 

provision(s) under which drawback is 

claimed; 

(vi) Statement of eligibility for 

applicable privileges (as provided for in 

subpart I of this part); 

(vii) Amount of refund claimed for 

each of relevant duties, taxes, and fees 

(calculated to two decimal places); 

(viii) For each designated import 

entry line item, the entry number and 

the line item number designating the 

merchandise, a description of the 

merchandise, a unique import tracing 

identification number(s) (ITIN) (used to 

associate the imported merchandise and 

any substituted merchandise with any 

intermediate products (if applicable) 

and the drawback-eligible exported or 

destroyed merchandise or finished 

article(s)), as well as the following 

information for the merchandise 

designated as the basis for the drawback 

claim: The 10-digit HTSUS 

classification and associated duty 

rate(s), amount of duties paid, 

applicable entered value (see 19 CFR 

190.11(a)), quantity and unit of measure 

(using the unit(s) of measure required 

under the HTSUS, if applicable), as well 

as the types, rates, and amounts of any 

other duties, taxes, or fees for which a 

refund is requested; 

(ix) For manufacturing claims under 

19 U.S.C. 1313(a) or (b), the basis of the 

claim (as provided for in § 190.23), the 

ruling number, the factory location, the 

date(s) of use of the imported and/or 

substituted merchandise in 

manufacturing/processing, the 10-digit 

HTSUS classification for the imported 

merchandise and/or which would have 

been applicable to the substituted 

merchandise had it been imported, the 

quantity and unit of measure (using the 

unit(s) of measure required under the 

HTSUS, if applicable) of the imported 

and/or substituted merchandise in 

manufacturing/processing, unique 

manufacture tracing identification 

number(s) (MTIN) (used to associate the 

manufactured merchandise, including 

any intermediate products, with the 

drawback-eligible exported or destroyed 

finished article(s)), and a certification 

from the claimant that provides as 

follows: ‘‘The article(s) described above 

were manufactured or produced and 

disposed of as stated herein in 


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accordance with the drawback ruling on 

file with CBP and in compliance with 

applicable laws and regulations.’’; 

(x) Indicate whether the designated 

imported merchandise, other 

substituted merchandise, or finished 

article (for manufacturing claims) was 

transferred to the drawback claimant 

prior to the exportation or destruction of 

the eligible merchandise, and for 

unused merchandise drawback claims 

under 19 U.S.C. 1313(j), provide a 

certification from the client that 

provides as follows: ‘‘The undersigned 

hereby certifies that the merchandise 

herein described is unused in the 

United States and further certifies that 

this merchandise was not subjected to 

any process of manufacture or other 

operation except the allowable 

operations as provided for by 

regulation.’’; 

(xi) Indicate whether the eligible 

merchandise was exported or destroyed 

and provide the applicable 10-digit 

HTSUS or Department of Commerce 

Schedule B classification, quantity, and 

unit of measure (the unit of measure 

specified must be the same as that 

which was required under the HTSUS 

for the designated imported 

merchandise) and, for claims under 19 

U.S.C. 1313(c), specify the basis as one 

of the following: 

(A) Merchandise does not conform to 

sample or specifications; 

(B) Merchandise was defective at time 

of importation; 

(C) Merchandise was shipped without 

consent of the consignee; or 

(D) Merchandise sold at retail and 

returned to the importer or the person 

who received the merchandise from the 

importer; 

(xii) For eligible merchandise that was 

exported, the unique export identifier 

(the number used to associate the export 

transaction with the appropriate 

documentary evidence of exportation), 

bill of lading number, export 

destination, name of exporter, the 

applicable comparative value pursuant 

to 19 CFR 190.11(b) (see 

§ 190.22(a)(1)(ii), § 190.22(a)(2)(ii), or 

§ 190.32(b)) for substitution claims, and 

a certification from the claimant that 

provides as follows: ‘‘I declare, to the 

best of my knowledge and belief, that all 

of the statements in this document are 

correct and that the exported article is 

not to be relanded in the United States 

or any of its possessions without paying 

duty.’’; 

(xiii) For eligible merchandise that 

was destroyed, the name of the 

destroyer and, if substituted, the 

applicable comparative value pursuant 

to 19 CFR 190.11(c) (see 

§ 190.22(a)(1)(ii), § 190.22(a)(2)(ii), or 

§ 190.32(b)), and a certification from the 

claimant, if applicable, that provides as 

follows: ‘‘The undersigned hereby 

certifies that, for the destroyed 

merchandise herein described, the value 

of recovered materials (including the 

value of any tax benefit or royalty 

payment) that accrues to the drawback 

claimant has been deducted from the 

value of the imported (or substituted) 

merchandise designated by the 

claimant, in accordance with 19 U.S.C. 

1313(x).’’; 

(xiv) For substitution unused 

merchandise drawback claims under 19 

U.S.C. 1313(j)(2), a certification from the 

claimant that provides as follows: ‘‘The 

undersigned hereby certifies that the 

substituted merchandise is unused in 

the United States and that the 

substituted merchandise was in our 

possession prior to exportation or 

destruction.’’; 

(xv) For NAFTA drawback claims 

provided for in subpart E of part 181, 

the foreign entry number and date of 

entry, the HTSUS classification for the 

foreign entry, the amount of duties paid 

for the foreign entry and the applicable 

exchange rate, and, if applicable, a 

certification from the claimant that 

provides as follows: ‘‘Same condition to 

NAFTA countries—The undersigned 

certifies that the merchandise herein 

described is in the same condition as 

when it was imported under the above 

import entry(s) and further certifies that 

this merchandise was not subjected to 

any process of manufacture or other 

operation except the allowable 

operations as provided for by 

regulation.’’; and 

(xvi) All certifications required in this 

part and as otherwise deemed necessary 

by CBP to establish compliance with the 

applicable laws and regulations, as well 

as the following declaration: ‘‘The 

undersigned acknowledges statutory 

requirements that all records supporting 

the information on this document are to 

be retained by the issuing party for a 

period of 3 years from the date of 

liquidation of the drawback claim. All 

required documentation that must be 

uploaded in accordance with 19 CFR 

190.51 will be provided to CBP within 

24 hours of the filing of the drawback 

claim. The undersigned acknowledges 

that a false certification of the foregoing 

renders the drawback claim incomplete 

and subject to denial. The undersigned 

is fully aware of the sanctions provided 

in 18 U.S.C. 1001, and 18 U.S.C. 550, 

and 19 U.S.C. 1593a.’’ 

(3) Election of line item designation 

for imported merchandise. Merchandise 

on a specific line on an entry summary 

may be designated for either direct 

identification or substitution claims but 

a single line on an entry summary may 

not be split for purposes of claiming 

drawback under both direct 

identification and substitution claims. 

The first complete drawback claim 

accepted by CBP which designates 

merchandise on a line on an entry 

summary establishes this designation 

for any remaining merchandise on that 

same line. For claims involving 

transferred merchandise, please see 

§ 190.10(c) regarding required 

notifications concerning whether the 

merchandise should be eligible for 

direct identification or substitution 

claims. 

(4) Limitation on line item eligibility 

for imported merchandise. Claimants 

are prohibited from filing substitution 

drawback claims under part 190 for 

imported merchandise associated with a 

line item on an entry summary if any 

other merchandise covered on that entry 

summary has been designated as the 

basis of a claim under part 191. 

(b) Drawback due—(1) Claimant 

required to calculate drawback. 

Drawback claimants are required to 

correctly calculate the amount of 

drawback due. The amount of drawback 

requested on the drawback entry is 

generally to be 99 percent of the duties, 

taxes, and fees eligible for drawback. 

(For example, if $1,000 in import duties 

are eligible for drawback less 1 percent 

($10), the amount claimed on the 

drawback entry should be for $990.) 

Claims exceeding 99 percent (or 100% 

when 100% of the duty is available for 

drawback) will not be paid until the 

calculations have been corrected by the 

claimant. Claims for less than 99 

percent (or 100% when 100% of the 

duty is available for drawback) will be 

paid as filed, unless the claimant 

amends the claim in accordance with 

§ 190.52(c). The amount of duties, taxes, 

and fees eligible for drawback is 

determined by whether a claim is based 

upon direct identification or 

substitution, as provided for below: 

(i) Direct identification. The amounts 

eligible for drawback for a unit of 

merchandise consists of those duties, 

taxes, and fees that were paid for that 

unit of the designated imported 

merchandise. This may be the amount 

of duties, taxes, and fees actually 

tendered on that unit or those 

attributable to that unit, if identified 

pursuant to an approved accounting 

method (see 19 CFR 190.14). 

(ii) Substitution. The amount of 

duties, taxes, and fees eligible for 

drawback pursuant to 19 U.S.C. 1313(b) 

or 19 U.S.C. 1313(j)(2) is determined by 

per unit averaging, as defined in 19 CFR 

190.2. The amount that may be refunded 

is also subject to the limitations set forth 


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in 19 CFR 190.22(a)(1)(ii) 

(manufacturing claims) and 19 CFR 

190.32(b) (unused merchandise claims), 

as applicable. 

(2) Merchandise processing fee 

apportionment calculation. Where a 

drawback claimant requests a refund of 

a merchandise processing fee paid 

pursuant to 19 U.S.C. 58c(a)(9)(A), the 

claimant is required to correctly 

apportion the fee to that imported 

merchandise for which drawback is 

claimed when calculating the amount of 

drawback requested on the drawback 

entry. This is determined as follows: 

(i) Relative value ratio for each line 

item. The value of each line item of 

entered merchandise subject to a 

merchandise processing fee is 

calculated (to four decimal places) by 

dividing the value of the line item 

subject to the fee by the total value of 

entered merchandise subject to the fee. 

The result is the relative value ratio. 

(ii) Merchandise processing fee 

apportioned to each line item. To 

apportion the merchandise processing 

fee to each line item, the relative value 

ratio for each line item is multiplied by 

the merchandise processing fee paid. 

(iii) Amount of merchandise 

processing fee eligible for drawback per 

line item. The amount of merchandise 

processing fee apportioned to each line 

item is multiplied by 99 percent to 

calculate that portion of the fee 

attributable to each line item that is 

eligible for drawback. 

(iv) Amount of merchandise 

processing fee eligible for drawback per 

unit of merchandise. To calculate the 

amount of a merchandise processing fee 

eligible for drawback per unit of 

merchandise, the line item amount that 

is eligible for drawback is divided by 

the number of units covered by that line 

item (to two decimal places). 

(v) Limitation on amount of 

merchandise processing fee eligible for 

drawback for substitution claims. The 

amount of a merchandise processing fee 

eligible for drawback per unit of 

merchandise for drawback claims based 

upon substitution is subject to the 

limitations set forth in §§ 190.22(a)(1)(ii) 

(manufacturing claims) and 190.32(b) 

(unused merchandise claims), as 

applicable. 

(vi)(A) Example 1: 

(1) Line item 1—5,000 articles valued at 

$10 each total $50,000 

(2) Line item 2—6,000 articles valued at 

$15 each total $90,000 

(3) Line item 3—10,000 articles valued 

at $20 each total $200,000 

(4) Total units = 21,000 

(5) Total value = $340,000 

(6) Merchandise processing fee = $485 

(for purposes of this example, the fee 

cap of $485 is assumed; see 19 CFR 

24.23 for the current amount 

consistent with 19 U.S.C. 

58c(a)(9)(B)(i)) 

(i) Line item relative value ratios. The 

relative value ratio for line item 1 is 

calculated by dividing the value of that 

line item by the total value ($50,000 ÷ 

340,000 = .1471). The relative value 

ratio for line item 2 is .2647. The 

relative value ratio for line item 3 is 

.5882. 

(ii) Merchandise processing fee 

apportioned to each line item. The 

amount of fee attributable to each line 

item is calculated by multiplying $485 

by the applicable relative value ratio. 

The amount of the $485 fee attributable 

to line item 1 is $71.3435 (.1471 × $485 

= $71.3435). The amount of the fee 

attributable to line item 2 is $128.3795 

(.2647 × $485 = $128.3795). The amount 

of the fee attributable to line item 3 is 

$285.2770 (.5882 × $485 = $285.2770). 

(iii) Amount of merchandise 

processing fee eligible for drawback per 

line item. The amount of merchandise 

processing fee eligible for drawback for 

line item 1 is $70.6301 (.99 × $71.3435). 

The amount of fee eligible for drawback 

for line item 2 is $127.0957 (.99 × 

$128.3795). The amount of fee eligible 

for drawback for line item 3 is 

$282.4242 (.99 × $285.2770). 

(iv) Amount of merchandise 

processing fee eligible for drawback per 

unit of merchandise. The amount of 

merchandise processing fee eligible for 

drawback per unit of merchandise is 

calculated by dividing the amount of fee 

eligible for drawback for the line item 

by the number of units in the line item. 

For line item 1, the amount of 

merchandise processing fee eligible for 

drawback per unit is $.0141 ($70.6301 ÷ 

5,000 = $.0141). If 1,000 widgets form 

the basis of a claim for drawback under 

19 U.S.C. 1313(j), the total amount of 

drawback attributable to the 

merchandise processing fee is $14.10 

(1,000 × .0141 = $14.10). For line item 

2, the amount of fee eligible for 

drawback per unit is $.0212 ($127.0957 

÷ 6,000 = $.0212). For line item 3, the 

amount of fee eligible for drawback per 

unit is $.0282 ($282.4242 ÷ 10,000 = 

$.0282). 

(B) Example 2. This example 

illustrates the treatment of dutiable 

merchandise that is exempt from the 

merchandise processing fee and dutyfree merchandise that is subject to the 

merchandise processing fee. 

(1)(i) Line item 1—700 meters of 

printed cloth valued at $10 per meter 

(total value $7,000) that is exempt from 

the merchandise processing fee under 

19 U.S.C. 58c(b)(8)(B)(iii) 

(ii) Line item 2—15,000 articles 

valued at $100 each (total value 

$1,500,000) 

(iii) Line item 3—10,000 duty-free 

articles valued at $50 each (total value 

$500,000) 

(iv) The relative value ratios are 

calculated using line items 2 and 3 only, 

as there is no merchandise processing 

fee imposed by reason of importation on 

line item 1. 

(2)(i) Line item 2—1,500,000 ÷ 

2,000,000 = .75 (line items 2 and 3 form 

the total value of the merchandise 

subject to the merchandise processing 

fee). 

(ii) Line item 3—500,000 ÷ 2,000,000 

= .25. 

(iii) If the total merchandise 

processing fee paid was $485, the 

amount of the fee attributable to line 

item 2 is $363.75 (.75 × $485 = $363.75). 

The amount of the fee attributable to 

line item 3 is $121.25 (.25 × $485 = 

$121.25). 

(iv) The amount of merchandise 

processing fee eligible for drawback for 

line item 2 is $360.1125 (.99 × $363.75). 

The amount of fee eligible for line item 

3 is $120.0375 (.99 × $121.25). 

(v) The amount of drawback on the 

merchandise processing fee attributable 

to each unit of line item 2 is $.0240 

($360.1125 ÷ 15,000 = $.0240). The 

amount of drawback on the 

merchandise processing fee attributable 

to each unit of line item 3 is $.0120 

($120.0375 ÷ 10,000 = $.0120). 

(vi) If 1,000 units of line item 2 were 

exported, the drawback attributable to 

the merchandise processing fee is 

$24.00 ($.0240 × 1,000 = $24.00). 

(3) Calculations for all other duties, 

taxes, and fees. 

(i) General. Where a drawback 

claimant requests a refund of any other 

duties, taxes, and fees allowable in 

accordance with § 190.3, the claimant is 

required to accurately calculate 

(including apportionment using per unit 

averaging or inventory management 

methods, as appropriate) the duties, 

taxes, and fees attributable to the 

designated imported merchandise for 

which drawback is being claimed when 

calculating the amount of drawback 

requested on the drawback entry 

(generally 99% of the duties, taxes, and 

fees paid on the imported merchandise). 

(ii) Examples. As illustrated in the 

examples in this paragraph, in the case 

of customs duties, the type of 

calculation required to determine the 

amount of duties available for refund 

(generally 99% of the duties paid on the 

imported merchandise) will vary 

depending on whether the duty 

involved is ad valorem, specific, or 

compound. 


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(1) Example 1: Ad valorem duty rate. 

Apportionment of the duties paid (and 

available for refund) will be based on 

the application of the duty rates to the 

per unit values of the imported 

merchandise. The per unit values are 

based on the invoice values unless the 

method of refund calculation is per unit 

averaging, which would require equal 

apportionment of the duties paid over 

the quantity of imported merchandise 

covered by the line item upon which the 

imported merchandise was reported on 

the import entry summary. As a result, 

the amount of duties available for 

refund will vary depending on the 

method used to calculate refunds. 

(2) Example 2: Specific duty rate. No 

apportionment of the duties paid is 

required to determine the amount 

available for refund. A fixed duty rate is 

applicable to each unit of the imported 

merchandise based on quantity. This 

fixed rate will not vary based on the per 

unit values of the imported merchandise 

and, as a result, there is no impact on 

the amount of duties available for 

refunds (regardless of whether the 

refunds are calculated based on invoice 

values or per unit averaging). 

(3) Example 3: Compound duty rate. 

A compound duty rate is a combination 

of an ad valorem duty rate and a specific 

duty rate, with both rates applied to the 

same imported merchandise. As a 

result, a combination of the calculations 

discussed in paragraphs (a) and (b) of 

this section will apply when calculating 

the amount of duties paid that are 

available for refund. 

(b) Limitation. The amount of duties, 

taxes, and fees eligible for drawback per 

unit of merchandise for drawback 

claims based upon substituted 

merchandise is subject to the limitations 

set forth in 19 CFR 190.22(a)(1)(ii) 

(manufacturing claims) and 19 CFR 

190.32(b) (unused merchandise claims), 

as applicable. 

(c) HTSUS classification or Schedule 

B commodity number(s)—(1) General. 

Drawback claimants are required to 

provide, on all drawback claims they 

submit, the 10-digit HTSUS 

classification or the Schedule B 

commodity number(s), for the following: 

(i) Designated imported merchandise. 

For imported merchandise designated 

on drawback claims, the HTSUS 

classification applicable at the time of 

entry (e.g., as required to be reported on 

the applicable entry summary(s) and 

other entry documentation). 

(ii) Substituted merchandise on 

manufacturing claims. For merchandise 

substituted on manufacturing drawback 

claims, the HTSUS classification 

numbers provided must be the same as 

either— 

(A) if the substituted merchandise 

was imported, the HTSUS classification 

applicable at the time of entry (e.g., as 

required to be reported on the 

applicable entry summary(s) and other 

entry documentation); or, 

(B) if the substituted merchandise was 

not imported, the HTSUS classification 

that would have been reported to CBP 

for the applicable entry summary(s) and 

other entry documentation, for the 

domestically produced substituted 

merchandise, at the time of entry of the 

designated imported merchandise. 

(iii) Exported merchandise or articles. 

For exported merchandise or articles, 

the HTSUS classification or Schedule B 

commodity number(s) must be from the 

Electronic Export Information (EEI), 

when required. If no EEI is required 

(see, 15 CFR part 30 subpart D for a 

complete list of exemptions), then the 

claimant must provide the Schedule B 

commodity number(s) or HTSUS 

number(s) that the exporter would have 

set forth on the EEI when the 

exportation took place, but for the 

exemption from the requirement for an 

EEI. 

(iv) Destroyed merchandise or 

articles. For destroyed merchandise or 

articles, the HTSUS classification or 

Schedule B commodity number(s) must 

be reported, subject to the following: 

(A) if the HTSUS classification is 

reported, then it must be the HTSUS 

classification that would have been 

applicable to the destroyed merchandise 

or articles if they had been entered for 

consumption at the time of destruction; 

or 

(B) if the Schedule B commodity 

number is reported, then it must be the 

Schedule B commodity number that 

would have been reported for the 

destroyed merchandise or articles if the 

EEI had been required for an exportation 

at the time of destruction. 

(2) Changes to classification. If the 10- 

digit HTSUS classification or the 

Schedule B commodity number(s) 

reported to CBP for the drawback claim 

are determined to be incorrect or 

otherwise in controversy after the filing 

of the drawback entry, then the claimant 

must notify the drawback office where 

the drawback claim was filed of the 

correct HTSUS classification or 

Schedule B commodity number or the 

nature of the controversy before the 

liquidation of the drawback entry. 

(d) Method of filing. All drawback 

claims must be submitted through a 

CBP-authorized system. 

(e) Time of filing—(1) General. A 

complete drawback claim is timely filed 

if it is successfully transmitted not later 

than 5 years after the date on which the 

merchandise designated as the basis for 

the drawback claim was imported and 

in compliance with all other applicable 

deadlines under this part. 

(i) Official date of filing. The official 

date of filing is the date upon which 

CBP receives a complete claim, as 

provided in paragraph (a) of this 

section, via transmission through a CBPauthorized system, including the 

uploading of all required supporting 

documentation. 

(ii) Abandonment. Claims not 

completed within the 5-year period after 

the date on which the merchandise 

designated as the basis for the drawback 

claim was imported will be considered 

abandoned. Except as provided in 

paragraph (e)(2) of this section, no 

extension will be granted unless it is 

established that CBP was responsible for 

the untimely filing; and 

(iii) Special timeframes. For 

substitution claims, the exportation or 

destruction of merchandise shall not 

have preceded the date of importation of 

the designated imported merchandise, 

and/or the exportation or destruction of 

merchandise shall not otherwise be 

outside of the timeframes specified in 

19 U.S.C. 1313(c)(2)(C) and 19 U.S.C. 

1313(p)(2), if applicable. 

(2) Major disaster. The 5-year period 

for filing a complete drawback claim 

provided for in paragraph (e)(1) of this 

section may be extended for a period 

not to exceed 18 months if: 

(i) The claimant establishes to the 

satisfaction of CBP that the claimant 

was unable to file the drawback claim 

because of an event declared by the 

President to be a major disaster, within 

the meaning given to that term in 42 

U.S.C. 5122(2), on or after January 1, 

1994; and 

(ii) The claimant files a request for 

such extension with CBP no later than 

1 year from the last day of the 5-year 

period referred to in paragraph (e)(1) of 

this section. 

(3) Record retention. If an extension is 

granted with respect to a request filed 

under paragraph (e)(2)(ii) of this section, 

the periods of time for retaining records 

under 19 U.S.C. 1508(c)(3) will be 

extended for an additional 18 months. 

§ 190.52 Rejecting, perfecting or amending 

claims. 

(a) Rejecting the claim. Upon review 

of a drawback claim, if the claim is 

determined to be incomplete (see 

§ 190.51(a)(1)) or untimely (see 

§ 190.51(e)), the claim will be rejected 

and CBP will notify the filer. The filer 

will then have the opportunity to 

complete the claim subject to the 

requirement for filing a complete claim 

within 5 years of the date of importation 


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of the merchandise designated as the 

basis for the drawback claim. 

(b) Perfecting the claim; additional 

evidence required. If CBP determines 

that the claim is complete according to 

the requirements of § 190.51(a)(1), but 

that additional evidence or information 

is required, CBP will notify the filer. 

The claimant must furnish, or have the 

appropriate party furnish, the evidence 

or information requested within 30 days 

of the date of notification by CBP. CBP 

may extend this 30-day period if the 

claimant files a written request for such 

extension within the 30-day period and 

provides good cause. The evidence or 

information required under this 

paragraph may be filed more than 5 

years after the date of importation of the 

merchandise designated as the basis for 

the drawback claim. Such additional 

evidence or information may include, 

but is not limited to: 

(1) Records or other documentary 

evidence of exportation, as provided for 

in § 190.72, which shows that the 

articles were shipped by the person 

filing the drawback entry, or a letter of 

endorsement from exporter which must 

be attached to such bill of lading, 

showing that the party filing the entry 

is authorized to claim drawback and 

receive payment (the claimant must 

have on file and make available to CBP 

upon request, the endorsement from the 

exporter assigning the right to claim 

drawback); 

(2) A copy of the import entry and 

invoice annotated for the merchandise 

identified or designated; 

(3) A copy of the export invoice 

annotated to indicate the items on 

which drawback is being claimed; and 

(4) Records documenting the transfer 

of the merchandise including records 

kept in the normal course of business 

upon which the claim is based (see 

§ 190.10). 

(c) Amending the claim; supplemental 

filing. Amendments to claims for which 

the drawback entries have not been 

liquidated must be made within 5 years 

of the date of importation of the 

merchandise designated as the basis for 

the drawback claim. Liquidated 

drawback entries may not be amended; 

however, they may be protested as 

provided for in § 190.84 and part 174 of 

this chapter. 

§ 190.53 Restructuring of claims. 

(a) General. CBP may require 

claimants to restructure their drawback 

claims in such a manner as to foster 

administrative efficiency. In making this 

determination, CBP will consider the 

following factors: 

(1) The number of transactions of the 

claimant (imports and exports); 

(2) The value of the claims; 

(3) The frequency of claims; 

(4) The product or products being 

claimed; and 

(5) For 19 U.S.C. 1313(a) and 1313(b) 

claims, the provisions, as applicable, of 

the general manufacturing drawback 

ruling or the specific manufacturing 

drawback ruling. 

(b) Exemption from restructuring; 

criteria. In order to be exempt from a 

restructuring, a claimant must 

demonstrate an inability or 

impracticability in restructuring its 

claims as required by CBP and must 

provide a mutually acceptable 

alternative. Criteria used in such 

determination will include a 

demonstration by the claimant of one or 

more of the following: 

(1) Complexities caused by multiple 

commodities or the applicable general 

manufacturing drawback ruling or the 

specific manufacturing drawback ruling; 

(2) Variable and conflicting 

manufacturing and inventory periods 

(for example, financial, accounting and 

manufacturing records maintained are 

significantly different); 

(3) Complexities caused by multiple 

manufacturing locations; 

(4) Complexities caused by difficulty 

in adjusting accounting and inventory 

records (for example, records 

maintained—financial or accounting— 

are significantly different); and/or 

(5) Complexities caused by 

significantly different methods of 

operation. 

Subpart F—Verification of Claims 

§ 190.61 Verification of drawback claims. 

(a) Authority. All claims are subject to 

verification by CBP. 

(b) Method. CBP personnel will verify 

compliance with the law and this part, 

the accuracy of the related general 

manufacturing drawback ruling or 

specific manufacturing drawback ruling 

(as applicable), and the selected 

drawback claims. Verification may 

include an examination of all records 

relating to the transaction(s). 

(c) Liquidation. When a claim has 

been selected for verification, 

liquidation will be postponed only on 

the drawback entry for the claim 

selected for verification. Postponement 

will continue in effect until the 

verification has been completed and a 

report is issued, subject to the limitation 

in 19 CFR 159.12(f). In the event that a 

substantial error is revealed during the 

verification, CBP may postpone 

liquidation of all related product line 

claims, or, in CBP’s discretion, all 

claims made by that claimant. 

(d) Errors in specific or general 

manufacturing drawback rulings—(1) 

Specific manufacturing drawback 

ruling; action by CBP. If verification of 

a drawback claim filed under a specific 

manufacturing drawback ruling (see 

§ 190.8) reveals errors or deficiencies in 

the drawback ruling or application 

therefor, the verifying CBP official will 

promptly inform CBP Headquarters 

(Attention: Entry Process and Duty 

Refunds Branch, Regulations and 

Rulings, Office of Trade). 

(2) General manufacturing drawback 

ruling. If verification of a drawback 

claim filed under a general 

manufacturing drawback ruling (see 

§ 190.7) reveals errors or deficiencies in 

a general manufacturing drawback 

ruling, the letter of notification of intent 

to operate under the general 

manufacturing drawback ruling, or the 

acknowledgment of the letter of 

notification of intent, the verifying CBP 

official will promptly inform CBP 

Headquarters (Attention: Entry Process 

and Duty Refunds Branch, Regulations 

and Rulings, Office of Trade). 

(3) Action by CBP Headquarters. CBP 

Headquarters will review the stated 

errors or deficiencies and take 

appropriate action (see 19 U.S.C. 1625; 

19 CFR part 177). 

§ 190.62 Penalties. 

(a) Criminal penalty. Any person who 

knowingly and willfully files any false 

or fraudulent entry or claim for the 

payment of drawback upon the 

exportation or destruction of 

merchandise or knowingly or willfully 

makes or files any false document for 

the purpose of securing the payment to 

himself or others of any drawback on 

the exportation or destruction of 

merchandise greater than that legally 

due, will be subject to the criminal 

provisions of 18 U.S.C. 550, 1001, or 

any other appropriate criminal 

sanctions. 

(b) Civil penalty. Any person who 

seeks, induces or affects the payment of 

drawback, by fraud or negligence, or 

attempts to do so, is subject to civil 

penalties, as provided under 19 U.S.C. 

1593a. A fraudulent violation is subject 

to a maximum administrative penalty of 

3 times the total actual or potential loss 

of revenue. Repetitive negligent 

violations are subject to a maximum 

penalty equal to the actual or potential 

loss of revenue. 

§ 190.63 Liability for drawback claims. 

(a) Liability of claimants. Any person 

making a claim for drawback will be 

liable for the full amount of the 

drawback claimed. 

(b) Liability of importers. An importer 

will be liable for any drawback claim 

made by another person with respect to 


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merchandise imported by the importer 

in an amount equal to the lesser of: 

(1) The amount of duties, taxes, and 

fees that the person claimed with 

respect to the imported merchandise; or 

(2) The amount of duties, taxes, and 

fees that the importer authorized the 

other person to claim with respect to the 

imported merchandise. 

(c) Joint and several liability. Persons 

described in paragraphs (a) and (b) will 

be jointly and severally liable for the 

amount described in paragraph (b). 

Subpart G—Exportation and 

Destruction 

§ 190.71 Drawback on articles destroyed 

under CBP supervision. 

(a) Procedure. At least 7 working days 

before the intended date of destruction 

of merchandise or articles upon which 

drawback is intended to be claimed, a 

Notice of Intent to Export, Destroy, or 

Return Merchandise for Purposes of 

Drawback on CBP Form 7553 must be 

filed by the claimant with the CBP port 

where the destruction is to take place, 

giving notification of the date and 

specific location where the destruction 

is to occur. Within 4 working days after 

receipt of the CBP Form 7553, CBP will 

advise the filer in writing of its 

determination to witness or not to 

witness the destruction. If the filer of 

the notice is not so notified within 4 

working days, the merchandise may be 

destroyed without delay and will be 

deemed to have been destroyed under 

CBP supervision. Unless CBP 

determines to witness the destruction, 

the destruction of the articles following 

timely notification on CBP Form 7553 

will be deemed to have occurred under 

CBP supervision. If CBP attends the 

destruction, CBP will certify on CBP 

Form 7553. 

(b) Evidence of destruction. When 

CBP does not attend the destruction, the 

claimant must submit evidence that 

destruction took place in accordance 

with the Notice of Intent to Export, 

Destroy, or Return Merchandise for 

Purposes of Drawback on CBP Form 

7553. The evidence must be issued by 

a disinterested third party (for example, 

a landfill operator). The type of 

evidence depends on the method and 

place of destruction, but must establish 

that the merchandise was, in fact, 

destroyed within the meaning of 

‘‘destruction’’ in § 190.2. 

(c) Completion of drawback entry. 

After destruction, the claimant must 

provide CBP Form 7553, certified by the 

CBP official witnessing the destruction 

in accordance with paragraph (a) of this 

section, to CBP as part of the completed 

drawback claim based on the 

destruction (see § 190.51(a)). If CBP has 

not attended the destruction, the 

claimant must provide the evidence that 

destruction took place in accordance 

with the approved CBP Form 7553, as 

provided for in paragraph (b) of this 

section, as part of the completed 

drawback claim based on the 

destruction (see § 190.51(a)). 

§ 190.72 Proof of Exportation. 

(a) Required export data. Proof of 

exportation of articles for drawback 

purposes must establish fully the date 

and fact of exportation and the identity 

of the exporter by providing the 

following summary data as part of a 

complete claim (see § 190.51) (in 

addition to providing prior notice of 

intent to export if applicable (see 

§§ 190.35, 190.36, 190.42, and 190.91)): 

(1) Date of export; 

(2) Name of exporter; 

(3) Description of the goods; 

(4) Quantity and unit of measure; 

(5) Schedule B number or HTSUS 

number; and 

(6) Country of ultimate destination. 

(b) Supporting documentary evidence. 

Exportation may be established by 

providing the following: 

(1) Records or other documentary 

evidence of exportation (originals or 

copies) issued by the exporting carrier, 

such as a bill of lading, air waybill, 

freight waybill, Canadian Customs 

manifest, and/or cargo manifest; 

(2) Records from a CBP-approved 

electronic export system of the United 

States Government (§ 190.73); 

(3) Official postal records (originals or 

copies) which evidence exportation by 

mail (§ 190.74); 

(4) Notice of lading for supplies on 

certain vessels or aircraft (§ 190.112); or 

(5) Notice of transfer for articles 

manufactured or produced in the United 

States which are transferred to a foreign 

trade zone (§ 190.183). 

§ 190.73 Electronic proof of exportation. 

Records kept through an electronic 

export system of the United States 

Government may be considered as 

actual proof of exportation only if CBP 

has officially approved the use of that 

electronic export system as proof of 

compliance for drawback claims. 

Official approval will be published as a 

general notice in the Customs Bulletin. 

§ 190.74 Exportation by mail. 

If the merchandise on which 

drawback is to be claimed is exported 

by mail or parcel post, the official postal 

records (original or copies) which 

describe the mail shipment will be 

sufficient to prove exportation. The 

postal record must be identified on the 

drawback entry, and must be retained 

by the claimant and submitted as part of 

the drawback claim (see § 190.51(a)). 

§ 190.75 Exportation by the Government. 

(a) Claim by U.S. Government. When 

a department, branch, agency, or 

instrumentality of the U.S. Government 

exports products with the intention of 

claiming drawback, it may establish the 

exportation in the manner provided in 

§ 190.72 of this subpart (see § 190.4). 

(b) Claim by supplier. When a 

supplier of merchandise to the 

Government or any of the parties 

specified in § 190.82 claims drawback, 

exportation must be established under 

§ 190.72 of this subpart. 

§ 190.76 [Reserved] 

Subpart H—Liquidation and Protest of 

Drawback Entries 

§ 190.81 Liquidation. 

(a) Time of liquidation. Drawback 

entries may be liquidated after: 

(1) Liquidation of the designated 

import entry or entries becomes final 

pursuant to paragraph (e); or 

(2) Deposit of estimated duties on the 

imported merchandise and before 

liquidation of the designated import 

entry or entries. 

(b) Claims based on estimated duties. 

(1) Drawback may be paid upon 

liquidation of a claim based on 

estimated duties if one or more of the 

designated import entries have not been 

liquidated, or the liquidation has not 

become final (because of a protest being 

filed) (see also § 173.4(c) of this 

chapter), only if the drawback claimant 

and any other party responsible for the 

payment of liquidated import duties 

each files a written request for payment 

of each drawback claim, waiving any 

right to payment or refund under other 

provisions of law, to the extent that the 

estimated duties on the unliquidated 

import entry are included in the 

drawback claim for which drawback on 

estimated duties is requested under this 

paragraph. The drawback claimant 

must, to the best of its knowledge, 

identify each import entry that has been 

protested and that is included in the 

drawback claim. A drawback entry, 

once finally liquidated on the basis of 

estimated duties pursuant to paragraph 

(e)(2), will not be adjusted by reason of 

a subsequent final liquidation of the 

import entry. 

(2) However, if final liquidation of the 

import entry discloses that the total 

amount of import duty is different from 

the total estimated duties deposited, 

except in those cases when drawback is 

100% of the duty, the party responsible 


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for the payment of liquidated duties, as 

applicable, will: 

(i) Be liable for 1 percent of all 

increased duties found to be due on that 

portion of merchandise recorded on the 

drawback entry; or 

(ii) Be entitled to a refund of 1 percent 

of all excess duties found to have been 

paid as estimated duties on that portion 

of the merchandise recorded on the 

drawback entry. 

(c) Claims based on voluntary tenders 

or other payments of duties—(1) 

General. Subject to the requirements in 

paragraph (2) of this section, drawback 

may be paid upon liquidation of a claim 

based on voluntary tenders of the 

unpaid amount of lawful ordinary 

customs duties or any other payment of 

lawful ordinary customs duties for an 

entry, or withdrawal from warehouse, 

for consumption (see § 190.3(a)(1)(iii)), 

provided that: 

(i) The tender or payment is 

specifically identified as duty on a 

specifically identified entry, or 

withdrawal from warehouse, for 

consumption; 

(ii) Liquidation of the specifically 

identified entry, or withdrawal from 

warehouse, for consumption became 

final prior to such tender or payment; 

and 

(iii) Liquidation of the drawback entry 

in which that specifically identified 

import entry, or withdrawal from 

warehouse, for consumption is 

designated has not become final. 

(2) Written request and waiver. 

Drawback may be paid on claims based 

on voluntary tenders or other payments 

of duties under this subsection only if 

the drawback claimant and any other 

party responsible for the payment of the 

voluntary tenders or other payments of 

duties each files a written request for 

payment of each drawback claim based 

on such voluntary tenders or other 

payments of duties, waiving any claim 

to payment or refund under other 

provisions of law, to the extent that the 

voluntary tenders or other payment of 

duties under this paragraph are 

included in the drawback claim for 

which drawback on the voluntary 

tenders or other payment of duties is 

requested under this paragraph. 

(d) Claims based on liquidated duties. 

Drawback will be based on the final 

liquidated duties paid that have been 

made final by operation of law (except 

in the case of the written request for 

payment of drawback on the basis of 

estimated duties, voluntary tender of 

duties, and other payments of duty, and 

waiver, provided for in paragraphs (b) 

and (c) of this section). 

(e) Liquidation procedure. (1) General. 

When the drawback claim has been 

completed by the filing of the entry and 

other required documents, and 

exportation (or destruction) of the 

merchandise or articles has been 

established, CBP will determine 

drawback due on the basis of the 

complete drawback claim, the 

applicable general manufacturing 

drawback ruling or specific 

manufacturing drawback ruling, and 

any other relevant evidence or 

information. Notice of liquidation will 

be given electronically as provided in 

§§ 159.9 and 159.10(c)(3). 

(2) Liquidation by operation of law. (i) 

Liquidated import entries. A drawback 

claim that satisfies the requirements of 

paragraph (d) that is not liquidated 

within one year from the date of the 

drawback claim (see § 190.51(e)(1)(i)) 

will be deemed liquidated for the 

purpose of the drawback claim at the 

drawback amount asserted by the 

claimant or claim, unless the time for 

liquidation is extended in accordance 

with § 159.12 or if liquidation is 

suspended as required by statute or 

court order. 

(ii) Unliquidated import entries. A 

drawback claim that satisfies the 

requirements of paragraphs (b) or (c) of 

this section will be deemed liquidated 

upon the deposit of estimated duties on 

the unliquidated imported merchandise 

(see § 190.81(b)). 

(f) Relative value; multiple products— 

(1) Distribution. Where two or more 

products result from the manufacture or 

production of merchandise, drawback 

will be distributed to the several 

products in accordance with their 

relative values at the time of separation. 

(2) Values. The values to be used in 

computing the distribution of drawback 

where two or more products result from 

the manufacture or production of 

merchandise under drawback 

conditions must be the market value (as 

provided for in the definition of relative 

value in § 190.2), unless other values are 

approved by CBP. 

(g) Payment. CBP will authorize the 

amount of the refund due as drawback 

to the claimant. 

§ 190.82 Person entitled to claim 

drawback. 

Unless otherwise provided in this part 

(see §§ 190.42(b), 190.162, 190.175(a), 

190.186), the exporter (or destroyer) will 

be entitled to claim drawback, unless 

the exporter (or destroyer), by means of 

a certification, waives the right to claim 

drawback and assigns such right to the 

manufacturer, producer, importer, or 

intermediate party (in the case of 

drawback under 19 U.S.C. 1313(j)(1) and 

(2), see § 190.33(a) and (b)). Such 

certification must also affirm that the 

exporter (or destroyer) has not and will 

not assign the right to claim drawback 

on the particular exportation or 

destruction to any other party. The 

certification provided for in this section 

may be a blanket certification for a 

stated period. 

§ 190.83 Person entitled to receive 

payment. 

Drawback is paid to the claimant (see 

§ 190.82). 

§ 190.84 Protests. 

Procedures to protest the denial, in 

whole or in part, of a drawback entry 

must be in accordance with part 174 of 

this chapter (19 CFR part 174). 

Subpart I—Waiver of Prior Notice of 

Intent to Export; Accelerated Payment 

of Drawback 

§ 190.91 Waiver of prior notice of intent to 

export. 

(a) General—(1) Scope. The 

requirement in § 190.35 for prior notice 

of intent to export merchandise which 

may be the subject of an unused 

merchandise drawback claim under 

§ 313(j) of the Act, as amended (19 

U.S.C. 1313(j)), may be waived under 

the provisions of this section. 

(2) Effective date for claimants with 

existing approval. For claimants 

approved for waiver of prior notice 

before February 24, 2019, and under 19 

CFR 191, such approval of waiver of 

prior notice will remain in effect, but 

only if the claimant provides the 

following certification as part of each 

complete claim filed on or after that 

date, pursuant to 19 CFR 

190.51(a)(2)(xvi): ‘‘The undersigned 

acknowledges the current statutory 

requirements under 19 U.S.C. 1313 and 

the regulatory requirements in 19 CFR 

part 190, and hereby certifies continuing 

eligibility for the waiver of prior notice 

(granted prior to February 24, 2019) in 

compliance therewith.’’ This 

certification may only be made for 

waiver of prior notice for the specific 

type of drawback claim for which the 

application was previously approved 

under 19 CFR 191, except that 

applications approved under 19 U.S.C. 

1313(j)(1) will also be applicable to 

claims for the same type of merchandise 

if made under 19 U.S.C. 1313(j)(2). 

(3) Limited successorship for waiver 

of prior notice. When a claimant 

(predecessor) is approved for waiver of 

prior notice under this section and all 

of the rights, privileges, immunities, 

powers, duties and liabilities of the 

claimant are transferred by written 

agreement, merger, or corporate 

resolution to a successor, such approval 

of waiver of prior notice will remain in 


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effect for a period of 1 year after such 

transfer. The approval of waiver of prior 

notice will terminate at the end of such 

1-year period unless the successor 

applies for waiver of prior notice under 

this section. If such successor applies 

for waiver of prior notice under this 

section within such 1-year period, the 

successor may continue to operate 

under the predecessor’s waiver of prior 

notice until CBP approves or denies the 

successor’s application for waiver of 

prior notice under this section, subject 

to the provisions in this section (see, in 

particular, paragraphs (d) and (e) of this 

section). 

(b) Application—(1) Who may apply. 

A claimant for unused merchandise 

drawback under 19 U.S.C. 1313(j) may 

apply for a waiver of prior notice of 

intent to export merchandise under this 

section. 

(2) Contents of application. An 

applicant for a waiver of prior notice 

under this section must file a written 

application (which may be physically 

delivered or delivered via email) with 

the drawback office where the claims 

will be filed. Such application must 

include the following: 

(i) Required information: 

(A) Name, address, and Internal 

Revenue Service (IRS) number (with 

suffix) of applicant; 

(B) Name, address, and Internal 

Revenue Service (IRS) number (with 

suffix) of current exporter(s) (if more 

than 3 exporters, such information is 

required only for the 3 most frequently 

used exporters), if applicant is not the 

exporter; 

(C) Export period covered by this 

application; 

(D) Commodity/product lines of 

imported and exported merchandise 

covered by this application; 

(E) Origin of merchandise covered by 

this application; 

(F) Estimated number of export 

transactions during the next calendar 

year covered by this application; 

(G) Port(s) of exportation to be used 

during the next calendar year covered 

by this application; 

(H) Estimated dollar value of potential 

drawback during the next calendar year 

covered by this application; 

(I) The relationship between the 

parties involved in the import and 

export transactions; and 

(J) Provision(s) of drawback covered 

by the application. 

(ii) A written declaration whether or 

not the applicant has previously been 

denied a waiver request, or had an 

approval of a waiver revoked, by any 

other drawback office, and whether the 

applicant has previously requested a 1- 

time waiver of prior notice under 

§ 190.36, and whether such request was 

approved or denied; and 

(iii) A certification that the following 

documentary evidence will be made 

available for CBP review upon request: 

(A) For the purpose of establishing 

that the imported merchandise was not 

used in the United States (for purposes 

of drawback under 19 U.S.C. 1313(j)(1)) 

or that the exported merchandise was 

not used in the United States and 

satisfies the requirements for 

substitution with the imported 

merchandise (for purposes of drawback 

under 19 U.S.C. 1313(j)(2)), and, as 

applicable: 

(1) Records; 

(2) Laboratory records prepared in the 

ordinary course of business; and/or 

(3) Inventory records prepared in the 

ordinary course of business tracing all 

relevant movements and storage of the 

imported merchandise, substituted 

merchandise, and/or exported 

merchandise; and 

(B) Any other evidence establishing 

compliance with other applicable 

drawback requirements, upon CBP’s 

request under paragraph (b)(2)(iii) of 

this section. 

(3) Samples of records to accompany 

application. To expedite the processing 

of applications under this section, the 

application should contain at least one 

sample of each of the records to be used 

to establish compliance with the 

applicable requirements (that is, sample 

of import document (for example, CBP 

Form 7501, or its electronic equivalent), 

sample of export document (for 

example, bill of lading), and samples of 

business, laboratory, and inventory 

records certified, under paragraph 

(b)(2)(iii)(A)(1) through (3) of this 

section, to be available to CBP upon 

request). 

(c) Action on application—(1) CBP 

review. The drawback office will review 

and verify the information submitted on 

and with the application. CBP will 

notify the applicant in writing within 90 

days of receipt of the application of its 

decision to approve or deny the 

application, or of CBP’s inability to 

approve, deny, or act on the application 

and the reason therefor. In order for CBP 

to evaluate the application, CBP may 

request any of the information listed in 

paragraph (b)(2)(iii)(A)(1) through (3) of 

this section. Based on the information 

submitted on and with the application 

and any information so requested, and 

based on the applicant’s record of 

transactions with CBP, the drawback 

office will approve or deny the 

application. The criteria to be 

considered in reviewing the applicant’s 

record with CBP include, but are not 

limited to: 

(i) The presence or absence of 

unresolved CBP charges (duties, taxes, 

or other debts owed CBP); 

(ii) The accuracy of the claimant’s 

past drawback claims; 

(iii) Whether waiver of prior notice 

was previously revoked or suspended; 

and 

(iv) The presence or absence of any 

failure to present merchandise to CBP 

for examination after CBP had timely 

notified the party filing a Notice of 

Intent to Export, Destroy, or Return 

Merchandise for Purposes of Drawback 

on CBP Form 7553 of CBP’s intent to 

examine the merchandise (see § 190.35). 

(2) Approval. The approval of an 

application for waiver of prior notice of 

intent to export, under this section, will 

operate prospectively, applying only to 

those export shipments occurring after 

the date of the waiver. It will be subject 

to a stay, as provided in paragraph (d) 

of this section. 

(3) Denial. If an application for waiver 

of prior notice of intent to export, under 

this section, is denied, the applicant 

will be given written notice, specifying 

the grounds therefor, together with what 

corrective action may be taken, and 

informing the applicant that the denial 

may be appealed in the manner 

prescribed in paragraph (g) of this 

section. The applicant may not reapply 

for a waiver until the reason for the 

denial is resolved. 

(d) Stay. An approval of waiver of 

prior notice may be stayed, for a 

specified reasonable period, should CBP 

desire for any reason to examine the 

merchandise being exported with 

drawback prior to its exportation for 

purposes of verification. CBP will 

provide written notice, by registered or 

certified mail, of such a stay to the 

person for whom waiver of prior notice 

was approved. CBP will specify the 

reason(s) for the stay in such written 

notice. The stay will take effect 2 

working days after the date the person 

signs the return post office receipt for 

the registered or certified mail. The stay 

will remain in effect for the period 

specified in the written notice, or until 

such earlier date as CBP notifies the 

person for whom waiver of prior notice 

was approved in writing that the reason 

for the stay has been satisfied. After the 

stay is lifted, operation under the waiver 

of prior notice procedure may resume 

for exports on or after the date the stay 

is lifted. 

(e) Proposed revocation. CBP may 

propose to revoke the approval of an 

application for waiver of prior notice of 

intent to export, under this section, for 

good cause (such as, noncompliance 

with the drawback law and/or 

regulations). CBP will give written 


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notice of the proposed revocation of a 

waiver of prior notice of intent to 

export. The notice will specify the 

reasons for CBP’s proposed action and 

provide information regarding the 

procedures for challenging CBP’s 

proposed revocation action as 

prescribed in paragraph (g) of this 

section. The written notice of proposed 

revocation may be included with a 

notice of stay of approval of waiver of 

prior notice as provided under 

paragraph (d) of this section. The 

revocation of the approval of waiver of 

prior notice will take effect 30 days after 

the date of the proposed revocation if 

not timely challenged under paragraph 

(g) of this section. If timely challenged, 

the revocation will take effect after 

completion of the challenge procedures 

in paragraph (g) of this section unless 

the challenge is successful. 

(f) Action by drawback office 

controlling. Action by the drawback 

office to approve, deny, stay, or revoke 

waiver of prior notice of intent to 

export, unless reversed by CBP 

Headquarters, will govern the 

applicant’s eligibility for this procedure 

in all CBP drawback offices. If the 

application for waiver of prior notice of 

intent to export is approved, the 

claimant must refer to such approval in 

the first drawback claim filed after such 

approval in the drawback office 

approving waiver of prior notice and 

must submit a copy of the approval 

letter with the first drawback claim filed 

in any drawback office other than the 

approving office, when the export upon 

which the claim is based was without 

prior notice, under this section. 

(g) Appeal of denial or challenge to 

proposed revocation. An appeal of a 

denial of an application under this 

section, or challenge to the proposed 

revocation of an approved application 

under this section, may be made by 

letter to the drawback office issuing the 

denial or proposed revocation and must 

be filed within 30 days of the date of 

denial or proposed revocation. A denial 

of an appeal or challenge made to the 

drawback office may itself be appealed 

to CBP Headquarters, Office of Trade, 

Trade Policy and Programs, and must be 

filed within 30 days of the denial date 

of the initial appeal or challenge. The 

30-day period for appeal or challenge to 

the drawback office or to CBP 

Headquarters may be extended for good 

cause, upon written request by the 

applicant or holder for such extension 

filed with the appropriate office within 

the 30-day period. 

§ 190.92 Accelerated payment. 

(a) General—(1) Scope. Accelerated 

payment of drawback is available under 

this section on drawback claims under 

this part, unless specifically excepted 

from such accelerated payment. 

Accelerated payment of drawback 

consists of the payment of estimated 

drawback before liquidation of the 

drawback entry. Accelerated payment of 

drawback is only available when CBP’s 

review of the request for accelerated 

payment of drawback does not find 

omissions from, or inconsistencies with 

the requirements of the drawback law 

and part 190 (see, especially, subpart E 

of this part). Accelerated payment of a 

drawback claim does not constitute 

liquidation of the drawback entry. 

(2) Effective date for claimants with 

existing approval. For claimants 

approved for accelerated payment of 

drawback before February 24, 2019, and 

under 19 CFR part 191, such approval 

of accelerated payment will remain in 

effect, but only if the claimant provides 

the following certification as part of 

each complete claim filed after that 

date, pursuant to 19 CFR 

190.51(a)(2)(xvi): ‘‘The undersigned 

acknowledges the current statutory 

requirements under 19 U.S.C. 1313 and 

the regulatory requirements in 19 CFR 

part 190, and hereby certifies continuing 

eligibility for accelerated payment 

(granted prior to February 24, 2019) in 

compliance therewith.’’ This 

certification may only be made for 

accelerated payment for the specific 

type of drawback claim for which the 

application was previously approved 

under 19 CFR 191, except that 

applications approved under 19 U.S.C. 

1313(j)(1) will also be applicable to 

claims for the same type of merchandise 

if made under 19 U.S.C. 1313(j)(2). 

(3) Limited successorship for approval 

of accelerated payment. When a 

claimant (predecessor) is approved for 

accelerated payment of drawback under 

this section and all of the rights, 

privileges, immunities, powers, duties 

and liabilities of the claimant are 

transferred by written agreement, 

merger, or corporate resolution to a 

successor, such approval of accelerated 

payment will remain in effect for a 

period of 1 year after such transfer. The 

approval of accelerated payment of 

drawback will terminate at the end of 

such 1-year period unless the successor 

applies for accelerated payment of 

drawback under this section. If such 

successor applies for accelerated 

payment of drawback under this section 

within such 1-year period, the successor 

may continue to operate under the 

predecessor’s approval of accelerated 

payment until CBP approves or denies 

the successor’s application for 

accelerated payment under this section, 

subject to the provisions in this section 

(see, in particular, paragraph (f) of this 

section). 

(b) Application for approval; contents. 

A person who wishes to apply for 

accelerated payment of drawback must 

file a written application (which may be 

physically delivered or delivered via 

email) with the drawback office where 

claims will be filed. 

(1) Required information. The 

application must contain: 

(i) Company name and address; 

(ii) Internal Revenue Service (IRS) 

number (with suffix); 

(iii) Identity (by name and title) of the 

person in claimant’s organization who 

will be responsible for the drawback 

program; 

(iv) Description of the bond coverage 

the applicant intends to use to cover 

accelerated payments of drawback (see 

paragraph (d) of this section), including: 

(A) Identity of the surety to be used; 

(B) Dollar amount of bond coverage 

for the first year under the accelerated 

payment procedure; and 

(C) Procedures to ensure that bond 

coverage remains adequate (that is, 

procedures to alert the applicant when 

and if its accelerated payment potential 

liability exceeds its bond coverage); 

(v) Description of merchandise and/or 

articles covered by the application; 

(vi) Provision(s) of drawback covered 

by the application; and 

(vii) Estimated dollar value of 

potential drawback during the next 12- 

month period covered by the 

application. 

(2) Previous applications. In the 

application, the applicant must state 

whether or not the applicant has 

previously been denied an application 

for accelerated payment of drawback, or 

had an approval of such an application 

revoked by any drawback office. 

(3) Certification of compliance. In or 

with the application, the applicant must 

also submit a certification, signed by the 

applicant, that all applicable statutory 

and regulatory requirements for 

drawback will be met. 

(4) Description of claimant’s 

drawback program. With the 

application, the applicant must submit 

a description (with sample documents) 

of how the applicant will ensure 

compliance with its certification that 

the statutory and regulatory drawback 

requirements will be met. This 

description may be in the form of a 

booklet. The detail contained in this 

description should vary depending on 

the size and complexity of the 

applicant’s accelerated drawback 

program (for example, if the dollar 

amount is great and there are several 

kinds of drawback involved, with 

differing inventory, manufacturing, and 


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shipping methods, greater detail in the 

description will be required). The 

description must include at least: 

(i) The name of the official in the 

claimant’s organization who is 

responsible for oversight of the 

claimant’s drawback program; 

(ii) The procedures and controls 

demonstrating compliance with the 

statutory and regulatory drawback 

requirements; 

(iii) The parameters of claimant’s 

drawback recordkeeping program, 

including the retention period and 

method (for example, paper, electronic, 

etc.); 

(iv) A list of the records that will be 

maintained, including at least sample 

import documents, sample export 

documents, sample inventory and 

transportation documents (if 

applicable), sample laboratory or other 

documents establishing the qualification 

of merchandise or articles for 

substitution under the drawback law (if 

applicable), and sample manufacturing 

documents (if applicable); 

(v) The procedures that will be used 

to notify CBP of changes to the 

claimant’s drawback program, variances 

from the procedures described in this 

application, and violations of the 

statutory and regulatory drawback 

requirements; and 

(vi) The procedures for an annual 

review by the claimant to ensure that its 

drawback program complies with the 

statutory and regulatory drawback 

requirements and that CBP is notified of 

any modifications from the procedures 

described in this application. 

(c) Sample application. The drawback 

office, upon request, will provide 

applicants for accelerated payment with 

a sample letter format to assist them in 

preparing their submissions. 

(d) Bond required. If approved for 

accelerated payment, the claimant must 

furnish a properly executed bond in an 

amount sufficient to cover the estimated 

amount of drawback to be claimed 

during the term of the bond. If 

outstanding accelerated drawback 

claims exceed the amount of the bond, 

the drawback office will require 

additional bond coverage as necessary 

before additional accelerated payments 

are made. 

(e) Action on application—(1) CBP 

review. The drawback office will review 

and verify the information submitted in 

and with the application. In order for 

CBP to evaluate the application, CBP 

may request additional information 

(including additional sample 

documents) and/or explanations of any 

of the information provided for in 

paragraph (b)(4) of this section. Based 

on the information submitted on and 

with the application and any 

information so requested, and based on 

the applicant’s record of transactions 

with CBP, the drawback office will 

approve or deny the application. The 

criteria to be considered in reviewing 

the applicant’s record with CBP include, 

but are not limited to (as applicable): 

(i) The presence or absence of 

unresolved CBP charges (duties, taxes, 

fees, or other debts owed CBP); 

(ii) The accuracy of the claimant’s 

past drawback claims; and 

(iii) Whether accelerated payment of 

drawback or waiver of prior notice of 

intent to export was previously revoked 

or suspended. 

(2) Notification to applicant. CBP will 

notify the applicant in writing within 90 

days of receipt of the application of its 

decision to approve or deny the 

application, or of CBP’s inability to 

approve, deny, or act on the application 

and the reason therefor. 

(3) Approval. The approval of an 

application for accelerated payment, 

under this section, will be effective as 

of the date of CBP’s written notification 

of approval under paragraph (e)(2) of 

this section. Accelerated payment of 

drawback will be available under this 

section to unliquidated drawback claims 

filed before and after such date. For 

claims filed before such date, 

accelerated payment of drawback will 

be paid only if the claimant furnishes a 

properly executed single transaction 

bond covering the claim, in an amount 

sufficient to cover the amount of 

accelerated drawback to be paid on the 

claim. 

(4) Denial. If an application for 

accelerated payment of drawback under 

this section is denied, the applicant will 

be given written notice, specifying the 

grounds therefor, together with what 

corrective action may be taken, and 

informing the applicant that the denial 

may be appealed in the manner 

prescribed in paragraph (i) of this 

section. The applicant may not reapply 

for accelerated payment of drawback 

until the reason for the denial is 

resolved. 

(f) Revocation. CBP may propose to 

revoke the approval of an application 

for accelerated payment of drawback 

under this section, for good cause (such 

as, noncompliance with the drawback 

law and/or regulations). In case of such 

proposed revocation, CBP will give 

written notice, by registered or certified 

mail, of the proposed revocation of the 

approval of accelerated payment. The 

notice will specify the reasons for CBP’s 

proposed action and the procedures for 

challenging CBP’s proposed revocation 

action as prescribed in paragraph (h) of 

this section. The revocation will take 

effect 30 days after the date of the 

proposed revocation if not timely 

challenged under paragraph (h) of this 

section. If timely challenged, the 

revocation will take effect after 

completion of the challenge procedures 

in paragraph (h) of this section unless 

the challenge is successful. 

(g) Action by drawback office 

controlling. Action by the drawback 

office to approve, deny, or revoke 

accelerated payment of drawback will 

govern the applicant’s eligibility for this 

procedure in all CBP drawback offices. 

If the application for accelerated 

payment of drawback is approved, the 

claimant must refer to such approval in 

the first drawback claim filed after such 

approval in the drawback office 

approving accelerated payment of 

drawback and must submit a copy of the 

approval letter with the first drawback 

claim filed in a drawback office other 

than the approving office. 

(h) Appeal of denial or challenge to 

proposed revocation. An appeal of a 

denial of an application under this 

section, or challenge to the proposed 

revocation of an approved application 

under this section, may be made in 

writing to the drawback office issuing 

the denial or proposed revocation and 

must be filed within 30 days of the date 

of denial or proposed revocation. A 

denial of an appeal or challenge made 

to the drawback office may itself be 

appealed to CBP Headquarters, Office of 

Trade, Trade Policy and Programs, and 

must be filed within 30 days. The 30- 

day period for appeal or challenge to the 

drawback office or to CBP Headquarters 

may be extended for good cause, upon 

written request by the applicant or 

holder for such extension filed with the 

appropriate office within the 30-day 

period. 

(i) Payment. The drawback office 

approving a drawback claim in which 

accelerated payment of drawback was 

requested will certify the drawback 

claim for payment. After liquidation, the 

drawback office will certify the claim 

for payment of any amount due or 

demand a refund of any excess amount 

paid. Any excess amount of duty the 

subject of accelerated payment that is 

not repaid to CBP within 30 days after 

the date of liquidation of the related 

drawback entry will be considered 

delinquent (see §§ 24.3a and 113.65(b) 

of this chapter). 

§ 190.93 Combined applications. 

An applicant for the procedures 

provided for in §§ 190.91 and 190.92 of 

this subpart may apply for only one 

procedure, both procedures separately, 

or both procedures in one application 

package (see also § 190.195 regarding 


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combined applications for certification 

in the drawback compliance program 

and waiver of prior notice and/or 

approval of accelerated payment of 

drawback). In the latter instance, the 

intent to apply for both procedures must 

be clearly stated. In all instances, all of 

the requirements for the procedure(s) 

applied for must be met (for example, in 

a combined application for both 

procedures, all of the information 

required for each procedure, all required 

sample documents for each procedure, 

and all required certifications must be 

included in and with the application). 

Subpart J—Internal Revenue Tax on 

Flavoring Extracts and Medicinal or 

Toilet Preparations (Including 

Perfumery) Manufactured From 

Domestic Tax-Paid Alcohol 

§ 190.101 Drawback allowance. 

(a) Drawback. Section 313(d) of the 

Act, as amended (19 U.S.C. 1313(d)), 

provides for drawback of internal 

revenue tax upon the exportation of 

flavoring extracts and medicinal or 

toilet preparations (including 

perfumery) manufactured or produced 

in the United States in part from 

domestic tax-paid alcohol. 

(b) Shipment to Puerto Rico, the 

Virgin Islands, Guam, and American 

Samoa. Drawback of internal revenue 

tax on articles manufactured or 

produced under this subpart and 

shipped to Puerto Rico, the Virgin 

Islands, Guam, or American Samoa will 

be allowed in accordance with section 

7653(c) of the Internal Revenue Code 

(26 U.S.C. 7653(c)). However, there is no 

authority of law for the allowance of 

drawback of internal revenue tax on 

flavoring extracts or medicinal or toilet 

preparations (including perfumery) 

manufactured or produced in the United 

States and shipped to Wake Island, 

Midway Islands, Kingman Reef, Canton 

Island, Enderbury Island, Johnston 

Island, or Palmyra Island. 

§ 190.102 Procedure. 

(a) General. Other provisions of this 

part relating to direct identification 

drawback (see subpart B of this part) 

will apply to claims for drawback filed 

under this subpart insofar as applicable 

to and not inconsistent with the 

provisions of this subpart. 

(b) Manufacturing record. The 

manufacturer of flavoring extracts or 

medicinal or toilet preparations on 

which drawback is claimed will record 

the products manufactured, the quantity 

of waste, if any, and a full description 

of the alcohol. These records must be 

available at all times for inspection by 

CBP officers. 

(c) Additional information required 

on the manufacturer’s application for a 

specific manufacturing drawback ruling. 

The manufacturer’s application for a 

specific manufacturing drawback ruling, 

under § 190.8, must state the quantity of 

domestic tax-paid alcohol contained in 

each product on which drawback is 

claimed. 

(d) Variance in alcohol content—(1) 

Variance of more than 5 percent. If the 

percentage of alcohol contained in an 

exported medicinal preparation, 

flavoring extract or toilet preparation 

varies by more than 5 percent from the 

percentage of alcohol in the total 

volume of the product as stated in a 

previously approved application for a 

specific manufacturing drawback ruling, 

the manufacturer must apply for a new 

specific manufacturing drawback ruling 

pursuant to § 190.8. If the variation 

differs from a previously filed schedule, 

the manufacturer must file a new 

schedule incorporating the change. 

(2) Variance of 5 percent or less. 

Variances of 5 percent or less of the 

volume of the product must be reported 

to the drawback office where the 

drawback entries are liquidated. In such 

cases, the drawback office may allow 

drawback without specific authorization 

from CBP Headquarters. 

(e) Time period for completing claims. 

Drawback claims under this subpart 

must be completed within 3 years after 

the date of exportation of the articles 

upon which drawback is claimed. 

(f) Filing of drawback entries on dutypaid imported merchandise and taxpaid alcohol. When the drawback claim 

covers duty-paid imported merchandise 

in addition to tax-paid alcohol, the 

claimant must file one set of entries for 

drawback of customs duty and another 

set for drawback of internal revenue tax. 

(g) Description of the alcohol. The 

description of the alcohol that is the 

subject of the drawback entry may be 

obtained from the description on the 

package containing the tax-paid alcohol. 

§ 190.103 Additional requirements. 

(a) Manufacturer claims domestic 

drawback. In the case of medicinal 

preparations and flavoring extracts, the 

claimant must file with the drawback 

entry, a declaration of the manufacturer 

stating whether a claim has been or will 

be filed by the manufacturer with the 

Alcohol and Tobacco Tax and Trade 

Bureau (TTB) for domestic drawback on 

alcohol under §§ 5111, 5112, 5113, and 

5114, Internal Revenue Code, as 

amended (26 U.S.C. 5111, 5112, 5113, 

and 5114). 

(b) Manufacturer does not claim 

domestic drawback—(1) Submission of 

statement. If no claim has been or will 

be filed with TTB for domestic 

drawback on medicinal preparations or 

flavoring extracts, the manufacturer 

must submit a statement, in duplicate, 

setting forth that fact to the Director, 

National Revenue Center, TTB. 

(2) Contents of the statement. The 

statement must show the: 

(i) Quantity and description of the 

exported products; 

(ii) Identity of the alcohol used by 

serial number of package or tank car; 

(iii) Name and registry number of the 

distilled spirits plant from which the 

alcohol was withdrawn; 

(iv) Date of withdrawal; 

(v) Serial number of the applicable 

record of tax determination (see 27 CFR 

17.163(a) and 27 CFR 19.626(c)(7); and 

(vi) Drawback office where the claim 

will be filed. 

(3) Verification of receipt of the 

statement. The Director, National 

Revenue Center, TTB, will verify receipt 

of this statement, and transmit a 

verification of receipt of the statement 

with a copy of that document to the 

drawback office designated. 

§ 190.104 Alcohol and Tobacco Tax and 

Trade Bureau (TTB) certificates. 

(a) Request. The drawback claimant or 

manufacturer must request the Director, 

National Revenue Center, TTB, to 

provide the CBP office where the 

drawback claim will be processed with 

a tax-paid certificate on TTB Form 

5100.4 (Certificate of Tax-Paid Alcohol). 

(b) Contents. The request must state 

the: 

(1) Quantity of alcohol in proof 

gallons; 

(2) Serial number of each package; 

(3) Amount of tax paid on the alcohol; 

(4) Name, registry number, and 

location of the distilled spirits plant; 

(5) Date of withdrawal; 

(6) Name of the manufacturer using 

the alcohol in producing the exported 

articles; 

(7) Address of the manufacturer and 

its manufacturing plant; and 

(8) Customs drawback office where 

the drawback claim will be processed. 

(c) Extract of TTB certificate. If a 

certification of any portion of the 

alcohol described in the TTB Form 

5100.4 is required for liquidation of 

drawback entries processed in another 

drawback office, the drawback office, on 

written application of the person who 

requested its issuance, will transmit a 

copy of the extract from the certificate 

for use at that drawback office. The 

drawback office will note that the copy 

of the extract was prepared and 

transmitted. 


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§ 190.105 Liquidation. 

The drawback office will ascertain the 

final amount of drawback due by 

reference to the specific manufacturing 

drawback ruling under which the 

drawback claimed is allowable. 

§ 190.106 Amount of drawback. 

(a) Claim filed with TTB. If the 

declaration required by § 190.103(a) of 

this subpart shows that a claim has been 

or will be filed with TTB for domestic 

drawback, drawback under § 313(d) of 

the Act, as amended (19 U.S.C. 1313(d)), 

will be limited to the difference between 

the amount of tax paid and the amount 

of domestic drawback claimed. 

(b) Claim not filed with TTB. If the 

declaration and statement required by 

§ 190.103(a) and (b) show that no claim 

has been or will be filed by the 

manufacturer with TTB for domestic 

drawback, the drawback will be the full 

amount of the tax on the alcohol used. 

Drawback under this provision may not 

be granted absent receipt from TTB of a 

copy of TTB Form 5100.4 (Certificate of 

Tax-Paid Alcohol) indicating that taxes 

have been paid on the exported product 

for which drawback is claimed. 

(c) No deduction of 1 percent. No 

deduction of 1 percent may be made in 

drawback claims under § 313(d) of the 

Act, as amended (19 U.S.C. 1313(d)). 

(d) Payment. The drawback due will 

be paid in accordance with § 190.81(f). 

Subpart K—Supplies for Certain 

Vessels and Aircraft 

§ 190.111 Drawback allowance. 

Section 309 of the Act, as amended 

(19 U.S.C. 1309), provides for drawback 

on articles laden as supplies on certain 

vessels or aircraft of the United States or 

as supplies including equipment upon, 

or used in the maintenance or repair of, 

certain foreign vessels or aircraft. 

§ 190.112 Procedure. 

(a) General. The provisions of this 

subpart will override conflicting 

provisions of this part, such as the 

export procedures in § 190.72. 

(b) Notice of lading. The drawback 

claimant must file with the drawback 

office a notice of lading. 

(c) Time of filing notice of lading. In 

the case of drawback in connection with 

19 U.S.C. 1309(b), the notice of lading 

must be filed within 5 years after the 

date of importation of the imported 

merchandise. 

(d) Contents of notice. The notice of 

lading must show: 

(1) The name of the vessel or identity 

of the aircraft on which articles were or 

are to be laden; 

(2) The number and kind of packages 

and their marks and numbers; 

(3) A description of the articles and 

their weight (net), gauge, measure, or 

number; and 

(4) The name of the exporter. 

(e) Declaration of Master or other 

officer—(1) Requirement. The master or 

an authorized representative of the 

vessel or aircraft having knowledge of 

the facts must provide the following 

declaration on the notice of lading ‘‘I 

declare that the information given above 

is true and correct to the best of my 

knowledge and belief; that I have 

knowledge of the facts set forth herein; 

that the articles described in this notice 

of lading were received in the quantities 

stated, from the person, and on the date, 

indicated above; that said articles were 

laden on the vessel (or aircraft) named 

above for use on said vessel (or aircraft) 

as supplies (or equipment), except as 

noted below; and that at the time of 

lading of the articles, the said vessel (or 

aircraft) was engaged in the business or 

trade checked below: (It is not necessary 

for a foreign vessel to show its class of 

trade.).’’ 

(2) Filing. The drawback claimant 

must file with the drawback office both 

the drawback entry and the notice of 

lading or separate document containing 

the declaration of the master or other 

officer or representative. 

(f) Information concerning class or 

trade. Information about the class of 

business or trade of a vessel or aircraft 

is required to be furnished in support of 

the drawback entry if the vessel or 

aircraft is American. 

(g) Articles laden or installed on 

aircraft as equipment or used in the 

maintenance or repair of aircraft. The 

drawback office where the drawback 

claim is filed will require a declaration 

or other evidence showing to its 

satisfaction that articles have been laden 

or installed on aircraft as equipment or 

used in the maintenance or repair of 

aircraft. 

(h) Fuel laden on vessels or aircraft as 

supplies—(1) Composite notice of 

lading. In the case of fuel laden on 

vessels or aircraft as supplies, the 

drawback claimant may file with the 

drawback office a composite notice of 

lading for each calendar month. The 

composite notice of lading must 

describe all of the drawback claimant’s 

deliveries of fuel supplies during the 

one calendar month at a single port or 

airport to all vessels or airplanes of one 

vessel owner or operator or airline. This 

includes fuel laden for flights or voyages 

between the contiguous United States 

and Hawaii, Alaska, or any U.S. 

possessions (see § 10.59 of this chapter). 

(2) Contents of composite notice. 

Composite notice must show for each 

voyage or flight: 

(i) The identity of the vessel or 

aircraft; 

(ii) A description of the fuel supplies 

laden; 

(iii) The quantity laden; and 

(iv) The date of lading. 

(3) Declaration of owner or operator. 

An authorized vessel or airline 

representative having knowledge of the 

facts must complete the ‘‘Declaration of 

Master or other officer’’(see paragraph 

(e) of this section). 

(i) Desire to land articles covered by 

notice of lading. The master of the 

vessel or commander of the aircraft 

desiring to land in the United States 

articles covered by a notice of lading 

must apply for a permit to land those 

articles under CBP supervision. All 

articles landed, except those transferred 

under the original notice of lading to 

another vessel or aircraft entitled to 

drawback, will be considered imported 

merchandise for the purpose of § 309(c) 

of the Act, as amended (19 U.S.C. 

1309(c)). 

Subpart L—Meats Cured With Imported 

Salt 

§ 190.121 Drawback allowance. 

Section 313(f) of the Act, as amended 

(19 U.S.C. 1313(f)), provides for the 

allowance of drawback upon the 

exportation of meats cured with 

imported salt. 

§ 190.122 Procedure. 

Other provisions of this part relating 

to direct identification manufacturing 

drawback will apply to claims for 

drawback under this subpart insofar as 

applicable to and not inconsistent with 

the provisions of this subpart. 

§ 190.123 Refund of duties. 

Drawback allowed under this subpart 

will be refunded in aggregate amounts 

of not less than $100 and will not be 

subject to the retention of 1 percent of 

duties paid. 

Subpart M—Materials for Construction 

and Equipment of Vessels and Aircraft 

Built for Foreign Account and 

Ownership 

§ 190.131 Drawback allowance. 

Section 313(g) of the Act, as amended 

(19 U.S.C. 1313(g)), provides for 

drawback on imported materials used in 

the construction and equipment of 

vessels and aircraft built for foreign 

account and ownership, or for the 

government of any foreign country, 

notwithstanding that these vessels or 

aircraft may not be exported within the 

strict meaning of the term. 


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§ 190.132 Procedure. 

Other provisions of this part relating 

to direct identification manufacturing 

drawback will apply to claims for 

drawback filed under this subpart 

insofar as applicable to and not 

inconsistent with the provisions of this 

subpart. 

§ 190.133 Explanation of terms. 

(a) Materials. Section 313(g) of the 

Act, as amended (19 U.S.C. 1313(g)), 

applies only to materials used in the 

original construction and equipment of 

vessels and aircraft, or to materials used 

in a ‘‘major conversion,’’ as defined in 

this section, of a vessel or aircraft. 

Section 313(g) does not apply to 

materials used for alteration or repair, or 

to materials not required for safe 

operation of the vessel or aircraft. 

(b) Foreign account and ownership. 

Foreign account and ownership, as used 

in § 313(g) of the Act, as amended (19 

U.S.C. 1313(g)), means only vessels or 

aircraft built or equipped for the 

account of an owner or owners residing 

in a foreign country and having a bona 

fide intention that the vessel or aircraft, 

when completed, will be owned and 

operated under the flag of a foreign 

country. 

(c) Major conversion. For purposes of 

this subpart, a ‘‘major conversion’’ 

means a conversion that substantially 

changes the dimensions or carrying 

capacity of the vessel or aircraft, 

changes the type of the vessel or aircraft, 

substantially prolongs the life of the 

vessel or aircraft, or otherwise so 

changes the vessel or aircraft that it is 

essentially a new vessel or aircraft, as 

determined by CBP (see 46 U.S.C. 

2101(14a)). 

Subpart N—Foreign-Built Jet Aircraft 

Engines Processed in the United 

States 

§ 190.141 Drawback allowance. 

Section 313(h) of the Act, as amended 

(19 U.S.C. 1313(h)), provides for 

drawback on the exportation of jet 

aircraft engines manufactured or 

produced abroad that have been 

overhauled, repaired, rebuilt, or 

reconditioned in the United States with 

the use of imported merchandise, 

including parts. 

§ 190.142 Procedure. 

Other provisions of this part will 

apply to claims for drawback filed 

under this subpart insofar as applicable 

to and not inconsistent with the 

provisions of this subpart. 

§ 190.143 Drawback entry. 

(a) Filing of entry. Drawback entries 

covering these foreign-built jet aircraft 

engines must show that the entry covers 

jet aircraft engines processed under 

§ 313(h) of the Act, as amended (19 

U.S.C. 1313(h)). 

(b) Contents of entry. The drawback 

entry must indicate the country in 

which each engine was manufactured 

and describe the processing performed 

thereon in the United States. 

§ 190.144 Refund of duties. 

Drawback allowed under this subpart 

will be refunded in aggregate amounts 

of not less than $100, and will not be 

subject to the deduction of 1 percent of 

duties paid. 

Subpart O—Merchandise Exported 

From Continuous CBP Custody 

§ 190.151 Drawback allowance. 

(a) Eligibility of entered or withdrawn 

merchandise—(1) Under 19 U.S.C. 

1557(a). Section 557(a) of the Act, as 

amended (19 U.S.C. 1557(a)), provides 

for drawback on the exportation to a 

foreign country, or the shipment to the 

Virgin Islands, American Samoa, Wake 

Island, Midway Islands, Kingman Reef, 

Johnston Island, or Guam, of 

merchandise upon which duties have 

been paid which has remained 

continuously in bonded warehouse or 

otherwise in CBP custody for a period 

not to exceed 5 years from the date of 

importation. 

(2) Under 19 U.S.C. 1313. Imported 

merchandise that has not been regularly 

entered or withdrawn for consumption, 

will not satisfy any requirement for use, 

importation, exportation or destruction, 

and will not be available for drawback, 

under § 313 of the Act, as amended (19 

U.S.C. 1313) (see 19 U.S.C. 1313(u)). 

(b) Guantanamo Bay. Guantanamo 

Bay Naval Station will be considered 

foreign territory for drawback purposes 

under this subpart and merchandise 

shipped there is eligible for drawback. 

Imported merchandise which has 

remained continuously in bonded 

warehouse or otherwise in CBP custody 

since importation is not entitled to 

drawback of duty when shipped to 

Puerto Rico, Canton Island, Enderbury 

Island, or Palmyra Island. 

§ 190.152 Merchandise released from CBP 

custody. 

No remission, refund, abatement, or 

drawback of duty will be allowed under 

this subpart because of the exportation 

or destruction of any merchandise after 

its release from Government custody, 

except in the following cases: 

(a) When articles are exported or 

destroyed on which drawback is 

expressly provided for by law; 

(b) When prohibited articles have 

been regularly entered in good faith and 

are subsequently exported or destroyed 

pursuant to statute and regulations 

prescribed by the Secretary of the 

Treasury; or 

(c) When articles entered under bond 

are destroyed within the bonded period, 

as provided in 19 U.S.C. 1557(c), or 

destroyed within the bonded period by 

death, accidental fire, or other casualty, 

and satisfactory evidence of destruction 

is furnished to CBP (see § 190.71), in 

which case any accrued duties will be 

remitted or refunded and any condition 

in the bond that the articles must be 

exported will be deemed satisfied (see 

19 U.S.C. 1558). 

§ 190.153 Continuous CBP custody. 

(a) Merchandise released under an 

importer’s bond and returned. 

Merchandise released to an importer 

under a bond prescribed by § 142.4 of 

this chapter and later returned to the 

public stores upon requisition of the 

appropriate CBP office will not be 

deemed to be in the continuous custody 

of CBP officers. 

(b) Merchandise released under 

Chapter 98, Subchapter XIII, 

Harmonized Tariff Schedule of the 

United States (HTSUS). Merchandise 

released as provided for in Chapter 98, 

Subchapter XIII, HTSUS (19 U.S.C. 

1202), will not be deemed to be in the 

continuous custody of CBP officers. 

(c) Merchandise released from 

warehouse. For the purpose of this 

subpart, in the case of merchandise 

entered for warehouse, CBP custody 

will be deemed to cease when estimated 

duty has been deposited and the 

appropriate CBP office has authorized 

the withdrawal of the merchandise. 

(d) Merchandise not warehoused, 

examined elsewhere than in public 

stores—(1) General rule. Except as 

stated in paragraph (d)(2) of this section, 

merchandise examined elsewhere than 

at the public stores, in accordance with 

the provisions of § 151.7 of this chapter, 

will be considered released from CBP 

custody upon completion of final 

examination for appraisement. 

(2) Merchandise upon the wharf. 

Merchandise which remains on the 

wharf by permission of the appropriate 

CBP office will be considered to be in 

CBP custody, but this custody will be 

deemed to cease when the CBP officer 

in charge accepts the permit and has no 

other duties to perform relating to the 

merchandise, such as measuring, 

weighing, or gauging. 

§ 190.154 Filing the entry. 

(a) Direct export. At least 6 working 

hours before lading the merchandise on 

which drawback is claimed under this 

subpart, the importer or the agent 


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designated by him or her in writing 

must file a direct export drawback entry. 

(b) Merchandise transported to 

another port for exportation. The 

importer of merchandise to be 

transported to another port for 

exportation must file an entry naming 

the transporting conveyance, route, and 

port of exit. The drawback office will 

certify one copy and forward it to the 

CBP office at the port of exit. A bonded 

carrier must transport the merchandise 

in accordance with the applicable 

regulations. Manifests must be prepared 

and filed in the manner prescribed in 

§ 144.37 of this chapter. 

§ 190.155 Merchandise withdrawn from 

warehouse for exportation. 

The regulations in part 18 of this 

chapter concerning the supervision of 

lading and certification of exportation of 

merchandise withdrawn from 

warehouse for exportation without 

payment of duty will be followed to the 

extent applicable. 

§ 190.156 Bill of lading. 

(a) Filing. In order to complete the 

claim for drawback under this subpart, 

a bill of lading covering the 

merchandise described in the drawback 

entry must be filed within 2 years after 

the merchandise is exported. 

(b) Contents. The bill of lading must 

either show that the merchandise was 

shipped by the person making the claim 

or bear an endorsement of the person in 

whose name the merchandise was 

shipped showing that the person 

making the claim is authorized to do so. 

(c) Limitation of the bill of lading. The 

terms of the bill of lading may limit and 

define its use by stating that it is for 

customs purposes only and not 

negotiable. 

(d) Inability to produce bill of lading. 

When a required bill of lading cannot be 

produced, the person making the 

drawback entry may request the 

drawback office, within the time 

required for the filing of the bill of 

lading, to accept a statement setting 

forth the cause of failure to produce the 

bill of lading and such evidence of 

exportation and of that person’s right to 

make the drawback entry as may be 

available. The request will be granted if 

the drawback office is satisfied by the 

evidence submitted that the failure to 

produce the bill of lading is justified, 

that the merchandise has been exported, 

and that the person making the 

drawback entry has the right to do so. 

If the drawback office is not so satisfied, 

such office will transmit the request and 

its accompanying evidence to the Office 

of Trade, CBP Headquarters, for final 

determination. 

(e) Extracts of bills of lading. 

Drawback offices may issue extracts of 

bills of lading filed with drawback 

claims. 

§ 190.157 [Reserved] 

§ 190.158 Procedures. 

When the drawback claim has been 

completed and the bill of lading filed, 

together with the landing certificate, if 

required, the reports of inspection and 

lading made, and the clearance of the 

exporting conveyance established by the 

record of clearance in the case of direct 

exportation or by certificate in the case 

of transportation and exportation, the 

drawback office will verify the 

importation by referring to the import 

records to ascertain the amount of duty 

paid on the merchandise exported. To 

the extent appropriate and not 

inconsistent with the provisions of this 

subpart, drawback entries will be 

liquidated in accordance with the 

provisions of § 190.81. 

§ 190.159 Amount of drawback. 

Drawback due under this subpart will 

not be subject to the deduction of 1 

percent. 

Subpart P—Distilled Spirits, Wines, or 

Beer Which Are Unmerchantable or Do 

Not Conform to Sample or 

Specifications 

§ 190.161 Refund of taxes. 

Section 5062(c), Internal Revenue 

Code, as amended (26 U.S.C. 5062(c)), 

provides for the refund, remission, 

abatement or credit to the importer of 

internal revenue taxes paid or 

determined incident to importation, 

upon the exportation, or destruction 

under CBP supervision, of imported 

distilled spirits, wines, or beer found 

after entry to be unmerchantable or not 

to conform to sample or specifications 

and which are returned to CBP custody. 

§ 190.162 Procedure. 

The export procedure will be the 

same as that provided in § 190.42 for 

rejected merchandise, except that the 

claimant must be the importer and must 

comply with all other provisions in this 

subpart. 

§ 190.163 Documentation. 

(a) Entry. A drawback entry must be 

filed to claim drawback under this 

subpart. 

(b) Documentation. The drawback 

entry for unmerchantable merchandise 

must be accompanied by a certificate of 

the importer setting forth in detail the 

facts which cause the merchandise to be 

unmerchantable and any additional 

evidence that the drawback office 

requires to establish that the 

merchandise is unmerchantable. 

§ 190.164 Return to CBP custody. 

There is no time limit for the return 

to CBP custody of distilled spirits, wine, 

or beer subject to refund of taxes under 

the provisions of this subpart. The 

claimant must return the merchandise 

to CBP custody prior to exportation or 

destruction and claims are subject to the 

filing deadline set forth in 19 U.S.C. 

1313(r)(1). 

§ 190.165 No exportation by mail. 

Merchandise covered by this subpart 

must not be exported by mail. 

§ 190.166 Destruction of merchandise. 

(a) Action by the importer. A 

drawback claimant who proposes to 

destroy rather than export the distilled 

spirits, wine, or beer must state that fact 

on the drawback entry. 

(b) Action by CBP. Distilled spirits, 

wine, or beer returned to CBP custody 

at the place approved by the drawback 

office where the drawback entry was 

filed must be destroyed under the 

supervision of the CBP officer who will 

certify the destruction on CBP Form 

7553. 

§ 190.167 Liquidation. 

No deduction of 1 percent of the 

internal revenue taxes paid or 

determined will be made in allowing 

entries under § 5062(c), Internal 

Revenue Code, as amended (26 U.S.C. 

5062(c)). 

§ 190.168 [Reserved] 

Subpart Q—Substitution of Finished 

Petroleum Derivatives 

§ 190.171 General; drawback allowance. 

(a) General. Section 313(p) of the Act, 

as amended (19 U.S.C. 1313(p)), 

provides for drawback for duties, taxes, 

and fees paid on qualified articles (see 

definition below) which consist of 

either petroleum derivatives that are 

imported, duty-paid, and qualified for 

drawback under the unused 

merchandise drawback law (19 U.S.C. 

1313(j)(1)), or petroleum derivatives that 

are manufactured or produced in the 

United States, and qualified for 

drawback under the manufacturing 

drawback law (19 U.S.C. 1313(a) or (b)). 

(b) Allowance of drawback. Drawback 

may be granted under 19 U.S.C. 1313(p): 

(1) In cases where there is no 

manufacture, upon exportation of the 

imported article, an article of the same 

kind and quality, or any combination 

thereof; or 

(2) In cases where there is a 

manufacture or production, upon 


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exportation of the manufactured or 

produced article, an article of the same 

kind and quality, or any combination 

thereof. 

(c) Calculation of drawback. For 

drawback of finished petroleum 

derivatives pursuant to § 1313(p), the 

claimant is required to calculate the 

total amount of drawback due, for 

purposes of 190.51(b), which will not 

exceed 99 percent of the allowable 

duties, taxes, and fees, subject to the 

following: 

(1) Per unit averaging calculation. The 

amount of duties, taxes, and fees eligible 

for drawback is determined by per unit 

averaging, as defined in 19 CFR 190.2, 

for any drawback claim based on 19 

U.S.C. 1313(p) pursuant to the standards 

set forth in 19 CFR 190.172(b) and 

without respect to the limitations set 

forth in subparagraphs (B) and (C) of 19 

U.S.C. 1313(l). 

(2) Limitations. The amount of duties, 

taxes, and fees eligible for drawback is 

not subject to the limitations set out in 

19 U.S.C. 1313(p)(4) for unused 

merchandise claims (no manufacture) 

and manufacturing claims (see 

190.173(e) and 190.174(f)). 

(3) Federal excise tax. For purposes of 

drawback of internal revenue tax 

imposed under Chapters 32 and 38 of 

the Internal Revenue Code of 1986, as 

amended (IRC), drawback granted on 

the export of substituted merchandise 

will be limited to the amount of taxes 

paid (and not returned by refund, credit, 

or drawback) on the substituted 

merchandise. 

§ 190.172 Definitions. 

The following are definitions for 

purposes of this subpart only: 

(a) Qualified article. Qualified article 

means an article described in headings 

2707, 2708, 2710 through 2715, 2901, 

2902, 2909.19.14, or 3901 through 3914 

of the Harmonized Tariff Schedule of 

the United States (HTSUS). In the case 

of an article described in headings 3901 

through 3914, the definition covers the 

article in its primary forms as provided 

in Note 6 to chapter 39 of the HTSUS. 

(b) Same kind and quality article. 

Same kind and quality article means an 

article which is referred to under the 

same 8-digit classification of the HTSUS 

as the article to which it is compared. 

(c) Exported article. Exported article 

means an article which has been 

exported and is a qualified article, an 

article of the same kind and quality as 

the qualified article, or any combination 

thereof. 

§ 190.173 Imported duty-paid derivatives 

(no manufacture). 

When the basis for drawback under 19 

U.S.C. 1313(p) is imported duty-paid 

petroleum derivatives (that is, not 

articles manufactured under 19 U.S.C. 

1313(a) or (b)), the requirements for 

drawback are as follows: 

(a) Imported duty-paid merchandise. 

The imported duty-paid merchandise 

designated for drawback must be a 

‘‘qualified article’’ as defined in 

§ 190.172(a) of this subpart; 

(b) Exported article. The exported 

article on which drawback is claimed 

must be an ‘‘exported article’’ as defined 

in § 190.172(c) of this subpart; 

(c) Exporter. The exporter of the 

exported article must have either: 

(1) Imported the qualified article in at 

least the quantity of the exported article; 

or 

(2) Purchased or exchanged (directly 

or indirectly) from an importer an 

imported qualified article in at least the 

quantity of the exported article; 

(d) Time of export. The exported 

article must be exported within 180 

days after the date of entry of the 

designated imported duty-paid 

merchandise; and 

(e) Amount of drawback. The amount 

of drawback payable may not exceed the 

amount of drawback which would be 

attributable to the imported qualified 

article under 19 U.S.C. 1313(j)(1) which 

serves as the basis for drawback. 

§ 190.174 Derivatives manufactured under 

19 U.S.C. 1313(a) or (b). 

When the exported article which is 

the basis for a drawback claim under 19 

U.S.C. 1313(p) is petroleum derivatives 

which were manufactured or produced 

in the United States and qualify for 

drawback under the manufacturing 

drawback law (19 U.S.C. 1313(a) or (b)), 

the requirements for drawback are as 

follows: 

(a) Merchandise. The merchandise 

which is the basis for drawback under 

19 U.S.C. 1313(p) must: 

(1) Have been manufactured or 

produced as described in 19 U.S.C. 

1313(a) or (b) from crude petroleum or 

a petroleum derivative; and 

(2) Be a ‘‘qualified article’’ as defined 

in § 190.172(a) of this subpart; 

(b) Exported article. The exported 

article on which drawback is claimed 

must be an ‘‘exported article’’ as defined 

in § 190.172(c) of this subpart; 

(c) Exporter. The exporter of the 

exported article must have either: 

(1) Manufactured or produced the 

qualified article in at least the quantity 

of the exported article; or 

(2) Purchased or exchanged (directly 

or indirectly) from a manufacturer or 

producer described in 19 U.S.C. 1313(a) 

or (b) the qualified article in at least the 

quantity of the exported article; 

(d) Manufacture in specific facility. 

The qualified article must have been 

manufactured or produced in a specific 

petroleum refinery or production 

facility which must be identified; 

(e) Time of export. The exported 

article must be exported either: 

(1) During the period provided for in 

the manufacturer’s or producer’s 

specific manufacturing drawback ruling 

(see § 190.8) in which the qualified 

article is manufactured or produced; or 

(2) Within 180 days after the close of 

the period in which the qualified article 

is manufactured or produced; and 

(f) Amount of drawback. The amount 

of drawback payable may not exceed the 

amount of drawback which would be 

attributable to the article manufactured 

or produced under 19 U.S.C. 1313(a) or 

(b) which serves as the basis for 

drawback. 

§ 190.175 Drawback claimant; 

maintenance of records. 

(a) Drawback claimant. A drawback 

claimant under 19 U.S.C. 1313(p) must 

be the exporter of the exported article, 

or the refiner, producer, or importer of 

either the qualified article or the 

exported article. Any of these persons 

may designate another person to file the 

drawback claim. 

(b) Transfer of merchandise—(1) 

General. A drawback claimant under 19 

U.S.C. 1313(p) must maintain records 

(which may be records kept in the 

normal cause of business) to support the 

receipt of transferred merchandise and 

the party transferring the merchandise 

must maintain records to demonstrate 

the transfer. 

(2) Article substituted for the qualified 

article. (i) Subject to paragraph (b)(2)(iii) 

of this section, the manufacturer, 

producer, or importer of a qualified 

article may transfer to the exporter an 

article of the same kind and quality as 

the qualified article in a quantity not 

greater than the quantity of the qualified 

article. 

(ii) Subject to paragraph (b)(2)(iii) of 

this section, any intermediate party in 

the chain of commerce leading to the 

exporter from the manufacturer, 

producer, or importer of a qualified 

article may also transfer to the exporter 

or to another intermediate party an 

article of the same kind and quality as 

the article purchased or exchanged from 

the prior transferor (whether the 

manufacturer, producer, importer, or 

another intermediate transferor) in a 

quantity not greater than the quantity of 

the article purchased or exchanged. 

(iii) Under either paragraph (b)(2)(i) or 

(b)(2)(ii) of this section, the article 

transferred, regardless of its origin 

(imported, manufactured, substituted, or 

any combination thereof), will be the 


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qualified article eligible for drawback 

for purposes of section 1313(p). 

(c) Maintenance of records. The 

manufacturer, producer, importer, 

transferor, exporter and drawback 

claimant of the qualified article and the 

exported article must all maintain their 

appropriate records required by this 

part. 

§ 190.176 Procedures for claims filed 

under 19 U.S.C. 1313(p). 

(a) Applicability. The general 

procedures for filing drawback claims 

will be applicable to claims filed under 

19 U.S.C. 1313(p) unless otherwise 

specifically provided for in this section. 

(b) Administrative efficiency, 

frequency of claims, and restructuring of 

claims. The procedures regarding 

administrative efficiency, frequency of 

claims, and restructuring of claims (as 

applicable, see § 190.53) will apply to 

claims filed under this subpart. 

(c) Imported duty-paid derivatives (no 

manufacture). When the basis for 

drawback under 19 U.S.C. 1313(p) is 

imported duty-paid petroleum (not 

articles manufactured under 19 U.S.C. 

1313(a) or (b)), claims under this 

subpart may be paid and liquidated if: 

(1) The claim is filed on the drawback 

entry; and 

(2) The claimant provides a 

certification stating the basis (such as 

company records, or customer’s written 

certification), for the information 

contained therein and certifying that: 

(i) The exported merchandise was 

exported within 180 days of entry of the 

designated, imported merchandise; 

(ii) The qualified article and the 

exported article are commercially 

interchangeable or both articles are 

subject to the same 8-digit HTSUS 

subheading number; 

(iii) To the best of the claimant’s 

knowledge, the designated imported 

merchandise, the qualified article and 

the exported article have not and will 

not serve as the basis of any other 

drawback claim; 

(iv) Evidence in support of the 

certification will be retained by the 

person providing the certification for 3 

years after liquidation of the claim; and 

(v) Such evidence will be available for 

verification by CBP. 

(d) Derivatives manufactured under 

19 U.S.C. 1313(a) or (b). When the basis 

for a claim for drawback under 19 

U.S.C. 1313(p) is articles manufactured 

under 19 U.S.C. 1313(a) or (b), claims 

under this section may be paid and 

liquidated if: 

(1) The claim is filed on the drawback 

entry; 

(2) All documents required to be filed 

with a manufacturing claim under 19 

U.S.C. 1313(a) or (b) are filed with the 

claim; 

(3) The claim identifies the specific 

refinery or production facility at which 

the derivatives were manufactured or 

produced; 

(4) The claim states the period of 

manufacture for the derivatives; and 

(5) The claimant provides a 

certification stating the basis (such as 

company records or a customer’s 

written certification), for the 

information contained therein and 

certifying that: 

(i) The exported merchandise was 

exported during the manufacturing 

period for the qualified article or within 

180 days after the close of that period; 

(ii) The qualified article and the 

exported article are commercially 

interchangeable or both articles are 

classifiable under the same 8-digit 

HTSUS subheading number; 

(iii) To the best of the claimant’s 

knowledge, the designated imported 

merchandise, the qualified article and 

the exported article have not and will 

not serve as the basis of any other 

drawback claim; 

(iv) Evidence in support of the 

certification will be retained by the 

person providing the certification for 3 

years after liquidation of the claim; and 

(v) Such evidence will be available for 

verification by CBP. 

Subpart R—Merchandise Transferred 

to a Foreign Trade Zone from Customs 

Territory 

§ 190.181 Drawback allowance. 

The fourth proviso of § 3 of the 

Foreign Trade Zones Act of June 18, 

1934, as amended (19 U.S.C. 81c), 

provides that merchandise transferred to 

a foreign trade zone for the sole purpose 

of exportation, storage or destruction 

(except destruction of distilled spirits, 

wines, and fermented malt liquors), will 

be considered to be exported for the 

purpose of drawback, provided there is 

compliance with the regulations of this 

subpart. 

§ 190.182 Zone-restricted merchandise. 

Merchandise in a foreign trade zone 

for the purposes specified in § 190.181 

will be given status as zone-restricted 

merchandise on proper application (see 

§ 146.44 of this chapter). 

§ 190.183 Articles manufactured or 

produced in the United States. 

(a) Procedure for filing documents. 

Except as otherwise provided, the 

drawback procedures prescribed in this 

part must be followed when claiming 

drawback under this subpart on articles 

manufactured or produced in the United 

States with the use of imported or 

substituted merchandise, and on 

flavoring extracts or medicinal or toilet 

preparations (including perfumery) 

manufactured or produced with the use 

of domestic tax-paid alcohol. 

(b) Notice of transfer—(1) Evidence of 

export. The notice of zone transfer on 

CBP Form 214 (Application for ForeignTrade Zone Admission and/or Status 

Designation) or its electronic equivalent 

will be in place of the documents under 

subpart G of this part to establish the 

exportation. 

(2) Filing procedures. The notice of 

transfer (CBP Form 214) will be filed not 

later than 3 years after the transfer of the 

articles to the zone. A notice filed after 

the transfer will state the foreign trade 

zone lot number. 

(3) Contents of notice. Each notice of 

transfer must show the: 

(i) Number and location of the foreign 

trade zone; 

(ii) Number and kind of packages and 

their marks and numbers; 

(iii) Description of the articles, 

including weight (gross and net), gauge, 

measure, or number; and 

(iv) Name of the transferor. 

(c) Action of foreign trade zone 

operator. After articles have been 

received in the zone, the zone operator 

must certify on a copy of the notice of 

transfer (CBP Form 214) the receipt of 

the articles (see § 190.184(d)(2)) and 

forward the notice to the transferor or 

the person designated by the transferor. 

The transferor must verify that the 

notice has been certified before filing it 

with the drawback claim. 

(d) Drawback entries. Drawback 

entries must indicate that the 

merchandise was transferred to a foreign 

trade zone. The ‘‘Declaration of 

Exportation’’ must be modified as 

follows: 

Declaration of Transfer to a Foreign 

Trade Zone 

I, llllllll (member of firm, 

officer representing corporation, agent, 

or attorney), of llll, declare that, to 

the best of my knowledge and belief, the 

particulars of transfer stated in this 

entry, the notices of transfer, and 

receipts are correct, and that the 

merchandise was transferred to a foreign 

trade zone for the sole purpose of 

exportation, destruction, or storage, not 

to be removed from the foreign trade 

zone for domestic consumption. 

Dated: lllllllllllllll

lllllllllllllllllll

Transferor or agent 

§ 190.184 Merchandise transferred from 

continuous CBP custody. 

(a) Procedure for filing claims. The 

procedure described in subpart O of this 


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part will be followed as applicable, for 

drawback on merchandise transferred to 

a foreign trade zone from continuous 

CBP custody. 

(b) Drawback entry. Before the 

transfer of merchandise from 

continuous CBP custody to a foreign 

trade zone, the importer or a person 

designated in writing by the importer 

for that purpose must file with the 

drawback office a direct export 

drawback entry. CBP will notify the 

zone operator at the zone. 

(c) Certification by zone operator. 

After the merchandise has been received 

in the zone, the zone operator must 

certify the receipt of the merchandise 

(see paragraph (d)(2) of this section) and 

notify the transferor or the person 

designated by the transferor. After 

executing the declaration provided for 

in paragraph (d)(3) of this section, the 

transferor must resubmit the drawback 

entry to the drawback office in place of 

the bill of lading required by § 190.156. 

(d) Modification of drawback entry— 

(1) Indication of transfer. The drawback 

entry must include a certification to 

indicate that the merchandise is to be 

transferred to a foreign trade zone. 

(2) Endorsement. The transferor or 

person designated by the transferor and 

the foreign trade zone operator must 

certify transfer to the foreign trade zone, 

with respect to the drawback entry, as 

follows: 

Certification by Foreign Trade Zone 

Operator 

The merchandise described in the 

entry was received from llllll 

on llll; 20ll; in Foreign Trade 

Zone No. ll, (City and State) 

Exceptions lllllllllllll

(Name and title) 

By lllllllllllllllll

(Name of operator) 

(3) Transferor’s declaration. The 

transferor must declare, with respect to 

the drawback entry, as follows: 

Transferor’s Declaration 

I, llllllll of the firm of 

llll, declare that the merchandise 

described in this entry was duly entered 

at the customhouse on arrival at this 

port; that the duties thereon have been 

paid as specified in this entry; and that 

it was transferred to Foreign Trade Zone 

No. ll, located at llll, (City and 

State) for the sole purpose of 

exportation, destruction, or storage, not 

to be removed from the foreign trade 

zone for domestic consumption. I 

further declare that to the best of my 

knowledge and belief, this merchandise 

is in the same quantity, quality, value, 

and package, unavoidable wastage and 

damage excepted, as it was at the time 

of importation; that no allowance nor 

reduction of duties has been made for 

damage or other cause except as 

specified in this entry; and that no part 

of the duties paid has been refunded by 

drawback or otherwise. 

Dated: lllllllllllllll

Transferor 

§ 190.185 Unused merchandise drawback 

and merchandise not conforming to sample 

or specification, shipped without consent of 

the consignee, found to be defective as of 

the time of importation, or returned after 

retail sale. 

(a) Procedure for filing claims. The 

procedures described in subpart C of 

this part relating to unused merchandise 

drawback, and in subpart D of this part 

relating to rejected merchandise, must 

be followed with respect to drawback 

under this subpart for unused 

merchandise drawback and 

merchandise that does not conform to 

sample or specification, is shipped 

without consent of the consignee, or is 

found to be defective as of the time of 

importation. 

(b) Drawback entry. Before transfer of 

the merchandise to a foreign trade zone, 

the importer or a person designated in 

writing by the importer for that purpose 

must file the drawback entry. CBP will 

notify the zone operator at the zone. 

(c) Certification by zone operator. 

After the merchandise has been received 

in the zone, the zone operator at the 

zone must certify, with respect to the 

drawback entry, the receipt of the 

merchandise and notify the transferor or 

the person designated by the transferor. 

After executing the declaration provided 

for in paragraph (d)(3) of this section, 

the transferor must resubmit the 

drawback entry in place of the bill of 

lading required by § 190.156. 

(d) Modification of drawback entry— 

(1) Indication of transfer. The drawback 

entry must indicate that the 

merchandise is to be transferred to a 

foreign trade zone. 

(2) Endorsement. The transferor or 

person designated by the transferor and 

the foreign trade zone operator must 

certify transfer to the foreign trade zone, 

with respect to the drawback entry, as 

follows: 

Certification by Foreign Trade Zone 

Operator 

The merchandise described in this 

entry was received from llllllon 

llll, 20 ll, in Foreign Trade 

Zone No. ll, llll(City and State). 

Exceptions: lllllllllllll

lllllllllllllllllll

(Name of operator) 

By lllllllllllllllll

(Name and title) 

(3) Transferor’s declaration. The 

transferor must certify, with respect to 

the drawback entry, as follows: 

Transferor’s Declaration 

I, llllllll of the firm of 

lllll, declare that the 

merchandise described in the within 

entry was duly entered at the 

customhouse on arrival at this port; that 

the duties thereon have been paid as 

specified in this entry; and that it was 

transferred to Foreign Trade Zone No. 

ll, located at llll (City and State) 

for the sole purpose of exportation, 

destruction, or storage, not to be 

removed from the foreign trade zone for 

domestic consumption. I further declare 

that to the best of my knowledge and 

belief, said merchandise is the same in 

quantity, quality, value, and package as 

specified in this entry; that no 

allowance nor reduction in duties has 

been made; and that no part of the 

duties paid has been refunded by 

drawback or otherwise. 

Dated: lllllllllllllll

Transferor 

§ 190.186 Person entitled to claim 

drawback. 

The person named in the foreign trade 

zone operator’s certification on the 

notice of transfer or the drawback entry, 

as applicable, will be considered to be 

the transferor. Drawback may be 

claimed by, and paid to, the transferor. 

Subpart S—Drawback Compliance 

Program 

§ 190.191 Purpose. 

This subpart sets forth the 

requirements for the drawback 

compliance program in which claimants 

and other parties in interest, including 

customs brokers, may participate after 

being certified by CBP. Participation in 

the program is voluntary. Under the 

program, CBP is required to inform 

potential drawback claimants and 

related parties clearly about their rights 

and obligations under the drawback law 

and regulations. Reduced penalties and/ 

or warning letters may be issued once a 

party has been certified for the program, 

and is in general compliance with the 

appropriate procedures and 

requirements thereof. 

§ 190.192 Certification for compliance 

program. 

(a) General. A party may be certified 

as a participant in the drawback 

compliance program after meeting the 

core requirements established under the 

program, or after negotiating an 

alternative drawback compliance 


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program suited to the needs of both the 

party and CBP. Certification 

requirements will take into account the 

size and nature of the party’s drawback 

program, the type of drawback claims 

filed, and the volume of claims filed. 

Whether the party is a drawback 

claimant, a broker, or one that provides 

data and documentation on which a 

drawback claim is based, will also be 

considered. 

(b) Core requirements of program. In 

order to be certified as a participant in 

the drawback compliance program or 

negotiated alternative drawback 

compliance program, the party must 

demonstrate that it: 

(1) Understands the legal 

requirements for filing claims, including 

the nature of the records that are 

required to be maintained and produced 

and the time periods involved; 

(2) Has in place procedures that 

explain the CBP requirements to those 

employees involved in the preparation 

of claims, and the maintenance and 

production of required records; 

(3) Has in place procedures regarding 

the preparation of claims and 

maintenance of required records, and 

the production of such records to CBP; 

(4) Has designated a dependable 

individual or individuals who will be 

responsible for compliance under the 

program, and maintenance and 

production of required records; 

(5) Has in place a record maintenance 

program approved by CBP regarding 

original records, or if approved by CBP, 

alternative records or recordkeeping 

formats for other than the original 

records; and 

(6) Has procedures for notifying CBP 

of variances in, or violations of, the 

drawback compliance program or other 

alternative negotiated drawback 

compliance program, and for taking 

corrective action when notified by CBP 

of violations and problems regarding 

such program. 

(c) Broker certification. A customs 

broker may be certified as a participant 

in the drawback compliance program 

only on behalf of a given claimant (see 

§ 190.194(b)). To do so, a customs 

broker who assists a claimant in filing 

for drawback must be able to 

demonstrate, for and on behalf of such 

claimant, conformity with the core 

requirements of the drawback 

compliance program as set forth in 

paragraph (b) of this section. The broker 

must ensure that the claimant has the 

necessary documentation and records to 

support the drawback compliance 

program established on its behalf, and 

that claims to be filed under the 

program are reviewed by the broker for 

accuracy and completeness. 

§ 190.193 Application procedure for 

compliance program. 

(a) Who may apply. Claimants and 

other parties in interest may apply for 

participation in the drawback 

compliance program. This includes any 

person, corporation or business entity 

that provides supporting information or 

documentation to one who files 

drawback claims, as well as customs 

brokers who assist claimants in filing for 

drawback. Program participants may 

further consist of importers, 

manufacturers or producers, agentmanufacturers, complementary 

recordkeepers, subcontractors, 

intermediate parties, and exporters. 

(b) Place of filing. An application in 

letter format containing the information 

as prescribed in paragraphs (c) and (d) 

of this section may be submitted to any 

drawback office. 

(c) Letter of application; contents. A 

party requesting certification to become 

a participant in the drawback 

compliance program must file with the 

drawback office a written application, 

signed by an authorized individual (see 

§ 190.6(c) of this part). The detail 

required in the application must take 

into account the size and nature of the 

applicant’s drawback program, the type 

of drawback claims filed, and the dollar 

value and volume of claims filed. 

However, the application must contain 

at least the following information: 

(1) Name of applicant, address, IRS 

number (with suffix), and the type of 

business in which engaged, as well as 

the name(s) of the individual(s) 

designated by the applicant to be 

responsible for compliance under the 

program; 

(2) A description of the nature of the 

applicant’s drawback program, 

including the type of drawback in 

which involved (such as, 

manufacturing, or unused or rejected 

merchandise), and the applicant’s 

particular role(s) in the drawback claims 

process (such as claimant and/or 

importer, manufacturer or producer, 

agent-manufacturer, complementary 

recordkeeper, subcontractor, 

intermediate party (possessor or 

purchaser), or exporter (destroyer)); and 

(3) Size of applicant’s drawback 

program. For example, if the applicant 

is a claimant, the number of claims filed 

over the previous 12-month period 

should be included, along with the 

number estimated to be filed over the 

next 12-month period, and the 

estimated amount of drawback to be 

claimed annually. Other parties should 

describe the extent to which they are 

involved in drawback activity, based 

upon their particular role(s) in the 

drawback process; for example, 

manufacturers should explain how 

much manufacturing they are engaged 

in for drawback, such as the quantity of 

drawback product produced on an 

annual basis, as established by the 

certificates of manufacture and delivery 

they have executed. 

(d) Application package. Along with 

the letter of application as prescribed in 

paragraph (c) of this section, the 

application package must include a 

description of how the applicant will 

ensure compliance with statutory and 

regulatory drawback requirements. This 

description may be in the form of a 

booklet or set forth otherwise. The 

description must include at least the 

following: 

(1) The name and title of the official 

in the applicant’s organization who is 

responsible for oversight of the 

applicant’s drawback program, and the 

name and title, with mailing address 

and, if available, fax number and email 

address, of the person(s) in the 

applicant’s organization responsible for 

the actual maintenance of the 

applicant’s drawback program; 

(2) If the applicant is a manufacturer 

and the drawback involved is 

manufacturing drawback, a copy of the 

letter of notification of intent to operate 

under a general manufacturing 

drawback ruling or the application for a 

specific manufacturing drawback ruling 

(see §§ 190.7 and 190.8), as appropriate; 

(3) A description of the applicant’s 

drawback record-keeping program, 

including the retention period and 

method (for example, paper, and 

electronic.); 

(4) A list of the records that will be 

maintained, including at least sample 

import documents, sample export 

documents, sample inventory and 

transportation documents (if 

applicable), sample laboratory or other 

documents establishing the qualification 

of merchandise or articles for 

substitution under the drawback law (if 

applicable), and sample manufacturing 

documents (if applicable); 

(5) A description of the applicant’s 

specific procedures for: 

(i) How drawback claims are prepared 

(if the applicant is a claimant); and 

(ii) How the applicant will fulfill any 

requirements under the drawback law 

and regulations applicable to its role in 

the drawback program; 

(6) A description of the applicant’s 

procedures for notifying CBP of 

variances in, or violations of, its 

drawback compliance program or 

negotiated alternative drawback 

compliance program, and procedures for 

taking corrective action when notified 

by CBP of violations or other problems 

in such program; and 


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(7) A description of the applicant’s 

procedures for annual review to ensure 

that its drawback compliance program 

meets the statutory and regulatory 

drawback requirements and that CBP is 

notified of any modifications from the 

procedures described in this 

application. 

§ 190.194 Action on application to 

participate in compliance program. 

(a) Review by drawback office—(1) 

General. It is the responsibility of the 

drawback office to coordinate its 

decision making on the package with 

CBP Headquarters and other CBP offices 

as appropriate. CBP processing of the 

package will consist of the review of the 

information contained therein as well as 

any additional information requested 

(see paragraph (a)(2) of this section). 

(2) Criteria for CBP review. The 

drawback office will review and verify 

the information submitted in and with 

the application. In order for CBP to 

evaluate the application, CBP may 

request additional information 

(including additional sample 

documents) and/or explanations of any 

of the information provided for in 

§ 190.193(c) and (d) of this subpart. 

Based on the information submitted on 

and with the application and any 

information so requested, and based on 

the applicant’s record of transactions 

with CBP, the drawback office will 

approve or deny the application. The 

criteria to be considered in reviewing 

the applicant’s record with CBP will 

include (as applicable): 

(i) The presence or absence of 

unresolved customs charges (duties, 

taxes, fees, or other debts owed CBP); 

(ii) The accuracy of the claimant’s 

past drawback claims; and 

(iii) Whether accelerated payment of 

drawback or waiver of prior notice of 

intent to export was previously revoked 

or suspended. 

(b) Approval. Certification as a 

participant in the drawback compliance 

program will be given to applicants 

whose applications are approved under 

the criteria in paragraph (a)(2) of this 

section. The drawback office will give 

written notification to an applicant of its 

certification as a participant in the 

drawback compliance program. A 

customs broker obtaining certification 

for a drawback claimant will be sent 

written notification on behalf of such 

claimant, with a copy of the notification 

also being sent to the claimant. 

(c) Benefits of participation in 

program. When a party that has been 

certified as a participant in the 

drawback compliance program and is 

generally in compliance with the 

appropriate procedures and 

requirements of the program commits a 

violation of 19 U.S.C. 1593a(a) (see 

§ 190.62(b)), CBP will, in the absence of 

fraud or repeated violations, and in lieu 

of a monetary penalty as otherwise 

provided under § 1593a, issue a written 

notice of the violation to the party. 

Repeated violations by a participant, 

including a customs broker, may result 

in the issuance of penalties and the 

removal of certification under the 

program until corrective action, 

satisfactory to CBP, is taken. 

(d) Denial. If certification as a 

participant in the drawback compliance 

program is denied, the applicant will be 

given written notice by the drawback 

office, specifying the grounds for such 

denial, together with any action that 

may be taken to correct the perceived 

deficiencies, and informing the 

applicant that such denial may be 

appealed to the drawback office that 

issued the notice of denial and then 

appealed to CBP Headquarters. 

(e) Certification removal—(1) Grounds 

for removal. The certification for 

participation in the drawback 

compliance program by a party may be 

removed when any of the following 

conditions are discovered: 

(i) The certification privilege was 

obtained through fraud or mistake of 

fact; 

(ii) The program participant is no 

longer in compliance with the customs 

laws and CBP regulations, including the 

requirements set forth in § 190.192; 

(iii) The program participant has 

repeatedly filed false drawback claims 

or false or misleading documentation or 

other information relating to such 

claims; or 

(iv) The program participant is 

convicted of any felony or has 

committed acts which would constitute 

a misdemeanor or felony involving 

theft, smuggling, or any theft-connected 

crime. 

(2) Removal procedure. If CBP 

determines that the certification of a 

program participant should be removed, 

the drawback office will send the 

program participant a written notice of 

the removal. Such notice will inform the 

program participant of the grounds for 

the removal and will advise the program 

participant of its right to file an appeal 

of the removal in accordance with 

paragraph (f) of this section. 

(3) Effect of removal. The removal of 

certification will be effective 

immediately in cases of willfulness on 

the part of the program participant or 

when required by public health, 

interest, or safety. In all other cases, the 

removal of certification will be effective 

when the program participant has 

received notice under paragraph (e)(2) 

of this section and either no appeal has 

been filed within the time limit 

prescribed in paragraph (f)(2) of this 

section or all appeal procedures have 

been concluded by a decision that 

upholds the removal action. Removal of 

certification may subject the affected 

person to penalties. 

(f) Appeal of certification denial or 

removal—(1) Appeal of certification 

denial. A party may challenge a denial 

of an application for certification as a 

participant in the drawback compliance 

program by filing a written appeal, 

within 30 days of issuance of the notice 

of denial, with the drawback office. A 

denial of an appeal may itself be 

appealed to CBP Headquarters, Trade 

Policy and Programs, Office of Trade, 

within 30 days after issuance of the 

drawback office’s appeal decision. This 

office will review the appeal and will 

respond with a written decision within 

30 days after receipt of the appeal 

unless circumstances require a delay in 

issuance of the decision. If the decision 

cannot be issued within the 30-day 

period, the officewill advise the 

appellant of the reasons for the delay 

and of any further actions which will be 

carried out to complete the appeal 

review and of the anticipated date for 

issuance of the appeal decision. 

(2) Appeal of certification removal. A 

party who has received a CBP notice of 

removal of certification for participation 

in the drawback compliance program 

may challenge the removal by filing a 

written appeal, within 30 days after 

issuance of the notice of removal, with 

the drawback office. A denial of an 

appeal may itself be appealed to CBP 

Headquarters, Trade Policy and 

Programs, Office of Trade, within 30 

days after issuance of the drawback 

office’s appeal decision. This office will 

consider the allegations upon which the 

removal was based and the responses 

made to those allegations by the 

appellant and will render a written 

decision on the appeal within 30 days 

after receipt of the appeal. 

§ 190.195 Combined application for 

certification in drawback compliance 

program and waiver of prior notice and/or 

approval of accelerated payment of 

drawback. 

An applicant for certification in the 

drawback compliance program may 

also, in the same application, apply for 

waiver of prior notice of intent to export 

and accelerated payment of drawback, 

under subpart I of this part. 

Alternatively, an applicant may 

separately apply for certification in the 

drawback compliance program and 

either or both waiver of prior notice and 

accelerated payment of drawback. In the 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37958 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. 

former instance, the intent to apply for 

certification and waiver of prior notice 

and/or approval of accelerated payment 

of drawback must be clearly stated. In 

all instances, all of the requirements for 

certification and the procedure applied 

for must be met (for example, in a 

combined application for certification in 

the drawback compliance program and 

both procedures, all of the information 

required for certification and each 

procedure, all required sample 

documents for certification and each 

procedure, and all required 

certifications must be included with the 

application). 

Appendix A to Part 190—General 

Manufacturing Drawback Rulings 

Table of Contents 

I. General Instructions 

II. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) (T.D. 81–234; 

T.D. 83–123) 

III. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) or 1313(b) for 

Agents (T.D. 81–181) 

IV. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) for Burlap or 

Other Textile Material (T.D. 83–53) 

V. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Component 

Parts (T.D. 81–300) 

VI. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) for Flaxseed 

(T.D. 83–80) 

VII. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) for Fur Skins or 

Fur Skin Articles (T.D. 83–77) 

VIII. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for 

Orange Juice (T.D. 85–110) 

IX. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Petroleum or 

Petroleum Derivatives (T.D. 84–49) 

X. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Piece Goods 

(T.D. 83–73) 

XI. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Raw Sugar 

(T.D. 83–59) 

XII. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Steel (T.D. 

81–74) 

XIII. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for Sugar 

(T.D. 81–92) 

XIV. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(a) for 

Woven Piece Goods (T.D. 83–84) 

I. General Instructions 

A. There follow various general 

manufacturing drawback rulings which have 

been designed to simplify drawback 

procedures. Any person that can comply 

with the conditions of any one of these 

rulings may notify a CBP drawback office in 

writing of its intention to operate under the 

ruling (see § 190.7). Such a letter of 

notification must include the following 

information: 

1. Name and address of manufacturer or 

producer; 

2. IRS (Internal Revenue Service) number 

(with suffix) of manufacturer or producer; 

3. Location[s] of factory[ies] which will 

operate under the general ruling; 

4. If a business entity, names of persons 

who will sign drawback documents (see 

§ 190.6); 

5. Identity (by T.D. number and title, as 

stated in this Appendix) of general 

manufacturing drawback ruling under which 

the manufacturer or producer intends to 

operate; 

6. Description of the merchandise and 

articles, unless specifically described in the 

general manufacturing drawback ruling, and 

8-digit HTSUS subheading number, and the 

quantity of the merchandise; 

7. Only for General Manufacturing 

Drawback Ruling Under 19 U.S.C. 1313(b) for 

Petroleum or Petroleum Derivatives, the 

name of each article to be exported or, if the 

identity of the product is not clearly evident 

by its name, what the product is, and the 

abstract period to be used for each refinery 

(monthly or other specified period (not to 

exceed 1 year)), subject to the conditions in 

the General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Petroleum or 

Petroleum Derivatives, I. Procedures and 

Records Maintained, 4(a) or (b); 

8. Basis of claim used for calculating 

drawback; and 

9. Description of the manufacturing or 

production process, unless specifically 

described in the general manufacturing 

drawback ruling. 

For the General Manufacturing Drawback 

Ruling under § 1313(a), the General 

Manufacturing Drawback Ruling Under 19 

U.S.C. 1313(b) for Component Parts, and the 

General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) or 1313(b) for 

Agents, if the drawback office has doubts as 

to whether there is a manufacture or 

production, as defined in § 190.2, the 

manufacturer or producer will be asked to 

provide details of the operation purported to 

be a manufacture or production. 

10. For the General Manufacturing 

Drawback Ruling where substituted 

merchandise will be used, the bill of 

materials and/or formulas annotated with the 

8-digit HTSUS classifications. 

B. These general manufacturing drawback 

rulings supersede general ‘‘contracts’’ 

previously published under the following 

Treasury Decisions (T.D.s): 81–74, 81–92, 81– 

181, 81–234, 81–300, 83–53, 83–59, 83–73, 

83–77, 83–80, 83–84, 83–123, 84–49, and 85– 

110. Anyone currently operating under any 

of the above-listed Treasury Decisions will 

automatically be covered by the superseding 

general ruling, including all privileges of the 

previous ‘‘contract’’. 

II. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(a) (T.D. 81–234; T.D. 

83–123) 

A. Imported Merchandise or Drawback 

Products 1 Used 

Imported merchandise or drawback 

products are used in the manufacture of the 

exported articles upon which drawback 

claims will be based. 

B. Exported Articles on Which Drawback Will 

be Claimed 

Exported articles on which drawback will 

be claimed will be manufactured in the 

United States using imported merchandise or 

drawback products. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The imported merchandise or drawback 

products will be used to manufacture or 

produce articles in accordance with § 190.2. 

E. Multiple Products 

1. Relative Values 

Drawback law mandates the assignment of 

relative values when two or more products 

necessarily are produced concurrently in the 

same operation. If multiple products are 

produced records, which may include 

records kept in the normal course of 

business, will be maintained of the market 

value of each product at the time it is first 

separated in the manufacturing process. 

2. Appearing-in Method 

The appearing-in basis may not be used if 

multiple products are produced. 

F. Loss or Gain 

Records, which may include records kept 

in the normal course of business, will be 

maintained showing the extent of any loss or 

gain in net weight or measurement of the 

imported merchandise, caused by 

atmospheric conditions, chemical reactions, 

or other factors. 

G. [Reserved] 

H. Stock in Process 

Stock in process does not result; or if it 

does result, details will be given in claims as 

filed, and it will not be included in the 

computation of the merchandise used to 

manufacture the finished articles on which 

drawback is claimed. 

I. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of merchandise 

appearing in the exported articles, records 

will be maintained to establish the value, the 

quantity, and the disposition of any waste 

that results from manufacturing the exported 

articles. If no waste results, records will be 

maintained to establish that fact. 

J. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37959 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of the sentence should read 

‘‘appearing in the exported articles.’’ 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of the imported merchandise, and 

2. The quantity of imported merchandise 2

used in producing the exported articles. (To 

obtain drawback the claimant must establish 

that the completed articles were exported 

within 5 years after importation of the 

imported merchandise. Records establishing 

compliance with these requirements must be 

available for audit by CBP during business 

hours. Drawback is not payable without proof 

of compliance). 

K. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(a) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures And Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

L. Basis of Claim for Drawback 

Drawback will be claimed on the full 

quantity of merchandise used in producing 

the exported articles only if there is no waste 

or valueless or unrecovered waste in the 

manufacturing operation. A drawback claim 

may be based on the quantity of eligible 

merchandise that appears in the exported 

articles, regardless of whether there is waste, 

and no records of waste need be maintained. 

If there is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste, drawback may be claimed on the 

quantity of eligible material used to produce 

the exported articles less the amount of that 

merchandise which the value of the waste 

would replace. 

M. General Requirements 

The manufacturer or producer must: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

III. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(a) or 1313(b) 

for Agents (T.D. 81–181) 

Manufacturers or producers operating 

under this general manufacturing drawback 

ruling must comply with T.D.s 55027(2) and 

55207(1), and 19 U.S.C. 1313(b), if 

applicable, as well as 19 CFR part 190 (see 

particularly, § 190.9). 

A. Name and Address of Principal 

B. Process of Manufacture or Production 

The imported merchandise or drawback 

products or other substituted merchandise 

will be used to manufacture or produce 

articles in accordance with § 190.2. 

C. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. Quantity, kind, quality, and 8-digit 

HTSUS subheading number of merchandise 

transferred from the principal to the agent; 

2. Date of transfer of the merchandise from 

the principal to the agent; 

3. Date of manufacturing or production 

operations performed by the agent; 

4. Total quantity and description of 

merchandise (including 8-digit HTSUS 

subheading number) appearing in or used in 

manufacturing or production operations 

performed by the agent; 

5. Total quantity and description of articles 

(including 8-digit HTSUS subheading 

number) produced in manufacturing or 

production operations performed by the 

agent; 

6. Quantity, kind, quality, and 8-digit 

HTSUS subheading number of articles 

transferred from the agent to the principal; 

and 

7. Date of transfer of the articles from the 

agent to the principal. 

D. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when manufacturing or 

producing articles for account of the 

principal under the principal’s general 

manufacturing drawback ruling or specific 

manufacturing drawback ruling, as 

appropriate; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates the claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to help ensure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

IV. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(a) for Burlap 

or Other Textile Material (T.D. 83–53) 

Drawback may be allowed under 19 U.S.C. 

1313(a) upon the exportation of bags or meat 

wrappers manufactured with the use of 

imported burlap or other textile material, 

subject to the following special requirements: 

A. Imported Merchandise or Drawback 

Products 1 Used 

Imported merchandise or drawback 

products (burlap or other textile material) are 

used in the manufacture of the exported 

articles upon which drawback claims will be 

based. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

Exported articles on which drawback will 

be claimed will be manufactured in the 

United States using imported merchandise or 

drawback products. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another, or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The imported merchandise or drawback 

products will be used to manufacture or 

produce articles in accordance with § 190.2. 

E. Multiple Products 

Not applicable. 

F. Loss or Gain 

Not applicable. 

G. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of merchandise 

appearing in the exported articles, records 

will be maintained to establish the value, the 

quantity, and the disposition of any waste 

that results from manufacturing the exported 

articles. If no waste results, records will be 

maintained to establish that fact. 

H. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of the imported merchandise; and 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37960 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of the sentence should read 

‘‘appearing in the exported articles.’’ 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles produced.’’ 

3The date of production is the date an article is 

completed. 

2. The quantity of imported merchandise 2

used in producing the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after importation of 

the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

I. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(a) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures and Records 

Maintained’’. If those records do not establish 

compliance with those legal requirements, 

drawback cannot be paid. Each lot of 

imported material received by a 

manufacturer or producer must be given a lot 

number and kept separate from other lots 

until used. The records of the manufacturer 

or producer must show, as to each 

manufacturing lot or period of manufacture, 

the 8-digit HTSUS classification, the quantity 

of material used from each imported lot and 

the number of each kind and size of bags or 

meat wrappers obtained. 

All bags or meat wrappers manufactured or 

produced for the account of the same 

exporter during a specified period may be 

designated as one manufacturing lot. All 

exported bags or meat wrappers must be 

identified by the exporter. 

J. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of merchandise used in producing the 

exported articles only if there is no waste or 

valueless or unrecovered waste in the 

manufacturing operation. Drawback may be 

claimed on the quantity of eligible 

merchandise that appears in the exported 

articles, regardless of whether there is waste, 

and no records of waste need be maintained. 

If there is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste, drawback may be claimed on the 

quantity of eligible material used to produce 

the exported articles, less the amount of that 

merchandise which the value of the waste 

would replace. 

K. General Requirements 

The manufacturer or producer must: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation. 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to help ensure proper 

compliance with 19, United States Code, 

§ 1313, part 190 of the CBP Regulations and 

this general ruling. 

V. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Component 

Parts (T.D. 81–300) 

A. Same 8-Digit HTSUS Classification 

(Parallel Columns) 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products 

Duty-paid, duty-free or domestic merchandise classifiable under the 

same 8-digit HTSUS subheading number as that designated which will 

be used in the production of the exported products 

Component parts identified by individual part numbers and 8-digit 

HTSUS subheading number.

Component parts classifiable under the same 8-digit HTSUS subheading number and identified with the same individual part numbers 

as those in the column immediately to the left hereof. 

The designated components will have been 

manufactured in accordance with the same 

specifications and from the same materials, 

and identified by the same 8-digit HTSUS 

classification, and part number as the 

substituted components. Further, the 

designated and substituted components are 

used interchangeably in the manufacture of 

the exported articles upon which drawback 

will be claimed. Specifications or drawings 

will be maintained and made available for 

CBP officers. Fluctuations in market value 

resulting from factors other than quality will 

not affect the drawback. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

The exported articles will have been 

manufactured in the United States using 

components described in the parallel 

columns above. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The components described in the parallel 

columns will be used to manufacture or 

produce articles in accordance with § 190.2. 

E. Multiple Products 

Not applicable. 

F. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of components 

appearing in the exported articles, records 

will be maintained to establish the value (or 

the lack of value), the quantity, and the 

disposition of any waste that results from 

manufacturing the exported articles. If no 

waste results, records will be maintained to 

establish that fact. 

G. [Reserved] 

H. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The identity, specifications, and 8-digit 

HTSUS classification of the designated 

merchandise; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS classification 

as the designated merchandise 2 used to 

produce the exported articles; 

3. That, within 5 years after the date of 

importation of the designated merchandise, 

the manufacturer or producer used the 

merchandise to produce articles. During the 

same 5-year period, the manufacturer or 

producer produced 3 the exported articles. To 

obtain drawback the claimant must establish 

that the completed articles were exported 

within 5 years after the importation of the 

imported merchandise. Records establishing 

compliance with these requirements will be 

available for audit by CBP during business 

hours. Drawback is not payable without proof 

of compliance. 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37961 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of the sentence should read 

‘‘appearing in the exported articles.’’ 

I. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures And Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

J. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of eligible components used in producing the 

exported articles only if there is no waste or 

valueless or unrecovered waste in the 

manufacturing operation. Drawback may be 

claimed on the quantity of eligible 

components that appear in the exported 

articles, regardless of whether there is waste, 

and no records of waste need be maintained. 

If there is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste, drawback may be claimed on the 

quantity of eligible components used to 

produce the exported articles less the amount 

of those components which the value of the 

waste would replace. 

K. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

VI. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(a) for Flaxseed 

(T.D. 83–80) 

Drawback may be allowed under the 

provision of 19 U.S.C. 1313(a) upon the 

exportation of linseed oil, linseed oil cake, 

and linseed oil meal, manufactured or 

produced with the use of imported flaxseed, 

subject to the following special requirements: 

A. Imported Merchandise or Drawback 

Products 1 Used 

Imported merchandise or drawback 

products (flaxseed) are used in the 

manufacture of the exported articles upon 

which drawback claims will be based. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

Exported articles on which drawback will 

be claimed will be manufactured in the 

United States using imported merchandise or 

drawback products. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The imported merchandise or drawback 

products will be used to manufacture or 

produce articles in accordance with § 190.2. 

E. Multiple Products 

Drawback law mandates the assignment of 

relative values when two or more products 

necessarily are produced concurrently in the 

same operation. If multiple products are 

produced records will be maintained of the 

market value of each product at the time it 

is first separated in the manufacturing 

process (when a claim covers a 

manufacturing period, the entire period 

covered by the claim is the time of separation 

of the products and the value per unit of 

product is the market value for the period 

(see §§ 190.2, 190.22(e)). The ‘‘appearing in’’ 

basis may not be used if multiple products 

are produced. 

F. Loss or Gain 

Records will be maintained showing the 

extent of any loss or gain in net weight or 

measurement of the imported merchandise, 

caused by atmospheric conditions, chemical 

reactions, or other factors. 

G. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of merchandise 

appearing in the exported articles, records 

will be maintained to establish the value, the 

quantity, and the disposition of any waste 

that results from manufacturing the exported 

articles. If no waste results, records will be 

maintained to establish that fact. 

H. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of the imported merchandise; and 

2. The quantity of imported merchandise 2

used in producing the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after importation of 

the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

I. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(a) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures and Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

The inventory records of the manufacturer 

or producer will show the inclusive dates of 

manufacture; the quantity, identity, value, 

and 8-digit HTSUS classification of the 

imported flaxseed or screenings, scalpings, 

chaff, or scourings used; the quantity by 

actual weight and value, if any, of the 

material removed from the foregoing by 

screening prior to crushing; the quantity and 

kind of domestic merchandise added, if any; 

the quantity by actual weight or gauge and 

value of the oil, cake, and meal obtained; and 

the quantity and value, if any, of the waste 

incurred. The quantity of imported flaxseed, 

screenings, scalpings, chaff, or scourings 

used or of material removed will not be 

estimated nor computed on the basis of the 

quantity of finished products obtained, but 

will be determined by actually weighing the 

said flaxseed, screenings, scalpings, chaff, 

scourings, or other material; or, at the option 

of the crusher, the quantities of imported 

materials used may be determined from CBP 

weights, as shown by the import entry 

covering such imported materials, and the 

Government weight certificate of analysis 

issued at the time of entry. The entire period 

covered by an abstract will be deemed the 

time of separation of the oil and cake covered 

thereby. 

If the records of the manufacturer or 

producer do not show the quantity of oil cake 

used in the manufacture or production of the 

exported oil meal and the quantity of oil 

meal obtained, the net weight of the oil meal 

exported will be regarded as the weight of the 

oil cake used in the manufacture thereof. 

If various tanks are used for the storage of 

imported flaxseed, the mill records must 

establish the tank or tanks in which each lot 

or cargo is stored. If raw or processed oil 

manufactured or produced during different 

periods of manufacture is intermixed in 

storage, a record must be maintained 

showing the quantity, identity, kind, and 8- 

digit HTSUS classification of oil so 

intermixed. Identity of merchandise or 

articles in either instance must be in 

accordance with § 190.14. 


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1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of the sentence should read 

‘‘appearing in the exported articles.’’ 

J. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of merchandise used in producing the 

exported articles only if there is no waste or 

valueless or unrecovered waste in the 

manufacturing operation. Drawback may be 

claimed on the quantity of eligible 

merchandise that appears in the exported 

articles, regardless of whether there is waste, 

and no records of waste need be maintained. 

If there is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste, drawback may be claimed on the 

quantity of eligible material used to produce 

the exported articles, less the amount of that 

merchandise which the value of the waste 

would replace. 

K. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation. 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with 19, United States Code, 

§ 1313, part 190 of the CBP Regulations and 

this general ruling. 

VII. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(a) for Fur 

Skins or Fur Skin Articles (T.D. 83–77) 

Drawback may be allowed under 19 U.S.C. 

1313(a) upon the exportation of dressed, 

redressed, dyed, redyed, bleached, blended, 

or striped fur skins or fur skin articles 

manufactured or produced by any one or a 

combination of the foregoing processes with 

the use of fur skins or fur skin articles, such 

as plates, mats, sacs, strips, and crosses, 

imported in a raw, dressed, or dyed 

condition, subject to the following special 

requirements: 

A. Imported Merchandise or Drawback 

Products 1 Used 

Imported merchandise or drawback 

products (fur skins or fur skin articles) are 

used in the manufacture of the exported 

articles upon which drawback claims will be 

based. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

Exported articles on which drawback will 

be claimed will be manufactured in the 

United States using imported merchandise or 

drawback products. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The imported merchandise or drawback 

products will be used to manufacture or 

produce articles in accordance with § 190.2. 

Drawback will not be allowed under this 

general manufacturing drawback ruling when 

the process performed results only in the 

restoration of the merchandise to its 

condition at the time of importation. 

E. Multiple Products 

Not applicable. 

F. Loss or Gain 

Records will be maintained showing the 

extent of any loss or gain in net weight or 

measurement of the imported merchandise, 

caused by atmospheric conditions, chemical 

reactions, or other factors. 

G. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of merchandise 

appearing in the exported articles, records 

will be maintained to establish the value, the 

quantity, and the disposition of any waste 

that results from manufacturing the exported 

articles. If no waste results, records will be 

maintained to establish that fact. 

H. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of the imported merchandise; and 

2. The quantity of imported merchandise 2

used in producing the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after importation of 

the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

I. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(a) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures and Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

The records of the manufacturer or 

producer must show, as to each lot of fur 

skins and/or fur skin articles used in the 

manufacture or production of articles for 

exportation with benefit of drawback, the lot 

number and date or inclusive dates of 

manufacture or production, the quantity, 

identity, description, and 8-digit HTSUS 

classification of the imported merchandise 

used, the condition in which imported, the 

process or processes applied thereto, the 

quantity, description, and 8-digit HTSUS 

classification of the finished articles 

obtained, and the quantity of imported pieces 

rejected, if any, or spoiled in manufacture or 

production. 

J. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of merchandise used in producing the 

exported articles only if there is no waste or 

valueless or unrecovered waste in the 

manufacturing operation. Drawback may be 

claimed on the quantity of eligible 

merchandise that appears in the exported 

articles, regardless of whether there is waste, 

and no records of waste need be maintained. 

If there is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste, drawback may be claimed on the 

quantity of eligible material used to produce 

the exported articles, less the amount of that 

merchandise which the value of the waste 

would replace. (If rejects and/or spoilage are 

incurred, the quantity of imported 

merchandise used will be determined by 

deducting from the quantity of fur skins or 

fur skin articles put into manufacture or 

production the quantity of such rejects and/ 

or spoilage.) 

K. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation. 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with 19, United States Code, 


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Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37963 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles produced.’’ 

3The date of production is the date an article is 

completed. 

§ 1313, part 190 of the CBP Regulations and 

this general ruling. 

VIII. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for Orange 

Juice (T.D. 85–110) 

A. Same 8-Digit HTSUS Classification 

(Parallel Columns) 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products 

Duty-paid, duty-free or domestic merchandise classifiable under the 

same 8-digit HTSUS subheading number as that designated which will 

be used in the production of the exported products 

Concentrated orange juice for manufacturing (of not less than 55° Brix) 

as defined in the standard of identity of the Food and Drug Administration (21 CFR 146.53) which meets the Grade A standard of the 

U.S. Dept. of Agriculture (7 CFR 52.1557, Table IV).

Concentrated orange juice for manufacturing as described in the lefthand parallel column. 

The imported merchandise designated on 

drawback claims must be classifiable under 

the same 8-digit HTSUS classification as the 

merchandise used in producing the exported 

articles on which drawback is claimed. 

Fluctuations in the market value resulting 

from factors other than quality will not affect 

the drawback. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

1. Orange juice from concentrate 

(reconstituted juice). 

2. Frozen concentrated orange juice. 

3. Bulk concentrated orange juice. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

1. Orange juice from concentrate 

(reconstituted juice). Concentrated orange 

juice for manufacturing is reduced to a 

desired 11.8° Brix by a blending process to 

produce orange juice from concentrate. The 

following optional blending processes may 

be used: 

i. The concentrate is blended with fresh 

orange juice (single strength juice); or 

ii. The concentrate is blended with 

essential oils, flavoring components, and 

water; or 

iii. The concentrate is blended with water 

and is heat treated to reduce the enzymatic 

activity and the number of viable 

microorganisms. 

2. Frozen concentrated orange juice. 

Concentrated orange juice for manufacturing 

is reduced to a desired degree Brix of not less 

than 41.8° Brix by the following optional 

blending processes: 

i. The concentrate is blended with fresh 

orange juice (single strength juice); or 

ii. The concentrate is blended with 

essential oils and flavoring components and 

water. 

3. Bulk concentrated orange juice. 

Concentrated orange juice for manufacturing 

is blended with essential oils and flavoring 

components which would enable another 

processor such as a dairy to prepare finished 

frozen concentrated orange juice or orange 

juice from concentrate by merely adding 

water to the (intermediate) bulk concentrated 

orange juice. 

E. Multiple Products, Waste, Loss or Gain 

Not applicable. 

F. [Reserved] 

G. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The 8-digit HTSUS classification, 

identity, and specifications of the designated 

merchandise; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS classification 

as the designated merchandise 2 used to 

produce the exported articles; 

3. That, within 5 years after the date of 

importation of the designated merchandise, 

the manufacturer or producer used the 

designated merchandise to produce articles. 

During the same 5-year period, the 

manufacturer or producer produced 3 the 

exported articles. 

To obtain drawback it must be established 

that the completed articles were exported 

within 5 years after the importation of the 

imported merchandise. Records establishing 

compliance with these requirements must be 

available for audit by CBP during business 

hours. No drawback is payable without proof 

of compliance. 

H. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures And Records 

Maintained’’, and will show what 

components were blended with the 

concentrated orange juice for manufacturing. 

If those records do not establish satisfaction 

of those legal requirements drawback cannot 

be paid. 

I. Basis of Claim for Drawback 

The basis of claim for drawback will be the 

quantity of concentrated orange juice for 

manufacturing used in the production of the 

exported articles. It is understood that when 

fresh orange juice is used as ‘‘cutback’’, it 

will not be included in the ‘‘pound solids’’ 

when computing the drawback due. 

J. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

IX. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for 

Petroleum or Petroleum Derivatives (T.D. 

84–49) 

A. Same 8-Digit HTSUS Classification 

(Parallel Columns) 


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37964 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

2A manufacturer who proposes to use standards 

other than those in T.D. 66–16 must state the 

proposed standards and provide sufficient 

information to CBP in order for those proposed 

standards to be verified in accordance with 

T.D. 84–49. 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products.

Duty-paid, duty-free or domestic merchandise classifiable under the 

same 8-digit HTSUS subheading number as that designated which 

will be used in the production of the exported products. 

B. Exported Articles Produced From 

Fractionation 

1. Motor Gasoline 

2. Aviation Gasoline 

3. Special Naphthas 

4. Jet Fuel 

5. Kerosene & Range Oils 

6. Distillate Oils 

7. Residual Oils 

8. Lubricating Oils 

9. Paraffin Wax 

10. Petroleum Coke 

11. Asphalt 

12. Road Oil 

13. Still Gas 

14. Liquified Petroleum Gas 

15. Petrochemical Synthetic Rubber 

16. Petrochemical Plastics & Resins 

17. All Other Petrochemical Products 

C. Exported Articles on Which Drawback Will 

Be Claimed 

See the General Instructions, I.A.7., for this 

general drawback ruling. Each article to be 

exported must be named. When the identity 

of the product is not clearly evident by its 

name, there must be a statement as to what 

the product is, e.g., a herbicide. 

D. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

E. Process of Manufacture or Production 

Heated crude oil is charged to an 

atmospheric distillation tower where it is 

subjected to fractionation. The charge to the 

distillation tower consists of a single crude 

oil, or of commingled crudes which are fed 

to the tower simultaneously or after blending 

in a tank. During fractionation, components 

of different boiling ranges are separated. 

F. Multiple Products 

1. Relative Values 

Fractionation results in 17 products. In 

order to insure proper distribution of 

drawback to each of these products, the 

manufacturer or producer agrees to record 

the relative values at the time of separation. 

The entire period covered by an abstract is 

to be treated as the time of separation. The 

value per unit of each product will be the 

average market value for the abstract period. 

2. Producibility 

The manufacturer or producer can vary the 

proportionate quantity of each product. The 

manufacturer or producer understands that 

drawback is payable on exported products 

only to the extent that these products could 

have been produced from the designated 

merchandise. The records of the 

manufacturer or producer must show that all 

of the products exported for which drawback 

will be claimed under this general 

manufacturing drawback ruling could have 

been produced concurrently on a practical 

operating basis from the designated 

merchandise. 

The manufacturer or producer agrees to 

establish the amount to be designated by 

reference to the Industry Standards of 

Potential Production published in T.D. 66– 

16.2

There are no valuable wastes as a result of 

the processing. 

G. Loss or Gain 

Because the manufacturer or producer 

keeps records on a volume basis rather than 

a weight basis, it is anticipated that the 

material balance will show a volume gain. 

For the same reason, it is possible that 

occasionally the material balance will show 

a volume loss. Fluctuations in type of crude 

used, together with the type of finished 

product desired make an estimate of an 

average volume gain meaningless. However, 

records will be kept to show the amount of 

loss or gain with respect to the production of 

export products. 

H. Exchange 

The use of any domestic merchandise 

acquired in exchange for imported 

merchandise that meets the same kind and 

quality specifications contained in the 

parallel columns of this general ruling shall 

be treated as use of the imported 

merchandise. 

I. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The identity, specifications, and 8-digit 

HTSUS classification of the merchandise 

designated; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS classification 

as the designated merchandise used to 

produce the exported articles. 

3. That, within 5 years after importation, 

the manufacturer or producer used the 

designated merchandise to produce articles. 

During the same 5-year period, the 

manufacturer or producer produced the 

exported articles. 

4(a). The manufacturer or producer agrees 

to use a 28–31 day period (monthly) abstract 

period for each refinery covered by this 

general manufacturing drawback ruling, or 

(b). The manufacturer or producer agrees to 

use an abstract period (not to exceed 1 year) 

for each refinery covered by this general 

manufacturing drawback ruling. The 

manufacturer or producer certifies that if it 

were to file abstracts covering each 

manufacturing period of not less than 28 

days and not more than 31 days (monthly) 

within the longer period, in no such monthly 

abstract would the quantity of designated 

merchandise exceed the material introduced 

into the manufacturing process during that 

monthly period. (Select (a) or (b), and state 

which is selected in the application, and, if 

(b) is selected, specify the length of the 

particular abstract period chosen (not to 

exceed 1 year (see General Instruction 

I.A.7.)).) 

5. On each abstract of production the 

manufacturer or producer agrees to show the 

value per barrel to five decimal places. 

6. The manufacturer or producer agrees to 

file claims in the format set forth in exhibits 

A through F which are attached to this 

general manufacturing drawback ruling. The 

manufacturer or producer realizes that to 

obtain drawback the claimant must establish 

that the completed articles were exported 

within 5 years after importation of the 

imported merchandise. Records establishing 

compliance with these requirements will be 

available for audit by CBP during business 

hours. It is understood that drawback is not 

payable without proof of compliance. 

Records will be kept in accordance with T.D. 

84–49, as amended by T.D. 95–61. 

J. Residual Rights 

It is understood that the refiner can reserve 

as the basis for future payment the right to 

drawback only on the number of barrels of 

raw material computed by subtracting from 

Line E the larger of Lines A or B, of a given 

Exhibit E. It is further understood that this 

right to future payment can be claimed only 

against products concurrently producible 

with the products listed in Column 21, in the 

quantities shown in Column 22 of such 

Exhibit E. Such residual right can be 

transferred to another refinery of the same 

refiner only when Line B of Exhibit E is 

larger than Line A. Unless the number of 

residual barrels is specifically computed and 

rights thereto are expressly reserved on 

Exhibit E, such residual rights will be 

deemed waived. The procedure the 

manufacturer or producer must follow in 

preparing drawback entries claiming this 

residual right is illustrated in the attached 

sample Exhibit E–1. It is understood that 

claims involving residual rights must be filed 

only at the port where the Exhibit E reserving 

such right was filed. 

K. Inventory Procedures 

The manufacturer or producer realizes that 

inventory control is of major importance. In 


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Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37965 

accordance with the normal accounting 

procedures of the manufacturer or producer, 

each refinery prepares a monthly stock and 

yield report, which accounts for inventories, 

production and disposals from time of 

receipt to time of disposition. This provides 

an audit trail of all products. 

The above-noted records will provide the 

required audit trail from the initial source 

documents to the drawback claims of the 

manufacturer or producer and will support 

adherence with the requirements discussed 

under the heading PROCEDURES AND 

RECORDS MAINTAINED. 

L. Basis of Claim for Drawback 

The amount of raw material on which 

drawback may be based will be computed by 

multiplying the quantity of each product 

exported by the drawback factor for that 

product. The amount of raw material which 

may be designated as the basis for drawback 

on the exported products produced at a given 

refinery and covered by a drawback entry 

must not exceed the quantity of such raw 

material used at the refinery during the 

abstract period or periods from which the 

exported products were produced. The 

quantity of raw material to be designated as 

the basis for drawback on exported products 

must be at least as great as the quantity of 

raw material which would be required to 

produce the exported products in the 

quantities exported. 

M. Agreements 

The manufacturer or producer specifically 

agrees that it will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its refinery and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

application; 

4. Keep this application current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 


daltland on DSKBBV9HB2PROD with PROPOSALS2EP02AU18.000</GPH>
37966 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

EXHIBIT C—INVENTORY CONTROL SHEET: ABC OIL CO., INC.; BEAUMONT, TEXAS REFINERY, PERIOD FROM JANUARY 1, 

2019 TO JANUARY 31, 2019 

[All quantities exclude non-petroleum additives] 

Aviation gasoline Residual oils Lubricating oils Petrochemicals, all other 

Bbls. Drawback 

factor Bbls. Drawback factor Bbls. Drawback factor Bbls. Drawback factor 

(10) Opening Inventory ............................................. 11,218 1.00126 21,221 .45962 9,242 4.52178 891 1.00244 

(11) Production .......................................................... 108,269 1.01300 308,002 .43642 292,492 4.64041 7,996 1.07895 

(11–A) Receipts ........................................................ .............. ........................ .............. ........................ .............. ........................ .............. ........................

(12) Exports ............................................................... 11,218 

176 

1.00126 

1.01300 

21,221 

104,397 

.45962 

.43642 

8,774 4.52178 195 1.00244 

(13) Drawback Deliveries .......................................... .............. ........................ .............. ........................ .............. ........................ 696 

319 

1.00244 

1.07895 

(14) Domestic Shipments .......................................... 97,863 1.01300 180,957 .43642 468 

278,286 

4.52178 

4.64041 

6,867 1.07895 

(15) Closing Inventory ............................................... 10,230 1.01300 22,648 .43642 14,206 4.64041 810 1.07895 

Line (10)—Opening inventory from previous period’s closing inventory. 

Line (11)—From production period under consideration. 

Line (11–A)—Product received from other sources. 

Line (12)—From earliest on hand (inventory or production). Totals from drawback entry or entries recapitulated (see column 18). 

Line (13)—Deliveries for export or for designation against further manufacture—earliest on hand after exports are deducted. 

Line (14)—From earliest on hand after lines (12) and (13) are deducted. 

Line (15)—Balance on hand. 


daltland on DSKBBV9HB2PROD with PROPOSALS2EP02AU18.001</GPH>
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37967 


daltland on DSKBBV9HB2PROD with PROPOSALS2EP02AU18.002</GPH>

EXHIBITD 

RECAPITULATION OF DRAWBACK ENTRY 

ABC OIL CO., INC -BEAUMONT, TEXAS REFINERY 

PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019 

Duty paid on raw material selected for designation - $.1050 per bbl. (class III crude) 

Amount of drawback claimed - gross - 106,594 x .1 050 = $11,192 

Less 1% - 112 

Amount of drawback claimed- net $11,080 

Col. (16) Lists only products exported. 

Col. (17) Quantities in condition as shown on the notices of exportation and notices of lading. 

Col. (18) Quantities in condition as shown on the abstract (i.e., less additives if any). These 

quantities will appear in line 12. 

Col. (19) The drawback factor(s) shown on line 12. 

Col (20) Raw material (crude or derivatives) allowable, determined by multiplying column 18 

by 19. 

Col (20a) Raw material (crude or derivatives) allowable, for drawback deliveries determined by 

multiplying column 18 by column 19. 
37968 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 


daltland on DSKBBV9HB2PROD with PROPOSALS2EP02AU18.003</GPH>

EXHIBITE 

PRODUCIBILITY TEST FOR PRODUCTS EXPORTED 

(INCLUDING DRAWBACK DELIVERIES) 

ABC OIL CO., INC -BEAUMONT, TEXAS REFINERY 

PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019 

Type and Class of Raw Material Designated - Crude, Class III 
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37969 


daltland on DSKBBV9HB2PROD with PROPOSALS2EP02AU18.004</GPH>

EXHIBIT E-1 

PRODUCIBILITY TEST FOR PRODUCTS ON WHICH RESIDUAL RIGHT TO 

DRAWBACK IS NOW CLAIMED AND PRODUCTS COVERED BY ABSTRACTS ON 

WHICH RAW MATERIALS COVERED WERE PREVIOUSLY DESIGNATED 

ABC OIL CO., INC - TULSA, OKLAHOMA REFINERY 

PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019 

Type and Class of Raw Material Designated - Cmde. Class III 
37970 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

EXHIBIT E (COMBINATION)—PRODUCIBILITY TEST FOR PRODUCTS EXPORTED (INCLUDING DRAWBACK DELIVERIES) ABC 

OIL CO., INC.; BEAUMONT, TEXAS REFINERY, PERIOD FROM JANUARY 1, 2019 TO JANUARY 31, 2019 

[Type and Class of Raw Material Designated—Crude, Class III] 

Product Quantity in 

barrels 

Industry 

standard 

(%) 

Quantity of 

raw material of 

type and class 

designated 

needed to 

produce 

product per 

barrel 

Drawback factor Crude allowed 

for drawback 

(21) (22) (23) (24) (19) (20) 

Aviation Gasoline 1 ............................................... 1 11,218 

1 176 

40 

40 

28,045 

440 

1.00126 

1.01300 

11,232 

178 

Residual Oils 1 ...................................................... 1 21,221 1 104,397 83 

83 

25,567 

125,780 

.45962 

.43642 

9,754 

45,561 

Lubricating Oils 1 .................................................. 1 8,774 50 17,548 4.52178 39,674 

Petrochemicals, Other 1 ....................................... 1 195 29 672 1.00244 195 

Petrochemicals, Other 2 ....................................... 2 696 29 2,400 1.00244 698 

Petrochemicals, Other 2 ....................................... 2 319 29 1,100 1.07895 344 

Total .............................................................. 146,996 ........................ ........................ ........................................ 107,636 

1Exports. 

2 Drawback deliveries. 

A—Crude allowed (column 20: 107,636 bbls. (106,594 for export, plus 1,042 for drawback deliveries)). 

B—Total quantity exported (including drawback deliveries) (column 22): 146,996. 

C—Largest quantity of raw material needed to produce an individual exported product (see column 24): 151,347. 

D—The excess of raw material over the largest of lines A, B, or C, required to produce concurrently on a practical operating basis, using the 

most efficient processing equipment existing within the domestic industry, the exported articles (including drawback deliveries) in the quantities 

exported (or delivered): None. 

E—Minimum quantity of raw material required to be designated (which is A, B, or C, whichever is largest, plus D, if applicable): 151,347 bbs. 

I hereby certify that all the above drawback deliveries and products exported by the Beaumont refinery of ABC Oil Co., Inc. during the period 

from January 1, 1995 to January 31, 1995, could have been produced concurrently on a practical operating basis from 151,347 barrels of imported Class III crude against which drawback is claimed. 

EXHIBIT F—DESIGNATIONS FOR DRAWBACK CLAIM, ABC OIL CO., INC.; BEAUMONT, TEXAS REFINERY

[Period From January 1, 2019 to January 31, 2019] 

Entry No. Date of 

importation 

Kind of 

materials 

Quantity of 

materials in 

barrels 

Date 

received 

Date 

consumed 

Rate of 

duty 

26192 ............. 04/13/17 Class III Crude .................. 75,125 04/13/17 May 2017 ............................. $.1050 

23990 ............. 08/04/18 ......do ................................ 37,240 08/04/18 Oct. 2018 .............................. .1050

22517 ............. 10/05/18 ......do ................................ 38,982 10/05/18 Nov. 2018 ............................. .1050 


daltland on DSKBBV9HB2PROD with PROPOSALS2EP02AU18.005</GPH>
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37971 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under 19 U.S.C. 1313(b). They may be designated 

as the basis for drawback and also may be deemed 

to be domestic merchandise. 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles produced.’’ 

3The date of production is the date an article is 

completed. 

X. General Manufacturing Drawback Ruling 

Under 19 U.S.C. 1313(b) for Piece Goods 

(T.D. 83–73) 

A. Same 8-Digit HTSUS Classification 

(Parallel Columns) 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products 

Duty-paid, duty-free or domestic merchandise classifiable under the 

same 8-digit HTSUS subheading number as that designated which will 

be used in the production of the exported products 

Piece goods. Piece goods. 

The piece goods used in manufacture will 

be classifiable under the same 8-digit HTSUS 

classification as the piece goods designated 

as the basis of claim for drawback, and are 

used interchangeably without change in 

manufacturing processes or resultant 

products (including, if applicable, multiple 

products), or wastes. Some tolerances 

between imported-designated piece goods 

and the used-exported piece goods will be 

permitted to accommodate variations which 

are normally found in piece goods. These 

tolerances are no greater than the tolerances 

generally allowed in the industry for piece 

goods classifiable under the same 8-digit 

HTSUS classification as follows: 

1. A 4% weight tolerance so that the piece 

goods used in manufacture will be not more 

than 4% lighter or heavier than the imported 

piece goods which will be designated; 

2. A tolerance of 4% in the aggregate 

thread count per square inch so that the piece 

goods used in manufacture will have an 

aggregate thread count within 4%, more or 

less of the aggregate thread count of the 

imported piece goods which will be 

designated. In each case, the average yarn 

number of the domestic piece goods will be 

the same or greater than the average yarn 

number of the imported piece goods 

designated, and in each case, the substitution 

and tolerance will be employed only within 

the same family of fabrics, i.e., print cloth for 

print cloth, gingham for gingham, greige for 

greige, dyed for dyed, bleached for bleached, 

etc. The piece goods used in manufacture of 

the exported articles will be designated as 

containing the identical percentage of 

identical fibers as the piece goods designated 

as the basis for allowance of drawback; for 

example, piece goods containing 65% cotton 

and 35% dacron will be designated against 

the use of piece goods shown to contain 65% 

cotton and 35% dacron. The actual fiber 

composition may vary slightly from that 

described on the invoice or other acceptance 

of the fabric as having the composition 

described on documents in accordance with 

trade practices. Differences in value resulting 

from factors other than quality, as for 

example, price fluctuations, will not 

preclude an allowance of drawback. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

Finished piece goods. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s. 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

Piece goods are subject to any one of the 

following finishing productions: 

1. Bleaching, 

2. Mercerizing, 

3. Dyeing, 

4. Printing, 

5. A combination of the above, or 

6. Any additional finishing processes. 

E. Multiple Products 

Not applicable. 

F. Waste 

Rag waste may be incurred. No drawback 

is payable on any waste which results from 

the manufacturing operation. Unless the 

claim for drawback is based on the quantity 

of merchandise appearing in the exported 

articles, the records of the manufacturer or 

producer must show the quantity of rag 

waste, if any, and its value. In instances 

where rag waste occurs and it is impractical 

to account for the actual quantity of rag waste 

incurred, it may be assumed that such rag 

waste constituted 2% of the piece goods put 

into the finishing processes. If necessary to 

establish the quantity of merchandise 

(eligible piece goods) appearing in the 

exported articles, such waste records must 

also be kept. 

G. Shrinkage, Gain, and Spoilage 

Unless the claim for drawback is based on 

the quantity of merchandise appearing in the 

exported articles, the records of the 

manufacturer or producer must show the 

yardage lost by shrinkage or gained by 

stretching during manufacture or production, 

and the quantity of remnants resulting and of 

spoilage incurred, if any. If necessary to 

establish the quantity of merchandise 

(eligible piece goods) appearing in the 

exported articles, such records for shrinkage, 

gain and spoilage will also be kept. 

H. [Reserved] 

I. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The identity, specifications, and 8-digit 

HTSUS classification of the designated 

merchandise; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS classification 

as the designated merchandise 2 used to 

produce the exported articles; 

3. That, within 5 years after the date of 

importation of the designated merchandise, 

the manufacturer or producer used the 

merchandise to produce articles. During the 

same 5-year period, the manufacturer or 

producer produced 3 the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after the importation 

of the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

J. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures And Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

K. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of eligible piece goods used in producing the 

exported articles only if there is no waste or 

valueless or unrecovered waste in the 

manufacturing operation. Drawback may be 

claimed on the quantity of eligible piece 

goods that appears in the exported articles, 

regardless of whether there is waste, and no 

records of waste need be maintained. If there 

is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste from each lot of piece goods, drawback 

may be claimed on the quantity of eligible 

piece goods used to produce the exported 

articles less the amount of piece goods which 

the value of the waste would replace. 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37972 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

L. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

XI. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for Raw 

Sugar (T.D. 83–59) 

Drawback may be allowed under 19 U.S.C. 

1313(b) upon the exportation of hard or soft 

refined sugars and sirups manufactured from 

raw sugar, subject to the following special 

requirements: 

A. The drawback allowance must not 

exceed an amount calculated pursuant to 

regulations prescribed by the Secretary of the 

Treasury, of the duties, taxes, and fees paid 

on a quantity of raw sugar designated by the 

refiner which contains a quantity of sucrose 

not in excess of the quantity required to 

manufacture the exported sugar or sirup, 

ascertained as provided in this general rule. 

B. The refined sugars and sirups must have 

been manufactured with the use of duty-paid, 

duty-free, or domestic sugar, or combinations 

thereof, within 5 years after the date of 

importation, and must have been exported 

within 5 years from the date of importation 

of the designated sugar. 

C. All granulated sugar testing by the 

polariscope 99.5 [degrees] and over will be 

deemed hard refined sugar. All refined sugar 

testing by the polariscope less than 99.5 

[degrees] will be deemed soft refined sugar. 

All ‘‘blackstrap,’’ ‘‘unfiltered sirup,’’ and 

‘‘final molasses’’ will be deemed sirup. 

D. The imported duty-paid sugar selected 

by the refiner as the basis for the drawback 

claim (designated sugar) must be classifiable 

under the same 8-digit HTSUS classification 

as that used in the manufacture of the 

exported refined sugar or sirup and must 

have been used within 5 years after the date 

of importation. Duty-paid sugar which has 

been used at a plant of a refiner within 5 

years after the date on which it was imported 

by such refiner may be designated as the 

basis for the allowance of drawback on 

refined sugars or sirups manufactured at 

another plant of the same refiner. 

E. For the purpose of distributing the 

drawback, relative values must be established 

between hard refined (granulated) sugar, soft 

refined (various grades) sugar, and sirups at 

the time of separation. The entire period 

covered by an abstract will be deemed the 

time of separation of the sugars and sirups 

covered by such abstract. 

F. The sucrose allowance per pound on 

hard refined (granulated) sugar established 

by an abstract, as provided for in this general 

ruling, will be applied to hard refined sugar 

commercially known as loaf, cut loaf, cube, 

pressed, crushed, or powdered sugar 

manufactured from the granulated sugar 

covered by the abstract. 

G. The sucrose allowance per gallon on 

sirup established by an abstract, as provided 

for in this general ruling, will be applied to 

sirup further advanced in value by filtration 

or otherwise, unless such sirup is the subject 

of a special manufacturing drawback ruling. 

H. As to each lot of imported or domestic 

sugar used in the manufacture of refined 

sugar or sirup on which drawback is to be 

claimed, the raw stock records must show the 

refiner’s raw lot number, the number and 

character of the packages, the settlement 

weight in pounds, the settlement 

polarization, and the 8-digit HTSUS 

classification. Such records covering 

imported sugar must show, in addition to the 

foregoing, the import entry number, date of 

importation, name of importing carrier, 

country of origin, the Government weight, 

and the Government polarization. 

I. The melt records must show the date of 

melting, the number of pounds of each lot of 

raw sugar melted, and the full analysis at 

melting. 

J. There must be kept a daily record of final 

products boiled showing the date of the melt, 

the date of boiling, the magma filling serial 

number, the number of the vacuum pan or 

crystallizer filling, the date worked off, and 

the sirup filling serial number. 

K. The sirup manufacture records must 

show the date of boiling, the period of the 

melt, the sirup filling serial number, the 

number of barrels in the filling, the magma 

filling serial number, the quantity of sirup, its 

disposition in tanks or barrels and the 

refinery serial manufacture number. 

L. The refined sugar stock records must 

show the refinery serial manufacture number, 

the period of the melt, the date of 

manufacture, the grade of sugar produced, its 

polarization, the number and kind of 

packages, and the net weight. When soft 

sugars are manufactured, the commercial 

grade number and quantity of each must be 

shown. 

M. Each lot of hard or soft refined sugar 

and each lot of sirup manufactured, 

regardless of the character of the containers 

or vessels in which it is packed or stored, 

must be marked immediately with the date 

of manufacture and the refinery manufacture 

number applied to it in the refinery records 

provided for and shown in the abstract, as 

provided for in this general ruling, from such 

records. If all the sugar or sirup contained in 

any lot manufactured is not intended for 

exportation, only such of the packages as are 

intended for exportation need be marked as 

prescribed above, provided there is filed with 

the drawback office immediately after such 

marking a statement showing the date of 

manufacture, the refinery manufacture 

number, the number of packages marked, and 

the quantity of sugar or sirup contained 

therein. No drawback will be allowed in such 

case on any sugar or sirup in excess of the 

quantity shown on the statement as having 

been marked. If any packages of sugar or 

sirup so marked are repacked into other 

containers, the new containers must be 

marked with the marks which appeared on 

the original containers and a revised 

statement covering such repacking and 

remarking must be filed with the drawback 

office. If sirups from more than one lot are 

stored in the same tank, the refinery records 

must show the refinery manufacture number 

and the quantity of sirup from each lot 

contained in such tank. 

N. An abstract from the foregoing records 

covering manufacturing periods of not less 

than 1 month nor more than 3 months, unless 

a different period will have been authorized, 

must be filed when drawback is to be 

claimed on any part of the refined sugar or 

sirup manufactured during such period. Such 

abstract must be filed by each refiner with 

the drawback office where drawback claims 

are filed on the basis of this general ruling. 

Such abstract must consist of: (1) A raw stock 

record (accounting for Refiner’s raw lot No., 

Import entry No., Packages No. and kind, 

Pounds, Polarization, By whom imported or 

withdrawn, Date of importation, Date of 

receipt by refiner, Date of melt, Importing 

carrier, Country of origin); (2) A melt record 

[number of pounds in each lot melted] 

(accounting for Lot No. Pounds, and 

Polarization degrees and pounds sucrose); (3) 

Sirup stock records (accounting for Date of 

boiling, Refinery serial manufacture No., 

Quantity of sirup in gallons, and Pounds 

sucrose contained therein); (4) Refined sugar 

stock record (accounting for Refinery serial 

production No., Date of manufacture, Hard or 

soft refined, Polarization and No., Net weight 

in pounds); (5) Recapitulation (consisting of 

(in pounds): (a) Sucrose in process at 

beginning of period, (b) sucrose melted 

during period, (c) sucrose in process at end 

of period, (d) sucrose used in manufacture, 

and (e) sucrose contained in manufacture, in 

which item (a) plus item (b), minus item (c), 

should equal item (d)); and (6) A statement 

as follows: 

I, lllll, the lll refiner at the 

lll refinery of lll, located at lll, 

do solemnly and truly declare that each of 

the statements contained in the foregoing 

abstract is true to the best of my knowledge 

and belief and can be verified by the refinery 

records, which have been kept in accordance 

with Treasury Decision 83–59 and Appendix 

A of 19 CFR part 190 and which are at all 

times open to the inspection of CBP. 

Date llllllllllllllllll

Signature llllllllllllllll

O. The refiner must file with each abstract 

a statement, showing the average market 

values of the products specified in the 

abstract and including a statement as follows: 

I, lllll, (Official capacity) of the 

lll (Refinery), do solemnly and truly 

declare that the values shown above are true 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37973 

1 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles produced.’’ 

2The date of production is the date an article is 

completed. 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

2Standards set by the Society of Automotive 

Engineers (SAE), the American Iron and Steel 

Institute (AISI), or the American Society for Testing 

and Materials (ASTM). 

to the best of my knowledge and belief, and 

can be verified by our records. 

Date llllllllllllllllll

Signature llllllllllllllll

P. At the end of each calendar month the 

refiner must furnish to the drawback office a 

statement showing the actual sales of sirup 

and the average market values of refined 

sugars for the calendar month. 

Q. The sucrose allowance to be applied to 

the various products based on the abstract 

and statement provided for in this general 

ruling will be in accordance with the 

example set forth in Treasury Decision 83– 

59. 

R. [Reserved.] 

S. Drawback entries under this general 

ruling must state the polarization in degrees 

and the sucrose in pounds for the designated 

imported sugar. Drawback claims under this 

general ruling must include a statement as 

follows: 

I, lllll, the lll of lll, located 

at lll declare that the sugar (or sirup) 

described in this entry, was manufactured by 

said company at its refinery at lll and is 

part of the sugar (or sirup) covered by 

abstract No. ll, filed at the port of ll; 

that, subject to 19 U.S.C. 1508 and 1313(t), 

the refinery and other records of the 

company verifying the statements contained 

in said abstract are now and at all times 

hereafter will be open to inspection by CBP. 

I further declare that the above-designated 

imported sugar (upon which the duties have 

been paid) was received by said company on 

l and was used in the manufacture of sugar 

and sirup during the period covered by 

abstract No. ll, CBP No. ll, on file with 

the port director at lll. 

I further declare that the sugar or sirup 

specified therein was exported as stated in 

the entry. 

Date llllllllllllllllll

Signature llllllllllllllll

T. General Statement. The refiner 

manufactures or produces for its own 

account. The refiner may manufacture or 

produce articles for the account of another or 

another manufacturer or producer may 

manufacture or produce for the refiner’s 

account under contract within the principal 

and agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

U. Waste. No drawback is payable on any 

waste which results from the manufacturing 

operation. Unless drawback claims are based 

on the ‘‘appearing in’’ method, records will 

be maintained to establish the value (or the 

lack of value), the quantity, and the 

disposition of any waste that results from 

manufacturing the exported articles. If no 

waste results, records to establish that fact 

will be maintained. 

V. Loss or Gain. The refiner will maintain 

records showing the extent of any loss or gain 

in net weight or measurement of the sugar 

caused by atmospheric conditions, chemical 

reactions, or other factors. 

W. [Reserved] 

X. Procedures and Records Maintained. 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The identity, specifications, and 8-digit 

HTSUS classification of the designated 

merchandise; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS classification 

as the designated merchandise 1 used to 

produce the exported articles; and 

3. That, within 5 years of the date of 

importation of the designated merchandise, 

the refiner used the designated merchandise 

to produce articles. During the same 5-year 

period, the refiner produced 2 the exported 

articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after the importation 

of the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

Y. General requirements. The refiner will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

XII. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for Steel 

(T.D. 81–74) 

A. Same 8-Digit HTSUS Classification 

(Parallel Columns) 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products 

Duty-paid, duty-free or domestic merchandise classifiable under the 

same 8-digit HTSUS subheading number as that designated which will 

be used in the production of the exported products. 

Steel of one general class, e.g., an ingot, falling within on SAE, AISI, or 

ASTM 2 specification and, if the specification contains one or more 

grades, falling within one grade of the specification. 

Steel of the same general class, specification, and grade as the steel 

in the column immediately to the left hereof. 

1. The duty-paid, duty-free, or domestic 

steel used instead of the imported, duty-paid 

steel (or drawback products) will be 

interchangeable for manufacturing purposes 

with the duty-paid steel. To be 

interchangeable a steel must be able to be 

used in place of the substituted steel without 

any additional processing step in the 

manufacture of the article on which 

drawback is to be claimed. 

2. Because the duty-paid steel (or drawback 

products) that is to be designated as the basis 

for drawback is dutiable according to its 

value, the amount of duty can vary with its 

size (gauge, width, or length) or composition 

(e.g., chrome content). If such variances 

occur, designation will be by ‘‘price extra’’, 

and in no case will drawback be claimed in 

a greater amount than that which would have 

accrued to that steel used in manufacture of 

or appearing in the exported articles. Price 

extra is not available for coated or plated 

steel, covered in paragraph 4, infra, insofar as 

the coating or plating is concerned. 

3. Any fluctuation in market value caused 

by a factor other than quality does not affect 

drawback. 

4. If the steel is coated or plated with a 

base metal, in addition to meeting the 

requirements for uncoated or unplated steel 

set forth in the parallel columns, the basemetal coating or plating on the duty-paid, 

duty-free, or domestic steel used in place of 

the duty-paid steel (or drawback products) 

will have the same composition and 

thickness as the coating or plating on the 

duty-paid steel. If the coated or plated dutypaid steel is within an SAE, AISI, ASTM 

specification, then any duty-paid, duty-free, 

or domestic coated or plated steel must be 

covered by the same specification and grade 

(if two or more grades are in the 

specification). 


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3 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles produced.’’ 

4The date of production is the date an article is 

completed. 1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

The exported articles will have been 

manufactured in the United States using 

steels described in the parallel columns 

above. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. 

The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The steel described in the parallel columns 

will be used to manufacture or produce 

articles in accordance with § 190.2. 

E. Multiple Products 

Not applicable. 

F. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of steel appearing in 

the exported articles, records will be 

maintained to establish the value (or the lack 

of value), the quantity, and the disposition of 

any waste that results from manufacturing 

the exported articles. If no waste results, 

records to establish that fact will be 

maintained. 

G. Loss or Gain 

The manufacturer or producer will 

maintain records showing the extent of any 

loss or gain in net weight or measurement of 

the steel caused by atmospheric conditions, 

chemical reactions, or other factors. 

H. [Reserved] 

I. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The identity, specifications, and 8-digit 

HTSUS classification of the designated 

merchandise; 

2. The quantity of merchandise of the 

designated merchandise 3 used to produce 

the exported articles; 

3. That, within 5 years of the date of 

importation of the designated merchandise, 

the manufacturer or producer used the 

merchandise to produce articles. During the 

same 5-year period, the manufacturer or 

producer produced 4 the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after the importation 

of the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

J. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures And Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

K. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of steel used in producing the exported 

articles only if there is no waste or valueless 

or unrecovered waste in the manufacturing 

operation. Drawback may be claimed on the 

quantity of eligible steel that appears in the 

exported articles, regardless of whether there 

is waste, and no records of waste need be 

maintained. If there is valuable waste 

recovered from the manufacturing operation 

and records are kept which show the 

quantity and value of the waste from each lot 

of steel, drawback may be claimed on the 

quantity of eligible steel used to produce the 

exported articles less the amount of that steel 

which the value of the waste would replace. 

L. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification to operate 

under this general ruling current by reporting 

promptly to the drawback office which 

liquidates its claims any changes in the 

information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

XIII. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(b) for Sugar 

(T.D. 81–92) 

A. Same 8-Digit HTSUS Classification 

(Parallel Columns) 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products 

Duty-paid, duty-free or domestic merchandise classifiable under the 

same 8-digit HTSUS subheading number as that designated which will 

be used in the production of the exported products 

1. Granulated or liquid sugar for manufacturing, containing sugar solids 

of not less than 99.5 sugar degrees. 

1. Granulated or liquid sugar for manufacturing, containing sugar solids 

of less than 99.5 sugar degrees. 

2. Granulated or liquid sugar for manufacturing, containing sugar solids 

of not less than 99.5 sugar degrees. 

2. Granulated or liquid sugar for manufacturing, containing sugar solids 

of less than 99.5 sugar degrees. 

The sugars listed above test within threetenths of a degree on the polariscope. Sugars 

in each column are completely 

interchangeable with the sugars directly 

opposite and designation will be made on 

this basis only. The designated sugar on 

which claims for drawback will be based will 

be classifiable under the same 8-digit HTSUS 

classification. Differences in value resulting 

from factors other than quality, such as 

market fluctuation, will not affect the 

allowance of drawback. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

Edible substances (including 

confectionery) and/or beverages and/or 

ingredients therefor. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The sugars are subjected to one or more of 

the following operations to form the desired 

product(s): 

1. Mixing with other substances, 

2. Cooking with other substances, 

3. Boiling with other substances, 


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2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles produced.’’ 

3The date of production is the date an article is 

completed. 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of the sentence should read 

‘‘appearing in the exported articles.’’ 

4. Baking with other substances, 

5. Additional similar processes. 

E. Multiple Products 

Not applicable. 

F. Waste 

No drawback is payable on any waste 

which results from the manufacturing 

operation. Unless the claim for drawback is 

based on the quantity of sugar appearing in 

the exported articles, records will be 

maintained to establish the value (or the lack 

of value), the quantity, and the disposition of 

any waste that results from manufacturing 

the exported articles. If no waste results, 

records to establish that fact will be 

maintained. 

G. Loss or Gain 

The manufacturer or producer will 

maintain records showing the extent of any 

loss or gain in net weight or measurement of 

the sugar caused by atmospheric conditions, 

chemical reactions, or other factors. 

H. [Reserved] 

I. Procedures And Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. The identity, specifications, and 8-digit 

HTSUS classification of the designated 

merchandise; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS classification 

as the designated merchandise 2 used to 

produce the exported articles; 

3. That, within 5 years of the date of 

importation of the designated merchandise, 

the manufacturer or producer used the 

merchandise to produce articles. During the 

same 5-year period, the manufacturer or 

producer produced 3 the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after the importation 

of the imported merchandise. Records 

establishing compliance with these 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

J. Inventory Procedures 

The inventory records of the manufacturer 

or producer, will show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures And Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

K. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of sugar used in producing the exported 

articles only if there is no waste or valueless 

or unrecovered waste in the manufacturing 

operation. Drawback may be claimed on the 

quantity of eligible sugar that appears in the 

exported articles regardless of whether there 

is waste, and no records of waste need be 

maintained. If there is valuable waste 

recovered from the manufacturing operation 

and records are kept which show the 

quantity and value of the waste, drawback 

may be claimed on the quantity of eligible 

material used to produce the exported 

articles less the amount of that sugar which 

the value of the waste would replace. 

L. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation; 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this general ruling. 

XIV. General Manufacturing Drawback 

Ruling Under 19 U.S.C. 1313(a) for Woven 

Piece Goods (T.D. 83–84) 

Drawback may be allowed under 19 U.S.C. 

1313(a) upon the exportation of bleached, 

mercerized, printed, dyed, or redyed piece 

goods manufactured or produced by any one 

or a combination of the foregoing processes 

with the use of imported woven piece goods, 

subject to the following special requirements: 

A. Imported Merchandise or Drawback 

Products 1 Used 

Imported merchandise or drawback 

products (woven piece goods) are used in the 

manufacture of the exported articles upon 

which drawback claims will be based. 

B. Exported Articles on Which Drawback Will 

Be Claimed 

Exported articles on which drawback will 

be claimed will be manufactured in the 

United States using imported merchandise or 

drawback products. 

C. General Statement 

The manufacturer or producer 

manufactures or produces for its own 

account. The manufacturer or producer may 

manufacture or produce articles for the 

account of another or another manufacturer 

or producer may manufacture or produce for 

the account of the manufacturer or producer 

under contract within the principal and 

agency relationship outlined in T.D.s 

55027(2) and 55207(1) (see § 190.9). 

D. Process of Manufacture or Production 

The imported merchandise or drawback 

products will be used to manufacture or 

produce articles in accordance with § 190.2. 

The piece goods used in manufacture or 

production under this general manufacturing 

drawback ruling may also be subjected to one 

or more finishing processes. Drawback will 

not be allowed under this general 

manufacturing drawback ruling when the 

process performed results only in the 

restoration of the merchandise to its 

condition at the time of importation. 

E. Multiple Products 

Not applicable. 

F. Waste 

Rag waste may be incurred. No drawback 

is payable on any waste which results from 

the manufacturing operation. Unless the 

claim for drawback is based on the quantity 

of merchandise appearing in the exported 

articles, the records of the manufacturer or 

producer must show the quantity of rag 

waste, if any, its value, and its disposition. 

If no waste results, records will be 

maintained to establish that fact. In instances 

where rag waste occurs and it is impractical 

to account for the actual quantity of rag waste 

incurred, it may be assumed that such rag 

waste constituted 2% of the woven piece 

goods put into process. If necessary to 

establish the quantity of merchandise 

(eligible piece goods) appearing in the 

exported articles, such waste records will 

also be kept. 

G. Shrinkage, Gain, and Spoilage 

Unless the claim for drawback is based on 

the quantity of merchandise appearing in the 

exported articles, the records of the 

manufacturer or producer must show the 

yardage lost by shrinkage or gained by 

stretching during manufacture, and the 

quantity of remnants resulting and of 

spoilage incurred, if any. If necessary to 

establish the quantity of merchandise 

(eligible piece goods) appearing in the 

exported articles, such records for shrinkage, 

gain, and spoilage will also be kept. 

H. Procedures and Records Maintained 

Records, which may include records kept 

in the normal course of business, will be 

maintained to establish: 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of the imported merchandise; and 

2. The quantity of imported merchandise 2

used in producing the exported articles. 

To obtain drawback the claimant must 

establish that the completed articles were 

exported within 5 years after importation of 

the imported merchandise. Records 

establishing compliance with these 


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37976 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

requirements will be available for audit by 

CBP during business hours. Drawback is not 

payable without proof of compliance. 

I. Inventory Procedures 

The inventory records of the manufacturer 

or producer must show how the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(a) and part 190 of the CBP 

Regulations will be met, as discussed under 

the heading ‘‘Procedures and Records 

Maintained’’. If those records do not establish 

satisfaction of those legal requirements, 

drawback cannot be paid. 

The records of the manufacturer or 

producer must show, as to each lot of piece 

goods manufactured or produced for 

exportation with benefit of drawback, the lot 

number and the date or inclusive dates of 

manufacture or production, the quantity, 

identity, value, and 8-digit HTSUS 

classification of the imported (or drawback 

product) piece goods used, the condition in 

which imported or received (whether in the 

gray, bleached, dyed, or mercerized), the 

working allowance specified in the contract 

under which they are received, the process 

or processes applied thereto, and the quantity 

and description of the piece goods obtained. 

The records must also show the yardage lost 

by shrinkage or gained by stretching during 

manufacture or production, and the quantity 

of remnants resulting and of spoilage 

incurred. 

J. Basis of Claim for Drawback 

Drawback will be claimed on the quantity 

of merchandise used in producing the 

exported articles only if there is no waste or 

valueless or unrecovered waste in the 

manufacturing operation. Drawback may be 

claimed on the quantity of eligible 

merchandise that appears in the exported 

articles, regardless of whether there is waste, 

and no records of waste need be maintained. 

If there is valuable waste recovered from the 

manufacturing operation and records are kept 

which show the quantity and value of the 

waste, drawback may be claimed on the 

quantity of eligible material used to produce 

the exported articles, less the amount of that 

merchandise which the value of the waste 

would replace. (If remnants and/or spoilage 

occur during manufacture or production, the 

quantity of imported merchandise used will 

be determined by deducting from the 

quantity of piece goods received and put into 

manufacture or production the quantity of 

such remnants and/or spoilage. The 

remaining quantity will be reduced by the 

quantity thereof which the value of the rag 

waste, if any, would replace.) 

K. General Requirements 

The manufacturer or producer will: 

1. Comply fully with the terms of this 

general ruling when claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

general ruling; 

4. Keep its letter of notification of intent to 

operate under this general ruling current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the information required by the General 

Instructions of this Appendix to be included 

therein (I. General Instructions, 1 through 10) 

or the corporate name or corporate 

organization by succession or 

reincorporation. 

5. Keep a copy of this general ruling on file 

for ready reference by employees and require 

all officials and employees concerned to 

familiarize themselves with the provisions of 

this general ruling; and 

6. Issue instructions to insure proper 

compliance with 19, United States Code, 

§ 1313, part 190 of the CBP Regulations and 

this general ruling. 

Appendix B to Part 190—Sample 

Formats for Applications for Specific 

Manufacturing Drawback Rulings 

Table of Contents 

I. General 

II. Format for Application for Specific 

Manufacturing Drawback Ruling Under 

19 U.S.C. 1313(a) and 1313(b) 

(Combination) 

III. Format for Application for Specific 

Manufacturing Drawback Ruling Under 

19 U.S.C. 1313(b) 

IV. Format for Application for Specific 

Manufacturing Drawback Ruling Under 

19 U.S.C. 1313(d) 

V. Format for Application for Specific 

Manufacturing Drawback Ruling Under 

19 U.S.C. 1313(g) 

I. General 

Applications for specific manufacturing 

drawback rulings using these sample formats 

must be submitted to and reviewed and 

approved by CBP Headquarters. See 19 CFR 

190.8. A specific manufacturing drawback 

ruling consists of the letter of approval that 

CBP issues to the applicant. In these 

application formats, remarks in parentheses 

and footnotes are for explanatory purposes 

only and should not be copied. Other 

material should be quoted directly in the 

applications. 

II. Format for Application for Specific 

Manufacturing Drawback Ruling Under 19 

U.S.C. 1313(a) and 1313(b) (Combination) 

COMPANY LETTERHEAD (Optional) 

U.S. Customs and Border Protection, Entry 

Process and Duty Refunds, Regulations and 

Rulings, Office of Trade, 90 K Street NE— 

10th Floor (Mail Stop 1177), Washington, DC 

20229–1177. 

Dear Sir or Madam: We, (Applicant’s 

Name), a (State, e.g., Delaware) corporation 

(or other described entity) submit this 

application for a specific manufacturing 

drawback ruling that our manufacturing 

operations qualify for drawback under title 

19, United States Code, §§ 1313 (a) & (b), and 

part 190 of the CBP Regulations. We request 

that CBP authorize drawback on the basis of 

this application. 

NAME AND ADDRESS AND IRS NUMBER 

(WITH SUFFIX) OF APPLICANT 

(Section 190.8(a) of the CBP Regulations 

provides that each manufacturer or producer 

of articles intended for exportation with the 

benefit of drawback must apply for a specific 

manufacturing drawback ruling, unless 

operating under a general manufacturing 

drawback ruling under § 190.7 of the CBP 

Regulations. CBP will not approve an 

application which shows an unincorporated 

division or company as the applicant (see 

§ 190.8(a)).) 

LOCATION OF FACTORY 

(Give the address of the factory(s) where 

the process of manufacture or production 

will take place. If the factory is a different 

legal entity from the applicant, so state and 

indicate if operating under an Agent’s general 

manufacturing drawback ruling.) 

PERSONS WHO WILL SIGN DRAWBACK 

DOCUMENTS 

(List persons legally authorized to bind the 

corporation who will sign drawback 

documents. Section 190.6 of the CBP 

Regulations permits only the president, vice 

president, secretary, treasurer, or any 

employee legally authorized to bind the 

corporation to sign for a corporation. In 

addition, a person within a business entity 

with a customs power of attorney for the 

company may sign. A customs power of 

attorney may also be given to a licensed 

customs broker. This heading should be 

changed to Names of Partners or Proprietor 

in the case of a partnership or sole 

proprietorship, respectively (see footnote at 

end of this sample format for persons who 

may sign applications for specific 

manufacturing drawback rulings).) 

CBP OFFICE WHERE DRAWBACK CLAIMS 

WILL BE FILED 

(The four offices where drawback claims 

can be filed are located at: New York, NY; 

Houston, TX; Chicago, IL; San Francisco, 

CA.) 

(An original application and two copies 

must be filed. If the applicant intends to file 

drawback claims at more than one drawback 

office, one additional copy of the application 

must be furnished for each additional office 

indicated.) 

GENERAL STATEMENT 

(The following questions must be 

answered:) 

1. Who will be the importer of the 

designated merchandise? 

(If the applicant will not always be the 

importer of the designated merchandise, does 

the applicant understand its obligations to 

maintain records to support the transfer 

under § 190.10, and its liability under 

§ 190.63?) 

2. Will an agent be used to process the 

designated or the substituted merchandise 

into articles? 

(If an agent is to be used, the applicant 

must state it will comply with T.D.s 55027(2) 

and 55207(1) and § 190.9, as applicable, and 

that its agent will submit a letter of 

notification of intent to operate under the 

general manufacturing drawback ruling for 

agents (see § 190.7 and Appendix A) or an 

application for a specific manufacturing 

drawback ruling (see § 190.8 and this 

Appendix B).) 

3. Will the applicant be the exporter? 


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1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

(If the applicant will not be the exporter in 

every case but will be the claimant, the 

manufacturer must state that it will reserve 

the right to claim drawback with the 

knowledge and written consent of the 

exporter (19 CFR 190.82).) 

PROCEDURES UNDER SECTION 1313(b) 

(PARALLEL COLUMNS—‘‘SAME 8-DIGIT 

CLASSIFICATION’’) 

Imported merchandise or drawback products 1 to be designated as the 

basis for drawback on the exported products 

Duty-paid, duty-free or domestic merchandise of the same 8-digit 

HTSUS subheading number as that designated which will be used in 

the production of the exported products 

1. 1. 

2. 2. 

3. 3. 

(Following the items listed in the parallel 

columns, a statement will be made, by the 

applicant, that affirms the same 8-digit 

HTSUS classification of the merchandise. 

This statement should be included in the 

application exactly as it is stated below:) 

The imported merchandise which we will 

designate in our claims will be classifiable 

under the same 8-digit HTSUS classification 

as the merchandise used in producing the 

exported articles on which we claim 

drawback. 

Fluctuations in the market value resulting 

from factors other than quality will not affect 

the drawback. 

(In order to successfully claim drawback it 

is necessary to prove that the duty-paid, 

duty-free or domestic merchandise which is 

to be substituted for the imported 

merchandise is ‘‘classifiable under the same 

8-digit HTSUS classification’’. In order to 

enable CBP to rule on ‘‘the same 8-digit 

HTSUS classification’’, the application must 

include a detailed description of the 

designated imported merchandise and of the 

substituted duty-paid, duty-free or domestic 

merchandise to be used to produce the 

exported articles, as well as provide the Bill 

of Materials and/or formulas annotated with 

the HTSUS classifications.) 

(It is essential that all the characteristics 

which determine the quality of the 

merchandise are provided in the application 

in order to substantiate that the merchandise 

meets the ‘‘the same 8-digit HTSUS 

classification’’ statutory requirement. These 

characteristics should clearly distinguish 

merchandise of different qualities. For 

example, USDA standards; FDA standards; 

industry standards, e.g., ASTM; 

concentration; specific gravity; purity; luster; 

melting point, boiling point; odor; color; 

grade; type; hardness; brittleness; etc. Note 

that these are only a few examples of 

characteristics and that each kind of 

merchandise has its own set of specifications 

that characterizes its quality. If specifications 

are given with a minimum value, be sure to 

include a maximum value. The converse is 

also true. Often characteristics are given to 

CBP on attached specification sheets. These 

specifications should not include Material 

Safety Data sheets or other descriptions of the 

merchandise that do not contribute to the 

‘‘same 8-digit HTSUS subheading number’’ 

determination. When the merchandise is a 

chemical, state the chemical’s generic name 

as well as its trade name plus any generally 

recognized identifying number, e.g., CAS 

number; Color Index Number, etc.) (In order 

to expedite the specific manufacturing 

drawback ruling process, it will be helpful if 

you provide copies of technical standards/ 

specifications (particularly industry 

standards such as ASTM standards) referred 

to in your application.) 

(The descriptions of the ‘‘the same 8-digit 

HTSUS subheading number’’ merchandise 

should be formatted in the parallel columns. 

The left-hand column will consist of the 

name and specifications of the designated 

imported merchandise under the heading set 

forth above. The right-hand column will 

consist of the name, specifications, and 8- 

digit HTSUS subheading number for the 

duty-paid, duty-free or domestic 

merchandise under the heading set forth 

above. Amendments to rulings will be 

required if any changes to the HTSUS 

classifications occur.) 

EXPORTED ARTICLES ON WHICH 

DRAWBACK WILL BE CLAIMED 

(Name each article to be exported. When 

the identity of the product is not clearly 

evident by its name state what the product 

is, e.g., a herbicide. There must be a match 

between each article described under the 

PROCESS OF MANUFACTURE OR 

PRODUCTION section below and each article 

listed here.) 

PROCESS OF MANUFACTURE OR 

PRODUCTION 

(Drawback under § 1313(b) is not allowable 

except where a manufacture or production 

exists. Manufacture or production is defined, 

for drawback purposes, in § 190.2. In order to 

obtain drawback under § 1313(b), it is 

essential for the applicant to show use in 

manufacture or production by giving a 

thorough description of the manufacturing 

process. This description should include the 

name and exact condition of the merchandise 

listed in the Parallel Columns, a complete 

explanation of the processes to which it is 

subjected in this country, the effect of such 

processes, the name and exact description of 

the finished article, and the use for which the 

finished article is intended. When applicable, 

give equations of the chemical reactions. The 

attachment of a flow chart in addition to the 

description showing the manufacturing 

process is an excellent means of illustrating 

whether or not a manufacture or production 

has occurred. Flow charts can clearly 

illustrate if and at what point during the 

manufacturing process by-products and 

wastes are generated.) 

(This section should contain a description 

of the process by which each item of 

merchandise listed in the parallel columns 

above is used to make or produce every 

article that is to be exported.) 

MULTIPLE PRODUCTS 

1. Relative Values 

(Some processes result in the separation of 

the merchandise used in the same operation 

into two or more products. List all of the 

products. State that you will record the 

market value of each product at the time it 

is first separated in the manufacturing 

process. If this section is not applicable to 

you, then state so.) 

(Drawback law mandates the assignment of 

relative values when two or more products 

necessarily are produced concurrently in the 

same operation. For instance, the refining of 

flaxseed necessarily produces linseed oil and 

linseed husks (animal feed), and drawback 

must be distributed to each product in 

accordance with its relative value. However, 

the voluntary election of a steel fabricator, for 

instance, to use part of a lot of imported steel 

to produce automobile doors and part of the 

lot to produce automobile fenders does not 

call for relative value distribution.) 

(The relative value of a product is its value 

divided by the total value of all products, 

whether or not exported. For example, 100 

gallons of drawback merchandise are used to 

produce 100 gallons of products, including 

60 gallons of product A, 20 gallons of 

product B, and 20 gallons of product C. At 

the time of separation, the unit values of 

products A, B, and C are $5, $10, and $50 

respectively. The relative value of product A 

is $300 divided by $1500 or 1⁄5. The relative 

value of B is 2⁄15 and of product C is 2⁄3, 

calculated in the same manner. This means 

that 1⁄5 of the drawback product payments 

will be distributed to product A, 2⁄15 to 

product B, and 2⁄3 to product C.) 

(Drawback is allowable on exports of any 

of multiple products, but is not allowable on 

exports of valuable waste. In making this 

distinction between a product and valuable 

waste, the applicant should address the 

following significant elements: (1) The nature 

of the material of which the residue is 

composed; (2) the value of the residue as 

compared to the value of the principal 

manufactured product and the raw material; 

(3) the use to which it is put; (4) its status 

under the tariff laws, if imported; (5) whether 

it is a commodity recognized in commerce; 

(6) whether it must be subjected to some 

process to make it saleable.) 


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2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles we produce.’’ 

3The date of production is the date an article is 

completed. 

2. Producibility 

(Some processes result in the separation of 

fixed proportions of each product, while 

other processes afford the opportunity to 

increase or decrease the proportion of each 

product. An example of the latter is 

petroleum refining, where the refiner has the 

option to increase or decrease the production 

of one or more products relative to the others. 

State under this heading whether you can or 

cannot vary the proportionate quantity of 

each product.) (The MULTIPLE PRODUCTS 

section consists of two sub-sections: Relative 

Values and Producibility. If multiple 

products do not result from your operation 

state ‘‘not applicable’’ for the entire section. 

If multiple products do result from your 

operation Relative Values will always apply. 

However, Producibility may or may not 

apply. If Producibility does not apply to your 

multiple product operation state ‘‘Not 

Applicable’’ for this sub-section.) 

WASTE 

(Many processes result in residue materials 

which, for drawback purposes, are treated as 

wastes. Describe any residue materials which 

you believe should be so treated. If no waste 

results, include a positive statement to that 

effect under this heading.) 

(If waste occurs, state: (1) Whether or not 

it is recovered, (2) whether or not it is 

valueless, and (3) what you do with it. This 

information is required whether claims are 

made on a ‘‘used in’’ or ‘‘appearing in’’ basis 

and regardless of the amount of waste 

incurred.) 

(Irrecoverable wastes are those consisting 

of materials which are lost in the process. 

Valueless wastes are those which may be 

recovered but have no value. These 

irrecoverable and valueless wastes do not 

reduce the drawback claim provided the 

claim is based on the quantity of imported 

material used in manufacturing. If the claim 

is based upon the quantity of imported 

merchandise appearing in the exported 

article, irrecoverable and valueless waste will 

cause a reduction in the amount of 

drawback.) 

(Valuable wastes are those recovered 

wastes which have a value either for sale or 

for use in a different manufacturing process. 

However, it should be noted that this 

standard applies to the entire industry and is 

not a selection on your part. An option by 

you not to choose to sell or use the waste in 

some different operation does not make it 

valueless if another manufacturer can use the 

waste. State what you do with the waste. If 

you have to pay someone to get rid of it, or 

if you have buyers for the waste, you must 

state so in your application regardless of 

what ‘‘Basis’’ you are using.) 

(If you recover valuable waste and if you 

choose to claim on the basis of the quantity 

of imported or substituted merchandise used 

in producing the exported articles (less 

valuable waste), state that you will keep 

records to establish the quantity and value of 

the waste recovered. See ‘‘Basis of Claim for 

Drawback’’ section below.) 

STOCK IN PROCESS 

(Some processes result in another type of 

residual material, namely, stock in process, 

which affects the allowance of drawback. 

Stock in process may exist when residual 

material resulting from a manufacturing or 

processing operation is reintroduced into a 

subsequent manufacturing or processing 

operation; e.g., trim pieces from a cast article. 

The effect of stock in process on a drawback 

claim is that the amount of drawback for the 

period in which the stock in process was 

withdrawn from the manufacturing or 

processing operation (or the manufactured 

article, if manufacturing or processing 

periods are not used) is reduced by the 

quantity of merchandise or drawback 

products used to produce the stock in 

process if the ‘‘used in’’ or ‘‘used in less 

valuable waste’’ methods are used (if the 

‘‘appearing in’’ method is used, there will be 

no effect on the amount of drawback), and 

the quantity of merchandise or drawback 

products used to produce the stock in 

process is added to the merchandise or 

drawback products used in the subsequent 

manufacturing or production period (or the 

subsequently produced article)). 

(If stock in process occurs and claims are 

to be based on stock in process, the 

application must include a statement to that 

effect. The application must also include a 

statement that merchandise is considered to 

be used in manufacture at the time it was 

originally processed so that the stock in 

process will not be included twice in the 

computation of the merchandise used to 

manufacture the finished articles on which 

drawback is claimed.) 

LOSS OR GAIN (Separate and distinct from 

WASTE) 

(Some manufacturing processes result in 

an intangible loss or gain of the net weight 

or measurement of the merchandise used. 

This loss or gain is caused by atmospheric 

conditions, chemical reactions, or other 

factors. State the approximate usual 

percentage or quantity of such loss or gain. 

Note that percentage values will be 

considered to be measured ‘‘by weight’’ 

unless otherwise specified. Loss or gain does 

not occur during all manufacturing 

processes. If loss or gain does not apply to 

your manufacturing process, state ‘‘Not 

Applicable.’’) 

PROCEDURES AND RECORDS 

MAINTAINED 

We will maintain records to establish: 

1. The identity, specifications, and 8-digit 

HTSUS subheading number of the 

merchandise we designate; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS subheading 

number as the designated merchandise 2 we 

used to produce the exported articles; 

3. That, within 5 years after the date of 

importation, we used the designated 

merchandise to produce articles. During the 

same 5-year period, we produced 3 the 

exported articles. 

We realize that to obtain drawback the 

claimant must establish that the completed 

articles were exported within 5 years after 

the importation of the imported merchandise. 

Our records establishing our compliance 

with these requirements will be available for 

audit by CBP during business hours. We 

understand that drawback is not payable 

without proof of compliance. 

INVENTORY PROCEDURES 

(Describe your inventory records and state 

how those records will meet the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations as discussed under the heading 

PROCEDURES AND RECORDS 

MAINTAINED. To insure compliance the 

following areas, as applicable, should be 

included in your discussion:) 

RECEIPT AND STORAGE OF DESIGNATED 

MERCHANDISE 

RECORDS OF USE OF DESIGNATED 

MERCHANDISE 

BILLS OF MATERIALS 

MANUFACTURING RECORDS 

WASTE RECORDS 

RECORDS OF USE OF DUTY-PAID, DUTYFREE OR DOMESTIC MERCHANDISE OF 

THE REQUIRED SAME 8-DIGIT HTSUS 

SUBHEADING NUMBER WITHIN 5 YEARS 

AFTER THE DATE OF IMPORTATION 

FINISHED STOCK STORAGE RECORDS 

SHIPPING RECORDS 

(Proof of time frames may be specific or 

inclusive, e.g., within 120 days, but specific 

proof is preferable. Separate storage and 

identification of each article or lot of 

merchandise usually will permit specific 

proof of exact dates. Proof of inclusive dates 

of use, production or export may be 

acceptable, but in such cases it is best to 

describe very specifically the data you intend 

to use to establish each legal requirement, 

thereby avoiding misunderstandings at the 

time of audit.) (If you do not describe the 

inventory records that you will use, a 

statement that the legal requirements will be 

met by your inventory procedures is 

acceptable. However, it should be noted that 

without a detailed description of the 

inventory procedures set forth in the 

application a judgment as to the adequacy of 

such a statement cannot be made until a 

drawback claim is verified. Approval of this 

application for a specific manufacturing 

drawback ruling merely constitutes approval 

of the ruling application as submitted; it does 

not constitute approval of the applicant’s 

record keeping procedures if, for example, 

those procedures are merely described as 

meeting the legal requirements, without 

specifically stating how the requirements 

will be met. Drawback is not payable without 

proof of compliance.) 

BASIS OF CLAIM FOR DRAWBACK 

(There are three different bases that may be 

used to claim drawback: (1) Used in; (2) 

appearing in; and (3) used in less valuable 

waste.) 

(The ‘‘used in’’ basis may be employed 

only if there is either no waste or valueless 

or unrecovered waste in the operation. 

Irrecoverable or valueless waste does not 


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4 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of the sentence should read 

‘‘appearing in the exported articles we produce.’’ 

reduce the amount of drawback when claims 

are based on the ‘‘used in’’ basis. Drawback 

is payable in the amount of 99 percent of the 

duties, taxes, and fees paid on the quantity 

of imported material designated as the basis 

for the allowance of drawback on the 

exported articles. The designated quantity 

may not exceed the quantity of material 

actually used in the manufacture of the 

exported articles.) 

(For example, if 100 pounds of material, 

valued at $1.00 per pound, were used in 

manufacture resulting in 10 pounds of 

irrecoverable or valueless waste, the 10 

pounds of irrecoverable or valueless waste 

would not reduce the drawback. In this case 

drawback would be payable on 99% of the 

duties, taxes, and fees paid on the 100 

pounds of designated material used to 

produce the exported articles.) 

(The ‘‘appearing in’’ basis may be used 

regardless of whether there is waste. If the 

‘‘appearing in’’ basis is used, the claimant 

does not need to keep records of waste and 

its value. However, the manufacturer must 

establish the identity and quantity of the 

merchandise appearing in the exported 

product and provide this information. Waste 

reduces the amount of drawback when 

claims are made on the ‘‘appearing in’’ basis. 

Drawback is payable on 99 percent of the 

duties, taxes, and fees paid on the quantity 

of material designated, which may not 

exceed the quantity of eligible material that 

appears in the exported articles. ‘‘Appearing 

in’’ may not be used if multiple products are 

involved.) 

(Based on the previous example, drawback 

would be payable on the 90 pounds of 

merchandise which actually went into the 

exported product (appearing in) rather than 

the 100 pounds used in as set forth 

previously.) 

(The ‘‘used in less valuable waste’’ basis 

may be employed when the manufacturer 

recovers valuable waste, and keeps records of 

the quantity and value of waste from each lot 

of merchandise. The value of the waste 

reduces the amount of drawback when 

claims are based on the ‘‘used in less 

valuable waste’’ basis. When valuable waste 

is incurred, the drawback allowance on the 

exported article is based on the duties, taxes, 

and fees paid on the quantity of merchandise 

used in the manufacture, reduced by the 

quantity of such merchandise which the 

value of the waste would replace. Thus in 

this case, drawback is claimed on the 

quantity of eligible material actually used to 

produce the exported product, less the 

amount of such material which the value of 

the waste would replace. Note section 

190.26(c) of the CBP Regulations.) 

(Based on the previous examples, if the 10 

pounds of waste had a value of $.50 per 

pound, then the 10 pounds of waste, having 

a total value of $5.00, would be equivalent 

in value to 5 pounds of the designated 

material. Thus the value of the waste would 

replace 5 pounds of the merchandise used, 

and drawback is payable on 99 percent of the 

duties, taxes, and fees paid on the 95 pounds 

of imported material designated as the basis 

for the allowance of drawback on the 

exported article rather than on the 100 

pounds ‘‘used in’’ or the 90 pounds 

‘‘appearing in’’ as set forth in the above 

examples.) 

(Two methods exist for the manufacturer to 

show the quantity of material used or 

appearing in the exported article: (1) 

Schedule or (2) Abstract.) 

(A ‘‘schedule’’ shows the quantity of 

material used in producing each unit of 

product. The schedule method is usually 

employed when a standard line of 

merchandise is being produced according to 

fixed formulas. Some schedules will show 

the quantity of merchandise used to 

manufacture or produce each article and 

others will show the quantity appearing in 

each finished article. Schedules may be 

prepared to show the quantity of 

merchandise either on the basis of 

percentages or by actual weights and 

measurements. A schedule determines the 

amount that will be needed to produce a unit 

of product before the material is actually 

used in production.) 

(An ‘‘abstract’’ is the summary of the 

records which shows the total quantity used 

in producing all products during the period 

covered by the abstract. The abstract looks at 

a period of time, for instance 3 months, in 

which the quantity of material has been used. 

An abstract looks back at how much material 

was actually used after a production period 

has been completed.) 

(An applicant who fails to indicate the 

‘‘schedule’’ choice must base its claims on 

the ‘‘abstract’’ method. State which Basis and 

Method you will use. An example of Used In 

by Schedule follows:) 

We will claim drawback on the quantity of 

(specify material) used in manufacturing 

(exported article) according to the schedule 

set forth below. (Section 190.8(f) of the CBP 

Regulations requires submission of the 

schedule with the application for a specific 

manufacturing drawback ruling. An 

applicant who desires to file supplemental 

schedules with the drawback office whenever 

there is a change in the quantity or material 

used should state:) 

We request permission to file supplemental 

schedules with the drawback office covering 

changes in the quantities of material used to 

produce the exported articles, or different 

styles or capacities of containers of such 

exported merchandise. (Neither the 

‘‘appearing in’’ basis nor the ‘‘schedule’’ 

method for claiming drawback may be used 

where the relative value procedure is 

required.) 

PROCEDURES UNDER SECTION 1313(a) 

IMPORTED MERCHANDISE OR 

DRAWBACK PRODUCTS USED UNDER 

1313(a) 

(List the imported merchandise or 

drawback products.) 

EXPORTED ARTICLES ON WHICH 

DRAWBACK WILL BE CLAIMED 

(Name each article to be exported. When 

the identity of the product is not clearly 

evident by its name state what the product 

is, e.g., a herbicide. There must be a match 

between each article described under the 

PROCESS OF MANUFACTURE AND 

PRODUCTION section below and each article 

listed here.) 

(If the merchandise used under § 1313(a) is 

not also used under § 1313(b), the sections 

entitled PROCESS OF MANUFACTURE OR 

PRODUCTION, BY-PRODUCTS, LOSS OR 

GAIN, and STOCK IN PROCESS should be 

included here to cover merchandise used 

under § 1313(a). However, if the merchandise 

used under § 1313(a) is also used under 

§ 1313(b) these sections need not be repeated 

unless they differ in some way from the 

§ 1313(b) descriptions.) 

PROCEDURES AND RECORDS 

MAINTAINED 

We will maintain records to establish: 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of the imported merchandise, and 

2. The quantity of imported merchandise 4

we used in producing the exported articles. 

We realize that to obtain drawback the 

claimant must establish that the completed 

articles were exported within 5 years after 

importation of the imported merchandise. 

We understand that drawback is not payable 

without proof of compliance. 

INVENTORY PROCEDURES 

(This section must be completed separately 

from that set forth under the § 1313(b) 

portion of your application. The legal 

requirements under § 1313(a) differ from 

those under § 1313(b).) 

(Describe your inventory procedures and 

state how you will identify the imported 

merchandise from date of importation until 

it is incorporated in the articles to be 

exported. Also describe how you will 

identify the finished articles from the time of 

manufacture until shipment.) 

BASIS OF CLAIM FOR DRAWBACK 

(See section with this title for procedures 

under § 1313(b). Either repeat the same basis 

of claim or use a different basis of claim, as 

described above, specifically for drawback 

claimed under § 1313(a).) 

AGREEMENTS 

The Applicant specifically agrees that it 

will: 

1. Operate in full conformance with the 

terms of this application for a specific 

manufacturing drawback ruling when 

claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

application; 

4. Keep this application current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the number or locations of its offices or 

factories, the corporate name, the persons 

who will sign drawback documents, the basis 

of claim used for calculating drawback, the 

decision to use or not to use an agent under 

§ 190.9 or the identity of an agent under that 

section, or the corporate organization by 

succession or reincorporation; 


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5Section 190.6(a) requires that applications for 

specific manufacturing drawback rulings be signed 

by any individual legally authorized to bind the 

person (or entity) for whom the application is 

signed or the owner of a sole proprietorship, a full 

partner in a partnership, or, if a corporation, the 

president, a vice president, secretary, treasurer or 

employee legally authorized to bind the 

corporation. In addition, any employee of a 

business entity with a customs power of attorney 

filed with the CBP port for the drawback office 

which will liquidate your drawback claims may 

sign such an application, as may a licensed customs 

broker with a customs power of attorney. You 

should state in which CBP port your customs 

power(s) of attorney is/are filed. 

1 Drawback products are those produced in the 

United States in accordance with the drawback law 

and regulations. Such products have ‘‘dual status’’ 

under section 1313(b). They may be designated as 

the basis for drawback and also may be deemed to 

be domestic merchandise. 

5. Keep this application current by 

reporting promptly to CBP Headquarters all 

other changes affecting information 

contained in this application; 

6. Keep a copy of this application and the 

letter of approval by CBP Headquarters on 

file for ready reference by employees and 

require all officials and employees concerned 

to familiarize themselves with the provisions 

of this application and that letter of approval; 

and 

7. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this application and letter of approval. 

DECLARATION OF OFFICIAL 

I declare that I have read this application 

for a specific manufacturing drawback ruling; 

that I know the averments and agreements 

contained herein are true and correct; and 

that my signature on this ll day of 

llll 20l, makes this application 

binding on 

lllllllllllllllllllll

(Name of Applicant Corporation, Partnership, 

or Sole Proprietorship) 

By 5 llllllllllllllllll

(Signature and Title) 

lllllllllllllllllllll

(Print Name) 

III. Format for Application for Specific 

Manufacturing Drawback Ruling Under 19 

U.S.C. 1313(b) 

COMPANY LETTERHEAD (Optional) 

U.S. Customs and Border Protection, Entry 

Process and Duty Refunds Branch, 

Commercial and Trade Facilitation Division, 

Regulations and Rulings, Office of Trade, 90 

K Street NE—10th Floor (Mail Stop 1177), 

Washington, DC 20229–1177. 

Dear Sir or Madam: We, (Applicant’s 

Name), a (State, e.g., Delaware) corporation 

(or other described entity) submit this 

application for a specific manufacturing 

drawback ruling that our manufacturing 

operations qualify for drawback under title 

19, United States Code, section 1313(b), and 

part 190 of the CBP Regulations. We request 

that CBP authorize drawback on the basis of 

this application. 

NAME AND ADDRESS AND IRS NUMBER 

(WITH SUFFIX) OF APPLICANT 

(Section 190.8(a) of the CBP Regulations 

provides that each manufacturer or producer 

of articles intended for exportation with the 

benefit of drawback will apply for a specific 

manufacturing drawback ruling, unless 

operating under a general manufacturing 

drawback ruling under § 190.7 of the CBP 

Regulations. CBP will not approve an 

application which shows an unincorporated 

division or company as the applicant (see 

§ 190.8(a)).) 

LOCATION OF FACTORY 

(Give the address of the factory(s) where 

the process of manufacture or production 

will take place. If the factory is a different 

legal entity from the applicant, so state and 

indicate if operating under an Agent’s general 

manufacturing drawback ruling.) 

PERSONS WHO WILL SIGN DRAWBACK 

DOCUMENTS 

(List persons legally authorized to bind the 

corporation who will sign drawback 

documents. Section 190.6 of the CBP 

Regulations permits only the president, vice 

president, secretary, treasurer, or any 

employee legally authorized to bind the 

corporation to sign for a corporation. In 

addition, a person within a business entity 

with a customs power of attorney for the 

company may sign. A customs power of 

attorney may also be given to a licensed 

customs broker. This heading should be 

changed to NAMES OF PARTNERS or 

PROPRIETOR in the case of a partnership or 

sole proprietorship, respectively (see footnote 

at end of this sample format for persons who 

may sign applications for specific 

manufacturing drawback rulings).) 

CBP OFFICE WHERE DRAWBACK CLAIMS 

WILL BE FILED 

(The four offices where drawback claims 

can be filed are located at: New York, NY; 

Houston, TX; Chicago, IL; San Francisco, 

CA.) 

(An original application and two copies 

must be filed. If the applicant intends to file 

drawback claims at more than one drawback 

office, one additional copy of the application 

must be furnished for each additional office 

indicated.) 

GENERAL STATEMENT 

(The following questions must be 

answered:) 

1. Who will be the importer of the 

designated merchandise? 

(If the applicant will not always be the 

importer of the designated merchandise, does 

the applicant understand its obligations to 

maintain records to support the transfer 

under § 190.10, and its liability under 

§ 190.63?) 

2. Will an agent be used to process the 

designated or the substituted merchandise 

into articles? 

(If an agent is to be used, the applicant 

must state it will comply with T.D.s 55027(2) 

and 55207(1), and § 190.9, as applicable, and 

that its agent will submit a letter of 

notification of intent to operate under the 

general manufacturing drawback ruling for 

agents (see § 190.7 and Appendix A), or an 

application for a specific manufacturing 

drawback ruling (see § 190.8 and this 

Appendix B).) 

3. Will the applicant be the exporter? 

(If the applicant will not be the exporter in 

every case but will be the claimant, the 

manufacturer must state that it will reserve 

the right to claim drawback with the 

knowledge and written consent of the 

exporter (19 CFR 190.82).) 

PARALLEL COLUMNS—‘‘SAME 8-DIGIT 

HTSUS CLASSIFICATION’’) 

Imported Merchandise or Drawback Products 1 to be Designated as the 

Basis for Drawback on the Exported Products 

Duty-Paid, Duty-Free or Domestic Merchandise of the 

Same 8-Digit HTSUS Subheading Number as that Designated Which 

Will be Used in the Production of the Exported Products 

1. 1. 

2. 2. 

3. 3. 

(Following the items listed in the parallel 

columns, a statement will be made, by the 

applicant, that affirms the ‘‘same 8-digit 

HTSUS subheading number’’ of the 

merchandise. This statement should be 

included in the application exactly as it is 

stated below:) 

The imported merchandise which we will 

designate on our claims will be classifiable 

under the same 8-digit HTSUS subheading 

number as to the merchandise used in 

producing the exported articles on which we 

claim drawback, such that the merchandise 

used would, if imported, be subject to the 

same rate of duty as the imported designated 

merchandise. 

Fluctuations in the market value resulting 

from factors other than quality will not affect 

the drawback. 

(In order to successfully claim drawback it 

is necessary to prove that the duty-paid, 

duty-free or domestic merchandise which is 

to be substituted for the imported 

merchandise is ‘‘classifiable under the same 

8-digit HTSUS subheading number’’. In order 

to enable CBP to rule on ‘‘same 8-digit 

HTSUS subheading number’’, the application 

must include a detailed description of the 

designated imported merchandise and of the 


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substituted duty-paid, duty-free or domestic 

merchandise to be used to produce the 

exported articles, as well as provide the Bill 

of Materials and/or formulas annotated with 

the HTSUS classification.) 

(It is essential that all the characteristics 

which determine the quality of the 

merchandise are provided in the application 

in order to substantiate that the merchandise 

meets the ‘‘same 8-digit HTSUS subheading 

number’’ statutory requirement. These 

characteristics should clearly distinguish 

merchandise of different qualities. For 

example, USDA standards; FDA standards; 

industry standards, e.g., ASTM; 

concentration; specific gravity; purity; luster; 

melting point, boiling point; odor; color; 

grade; type; hardness; brittleness; etc. Note 

that these are only a few examples of 

characteristics and that each kind of 

merchandise has its own set of specifications 

that characterizes its quality. If specifications 

are given with a minimum value, be sure to 

include a maximum value. The converse is 

also true. Often characteristics are given to 

CBP on attached specification sheets. These 

specifications should not include Material 

Safety Data sheets or other descriptions of the 

merchandise that do not contribute to the 

‘‘same 8-digit HTSUS subheading number’’ 

determination. When the merchandise is a 

chemical, state the chemical’s generic name 

as well as its trade name plus any generally 

recognized identifying number, e.g., CAS 

number; Color Index Number, etc.) 

(In order to expedite the specific 

manufacturing drawback ruling review 

process, it will be helpful if you provide 

copies of technical standards/specifications 

(particularly industry standards such as 

ASTM standards) referred to in your 

application.) 

(The descriptions of the ‘‘same 8-digit 

HTSUS subheading number’’ merchandise 

should be formatted in the parallel columns. 

The left-hand column will consist of the 

name and specifications of the designated 

imported merchandise under the heading set 

forth above. The right-hand column will 

consist of the name, specifications, and 8- 

digit HTSUS subheading number for the 

duty-paid, duty-free or domestic 

merchandise under the heading set forth 

above. Amendments to rulings will be 

required if any changes to the HTSUS 

classifications occur.) 

EXPORTED ARTICLES ON WHICH 

DRAWBACK WILL BE CLAIMED 

(Name each article to be exported. When 

the identity of the product is not clearly 

evident by its name state what the product 

is, e.g., a herbicide. There must be a match 

between each article described under the 

PROCESS OF MANUFACTURE AND 

PRODUCTION section below and each article 

listed here.) 

PROCESS OF MANUFACTURE OR 

PRODUCTION 

(Drawback under § 1313(b) is not allowable 

except where a manufacture or production 

exists. Manufacture or production is defined, 

for drawback purposes, in § 190.2. In order to 

obtain drawback under § 1313(b), it is 

essential for the applicant to show use in 

manufacture or production by giving a 

thorough description of the manufacturing 

process. This description should include the 

name and exact condition of the merchandise 

listed in the Parallel Columns, a complete 

explanation of the processes to which it is 

subjected in this country, the effect of such 

processes, the name and exact description of 

the finished article, and the use for which the 

finished article is intended. When applicable, 

give equations of the chemical reactions. The 

attachment of a flow chart in addition to the 

description showing the manufacturing 

process is an excellent means of illustrating 

whether or not a manufacture or production 

has occurred. Flow charts can clearly 

illustrate if and at what point during the 

manufacturing process by-products and 

wastes are generated.) 

(This section should contain a description 

of the process by which each item of 

merchandise listed in the parallel columns 

above is used to make or produce every 

article that is to be exported.) 

MULTIPLE PRODUCTS 

1. Relative Values 

(Some processes result in the separation of 

the merchandise used in the same operation 

into two or more products. List all of the 

products. State that you will record the 

market value of each product or by-product 

at the time it is first separated in the 

manufacturing process. If this section is not 

applicable to you, then state so.) 

(Drawback law mandates the assignment of 

relative values when two or more products 

necessarily are produced concurrently in the 

same operation. For instance, the refining of 

flaxseed necessarily produces linseed oil and 

linseed husks (animal feed), and drawback 

must be distributed to each product in 

accordance with its relative value. However, 

the voluntary election of a steel fabricator, for 

instance, to use part of a lot of imported steel 

to produce automobile doors and part of the 

lot to produce automobile fenders does not 

call for relative value distribution.) 

(The relative value of a product is its value 

divided by the total value of all products, 

whether or not exported. For example, 100 

gallons of drawback merchandise are used to 

produce 100 gallons of products, including 

60 gallons of product A, 20 gallons of 

product B, and 20 gallons of product C. At 

the time of separation, the unit values of 

products A, B, and C are $ 5, $ 10, and $ 50 

respectively. The relative value of product A 

is $ 300 divided by $ 1500 or 1⁄5. The relative 

value of B is 2⁄15 and of product C is 2⁄3, 

calculated in the same manner. This means 

that 1⁄5 of the drawback product payments 

will be distributed to product A, 2⁄15 to 

product B, and 2⁄3 to product C.) 

(Drawback is allowable on exports of any 

of multiple products, but is not allowable on 

exports of valuable waste. In making this 

distinction between a product and valuable 

waste, the applicant should address the 

following significant elements: (1) the nature 

of the material of which the residue is 

composed; (2) the value of the residue as 

compared to the value of the principal 

manufactured product and the raw material; 

(3) the use to which it is put; (4) its status 

under the tariff laws, if imported; (5) whether 

it is a commodity recognized in commerce; 

(6) whether it must be subjected to some 

process to make it saleable.) 

2. Producibility 

(Some processes result in the separation of 

fixed proportions of each product, while 

other processes afford the opportunity to 

increase or decrease the proportion of each 

product. An example of the latter is 

petroleum refining, where the refiner has the 

option to increase or decrease the production 

of one or more products relative to the others. 

State under this heading whether you can or 

cannot vary the proportionate quantity of 

each product.) 

(The MULTIPLE PRODUCTS section 

consists of two sub-sections: Relative Values 

and Producibility. If multiple products do 

not result from your operation state ‘‘Not 

Applicable’’ for the entire section. If multiple 

products do result from your operation 

Relative Values will always apply. However, 

Producibility may or may not apply. If 

Producibility does not apply to your multiple 

product operation state ‘‘Not Applicable’’ for 

this sub-section.) 

WASTE 

(Many processes result in residue materials 

which, for drawback purposes, are treated as 

waste. Describe any residue materials which 

you believe should be so treated. If no waste 

results, include a positive statement to that 

effect under this heading.) 

(If waste occurs, state: (1) whether or not 

it is recovered, (2) whether or not it is 

valueless, and (3) what you do with it. This 

information is required whether claims are 

made on a ‘‘used in’’ or ‘‘appearing in’’ basis 

and regardless of the amount of waste 

incurred.) 

(Irrecoverable wastes are those consisting 

of materials which are lost in the process. 

Valueless wastes are those which may be 

recovered but have no value. These 

irrecoverable and valueless wastes do not 

reduce the drawback claim provided the 

claim is based on the quantity of imported 

material used in manufacturing. If the claim 

is based upon the quantity of imported 

merchandise appearing in the exported 

article, irrecoverable and valueless waste will 

cause a reduction in the amount of 

drawback.) 

(Valuable wastes are those recovered 

wastes which have a value either for sale or 

for use in a different manufacturing process. 

However, it should be noted that this 

standard applies to the entire industry and is 

not a selection on your part. An option by 

you not to choose to sell or use the waste in 

some different operation does not make it 

valueless if another manufacturer can use the 

waste. State what you do with the waste. If 

you have to pay someone to get rid of it, or 

if you have buyers for the waste, you must 

state so in your application regardless of 

what ‘‘Basis’’ you are using.) 

(If you recover valuable waste and if you 

choose to claim on the basis of the quantity 

of imported or substituted merchandise used 

in producing the exported articles less 

valuable waste, state that you will keep 

records to establish the quantity and value of 

the waste recovered. See ‘‘Basis of Claim for 

Drawback’’ section below.) 


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37982 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

2 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles we produce.’’ 

3The date of production is the date an article is 

completed. 

STOCK IN PROCESS 

(Some processes result in another type of 

residual material, namely, stock in process, 

which affects the allowance of drawback. 

Stock in process may exist when residual 

material resulting from a manufacturing or 

processing operation is reintroduced into a 

subsequent manufacturing or processing 

operation; e.g., trim pieces from a cast article. 

The effect of stock in process on a drawback 

claim is that the amount of drawback for the 

period in which the stock in process was 

withdrawn from the manufacturing or 

processing operation (or the manufactured 

article, if manufacturing or processing 

periods are not used) is reduced by the 

quantity of merchandise or drawback 

products used to produce the stock in 

process if the ‘‘used in’’ or ‘‘used in less 

valuable waste’’ methods are used (if the 

‘‘appearing in’’ method is used, there will be 

no effect on the amount of drawback), and 

the quantity of merchandise or drawback 

products used to produce the stock in 

process is added to the merchandise or 

drawback products used in the subsequent 

manufacturing or production period (or the 

subsequently produced article)). 

(If stock in process occurs and claims are 

to be based on stock in process, the 

application must include a statement to that 

effect. The application must also include a 

statement that merchandise is considered to 

be used in manufacture at the time it was 

originally processed so that the stock in 

process will not be included twice in the 

computation of the merchandise used to 

manufacture the finished articles on which 

drawback is claimed.) 

LOSS OR GAIN (Separate and distinct from 

WASTE) 

(Some manufacturing processes result in 

an intangible loss or gain of the net weight 

or measurement of the merchandise used. 

This loss or gain is caused by atmospheric 

conditions, chemical reactions, or other 

factors. State the approximate usual 

percentage or quantity of such loss or gain. 

Note that percentage values will be 

considered to be measured ‘‘by weight’’ 

unless otherwise specified. Loss or gain does 

not occur during all manufacturing 

processes. If loss or gain does not apply to 

your manufacturing process, state ‘‘Not 

Applicable.’’) 

PROCEDURES AND RECORDS 

MAINTAINED 

We will maintain records to establish: 

1. The identity, specifications, and 8-digit 

HTSUS subheading number of the 

merchandise we designate; 

2. The quantity of merchandise classifiable 

under the same 8-digit HTSUS subheading 

number as the designated merchandise 2 we 

used to produce the exported articles; 

3. That, within 5 years after the date of 

importation, we used the designated 

merchandise to produce articles. During the 

same 5-year period, we produced 3 the 

exported articles; 

We realize that to obtain drawback the 

claimant must establish that the completed 

articles were exported within 5 years after 

the importation of the imported merchandise. 

Our records establishing our compliance 

with these requirements will be available for 

audit by CBP during business hours. We 

understand that drawback is not payable 

without proof of compliance. 

INVENTORY PROCEDURES 

(Describe your inventory records and state 

how those records will meet the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(b) and part 190 of the CBP 

Regulations as discussed under the heading 

PROCEDURES AND RECORDS 

MAINTAINED. To help ensure compliance 

the following areas, as applicable, should be 

included in your discussion:) 

RECEIPT AND STORAGE OF DESIGNATED 

MERCHANDISE 

RECORDS OF USE OF DESIGNATED 

MERCHANDISE 

BILLS OF MATERIALS 

MANUFACTURING RECORDS 

WASTE RECORDS 

RECORDS OF USE OF DUTY-PAID, DUTYFREE OR DOMESTIC MERCHANDISE OF 

THE REQUIRED SAME 8-DIGIT HTSUS 

SUBHEADING WITHIN 5 YEARS AFTER 

IMPORTATION OF THE DESIGNATED 

MERCHANDISE 

FINISHED STOCK STORAGE RECORDS 

SHIPPING RECORDS 

(Proof of time frames may be specific or 

inclusive, e.g., within 120 days, but specific 

proof is preferable. Separate storage and 

identification of each article or lot of 

merchandise usually will permit specific 

proof of exact dates. Proof of inclusive dates 

of use, production or export may be 

acceptable, but in such cases it is better to 

describe very specifically the data you intend 

to use to establish each legal requirement, 

thereby avoiding misunderstandings at the 

time of audit.) 

(If you do not describe the inventory 

records that you will use, a statement that the 

legal requirements will be met by your 

inventory procedures is acceptable. However, 

it should be noted that without a detailed 

description of the inventory procedures set 

forth in the application, a judgment as to the 

adequacy of such a statement cannot be made 

until a drawback claim is verified. Approval 

of this application for a specific 

manufacturing drawback ruling merely 

constitutes approval of the ruling application 

as submitted; it does not constitute approval 

of the applicant’s record keeping procedures 

if, for example, those procedures are merely 

described as meeting the legal requirements, 

without specifically stating how the 

requirements will be met. Drawback is not 

payable without proof of compliance.) 

BASIS OF CLAIM FOR DRAWBACK 

(There are three different bases that may be 

used to claim drawback: (1) used in; (2) 

appearing in; and (3) used in less valuable 

waste.) 

(The ‘‘used in’’ basis may be employed 

only if there is either no waste or valueless 

or unrecovered waste in the operation. 

Irrecoverable or valueless waste does not 

reduce the amount of drawback when claims 

are based on the ‘‘used in’’ basis. Drawback 

is payable in the amount of 99 percent of the 

duties, taxes, and fees paid on the quantity 

of imported material designated as the basis 

for the allowance of drawback on the 

exported articles. The designated quantity 

may not exceed the quantity of material 

actually used in the manufacture of the 

exported articles.) 

(For example, if 100 pounds of material, 

valued at $1.00 per pound, were used in 

manufacture resulting in 10 pounds of 

irrecoverable or valueless waste, the 10 

pounds of irrecoverable or valueless waste 

would not reduce the drawback. In this case 

drawback would be payable on 99% of the 

duties, taxes, and fees paid on the 100 

pounds of designated material used to 

produce the exported articles.) 

(The ‘‘appearing in’’ basis may be used 

regardless of whether there is waste. If the 

‘‘appearing in’’ basis is used, the claimant 

does not need to keep records of waste and 

its value. However, the manufacturer must 

establish the identity and quantity of the 

merchandise appearing in the exported 

product and provide this information. Waste 

reduces the amount of drawback when 

claims are made on the ‘‘appearing in’’ basis. 

Drawback is payable on 99 percent of the 

duties, taxes, and fees paid on the quantity 

of material designated, which may not 

exceed the quantity of eligible material that 

appears in the exported articles. ‘‘Appearing 

in’’ may not be used if multiple products are 

involved.) 

(Based on the previous example, drawback 

would be payable on the 90 pounds of 

merchandise which actually went into the 

exported product (appearing in) rather than 

the 100 pounds used in as set forth 

previously.) 

(The ‘‘used in less valuable waste’’ basis 

may be employed when the manufacturer 

recovers valuable waste, and keeps records of 

the quantity and value of waste from each lot 

of merchandise. The value of the waste 

reduces the amount of drawback when 

claims are based on the ‘‘used in less 

valuable waste’’ basis. When valuable waste 

is incurred, the drawback allowance on the 

exported article is based on the duties, taxes, 

and fees paid on the quantity of merchandise 

used in the manufacture, reduced by the 

quantity of such merchandise which the 

value of the waste would replace. Thus in 

this case, drawback is claimed on the 

quantity of eligible material actually used to 

produce the exported product, less the 

amount of such material which the value of 

the waste would replace. Note section 

190.26(c) of the CBP Regulations.) 

(Based on the previous examples, if the 10 

pounds of waste had a value of $.50 per 

pound, then the 10 pounds of waste, having 

a total value of $ 5.00, would be equivalent 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37983 

4Section 190.6(a) requires that applications for 

specific manufacturing drawback rulings be signed 

by any individual legally authorized to bind the 

person (or entity) for whom the application is 

signed or the owner of a sole proprietorship, a full 

partner in a partnership, or, if a corporation, the 

president, a vice president, secretary, treasurer or 

employee legally authorized to bind the 

corporation. In addition, any employee of a 

business entity with a customs power of attorney 

filed with the CBP port for the drawback office 

which will liquidate your drawback claims may 

sign such an application, as may a licensed customs 

broker with a customs power of attorney. You 

should state in which CBP port your customs 

power(s) of attorney is/are filed. 

in value to 5 pounds of the designated 

material. Thus the value of the waste would 

replace 5 pounds of the merchandise used, 

and drawback is payable on 99 percent of the 

duties, taxes, and fees paid on the 95 pounds 

of imported material designated as the basis 

for the allowance of drawback on the 

exported article rather than on the 100 

pounds ‘‘used in’’ or the 90 pounds 

‘‘appearing in’’ as set forth in the above 

examples.) 

(Two methods exist for the manufacturer to 

show the quantity of material used or 

appearing in the exported article: (1) 

Schedule or (2) Abstract.) 

(A ‘‘schedule’’ shows the quantity of 

material used in producing each unit of 

product. The schedule method is usually 

employed when a standard line of 

merchandise is being produced according to 

fixed formulas. Some schedules will show 

the quantity of merchandise used to 

manufacture or produce each article and 

others will show the quantity appearing in 

each finished article. Schedules may be 

prepared to show the quantity of 

merchandise either on the basis of 

percentages or by actual weights and 

measurements. A schedule determines the 

amount that will be needed to produce a unit 

of product before the material is actually 

used in production.) 

(An ‘‘abstract’’ is the summary of the 

records which shows the total quantity used 

in producing all products during the period 

covered by the abstract. The abstract looks at 

a period of time, for instance 3 months, in 

which the quantity of material has been used. 

An abstract looks back at how much material 

was actually used after a production period 

has been completed.) 

(An applicant who fails to indicate the 

‘‘schedule’’ choice must base its claims on 

the ‘‘abstract’’ method. State which Basis and 

Method you will use. An example of Used In 

by Schedule would read:) 

We will claim drawback on the quantity of 

(specify material) used in manufacturing 

(exported article) according to the schedule 

set forth below. 

(Section 190.8(f) of the CBP Regulations 

requires submission of the schedule with the 

application for a specific manufacturing 

drawback ruling. An applicant who desires to 

file supplemental schedules with the 

drawback office whenever there is a change 

in the quantity or material used should state:) 

We request permission to file supplemental 

schedules with the drawback office covering 

changes in the quantities of material used to 

produce the exported articles, or different 

styles or capacities of containers of such 

exported merchandise. 

(Neither the ‘‘appearing in’’ basis nor the 

‘‘schedule’’ method for claiming drawback 

may be used where the relative value 

procedure is required.) 

AGREEMENTS 

The Applicant specifically agrees that it 

will: 

1. Operate in full conformance with the 

terms of this application for a specific 

manufacturing drawback ruling when 

claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

application; 

4. Keep this application current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the number or locations of its offices or 

factories, the corporate name, the persons 

who will sign drawback documents, the basis 

of claim used for calculating drawback, the 

decision to use or not to use an agent under 

§ 190.9 or the identity of an agent under that 

section, or the corporate organization by 

succession or reincorporation; 

5. Keep this application current by 

reporting promptly to CBP Headquarters, all 

other changes affecting information 

contained in this application; 

6. Keep a copy of this application and the 

letter of approval by CBP Headquarters on 

file for ready reference by employees and 

require all officials and employees concerned 

to familiarize themselves with the provisions 

of this application and that letter of approval; 

and 

7. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this application and letter of approval. 

Declaration of Official 

I declare that I have read this application 

for a specific manufacturing drawback ruling; 

that I know the averments and agreements 

contained herein are true and correct; and 

that my signature on this ll day of ll 

20l, makes this application binding on 

lllllllllllllllllllll

(Name of Applicant Corporation, Partnership, 

or Sole Proprietorship) 

By 4 llllllllllllllllll

(Signature and Title) 

lllllllllllllllllllll

(Print Name) 

IV. Format for Application for Specific 

Manufacturing Drawback Ruling Under 19 

U.S.C. 1313(d) 

COMPANY LETTERHEAD (Optional) 

U.S. Customs and Border Protection, Entry 

Process and Duty Refunds Branch, 

Commercial and Trade Facilitation Division, 

Regulations and Rulings, Office of Trade, 90 

K Street NE—10th Floor (Mail Stop 1177), 

Washington, DC 20229–1177. 

Dear Sir or Madam: We, (Applicant’s 

Name), a (State, e.g., Delaware) corporation 

(or other described entity) submit this 

application for a specific manufacturing 

drawback ruling that our manufacturing 

operations qualify for drawback under title 

19, United States Code, section 1313(d), and 

part 190 of the CBP Regulations. We request 

that CBP authorize drawback on the basis of 

this application. 

NAME AND ADDRESS AND IRS NUMBER 

(WITH SUFFIX) OF APPLICANT 

(Section 190.8(a) of the CBP Regulations 

provides that each manufacturer or producer 

of articles intended for exportation with the 

benefit of drawback must apply for a specific 

manufacturing drawback ruling, unless 

operating under a general manufacturing 

drawback ruling under § 190.7 of the CBP 

Regulations. CBP will not approve an 

application which shows an unincorporated 

division or company as the applicant (see 

§ 190.8(a)).) 

LOCATION OF FACTORY 

(Give the address of the factory(s) where 

the process of manufacture or production 

will take place. If the factory is a different 

legal entity from the applicant, so state and 

indicate if operating under an Agent’s general 

manufacturing drawback ruling.) 

PERSONS WHO WILL SIGN DRAWBACK 

DOCUMENTS 

(List persons legally authorized to bind the 

corporation who will sign drawback 

documents. Section 190.6 of the CBP 

Regulations permits only the president, vice 

president, secretary, treasurer, or any 

employee legally authorized to bind the 

corporation to sign for a corporation. In 

addition, a person within a business entity 

with a customs power of attorney for the 

company may sign. A customs power of 

attorney may also be given to a licensed 

customs broker. This heading should be 

changed to NAMES OF PARTNERS or 

PROPRIETOR in the case of a partnership or 

sole proprietorship, respectively (see footnote 

at end of this sample format for persons who 

may sign applications for specific 

manufacturing drawback rulings). 

CBP OFFICE WHERE DRAWBACK CLAIMS 

WILL BE FILED 

(The four offices where drawback claims 

can be filed are located at: New York, NY; 

Houston, TX; Chicago, IL; San Francisco, 

CA.) 

(An original application and two copies 

must be filed. If the applicant intends to file 

drawback claims at more than one drawback 

office, one additional copy of the application 

must be furnished for each additional office 

indicated.) 

GENERAL STATEMENT 

(The exact material placed under this 

heading in individual cases will vary, but it 

should include such information as the type 

of business in which the manufacturer is 

engaged, whether the manufacturer is 

manufacturing for its own account or is 

performing the operation on a toll basis 

(including commission or conversion basis) 

for the account of others, whether the 

manufacturer is a direct exporter of its 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37984 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

1 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles we produce.’’ 

products or sells or delivers them to others 

for export, and whether drawback will be 

claimed by the manufacturer or by others.) 

(If an agent is to be used, the applicant 

must state it will comply with T.D.s 55027(2) 

and 55207(1), and § 190.9, as applicable, and 

that its agent will submit a letter of 

notification of intent to operate under the 

general manufacturing drawback ruling for 

agents (see § 190.7 and Appendix A), or an 

application for a specific manufacturing 

drawback ruling (see § 190.8 and this 

Appendix B).) 

(Regarding drawback operations conducted 

under § 1313(d), the data may describe the 

flavoring extracts, medicinal, or toilet 

preparations (including perfumery) 

manufactured with the use of domestic taxpaid alcohol; and where such alcohol is 

obtained or purchased.) 

TAX-PAID MATERIAL USED UNDER 

SECTION 1313(d) 

(Describe or list the tax-paid material) 

EXPORTED ARTICLES ON WHICH 

DRAWBACK WILL BE CLAIMED 

(Name each article to be exported) 

PROCESS OF MANUFACTURE OR 

PRODUCTION 

(Drawback under § 1313(d) is not allowable 

except where a manufacture or production 

exists. ‘‘Manufacture or production’’ is 

defined, for drawback purposes, in § 190.2. In 

order to obtain drawback under § 1313(d), it 

is essential for the applicant to show use in 

manufacture or production by giving a 

thorough description of the manufacturing 

process. Describe how the tax-paid material 

is processed into the export article.) 

WASTE 

(Many processes result in residue materials 

which, for drawback purposes, are treated as 

wastes. Describe any residue materials which 

you believe should be so treated. If no waste 

results, include a positive statement to that 

effect under this heading.) (If waste occurs, 

state: (1) whether or not it is recovered, (2) 

whether or not it is valueless, and (3) what 

you do with it. This information is required 

whether claims are made on a ‘‘used in’’ or 

‘‘appearing in’’ basis and regardless of the 

amount of waste incurred.) 

(Irrecoverable wastes are those consisting 

of materials which are lost in the process. 

Valueless wastes are those which may be 

recovered but have no value. These 

irrecoverable and valueless wastes do not 

reduce the drawback claim provided the 

claim is based on the quantity of domestic 

tax-paid alcohol used in manufacturing. If 

the claim is based upon the quantity of 

domestic tax-paid alcohol appearing in the 

exported article, irrecoverable and valueless 

waste will cause a reduction in the amount 

of drawback.) 

(Valuable wastes are those recovered 

wastes which have a value either for sale or 

for use in a different manufacturing process. 

However, it should be noted that this 

standard applies to the entire industry and is 

not a selection on your part. An option by 

you not to choose to sell or use the waste in 

some different operation, does not make it 

valueless if another manufacturer can use the 

waste. State what you do with the waste. If 

you have to pay someone to get rid of it, or 

if you have buyers for the waste, you must 

state so in your application regardless of 

what ‘‘Basis’’ you are using.) 

(If you recover valuable waste and if you 

choose to claim on the basis of the quantity 

of domestic tax-paid alcohol used in 

producing the exported articles (less valuable 

waste), state that you will keep records to 

establish the quantity and value of the waste 

recovered. See ‘‘Basis of Claim for Drawback’’ 

section below.) 

STOCK IN PROCESS 

(Some processes result in another type of 

residual material, namely, stock in process, 

which affects the allowance of drawback. 

Stock in process may exist when residual 

material resulting from a manufacturing or 

processing operation is reintroduced into a 

subsequent manufacturing or processing 

operation; e.g., trim pieces from a cast article. 

The effect of stock in process on a drawback 

claim is that the amount of drawback for the 

period in which the stock in process was 

withdrawn from the manufacturing or 

processing operation (or the manufactured 

article, if manufacturing or processing 

periods are not used) is reduced by the 

quantity of merchandise or drawback 

products used to produce the stock in 

process if the ‘‘used in’’ or ‘‘used in less 

valuable waste’’ methods are used (if the 

‘‘appearing in’’ method is used, there will be 

no effect on the amount of drawback), and 

the quantity of merchandise or drawback 

products used to produce the stock in 

process is added to the merchandise or 

drawback products used in the subsequent 

manufacturing or production period (or the 

subsequently produced article)). 

(If stock in process occurs and claims are 

to be based on stock in process, the 

application must include a statement to that 

effect. The application must also include a 

statement that the domestic tax-paid alcohol 

is considered to be used in manufacture at 

the time it was originally processed so that 

the stock in process will not be included 

twice in the computation of the domestic taxpaid alcohol used to manufacture the 

finished articles on which drawback is 

claimed.) 

LOSS OR GAIN (Separate and distinct from 

WASTE) 

(Some manufacturing processes result in 

an intangible loss or gain of the net weight 

or measurement of the merchandise used. 

This loss or gain is caused by atmospheric 

conditions, chemical reactions, or other 

factors. State the approximate usual 

percentage or quantity of such loss or gain. 

Note that percentage values will be 

considered to be measured ‘‘by weight’’ 

unless otherwise specified. Loss or gain does 

not occur during all manufacturing 

processes. If loss or gain does not apply to 

your manufacturing process, state ‘‘Not 

Applicable.’’) 

PROCEDURES AND RECORDS 

MAINTAINED 

We will maintain records to establish: 

1. That the exported articles on which 

drawback is claimed were produced with the 

use of a particular lot (or lots) of domestic 

tax-paid alcohol, and 

2. The quantity of domestic tax-paid 

alcohol1 we used in producing the exported 

articles. 

We realize that to obtain drawback the 

claimant must establish that the completed 

articles were exported within 5 years after 

the tax has been paid on the domestic 

alcohol. Our records establishing our 

compliance with these requirements will be 

available for audit by CBP during business 

hours. We understand that drawback is not 

payable without proof of compliance. 

INVENTORY PROCEDURES 

(Describe your inventory records and state 

how those records will meet the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313(d) and part 190 of the CBP 

Regulations as discussed under the heading 

PROCEDURES AND RECORDS 

MAINTAINED. To help ensure compliance 

the following areas should be included in 

your discussion:) 

RECEIPT AND RAW STOCK STORAGE 

RECORDS 

MANUFACTURING RECORDS 

FINISHED STOCK STORAGE RECORDS 

BASIS OF CLAIM FOR DRAWBACK 

(There are three different bases that may be 

used to claim drawback: (1) used in; (2) 

appearing in; and (3) used in less valuable 

waste.) 

(The ‘‘used in’’ basis may be employed 

only if there is either no waste or valueless 

or unrecovered waste in the operation. 

Irrecoverable or valueless waste does not 

reduce the amount of drawback when claims 

are based on the ‘‘used in’’ basis. Drawback 

is payable in the amount of 100% of the tax 

paid on the quantity of domestic alcohol 

used in the manufacture of flavoring extracts 

and medicinal or toilet preparation 

(including perfumery).) 

(For example, if 100 gallons of alcohol, 

valued at $ 1.00 per gallon, were used in 

manufacture resulting in 10 gallons of 

irrecoverable or valueless waste, the 10 

gallons of irrecoverable or valueless waste 

would not reduce the drawback. In this case 

drawback would be payable on 100% of the 

tax paid on the 100 gallons of domestic 

alcohol used to produce the exported 

articles.) 

The ‘‘appearing in’’ basis may be used 

regardless of whether there is waste. If the 

‘‘appearing in’’ basis is used, the claimant 

does not need to keep records of waste and 

its value. However, the manufacturer must 

establish the identity and quantity of the 

merchandise appearing in the exported 

product and provide this information. Waste 

reduces the amount of drawback when 

claims are made on the ‘‘appearing in’’ basis. 

Drawback is payable on 100% of the tax paid 

on the quantity of domestic alcohol which 

appears in the exported articles. 

(Based on the previous example, drawback 

would be payable on the 90 gallons of 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37985 

2Section 190.6(a) requires that applications for 

specific manufacturing drawback rulings be signed 

by any individual legally authorized to bind the 

person (or entity) for whom the application is 

signed or the owner of a sole proprietorship, a full 

partner in a partnership, or, if a corporation, the 

president, a vice president, secretary, treasurer or 

employee legally authorized to bind the 

corporation. In addition, any employee of a 

business entity with a customs power of attorney 

filed with the CBP port for the drawback office 

which will liquidate your drawback claims may 

sign such an application, as may a licensed customs 

broker with a customs power of attorney. You 

should state in which CBP port your customs 

power(s) of attorney is/are filed. 

domestic alcohol which actually went into 

the exported product (appearing in) rather 

than the 100 gallons used in as set forth 

previously.) 

(The ‘‘used in less valuable waste’’ basis 

may be employed when the manufacturer 

recovers valuable waste, and keeps records of 

the quantity and value of waste from each lot 

of domestic tax-paid alcohol. The value of 

the waste reduces the amount of drawback 

when claims are based on the ‘‘used in less 

valuable waste’’ basis. When valuable waste 

is incurred, the drawback allowance on the 

exported article is based on the quantity of 

tax-paid alcohol used to manufacture the 

exported articles, reduced by the quantity of 

such alcohol which the value of the waste 

would replace.) 

(Based on the previous examples, if the 10 

gallons of waste had a value of $.50 per 

gallon, then the 10 gallons of waste, having 

a total value of $ 5.00, would be equivalent 

in value to 5 gallons of the tax-paid alcohol. 

Thus the value of the waste would replace 5 

gallons of the alcohol used, and drawback is 

payable on 100% of the tax paid on 95 

gallons of alcohol rather than on the 100 

gallons ‘‘used in’’ or the 90 gallons 

‘‘appearing in’’ as set forth in the above 

examples.) (Two methods exist for the 

manufacturer to show the quantity of 

material used or appearing in the exported 

article: (1) Schedule or (2) Abstract.) 

(A ‘‘schedule’’ shows the quantity of 

material used in producing each unit of 

product. The schedule method is usually 

employed when a standard line of 

merchandise is being produced according to 

fixed formulas. Some schedules will show 

the quantity of merchandise used to 

manufacture or produce each article and 

others will show the quantity appearing in 

each finished article. Schedules may be 

prepared to show the quantity of 

merchandise either on the basis of 

percentages or by actual weights and 

measurements. A schedule determines the 

amount that will be needed to produce a unit 

of product before the material is actually 

used in production.) 

(An ‘‘abstract’’ is the summary of the 

records which shows the total quantity used 

in producing all products during the period 

covered by the abstract. The abstract looks at 

a period of time, for instance 3 months, in 

which the quantity of material has been used. 

An abstract looks back at how much material 

was actually used after a production period 

has been completed.) 

(An applicant who fails to indicate the 

‘‘schedule’’ choice must base its claims on 

the ‘‘abstract’’ method. State which Basis and 

Method you will use. An example of Used In 

by schedule follows:) 

We will claim drawback on the quantity of 

(specify material) used in manufacturing 

(exported article) according to the schedule 

set forth below. 

(Section 190.8(f) of the CBP Regulations 

requires submission of the schedule with the 

application for a specific manufacturing 

drawback ruling. An applicant who desires to 

file supplemental schedules with the 

drawback office whenever there is a change 

in the quantity or material used should state:) 

We request permission to file supplemental 

schedules with the drawback office covering 

changes in the quantities of material used to 

produce the exported articles, or different 

styles or capacities of containers of such 

exported merchandise. 

(Neither the ‘‘appearing in’’ basis nor the 

‘‘schedule’’ method for claiming drawback 

may be used where the relative value 

procedure is required.) 

AGREEMENTS 

The Applicant specifically agrees that it 

will: 

1. Operate in full conformance with the 

terms of this application for a specific 

manufacturing drawback ruling when 

claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

application; 

4. Keep this application current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the number or locations of its offices or 

factories, the corporate name, the persons 

who will sign drawback documents, the basis 

of claim used for calculating drawback, the 

decision to use or not to use an agent under 

§ 190.9 or the identity of an agent under that 

section, the drawback office where claims 

will be filed under the ruling, or the 

corporate organization by succession or 

reincorporation; 

5. Keep this application current by 

reporting promptly to CBP Headquarters, all 

other changes affecting information 

contained in this application; 

6. Keep a copy of this application and the 

letter of approval by CBP Headquarters on 

file for ready reference by employees and 

require all officials and employees concerned 

to familiarize themselves with the provisions 

of this application and that letter of approval; 

and 

7. Issue instructions to insure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this application and letter of approval. 

DECLARATION OF OFFICIAL 

I declare that I have read this application 

for a specific manufacturing drawback ruling; 

that I know the averments and agreements 

contained herein are true and correct; and 

that my signature on this l day of llll 

20 l, makes this application binding on 

lllllllllllllllllllll

(Name of Applicant Corporation, Partnership, 

or Sole Proprietorship) 

By 2 llllllllllllllllll

(Signature and Title) 

lllllllllllllllllllll

(Print Name) 

V. Format for Application for Specific 

Manufacturing Drawback Ruling Under 19 

U.S.C. 1313(g). 

COMPANY LETTERHEAD (Optional) 

U.S. Customs and Border Protection, Entry 

Process and Duty Refunds Branch, 

Commercial and Trade Facilitation Division, 

Regulations and Rulings, Office of Trade, 90 

K Street NE—10th Floor (Mail Stop 1177), 

Washington, DC 20229–1177. 

Dear Sir or Madam: We, (Applicant’s 

Name), a (State, e.g., Delaware) corporation 

(or other described entity) submit this 

application for a specific manufacturing 

drawback ruling that our manufacturing 

operations qualify for drawback under title 

19, United States Code, section 1313(g), and 

part 190 of the CBP Regulations. We request 

that CBP authorize drawback on the basis of 

this application. 

NAME AND ADDRESS AND IRS NUMBER 

(WITH SUFFIX) OF APPLICANT 

(Section 190.8(a) of the CBP Regulations 

provides that each manufacturer or producer 

of articles intended for exportation with the 

benefit of drawback must apply for a specific 

manufacturing drawback ruling, unless 

operating under a general manufacturing 

drawback ruling under § 190.7 of the CBP 

Regulations. CBP will not approve an 

application which shows an unincorporated 

division or company as the applicant (see 

§ 190.8(a).) 

LOCATION OF FACTORY OR SHIPYARD 

(Give the address of the factory(s) or 

shipyard(s) at which the construction and 

equipment will take place. If the factory or 

shipyard is a different legal entity from the 

applicant, so state and indicate if operating 

under an Agent’s general manufacturing 

drawback ruling.) 

PERSONS WHO WILL SIGN DRAWBACK 

DOCUMENTS 

(List persons legally authorized to bind the 

corporation who will sign drawback 

documents. Section 190.6 of the CBP 

Regulations permits only the president, vice 

president, secretary, treasurer, or any 

employee legally authorized to bind the 

corporation to sign for a corporation. In 

addition, a person within a business entity 

with a customs power of attorney for the 

company may sign. A customs power of 

attorney may also be given to a licensed 

customs broker. This heading should be 

changed to NAMES OF PARTNERS or 

PROPRIETOR in the case of a partnership or 

sole proprietorship, respectively (see footnote 

at end of this sample format for persons who 

may sign applications for specific 

manufacturing drawback rulings).) 

CBP OFFICE WHERE DRAWBACK CLAIMS 

WILL BE FILED 

(The four offices where drawback claims 

can be filed are located at: New York, NY; 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37986 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

1 If claims are to be made on an ‘‘appearing in’’ 

basis, the remainder of this sentence should read 

‘‘appearing in the exported articles we produce.’’ 

Houston, TX; Chicago, IL; San Francisco, 

CA.) 

(An original application and two copies 

must be filed. If the applicant intends to file 

drawback claims at more than one drawback 

office, one additional copy of the application 

must be furnished for each additional office 

indicated.) 

GENERAL STATEMENT 

(The following questions must be 

answered: 

1. Who will be the importer of the 

merchandise? (If the applicant will not 

always be the importer, does the applicant 

understand its obligations to maintain 

records to support the transfer under 19 CFR 

190.10, and its liability under 19 CFR 

190.63?) 

2. Who is the manufacturer? 

(Is the applicant constructing and 

equipping for his own account or merely 

performing the operation on a toll basis for 

others?) 

(If an agent is to be used, the applicant 

must state it will comply with T.D.s 55027(2) 

and 55207(1), and § 190.9, as applicable, and 

that its agent will submit a letter of 

notification of intent to operate under the 

general manufacturing drawback ruling for 

agents (see § 190.7 and Appendix A), or an 

application for a specific manufacturing 

drawback ruling (see § 190.8 and this 

Appendix B).) 

3. Will the applicant be the drawback 

claimant? 

(State how the vessel will qualify for 

drawback under 19 U.S.C. 1313(g). Who is 

the foreign person or government for whom 

the vessel is being made or equipped?) 

(There must be included under this 

heading the following statement: 

We are particularly aware of the terms of 

§ 190.76(a)(1) of and subpart M of part 190 

of the CBP Regulations, and will comply with 

these sections where appropriate.) 

IMPORTED MERCHANDISE OR 

DRAWBACK PRODUCTS USED 

(Describe the imported merchandise or 

drawback products.) 

ARTICLES CONSTRUCTED AND EQUIPPED 

FOR EXPORT 

(Name the vessel or vessels to be made 

with imported merchandise or drawback 

products.) 

PROCESS OF CONSTRUCTION AND 

EQUIPMENT 

(What is required here is a clear, concise 

description of the process of construction 

and equipment involved. The description 

should also trace the flow of materials 

through the manufacturing process for the 

purpose of establishing physical 

identification of the imported merchandise or 

drawback products and of the articles 

resulting from the processing.) 

WASTE 

(Many processes result in residue materials 

which, for drawback purposes, are treated as 

wastes. Describe any residue materials which 

you believe should be so treated. If no waste 

results, include a positive statement to that 

effect under this heading.) 

(If waste occurs, state: (1) whether or not 

it is recovered, (2) whether or not it is 

valueless, and (3) what you do with it. This 

information is required whether claims are 

made on a ‘‘used in’’ or ‘‘appearing in’’ basis 

and regardless of the amount of waste 

incurred.) 

(Irrecoverable wastes are those consisting 

of materials which are lost in the process. 

Valueless wastes are those which may be 

recovered but have no value. These 

irrecoverable and valueless wastes do not 

reduce the drawback claim provided the 

claim is based on the quantity of imported 

material used in manufacturing. If the claim 

is based upon the quantity of imported 

merchandise appearing in the exported 

article, irrecoverable and valueless waste will 

cause a reduction in the amount of 

drawback.) 

(Valuable wastes are those recovered 

wastes which have a value either for sale or 

for use in a different manufacturing process. 

However, it should be noted that this 

standard applies to the entire industry and is 

not a selection on your part. An option by 

you not to choose to sell or use the waste in 

some different operation does not make it 

valueless if another manufacturer can use the 

waste. State what you do with the waste. If 

you have to pay someone to get rid of it, or 

if you have buyers for the waste, you must 

state so in your application regardless of 

what ‘‘Basis’’ you are using.) 

(If you recover valuable waste and if you 

choose to claim on the basis of the quantity 

of imported or substituted merchandise used 

in producing the exported articles (less 

valuable waste), state that you will keep 

records to establish the quantity and value of 

the waste recovered. See ‘‘Basis of Claim for 

Drawback’’ section below.) 

LOSS OR GAIN (Separate and distinct from 

WASTE) 

(Some manufacturing processes result in 

an intangible loss or gain of the net weight 

or measurement of the merchandise used. 

This loss or gain is caused by atmospheric 

conditions, chemical reactions, or other 

factors. State the approximate usual 

percentage or quantity of such loss or gain. 

Note that percentage values will be 

considered to be measured ‘‘by weight’’ 

unless otherwise specified. Loss or gain does 

not occur during all manufacturing 

processes. If loss or gain does not apply to 

your manufacturing process, state ‘‘Not 

Applicable.’’) 

PROCEDURES AND RECORDS 

MAINTAINED 

We will maintain records to establish: 

1. That the exported article on which 

drawback is claimed was constructed and 

equipped with the use of a particular lot (or 

lots) of imported material; and 

2. The quantity of imported merchandise 1

we used in producing the exported article. 

We realize that to obtain drawback the 

claimant must establish that the completed 

articles were exported within 5 years after 

the importation of the imported merchandise. 

Our records establishing our compliance 

with these requirements will be available for 

audit by CBP during business hours. We 

understand that drawback is not payable 

without proof of compliance. 

INVENTORY PROCEDURES 

(Describe your inventory records and state 

how those records will meet the drawback 

recordkeeping requirements set forth in 19 

U.S.C. 1313 and part 190 of the CBP 

Regulations as discussed under the heading 

PROCEDURES AND RECORDS 

MAINTAINED. To help ensure compliance 

the following should be included in your 

discussion:) 

RECEIPT AND RAW STOCK STORAGE 

RECORDS 

CONSTRUCTION AND EQUIPMENT 

RECORDS 

FINISHED STOCK STORAGE RECORDS 

SHIPPING RECORDS 

BASIS OF CLAIM FOR DRAWBACK 

(There are three different bases that may be 

used to claim drawback: (1) Used in; (2) 

appearing in; and (3) used in less valuable 

waste.) 

(The ‘‘used in’’ basis may be employed 

only if there is either no waste or valueless 

or unrecovered waste in the operation. 

Irrecoverable or valueless waste does not 

reduce the amount of drawback when claims 

are based on the ‘‘used in’’ basis. Drawback 

is payable in the amount of 99 percent of the 

duties, taxes, and fees paid on the quantity 

of imported material used to construct and 

equip the exported article.) 

(For example, if 100 pounds of material, 

valued at $ 1.00 per pound, were used in 

manufacture resulting in 10 pounds of 

irrecoverable or valueless waste, the 10 

pounds of irrecoverable or valueless waste 

would not reduce the drawback. In this case 

drawback would be payable on 99% of the 

duties, taxes, and fees paid on the 100 

pounds of imported material used in 

constructing and equipping the exported 

articles.) 

(The ‘‘appearing in’’ basis may be used 

regardless of whether there is waste. If the 

‘‘appearing in’’ basis is used, the claimant 

does not need to keep records of waste and 

its value. However, the manufacturer must 

establish the identity and quantity of the 

merchandise appearing in the exported 

product and provide this information. Waste 

reduces the amount of drawback when 

claims are made on the ‘‘appearing in’’ basis. 

Drawback is payable on 99 percent of the 

duties, taxes, and fees paid on the quantity 

of imported material which appears in the 

exported articles. ‘‘Appearing in’’ may not be 

used if multiple products are involved.) 

(Based on the previous example, drawback 

would be payable on the 90 pounds of 

imported material which actually went into 

the exported product (appearing in) rather 

than the 100 pounds used in as set forth 

previously.) 

(The ‘‘used in less valuable waste’’ basis 

may be employed when the manufacturer 

recovers valuable waste, and keeps records of 

the quantity and value of waste from each lot 

of merchandise. The value of the waste 

reduces the amount of drawback when 

claims are based on the ‘‘used in less 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 37987 

2Section 190.6(a) requires that applications for 

specific manufacturing drawback rulings be signed 

by any individual legally authorized to bind the 

person (or entity) for whom the application is 

signed or the owner of a sole proprietorship, a full 

partner in a partnership, or, if a corporation, the 

president, a vice president, secretary, treasurer or 

employee legally authorized to bind the 

corporation. In addition, any employee of a 

business entity with a customs power of attorney 

filed with the CBP port for the drawback office 

which will liquidate your drawback claims may 

sign such an application, as may a licensed customs 

broker with a customs power of attorney. You 

should state in which CBP port your customs 

power(s) of attorney is/are filed. 

valuable waste’’ basis. When valuable waste 

is incurred, the drawback allowance on the 

exported article is based on the duties, taxes, 

and fees paid on the quantity of imported 

material used to construct and equip the 

exported product, reduced by the quantity of 

such material which the value of the waste 

would replace. Thus in this case, drawback 

is claimed on the quantity of eligible material 

actually used to produce the exported 

product, less the amount of such material 

which the value of the waste would replace. 

Note section 190.26(c) of the CBP 

Regulations.) 

(Based on the previous examples, if the 10 

pounds of waste had a value of $.50 per 

pound, then the 10 pounds of waste, having 

a total value of $5.00, would be equivalent 

in value to 5 pounds of the imported 

material. Thus the value of the waste would 

replace 5 pounds of the merchandise used, 

and drawback is payable on 99 percent of the 

duties, taxes, and fees paid on the 95 pounds 

of imported material rather than on the 100 

pounds ‘‘used in’’ or the 90 pounds 

‘‘appearing in’’ as set forth in the above 

examples.) 

(Two methods exist for the manufacturer to 

show the quantity of material used or 

appearing in the exported article: (1) 

Schedule or (2) Abstract.) 

(A ‘‘schedule’’ shows the quantity of 

material used in producing each unit of 

product. The schedule method is usually 

employed when a standard line of 

merchandise is being produced according to 

fixed formulas. Some schedules will show 

the quantity of merchandise used to 

manufacture or produce each article and 

others will show the quantity appearing in 

each finished article. Schedules may be 

prepared to show the quantity of 

merchandise either on the basis of 

percentages or by actual weights and 

measurements. A schedule determines the 

amount that will be needed to produce a unit 

of product before the material is actually 

used in production.) 

(An ‘‘abstract’’ is the summary of the 

records which shows the total quantity used 

in producing all products during the period 

covered by the abstract. The abstract looks at 

a period of time, for instance 3 months, in 

which the quantity of material has been used. 

An abstract looks back at how much material 

was actually used after a production period 

has been completed.) 

(An applicant who fails to indicate the 

‘‘schedule’’ choice must base its claims on 

the ‘‘abstract’’ method. State which Basis and 

Method you will use. An example of Used In 

by Schedule would read:) 

We will claim drawback on the quantity of 

(specify material) used in manufacturing 

(exported article) according to the schedule 

set forth below. 

(Section 190.8(f) of the CBP Regulations 

requires submission of the schedule with the 

application for a specific manufacturing 

drawback ruling. An applicant who desires to 

file supplemental schedules with the 

drawback office whenever there is a change 

in the quantity or material used should state:) 

We request permission to file supplemental 

schedules with the drawback office covering 

changes in the quantities of material used to 

produce the exported articles, or different 

styles or capacities of containers of such 

exported merchandise. 

(Neither the ‘‘appearing in’’ basis nor the 

‘‘schedule’’ method for claiming drawback 

may be used where the relative value 

procedure is required.) 

AGREEMENTS 

The Applicant specifically agrees that it 

will: 

1. Operate in full conformance with the 

terms of this application for a specific 

manufacturing drawback ruling when 

claiming drawback; 

2. Open its factory and records for 

examination at all reasonable hours by 

authorized Government officers; 

3. Keep its drawback related records and 

supporting data for at least 3 years from the 

date of liquidation of any drawback claim 

predicated in whole or in part upon this 

application; 

4. Keep this application current by 

reporting promptly to the drawback office 

which liquidates its claims any changes in 

the number or locations of its offices or 

factories, the corporate name, the persons 

who will sign drawback documents, the basis 

of claim used for calculating drawback, the 

decision to use or not to use an agent under 

§ 190.9 or the identity of an agent under that 

section, the drawback office where claims 

will be filed under the ruling, or the 

corporate organization by succession or 

reincorporation; 

5. Keep this application current by 

reporting promptly to CBP Headquarters, all 

other changes affecting information 

contained in this application; 

6. Keep a copy of this application and the 

letter of approval by CBP Headquarters on 

file for ready reference by employees and 

require all officials and employees concerned 

to familiarize themselves with the provisions 

of this application and that letter of approval; 

and 

7. Issue instructions to help ensure proper 

compliance with title 19, United States Code, 

section 1313, part 190 of the CBP Regulations 

and this application and letter of approval. 

DECLARATION OF OFFICIAL 

I declare that I have read this application 

for a specific manufacturing drawback ruling; 

that I know the averments and agreements 

contained herein are true and correct; and 

that my signature on this ll day of 

llll 20 l, makes this application 

binding on 

lllllllllllllllllllll

(Name of Applicant Corporation, Partnership, 

or Sole Proprietorship) 

By 2 llllllllllllllllll

(Signature and Title) 

lllllllllllllllllllll

PART 191—DRAWBACK 

■ 6. The general authority citations 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; 

* * * * * 

■ 7. Revise § 191.0 to read as follows: 

§ 191.0 Scope. 

This part sets forth general provisions 

applicable to drawback claims and 

specialized provisions applicable to 

specific types of drawback claims filed 

under 19 U.S.C. 1313, prior to the 

February 24, 2016, amendments to the 

U.S. drawback law. Drawback claims 

may not be filed under this part after 

February 23, 2019. For drawback claims 

filed under 19 U.S.C. 1313, as amended, 

see part 190. Additional drawback 

provisions relating to the North 

American Free Trade Agreement 

(NAFTA) are contained in subpart E of 

part 181 of this chapter. 

■ 8. Revise § 191.1 to read as follows: 

§ 191.1 Authority of the Commissioner of 

CBP. 

Pursuant to DHS Delegation number 

7010.3, the Commissioner of CBP has 

the authority to prescribe, and pursuant 

to Treasury Department Order No. 100– 

16 (set forth in the appendix to part 0 

of this chapter), the Secretary of the 

Treasury has the sole authority to 

approve, rules and regulations regarding 

drawback. 

■ 9. In § 191.3: 

■ a. Revise the section heading; 

■ b. Amend paragraph (a)(3) by 

removing the word ‘‘and’’ at the end of 

the paragraph; 

■ c. Amend paragraph (a)(4) by 

removing the ‘‘(iv).’’ and adding in its 

place the words ‘‘(iv); and’’; 

■ d. Add paragraph (a)(5). 

■ e. Revise paragraph (b). 

The revisions and additions read as 

follows: 

§ 191.3 Duties, taxes, and fees subject or 

not subject to drawback. 

(a) * * * 

(5) Harbor maintenance taxes (see 

§ 24.24 of this chapter) for unused 

merchandise drawback pursuant to 19 

U.S.C. 1313(j), and drawback for 

substitution of finished petroleum 

derivatives pursuant to 19 U.S.C. 

1313(p)(2)(A)(iii) or (iv). 

(b) Duties and fees not subject to 

drawback include: 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37988 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

(1) Harbor maintenance taxes (see 

§ 24.24 of this chapter) except where 

unused merchandise drawback pursuant 

to 19 U.S.C. 1313(j) or drawback for 

substitution of finished petroleum 

derivatives pursuant to 19 U.S.C. 

1313(p)(2)(A)(iii) or (iv) is claimed; 

(2) Merchandise processing fees (see 

§ 24.23 of this chapter), except where 

unused merchandise drawback pursuant 

to 19 U.S.C. 1313(j) or drawback for 

substitution of finished petroleum 

derivatives pursuant to 19 U.S.C. 

1313(p)(2)(A)(iii) or (iv) is claimed; and 

(3) Antidumping and countervailing 

duties on merchandise entered, or 

withdrawn from warehouse, for 

consumption on or after August 23, 

1988. 

* * * * * 

■ 10. Section 191.5 is revised to read as 

follows: 

§ 191.5 Guantanamo Bay, insular 

possessions, trust territories. 

Guantanamo Bay Naval Station is 

considered foreign territory for 

drawback purposes and, accordingly, 

drawback may be permitted on articles 

shipped there. Drawback is not allowed, 

except on claims made under 19 U.S.C. 

1313(j)(1), on articles shipped to the 

U.S. Virgin Islands, American Samoa, 

Wake Island, Midway Islands, Kingman 

Reef, Guam, Canton Island, Enderbury 

Island, Johnston Island, or Palmyra 

Island. Puerto Rico is not considered 

foreign territory for drawback purposes 

and, accordingly, drawback may not be 

permitted on articles shipped there from 

elsewhere in the customs territory of the 

United States. 

■ 11. In § 191.22, paragraph (a) is 

amended by adding a new sentence to 

the end of the paragraph to read as 

follows: 

§ 191.22 Substitution drawback. 

(a) * * * For purposes of drawback of 

internal revenue tax imposed under 

Chapters 32, 38, 51, and 52 of the 

Internal Revenue Code of 1986, as 

amended (IRC), drawback granted on 

the export or destruction of substituted 

merchandise will be limited to the 

amount of taxes paid (and not returned 

by refund, credit, or drawback) on the 

substituted merchandise. 

* * * * * 

■ 12. In § 191.32: 

■ a. Remove the word ‘‘and’’ at the end 

of paragraph (b)(2); 

■ b. Remove ‘‘.’’ and adding, in its place, 

‘‘; and’’; at the end of paragraph (b)(3) 

and; 

■ c. Add paragraph (b)(4) to read as 

follows: 

§ 191.32 Substitution drawback. 

* * * * * 

(b) * * * 

(4) For purposes of drawback of 

internal revenue tax imposed under 

Chapters 32, 38, 51, and 52 of the 

Internal Revenue Code of 1986, as 

amended (IRC), drawback granted on 

the export or destruction of substituted 

merchandise will be limited to the 

amount of taxes paid (and not returned 

by refund, credit, or drawback) on the 

substituted merchandise. 

* * * * * 

■ 13. Section 191.42 is revised to read 

as follows: 

§ 191.42 Procedures and supporting 

documentation. 

(a) Time limit for exportation or 

destruction. Drawback will be denied on 

merchandise that is exported or 

destroyed after the statutory 3-year time 

period. 

(b) Required documentation. The 

claimant must submit documentation to 

CBP as part of the complete drawback 

claim (see § 191.51) to establish that the 

merchandise did not conform to sample 

or specification, was shipped without 

the consent of the consignee, or was 

defective as of the time of importation 

(see § 191.45 for additional 

requirements for claims made with 

respect to rejected retail merchandise 

under 19 U.S.C. 1313(c)(1)(C)(ii)). If the 

claimant was not the importer, the 

claimant must also: 

(1) Submit a statement signed by the 

importer and every other person, other 

than the ultimate purchaser, that owned 

the goods that no other claim for 

drawback was made on the goods by 

any other person; and 

(2) Certify that records are available to 

support the statement required in 

paragraph (b)(1) of this section. 

(c) Notice. A notice of intent to export 

or destroy merchandise which may be 

the subject of a rejected merchandise 

drawback claim (19 U.S.C. 1313(c)) 

must be provided to CBP to give CBP 

the opportunity to examine the 

merchandise. The claimant, or the 

exporter (for destruction under CBP 

supervision, see § 191.71), must file at 

the port of intended redelivery to CBP 

custody a Notice of Intent to Export, 

Destroy, or Return Merchandise for 

Purposes of Drawback on CBP Form 

7553 at least 5 working days prior to the 

date of intended return to CBP custody. 

Waiver of prior notice for exportations 

under 19 U.S.C. 1313(j) (see § 191.91) is 

inapplicable to exportations under 19 

U.S.C. 1313(c). 

(d) Required information. The notice 

must provide the bill of lading number, 

if known, the name and telephone 

number, mailing address, and, if 

available, fax number and email address 

of a contact person, and the location of 

the merchandise. 

(e) Decision to waive examination. 

Within 2 working days after receipt of 

the Notice of Intent to Export, Destroy, 

or Return Merchandise for Purposes of 

Drawback (see paragraph (c) of this 

section), CBP will notify, in writing, the 

party designated on the Notice of CBP’s 

decision to either examine the 

merchandise to be exported or 

destroyed, or to waive examination. If 

CBP timely notifies the designated 

party, in writing, of its decision to 

examine the merchandise (see 

paragraph (f) of this section), but the 

merchandise is exported or destroyed 

without having been presented to CBP 

for such examination, any drawback 

claim, or part thereof, based on the 

Notice of Intent to Export, Destroy, or 

Return Merchandise for Purposes of 

Drawback, must be denied. If CBP 

notifies the designated party, in writing, 

of its decision to waive examination of 

the merchandise, or, if timely 

notification of a decision by CBP to 

examine or to waive examination is 

absent, the merchandise may be 

exported or destroyed without delay 

and will be deemed to have been 

returned to CBP custody. 

(f) Time and place of examination. If 

CBP gives timely notice of its decision 

to examine the merchandise to be 

exported or destroyed, the merchandise 

to be examined must be promptly 

presented to CBP. CBP must examine 

the merchandise within 5 working days 

after presentation of the merchandise. 

The merchandise may be exported or 

destroyed without examination if CBP 

fails to timely examine the merchandise 

after presentation to CBP, and in such 

case the merchandise will be deemed to 

have been returned to CBP custody. If 

the examination is completed at a port 

other than the port of actual exportation 

or destruction, the merchandise must be 

transported in-bond to the port of 

exportation or destruction. 

(g) Extent of examination. The 

appropriate CBP office may permit 

release of merchandise without 

examination, or may examine, to the 

extent determined to be necessary, the 

items exported or destroyed. 

(h) Drawback claim. When filing the 

drawback claim, the drawback claimant 

must correctly calculate the amount of 

drawback due (see § 191.51(b)). The 

procedures for restructuring a claim (see 

§ 191.53) apply to rejected merchandise 

drawback if the claimant has an ongoing 

export program which qualifies for this 

type of drawback. 


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(i) Exportation. Claimants must 

provide documentary evidence of 

exportation (see subpart G of this part). 

The claimant may establish exportation 

by mail as set out in § 191.74 of this 

part. 

■ 14. Section 191.45 is added to read as 

follows: 

§ 191.45 Returned retail merchandise. 

(a) Special rule for substitution. 

Section 313(c)(1)(C)(ii) of the Tariff Act 

of 1930, as amended (19 U.S.C. 

1313(c)(1)(C)(ii)), provides for drawback 

upon the exportation or destruction 

under CBP supervision of imported 

merchandise which has been entered, or 

withdrawn from warehouse, for 

consumption, duty-paid and ultimately 

sold at retail by the importer, or the 

person who received the merchandise 

from the importer, and for any reason 

returned to and accepted by the 

importer, or the person who received 

the merchandise from the importer. 

(b) Eligibility requirements. (1) 

Drawback is allowable, subject to 

compliance with all requirements set 

forth in this subpart; and 

(2) The claimant must also show by 

evidence satisfactory to CBP that 

drawback may be claimed by— 

(i) Designating an entry of 

merchandise that was imported within 

1 year before the date of exportation or 

destruction of the merchandise 

described in paragraph (a) of this 

section under CBP supervision. 

(ii) Certifying that the same 8-digit 

HTSUS subheading number and specific 

product identifier (such as part number, 

SKU, or product code) apply to both the 

merchandise designated for drawback 

(in the import documentation) and the 

returned merchandise. 

(c) Allowable refund. The amount of 

drawback allowable will be equal to 99 

percent of the amount of duties, taxes, 

and fees paid with respect to the 

imported merchandise. 

(d) Denial of claims. No drawback 

will be refunded if CBP is not satisfied 

that the claimant has provided, upon 

request, the documentation necessary to 

support the certification required in 

paragraph (b)(2)(ii) of this section. 

■ 15. Amend § 191.51 by adding a new 

paragraph (a)(3) to read as follows: 

§ 191.51 Completion of drawback claims. 

(a) * * * 

(3) Limitation on eligibility for 

imported merchandise. Claimants are 

prohibited from filing any drawback 

claims under part 191 for imported 

merchandise associated with an entry 

summary if any other merchandise 

covered on that entry summary has been 

designated as the basis of a drawback 

substitution claim under part 190. 

* * * * * 

■ 16. Section 191.81 is revised to read 

as follows: 

§ 191.81 Liquidation. 

(a) Time of liquidation. Drawback 

entries may be liquidated after: 

(1) Liquidation of the designated 

import entry or entries becomes final 

pursuant to paragraph (e) of this section; 

or 

(2) Deposit of estimated duties on the 

imported merchandise and before 

liquidation of the designated import 

entry or entries. 

(b) Claims based on estimated duties. 

(1) Drawback may be paid upon 

liquidation of a claim based on 

estimated duties if one or more of the 

designated import entries have not been 

liquidated, or the liquidation has not 

become final (because of a protest being 

filed) (see also § 173.4(c) of this 

chapter), only if the drawback claimant 

and any other party responsible for the 

payment of liquidated import duties 

each files a written request for payment 

of each drawback claim, waiving any 

right to payment or refund under other 

provisions of law, to the extent that the 

estimated duties on the unliquidated 

import entry are included in the 

drawback claim for which drawback on 

estimated duties is requested under this 

paragraph. The drawback claimant 

must, to the best of its knowledge, 

identify each import entry that has been 

protested and that is included in the 

drawback claim. A drawback entry, 

once finally liquidated on the basis of 

estimated duties pursuant to paragraph 

(e)(2), will not be adjusted by reason of 

a subsequent final liquidation of the 

import entry. 

(2) However, if final liquidation of the 

import entry discloses that the total 

amount of import duty is different from 

the total estimated duties deposited, 

except in those cases when drawback is 

100% of the duty, the party responsible 

for the payment of liquidated duties, as 

applicable, will: 

(i) Be liable for 1 percent of all 

increased duties found to be due on that 

portion of merchandise recorded on the 

drawback entry; or 

(ii) Be entitled to a refund of 1 percent 

of all excess duties found to have been 

paid as estimated duties on that portion 

of the merchandise recorded on the 

drawback entry. 

(c) Claims based on voluntary tenders 

or other payments of duties—(1) 

General. Subject to the requirements in 

paragraph (c)(2) of this section, 

drawback may be paid upon liquidation 

of a claim based on voluntary tenders of 

the unpaid amount of lawful ordinary 

customs duties or any other payment of 

lawful ordinary customs duties for an 

entry, or withdrawal from warehouse, 

for consumption (see § 191.3(a)(1)(iii)), 

provided that: 

(i) The tender or payment is 

specifically identified as duty on a 

specifically identified entry, or 

withdrawal from warehouse, for 

consumption; 

(ii) Liquidation of the specifically 

identified entry, or withdrawal from 

warehouse, for consumption became 

final prior to such tender or payment; 

and 

(iii) Liquidation of the drawback entry 

in which that specifically identified 

import entry, or withdrawal from 

warehouse, for consumption is 

designated has not become final. 

(2) Written request and waiver. 

Drawback may be paid on claims based 

on voluntary tenders or other payments 

of duties under this subsection only if 

the drawback claimant and any other 

party responsible for the payment of the 

voluntary tenders or other payments of 

duties each files a written request for 

payment of each drawback claim based 

on such voluntary tenders or other 

payments of duties, waiving any claim 

to payment or refund under other 

provisions of law, to the extent that the 

voluntary tenders or other payment of 

duties under this paragraph are 

included in the drawback claim for 

which drawback on the voluntary 

tenders or other payment of duties is 

requested under this paragraph. 

(d) Claims based on liquidated duties. 

Drawback will be based on the final 

liquidated duties paid that have been 

made final by operation of law (except 

in the case of the written request for 

payment of drawback on the basis of 

estimated duties, voluntary tender of 

duties, and other payments of duty, and 

waiver, provided for in paragraphs (b) 

and (c) of this section). 

(e) Liquidation procedure. (1) General. 

When the drawback claim has been 

completed by the filing of the entry and 

other required documents, and 

exportation (or destruction) of the 

merchandise or articles has been 

established, CBP will determine 

drawback due on the basis of the 

complete drawback claim, the 

applicable general manufacturing 

drawback ruling or specific 

manufacturing drawback ruling, and 

any other relevant evidence or 

information. Notice of liquidation will 

be given electronically as provided in 

§§ 159.9 and 159.10(c)(3). 

(2) Liquidation by operation of law. (i) 

Liquidated import entries. A drawback 

claim that satisfies the requirements of 


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37990 Federal Register / Vol. 83, No. 149 / Thursday, August 2, 2018 / Proposed Rules 

paragraph (d) that is not liquidated 

within one year from the date of the 

drawback claim (see § 190.51(e)(1)(i)) 

will be deemed liquidated for the 

purposes of the drawback claim at the 

drawback amount asserted by the 

claimant or claim, unless the time for 

liquidation is extended in accordance 

with § 159.12 or if liquidation is 

suspended as required by statute or 

court order. 

(ii) Unliquidated import entries. A 

drawback claim that satisfies the 

requirements of paragraphs (b) or (c) of 

this section will be deemed liquidated 

upon the deposit of estimated duties on 

the unliquidated imported merchandise 

(see § 191.81(b)). 

(iii) Applicability. The provisions of 

paragraphs (e)(2)(i) of this section will 

apply to drawback entries made on or 

after December 3, 2004. An entry or 

claim for drawback filed before 

December 3, 2004, the liquidation of 

which was not final as of December 3, 

2004, will be deemed liquidated on the 

date that is 1 year after December 3, 

2004, at the drawback amount asserted 

by the claimant at the time of the entry 

or claim. 

(f) Relative value; multiple products— 

(1) Distribution. Where two or more 

products result from the manufacture or 

production of merchandise, drawback 

will be distributed to the several 

products in accordance with their 

relative values at the time of separation. 

(2) Values. The values to be used in 

computing the distribution of drawback 

where two or more products result from 

the manufacture or production of 

merchandise under drawback 

conditions must be the market value (as 

provided for in the definition of relative 

value in § 191.2(u)), unless other values 

are approved by CBP. 

(g) Payment. CBP will authorize 

payment of the amount of the refund 

due as drawback to the claimant. 

■ 17. Section 191.103 is revised to read 

as follows: 

§ 191.103 Additional requirements. 

(a) Manufacturer claims domestic 

drawback. In the case of medicinal 

preparations and flavoring extracts, the 

claimant must file with the drawback 

entry, a declaration of the manufacturer 

showing whether a claim has been or 

will be filed by the manufacturer with 

the Alcohol and Tobacco Tax and Trade 

Bureau (TTB) for domestic drawback on 

alcohol under §§ 5111, 5112, 5113, and 

5114, Internal Revenue Code, as 

amended (26 U.S.C. 5111, 5112, 5113, 

and 5114). 

(b) Manufacturer does not claim 

domestic drawback—(1) Submission of 

statement. If no claim has been or will 

be filed with TTB for domestic 

drawback on medicinal preparations or 

flavoring extracts, the manufacturer 

must submit a statement setting forth 

that fact to the Director, National 

Revenue Center, TTB. 

(2) Contents of the statement. The 

statement must show the: 

(i) Quantity and description of the 

exported products; 

(ii) Identity of the alcohol used by 

serial number of package or tank car; 

(iii) Name and registry number of the 

distilled spirits plant from which the 

alcohol was withdrawn; 

(iv) Date of withdrawal; 

(v) Serial number of the applicable 

record of tax determination (see 27 CFR 

17.163(a) and 27 CFR 19.626(c)(7); and 

(vi) CBP office where the claim will 

be filed. 

(3) Verification of the statement. The 

Director, National Revenue Center, TTB, 

will verify receipt of this statement, 

forward the original of the document to 

the drawback office designated, and 

retain the copy. 

■ 18. Section 191.104 is revised to read 

as follows: 

§ 191.104 Alcohol and Tobacco Tax and 

Trade Bureau (TTB) certificates. 

(a) Request. The drawback claimant or 

manufacturer must request the Director, 

National Revenue Center, TTB, provide 

the CBP office where the drawback 

claim will be processed with a tax-paid 

certificate on TTB Form 5100.4 

(Certificate of Tax-Paid Alcohol). 

(b) Contents. The request must state 

the: 

(1) Quantity of alcohol in proof 

gallons; 

(2) Serial number of each package; 

(3) Amount of tax paid on the alcohol; 

(4) Name, registry number, and 

location of the distilled spirits plant; 

(5) Date of withdrawal; 

(6) Name of the manufacturer using 

the alcohol in producing the exported 

articles; 

(7) Address of the manufacturer and 

its manufacturing plant; and 

(8) CBP drawback office where the 

drawback claim will be processed. 

(c) Extract of TTB certificate. If a 

certification of any portion of the 

alcohol described in the TTB Form 

5100.4 is required for liquidation of 

drawback entries processed in another 

drawback office, the drawback office, on 

written application of the person who 

requested its issuance, will transmit a 

copy of the extract from the certificate 

for use at that drawback office. The 

drawback office will note that the copy 

of the extract was prepared and 

transmitted. 

■ 19. Section 191.103 is revised to read 

as follows: 

§ 191.106 Amount of drawback. 

(a) Claim filed with TTB. If the 

declaration required by § 191.103 of this 

subpart shows that a claim has been or 

will be filed with TTB for domestic 

drawback, drawback under § 313(d) of 

the Act, as amended (19 U.S.C. 1313(d)), 

will be limited to the difference between 

the amount of tax paid and the amount 

of domestic drawback claimed. 

(b) Claim not filed with TTB. If the 

declaration and verified statement 

required by § 191.103 show that no 

claim has been or will be filed by the 

manufacturer with TTB for domestic 

drawback, the drawback will be the full 

amount of the tax on the alcohol used. 

Drawback under this provision may not 

be granted absent receipt from TTB of a 

copy of TTB Form 5100.4 (Certificate of 

Tax-Paid Alcohol) indicating that taxes 

have been paid on the exported product 

for which drawback is claimed. 

(c) No deduction of 1 percent. No 

deduction of 1 percent will be made in 

drawback claims under § 313(d) of the 

Act, as amended (19 U.S.C. 1313(d)). 

(d) Payment. The drawback due will 

be paid in accordance with § 191.81(f). 

■ 20. In § 191.171, add paragraph (d) to 

read as follows: 

§ 191.171 General; drawback allowance. 

* * * * * 

(d) Federal excise tax. For purposes of 

drawback of internal revenue tax 

imposed under Chapters 32 and 38 of 

the Internal Revenue Code of 1986, as 

amended (IRC), drawback granted on 

the export of substituted merchandise 

will be limited to the amount of taxes 

paid (and not returned by refund, credit, 

or drawback) on the substituted 

merchandise. 

Kevin K. McAleenan, 

Commissioner, U.S. Customs and Border 

Protection. 

Approved: 

Timothy E. Skud, 

Deputy Assistant Secretary of the Treasury. 

[FR Doc. 2018–16279 Filed 7–27–18; 11:15 am] 

BILLING CODE 9111–14–P 


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