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[Federal Register Volume 70, Number 215 (Tuesday, November 8, 2005)]
[Rules and Regulations]
[Pages 67645-67650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22244]

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DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE INTERIOR

Office of Insular Affairs

15 CFR Part 303

[Docket No. 050613157-5219-02]
RIN 0625-AA68

Changes in the Insular Possessions Watch, Watch Movement and 
Jewelry Programs

AGENCIES: Import Administration, International Trade Administration, 
Department of Commerce; Office of Insular Affairs, Department of the 
Interior.

ACTION: Final rule.

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SUMMARY: The Departments of Commerce and the Interior (the Departments) 
amend their regulations governing watch duty-exemption allocations and 
the watch and jewelry duty-refund benefits for producers in the United 
States insular possessions (the U.S. Virgin Islands, Guam, American 
Samoa and the Commonwealth of the Northern Mariana Islands). The rule 
amends the regulations by making technical changes required by passage 
of the Miscellaneous Trade and Technical Corrections Act of 2004; 
extending the duty refund benefits to include the value of usual and 
customary health insurance, life insurance and pension benefits; 
raising the ceiling on the amount of jewelry that qualifies for the 
duty refund benefit; allowing new insular jewelry producers to assemble 
jewelry and have such jewelry treated as an article of the insular 
possessions for up to 18 months after the jewelry company commences 
assembly operations; allowing duty refund certificate holders to secure 
a duty refund on any articles that are imported into the customs 
territory of the United States by the certificate holder duty paid; 
providing a more comprehensive definition of ``unit;'' adjusting the 
amount of watch repairs that are eligible for the duty refund; 
providing compensation to insular watch producers if tariffs on watches 
and watch movements are reduced; and clarifying which wages are 
eligible for purposes of determining the duty refund and identifying 
which records are needed for the audit.

DATES: This rule is effective December 8, 2005.

[[Page 67646]]

FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526.

SUPPLEMENTARY INFORMATION: The Departments of Commerce and the Interior 
(the Departments) issue this rule to amend their regulations governing 
watch duty-exemption allocations and the watch and jewelry duty-refund 
benefits for producers in the United States insular possessions (the 
U.S. Virgin Islands, Guam, American Samoa and the Commonwealth of the 
Northern Mariana Islands). The background information and purpose of 
this rule is found in the preamble to the proposed rule (70 FR 38828, 
July 6, 2005) and is not repeated here.

Amendments

    Section 1562 of Public Law 108-429 (2004) amends Public Law 97-446, 
Public Law 103-465 and Public Law 106-36. The rule makes the necessary 
technical changes to reflect the new authority for the insular watch 
and jewelry programs. Changes are made to Authority, 15 CFR Sections 
303.1(a), 303.2(a)(1), 303.12 (c)(2), 303.15(a), and 303.16(a)(1).
    Pursuant to Public Law 108-429, the definition of ``creditable 
wages'' is changed by amending 15 CFR 303.2(a)(13) and 15 CFR 
303.16(a)(9) to include the value of usual and customary health 
insurance, life insurance and pension benefits. The rule also changes 
the definition of creditable wages to include the difference between 
the duty rates for watches and watch movements that were in effect on 
January 1, 2001 and any new lower duty rates that takes place in the 
future. This provision in Public Law 108-429 is only applicable if 
there were duty reductions on watches and watch movements. We further 
reapportion the percentage of watch and watch movement repair wages 
that are creditable towards the duty-refund. The rule raises the 
percentage of repairs that are eligible for benefits in response to a 
request we received which pointed out that repair work is very labor 
intensive and more time consuming than regular watch assembly.
    In an effort to further clarify which wages are eligible for the 
duty refund, we added a new Section 303.2(a)(14); redesignated the 
current Sections 303.2(a)(14) through (a)(16) as Sections 303.2(a)(15) 
through (a)(17), respectively; added a new Section 303.16(a)(10); and 
redesignated current Sections 303.16(a)(10) and 303.16(a)(11) as 
Sections 303.16(a)(11) and Sec.  303.16(a)(12), respectively, to 
further clarify which wages are not creditable. We also, as requested 
by a producer, clarified the term ``year'' in current Sections 
303.2(a)(16) and 303.16(a)(11) to clear up any possible confusion.
    We also amended Sec. Sec.  303.2(b)(4), 303.2(b)(5), 303.12(c)(1), 
303.16(b)(2), 303.16(b)(3), and 303.19(c)(1). Pursuant to Public Law 
108-429, we are changing the regulations to allow the refund of duties 
on any articles that are imported into the customs territory of the 
United States duty paid by the certificate holder unless the articles 
contain a material to which column 2 rates of duty apply.
    Further, the rule amends Sections 303.20(b)(ii),(b)(iii) and 
(b)(iv) by raising the ceiling on the number of duty-free units of 
jewelry entering the United States each year that qualify for duty 
refund benefits under the program. Pursuant to Public Law 108-429, the 
rule changes the maximum number of units a year to qualify for the duty 
refund benefit from 750,000 units to 10,000,000 units as long as the 
limit on available program funds is not exceeded and all the units are 
entered free of duty in accordance with the regulations.
    Another change, pursuant to Public Law 108-429, amends Section 
303.20(a)(2) to allow new program jewelry producers up to an18 month 
exemption from meeting the substantial transformation requirements and 
the other provisions normally required for duty-free entry into the 
United States. Starting on the day the new producer commences jewelry 
manufacturing or jewelry assembly, the jewelry producer has up to 18 
months for any article of jewelry provided for in heading 7113, HTSUS, 
that is assembled in an insular possession, to be treated as a product 
of the insular possession.
    The rule also amends Section 303.16(a)(7) by expanding the 
definition of a ``unit'' of jewelry so that the term unit more 
accurately represents the way some heading 7113, HTSUS, jewelry is sold 
in the industry.
    The rule further amends Sections 303.5(b)(5) and 303.17(b)(4) to 
clarify that all records pertaining to shipment documents and proof of 
residency, as required, must be maintained and made available for the 
verification of data. The provision also adds new Sections 303.5(b)(8) 
and 303.17(b)(9) which require the collection and maintenance of 
information pertaining to health insurance, life insurance and pension 
benefits for each employee in order that the benefit information can be 
verified and the duty refunds, based on the verified data, be issued in 
accordance with Public Law 108-429. Further, in accordance with Public 
Law 108-429, the rule adds a new Section 303.5(b)(9) in the event that 
the HTSUS tariffs on watches and watch movements are reduced.
    ITA received two comments in response to the proposed rule and 
request for comments. Both commenters supported all the provisions that 
were proposed and as a result we are adopting the proposed regulations 
in this final rule.

Administrative Law Requirements

    Regulatory Flexibility Act. In accordance with the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., the Chief Counsel for Regulation 
at the Department of Commerce has certified to the Chief Counsel for 
Advocacy, Small Business Administration, that this rule would not have 
a significant economic impact on a substantial number of small 
entities. The factual basis for this certification was published in the 
proposed rule and is not repeated here. No comments were received 
regarding the economic impact of this rule on small entities. As a 
result, a final regulatory flexibility analysis is not required and has 
not been prepared.
    Paperwork Reduction Act. This rulemaking contains revised 
collection of information requirements that have been approved by the 
Office of Management and Budget (OMB) under control number 0625-0040. 
Send comments regarding the burden estimate or any other aspect of the 
collection of information to U.S. Department of Commerce, ITA 
Information Officer, Washington, DC 20230 and the Office of Information 
and Regulations Officer, Office of Management and Budget, Washington, 
DC 20503 (Attn: OMB Desk Officer), or e-mail [email protected].
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with the collection of information unless it 
displays a currently valid OMB Control Number.
    E.O. 12866. It has been determined that this rulemaking is not 
significant for purposes of Executive Order 12866.

List of Subjects in 15 CFR Part 303

    Administrative practice and procedure, American Samoa, Customs 
duties and inspection, Guam, Imports, Marketing quotas, Northern 
Mariana Islands, Reporting and record keeping requirements, Virgin 
Islands, Watches and jewelry.

0
For reasons set forth above, the Departments amend 15 CFR part 303 as 
follows:

[[Page 67647]]

PART 303--WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAMS

0
1. The authority citation for 15 CFR part 303 is revised to read as 
follows:

    Authority: Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); 
Pub. L. 103-465, 108 Stat. 4991; Pub. L. 94-241, 90 Stat. 263 (48 
U.S.C. 1681, note); Pub. L. 106-36, 113 Stat. 167; Pub. L. 108-429, 
118 Stat. 2582.

Sec.  303.1  [Amended]

0
2. The first sentence of Sec.  303.1(a) is amended by removing ``and 
amended by Public Law 103-465, enacted 8 December 1994.'' and adding 
``amended by Public Law 103-465, enacted 8 December 1994 and amended by 
Public Law 108-429 enacted 3 December 2004.'' in its place.

0
3. Section 303.2 is amended as follows:
0
A. Section 303.2(a)(1) is amended by removing ``.'' at the end of the 
sentence and adding ``, Public Law 108-429, enacted on 3 December 2004, 
118 Stat. 2582.'' in its place.
0
B. Section 303.2(a)(13) is revised as set forth below.
0
C. In Section 303.2, paragraphs (a)(14) through (a)(16) are 
redesignated as paragraphs (a)(15) through (a)(17), and a new paragraph 
(a)(14) is added as set forth below.
0
D. Newly designated paragraph (a)(17) is amended by removing ``(i.e., 
be physically present for at least 183 days per year)'' and adding 
``(i.e., be physically present for at least 183 days within a 
continuous 365 day period)'' in its place.
0
E. The heading and the first sentences of paragraph (b)(4) are revised 
as set forth below.
0
F. Paragraph (b)(5) heading is revised as set forth below.

Sec.  303.2  Definitions and forms.

    (a) * * *
    (13) Creditable wages, creditable fringe benefits and creditable 
duty differentials eligible for the duty refund benefit include, but 
are not limited to, the following:
    (i) Wages up to an amount equal to 65 percent of the contribution 
and benefit base for Social Security, as defined in the Social Security 
Act for the year in which wages were earned, paid to permanent 
residents of the insular possessions employed in a firm's 91/5 watch 
and watch movement program.
    (A) Wages paid for the repair of watches up to an amount equal to 
85 percent of the firm's total creditable wages.
    (B) Wages paid to watch and watch movement assembly workers 
involved in the complete assembly of watches and watch movements which 
have entered the United States duty-free and have complied with the 
laws and regulations governing the program.
    (C) Wages paid to watch and watch movement assembly workers 
involved in the complete assembly of watches, excluding the movement, 
only in situations where the desired movement can not be purchased 
unassembled and the producer has documentation establishing this.
    (D) Wages paid to those persons engaged in the day-to-day assembly 
operations on the premises of the company office, wages paid to 
administrative employees working on the premises of the company office, 
wages paid to security employees and wages paid to servicing and 
maintenance employees if these services are integral to the assembly 
and manufacturing operations and the employees are working on the 
premises of the company office.
    (E) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations may be credited 
proportionally provided the firm maintains production, shipping and 
payroll records adequate for the Departments' verification of the 
creditable portion.
    (F) Wages paid to new permanent residents who have met the 
requirements of permanent residency in accordance with the Departments' 
regulations, along with meeting all other creditable wage requirements 
of the regulations, which must be documented and verified to the 
satisfaction of the Secretaries.
    (ii) The combined creditable amount of individual health and life 
insurance per year, for each full-time permanent resident employee who 
works on the premises of the company office and whose wages qualify as 
creditable, may not exceed 100 percent of the ``weighted average'' 
yearly federal employee health insurance, which is calculated from the 
individual health plans weighted by the number of individual contracts 
in each plan. The yearly amount is calculated by the Office of 
Personnel Management and includes the ``weighted average'' of all 
individual health insurance costs for federal employees throughout the 
United States. The maximum life insurance allowed within this combined 
amount is $50,000 for each employee.
    (A) The combined creditable amount of family health and life 
insurance per year, for each full-time permanent resident employee who 
works on the premises of the company office and whose wages qualify as 
creditable, may not exceed 120 percent of the ``weighted average'' 
yearly federal employee health insurance, which is calculated from the 
family health plans weighted by the number of family contracts in each 
plan. The yearly amount is calculated by the Office of Personnel 
Management and includes the ``weighted average'' of all family health 
insurance costs for federal employees throughout the United States. The 
maximum life insurance allowed within this combined amount is $50,000 
for each employee.
    (B) The creditable pension benefit, for each full-time permanent 
resident employee who works on the premises of the company office and 
whose wages qualify as creditable, is up to 3 percent of the employee's 
wages unless the employee's wages exceed the maximum annual creditable 
wage allowed under the program (see paragraph (a)(13)(i) of this 
section). An employee earning more than the maximum creditable wage 
allowed under the program will be eligible for only 3 percent of the 
maximum creditable wage.
    (iii) If tariffs on watches and watch movements are reduced, then 
companies would be required to provide the annual aggregate data by 
individual HTSUS watch tariff numbers for the following components 
contained therein: the quantity and value of watch cases, the quantity 
of movements, the quantity and value of each type of strap, bracelet or 
band, and the quantity and value of batteries shipped free of duty into 
the United States. If discrete watch movements are shipped free of duty 
into the United States, then the annual aggregate quantity by 
individual HTSUS movement tariff numbers would also be required along 
with the value of each battery if it is contained within. These data 
would be used to calculate the annual duty rate before each HTSUS 
tariff reduction, and the annual duty rate after the HTSUS tariff 
reduction. The amount of the difference would be creditable toward the 
duty refund. The tariff information would only be collected and used in 
the calculation of the annual duty-refund certificate and would not be 
used in the calculation of the mid-year duty-refund.
    (14) Non-creditable wages and non-creditable fringe benefits. Wages 
ineligible for the duty refund benefit wages include, but are not 
limited to, the following:
    (i) Wages over 65 percent of the contribution and benefit base for 
Social Security, as defined in the Social Security Act for the year in 
which wages were earned, paid to permanent residents of the territories 
employed in a firm's 91/5 watch and watch movement program.

[[Page 67648]]

    (A) Wages paid for the repair of watches in an amount over 85 
percent of the firm's total creditable wages.
    (B) Wages paid for the assembly of watches and watch movements 
which are shipped outside the customs territory of the United States; 
wages paid for the assembly of watches and watch movements that do not 
meet the regulatory assembly requirements; or wages paid for the 
assembly of watches or watch movements that contain HTSUS column 2 
components.
    (C) Wages paid for the complete assembly of watches, excluding the 
movement, when the desired movement can be purchased unassembled, if 
the producer does not have adequate documentation, demonstrating to the 
satisfaction of the Secretaries, that the movement could not be 
purchased unassembled whether or not it is entering the United States.
    (D) Wages paid to persons not engaged in the day-to-day assembly 
operations on the premises of the company office; wages paid to any 
outside consultants; wages paid to outside the office personnel, 
including but not limited to, lawyers, gardeners, construction workers, 
and accountants; wages paid to employees not working on the premises of 
the company office; and wages paid to employees who do not qualify as 
permanent residents in accordance with the Departments' regulations.
    (E) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations if the producer does not 
maintain production, shipping and payroll records adequate for the 
Departments' verification of the creditable portion.
    (ii) Any costs, for the year in which the wages were paid, of the 
combined creditable amount of individual health and life insurance for 
employees over 100 percent of the ``weighted average'' yearly 
individual health insurance costs for all federal employees. The cost 
of any life insurance over the $50,000 limit for each employee.
    (A) Any costs, for the year in which the wages were paid, of the 
combined creditable amount of family health and life insurance for 
employees over 120 percent of the ``weighted average'' yearly family 
health insurance costs for all federal employee. The cost of any life 
insurance over the $50,000 limit for each employee.
    (B) The cost of any pension benefit per employee over 3 percent of 
the employee's creditable wages unless the employee's wages exceed the 
maximum annual creditable annual maximum creditable wage allowed under 
the program (see paragraph (a)(13)(i) of this section). Employees 
earning over the maximum creditable wage allowed under the program 
would have a creditable annual pension benefit of up to 3 percent of 
the maximum creditable wage and wages over 3 percent of the maximum 
creditable wage would not be creditable.
* * * * *
    (b) * * *
    (4) ITA-360P ``Certificate of Entitlement to Secure the Refund of 
Duties on Articles that Entered the Customs Territory of The United 
State Duty Paid.'' This document authorizes an insular watch producer 
to request the refund of duties on imports of articles that entered the 
customs territory of the United States duty paid, up to the specified 
value of the certificate. * * *
    (5) ITA-361P ``Request for Refund of Duties on Articles that 
Entered the Customs Territory of the United States Duty Paid.'' * * *
* * * * *

0
4. Section 303.5(b)(5) is revised to read as set forth below and 
paragraph(b)(8) and (b)(9) are added to read as set forth below.

Sec.  303.5  Application for annual allocation of duty-exemptions.

* * * * *
    (b) * * *
    (5) Customs, bank, payroll, production records, and all shipping 
records including the importer of record number and proof of residency, 
as requested;
* * * * *
    (8) All records pertaining to health insurance, life insurance and 
pension benefits for each employee; and
    (9) If HTSUS tariffs on watches and watch movements are reduced, 
records of the annual aggregate data by individual HTSUS watch tariff 
numbers for the following components contained therein would be 
required: the quantity and value of watch cases; the quantity of 
movements; the quantity and value of each type of strap, bracelet or 
band; and the quantity and value of batteries shipped free of duty into 
the United States. In addition, if applicable, records of the annual 
aggregate quantity of discrete watch movements shipped free of duty 
into the United States by HTSUS tariff number.
* * * * *

0
5. Section 303.12(c)(1) and (c)(2) are revised to read as follows:

Sec.  303.12  Issuance and use of production incentive certificates.

* * * * *
    (c) The use and transfer of certificate of entitlements. (1) 
Insular producers issued a certificate may request a refund by 
executing Form ITA-361P (see Sec.  303.2(b)(5) and the instructions on 
the form). After authentication by the Department of Commerce, Form 
ITA-361P may be used to obtain duty refunds on articles that entered 
the customs territory of the United States duty paid except for any 
article containing a material which is the product of a country to 
which column 2 rates of duty apply. Articles for which duty refunds are 
claimed must have entered the customs territory of the United States 
during the two-year period prior to the issue date of the certificate 
or during the one-year period the certificate remains valid. Copies of 
the appropriate Customs entries must be provided with the refund 
request in order to establish a basis for issuing the claimed amounts. 
Certification regarding drawback claims and liquidated refunds relating 
to the presented entries is required from the claimant on the form.
    (2) Regulations issued by the Bureau of Customs and Border 
Protection, U.S. Department of Homeland Security, govern the refund of 
duties under Public Law 97-446, as amended by Public Law 103-465 and 
Public Law 108-429. If the Departments receive information from the 
Bureau of Customs and Border Protection that a producer has made 
unauthorized use of any official form, they shall cancel the affected 
certificate.
* * * * *

Sec.  303.15  [Amended]

0
6. Section 303.15(a) is amended by removing ``.'' at the end of the 
sentence and adding ``, and Public Law 108-429, enacted on 3 December 
2004.'' in its place.

0
7. Section 303.16 is amended as follows:
0
A. Paragraph (a)(1) is amended by removing ``.'' at the end of the last 
sentence and adding ``, and Public Law 108-429, enacted on 3 December 
2004.'' in its place.
0
B. Paragraph (a)(7) is revised to read as set forth below.
0
C. Paragraph (a)(9) is revised to read as set forth below.
0
D. Paragraphs (a)(10) and (a)(11) are redesignated as paragraphs 
(a)(11) and (12) and a new paragraph (a)(10) is added as set forth 
below.
0
E. Newly designated paragraph (a)(12) is amended by removing ``(i.e., 
be physically present for at least 183 days per year)'' and adding 
``(i.e., be physically present for at least 183 days within a 
continuous 365 day period year)'' in its place.
0
F. Paragraph (b)(2) is revised to read as set forth below.

[[Page 67649]]

0
G. The heading of paragraph (b)(3) is revised to read as set forth 
below.

Sec.  303.16  Definitions and forms.

    (a) * * *
    (7) Unit of Jewelry means a single article (e.g., ring, bracelet, 
necklace), pair (e.g, cufflinks), gram for links which are sold in 
grams and stocked in grams, and other subassemblies and components in 
the customary unit of measure they are stocked and sold within the 
industry.
* * * * *
    (9) Creditable wages and creditable fringe benefits eligible for 
the duty refund benefit include, but are not limited to, the following:
    (i) Wages up to an amount equal to 65 percent of the contribution 
and benefit base for Social Security, as defined in the Social Security 
Act for the year in which wages were earned, paid to permanent 
residents of the insular possessions employed in a firm's manufacture 
of HTSUS heading 7113 articles of jewelry which are a product of the 
insular possessions and have met the Bureau of Customs and Border 
Protection's criteria for duty-free entry into the United States, plus 
any wages paid for the repair of non-insular HTSUS heading 7113 jewelry 
up to an amount equal to 50 percent of the firm's total creditable 
wages.
    (A) Wages paid to persons engaged in the day-to-day assembly 
operations at the company office, wages paid to administrative 
employees working on the premises of the company office, wages paid to 
security operations employees and wages paid to servicing and 
maintenance employees if these services are integral to the assembly 
and manufacturing operations and the employees are working on the 
premises of the company office.
    (B) Wages paid to permanent residents who are employees of a new 
company involved in the jewelry assembly and jewelry manufacturing of 
HTSUS heading 7113 jewelry for up to 18 months after such jewelry 
company commences jewelry manufacturing or jewelry assembly operations 
in the insular possessions.
    (C) Wages paid when a maximum of two producers work on a single 
piece of HTSUS heading 7113 jewelry which entered the United States 
free of duty under the program. Wages paid by the two producers will be 
credited proportionally provided both producers demonstrate to the 
satisfaction of the Secretaries that they worked on the same piece of 
jewelry, the jewelry received duty-free treatment into the customs 
territory of the United States, and the producers maintained production 
and payroll records sufficient for the Departments' verification of the 
creditable wage portion (see Sec.  303.17(b)).
    (D) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations may be credited 
proportionally provided the firm maintains production, shipping and 
payroll records adequate for the Departments' verification of the 
creditable portion.
    (E) Wages paid to new permanent residents who have met the 
requirements of permanent residency in accordance with the Departments' 
regulations along with meeting all other creditable wage requirements 
of the regulations, which must be documented and verified to the 
satisfaction of the Secretaries.
    (ii) The combined creditable amount of individual health and life 
insurance per year, for each full-time permanent resident employee who 
works on the premises of the company office and whose wages qualify as 
creditable, may not exceed 100 percent of the ``weighted average'' 
yearly federal employee health insurance, which is calculated from the 
individual health plans weighted by the number of individual contracts 
in each plan. The yearly amount is calculated by the Office of 
Personnel Management and includes the ``weighted average'' of all 
individual health insurance costs for federal employees throughout the 
United States. The maximum life insurance allowed within this combined 
amount is $50,000 for each employee.
    (A) The combined creditable amount of family health and life 
insurance per year, for each full-time permanent resident employee who 
works on the premises of the company office and whose wages qualify as 
creditable, may not exceed 120 percent of the ``weighted average'' 
yearly federal employee health insurance, which is calculated from the 
family health plans weighted by the number of family contracts in each 
plan. The yearly amount is calculated by the Office of Personnel 
Management and includes the ``weighted average'' of all family health 
insurance costs for federal employees throughout the United States. The 
maximum life insurance allowed within this combined amount is $50,000 
dollars for each employee.
    (B) The creditable pension benefit, for each full-time permanent 
resident employee who works on the premises of the company office and 
whose wages qualify as creditable, is up to 3 percent of the employee's 
wages unless the employee's wages exceed the maximum annual creditable 
wage allowed under the program (see paragraph (a)(9)(i) of this 
section). An employee earning more than the maximum creditable wage 
allowed under the program will be eligible for only 3 percent of the 
maximum creditable wage.
    (10) Non-creditable wages and non-creditable fringe benefits. Wages 
ineligible for the duty refund benefit include, but are not limited to, 
the following:
    (i) Wages over 65 percent of the contribution and benefit base for 
Social Security, as defined in the Social Security Act for the year in 
which wages were earned, paid to permanent residents of the territories 
employed in a firm's 91/5 heading 7113, HTSUS, jewelry program.
    (A) Wages paid for the repair of jewelry in an amount over 50 
percent of the firm's total creditable wages.
    (B) Wages paid to employees who are involved in assembling HTSUS 
heading 7113 jewelry beyond 18 months after such jewelry company 
commences jewelry manufacturing or jewelry assembly operations in the 
insular possessions if the jewelry does not meet the Bureau of Customs 
and Border Protection's substantial transformation requirements and 
other criteria for duty-free enter into the United States.
    (C) Wages paid for the assembly and manufacturing of jewelry which 
is shipped to places outside the customs territory of the United 
States; wages paid for the assembly and manufacturing of jewelry that 
does not meet the regulatory assembly requirements; or wages paid for 
the assembly and manufacture of jewelry that contain HTSUS column 2 
components.
    (D) Wages paid to those persons not engaged in the day-to-day 
assembly operations on the premises of the company office, wages paid 
to any outside consultants, wages paid to outside the office personnel, 
including but not limited to, lawyers, gardeners, construction workers 
and accountants; wages paid to employees not working on the premises of 
the company office and wages paid to employees who do not qualify as 
permanent residents in accordance with the Departments' regulations.
    (E) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations if the producer does not 
maintain production, shipping and payroll records adequate for the 
Departments' verification of the creditable portion.
    (ii) Any costs, for the year in which the wages were paid, of the 
combined creditable amount of individual health and life insurance for 
employees over 100 percent of the ``weighted average'' yearly 
individual health insurance costs

[[Page 67650]]

for all federal employees. The cost of any life insurance over the 
$50,000 limit for each employee.
    (A) Any costs, for the year in which the wages were paid, of the 
combined creditable amount of family health and life insurance for 
employees over 120 percent of the ``weighted average'' yearly family 
health insurance costs for all federal employee. The cost of any life 
insurance over the $50,000 limit for each employee.
    (B) The cost of any pension benefit per employee over 3 percent of 
the employee's creditable wages unless the employee's wages exceed the 
maximum annual creditable annual maximum creditable wage allowed under 
the program (see paragraph (a)(9)(i) of this section). Employees 
earning over the maximum creditable wage allowed under the program 
would have a creditable annual pension benefit of up to 3 percent of 
the maximum creditable wage and wages over 3 percent of the maximum 
creditable wage would not be creditable.
* * * * *
    (b) * * *
    (2) ITA-360P ``Certificate of Entitlement to Secure the Refund of 
Duties on Articles that Entered the Customs Territory of The United 
State Duty Paid.'' This document authorizes an insular jewelry producer 
to request the refund of duties on imports of articles that entered the 
customs territory of the United States duty paid, with certain 
exceptions, up to the specified value of the certificate. Certificates 
may be used to obtain duty refunds only when presented with a properly 
executed Form ITA-361P.
    (3) ITA-361P ``Request for Refund of Duties on Articles that 
Entered the Customs Territory of the United States Duty Paid.'' * * *
* * * * *

0
8. Section 303.17 is amended by revising paragraph (b)(6); by 
redesignating paragraphs (b)(7) and (b)(8) as paragraphs (b)(8) and 
(b)(9); and by adding a new paragraph (b)(7) to read as follows:

Sec.  303.17  Annual jewelry application.

* * * * *
    (b) * * *
    (6) Customs, bank, payroll, production records, and all shipping 
records including the importer of record number and proof of residency, 
as requested;
    (7) All records pertaining to health insurance, life insurance and 
pension benefits for each employee;
* * * * *

0
9. Section 303.19(c)(1) is revised to read as follows:

Sec.  303.19  Issuance and use of production incentive certificates.

* * * * *
    (C) The use and transfer of certificate entitlements. (1) Insular 
producers issued a certificate may request a refund by executing Form 
ITA-361P (see Sec.  303.16(b)(3)) and the instruction on the form). 
After authentication by the Department of Commerce, Form ITA-361P may 
be used to obtain duty refunds on article that entered the customs 
territory of the United States duty paid. Duties on an article which is 
the product of a country with respect to column 2 rates of duty apply 
may not be refunded Articles for which duty refunds are claimed must 
have entered the customs territory of the United States during the two-
year period prior to the issue date of the certificate or during the 
one-year period the certificate remains valid. Copies of the 
appropriate Customs entries must be provided with the refund request in 
order to establish a basis for issuing the claimed amounts. 
Certification regarding drawback claims and liquidated refunds relating 
to the presented entries is required from the claimant on the form.
* * * * *

0
10. In Sec.  303.20:
0
A. Paragraph (a)(2) is revised;
0
B. Paragraph (b)(1)(ii) is amended by removing ``450,000'' and adding 
``3,533,334'' in its place;
0
C. Paragraph (b)(1)(iii) is amended by removing ``600,000'' and adding 
``6,766,667'' in its place; and
0
D. Paragraph 303.20(b)(1)(iv) is amended by removing ``750,000'' and 
adding ``10,000,000'' in its place.

Sec.  303.20  Duty refund.

* * * * *
    (a) * * *
    (2) Eighteen month exemption. Any article of jewelry provided for 
in HTSUS heading 7113, assembled in the insular possessions by a new 
entrant jewelry manufacturer shall be treated as a product of the 
insular possessions if such article is entered into the customs 
territory of the United States no later than 18 months after such 
producer commences jewelry manufacturing or jewelry assembly operations 
in the insular possessions.
* * * * *

Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration, Department of 
Commerce.
Nikolao I. Pula,
Director for Insular Affairs, Department of the Interior.
[FR Doc. 05-22244 Filed 11-7-05; 8:45 am]
BILLING CODE 3510-DS-P; 4310-93-P
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