Supporting Law/Regulation

19 USC 1562

Sec. 1562. - Manipulation in warehouse

Unless by special authority of the Secretary of the Treasury, no merchandise shall be withdrawn from bonded warehouse in less quantity than an entire bale, cask, box, or other package; or, if in bulk, in the entire quantity imported or in a quantity not less than one ton weight. All merchandise so withdrawn shall be withdrawn in the original packages in which imported unless, upon the application of the importer, it appears to be the appropriate customs officer that it is necessary to the safety or preservation of the merchandise to repack or transfer the same; except that upon permission therefor being granted by the Secretary of the Treasury, and under customs supervision, at the expense of the proprietor, merchandise may be cleaned, sorted, repacked, or otherwise changed in condition, but not manufactured, in bonded warehouses established for that purpose and be withdrawn therefrom -

(1) without payment of duties for exportation to a NAFTA country, as defined in section 3301(4) of this title, if the merchandise is of a kind described in any of paragraphs (1) through (8) of section 3333(a) of this title;

(2) for exportation to a NAFTA country if the merchandise consists of goods subject to NAFTA drawback, as defined in section 3333(a) of this title, except that –

(A)the merchandise may not be withdrawn from warehouse without assessment

of a duty on the merchandise in its condition and quantity, and at its weight, at

the time of withdrawal from the warehouse with such additions to or deductions

from the final appraised value as may be necessary by reason of change in

condition, and

(B) duty shall be paid on the merchandise before the 61st day after the date of

exportation, but upon the presentation, before such 61st day, of satisfactory

evidence of the amount of any customs duties paid to the NAFTA country on the

merchandise, the customs duty may be waived or reduced (subject to section 1508(b)(2)(B) of this title) in an amount that does not exceed the lesser of –

(i) the total amount of customs duties paid or owed on the merchandise on

importation into the United States, or

(ii) the total amount of customs duties paid on the merchandise to the NAFTA

country;

(3) without payment of duties for exportation to any foreign country other than to a NAFTA country or to Canada when exports to that country are subject to paragraph (4);

(4) without payment of duties for exportation to Canada (if that country ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates), but the exemption from the payment of duties under this paragraph applies only in the case of an exportation during the period such Agreement is in operation of merchandise that –

1. is only cleaned, sorted, or repacked in a bonded warehouse, or

2. is a drawback eligible good under section 204(a) of the United States-Canada Free-Trade Agreement Implementation Act of 1988; and

(5) without payment of duties for shipment to the Virgin Islands, American Samoa, Wake Island, Midway Island, Kingman Reef, Johnston Island or the island of Guam.

Merchandise may be withdrawn from bonded warehouse for consumption, or for exportation to Canada if the duty exemption under paragraph (4) of the preceding sentence does not apply, upon the payment of duties accruing thereon, in its condition and quantity, and at its weight, at the time of withdrawal from warehouse, with such additions to or deductions from the final appraised value as may be necessary by reason of change in condition. The basis for the assessment of duties on such merchandise so withdrawn for consumption shall be the adjusted final appraised value, and if the rate of duty is based upon or regulated in any manner by the value of the merchandise, such rate shall be based upon or regulated by such adjusted final appraised value. The scouring or carbonizing of wool shall not be considered a process of manufacture within the provisions of this section. Under such regulations as the Secretary of the Treasury shall prescribe, imported merchandise which has been entered and which has remained in continuous customs custody may be manipulated in accordance with the provisions of this section under customs supervision and at the risk and expense of the consignee, but elsewhere than in a bonded warehouse, in cases where neither the protection of the revenue nor the proper conduct of customs business requires that such manipulation be done in bonded warehouse

19 USC 1563

Sec. 1563. - Allowance for loss, abandonment of warehouse goods

(a) Abatement or allowance for deterioration, loss or damage to merchandise in customs custody; exception

In no case shall there be any abatement or allowance made in the duties for any injury, deterioration, loss, or damage sustained by any merchandise while remaining in customs custody, except that the Secretary of the Treasury is authorized, upon production of proof satisfactory to him of the loss or theft of any merchandise while in the appraiser's stores, or of the actual injury or destruction, in whole or in part, of any merchandise by accidental fire or other casualty, while in bonded warehouse, or in the appraiser's stores, or while in transportation under bond, or while in the custody of the officers of the customs, although not in bond, or while within the limits of any port of entry and before having been landed under the supervision of the officers of the customs, to abate or refund, as the case may be, the duties upon such merchandise, in whole or in part, and to pay any such refund out of any moneys in the Treasury not otherwise appropriated, and to cancel any warehouse bond or bonds, or enter satisfaction thereon in whole or in part, as the case may be, but no abatement or refund shall be made in respect of injury or destruction of any merchandise in bonded warehouse occurring after the expiration of three years from the date of importation. The decision of the Secretary of the Treasury as to the abatement or refund of the duties on any such merchandise shall be final and conclusive upon all persons.

The Secretary of the Treasury is authorized to prescribe such regulations as he may deem necessary to carry out the provisions of this subdivision and he may by such regulations limit the time within which proof of loss, theft, injury, or destruction shall be submitted, and may provide for the abatement or refund of duties, as authorized herein, by appropriate customs officers in cases in which the amount of the abatement or refund claimed is less than $25 and in which the importer has agreed to abide by the decision of the customs officer. The decision of the customs officer in any such case shall be final and conclusive upon all persons.

(b) Abandonment of merchandise to Government; remittal or refund of duties paid

Under such regulations as the Secretary of the Treasury may prescribe and subject to any conditions imposed thereby the consignee may at any time within three years from the date of original importation, abandon to the Government any merchandise in bonded warehouse, whereupon any duties on such merchandise may be remitted or refunded as the case may be, but any merchandise so abandoned shall not be less than an entire package and shall be abandoned in the original package without having been repacked while in a bonded warehouse (other than a bonded manipulating warehouse)

TITLE 19--CUSTOMS DUTIES CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS AND CONTROL OF MERCHANDISE THEREIN

19.8 Examination of goods by importer; sampling; repacking; examination of merchandise by prospective purchasers. Importers may, upon application approved by the port director on Customs Form 3499 examine, sample, and repack or transfer merchandise in bonded warehouse. Where there will be no interference with the orderly conduct of Customs business and no danger to the revenue prospective purchaser may be permitted to examine merchandise in bonded warehouses upon the written request of the owner, importer, consignee, or transferee.

TITLE 19--CUSTOMS DUTIES CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS AND CONTROL OF MERCHANDISE THEREIN

19.11 Manipulation in bonded warehouses and elsewhere.

1. So far as applicable, the general provisions of the regulations governing warehouses bonded for the storage of imported merchandise shall apply to bonded manipulation warehouses and to other designated places of manipulation.

2. Merchandise to be manipulated under section 562, Tariff Act of 1930, as amended, may be entered on Customs Form 7501 and sent directly to a storage-manipulation warehouse.

3. Warehouse proprietors shall not allow manipulation of any merchandise without a

prior permit issued by the port director, except as provided in paragraph (h) of this

section. Merchandise entered for warehouse may be transferred to a storage-

manipulation warehouse; or merchandise entered for storage-manipulation

warehouse may be transferred after manipulation to the storage portion of the same

warehouse, to another storage warehouse, or to a manufacturing warehouse of

class 6.

4. The application to manipulate, which shall be filed on Customs Form 3499 with the

port director having jurisdiction of the warehouse or other designated place of

manipulation, shall describe the contemplated manipulation in sufficient detail to

enable the port director to determine whether the imported merchandise is to be

cleaned, sorted, repacked, or otherwise changed in condition, but not manufactured,

within the meaning of section 562, Tariff Act of 1930, as amended. If the port

director is satisfied that the merchandise is to be so manipulated, he may issue a

permit on Customs Form 3499, making any necessary modification in such form.

The port director may approve a blanket application to manipulate on Customs Form

3499, for a period of up to one year, for a continuous or a repetitive manipulation.

The warehouse proprietor must maintain a running record of manipulations

performed under a blanket application, indicating the quantities before and after each

manipulation. The record must show what took place at each manipulation

describing marks and numbers of packages, location within the facility, quantities,

and description of goods before and after manipulation. The port director is

authorized to revoke a blanket approval to manipulate and require the proprietor to

file individual applications if necessary to protect the revenue, administer any law or

regulation, or both. Manipulation resulting in a change in condition of the

merchandise, which will make it subject to a lower rate of duty or free of duty upon

withdrawal for consumption, is not precluded by the provisions of such section 562.

5. No merchandise shall be manipulated elsewhere than in a bonded warehouse

unless the merchandise has been regularly entered for consumption or warehouse

and is of a class entitled to the warehousing privilege under section 557, Tariff Act of

1930, as amended.

6. Upon compliance with the provisions of paragraph (d) of this section, manipulated

merchandise may be further manipulated before withdrawal in cases where the port

director is satisfied that this will not endanger the revenue or interfere with the

efficient conduct of Customs business. The merchandise remaining in the

warehouse shall be properly repacked after each manipulation.

7. Except as provided in Sec. 144.38 of this chapter, manipulated merchandise may be

withdrawn under any form of withdrawal, but no withdrawal shall be accepted for less

than an entire repacked package. Each type of withdrawal filed shall contain a

summary statement indicating the quantity in the warehouse account after

manipulation and immediately before the withdrawal, the quantity withdrawn on the

particular withdrawal, and the quantity remaining in the warehouse after the

withdrawal. When merchandise covered by a consumption entry is manipulated

elsewhere than in a bonded warehouse and thereafter withdrawn for consumption,

the withdrawal shall be on Customs Form 7501 and shall be liquidated in accordance

with Sec. 159.9 of this chapter.

8. Merchandise which has been entered for warehouse and placed in a Class 9

warehouse (duty-free store) may be unpacked into its smallest irreducible unit for

sale without a prior permit issued by the port director. The port director may issue a

blanket permit to a duty-free store for up to one year permitting the destruction of

merchandise covered by any entry and found to be nonsaleable, if the merchandise

to be destroyed is valued at less than 5 percent of the value of the merchandise at

time of entry or $1,250, whichever is less, in its undamaged condition. Such permit

may be revoked in favor of a permit for each entry and/or destruction whenever

necessary to assure proper destruction and protection of the revenue. The proprietor

shall maintain a record of unpacking merchandise into saleable units and destruction

of nonsaleable merchandise in its inventory and accounting records.

[28 FR 14763, Dec. 31, 1963, as amended by T.D. 82-204, 47 FR 49371, Nov. 1, 1982; T.D. 84-129, 49 FR 23166, June 5, 1984; T.D. 84-171, 49 FR 31253, Aug. 3, 1984; T.D. 84-213, 49 FR 41169, Oct. 19, 1984; T.D. 85- 38, 50 FR 8723, Mar. 5, 1985; T.D. 89-1, 53 FR 51254, Dec. 21, 1988; T.D. 92-81, 57 FR 37698, Aug. 20, 1992; T.D. 95-81, 60 FR 52295, Oct. 6, 1995; T.D. 97-19, 62 FR 15836, Apr. 3, 1997]

TITLE 19--CUSTOMS DUTIES CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY PART 158--RELIEF FROM DUTIES ON MERCHANDISE LOST, DAMAGED, ABANDONED, OR EXPORTED

Subpart D--Destroyed, Abandoned, or Exported Merchandise

Sec. 158.43 Abandonment or destruction of merchandise in bond. Allowance in duties for merchandise entered under bond destroyed under section 557(c), Tariff Act of 1930, as amended (19 U.S.C. 1557(c)), or for merchandise in bonded warehouse abandoned to the Government under section 563(b), Tariff Act of 1930, as amended (19 U.S.C. 1563(b)), shall be subject to the following conditions:

1. Application by importer. The importer shall file an application for abandonment or

destruction of merchandise in bond with the port director on Customs From 3499,

with the title modified to read ``Application and Permit to Abandon (or Destroy)

Goods in Bond.'' When an application is for permission to destroy, the proposed

method of destruction shall be stated in the application and be subject to the

approval of the port director.

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