§ 81c. Exemption from customs laws of merchandise brought into foreign
trade zone
(a) Handling of merchandise
in zone; shipment of foreign merchandise into customs territory;
appraisal; reshipment to zone Foreign and domestic merchandise of every
description, except such as is prohibited by law, may, without being
subject to the customs laws of the United States, except as otherwise
provided in this chapter, be brought into a zone and may be stored, sold,
exhibited, broken up, repacked, assembled, distributed, sorted, graded,
cleaned, mixed with foreign or domestic merchandise, or otherwise
manipulated, or be manufactured except as otherwise provided in this
chapter, and be exported, destroyed, or sent into customs territory of the
United States therefrom, in the original package or otherwise; but when
foreign merchandise is so sent from a zone into customs territory of the
United States it shall be subject to the laws and regulations of the
United States affecting imported merchandise: Provided, That whenever the
privilege shall be requested and there has been no manipulation or manufacture
effecting a change in tariff classification, the appropriate customs
officer shall take under supervision any lot or part of a lot of foreign
merchandise in a zone, cause it to be appraised and taxes determined and
duties liquidated thereon. Merchandise so taken under supervision may be
stored, manipulated, or manufactured under the supervision and regulations
prescribed by the Secretary of the Treasury, and whether mixed or
manufactured with domestic merchandise or not may, under regulations
prescribed by the Secretary of the Treasury, be exported or destroyed, or
may be sent into customs territory upon the payment of such liquidated
duties and determined taxes thereon. If merchandise so taken under
supervision has been manipulated or manufactured, such duties and taxes
shall be payable on the quantity of such foreign merchandise used in the
manipulation or manufacture of the entered article. Allowance shall be
made for recoverable and irrecoverable waste; and if recoverable waste is
sent into customs territory, it shall be dutiable and taxable in its
condition and quantity and at its weight at the time of entry. Where two
or more products result from the manipulation or manufacture of
merchandise in a zone the liquidated duties and determined taxes shall be
distributed to the several products in accordance with their relative
value at the time of separation with due allowance for waste as provided
for above: Provided further, That subject to such regulations respecting
identity and the safeguarding of the revenue as the Secretary of the
Treasury may deem necessary, articles, the growth, product, or manufacture
of the United States, on which all internal-revenue taxes have been paid,
if subject thereto, and articles previously imported on which duty and/or
tax has been paid, or which have been admitted free of duty and tax, may
be taken into a zone from the customs territory of the United States,
placed under the supervision of the appropriate customs officer, and
whether or not they have been combined with or made part, while in such
zone, of other articles, may be brought back thereto free of quotas, duty,
or tax: Provided further, That if in the opinion of the Secretary of the
Treasury their identity has been lost, such articles not entitled to free
entry by reason of noncompliance with the requirements made hereunder by
the Secretary of the Treasury shall be treated when they reenter customs
territory of the United States as foreign merchandise under the provisions
of the tariff and internal-revenue laws in force at that time: Provided
further, That under the rules and regulations of the controlling Federal
agencies, articles which have been taken into a zone from customs
territory for the sole purpose of exportation, destruction (except
destruction of distilled spirits, wines, and fermented malt liquors), or
storage shall be considered to be exported for the purpose of -
(1) the draw-back,
warehousing, and bonding, or any other provisions of the Tariff Act of
1930, as amended, and the regulations thereunder; and
(2) the statutes and
bonds exacted for the payment of draw-back, refund, or exemption from
liability for internal-revenue taxes and for the purposes of the
internal-revenue laws generally and the regulations thereunder. Such a
transfer may also be considered an exportation for the purposes of other
Federal laws insofar as Federal agencies charged with the enforcement of
those laws deem it advisable. Such articles may not be returned to
customs territory for domestic consumption except where the Foreign-Trade
Zones Board deems such return to be in the public interest, in which
event the articles shall be subject to the provisions of paragraph
1615(f) of section 1201 of this title: Provided further, That no
operation involving any foreign or domestic merchandise brought into a
zone which operation would be subject to any provision or provisions of
section 1807, chapter 15, chapter 16, chapter 17, chapter 21, chapter 23,
chapter 24, chapter 25, chapter 26, or chapter 32 of the Internal Revenue
Code if performed in customs territory, or involving the manufacture of
any article provided for in paragraphs 367 or 368 of section 1001 of this
title, shall be permitted in a zone except those operations (other than
rectification of distilled spirits and wines, or the manufacture or
production of alcoholic products unfit for beverage purposes) which were
permissible under this chapter prior to July 1, 1949: Provided further,
That articles produced or manufactured in a zone and exported therefrom
shall on subsequent importation into the customs territory of the United
States be subject to the import laws applicable to like articles
manufactured in a foreign country, except that articles produced or
manufactured in a zone exclusively with the use of domestic merchandise,
the identity of which has been maintained in accordance with the second
proviso of this section may, on such importation, be entered as American
goods returned: Provided, further, That no merchandise that consists of
goods subject to NAFTA drawback, as defined in section 3333(a) of this
title, that is manufactured or otherwise changed in condition shall be
exported to a NAFTA country, as defined in section 3301(4) of this title,
without an assessment of a duty on the merchandise in its condition and
quantity, and at its weight, at the time of its exportation (or if the
privilege in the first proviso to this subsection was requested, an
assessment of a duty on the merchandise in its condition and quantity,
and at its weight, at the time of its admission into the zone) and the
payment of the assessed duty before the 61st day after the date of
exportation of the article, except that upon the presentation, before
such 61st day, of satisfactory evidence of the amount of any customs
duties paid or owed to the NAFTA country on the article, the customs duty
may be waived or reduced (subject to section 508(b)(2)(B)of the Tariff
Act of 1930 (19 U.S.C. 1508(b)(2)(B))) in an amount that does not exceed
the lesser of (1) the total amount of customs duties paid or owed on the
merchandise on importation into the United States, or (2) the total
amount of customs duties paid on the article to the NAFTA country:
Provided, further, That, if Canada ceases to be a NAFTA country and the
suspension of the operation of the United States-Canada Free-Trade
Agreement thereafter terminates, with the exception of drawback eligible
goods under section 204(a) of the United States-Canada Free-Trade
Agreement Implementation Act of 1988, no article manufactured or
otherwise changed in condition (except a change by cleaning, testing or
repacking) shall be exported to Canada during the period such Agreement
is in operation without the payment of a duty that shall be payable on
the article in its condition and quantity, and at its weight, at the time
of its exportation to Canada unless the privilege in the first proviso to
this subsection was requested.. (FOOTNOTE 1)
(FOOTNOTE 1) So in original.
(b) Applicability to bicycle
component parts
The exemption from the customs laws of the United
States provided under subsection (a) of this section shall not be available on
or before December 31, 1992, to bicycle component parts unless such parts are
reexported from the United States, whether in the original package, as
components of a completely assembled bicycle, or otherwise.
(c) Articles manufactured or
produced from denatured distilled spirits withdrawn free of tax from
distilled spirits plant; products unfit for beverage purposes
(1) Notwithstanding
the provisions of the fifth proviso of subsection (a) of this section,
any article (within the meaning of section 5002(a)(14) of title 26) may
be manufactured or produced from denatured distilled spirits which have
been withdrawn free of tax from a distilled spirits plant (within the
meaning of section 5002(a)(1) of title 26), and articles thereof, in a
zone.
(2) Notwithstanding
the provisions of the fifth proviso of subsection (a) of this section,
distilled spirits which have been removed from a distilled spirits plant
(as defined in section 5002(a)(1) of title 26) upon payment or
determination of tax may be used in the manufacture or production of
medicines, medicinal preparation, food products, flavors, or flavoring
extracts, which are unfit for beverage purposes, in a zone. Such products
will be eligible for drawback under the internal revenue laws under the
same conditions applicable to similar manufacturing or production
operations occurring in customs territory.
(d) Foreign trade zones
In regard to the calculation of relative values in
the operations of petroleum refineries in a foreign trade zone, the time of
separation is defined as the entire manufacturing period. The price of products
required for computing relative values shall be the average per unit value of
each product for the manufacturing period. Definition and attribution of
products to feedstocks for petroleum manufacturing may be either in accordance
with Industry Standards of Potential Production on a Practical Operating Basis
as verified and adopted by the Secretary of the Treasury (known as
producibility) or such other inventory control method as approved by the
Secretary of the Treasury that protects the revenue. (e) Production equipment
(1) In general Notwithstanding any other provision of law, if all applicable
customs laws are complied with (except as otherwise provided in this
subsection), merchandise which is admitted into a Foreign-trade zone for use
within such zone as production equipment or as parts for such equipment, shall
not be subject to duty until such merchandise is completely assembled,
installed, tested, and used in the production for which it was admitted. (2)
Admission procedures The person who admits the merchandise described in
paragraph (1) into the zone shall, at the time of such admission, certify to
the Customs Service that the merchandise is admitted into the zone pursuant to
this subsection for use within the zone as production equipment or as parts for
such equipment and that the merchandise will be entered and estimated duties
deposited when use of the merchandise in production begins. (3) Entry
procedures At the time use of the merchandise in production begins, the
merchandise shall be entered, as provided for in section 484 of the Tariff Act
of 1930 (19 U.S.C. 1484), and estimated duties shall be deposited with the
Customs Service. The merchandise shall be subject to tariff classification
according to its character, condition, and quantity, and at the rate of duty
applicable, at the time use of the merchandise in production begins. (4)
Foreign-trade zone For purposes of this subsection, the term ''Foreign-trade
zone'' includes a subzone.