CBP Corrects 19 CFR on Seizures, FTZs, Drawback, Etc.

U.S. Customs and Border Protection has issued a final rule, effective August 26, 2010, making corrections to various parts of 19 CFR as part of its policy to periodically review its regulations to ensure that they are as accurate and up-to-date as possible so that the importing and general public are aware of CBP programs, requirements, and procedures regarding import-related activities.

Through the review process, CBP discovered a number of discrepancies and has therefore determined that certain corrections are necessary to 19 CFR Parts 4, 10, 12, 18, 101, 103, 118, 122, 141, 146, 159, 162, and 192.

The following are highlights of the final rule:

New Paragraph on Exports Contrary to Law Being Subject to Seizure

The final rule amends 19 CFR 162.23 (seizure under 19 USC 1595a(c)) to conform the regulations to changes contained in the USA PATRIOT ACT Improvement and Reauthorization Act of 2005.

The final rule adds a new paragraph (f) to 19 CFR 162.23 which states that merchandise exported or sent, or attempted to be exported or sent, from the U.S. contrary to law, or the proceeds or value thereof, and property used to facilitate the exporting or sending, or attempted exporting or sending, of such merchandise, will be seized and subject to forfeiture. In addition, the receipt, purchase, transportation, concealment or sale of such merchandise prior to exportation will result in its seizure and forfeiture to the U.S.

Drawback Entries Subject to One Year Deadline for Liquidation

19 CFR 159.11(b) sets forth the applicability of the provisions concerning the statutory time frame limit of one year for the liquidation of entries but excluded drawback entries in pending drawback claims from this time frame. However, the Miscellaneous Trade and Technical Corrections Act of 2004 amended 19 USC 1504 to include the applicability of the one year deadline to the liquidation of drawback entries or claims for drawback.

Accordingly, CBP’s final rule amends 19 CFR 159.11(b) by removing the language that excluded drawback entries from falling under the statutory liquidation time limit of one year.

Submission of Form 214 within 15 Calendar Days for Temporary FTZ Goods

19 CFR 145.35, which pertains to the procedures for the temporary deposit of merchandise in a foreign trade zone, allows for the temporary unlading of merchandise in an FTZ where the information or documentation necessary to complete CBP Form 214 (Application for FTZ Admission and/or Status Designation) is not available at the time the merchandise arrives within the jurisdiction of the port.

As currently written, 19 CFR 146.35(e) requires that CBP Form 214 be submitted within five working days and allows the port director to grant an extension of this time period, or the merchandise will be placed in general order. In September 1998, CBP published a decision amending 19 CFR 4.37, 122.50, and 123.10, to require a carrier’s obligated party to notify CBP within fifteen calendar days after unlading of the presence of unladen, unentered merchandise. It has come to CBP’s attention that it inadvertently omitted 19 CFR 146.35(e) when it was changing the time frame for merchandise to be admitted into a FTZ.

The final rule amends 19 CFR 146.35(e) to change the time required to file CBP Form 214 from five working days to fifteen calendar days and eliminates the port director’s discretion to grant an extension to make this provision consistent with the previous regulatory changes.

CES Agreements Cannot Last Longer than Five Years

19 CFR 118.3, regarding the written agreements between CBP and Centralized Examination Station (CES) operators, is being amended to comply with the McNamara-O'Hara Service Contract Act of 1965 (SCA). The SCA applies to every contract entered into by the U.S. or the District of Columbia in excess of $2,500, the principal purpose of which is to furnish services to the U.S. through the use of service employees.

The SCA applies to the written agreement between CBP and the operator of a CES because this agreement obligates the operator of a CES to perform the specific services listed in 19 CFR 118.4, and therefore the principal purpose of the agreement is the furnishing of services desired by the U.S.

19 CFR 118.3 currently provides that the duration of agreements with CES operators “will not be less than three years nor more than six years.” The term “six years” is in conflict with the SCA, which mandates that contracts to which the SCA applies may not exceed five years. Because the SCA requires that such agreements cannot exceed a term of five years, CBP is amending 19 CFR 118.3 to reflect the proper time frame.

CBP notes that it will honor existing agreements and will process future agreements with the revised term limits of not less than three years or more than five years.

FDA’s Authority to Regulate Imported Tobacco Products

19 CFR 12.1(a), 12.3(a), 141.113(c) set forth, in part, joint regulations issued by the Food and Drug Administration and other agencies concerning the admissibility of imported food, drugs, devices, and cosmetics pursuant to the Federal Food, Drug, and Cosmetic Act (FFDCA). In June 2009, the Family Smoking Prevention and Tobacco Control Act was signed into law, which amended the FFDCA to give the FDA the authority to regulate tobacco products.

Accordingly, the final rule amends 19 CFR 12.1(a), 12.3(a), and 141.113(c) to reflect the addition of “tobacco products” to the list of imported products subject to regulation under the FFDCA.

References to Outdated Bond Forms Removed

19 CFR 12.123(b) is being amended to remove outdated references to “Customs Form 7551, 7553, or 7595”. These forms were abolished and replaced by CBP Form 301 in order to modernize the CBP bond structure and simplify the transactions between CBP and the importing community.

Chile Post-Importation Claim Changes, Etc.

19 CFR 10.442(d)(1) sets forth the circumstances under which CBP may deny post-importation duty refund claims under the U.S.-Chile FTA. These circumstances include a determination by the port director that the imported good did not qualify as an originating good at the time of importation “following initiation of an origin verification”.

The final rule amends 19 CFR 10.442(d)(1) by removing the words “initiation of” to more accurately reflect when determinations are made by CBP based upon the results of origin verifications.

In addition, 19 CFR 10.470(a), concerning verifications by CBP of U.S.-Chile FTA preference claims, is being amended to add a reference to 19 CFR 10.442, which was inadvertently omitted.

(See final rule for amendments made to correct typographical errors, to update citations, to change references, etc.)

CBP contact -- Robert Shervette (202) 325-0274

(FR Pub 08/26/10, CBP Dec. 10-29)