DEPARTMENT OF THE TREASURY
AGENCY: Customs Service, Treasury.
19 CFR Part 146
Withdrawal of Proposed Customs Regulations Amendment
Relating To Admission Into Foreign-Trade Zone of Merchandise
From Customs Bonded Warehouse
49 FR 3200
January 26, 1984
ACTION: Withdrawal of proposed rule.
SUMMARY: This document withdraws the proposed amendment to the Customs
Regulations to allow imported merchandise withdrawn from a Customs bonded
warehouse to be admitted into a foreign-trade zone without restriction for
use in manufacturing operations. That merchandise will continue to be
restricted and must be exported from the United States, destroyed, or
merely stored in a foreign-trade zone. It cannot be used to manufacture
a product in a zone.
DATE: Withdrawal effective on January 26, 1984.
FOR FURTHER INFORMATION CONTACT: Russell A. Berger, Carriers, Drawback and
Bonds Division, U.S. Customs Service, 1301 Constitution Avenue, NW.,
Washington, D.C. 20229 (202-566-5856).
TEXT: SUPPLEMENTARY INFORMATION:
Foreign-trade zones ("zone") are established under the Foreign Trade
Zones Act of 1934, as amended (FTZA) (19 U.S.C. 81a-81u) and the general
regulations and rules of procedure of the Foreign-Trade Zones Board
contained in 15 CFR Part 400. Part 146, Customs Regulations (19 CFR Part
146), governs the admission of merchandise into a zone; manipulation,
manufacture, or exhibition of merchandise in a zone; exportation of
merchandise from a zone; and transfer of merchandise from a zone into the
customs territory of the United States ("customs territory").
Foreign or domestic merchandise may be admitted into a zone for, among
other things, manipulation, manufacture, assembly, or other processing, or
for storage or exhibition, provided these operations are not otherwise
prohibited by law. Normal customs entry procedures and payment of duty are
not required for merchandise located in a zone unless and until the
merchandise is removed from a zone and entered into the customs territory.
In response to a petition from a member of the public challenging the
restrictive nature of @ 146.25(d), Customs Regulations (19 CFR 146.25(d)),
relating to the treatment of certain zone merchandise, Customs published a
notice in the Federal Register on May 13, 1982 (47 FR 20627), proposing to
amend that section of the regulations. As proposed, @ 146.25(d) would have
been amended to allow imported merchandise withdrawn from a Customs bonded
warehouse to be admitted into a zone without restriction for use in
As presently written, @ 146.25(d) specifies that merchandise entered for
warehousing under section 557(a), Tariff Act of 1930, as amended (19 U.S.C.
1557(a)), and thereafter transferred to a zone shall have the status of
"zone-restricted merchandise". This means that the merchandise may be taken
into the zone only for the purpose of exportation, storage, or destruction.
Consequently, such merchandise may not be used in the zone in manufacturing
Discussion of Comments
A total of 24 comments were received in response to the notice, 20 of
which favored the proposal. Those commenting favorably stated that adoption
of the proposal will allow greater flexibility in distributing merchandise
to a zone depending upon existing commercial needs and will generally
enable more efficient and economical utilization of zones, which accords
with Congressional intent to stimulate American business and labor by
facilitating the conduct of any lawful activity in a zone.
Four commenters were opposed to the proposal. One commenter was opposed
to the possibility of heretofore zone-restricted merchandise being used in
a particular manufacturing operation in a zone. Another commenter objected
to the proposal because it is contended that to increase manufacturing in
zones only dislocates established small businesses and does not create jobs,
but only transfers existing jobs into zones. Finally, two other commenters
were opposed to the proposal on legal grounds, i.e. , construction of the
statutory language of 19 U.S.C. 1557(a) in light of the Congressional
intent (and the plain meaning of the language itself), the restriction
pertaining to this type of zone merchandise which is contained in the
fourth proviso to 19 U.S.C. 81c, and the rational correlation between 19
U.S.C. 1557(a) and 19 U.S.C. 1562 that would be destroyed if the proposal
were adopted. Parenthetically, an internal Customs comment noted that
adoption of the proposal could effectively defeat the 5-year maximum
warehousing period prescribed by law.
Customs has carefully reviewed and considered each of the comments.
Although the negative comments do constitute a minority of those received,
Customs believes they have significant merit and point out persuasive
legal impediments to adoption of the proposal. In addition, it is clear
that administrative precedent, e.g. , Customs Service Decisions 79-204 and
81-88, has consistently held that merchandise transferred from a bonded
warehouse to a zone may be admitted only in zone-restricted status.
Withdrawal of Proposal
In view of the foregoing, and after consideration of the comments
received and further review of the matter, Customs has determined to
withdraw the notice of proposed rulemaking published in the Federal
Register on May 13, 1982 (47 FR 20627).
The principal author of this document was Todd J. Schneider, Regulations
Control Branch, Office of Regulations and Rulings, U.S. Cusoms Service.
However, personnel from other Customs offices participated in its
William von Raab,
Commissioner of Customs.
Approved: January 12, 1984.
John M. Walker, Jr.,
Assistant Secretary of the Treasury.
[FR Doc. 84-2197 Filed 1-25-84; 8:45 am]
BILLING CODE 4820-02-M