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U.S. Code as of:
01/19/04
Section 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: Provided further, That no merchandise that consists
of goods subject to Chile FTA drawback, as defined in section
203(a) of the United States-Chile Free Trade Agreement
Implementation Act, that is manufactured or otherwise changed in
condition shall be exported to Chile 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 the customs duty may be
waived or reduced by (1) 100 percent during the 8-year period
beginning on January 1, 2004; (2) 75 percent during the 1-year
period beginning on January 1, 2012; (3) 50 percent during the
1-year period beginning on January 1, 2013; and (4) 25 percent
during the 1-year period beginning on January 1, 2014.
(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.
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