RR:IA 561654 RFC
Messrs. Robert E. Burke and Brian F. Walsh
Barnes, Richardson & Colburn
303 East Wacker Drive, Suite 1100
Chicago, IL 60601
Dear Messrs. Burke and Walsh:
This letter is in response to your February 28, 2000, letter on behalf of BP Amoco Corporation. In your letter, you request (1) that the U.S. Customs Service issue a ruling letter to BP Amoco certifying that certain goods when exported to Canada or Mexico are eligible for preferential tariff treatment under the North American Free Trade Agreement (NAFTA) and (2) that the U.S. Customs Service confirm that 19 CRF § 181.53(b)(4) does not apply to merchandise that has been withdrawn from a foreign trade zone, entered for consumption in the United States and later exported to Canada or Mexico.
FACTS:
The facts as indicated in the ruling request are as follows: BP Amoco is a producer and exporter of motor fuel. At its Whiting, Indiana, foreign trade sub-zone (FTSZ) refinery, BP Amoco produces motor fuel using domestic status crude (both U.S. crude and foreign duty paid crude), foreign "NAFTA-eligible" crude and privileged and non-privileged foreign crude oil. Upon completion of the refinery processes, the finished products are withdrawn from the FTSZ. All the crude oil entering the FTSZ is accounted for by BP Amoco: All refinery products obtained from the domestic status crude are removed from the FTSZ duty free, using appropriate Customs documentation, and all products from the original foreign crude having privileged and non-privileged status are entered for consumption into the United States. At that time, any duties on the privileged foreign crude and non-privileged foreign status crude (entered in the form of refined products) are paid according to zone status. Most of the motor fuel is consumed in the United States. A small portion of the motor fuel is shipped to a BP Amoco tank facility in River Rouge, Michigan, where it may be intermingled with other BP Amoco's identical "NAFTA-eligible" product. Other small amounts of the product are entered for consumption into the United States, moved from the refinery to terminals and loaded into a tanker by a truck rack and directly exported to Mexico or Canada.
ISSUES:
1. May the U.S. Customs Service issue a ruling to a U.S. producer or U.S. exporter with respect to the origin of the producer's or exporter's goods for the purpose of determining whether the goods are eligible for preferential tariff treatment under the NAFTA?
2. Does 19 CRF § 181.53(b)(4) apply to merchandise that has been withdrawn from a foreign trade zone in the United States, entered for consumption in the United States and later exported to Canada or Mexico?
LAW AND ANALYSIS:
Issuance of a Ruling Letter on the Origin of Goods under NAFTA
The U.S. Customs Service issues administrative rulings pertaining to the eligibility of goods under the NAFTA for preferential tariff treatment pursuant to section 181.92 (b)(5) of title 19 to the U.S. Code of Federal Regulations. Section 181.92(b)(5) does not identify a U.S. producer or U.S. exporter as one who may request or receive such a ruling letter. Therefore, the U.S. Customs Service may not issue a ruling to a U.S. producer or U.S. exporter with respect to the origin of the producer's or exporter's goods for the purpose of determining whether the goods are eligible for preferential tariff treatment under the NAFTA.1
Application of 19 CRF § 181.53(b)(4) to Merchandise Withdrawn from an FTZ
Part 181 of title 19 of the U.S. Code of Federal Regulations pertains to the customs procedures and requirements under the NAFTA. Subpart E to part 181 deals with restrictions on drawback and duty-deferral programs:
This subpart sets forth the provisions regarding drawback claims and duty-deferral programs under Article 303 of the NAFTA and applies to any good that is a "good subject to NAFTA drawback" within the meaning of 19 U.S.C. 3333. Except in the case of 181.42(d), the provisions of this subpart apply to goods which are imported into the United States and then subsequently exported from the United States to Canada on or after January 1, 1996, or to Mexico on or after January 1, 2001....
19 CFR § 181.41
Section 181.53 deals with the collection and waiver or reduction of duty under duty-deferral programs. A "duty-deferral program" is defined in that section:
A ``duty-deferral program'' means any measure which postpones duty payment upon arrival of a good in the United States until withdrawn or removed for exportation to Canada or Mexico or for entry into a Canadian or Mexican duty-deferral program. Such measures govern manipulation warehouses, manufacturing warehouses, smelting and refining warehouses, foreign trade zones, and those temporary importations under bond that are specified in paragraph (b)(5) of this section.
19 CFR § 181.53(a)(ii)
Section 181.53(b)(4) deals with foreign trade zones in the context of duty-deferral programs under the NAFTA2:
For a good that is manufactured or otherwise changed in condition in a foreign trade zone (19 U.S.C. 81c(a)) and then withdrawn from the zone for exportation to Canada or Mexico or for entry into a Canadian or Mexican duty-deferral program, the duty assessed, as calculated under paragraph (b)(4)(i) or (b)(4)(ii) of this section, shall be paid no later than 60 calendar days after either the date of exportation of the good to Canada or Mexico or the date of entry of the good into a duty-deferral program of Canada or Mexico, except that, upon filing of a proper claim under paragraph (a)(3) of this section, the duty shall be waived or reduced in an amount that does not exceed the lesser of the total amount of duty payable on the good under this section or the total amount of customs duties paid to Canada or Mexico.
19 CFR § 181.53(b)(4)
In light of the above, for merchandise to be subject to 19 CFR 181.53(b)(4), it must be withdrawn from a foreign trade zone for exportation to Canada or Mexico or withdrawn from a foreign trade zone for entry into a Canadian or Mexican duty-deferral program. The merchandise described in the above-mentioned ruling request will not be subject to 19 CFR § 181.53(b)(4) because it will not be withdrawn from a zone for exportation to Canada or Mexico or withdrawn from a zone for entry into a Canadian or Mexican duty-deferral program.
HOLDING:
1. Issuance of a Ruling Letter on the Origin of Goods under NAFTA.
The U.S. Customs Service may not issue a ruling letter to a U.S. producer or U.S. exporter with respect to the origin of the producer's or exporter's goods for the purpose of determining whether the goods are eligible for preferential tariff treatment under the NAFTA. Therefore, a ruling letter will not be issued in regard to your above-mentioned request.
2. Application of 19 CFR § 181.53(b)(4) to Merchandise Withdrawn from an FTZ
For merchandise to be subject to 19 CFR § 181.53(b)(4), it must either be withdrawn from a foreign trade zone for exportation to Canada or Mexico or withdrawn from a foreign trade zone for entry into a Canadian or Mexican duty-deferral program. The merchandise described in the above-mentioned ruling request does not meet either of those two conditions. Therefore, the merchandise will not be subject to 19 CFR § 181.53(b)(4).
Please be advised that should drawback be claimed when the above-mentioned merchandise is exported to Canada or to Mexico it will be subject to the provisions of 19 CFR §181.44 as concerns the calculation of the drawback of the duties paid when the merchandise was withdrawn for consumption from a foreign trade zone.
Sincerely,
John A. Durant, Director
Commercial Rulings Division
Office of Regulations & Rulings
1 See also Article 509 to the North American Free Trade Agreement:
Each Party shall, through its customs administration, provide for the expeditious issuance of written advance rulings, prior to the importation of a good into its territory, to an importer in its territory or an exporter or a producer in the territory of another Party.... (Emphasis added.)
Article 509, North American Free Trade Agreement, December 17, 1992, Can-Mex-U.S., 32 I.L.M. 289 (1993).
2 See also the underlying statutory law:
[N]o 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:
19 U.S.C. § 81c(a).
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