(1) A full description of the proposed operation;

(2) A designation of the exact place in the zone where the operation is to be performed;

(3) The identification of the involved merchandise by lot number, marks and numbers of the packages, description, quantity, and zone status; and

(4) In the case of manipulation or manufacture, a statement as to whether articles with one zone status are to be packed, commingled, or combined with articles having a different zone status.

(b) Approval of application. The district director shall approve the application unless the proposed operation would be in violation of the fourth or fifth proviso to section 3 of the ForeignTrade Zones Act, as amended, 19 U.S.C. 81c, or the place designated for its performance is not suitable for preventing confusion as to the identity or status of the merchandise and for safeguarding the revenue.

(1) Fourth proviso. The proviso reads as follows:

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—

(a) The draw-back, warehousing, and bonding, or any other provisions of the Tariff Act of 1930 as amended, and the regulations thereunder; and

(b) 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 internalrevenue 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: *

(2) Fifth proviso. The proviso reads as follows:

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 of Title

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26 and chapter 15-17, 21, 23-26, or 32 of Title 26, if performed in Customs territory, or involving the manufacture of any article provided for in paragraphs 367 and 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: * * *.

(For current reference to title 19 and 26 of the United States Code, see notes following text of 19 U.S.C. 81c)

(c) Appeal of adverse ruling. If the application is denied by the district director for any reason, the applicant or the grantee may appeal the adverse ruling to the Board. If any revenue protection considerations are involved in such an application, the Board shall be guided by the determinations of the Secretary of the Treasury with respect to them.

(d) Records to be maintained—(1) Privileged merchandise. When any privileged merchandise is to be manipulated in any way or manufactured, the person performing the operation shall maintain records containing the following information:

(i) A full identification, as specified in paragraph (a) of this section, of each lot of privileged merchandise used in the operation;

(ii) The unit and total values of each such lot, the values in the case of privileged foreign merchandise to be those declared in the zone Customs entry (§ 146.21(c)), including any amendment thereof;

(iii) The commercial name or description of the product resulting from the operation, or of each such product if there are more than one;

(iv) The quantity of such product or of each such product, as the case may be;

(v) The commercial name or description and quantity of each kind of waste recovered from the operation; and

(vi) The description (i.e., evaporation, leakage, spillage, dust, etc.) and quantity of each kind of loss resulting from the operation.

(2) Nonprivileged merchandise. If any nonprivileged merchandise is to be used in the operation, records shall be maintained containing a full identification, as specified in paragraph (a) of this section, and the unit and total values of each lot of the merchandise used in the operation.

(a) Application. Each application to destroy merchandise in a zone shall be filed with the district director on zone Form E. The application shall include: (1) A description of the proposed method of destruction;

(2) A designation of the place where the destruction is to be accomplished; and

(3) The identification of the involved merchandise by lot number, marks and numbers of the packages, description, quantity, and zone status.

(b) Approval of application and procedure for destruction of merchandise. The destruction of distilled spirits, wines, and fermented malt liquors having a zone-restricted status may not be authorized in view of the exception in the fourth proviso to section 3 of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81c). In any other case, if the district director is satisfied that the destruction will be effective and that the revenue will be adequately protected, he shall approve the application. If proper destruction cannot be effectively accomplished within the zone, the district director may permit it to be done elsewhere, in whole or in part, under such conditions as he shall specify for protecting the revenue. Any residue of destruction which is entirely worthless may be removed to Customs territory for disposal.

Subpart E-Removal of Merchandise From a Zone

§ 146.41 Direct exportation from a zone. Regardless of its zone status, any merchandise in a zone may be exported directly therefrom upon compliance with the procedure prescribed in § 146.44 for the transfer of privileged domestic merchandise to Customs territory.

§ 146.42 Supplies, equipment, and repair material for vessels or aircraft. (a) Applicability. Any article which may be withdrawn duty and tax free in Customs territory under section 309 or 317 of the Tariff Act of 1930, as amended (19 U.S.C. 1309, 1317) and §§ 10.59 through 10.65 of this chapter may similarly be withdrawn from a zone, regardless of its zone status, under said statutes and regulations. Privileged domestic merchandise is not subject to the provisions of this section and may be with

drawn from a zone in accordance with the provisions of § 146.44.

(b) Articles for delivery within zone where withdrawn. The withdrawal of articles provided for in paragraph (a) of this section for delivery within the zone where withdrawn to a qualified vessel or aircraft, or as ground equipment of a qualified aircraft, shall be on Customs Form 7512 (see § 10.60 of this chapter.

(1) Who may make the withdrawal. The withdrawal of articles composed in whole or in part of privileged foreign merchandise shall be made by the person identified on zone Form B as the consignee (see § 146.21 (c) (1). The withdrawal of all other articles under this section shall be made by the person designated as the consignee by the written authorization of the grantee.

(2) Supporting documents-(i) Description. The withdrawal shall be supported by a description of the articles similar to that provided for in § 146.44 (a).

(ii) Bond. A bond on Customs Form 7557, 7559, or 7595 shall be required with the withdrawal.

(3) Release of articles. Upon acceptance of the withdrawal, the district director shall release the merchandise to the grantee for delivery to the qualified vessel or aircraft in the zone.

(c) Articles for delivery outside zone where withdrawn. The withdrawal of articles provided for in paragraph (a) of this section for delivery at a place outside the zone to a qualified vessel or aircraft, or as ground equipment of a qualified aircraft, shall be on Customs Form 7512. (See § 10.60 of this chapter.)

(1) Who may make the withdrawal. The withdrawal of privileged foreign merchandise which has not been mixed, combined, or repacked in the zone or of a product of a manipulation or manufacture in a zone composed of or derived from privileged merchandise only, whether all foreign, or partly foreign and partly domestic, shall be made by the person named on zone Form B as the consignee or by a transferee designated on the withdrawal and approved by the grantee. (See § 146.45 (b) (2)). The withdrawal of other articles under this section shall be made by the person designated by the grantee on zone Form C as the consignee. Except for articles described in the first sentence of this paragraph the provisions of § 146.47 (b)

through (f) and § 146.48(b) relating to constructive transfer are applicable, whether or not the merchandise is zone restricted.

(2) Bond. The withdrawal shall be supported by a bond on Customs Form 7557, 7559, or 7595.

(3) Acceptance of withdrawal and release of merchandise. Upon acceptance of the withdrawal the district director shall note thereon the status of the merchandise and shall release the merchandise to the grantee for delivery to the bonded cartman, lighterman, or carrier.

§ 146.43 Transfer of merchandise from one zone to another.

(a) Privileged domestic merchandise. The transfer of privileged domestic merchandise from one zone to another is not subject to Customs control except that the removal of the merchandise from the first zone and its admission into the zone of destination shall be in accordance with §§ 146.44 and 146.12.

(b) Other merchandise (1) Procedure. The transfer of merchandise, other than privileged domestic merchandise, from a zone at one port of entry to a zone at another port shall be by bonded carrier under an entry for immediate transportation on Customs Form 7512. All copies of the entry for immediate transportation shall bear a notation that the merchandise is being taken from the first zone for the purpose of transfer to the second zone. Privileged foreign merchandise which has not been mixed, combined, or repacked in the zone and products of a manipulation or manufacture in a zone composed of or derived from privileged merchandise, whether all foreign, or partly foreign and partly domestic, shall be transferred from the zone in accordance with § 146.45 (c) (1)–(4) and admitted to the second zone in accordance with § 146.12. The transfer of other merchandise from the first zone into Customs territory and its admission into the zone of destination shall be in accordance with §§ 146.48(b) and 146.12.

(2) Forwarding of history of the merchandise. Upon removal of merchandise as specified in paragarph (b)(1) of this section from the first zone, the district director of the port where such zone is located shall immediately forward to the district director of the port where the zone of destination is located a history of

the merchandise as shown by the records of the first zone.

§ 146.44 Transfer of privileged domestic merchandise into Customs territory.

(a) Submission of description of transaction. When privileged domestic merchandise which has not been mixed, combined or repacked in a zone with merchandise having a different zone status is to be transferred from the zone to Customs territory, the grantee shall submit to the district director, in triplicate, a description of the proposed transaction signed by him which shall include: (1) The proposed date of transfer; (2) The identification of the carrier; (3) The destination of the shipment; (4) Identification of the merchandise by zone storage location, lot number, marks and numbers of packages, description, quantity, and zone status; and

(5) A notation as to any shortage or damage.

If a form of tally prepared by the grantee for its own purposes contains the necessary information, it may be accepted in lieu of the required description.

(b) Permit of delivery. If the transfer is approved by the district director, the original of the description shall be so stamped to serve as a permit of delivery. The original and one copy shall be returned to the grantee. No document other than the permit of delivery shall be required to release the merchandise to the grantee and authorize its transfer into Customs territory.

§ 146.45 Transfer of privileged foreign merchandise into Customs territory.

(a) Merchandise subject to the provisions of this section. The provisions of this section are applicable to privileged foreign merchandise which has not been mixed, combined, or repacked in a zone.

(b) Withdrawal for consumption at port where zone is located (1) Application for transfer. When merchandise subject to the provisions of this section is to be transferred to Customs territory for consumption, a zone withdrawal shall be made on Customs Form 7505 as an application for the transfer.

(2) Who may make the withdrawal. The withdrawal shall be made by the person identified on zone Form B as the consignee (see § 146.21 (c) (1) or by a transferee designated by an endorsement on Customs Form 7505 and approved by the grantee.

(3) Bond. The zone withdrawal shall be supported by a bond on Customs Form 7551, 7553, or other appropriate form. A bond shall not be required when all the merchandise to be transferred to Customs territory has been inspected, examined, and appraised, has been found to comply with all laws and regulations governing its admission into the commerce of the United States, and there have been produced all documents for the production of which a bond is required by law or regulations if not filed at the time of entry.

(4) Payment of duties and taxes. The applicant shall pay the liquidated duties and determined taxes, as assessed in the liquidation of the zone Customs entry (§ 146.21(c)), on the quantity of merchandise to be transferred. If the pertinent zone Customs entry has not been liquidated, estimated duties and taxes shall be deposited.

(5) Release of merchandise. Upon acceptance of the withdrawal, the district director shall release the merchandise to the grantee for delivery.

(c) Withdrawal for transportation to another port for withdrawal for consumption—(1) Application for transfer. When merchandise subject to the provisions of this section is to be transferred to Customs territory for transportation to another port for withdrawal for consumption, a zone withdawal for transportation clearly indicating the status of the merchandise shall be made on Customs Form 7512 as an application for the transfer.

(2) Who may make the withdrawal for transportation. The withdrawal shall be made by the person identified on zone Form B as the consignee (see § 146.21(c) (1)) or by transferee designated by an endorsement on Customs Form 7512 and approved by the grantee.

(3) Certification by district director at zone port. The district director at the zone port shall issue a certificate, in triplicate, describing the merchandise in its present condition and certifying the amount of duties and taxes applicable to the shipment. The duplicate copy of such certificate shall be given to the withdrawer.

(4) Release of merchandise for transportation. Upon acceptance of the withdrawal, the district director shall release the merchandise to the grantee for delivery to the bonded carrier.

(5) Withdrawal for consumption at port of destination. A withdrawal for

consumption shall be made at the port of destination on Customs Form 7519 by the person identified on zone Form B as the consignee (see § 146.21(c)(1)) or by a transferee designated on the withdrawal and approved by the grantee. The withdrawal for consumption shall be supported by the duplicate copy of the certificate described in paragraph (c) (3) of this section and also by a bond on Customs Form 7551, 7553, or other appropriate form, when required, pursuant to paragraph (b) (3).

(6) Payment of duties and taxes. The applicant shall pay the liquidated duties and determined taxes, as assessed in the liquidation of the zone Customs entry (§ 146.21 (c)), on the quantity of merchandise being withdrawn. If the zone Customs entry has not been liquidated, estimated duties and taxes shall be deposited.

(d) Withdrawal for transfer into Customs territory for exportation. When merchandise subject to the provisions of this section is to be transferred to Customs territory for exportation, a withdrawal for exportation, or for transportation and exportation, shall be made on Customs Form 7512 by the person identified on zone Form B as the consignee (see § 146.21 (c) (1)) or by a transferee designated by an endorsement on Customs Form 7512 and approved by the grantee. Upon acceptance of the withdrawal the district director shall note the status of the merchandise on the document, and release the merchandise to the grantee for delivery to the carrier. § 146.46 Transfer of products of manipulation or manufacture of privileged merchandise into Customs territory. (a) Merchandise subject to the provisions of this section. The provisions of this section are applicable to products of manipulation or manufacture in a zone composed of or derived from privileged merchandise only, whether all foreign, or partly foreign and partly domestic.

(b) Withdrawal for consumption at port where zone is located. When products subject to the provisions of this section are to be transferred to Customs territory for consumption, a zone withdrawal shall be made on Customs Form 7505 as an application for the transfer, and the requirements of this paragraph and of § 146.45(b) shall be applicable.

(1) Documents required in support of the withdrawal-(i) Statement. A state

ment in the form of an invoice containing the information required by § 146.32 (d) (1) shall be filed with the withdrawal.

(ii) Certificate of identification. When necessary to support the withdrawal, application may be made to the district director for a certificate on zone Form F covering identification, as shown by Customs records, of the privileged merchandise used in the manipulation or manufacture.

(2) Conditions for acceptance of withdrawal. The district director shall not accept zone withdrawals for products of manipulation or manufacture of privileged foreign merchandise until he has definitely established that the merchandise actually exists in the zone in its final form as described in the withdrawal and that all other documents required to be submitted with the withdrawal have been received.

(c) Withdrawal for transportation to another port for withdrawal for consumption. When products subject to the provisions of this section are to be transferred to Customs territory for transportation to another port for withdrawal for consumption, a zone withdrawal for transportation clearly indicating the status of the merchandise shall be made on Customs Form 7512 as an application for the transfer. The provisions of paragraph (b) (1) and (2) of this section and the procedure prescribed in § 146.45(c) (2) through (6) shall be applicable.

(d) Withdrawal for transfer into Customs territory for exportation. When products subject to the provisions of this section are to be transferred to Customs territory for exportation, the procedure § 146.45 (d) prescribed in shall be applicable.

(e) Articles produced or manufactured in a zone returned to Customs territory after exportation. Articles produced or manufactured in a zone and exported without having been transferred to Customs territory other than for exportation or for transportation and exportation shall, on their return to Customs territory, be subject to the duties and taxes applicable to like articles of wholly foreign origin, unless it is conclusively established that they were produced or manufactured exclusively with the use of privileged domestic merchandise, the identity of which was maintained in accordance with the pertinent provisions of these foreign-trade zone regulations, in which case they shall be subject to the

pertinent provisions of schedule 8, part 1 of the Tariff Schedules of the United States.

§ 146.47 Transfer of zone-restricted merchandise into Customs territory.

(a) Types of entry. Zone-restricted merchandise may be returned to Customs territory only for entry for exportation, for entry for transportation and exportation, for destruction (except destruction of distilled spirits, wines and fermented malt liquors), for transfer from one zone to another, or for delivery to a qualified vessel or aircraft or as ground equipment of a qualified aircraft under section 309 or 317 of the Tariff Act of 1930, as amended, unless the Board has ruled that the return of the merchandise to Customs territory for domestic consumption is in the public interest. If the return of zone-restricted merchandise to Customs territory for domestic consumption has been ruled by the Board to be in the public interest, it may be entered for consumption, for warehousing, or for immediate transportation without appraisement, unless the Board has specified which of these forms of entry shall be made.

(b) Application for constructive transfer to Customs territory. When zone-restricted merchandise is to be transferred to Customs territory, the grantee shall file an application with the district director on zone Form C naming the person who will be deemed the consignee of the merchandise with the right to make entry or withdrawal therefor upon its transfer to Customs territory. The application shall include a complete identification of the merchandise as it entered the zone, including lot numbers, marks and numbers of the packages, status of each lot, description, and quantities. If any change in respect of any of these items of identification occurred while the merchandise was in the zone, the current information with respect to each such item shall also be stated. The district director shall not accept a term application on Form C.

(c) Construction transfer. Upon the approval by the district director of an application on zone Form C, the merchandise shall be deemed to have been transferred to Customs territory but without physical removal from the zone. For all Customs purposes the merchandise shall be considered to have been imported into Customs territory at the time of this constructive transfer. The