Bonded Warehouse Manual

7/14/2019 Bonded Warehouse Manual

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BONDED WAREHOUSE MANUALfor

PROPRIETORSIMPORTERSCUSTOMS OFFICERS

$' 1.00


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) FOREWORDBonded warehouses have existed in the United States since the early 1800's to fulfil an important role in international trade, the storage of imported cargo pending the payment of duty or exportation of the merchandise. Such ware-houses exist in many countries around the world, and are recognized by the Customs Cooperation Council and other

multilateral organizations as a useful, even essential, instrument of international trade.This Manual has been developed by the United States Customs Service as a comprehensive guide to bondedwarehouse operations in the United States for the use of warehouse proprietors, importers, Customs officers, andother parties in the import-export community.The Manual brings together, from many different references into one publication, the many laws, regulations, andCustoms and other agency issuances and rulings dealing with bonded warehouses. The laws and regulations areparaphrased for the sake of simplicity and easier reading. Therefore, proprietors, importers, and other readers arecautioned to study the actual text of the cited laws or regulations before making any costly investment decisions initiallybased on information in the Manual.The Manual is also designed for the use of Customs officers, and it supersedes a number of Customs issuances.Thus, proprietors, importers, and Customs officers are all working under the same set of public guidelines and instructions. Internal instructions to Customs officers not intended for public dissemination are, of course, not included in thisManual.Part 12 of the Manual deals with duty-free stores. This Part of the first edition is reserved for later addition.Through the Omnibus Trade and Competitiveness Act of 1988 (Public Law 100-418), important new measures wereenacted for duty-free stores, including the authority for the Secretary of the Treasury to promulgate regulations. Part12 will not be published as a Part of the Manual until a Final Rule establishing regulations for duty-free stores has beenpromulgated. In the meantime, general procedures for duty-free stores under Customs Directive 3265-02 dated Feb-ruary 18, 1983, will continue to be followed by duty-free store operators and Customs officers to the extent they are notin direct conflict with Public Law 100-418.This first edition of the Manual does not implement any new measures concerning bonded warehouses; it simplycontinues existing instructions and guidelines. However, any new measures taken by Customs in respect to ware-houses after the first edition will be implemented by e l e ~ or temporary directive, followed by new or substitutepages ofthe Manual. New or amended laws or regulations will also be followed by new or substituted pages. The Manual willbe kept updated by Customs on at least an annual basis.We believe the Manual will prove to be of great value to the import-export community, and we welcome sugges-tions from readers for any additions, corrections, or deletions to improve the Manual. Please forward any correspondenceconcerning the Manual to: Commissionerof Customs, U.S. Customs Service, 1301 Constitution Avenue, N.W.,Washington, D.C. 20229.

CAROL HALLEn,Commissionerof Customs.


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Bonded Warehouse Manual Table of Contents

Section1.11.21.31.41.51.61.71.81.91.10

TABLE OF CONTENTSPART 1-1NTRODUCTION, PURPOSE, AND INTERPRETATIONS

Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Referenced Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Paraphrasing of Law and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Instructions VS. Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .District Director Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Customs Issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rulings, Opinions, and Disagreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Local Customs Procedures .. , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Automated Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page1-11-11-11-11-11-11-11-11-11-2

PART 2-SUPERVISION OF BONDED WAREHOUSES, PROPRIETORS' RESPONSIBILITIES,AND CUSTOMS FEESSection Page2.0 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12.1 Audit-Inspection Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12.2 Customs Supervision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12.2(a) Physical Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12.2(b) Customs Staffing for Audit-Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12.2(c) Access to Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12.2(d) Search Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.3 Spot Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.3(a) Notification and Arrival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.3(b) Duration, Frequency. and Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.3(c) Completion and Closeout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.4 Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.4(a) Arrival and Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.4(b) Closeout. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.5 Coordination of Spot Checks and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.6 BATF Spot Checks and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22.6(a) Determination of Alcohol-Only Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3

2.6(b) Switching Between Customs and BATF Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-32.6(c) Effect of Program , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-32.7 Supervision by Proprietor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-32.8 Proprietor Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-32.9 Private Business Operations of Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-42.10 Customs Reimbursement and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-42.10(a) Establishment and Alteration Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-42.1 O(b) Merchandise Processing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-42.10(c) Harbor Maintenance Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5


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Table of Contents United States Customs Service

PART 3-WAREHOUSE CLASSES, CONSTRUCnON, ESTABLISHMENT, AND CHANGES ection Page3.1 Classes of Bonded Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13.2 Construction of Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13.2(a) Vessels and Barges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13.2(b) Parts of Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13.2(c) Cold Storage Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23.3 Definition of Warehouse Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23.4 Application for Bonded Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23.4(a) Supporting Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23.S Processing of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33.S(a) Facility Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33.S(b) Background Inquiry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33.S(c) Other Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33.S(d) Approval or Denial of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-43.6 Application for Alteration or Other Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-43.6(a) Alteration or Relocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-43.6(b) Voluntary Suspension or Discontinuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-43.6(c) Other Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-43.7 Warehouse File of District Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-S

PART 4-ENTRY AND DEPOSIT IN WAREHOUSE--' ! ~ i O n General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~ ;

4.1 Duration in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14.2 Eligibility for Entry for Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14.2(a) Domestic Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14.2(b) Other Limits on Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14.3 Warehouse Entry Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14.3(a) Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.3(b) Entry/Entry Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.3(c) Immediate Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.3(d) Electronic Entry Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.4 Certification of Entry and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.S Right to Make Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.6 Place of Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.7 Warehouse Entry Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.7(a) Bond Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24.8 Entry Processing and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.9 Direct Delivery to Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.9(a) Receipt at Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.9(b) Proprietor Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.10 Examination of Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.10(a) Examination at Centralized Examination Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.1 O(b) Examination at Other Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34.11 Rewarehouse Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-44.11 (a) Entry Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-44.11(b) Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4 .'.11 (c) Examination and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

II


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PART 4-ENTRY AND DEPOSIT IN WAREHOUSE (continued)Section Page4.12 Merchandise Entered But Not Deposited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-44.12(a) Entry for Constructive Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-44.12(b) Immediate Dock Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

4.12(c) Combined Rewarehouse Entry and Withdrawal for Consumption . . . . . . . . . . . . . . . . . . . . . . 4-44.12(d) Class 1 Warehouse Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54.12(e) Manipulation Not Done in Bonded Warehouse . . . . . . . . . . . . " . . . . . . . . . . . . . . . . . . . . . . . 4-54.12(f) Irregular Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; . . . . . . . . . . . . . . . . . . . . . . . 4-54.12(g) Control of Merchandise Not Deposited in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54.13 Transfer to Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54.13(a) Transfer Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54.14 Bond Liabilities for Transfer to Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54.15 Delivery to Warehouse and Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-64.15(a) Receipt Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-64.15(b) Receipt into Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-64.15(c) Liability of Warehouse Proprietor. .. . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-6

PART 5-PROPRIETOR RECORDKEEPING AND REPORTING RESPONSIBILITIESSection Page5.1 Authority for Proprietor Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15.2 Authority for Importer Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15.3 Accessibility and Retention of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15.4 Inventory and Accounting Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15.4(a) Transfer of Right to Withdraw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15.4(b) Prudent Businessman Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15.5 Permit File Folders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-25.5(a) File Maintenance and Updating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2

5.5(b) Security of Permit File Folders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-25.5(c) File Folder Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-25.5(d) Review and Submission of Permit File Folders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-35.5(e) Date of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-35.6 Merchandise Not Withdrawn From Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-45.7 Reports by Proprietor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-45.7(a) Annual Submission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-45.7(b) Merchandise Discrepancy Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-45.7(c) Employee Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4

PART &-MANIPULATION, DESTRUCTION, AND STORAGE CONDITIONSSec#on Page6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16.2 Manipulation in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16.2(a) What ConstiMes Manipulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16.2(b) Application to Manipulate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26.2(c) SuperviSion of Manipulation . . . . . . . . . . . . . . . . . . . . . " . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26.3 Destruction in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26.3(a) Application for Destruction .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36.3(b) Method of Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3

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Table of Contents United Stat.. Cuatoms ServicePART &-MANIPULATION, DESTRUCTION, AND STORAGE CONDmONS (continued) ection Page6.3(c) Supervision of Destruction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36.4 Storage Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36.4(a) Safety and Sanitary Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3

6.4(b) Manner of Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36.4(c) Storage of Animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.4(d) Separate Storage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.4(e) Bonded and Nonbonded Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.S Security Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.S(a) Security Standards and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.S(b) High-Security Warehouses for Certain Imported Firearms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.S(c) Employee Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-46.S(d) Spot Checks of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-S6.S(e) Full Security Surveys. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~6.S(f) Action on Security Deficiencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-S6.6 FIFO Storage and Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~6.6(a) Exclusions from FIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~6.6(b) Application for FIFO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-S6.6(c) Maintenance of FIFO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-66.6(d) Special Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-76.6(e) Discontinuance of FIFO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-86.6(f) Correction of FIFO Deficiencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-86.7 FIFO By Issues for Bonded Jet Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-86.7(a) Application for FIFO By Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-8 6.7(b) Changes to Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-86.7(c) Maintenance of FIFO By Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-86.7(d) Treatment of Overages and Shortages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-86.7(e) Termination of FIFO By Issues By Customs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-9

PART 7-WITHDRAWAL AND REMOVAL FROM WAREHOUSESection Page7.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-17.2 General Procedure for Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-17.2(a) Right to Withdraw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-17.2(b) Transfer of Right To Withdraw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-17.2(c) Statement of Quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.2(d) Charges and Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.2(e) Statistical Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.2(f) Bond Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.2(g) Minimum Quantities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.2(h) Place of Filing Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.2(i) Administrative Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.20) Penalties for False or Inaccurate In format ion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.3 Withdrawal for Consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-27.3(a) Filing of Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-37.3(b) Release for Immediate Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-37.3(c) Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-37.3(d) Admissibility..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 7-3 e7.3(e) Payment of Duty and Permit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3

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PART 7-WITHDRAWAL AND REMOVAL FROM WAREHOUSE (continued)Section7.3(f) Overpayment of Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(g) Classification and Appraisement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(h) Withdrawal of Samples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.3(i) Withdrawal Under Temporary Importation Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4 Withdrawal for Diplomatic Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4(a) Regulatory Provisions for Exemption From Duties and Taxes . . . . . . . . . . . . . . . . . . . . . . . . .7.4(b) Procedure for Diplomatic Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4(c) Procedure for Military Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4(d) Permit File Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4(e) Transfer to Other Ports After Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4(f) Refused Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.5 Transfer to Another Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.5(a) Transfer in Same Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.5(b) Transfer at Another Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.5(c) Uability and Payment of Internal Revenue Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6 Withdrawal for Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(a) Time limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(b) Physical Deposit Not Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(c) Withdrawal Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(d) Additional Information Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(e) Duty on Samples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(f) Forwarding and Entry Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.6(g) Exportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7 Withdrawal for Exportation or Shipment to Insular Possessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(a) Filing of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(b) Bond Uability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(c) Procedure for Indirect Exportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(d) Exportation by Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(e) Exportation by Foreign-Trade Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(f) Exportation under Port Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(g) Weight, Gauge, or Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(h) Supervision and Control of Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(i) Merchandise Not laden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(j) Relanding of Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.7(k) Penalty for False Claim of Exportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8 Withdrawal for Aircraft or Vessel Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(a) Eligibility for Duty-Free Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(b) Supply Use vs. Exportation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(c) Filing of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(d) Bond Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(e) Retention on Dock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(f) Special Permit and Procedure for Fishing Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(g) Special Procedure for Aircraft or Vessel Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(h) Special Procedure for Cigars and Cigarettes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(i) Supervision and Cancellation of Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8(j) Relanding in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.9 Blanket Permit to Withdraw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.9(a) Qualifications of Applicant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.9(b) Restriction on Airport Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.9(c) Filing and ProceSSing of Blanket Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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PART 7-WITHDRAWAL AND REMOVAL FROM WAREHOUSE (continued) Section Page7.9(d) Proprietor Responsibility for Blanket Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-107.9(e) Filing of Supplementary Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-107.9(f) Withdrawals for Other Disposition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-117.9(g) Last Withdrawal Under Blanket Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-117.10 Last Withdrawal from Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-117.10(a) Identifying Final Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-117.10(b) Responsibility of Importer, Transferee, and Proprietor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-117.10(c) Transmittal of Permit File Folder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-117.11 Removal from Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.11(a) Retention in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.11 (b) Liability of Proprietor for Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.11(c) Supervision of Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . .. .. . . . . . . . . . . . . . . . . 7-127.11 (d) Delivery to Authorized Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127 11 (e) Removal Without Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.12 Merchandise Not Removed From Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.12(a) Procedural Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.12(b) Disposition of Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.13 Bond Liability After Removal or Liquidation of Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-127.14 Drawback or Refunds on Warehoused Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-12

PART 8-DISCREPANCY REPORTING, CASUAL TV LOSS, AND ABANDONMENTSecffon Page

,- 8.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 .2 Proprietor Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18.2(a) Customs Supervision of Receipt or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18.2(b) Proprietor Responsibility Upon Receipt and Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18.2(c) Adjustments After Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18.2(d) Proprietor vs. Importer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8-18.3 Discrepancies Found Upon Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18.3(a) Manifest Discrepancy Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . . . 8-18.3(b) Breakbulk, Conveyance Not Sealed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18.3(c) Concealed Within-Case Shortage or Shortage in Sealed Conveyance. . . . . . . . . . . . . . . . . . . 8-18.3(d) Conveyance With Seals Not Intact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.3(e) Bulk Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.3(f) Refused Shipments and Nonagreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.3(g) Recordkeeping and Time Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.4 Discrepancies Found After Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.4(a) Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.4(b) Nonextraordinary Shortage or Damage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28.4(c) Recordkeeping of Discrepancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38.5 Discrepancies Found Upon Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38.6 Casualty Loss or Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38.6(a) Filing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38.6(b) Supporting Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38.6(c) District Director's Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-38.6(d) Proprietor's Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-33.7 Other Loss or Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.7(a) Destruction at Request of Consignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4

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') PART 8-DISCREPANCY REPORTING, CASUALTV LOSS, AND ABANDONMENT (continued)Section Page8.7(b) Destruction or Damage Before Importation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.7(c) Excessive Moisture or Other Impurities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.7(d) Destruction or Condemnation of Prohibited Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.7(e) Theft Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.7(f) Deliberate or Negligent Loss or ,Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.7(g) Other Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.8 Upward Adjustments of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.9 Abandonment of Goods in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.9(a) Abandonment Under Section 563(b) TA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-48.9(b) Abandonment Under Section 506(1) TA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-58.9(c) Disposition of Abandoned Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-58.9(d) Responsibilities of Proprietor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-58.10 Arrearage or Insolvency of Importer or Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5

PART 9-LlQUIDATION OF WAREHOUSE ENTRIESSection Page9.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.2 Liquidation by Regional or District Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.3 Preparation for Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.3(a) Control Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.4 Time Limit for Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.5 Liquidation Information on Withdrawal for Transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.6 Liquidation of Rewarehouse Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9::"19.6(a) Merchandise Excluded from Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.6(b) Reliquidation Required by Change in Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19.6(c) Shortage or Irregular Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-29.7 Quantity on Which Duties are Based . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-29.8 Assessment of Liquidated Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-29.9 Liability of Importer After Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-29.10 Liability of Importer After Expiration of Bonded Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2

PART 10-STORAGE AND DISPOSITION OF GENERAL ORDER MERCHANDISESection10.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.2 Customs Storage and Sales Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.2(a) Contract for Storage and Disposition of Seized and Abandoned Property . . . . . . . . . . . . . . .10.2(b) Contract for Sale of Unclaimed and Involuntarily Abandoned Merchandise . . . . . . . . . . . . . .10.3 Choice of Merchandise to be Sent to Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.4 Designation of General Order Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.5 Selection of Warehouse for Individual Lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.6 Transfer to and Receipt into Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.6(a) Transfer to Bonded Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " .10.6(b) Acceptance and Receipt of Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.6(c) Liability of Proprietor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.7 Responsibility for Merchandise in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.8 Removal from Bonded Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Page10-110-110-110-110-110-110-110-210-210-210-210-210-2

(August 1990)


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PART 10-STORAGE AND DISPOSITION OF GENERAL ORDER MERCHANDISE (continued)Section

10.8(a) Release for Entry ..........................................................10.8(b) Release for Sale ..........................................................10.8(c) Release for Destruction .....................................................10.8(d) Action by Proprietor Upon Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.8(e) Action Upon Final Removal of Lot .............................................PART 11-ALCOHOL AND ALCOHOLIC BEVERAGES

Section11.1 General ......................................................................11.2 Entry into Warehouse ...........................................................11.2(a) Basic Permit Requirement ...................................................11.2(b) Bulk Spirits for Nonindustrial Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.2(c) Entry of Imported Alcohol Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.2(d) Entry of Domestic Distilled Spirits and Wines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.2(e) Transfer of Puerto Rican Spirits and Wines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.2(f) Transfer of Puerto Rican Spirits and Wines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.2(g) Transfer of Domestic Beer ...................................................11.3 Storage and Handling in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.3(a) Bottling Requirement .......................................................11.3(b) Manipulation for Packaging, Marking, and Closure Requirements . . . . . . . . . . . . . . . . . . . . .11.3(c) Reduction in Alcohol Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.3(d) Recordkeeping and Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.3(e) Segregation of Domestic Spirits and Wines for Diplomatic Use . . . . . . . . . . . . . . . . . . . . . . .11.3(f) Gauging of Bulk Distilled Spirits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 .4 Withdrawal for Consumption ......................................................11.4(a) Withdrawal of Bulk Distilled Spirits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.4(b) Withdrawal for Transfer to BATF Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.4(c) Withdrawal of Ethyl Alcohol for Non-beverage Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.4(d) Preparation of Warehouse Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.4(e) Packaging, Marking, and Closure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 .5 Withdrawal of Domestic Distilled Spirits and Wines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.5(a) Withdrawal for Exportation ...................................................11.S(b) Withdrawal for Diplomatic Use ................................................11.5(c) Withdrawal for Alternative Exportation or Domestic Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.5(d) Withdrawal for Transfer to Another Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.5(e) Withdrawal for Return to BATF Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.5(f) Exemption from Tax ........................................................11.6 Withdrawal for Other Purposes ....................................................11.6(a) Withdrawal for Exportation ...................................................11.6(b) Withdrawal for Shipment to Puerto Rico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.6(c) Gauging Upon Removal .....................................................11.7 Loss of Bulk Distilled Spirits in Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.7(a) General .................................................................11.7(b) Gauging Techniques .......................................................11.7(c) Action on Shortages .......................................................11.7(d) Administrative Allowance of 1 Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.7(e) Attribution of Loss .........................................................1 8 Audits and Spot Checks by BATF Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vIII

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" PART 12-DUTYFREE STORES [Reserved]

PART 13-BONDED MANUFACTURING WAREHOUSES, CLASS 6Section13.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.2 Establishment of Class 6 Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.2(a) Application to Establish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.2(b) Secure Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.2(c) Voluntary Suspension of Bonded Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3 Entry and Deposit of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3(a) Entry of Imported Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3(b) Deposit of Domestic Distilled Spirits and Wines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3(c) Deposit of Other Domestic Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3(d) Receipt into Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3(e) Capital Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.4 Operations in Class 6 Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.4(a) Product Marking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.4(b) Limitation on Use of Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.4(c) Conformance With Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.4(d) Manufacture of Distilled Spirits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.4(e) Recordkeeping Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5 Withdrawal from Class 6 Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .J 13.5(a) Right to Withdraw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5(b) Packing Materials and Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5(c) By Products and Waste Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5(d) Summary Statement for Packing Materials, By Products, and Waste . . . . . . . . . . . . . . . . . . .13.5(e) Shipment of Distilled Spirits and Wines to Puerto Rico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5(f) Withdrawal for Transportation and Rewarehousing for Export . . . . . . . . . . . . . . . . . . . . . . . .13.5(g) Withdrawal for Exportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5(h) Proof of Manufacture and Exportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5(i) Certificate of Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.6 Reimportation of Class 6 Warehouse Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .PART 14-BONDED SMELTING AND REFINING WAREHOUSES, CLASS 7

Section14.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.2 Establishment of Class 7 Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.2(a) Application to Establish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.3 Entry and Receipt into Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.3(a) Blanket Smelting and Refining Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.4 Wastage Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.5 Cancellation of Bond Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.5(a) Substitution of Domestic and Imported Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.5(b) Determining Amount of Bond Charge Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.6 Recordkeaping and Reporting Requirements " . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.6(a) Record of Receipts and Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.6(b) Record of Wastage Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.6(c) Reports of Sampling, Weighing, and Assaying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Ix

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PART 14-BONDEDSMELTING AND REFINING WAREHOUSES, CLASS 7 (continued)Section14.6(d} Monthly Statement of Inventory and Bond Charges ...............................14.6(e} Annual Statement .........................................................14.6(f} Reporting of Smelting or Refining Change ......................................14.7 Prohibited Activities .............................................................14.8 Withdrawal for Consumption ......................................................14.8(a} Withdrawal for Later Physical Removal in Smelted or Refined Form . . . . . . . . . . . . . . . . . . .14.8(b} Quantity of Withdrawal . . . . . . . . . : ............................................14.9 Withdrawal for Exportation . . . . . . . . . . . . . . . . . ; .....................................14.9(a} Withdrawal for Exportation Credited to Another Plant ..............................14.9(b} Crediting of Withdrawal for Exportation .........................................14.9(c} Withdrawal of Products of Crude Metal for Exportation .............................14.9(d} Exportation from Another Warehouse ..........................................14.10 Transfer to Another Bonded Warehouse .............................................14.10(a} Transportation to Another Port ...............................................14.10(b} Smelting and Refining in Separate Establishments ................................14.10(c} Theoretical Transfer ........................................................14.10(d) Credit for Transfer .........................................................

PART 15-BONDS AND LIQUIDATED DAMAGESSection15.1 General ......................................................................15.2 Liquidated Damages ............................................................-' 15.3 Bond Administration ............................................................15.4 Agreements of Warehouse Importation and Entry Bond .................................15.4(a} Agreement to Pay Duties, Taxes, and Charges ..................................15.4(b} Reimbursement and Exoneration of the United States .............................

15.4(c) Agreement on Duty-Free Withdrawals ..........................................15.4(d} Consequences of Default ....................................................15.5 Agreements of Warehouse Custodial Bond ..........................................15.5(a} Receipt of Merchandise .....................................................15.5(b} Safekeeping of Merchandise .................................................15.5(c) Disposition of Merchandise ..................................................15.5(d} Compliance with Licensing and Operating Requirements ...........................15.5(e) Reimbursement and Exoneration of the United States .............................15.5(f) Consequences of Default ....................................................15.6 Merchandise VS. Nonmerchandise Default ...........................................15.6(a) Calculation of Merchandise Default Amount .....................................15.6(b} Calculation of Nonmerchandise Default Amount ..................................15.6(c) Customs Determination of Nature of Default .....................................15.7 What Constitutes a Merchandise Default ............................................15.8 What Constitutes a Nonmerchandise Default .........................................15.9 What Constitutes Restricted Merchandise ...........................................15.10 Issuance of Claims for Liquidated Damages ..........................................15.10(a) Processing of Liquidated Damages Claims and Petitions for Relief ...................15.10(b) Petitions for Relief .........................................................15.11 Waiver or Cancellation of Claim Without Payment .....................................15.11 (a) Mandatory Waiver or Cancellation .............................................15.11 (b) Discretionary Waiver or Cancellation for Default Involving Merchandise . . . . . . . . . . . . . . . .

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PART 15-BONDS AND LIQUIDATED DAMAGES (continued)Section Page15.11 (c) Discretionary Waiver or Cancellation for Default Not Involving Merchandise . . . . . . . . . . . . . 15-415.11 (d) Discretionary Waiver or Cancellation (Entry Bond) ................................. 15-415.11 (e) Effect of Discretionary Waiver or Cancellation .................................... 15-415.12 Cancellation Upon Payment of Smaller Amount (Custodial Bond) .......................... 15-415.12(a) Default Involving Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15--415.12(b) Default Not Involving Merchandise ............................................. 15-515.13 Cancellation Upon Payment of Smaller Amount (Entry Bond) ............................. 15-515.14 Suspension or Revocation of Bonded Warehouse Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5

PART 16-WAREHOUSE ENFORCEMENT ACTIONSSection16.1 General ......................................................................16.2 Warning Notice ................................................................16.3 Notice of Liquidated Damages ....................................................16.4 Revocation of Blanket Permit .....................................................16.5 Physical Supervision ............................................................16.6 New Bond Requirement .........................................................16.7 Suspension and Revocation Actions ................................................16.7(a) Grounds for Suspension or Revocation .........................................16.7(b) Procedure for Suspension or Revocation .......................................16.8 Suspension of Permits ..........................................................16.8(a) Length of Suspension ......................................................16.8(b) Kinds of Permits Affected ...................................................16.8(c) Effect of Permit Suspension .................................................16.9 Suspension of Bonded Status .....................................................16.9(a) Length of Suspension ......................................................16.9(b) Effect of Suspension . . . . . . . . . . . .. . . . . . . . . . . . .. . . . . . . . . . . .. . . . . . . . . . . . .. . . . . .16.10 Revocation of Bonded Status .....................................................16.10(a) Effect of Revocation ........................................................16.10(b) Reapplication by Revoked Warehouse .........................................16.11 Removal of Merchandise .........................................................16.12 Responsibility of Proprietor After Removal ...........................................16.13 Penalties for Fraud, Gross Negligence, or Negligence ..................................16.13(a) Procedural Protections .....................................................16.13(b) Payment of Duties .........................................................16.14 Criminal Violations ..............................................................16.15 Search, Arrest, and Seizure ......................................................16.15(a) Search Authority ..........................................................16.15(b) Arrest Authority ..................................... .....................

16.15(c) Seizure Authority ..........................................................

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APPENDIX A-Customs Form 300, Bonded Warehouse Proprietor's Submission (Sec. 5.7(a)) . . . . . . . . . A-1APPENDIX B-Customs Forms 3461, 7501, and 6043 for Entry for Warehouse (Sec. 4.3(b . . . . . . . . . . A-3APPENDIX C-Customs Form 3499, Application and Approval to Manipulate, Examine, Sample, or

Transfer Merchandise (Sec. 6.2(b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9APPENDIX D-Customs Form 7505, Warehouse Withdrawal for Consumption (Sec. 7.3(a)) . . . . . . . . . . . A-11APPENDIX E-Customs Forms 7512 for Warehouse Withdrawals for Transportation and for Exportation(Sees. 7.6(c) and 7.7(a)) ............................................................ A-13APPENDIX F-Special Standards for High-Security Warehouse for Certain Imported Firearms(Sec.6.5(b)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19APPENDIX G-FIFO Inventory Accounting Record (Sec. 6.6(c)(3)(i)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21APPENDIX H-5ummary Blanket Permits (Sec. 7.9(g)(2)) ..................................... A-23APPENDIX I-Agreement for Use of FIFO By Issues Inventory Method (Sec. 6.7(a)) . . . . . . . . . . . . . . . . A-31

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PART 1-INTRODUCTION, PURPOSE, AND INTERPRETATIONS1.1 Purpose-The purpose of this Manual is to set forth forpublic use in one document all the instructions, guidelines, andother information that bonded warehouse proprietors andimporters need to know for effective operation, supervision,and use of warehouses and warehouse transactions. ThisManual does not itself have the force of law, and is intendedonly as a convenient compilation of the reference materialcited in section 1.2 BWM and of Customs procedurespreviously included in the Customs Issuance System.1.2 Referenced Material-Where portions of this Manualare taken directly from the Tariff Act, Customs Regulations, orother sources, the referenced source is shown in parenthesesdirectly after the related sentence, section, or other passage.The references contain abbreviations as follows:

TAHTSCRMSPSCDCSDBWMHQ LtrUSCCFRSlipOp

Tariff Act of 1930, as amendedHarmonized Tariff Schedule of the U. S.Customs RegulationsManual SupplementPolicy StatementCustoms DirectiveCustoms Service DecisionBonded Warehouse ManualHeadquarters LetterUnited States CodeCode of Federal RegulationsOpinion of U.S. Court of International Trade1.3 Paraphrasing of Law and Regulations-For anguagesimplification purposes, many of the provisions of this Manualtaken from law, regulations, or other sources are paraphrasedrather than quoted directly. Users of this Manual should,therefore, review the referenced source itself before taking anydefinitive action on a particular matter.1.4 Instructions VS. Guidelines-This Manual providesboth instructions and guidelines for Customs officers, warehouse proprietors, and importers. Generally, instructions toproprietors and importers are conveyed through use of theword "shall," and are based on requirements of law orregulation. Instructions to Customs officers are conveyedthrough use of the word "will" or the immediate context.Guidelines for either Customs officers, proprietors, or importers are indicated through use of the word "should," "may,"section headings, or the context of the section or paragraph.Guidelines do not have the force of law, but they expressCustoms preference or an area in which Customs management may exercise some discretion or judgement.1.5 District Director Authority-Wherever the term "district director" appears in this Manual, it refers not only to districtdirectors themselves, but also to any Customs officers towhom a district director delegates authority to carry out a taskat a port or subport. Thus, the term may refer also to portdirectors, Customs inspectors, import speCialists, and any

1-1

other officer at the district level. The term also refers to areadirectors in the New York Region and their delegates; the NewYork Region is not organized into districts and area directorsare the functional equivalent of district directors.1.6 Customs Issuances-The Customs Issuance Systemis used to provide instructions, guidelines, and other information to Customs officers as to interpretations and proceduresfor carrying out the laws and regulations. Most of theissuances are Customs Directives (CD's), which supersededin 1983 an older format known as Manual SupplementsAnother kind of issuance is the Policy Statement, a briefstatement of Customs policy rather than a specific instructionor guideline. Although Customs Directives and PolicyStatements are internal instructions, most of the information inthem affecting bonded warehouses is disclosable, in whole oin part, to proprietors and users. Most of them containinstructions requiring district directors to disclose their contents to proprietors and users.1.7 Rulings, Opinions, and Disagreements-Anyonewho desires an interpretation or explanation of any law orregulation administered by Customs may request an opinionor binding ruling under the procedures in Part 177 CR. Anopinion or ruling issued under this procedure r e p r e s ~ n t s theofficial position of the Customs Service in the matter. Many othe rulings are published in the Customs Bulletin as CustomsService Decisions (CSD's). Any question or disagreemenconcerning a Customs issuance should be directed to theperson who signed the issuance. Any disagreement oquestion concerning a matter involving the judgement odiscretion of the district director should be directed to theregional commissioner having jurisdiction over the Customsdistrict, if the matter has been fully discussed with the districdirector.1.8 Disclosure of Information-Much of the information inCustoms possession affecting warehouse proprietors andimporters is available for disclosure under the procedures in 5USC 552 and Part 103 CR. Information exempt fromdisclosure is listed in Section 103.12 CR, which includes tradesecrets and confidential financial and business information.1.9 Local Customs Procedures-This Manual containsand describes instructions, guidelines, and proceduresauthorized by Customs Headquarters for use throughout theentire U.S. Customs territory. Customs regions, districts, andports have discretion to and sometimes adopt additionaprocedures which supplement and amplify Servicewideprocedures, but are not covered by the Manual. If locaprocedures conflict with Servicewide procedures and thisManual, proprietors and users are invited to identify the conflicto Customs Headquarters, Office of Inspection and Control, foresolution.


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1.10 Automated Procedur ......customs is only in theeginning stages of developing automated procedures forwarehouses through its Automated CommercialSystem. Some of the automated procedures have beenimplemented on apilot basis at some ports. Those proceduresare not included in this Manual at this time; however, they willbe so included when they are developed on a Servicewidebasis. 'Customs has encouraged warehouse proprietors and import-ers to develop and implement automated systems which are

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1.10

effective in reducing unnecessary paperwork, simplifying pro-cedures, and reducing the need for direct Customs supervi-sion, consistent with maintaining the integrity of aUdit-inspection supervision, and always with the understandingthat those procedures may be required to be superseded byprocedures developed under the Customs Automated Com-mercial System. The use of such automated systems by pro-prietors and importers has permitted in some cases greaterexercise of District Director discretion to supplement and am-plify Servicewide procedures.


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PART 2-8UPERVISION OF BONDED WAREHOUSES, PROPRIETORS' RESPONSIBILITIES,AND CUSTOMS FEES2.0 General-Merchandise n abonded warehouse is underthe joint supervision of Customs and the warehouse proprietor. All labor on the merchandise will be performed by the proprietor under the supervision of Customs. The compensationof Customs officers appointed to supervise the receipts anddeliveries of merchandise shall be reimbursed to the Government by the proprietor. (Sec. 555(a) TA) However, note Section 2.10 BWM concerning the current suspension of thereimbursement requirement. For many years, Customs physically supervised all warehouse receipts, deliveries, manipulations, and manufacturing (where applicable). However, theCustoms Regulations were amended in 1982 (TO 82-204 effective December 1, 1982), to replace physical supervision byCustoms with the audit-inspection supervision method.Through this change, Customs reduced reimbursable costs toproprietors from $8 million to $2 million annually, and allowedmuch more flexibility in warehouse operations during evenings, weekends, and holidays. At the same time, the changesaved taxpayers almost $2 million annually in Customs costsand reduced the number of Customs officers needed to supervise warehouses from about 300 to about 50.2.1 Audit-Inspection Supervision-The 1982 amendments did not change the law, and merchandise in a bondedwarehouse is still under the joint custody of Customs and theproprietor. However, the proprietor now exercises physicalsupervision, while Customs exercises general supervisionthrough the audit-inspection program. Audit-inspection is acomprehensive program basecl on six principles:

1. Determination by Customs of the identity and nature ofmerchandise before or upon its deposit in the warehouse sothat the initial responsibility of the proprietor for the merchandise can be reliably determined.2. Issuance of a prior permit by Customs to the proprietorfor receipt, delivery from the warehouse, and any processing in the warehouse.3. Assumption by the proprietor of responsibility for themerchandise in the warehouse, including physical supervision, recordkeeping, storage conditions, and processing.Quantities of merchandise received and delivered are determined jointly by the proprietor and the delivering or receiving carrier.4. Performance by Customs of spot checks and audits toverify whether the proprietor is properly supervising thewarehouse and maintaining its accounting and record keeping systems in compliance with the law and regulations.5. Adequate bonding of the proprietor and assessment ofliquidated damages by Customs to assure compliance withthe requirements for proper supervision by the proprietor.6. Authority for Customs to suspend or revoke any warehouse operation that cannot or does not comply with therules and regulations for warehouses.

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The same principles apply to audit-inspection supervision offoreign-trade zones under Part 146 CR.2.2 Customs Supervision-The extent and character ofCustoms supervision of warehouses and warehouse transactions shall be generally in accordance with Sections 646a TAand 161.1 CR. The district director (or the regional commissioner in the case of regulatory auditors) may detail or assign aCustoms officer of the appropriate grade and position classification to supervise any transaction or procedure at a bondedwarehouse. Customs supervision may be exercised throughaudits of records, quantitycounts of merchandise in inventory,spot checks of selected transactions or procedures, or reviewsof recordkeeping, security, or storage conditions. The districtdirector may order the physical supervision by aCustoms officer of any merchandise transaction in awarehouse for which aCustoms permit is required. (Sec. 19.4 CR)

(a) Physical Supervision-Customs is authorized underSection 19.4 CR to conduct physical supervision of any deposit, removal, activity, or other physical activity in abondedwarehouse to insure conformity with the laws and r e g u J ~ ~tions, in the same manner as it did prior to the inception ofaudit-inspection supervision under TO 82-204 (see Sec.2.0 BWM). However, because of the time and expense ofphysical supervision, supervision is usually conductedthrough the audit-inspection method. (See Secs. 8.2(a) and16.5 BWM.)(b) Customs Staffing for Audit-Inspection-The amount ofresources to be devoted to warehouse spot checks andaudits is determined by Customs Headquarters O ffice of Inspection and Control (for spot checks) and Office of Regulatory Audit (for audits). A set number of pOSitions aredistributed among the regions. In the case of spot checks,the regions further subdivide the resources among the districts. Headquarters monitors the use of the resources tosee that they are properly used and not diverted to otherCustoms programs. Thus, the total effort is determined andmanaged by Headquarters, although the extent and timingof individual spot checks and audits are determined by district directors (for spot checks) and regional directors, regulatory audit (for audits).(c) Access to Warehouses-The warehouse proprietormust permit Customs officers access to the warehouse toconduct spot checks, aUdits, and other lawful tasks. (Sec.19.4 CR) "Access to the warehouse" includes the furnishingby the proprietor to Customs officers of special equipmentfor their use in conducting spot checks and audits, such asweighing, gauging, and measuring equipment; protectiveclothing (for cold storage, hazardous substances, safetyhardhat, etc.); and computers and peripheral equipment.


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The proprietor should cooperate in any spot check, audit, orother Customs superivision task, including the location ofrecords and merchandise, so as to achieve its prompt completion and insure a rapid return to normal warehouse operations.(d) Search Authority-Although spot checks, audits, andother supervision tasks will be conducted during normalbusiness hours of the warehouse, a bonded warehouse iswithin Customs border search authority. (19 USC 482 andSecs. 499 and 555 TA) A search may, therefore, be conducted of the warehouse at any time without a warrant. (SeeSec. 16.15(a) BWM.)

2.3 Spot Checks-A spot check is a visit by one or two Customs officers, usually uniformed inspectors, from a district orport office to physically observe or examine transactions, records, procedures, or conditions in the warehouse. The purposes of spot checks are to (1) determine whether theproprietor and users are in compliance with applicable laws,regulations, and Customs procedures, and (2) provide Customs auditors with information in planning and conductingaudits of the warehouse records.(a) Notification andArrival-Spotchecks are made withoutadvance notification to the proprietor, except when prior notification is in the interest of Customs. However, the officersare instructed to announce their arrival to the manager orperson in charge at the warehouse before the spot check isstarted. Proprietors may request identification by badgenumber from uniformed officers and by U.S. Governmentidentification card from nonuniformed officers. The officersare instructed to invite the manager or person in charge tohave a representative present during the spot check, butthey will not be required to have a representative present,except as needed to locate records or merchandise, movemerchandise, operate special equipment, or otherwise provide access to the merchandise and records. Customs officers will seek to minimize disruption of the day-to-dayoperations of the warehouse.(b) Duration, Frequency, and Conduct-A spot check willgenerally be limited to a day or two, to allow the widest possible Customs presence at all warehouses in the districtwithin the total work effort determined by Customs Headquarters and region. However, a spot check may be extended in duration, at the discretion of the district director,for a further check on the basis of initial findings. The frequency of spot checks will depend on Customs assessmentof the risk represented by the warehouse, but normally spotchecks will be conducted from 2 to 5 times a year. During aspot check, Customs officers will usually conduct a quantitycount of selected entries of merchandise, and reconcile thequantity with records in the permit file folder and the proprietor's inventory and recordkeeping system. However, theymay at times focus their efforts on security, safety, housekeeping, receipt or delivery procedures, or other conditionsor transactions considered significant in their assessment ofthe warehouse risk.(c) Completion and Closeout-If Customs officers are unable to reconcile a discrepancy among their quantity count,the permit file folder balance, and the balance in the proprietor's inventory and accounting records, they are instructed

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to give the proprietor an opportunity to resolve the discrepancy before the spot check is completed. At the end of thespot check, the officers are instructed to conduct a closeoutinterview with the person in charge to relate their findings. Insome cases, the officers may issue an oral warning to correct a minor violation. Their findings are tentative, sincethey must be reviewed by district management before anyspecific action is taken. However, any action subsequentlytaken should come as no surprise to the proprietor. The person in charge may provide comment during the closeout interview or later to district management to explain apparentviolationsorto seek to avoid a claim for liquidated damages.Customs officers may make follow-up visits to the warehouse to determine whether minor violations have been corrected or to verify assertions made by the proprietor.

2.4 Audits-An audit is a systematic and thorough check ofthe proprietor's (and sometimes an importer's) inventory andfinancial records against the permit file folder and the actualquantity of merchandise in the warehouse. Audits are conducted by non uniformed Customs regulatory auditors assigned to a regional, rather than a district, Customs office.Audits are conducted much less frequently than spot checks;their frequency is closely held information which is not disclosed by Customs. Audits are much more intense and oflonger duration than spot checks, and may generally be expected to last from a week to several months, depending on thesize of the inventory, initial problems disclosed, kinds of merchandise in the warehouse, and many other factors. Auditorsmay be expected to look at all kinds of warehouse transactions, conditions, and requirements, not only current but alsofor past years. For that reason, they may request access toclosed as well as open files.(a) Arrival and Notification-Auditors, in contrast to spotcheck officers, provide advance notification of an audit, except when it is in Customs interest to conduct an unannounced audit. Upon arrival, auditors will announcethemselves to the appointed representative of the proprietor. The proprietor may request appropriate governmentidentification of the auditors.(b) Closeout-Auditors will provide a closeout interviewwith the proprietor to discuss their findings. Their findingsare tentative, since they must be reviewed by regional auditmanagement before presentation to the district director.The district director, not the auditors, takes managementaction on the audit findings.

2.5 Coordination of Spot Checks and Audits-Spotchecks and audits are separate and independent, but mutuallysupporting, methods of verifying compliance by the proprietorwith the laws, regulations, and procedures. Auditors shouldreceive a copy of each spot check report made by inspectors,and the officer in charge of spot checks should see each auditreport on a warehouse in his or her district.2.6 BATF Spot Checks and Audits-Under a special interagency agreement (TD 86-193 dated October 21, 1986), officers of the Bureau of Alcohol, Tobacco and Firearms, ratherthan Customs officers, conduct spot checks and audits ofbonded warehouses devoted exclusively to the storage of alcoholic beverages.


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)Bonded Warehouse Manual

(a) Determination of Alcohol-Only W a r e h o u s e ~Determination of which warehouses are devoted exclusively to alcoholic beverages is made, initially, according toinformation furnished in the warehouse proprietor's submission on Customs Form 300. (See Sec. 5.7(a) BWM) Thisinformation may be revised later by information coming tothe attention of either agency. A newly-approved warehouse will be considered under Customs authority for spotchecks and audits until a warehouse proprietor's submission is filed showing 1 full year of alcohol-only activity. "Exclusively for alcoholic beverages" is interpreted to allow Inthe warehouse inventory advertising or promotional material related solely to alcoholic beverages, up to 25 percent ofthe value of merchandise in the warehouse during its business year, but not including any restricted merchandise(textile products or other merchandise subject to quota orrequiring a special permit as a condition of withdrawal forconsumption). Certain warehouses are specifically excluded from participation in this program: warehouseswhere Customs has approved a blanket permit to withdraw(see Sec. 7.9 BWM), Class 6 bonded manufacturing warehouses, and warehouses containing nonbeverage alcoholor alcohol products-spot checks and audits of these warehouses are still conducted by Customs.(b) Switching Between Customs and BATF Responsibility-Warehouses under BATF spot checkand audit responsibility which become aware that they will be storingnon-alcoholic beverage merchandise shall immediately notify the Customs district director of this fact. The notificationwill be in writing at least 2days prior to the filing of the warehouse or rewarehouse entry. This notification will eliminatethe possibility of assessment of liquidated damages againstthe proprietor if non-alcoholic beverage merchandise issubsequently found by Customs or BATF officers in thewarehouse. These warehouses will thereupon revert toCustoms authority and remain under that authority until theyfile an annual submission under Section 19.12(a)(4) CRwhich shows alcohol-only activity for 1 full year. Customsand BATF officers are to cooperate closely to identify warehouses so that no warehouse is

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Bonded Warehouse Manual