10.175-10.177

(iv) Operations necessary to ensure the preservation of merchandise in its condition as introduced into the free trade zone.

(2) Merchandise may be purchased and resold, other than at retail, for export within the free trade zone.

(3) The Certificate of Origin issued by the designated beneficiary developing country of origin shall state in column 12, that the eligible articles comply with the origin requirements for goods exported to the United States under the Generalized System of Preferences. Column 2 of the Certificate of Origin shall include the name of the consignee in the United States or in the free trade zone.

(4) The certifying authority in the designated beneficiary developing country maintaining the free trade zone shall issue a Certificate of Origin Form A, declaring what operations were perfo. med within the free trade zone. The original Certificate of origin issued in the beneficiary developing country of origin shall be retained by the designated authority in the country maintaining the free trade zone and a copy thereof shall be furnished to the United States importer.

(5) For the purposes of this section, a free trade zone is a predetermined area or region declared and secured by or under governmental authority, where certain operations may be performed with respect to articles, without such articles having entered into the commerce of the country maintaining the free trade

zone.

TD 762.

10.176 Country of origin criteria.

(a) Merchandise produced in one beneficiary developing country. Merchandise which is the growth, product, manufacture, or assembly of a beneficiary developing country and which is imported directly from such beneficiary developing country may qualify for duty-free entry under the Generalized System of Preferences only if the sum of the cost or value of the materials produced in the beneficiary developing country, plus the direct costs of processing operations performed in such country, is not less than 35% of the value of the article as appraised in accordance with section 402 or 402a, Tariff Act of 1930, as amended (19 U.S.C. 1401a, 1402). For purposes of this paragraph, the term ''country'' does not include an association of countries which is treated as one country under section 10.171(b), but does include a country which is a member of any such association.

(b) Merchandise produced in two or more countries which are members of an association. Merchandise which is the growth, product manufacture, or assembly of two or more countries which are members of an association of countries treated as one country under section 502(a)(3) of the Trade Act of 1974 (19 U.S.C. 2462(a)(3)) and section 10.171(b), and which is imported directly from a member country, may qualify for duty-free treatment under the Generalized System of Preferences only if the sum of the cost or value of the materials produced in such countries, plus the direct costs of processing operations performed in such countries, is not less than 50% of the value of the article as appraised in accordance with section 402 or 402a, Tariff Act of 1930, as amended (19 U.S.C. 1401a, 1402).

(c) Merchandise grown, produced, or manufactured in a beneficiary developing country. Merchandise which is wholly the growth, product, or manufacture of a beneficiary developing country, or an association of countries treated as one country under section 502(a)(3) of the Trade Act of 1974 (19 U.S.C. 2462(a)(3)) and section 10.171(b), and manufactured products consisting of materials produced only in such country or countries, shall normally be presumed to meet the requirements set forth in this section.

10.177 Cost or value of materials produced in the beneficiary developing TD's 76-2, 76-100.

country.

(a) "Produced in the beneficiary developing country" defined. For purposes of sections 10.171 through 10.178, the words "produced in the beneficiary developing country" refer to the constituent materials of which the eligible article is composed which are either:

(1) Wholly the growth, product, or manufacture of the beneficiary developing country; or

(2) Substantially transformed in the beneficiary developing country into a new and different article of commerce.

(b) Questionable origin. When the origin of an article either is not ascertainable or not satisfactorily demonstrated to the appropriate district director, the

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article shall not be considered to have been produced in the beneficiary developing country.

(c) Determination of cost or value of materials produced in the beneficiary developing country.

(1) The cost or value of materials produced in the beneficiary developing country includes:

(i) The manufacturer's actual cost for the materials;

(ii) When not included in the manufacturer's actual cost for the materials, the freight , insurance, packing, and all other costs incurred in transporting the materials to the manufacturer's plant;

(iii) The actual cost of waste or spoilage (material lost), less the value of recoverable scrap; and

(iv) Taxes and/or duties imposed on the materials by the beneficiary developing country, or an association of countries treated as one country, provided they are not remitted upon exportation.

(2) Where the material is provided to the manufacturer without charge, or at less than fair market value, its cost or valut shall be determined by computing the sum of:

(i) All expenses incurred in the growth, production, manufacture or assembly of the material, including general expenses;

(ii) An amount for profit; and

(iii) Freight, insurance, packing, and all other costs incurred in transporting the materials to the manufacturer's plant. If the pertinent information needed to compute the cost or value of the materials is not available, the appraising officer may ascertain or estimate the value thereof using all reasonable ways and means at his disposal.

10.178 Direct costs of processing operations performed in the beneficiary

developing country.

(a) Items included in the direct costs of processing operations. As used in section 10.176, the words "direct costs of processing operations" mean those costs either directly incurred in, or which can be reasonably allocated to, the growth, production, manufacture, or assembly of the specific merchandise under consideration. Such costs include, but are not limited to:

(1) All actual labor costs involved in the growth, production, manufacture, or assembly of the specific merchandise, including fringe benefits, on-the-job training, and the cost of engineering, supervisory, quality control, and similar personnel;

(2) Dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific merchandise;

(3) Research, development, design, engineering, and blueprint costs insofar as they are allocable to the specific merchandise; and

(4) Costs of inspecting and testing the specific merchandise.

(b) Items not included in the direct costs of processing operations. Those items which are not included within the meaning of the words "direct costs of processing operations" are those which are not directly attributable to the mere chandise under consideration or are not "costs" of manufacturing the product. These include, but are not limited to:

(1) Profit; and

(2) General expenses of doing business which are either not allocable to the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries, casualty and liability insurance, advertising, and salesmen's salaries, commissions, or expenses.

TD 76-2.

a

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Parallel Reference Table

(This table shows the relation of revised sections 10.151 through 10.153 to superseded 19 CFR

Part 8, and revised sections 10.161 through 10.166 to superseded 19 CFR Part 16)

Superseded Section

Authority: Sections 11.1 to 11.21 issued under R.S. 161, as amended, 251, sec.

624, 46 Stat. 759; 5 U.S.C. 22, 19 U.S.C. 66, 1624. Statutory pro-
visions interpreted or applied and special rule-making authorities
are cited to text in parentheses.

PACKING AND STAMPING

11.1 Cigars, cigarettes, medicinal preparations, and perfumery.--(a) All IDs 25977, 51395, cigars and cigarettes imported into the United States, except importations by 52916, 53548, 54393,

54763, 54875, mail and in baggage, shall be placed in the public stores or in a designated bonded warehouse to remain until inspected, weighed, and repacked, if necessary, under the customs and internal-revenue laws. However, if the invoice and entry presented specify all of the information necessary for prompt determina tion of the estimated duty and tax on the packages of cigars and cigarettes covered thereby, the collector may permit designation of less than the entire importation for examination.

(b) After the cigars and cigarettes have been examined, weighed, and ap- TDs 10381, 11811, praised, before release the inspecting officer shall verify that they are in 15362, 21272, 21743, properly constructed packages, conforming to the requirements of the regula - 21865, 22770, 23887, tions of the Internal Revenue Service, bearing a legible imprint or a securely 30719, 41074, 41416,

44623, 51395, 52916, affixed label stating the quantity, kind, and classification for tax purposes as

53548, 54393, 54875, required by such regulations, Cigars or cigarettes must be in compliance with such requirements before being released for consumption unless specifically exempted therefrom as indicated in section 11.3 of these regulations.

(c) The immediate containers of all domestic cigars, cigarettes, medicinal TDs 51395, 53548, preparations, and perfumery, which are returned to the United States and are 54393, 51875. subject to a duty equal to an internal-revenue tax, shall be stamped by the customs inspector with a rubber stamp bearing the legend “U. S. Customs -American Goods Returned..

Inspector." The inspector's initials shall appear in the space provided therefor. The packaging requirements set forth in paragraph (b) of this section apply to returned cigars and cigarettes of domestic origin.

55472.

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