[Federal Register: April 5, 2007 (Volume 72, Number 65)]
[Rules and Regulations]
[Page 16712-16716]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ap07-15]
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DEPARTMENT OF COMMERCE
International Trade Administration
DEPARTMENT OF THE INTERIOR
15 CFR Part 303
[Docket No. 0612243019-7062-02]
RIN: 0625-AA72
Changes in the Insular Possessions Watch, Watch Movement and
Jewelry Programs 2006
AGENCIES: Import Administration, International Trade Administration,
Department of Commerce; Office of Insular Affairs, Department of the
Interior.
ACTION: Final rule.
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SUMMARY: The Departments of Commerce and the Interior (the Departments)
amend their regulations governing watch duty-exemption allocations and
the watch and jewelry duty-refund benefits for producers in the United
States insular possessions (the U.S. Virgin Islands, Guam, American
Samoa and the Commonwealth of the Northern Mariana Islands). The rule
amends certain regulations by updating the maximum total value of watch
components per watch that are eligible for duty-free entry into the
United States under the insular program, further clarifying the
definition of creditable and non-creditable wages and fringe benefits,
providing more details about the calculation of mid-year and annual
duty-refund and verification process, and making minor editorial
changes.
DATES: This rule is effective May 7, 2007.
[[Page 16713]]
FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526, same
address as above.
SUPPLEMENTARY INFORMATION: The Departments of Commerce and the Interior
(the Departments) issue this rule to amend their regulations governing
watch duty-exemption allocations and the watch and jewelry duty-refund
benefits for producers in the United States insular possessions (the
U.S. Virgin Islands, Guam, American Samoa and the Commonwealth of the
Northern Mariana Islands). The background information and purpose of
this rule is found in the preamble to the proposed rule (72 FR 3083,
January 24, 2007) and is not repeated here.
Amendments
We amend Sec. 303.14(b)(3) by raising the maximum total value of
watch components per watch and watch movement that are eligible for
duty-free entry into the U.S., from $800 to $3,000 per watch and from
$35 to $300 per watch movement due to recent increases in the price of
gold.
The rule amends Sec. Sec. 303.1(c) and 303.15(b) to reflect that
the duty-refunds may now be obtained on any articles that entered the
customs territory of the United States duty paid except for any article
containing a material which is the product of a country to which column
2 rates of duty apply, pursuant to Public Law 108-429. The rule further
amends Sec. 303.1(c) by removing the erroneous reference to ``Headnote
6'' and adding ``additional U.S. note 5 to chapter 91 of the HTSUS'' in
its place.
We also amend Sec. 303.2(a)(8) to correct a minor typographical
error by adding the closing parenthesis at the end of the sentence and
amend Sec. 303.2(a)(10) by changing ``watch components'' to ``watch
movements'' to more accurately define the kind of component.
Further, we amend Sec. Sec. 303.2(a)(13), 303.2(a)(13)(ii),
303.2(a)(13)(ii)(A), 303.2(a)(13)(ii)(B), 303.2(a)(14),
303.2(a)(14)(ii), 303.2(a)(14)(ii)(A), 303.2(a)(14)(ii)(B),
303.16(a)(9), 303.16(a)(9)(ii), 303.16(a)(9)(ii)(A),
303.16(a)(9)(ii)(B), 303.16(a)(10), 303.16(a)(10)(ii),
303.16(a)(10)(ii)(A) and 303.16(a)(10)(ii)(B) to further clarify which
wages, health insurance, life insurance and pension benefits are
creditable in the Departments' calculation of the duty-refund benefits
and which are not.
The rule also amends Sec. Sec. 303.16(a)(9)(i)(C) and
(a)(10)(i)(D) by clarifying that two program producers may, under
certain circumstances, work on the same unit of jewelry and receive
creditable wages and fringe benefits proportionally if both producers
demonstrate that they have met all the qualifications of the
regulations and have records sufficient for the Departments'
verification. However, a non-program jewelry producer may not work
together with a program jewelry producer on the manufacturing of a
single article of jewelry and receive creditable wages and benefits.
Further the rule amends Sec. Sec. 303.12(a)(1), 303.14(c),
303.19(a)(1) and 303.20(b) to provide further details about the
calculation of the mid-year duty-refund and annual duty-refund. The
rule also modifies the criteria for the calculation of the annual duty-
refund to include health insurance, life insurance and pension
benefits, pursuant to Public Law 108-429 and modifies the criteria for
the calculation of the mid-year duty refund.
We amend the heading to Sec. 303.5(b) to reflect that only
verified data is used in the calculation of the duty-exemptions and
duty-refunds. Also, we amend Sec. Sec. 303.5(b)(5) and 303.17(b)(6) to
clarify that the payroll information that should be available for use
in the verification includes time cards for each employee. The rule
amends Sec. Sec. 303.5(c) and 303.17(c) to specify that all data must
be available at the time of the annual verification and that the
Departments will not consider further data after the verification for
the particular year has been completed.
The rule amends Sec. Sec. 303.13(b) and 303.21(b) by changing
``post office address'' to ``address'' because some producers might not
have post office addresses and express mail carriers often will not
deliver to a post office address.
Finally, the rule amends Sec. Sec. 303.2(b)(5) and 303.16(b)(3) by
adding ``duty paid'' so it will be clearer that the refund of duties is
specifically on items that entered into the Customs territory of the
United States ``duty paid''.
ITA received three comments in response to the proposed rule and
request for comments. The commenters supported the provisions that were
proposed and suggested no changes. As a result we are adopting the
proposed regulations without change.
Administrative Law Requirements
Regulatory Flexibility Act. In accordance with the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., the Chief Counsel for Regulation
at the Department of Commerce has certified to the Chief Counsel for
Advocacy, Small Business Administration, that this rule would not have
a significant economic impact on a substantial number of small
entities. The factual basis for this certification was published in the
proposed rule and is not repeated here. No comments were received
regarding the economic impact of this rule on small entities. As a
result, a final regulatory flexibility analysis is not required and has
not been prepared.
Paperwork Reduction Act. This rulemaking does not contain revised
collection of information requirements subject to review and approval
by the Office of Management and Budget (OMB) under the Paperwork
Reduction Act of 1995. Collection activities are currently approved by
the Office of Management and Budget under control numbers 0625-0040 and
0625-0134.
Not withstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with a collection of information unless it
displays a currently valid OMB control number.
E.O. 12866. It has been determined that the rulemaking is not
significant for purposes of Executive Order 12866.
List of Subjects in 15 CFR Part 303
Administrative practice and procedure, American Samoa, Customs
duties and inspection, Guam, Imports, Marketing quotas, Northern
Mariana Islands, Reporting and record keeping requirements, Virgin
Islands, Watches and Jewelry.
0
For reasons set forth above, the Departments amend 15 CFR Part 303 as
follows:
PART 303--WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAMS
0
1. The authority citation for 15 CFR Part 303 continues to read as
follows:
Authority: Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note);
Pub. L. 103-465, 108 Stat. 4991; Pub. L. 94-241, 90 Stat. 263 (48
U.S.C. 1681, note); Pub. L. 106-36, 113 Stat. 167; Pub. L. 108-429,
118 Stat. 2582.
Sec. 303.1 [Amended]
0
2. Section 303.1 is amended as follows:
0
A. Remove ``on watches and watch movements and parts (except discrete
watch cases) imported into the customs territory of the United
States.'' from the first sentence of paragraph (c) and add ``on any
article imported into the customs territory of the United States duty
paid except for any article containing a material which is the product
of a country to which column 2 rates of duty apply.'' in its place.
0
B. Remove ``Headnote 6'' from the last sentence in paragraph (c) and
add ``additional U.S. note 5 to chapter 91 of
[[Page 16714]]
the Harmonized Tariff Schedule of the United States, HTSUS'' in its
place.
0
3. Section 303.2 is amended as follows:
0
A. Remove ``American Samoa) and the Northern Mariana Islands.'' from
the only sentence in paragraph (a)(8) and add ``American Samoa and the
Northern Mariana Islands).'' in its place.
0
B. Remove ``watch components'' from the only sentence in paragraph
(a)(10) and add ``watch movements'' in its place.
0
C. Amend paragraph (a)(13) introductory text by removing ``wages'' and
adding ``wages and associated'' in its place.
0
D. Add one new sentence at the end of paragraph (a)(13)(ii)
introductory text as set forth below.
0
E. Add one new sentence at the end of paragraph (a)(13)(ii)(A) as set
forth below.
0
F. Add one new sentence at the end of paragraph (a)(13)(ii)(B) as set
forth below.
0
G. Revise paragraph (a)(14) introductory text as set forth below.
0
H. Add one new sentence at the end of paragraph (a)(14)(ii)
introductory text as set forth below.
0
I. Add one new sentence at the end of paragraph (a)(14)(ii)(A) as set
forth below.
0
J. Add one new sentence at the beginning of paragraph (a)(14)(ii)(B) as
set forth below.
0
K. Remove ``United States during'' from the second sentence of
paragraph (b)(5) and add ``United States duty paid during'' in its
place.
Sec. 303.2 Definitions and forms.
(a) * * *
(13) * * *
(ii) * * * Only during the time employees are earning creditable
wages are they entitled to health and life insurance duty refund
benefits under the program.
(A) * * * Only during the time employees are earning creditable
wages are they entitled to health and life insurance duty refund
benefits under the program.
(B) * * * Only during the time employees are earning creditable
wages are they entitled to pension duty refund benefits under the
program.
* * * * *
(14) Non-creditable wages and associated non-creditable fringe
benefits ineligible for the duty refund benefit include, but are not
limited to, the following:
* * * * *
(ii) * * * Any health and life insurance costs during the time an
employee is not earning creditable wages.
(A) * * * Any health and life insurance costs during the time an
employee is not earning creditable wages.
(B) Any pension benefits that were not based on associated
creditable wages. * * *
* * * * *
0
4. Section 303.5 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. Remove ``allocation shall'' from the first sentence of paragraph (b)
introductory text and add ``allocation or duty-refund certificate
shall'' in its place.
0
C. Remove ``payroll, production records'' from paragraph (b)(5) and add
``payroll, including time cards, production records'' in its place.
0
D. Remove the last sentence of paragraph (c) and add two sentences in
its place as set forth below.
Sec. 303.5 Application for annual allocations of duty-exemptions and
duty-refunds.
* * * * *
(c) * * * It is the responsibility of each program producer to make
the appropriate data available to the Departments' officials for the
calendar year for which the annual verification is being performed and
no further data, from the calendar year for which the audit is being
completed, will be considered for benefits at any time after the audit
has been completed. In the event of discrepancies between the
application and substantiating data before the audit is complete, the
Secretaries shall determine which data will be used in the calculation
of the duty refund and allocations.
* * * * *
Sec. 303.12 [Amended]
0
5. Section 303.12 is amended as follows:
0
A. Remove ``creditable wages paid during'' from the second sentence in
paragraph (a)(1) and add ``creditable wages, determined from the wages
as reported on the employer's first two quarterly federal tax returns
(941-SS), paid during'' in its place.
0
B. Remove ``duty refund will remain the same.'' from the fifth sentence
in paragraph (a)(1) and add ``duty refund will be based on verified
creditable wages, duty-free shipments into the customs territory of the
United States, creditable health insurance, life insurance and pension
benefits and the duty differential, if watch tariffs have been reduced
during the calendar year.'' in its place.
Sec. 303.13 [Amended]
0
6. Section 303.13 is amended by removing ``post office address'' from
the first sentence of paragraph (b) introductory text and adding
``address'' in its place.
0
7. Section 303.14 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. In paragraph (b)(3), remove ``35'' and add ``300'' in its place; and
remove ``800'' and add ``3,000'' in its place.
0
C. Revise paragraph (c) to read as follows.
Sec. 303.14 Allocation factors, duty refund calculations and
miscellaneous provisions.
* * * * *
(c) Calculation of the value of the mid-year production incentive
certificates. (1) The value of each producer's certificate shall equal
the producer's average creditable wage per unit shipped during the
first six months of the calendar year multiplied by the sum of:
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor
of 85%; plus
(iii) Incremental units shipped up to 600,000 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 750,000 units times a factor
of 75%.
(2) Calculation of the value of the annual production incentive
certificates. The value of each producer's certificate shall equal the
producer's average creditable benefit per unit based on creditable
wages, health insurance, life insurance and pension benefits plus any
duty differential, if applicable, averaged from the amount of duty free
units shipped during the calendar year multiplied by the sum of the
following to obtain the total verified amount of the annual duty-refund
per company. This amount would then be adjusted by deducting the amount
of the mid-year duty-refund already issued.
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor
of 85%; plus
(iii) Incremental units shipped up to 600,000 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 750,000 units times a factor
of 75%.
(3) The Departments may make adjustments for these data in the
manner set forth in Sec. 303.5(c).
* * * * *
[[Page 16715]]
Sec. 303.15 [Amended]
0
8. Section 303.15 is amended by removing ``on watches and watch
movements and parts (except discrete watch cases) imported into the
customs territory of the United States.'' from the first sentence of
paragraph (b) and adding ``on any article imported into the customs
territory of the United States duty paid except for any article
containing a material which is the product of a country to which column
2 rates of duty apply.'' in its place.
0
9. Section 303.16 is amended as follows:
0
A. Amend paragraph (a)(9) introductory text by removing ``wages and
creditable fringe benefits'' and adding ``wages and associated
creditable fringe benefits and creditable duty differentials'' in its
place.
0
B. Remove ``two producers'' from the first sentence of paragraph
(a)(9)(i)(C) and add ``two program producers'' in its place.
0
C. Add one new sentence at the end of paragraph (a)(9)(ii) introductory
text as set forth below.
0
D. Add one new sentence at the end of paragraph (a)(9)(ii)(A) as set
forth below.
0
E. Add one new sentence at the end of paragraph (a)(9)(ii)(B) as set
forth below.
0
F. Revise paragraph (a)(10) introductory text as set forth below.
0
G. Add one new sentence at the end of paragraph (a)(10)(ii)
introductory text as set forth below.
0
H. Add one new sentence at the end of paragraph (a)(10)(ii)(A) as set
forth below.
0
I. Add one new sentence at the beginning of paragraph (a)(10)(ii)(B) as
set forth below.
0
J. Remove ``working on the premises of the company office and'' from
the first sentence of paragraph (a)(10)(i)(D) and add ``working on the
premises of the company office; wages paid to employees working with a
non-program producer to create a single piece of HTSUS heading 7113
jewelry whether or not it entered the United States free of duty; and''
in its place.
0
K. Remove ``United States during'' from the second sentence of
paragraph (b)(3) and add ``United States duty paid during'' in its
place.
Sec. 303.16 Definitions and forms.
(a) * * *
(9) * * *
(ii) * * * Only during the time employees are earning creditable
wages are they entitled to health and life insurance duty refund
benefits under the program.
(A) * * * Only during the time employees are earning creditable
wages are they entitled to health and life insurance duty refund
benefits under the program.
(B) * * * Only during the time employees are earning creditable
wages are they entitled to pension duty refund benefits under the
program.
* * * * *
(10) Non-creditable wages and associated non-creditable fringe
benefits ineligible for the duty refund benefit include, but are not
limited to, the following:
* * * * *
(ii) * * * Any health and life insurance costs during the time an
employee is not earning creditable wages.
(A) * * * Any health and life insurance costs during the time an
employee is not earning creditable wages.
(B) Any pension benefits that were not based on associated
creditable wages. * * *
* * * * *
0
10. Section 303.17 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. Remove ``payroll, production records'' from paragraph (b)(6) and add
``payroll, including time cards, production records'' in its place.
0
D. Remove the last sentence of paragraph (c) and add two sentences in
its place as set forth below.
Sec. 303.17 Application for annual duty-refunds.
* * * * *
(c) * * * It is the responsibility of each program producer to make
the appropriate data available to the Departments' officials for the
calendar year for which the annual verification is being performed and
no further data, from the calendar year for which the audit is being
completed, will be considered for benefits at any time after the audit
has been completed. In the event of discrepancies between the
application and substantiating data before the audit is complete, the
Secretaries shall determine which data will be used in the calculation
of the duty refund and allocations.
* * * * *
Sec. 303.19 [Amended]
0
11. Section 303.19 is amended as follows:
0
A. Remove ``creditable wages paid during'' from the second sentence in
paragraph (a)(1) and add ``creditable wages, determined from the wages
as reported on the employer's first two quarterly federal tax returns
(941-SS), paid during'' in its place.
0
B. Remove ``duty refund will remain the same.'' from the fifth sentence
in paragraph (a)(1) and add ``duty refund will be based on verified
creditable wages, duty-free shipments into the customs territory of the
United States, creditable health insurance, life insurance and pension
benefits and the duty differential, if watch tariffs have been reduced
during the calendar year.'' in its place
0
12. Section 303.20 is amended as follows:
0
A. Revise the section heading to read as set forth below.
0
B. Revise paragraph (b) to read as follows.
Sec. 303.20 Duty refund calculations and miscellaneous provisions.
* * * * *
(b) Calculation of the value of the mid-year production incentive
certificates. (1) The value of each producer's certificate shall equal
the producer's average creditable wage per unit shipped during the
first six months of the calendar year multiplied by the sum of:
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor
of 85%; plus
(iii) Incremental units shipped up to 600,000 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 750,000 units times a factor
of 75%.
(2) Calculation of the value of the annual production incentive
certificates. The value of each producer's certificate shall equal the
producer's average creditable benefit per unit based on creditable
wages, health insurance, life insurance and pension benefits plus any
duty differential, if applicable, averaged from the amount of duty free
units shipped during the calendar year multiplied by the sum of the
following to obtain the total verified amount of the annual duty-refund
per company. This amount would then be adjusted by deducting the amount
of the mid-year duty-refund already issued.
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor
of 85%; plus
(iii) Incremental units shipped up to 600,000 units times a factor
of 80%; plus
[[Page 16716]]
(iv) Incremental units shipped up to 750,000 units times a factor
of 75%.
(3) The Departments may make adjustments for these data in the
manner set forth in Sec. 303.17(c).
* * * * *
Sec. 303.21 [Amended]
0
13. Section 303.21 is amended by removing ``post office address'' from
the first sentence of paragraph (b) and adding ``address'' in its
place.
Dated: March 26, 2007.
David Spooner,
Assistant Secretary for Import Administration, Department of Commerce.
Dated: March 22, 2007.
Edgar Johnson,
Acting Director for Insular Affairs, Department of the Interior.
[FR Doc. 07-1578 Filed 4-4-07; 8:45 am]
BILLING CODE 3510-DS-P