Changes in the Insular Possessions Watch, Watch Movement and Jewelry Programs 2006, 3083-3087 [07-294]
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3083
Proposed Rules
Federal Register
Vol. 72, No. 15
Wednesday, January 24, 2007
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
DEPARTMENT OF COMMERCE
International Trade Administration
DEPARTMENT OF THE INTERIOR
15 CFR Part 303
[Docket No. 0612243019–7006–01]
RIN: 0625–AA72
Changes in the Insular Possessions
Watch, Watch Movement and Jewelry
Programs 2006
Import Administration,
International Trade Administration,
Department of Commerce; Office of
Insular Affairs, Department of the
Interior.
ACTION: Notice of Proposed Rulemaking
and Request for Comments.
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AGENCIES:
SUMMARY: The Departments of
Commerce and the Interior (the
Departments) propose amending their
regulations governing watch dutyexemption 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 proposed rule would
amend 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: Written comments must be
received on or before February 23, 2007.
ADDRESSES: Address written comments
to Faye Robinson, Director, Statutory
Import Programs Staff, Room 2104, U.S.
Department of Commerce, 14th and
Constitution Ave., NW., Washington,
DC 20230.
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Faye
Robinson, (202) 482–3526, same address
as above.
SUPPLEMENTARY INFORMATION: The
insular possessions watch industry
provision in Sec. 110 of Public Law 97–
446 (96 Stat. 2331) (1983), as amended
by Section 602 of Public Law 103–465
(108 Stat. 4991) (1994), and additional
U.S. Note 5 to chapter 91 of the
Harmonized Tariff Schedule of the
United States (‘‘ HTSUS’’), as amended
by Public Law 94–241 (90 Stat. 263)
(1976) requires the Secretary of
Commerce and the Secretary of the
Interior (‘‘the Secretaries’’), acting
jointly, to establish a limit on the
quantity of watches and watch
movements that may be entered free of
duty during each calendar year. The law
also requires the Secretaries to establish
the shares of this limited quantity that
may be entered from the Virgin Islands,
Guam, American Samoa and the
Commonwealth of the Northern Mariana
Islands (‘‘CNMI’’). After the
Departments have verified the data
submitted on the annual application
(Form ITA–334P), the producers’ dutyexemption allocations are calculated
from the territorial share in accordance
with 15 CFR 303.14 and each producer
is issued a duty-exemption license. The
law further requires the Secretaries to
issue duty-refund certificates to each
territorial watch and watch movement
producer based on the company’s dutyfree shipments and creditable wages
paid during the previous calendar year.
Public Law 106–36 (113 Stat. 127)
(1999) authorizes the issuance of a dutyrefund certificate to each territorial
jewelry producer for any article of
jewelry provided for in heading 7113 of
the HTSUS that is the product of any
such territory. The value of the
certificate is based on creditable wages
paid and duty-free units shipped into
the United States during the previous
calendar year. Although the law
specifically mentions the U.S. Virgin
Islands, Guam and American Samoa, the
issuance of the duty-refund certificate
would also apply to the CNMI due to
the Covenant to Establish a
Commonwealth of the Northern Mariana
Islands in Political Union with the
United States of America (Pub. L. 94–
241), that states that goods from the
CNMI are entitled to the same tariff
treatment as imports from Guam. See
also 19 CFR 7.2(a). In order to be
FOR FURTHER INFORMATION CONTACT:
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considered a product of such territories,
the jewelry must meet the U.S. Customs
Service substantial transformation
requirements (the jewelry must become
a new and different article of commerce
as a result of production or manufacture
performed in the territory). To receive
duty-free treatment, the jewelry must
also satisfy the requirements of General
Note 3(a)(iv) of the HTSUS and
applicable Customs Regulations (19 CFR
7.3). Section 1562 of Public Law 108–
429 (2004), amended by Public Law 97–
446, Public Law 103–465 and Public
Law 106–36 and authorizes extending
the duty refund benefits to include the
value of usual and customary health
insurance, life insurance and pension
benefits; raising the ceiling on the
amount of jewelry that qualifies for the
duty refund benefit; allowing new
insular jewelry producers to assemble
jewelry and have such jewelry treated as
an article of the insular possessions for
up to 18 months after the jewelry
company commences assembly
operations; allowing duty refund
certificate holders to secure a duty
refund on any articles that are imported
into the customs territory of the United
States by the certificate holder duty
paid; and providing compensation to
insular watch producers if tariffs on
watches and watch movements are
reduced.
Comments Received in Response to the
Advanced Notice of Proposed
Rulemaking
The Department’s regulations provide
that the current total value of watch
components per watch and watch
movement that are eligible for duty-free
entry into the U.S. are $800 per watch
and $35 per watch movement. See 15
CFR 303.14(b)(3). On July 25, 2006, the
Department received a letter from the
U.S. Virgin Islands Watch & Jewelry
Manufacturers Association requesting
that the Department of Commerce
reexamine the current value limits for
watches assembled in the U.S. Virgin
Islands. The Association asserted that
the rising cost of gold has made it
difficult to continue production of gold
watches with the current ceilings in
place.
In response to the Association’s
request, on October 20, 2006, we
published an advanced notice of
proposed rulemaking in the Federal
Register. See Insular Possession Watch,
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Watch Movement and Jewelry Programs,
71 FR 61923 (October 20, 2006). The
notice requested comments on whether
to change the maximum value of watch
components per watch and watch
movement that are eligible for benefits
under the program and provide
comments on four possible options. We
received comments from four parties:
The first commenter favored removing
any restrictions on the value of watch
components as long as all other program
requirements are met.
The second commenter suggested a
ceiling of $2,000 for watch components
per watch and $200 for watch
components per watch movement.
The third commenter encouraged the
Departments to significantly increase or
eliminate the value limits for watches
and watch movements.
The fourth commenter urged the
Departments of Commerce and the
Interior to eliminate the watch and
watch movement value limits from the
regulations.
In 1983, the passage of Pub. L. 97–446
added features to the insular
possessions watch program, which
included a duty refund provision for
watch producers. Contained in the
rulemaking, implementing Pub. L. 97–
446, was the addition of the value limits
on components for watches and watch
movements. (See Allocation of Watch
Quota for Calendar Year 1983 Among
Watch Producers Located in the Virgin
Islands, Guam and American Samoa, 48
FR 17579, April 25, 1983) (‘‘1983 Final
Rule’’)
Since 1983, the value limitations have
been raised on several occasions, most
recently in 1998 and 2004. Although
two commenters favored eliminating the
ceiling all together, we propose raising
the value limits rather than eliminating
them because we believe that the
original policy reasons for maintaining
the ceiling still have merit in terms of
domestic and international trade policy.
In the notice of proposed rulemaking
(See Allocation of Watch Quota for
Calendar Year 1983 Among Watch
Producers Located in the Virgin Islands,
Guam and American Samoa, 48 FR
7186, February 18, 1983) for the 1983
Final Rule, the Departments included
value limits in response to language
added by the Senate Finance Committee
report, which required the Secretaries to
ensure that work performed in the
insular possessions adds ‘‘significantly
to the value of the product.’’ A basic
tenant of the policy was to stimulate
employment in the insular possessions
while not creating disproportionate
gains for watch producers and
maintaining the ceiling assures that a
balance is maintained. Because there
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have been substantial increases in the
price of gold and the dollar has
weakened against the Euro and the
Swiss France, we propose 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 to account for
increases in the price of gold as well as
provide allowances for further
fluctuation. We believe that the increase
would provide flexibility to producers
and has the potential to attract new
producers and increases in employment
while maintaining a correlation between
wages paid to employees and duty
savings. We, therefore, propose
increasing the value limits on watches
and watch movements while
maintaining the option to further review
value limits in future years if
circumstances dictate a change.
Proposed Amendments
As discussed above, we propose to
amend § 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.
We further propose amending
§§ 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 Pub. L. 108–429. The
proposed rule would further amend
§ 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 propose amending
§ 303.2(a)(8) to correct a minor
typographical error by adding the
closing parenthesis at the end of the
sentence and amending § 303.2(a)(10) by
changing ‘‘watch components’’ to
‘‘watch movements’’ to more accurately
define the kind of component.
Further, we propose amending
§§ 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
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creditable in the Departments’
calculation of the duty-refund benefits
and which are not.
The proposed rule would also amend
§§ 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.
A further proposal would amend
§§ 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.
We modified 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 modified the criteria
for the calculation of the mid-year duty
refund.
We propose amending the heading to
§ 303.5(b) to reflect that only verified
data is used in the calculation of the
duty-exemptions and duty-refunds.
Also, we propose amending
§§ 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.
We further propose amending
§§ 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.
We propose amending §§ 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 proposed rule would
amend §§ 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’’.
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,
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Small Business Administration, that the
proposed rule, if promulgated as final,
will not have a significant economic
impact on a substantial number of small
entities. The majority of the changes are
being proposed to further clarify the
definition of creditable and noncreditable wages and fringe benefits, to
provide more details about the
calculation of mid-year and annual
duty-refund and the verification
process, and to make minor editorial
changes. There are currently four watch
companies in the insular watch program
and four jewelry companies in the
insular jewelry program, all of which
are small entities. This rulemaking
would update the total maximum value
of watch components per watch that are
eligible for duty-free entry into the
United States. Increases in the price of
gold and a weakened dollar against the
Euro and Swiss franc have driven up the
price of gold watch components.
Therefore, companies are faced with a
difficult situation because if the value
limit is exceeded, the watch becomes
ineligible for the duty-free benefit or the
duty refund benefit under the program
due to the fact that the insular
possessions are outside the Customs
territory of the United States and the
watches will not have met the
regulatory requirements of the program.
Adoption of this rule would increase the
maximum value of watch components
per watch that would be eligible for
duty-free treatment into the United
States. This would allow producers to
increase higher-priced components in
their watches. As a result, producers
would realize an economic benefit in
that they would increase flexibility in
the types of watches they could
produce, which may lead to increased
sales and employment to help the
insular economy. There would be no
adverse economic impact from this
proposed change.
This proposed rule also would not
change reporting or recordkeeping
requirements. The changes in the
regulations will also not duplicate,
overlap or conflict with other laws or
regulations. Consequently, the changes
are not expected to meet the RFA
criteria of having a ‘‘significant’’
economic effect on a ‘‘substantial
number’’ of small entities, as stated in
5 U.S.C. 603 et seq. Therefore, a
regulatory flexibility analysis was not
prepared.
Paperwork Reduction Act. This
proposed 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
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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 proposed 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 recordkeeping
requirements, Virgin Islands, Watches
and jewelry.
For reasons set forth above, the
Departments propose to amend 15 CFR
part 303 as follows:
PART 303—WATCHES, WATCH
MOVEMENTS AND JEWELRY
PROGRAMS
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.
§ 303.1
[Amended]
2. Section 303.1 is amended as
follows:
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.
B. Remove ‘‘Headnote 6’’ from the last
sentence in paragraph (c) and add
‘‘additional U.S. note 5 to chapter 91 of
the HTSUS’’ in its place.
3. Section 303.2 is amended as
follows:
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.
B. Remove ‘‘watch components’’ from
the only sentence in paragraph (a)(10)
and add ‘‘watch movements’’ in its
place.
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C. Amend paragraph (a)(13)
introductory text by removing ‘‘wages’’
and adding ‘‘wages and associated’’ in
its place.
D. Add one new sentence at the end
of paragraph (a)(13)(ii) introductory text
as set forth below.
E. Add one new sentence at the end
of paragraph (a)(13)(ii)(A) as set forth
below.
F. Add one new sentence at the end
of paragraph (a)(13)(ii)(B) as set forth
below.
G. Revise paragraph (a)(14)
introductory text as set forth below.
H. Add one new sentence at the end
of paragraph (a)(14)(ii) introductory text
as set forth below.
I. Add one new sentence at the end of
paragraph (a)(14)(ii)(A) as set forth
below.
J. Add one new sentence at the
beginning of paragraph (a)(14)(ii)(B) as
set forth below.
K. Remove ‘‘United States during’’
from the second sentence of paragraph
(b)(5) and add ‘‘United States duty paid
during’’ in its place.
§ 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. * * *
*
*
*
*
*
4. Section 303.5 is amended as
follows:
A. Revise the section heading to read
as set forth below.
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B. Remove ‘‘allocation shall’’ from the
first sentence of paragraph (b)
introductory text and add ‘‘allocation or
duty-refund certificate shall’’ in its
place.
C. Remove ‘‘payroll, production
records’’ from paragraph (b)(5) and add
‘‘payroll, including time cards,
production records’’ in its place.
D. Remove the last sentence of
paragraph (c) and add two sentences in
its place as set forth below.
§ 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.
*
*
*
*
*
§ 303.12
[Amended]
5. Section 303.12 is amended as
follows:
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.
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.
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§ 303.13
[Amended]
6. Section 303.13 is amended by
removing ‘‘post office address’’ from the
first sentence of paragraph (b) and
adding ‘‘address’’ in its place.
7. Section 303.14 is amended as
follows:
A. Revise the section heading to read
as set forth below.
B. In paragraph (b)(3), remove ‘‘35’’
and add ‘‘300’’ in its place; and remove
‘‘800’’ and add ‘‘3,000’’ in its place.
C. Revise paragraph (c) to read as
follows.
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§ 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 § 303.5(c).
*
*
*
*
*
§ 303.15
[Amended]
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.
9. Section 303.16 is amended as
follows:
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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.
B. Remove ‘‘two producers’’ from the
first sentence of paragraph (a)(9)(i)(C)
and add ‘‘two program producers’’ in its
place.
C. Add one new sentence at the end
of paragraph (a)(9)(ii) introductory text
as set forth below.
D. Add one new sentence at the end
of paragraph (a)(9)(ii)(A) as set forth
below.
E. Add one new sentence at the end
of paragraph (a)(9)(ii)(B) as set forth
below.
F. Revise paragraph (a)(10)
introductory text as set forth below.
G. Add one new sentence at the end
of paragraph (a)(10)(ii) introductory text
as set forth below.
H. Add one new sentence at the end
of paragraph (a)(10)(ii)(A) as set forth
below.
I. Add one new sentence at the
beginning of paragraph (a)(10)(ii)(B) as
set forth below.
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.
K. Remove ‘‘United States during’’
from the second sentence of paragraph
(b)(3) and add ‘‘United States duty paid
during’’ in its place.
§ 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:
*
*
*
*
*
E:\FR\FM\24JAP1.SGM
24JAP1
Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Proposed Rules
(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. * * *
*
*
*
*
*
10. Section 303.17 is amended as
follows:
A. Revise the section heading to read
as set forth below.
B. Remove ‘‘payroll, production
records’’ from paragraph (b)(6) and add
‘‘payroll, including time cards,
production records’’ in its place.
C. Remove the last sentence of
paragraph (c) and add two sentences in
its place as set forth below.
§ 303.17 Application for annual dutyrefunds.
*
*
*
*
*
(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.
*
*
*
*
*
rmajette on PROD1PC67 with PROPOSALS
§ 303.19
[Amended]
11. Section 303.19 is amended as
follows:
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.
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.
12. Section 303.20 is amended as
follows:
VerDate Aug<31>2005
15:28 Jan 23, 2007
Jkt 211001
A. Revise the section heading to read
as set forth below.
B. Revise paragraph (b) to read as
follows.
§ 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
(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 § 303.17(c).
*
*
*
*
*
§ 303.21
[Amended]
13. Section 303.21 is amended by
removing ‘‘post office address’’ from the
first sentence of paragraph (b) and
adding ‘‘address’’ in its place.
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
3087
Dated: January 18, 2007.
David Spooner,
Assistant Secretary for Import
Administration, Department of Commerce.
Dated: January 9, 2007.
Nikolao Pula,
Director for Insular Affairs, Department of
the Interior.
[FR Doc. 07–294 Filed 1–23–07; 8:45 am]
BILLING CODE 3510–DS–P, 4310–93–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–125632–06]
RIN 1545–BF83
Corporate Reorganizations;
Distributions Under Sections
368(a)(1)(D) and 354(b)(1)(B);
Correction Notice
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary
regulations; correction notice.
AGENCY:
SUMMARY: This document contains
corrections to notice of proposed
rulemaking by cross-reference to
temporary regulations that was
published in the Federal Register on
Tuesday, December 19, 2006 (71 FR
75898) providing guidance regarding the
qualification of certain transactions as
reorganizations described in section
368(a)(1)(D) where no stock and/or
securities of the acquiring corporation
are issued and distributed in the
transaction.
FOR FURTHER INFORMATION CONTACT:
Bruce A. Decker at (202) 622–7550 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The notice of proposed rulemaking by
cross-reference to temporary regulations
(REG–125632–06) that is the subject of
these corrections are under sections 368
and 354 of the Internal Revenue Code.
Need for Correction
As published, notice of proposed
rulemaking by cross-reference to
temporary regulations (REG–125632–06)
contains errors that may prove to be
misleading and are in need of
clarification.
Correction of Publication
Accordingly, the notice of proposed
rulemaking by cross-reference to
E:\FR\FM\24JAP1.SGM
24JAP1
]]>Agencies
[Federal Register Volume 72, Number 15 (Wednesday, January 24, 2007)]
[Proposed Rules]
[Pages 3083-3087]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-294]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 /
Proposed Rules
[[Page 3083]]
DEPARTMENT OF COMMERCE
International Trade Administration
DEPARTMENT OF THE INTERIOR
15 CFR Part 303
[Docket No. 0612243019-7006-01]
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: Notice of Proposed Rulemaking and Request for Comments.
-----------------------------------------------------------------------
SUMMARY: The Departments of Commerce and the Interior (the Departments)
propose amending 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 proposed rule would amend 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: Written comments must be received on or before February 23,
2007.
ADDRESSES: Address written comments to Faye Robinson, Director,
Statutory Import Programs Staff, Room 2104, U.S. Department of
Commerce, 14th and Constitution Ave., NW., Washington, DC 20230.
FOR FURTHER INFORMATION CONTACT: Faye Robinson, (202) 482-3526, same
address as above.
SUPPLEMENTARY INFORMATION: The insular possessions watch industry
provision in Sec. 110 of Public Law 97-446 (96 Stat. 2331) (1983), as
amended by Section 602 of Public Law 103-465 (108 Stat. 4991) (1994),
and additional U.S. Note 5 to chapter 91 of the Harmonized Tariff
Schedule of the United States (`` HTSUS''), as amended by Public Law
94-241 (90 Stat. 263) (1976) requires the Secretary of Commerce and the
Secretary of the Interior (``the Secretaries''), acting jointly, to
establish a limit on the quantity of watches and watch movements that
may be entered free of duty during each calendar year. The law also
requires the Secretaries to establish the shares of this limited
quantity that may be entered from the Virgin Islands, Guam, American
Samoa and the Commonwealth of the Northern Mariana Islands (``CNMI'').
After the Departments have verified the data submitted on the annual
application (Form ITA-334P), the producers' duty-exemption allocations
are calculated from the territorial share in accordance with 15 CFR
303.14 and each producer is issued a duty-exemption license. The law
further requires the Secretaries to issue duty-refund certificates to
each territorial watch and watch movement producer based on the
company's duty-free shipments and creditable wages paid during the
previous calendar year.
Public Law 106-36 (113 Stat. 127) (1999) authorizes the issuance of
a duty-refund certificate to each territorial jewelry producer for any
article of jewelry provided for in heading 7113 of the HTSUS that is
the product of any such territory. The value of the certificate is
based on creditable wages paid and duty-free units shipped into the
United States during the previous calendar year. Although the law
specifically mentions the U.S. Virgin Islands, Guam and American Samoa,
the issuance of the duty-refund certificate would also apply to the
CNMI due to the Covenant to Establish a Commonwealth of the Northern
Mariana Islands in Political Union with the United States of America
(Pub. L. 94-241), that states that goods from the CNMI are entitled to
the same tariff treatment as imports from Guam. See also 19 CFR
7.2(a). In order to be considered a product of such territories, the
jewelry must meet the U.S. Customs Service substantial transformation
requirements (the jewelry must become a new and different article of
commerce as a result of production or manufacture performed in the
territory). To receive duty-free treatment, the jewelry must also
satisfy the requirements of General Note 3(a)(iv) of the HTSUS and
applicable Customs Regulations (19 CFR 7.3). Section 1562 of Public Law
108-429 (2004), amended by Public Law 97-446, Public Law 103-465 and
Public Law 106-36 and authorizes extending the duty refund benefits to
include the value of usual and customary health insurance, life
insurance and pension benefits; raising the ceiling on the amount of
jewelry that qualifies for the duty refund benefit; allowing new
insular jewelry producers to assemble jewelry and have such jewelry
treated as an article of the insular possessions for up to 18 months
after the jewelry company commences assembly operations; allowing duty
refund certificate holders to secure a duty refund on any articles that
are imported into the customs territory of the United States by the
certificate holder duty paid; and providing compensation to insular
watch producers if tariffs on watches and watch movements are reduced.
Comments Received in Response to the Advanced Notice of Proposed
Rulemaking
The Department's regulations provide that the current total value
of watch components per watch and watch movement that are eligible for
duty-free entry into the U.S. are $800 per watch and $35 per watch
movement. See 15 CFR 303.14(b)(3). On July 25, 2006, the Department
received a letter from the U.S. Virgin Islands Watch & Jewelry
Manufacturers Association requesting that the Department of Commerce
reexamine the current value limits for watches assembled in the U.S.
Virgin Islands. The Association asserted that the rising cost of gold
has made it difficult to continue production of gold watches with the
current ceilings in place.
In response to the Association's request, on October 20, 2006, we
published an advanced notice of proposed rulemaking in the Federal
Register. See Insular Possession Watch,
[[Page 3084]]
Watch Movement and Jewelry Programs, 71 FR 61923 (October 20, 2006).
The notice requested comments on whether to change the maximum value of
watch components per watch and watch movement that are eligible for
benefits under the program and provide comments on four possible
options. We received comments from four parties:
The first commenter favored removing any restrictions on the value
of watch components as long as all other program requirements are met.
The second commenter suggested a ceiling of $2,000 for watch
components per watch and $200 for watch components per watch movement.
The third commenter encouraged the Departments to significantly
increase or eliminate the value limits for watches and watch movements.
The fourth commenter urged the Departments of Commerce and the
Interior to eliminate the watch and watch movement value limits from
the regulations.
In 1983, the passage of Pub. L. 97-446 added features to the
insular possessions watch program, which included a duty refund
provision for watch producers. Contained in the rulemaking,
implementing Pub. L. 97-446, was the addition of the value limits on
components for watches and watch movements. (See Allocation of Watch
Quota for Calendar Year 1983 Among Watch Producers Located in the
Virgin Islands, Guam and American Samoa, 48 FR 17579, April 25, 1983)
(``1983 Final Rule'')
Since 1983, the value limitations have been raised on several
occasions, most recently in 1998 and 2004. Although two commenters
favored eliminating the ceiling all together, we propose raising the
value limits rather than eliminating them because we believe that the
original policy reasons for maintaining the ceiling still have merit in
terms of domestic and international trade policy. In the notice of
proposed rulemaking (See Allocation of Watch Quota for Calendar Year
1983 Among Watch Producers Located in the Virgin Islands, Guam and
American Samoa, 48 FR 7186, February 18, 1983) for the 1983 Final Rule,
the Departments included value limits in response to language added by
the Senate Finance Committee report, which required the Secretaries to
ensure that work performed in the insular possessions adds
``significantly to the value of the product.'' A basic tenant of the
policy was to stimulate employment in the insular possessions while not
creating disproportionate gains for watch producers and maintaining the
ceiling assures that a balance is maintained. Because there have been
substantial increases in the price of gold and the dollar has weakened
against the Euro and the Swiss France, we propose 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 to account for increases
in the price of gold as well as provide allowances for further
fluctuation. We believe that the increase would provide flexibility to
producers and has the potential to attract new producers and increases
in employment while maintaining a correlation between wages paid to
employees and duty savings. We, therefore, propose increasing the value
limits on watches and watch movements while maintaining the option to
further review value limits in future years if circumstances dictate a
change.
Proposed Amendments
As discussed above, we propose to 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.
We further propose amending 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 Pub. L. 108-429. The
proposed rule would further amend 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 propose amending Sec. 303.2(a)(8) to correct a minor
typographical error by adding the closing parenthesis at the end of the
sentence and amending Sec. 303.2(a)(10) by changing ``watch
components'' to ``watch movements'' to more accurately define the kind
of component.
Further, we propose amending 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 proposed rule would also amend 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.
A further proposal would amend 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. We
modified 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 modified the criteria for the calculation of
the mid-year duty refund.
We propose amending 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 propose amending 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. We further propose amending 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.
We propose amending 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 proposed rule would amend 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''.
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,
[[Page 3085]]
Small Business Administration, that the proposed rule, if promulgated
as final, will not have a significant economic impact on a substantial
number of small entities. The majority of the changes are being
proposed to further clarify the definition of creditable and non-
creditable wages and fringe benefits, to provide more details about the
calculation of mid-year and annual duty-refund and the verification
process, and to make minor editorial changes. There are currently four
watch companies in the insular watch program and four jewelry companies
in the insular jewelry program, all of which are small entities. This
rulemaking would update the total maximum value of watch components per
watch that are eligible for duty-free entry into the United States.
Increases in the price of gold and a weakened dollar against the Euro
and Swiss franc have driven up the price of gold watch components.
Therefore, companies are faced with a difficult situation because if
the value limit is exceeded, the watch becomes ineligible for the duty-
free benefit or the duty refund benefit under the program due to the
fact that the insular possessions are outside the Customs territory of
the United States and the watches will not have met the regulatory
requirements of the program. Adoption of this rule would increase the
maximum value of watch components per watch that would be eligible for
duty-free treatment into the United States. This would allow producers
to increase higher-priced components in their watches. As a result,
producers would realize an economic benefit in that they would increase
flexibility in the types of watches they could produce, which may lead
to increased sales and employment to help the insular economy. There
would be no adverse economic impact from this proposed change.
This proposed rule also would not change reporting or recordkeeping
requirements. The changes in the regulations will also not duplicate,
overlap or conflict with other laws or regulations. Consequently, the
changes are not expected to meet the RFA criteria of having a
``significant'' economic effect on a ``substantial number'' of small
entities, as stated in 5 U.S.C. 603 et seq. Therefore, a regulatory
flexibility analysis was not prepared.
Paperwork Reduction Act. This proposed 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 proposed 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 recordkeeping requirements, Virgin
Islands, Watches and jewelry.
For reasons set forth above, the Departments propose to amend 15
CFR part 303 as follows:
PART 303--WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAMS
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]
2. Section 303.1 is amended as follows:
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.
B. Remove ``Headnote 6'' from the last sentence in paragraph (c)
and add ``additional U.S. note 5 to chapter 91 of the HTSUS'' in its
place.
3. Section 303.2 is amended as follows:
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.
B. Remove ``watch components'' from the only sentence in paragraph
(a)(10) and add ``watch movements'' in its place.
C. Amend paragraph (a)(13) introductory text by removing ``wages''
and adding ``wages and associated'' in its place.
D. Add one new sentence at the end of paragraph (a)(13)(ii)
introductory text as set forth below.
E. Add one new sentence at the end of paragraph (a)(13)(ii)(A) as
set forth below.
F. Add one new sentence at the end of paragraph (a)(13)(ii)(B) as
set forth below.
G. Revise paragraph (a)(14) introductory text as set forth below.
H. Add one new sentence at the end of paragraph (a)(14)(ii)
introductory text as set forth below.
I. Add one new sentence at the end of paragraph (a)(14)(ii)(A) as
set forth below.
J. Add one new sentence at the beginning of paragraph
(a)(14)(ii)(B) as set forth below.
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. * * *
* * * * *
4. Section 303.5 is amended as follows:
A. Revise the section heading to read as set forth below.
[[Page 3086]]
B. Remove ``allocation shall'' from the first sentence of paragraph
(b) introductory text and add ``allocation or duty-refund certificate
shall'' in its place.
C. Remove ``payroll, production records'' from paragraph (b)(5) and
add ``payroll, including time cards, production records'' in its place.
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]
5. Section 303.12 is amended as follows:
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.
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]
6. Section 303.13 is amended by removing ``post office address''
from the first sentence of paragraph (b) and adding ``address'' in its
place.
7. Section 303.14 is amended as follows:
A. Revise the section heading to read as set forth below.
B. In paragraph (b)(3), remove ``35'' and add ``300'' in its place;
and remove ``800'' and add ``3,000'' in its place.
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).
* * * * *
Sec. 303.15 [Amended]
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.
9. Section 303.16 is amended as follows:
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.
B. Remove ``two producers'' from the first sentence of paragraph
(a)(9)(i)(C) and add ``two program producers'' in its place.
C. Add one new sentence at the end of paragraph (a)(9)(ii)
introductory text as set forth below.
D. Add one new sentence at the end of paragraph (a)(9)(ii)(A) as
set forth below.
E. Add one new sentence at the end of paragraph (a)(9)(ii)(B) as
set forth below.
F. Revise paragraph (a)(10) introductory text as set forth below.
G. Add one new sentence at the end of paragraph (a)(10)(ii)
introductory text as set forth below.
H. Add one new sentence at the end of paragraph (a)(10)(ii)(A) as
set forth below.
I. Add one new sentence at the beginning of paragraph
(a)(10)(ii)(B) as set forth below.
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.
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:
* * * * *
[[Page 3087]]
(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. * * *
* * * * *
10. Section 303.17 is amended as follows:
A. Revise the section heading to read as set forth below.
B. Remove ``payroll, production records'' from paragraph (b)(6) and
add ``payroll, including time cards, production records'' in its place.
C. 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]
11. Section 303.19 is amended as follows:
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.
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.
12. Section 303.20 is amended as follows:
A. Revise the section heading to read as set forth below.
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
(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]
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: January 18, 2007.
David Spooner,
Assistant Secretary for Import Administration, Department of Commerce.
Dated: January 9, 2007.
Nikolao Pula,
Director for Insular Affairs, Department of the Interior.
[FR Doc. 07-294 Filed 1-23-07; 8:45 am]
BILLING CODE 3510-DS-P, 4310-93-P
