CSMS Message: 01-000191

TO: ALL ABI BROKERS.

FROM: LEON HAYWARD

SUBJECT: IMPLEMENTATION OF CARIBBEAN RUM

DATE: 02/12/2001

FEBRUARY 12, 2001

ENT-14 FO:TP:IA:TA LH

TO: DIRECTORS, FIELD OPERATIONS

FROM: EXECUTIVE DIRECTOR, TRADE PROGRAMS
OFFICE OF FIELD OPERATIONS

PASS TO: PORT DIRECTORS; ASSISTANT PORT DIRECTORS, TRADE; IMPORT AND
ENTRY SPECIALISTS; BROKERS; IMPORTERS AND OTHER INTERESTED
PARTIES

SUBJECT: IMPLEMENTATION INFORMATION FOR THE CARIBBEAN RUM PROVISION
OF THE TRADE AND DEVELOPMENT ACT OF 2000

BACKGROUND:

THE TRADE AND DEVELOPMENT ACT OF 2000 ("THE ACT") WAS SIGNED INTO LAW
ON MAY 18, 2000. TITLE II, SECTION 212, OF THE ACT PROVIDES DUTY-FREE
TREATMENT FOR CERTAIN BEVERAGES MADE WITH CARIBBEAN RUM.

PRESIDENTIAL PROCLAMATION 7351, WHICH PROVIDED NEW ALTERNATE
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS) ITEM NUMBERS FOR
ELIGIBLE BEVERAGES MADE WITH CARIBBEAN RUM, WAS PUBLISHED IN THE
FEDERAL REGISTER ON OCTOBER 4, 2000 (65 FR 59329).

INTERIM CUSTOMS REGULATIONS (NEW 19 CFR 10.199) IMPLEMENTING THE
CARIBBEAN RUM PROVISIONS OF THE ACT WERE PUBLISHED IN THE FEDERAL
REGISTER OF FEBRUARY 9, 2001 (66 FR 9643).

ELIGIBILITY:

A LIQUEUR OR OTHER SPIRITUOUS BEVERAGE THAT IS IMPORTED DIRECTLY FROM
THE TERRITORY OF CANADA AND THAT IS CLASSIFIABLE UNDER HTS SUBHEADINGS
2208.40 OR 2208.90 WILL BE ENTITLED, UPON ENTRY OR WITHDRAWAL FROM
WAREHOUSE FOR CONSUMPTION, TO DUTY-FREE TREATMENT UNDER THE CARIBBEAN
BASIN ECONOMIC RECOVERY ACT (CBERA) IF THE LIQUEUR OR SPIRITUOUS
BEVERAGE HAS BEEN PRODUCED IN THE TERRITORY OF CANADA, PROVIDED THAT
THE RUM MEETS THE FOLLOWING CRITERIA:

* IS THE GROWTH, PRODUCT OR MANUFACTURE EITHER OF A CBERA BENEFICIARY
COUNTRY OR THE U.S. VIRGIN ISLANDS;

* WAS IMPORTED DIRECTLY INTO THE TERRITORY OF CANADA FROM A CBERA
BENEFICIARY COUNTRY OR THE U.S. VIRGIN ISLANDS; AND

* ACCOUNTS FOR AT LEAST 90 PERCENT OF THE ALCOHOLIC CONTENT BY VOLUME
OF THE LIQUEUR OR SPIRITUOUS BEVERAGE.

IMPORTED DIRECTLY:

TO QUALIFY FOR DUTY-FREE ENTRY UNDER CBERA, THE LIQUEUR OR SPIRITUOUS
BEVERAGE MUST BE IMPORTED DIRECTLY INTO THE CUSTOMS TERRITORY OF THE
UNITED STATES FROM CANADA, AND THE RUM USED IN ITS PRODUCTION MUST
HAVE BEEN IMPORTED DIRECTLY INTO THE TERRITORY OF CANADA EITHER FROM A
CBERA BENEFICIARY COUNTRY OR FROM THE U.S. VIRGIN ISLANDS. A DETAILED
DEFINITION OF THE TERM "IMPORTED DIRECTLY" IN THIS CONTEXT MAY BE
FOUND AT THE NEW 19 CFR 10.199(C).

IMPORTER REQUIREMENTS:

THE IMPORTER MAY MAKE A CLAIM FOR DUTY-FREE TREATMENT OF A LIQUEUR OR
SPIRITUOUS BEVERAGE UNDER THIS PROVISION AT THE TIME OF FILING THE
ENTRY SUMMARY. THIS CLAIM SHALL BE MADE BY INCLUDING THE APPROPRIATE
ALTERNATIVE HTS ITEM NUMBER, 9817.22.05, ON THE ENTRY SUMMARY DOCUMENT
OR ITS ELECTRONIC EQUIVALENT FOR EACH PRODUCT FOR WHICH SUCH TREATMENT
IS CLAIMED.

TO CLAIM DUTY-FREE TREATMENT UNDER THIS PROVISION, THE IMPORTER MUST
HAVE THE FOLLOWING RECORDS AVAILABLE AND BE ABLE TO PRESENT THEM TO
CUSTOMS UPON REQUEST:

* EVIDENCE OF DIRECT SHIPMENT - THE IMPORTER MUST HAVE RECORDS
DEMONSTRATING THAT A LIQUEUR OR SPIRITUOUS BEVERAGE WAS IMPORTED
DIRECTLY INTO THE UNITED STATES FROM CANADA, AND THAT THE RUM USED IN
ITS PRODUCTION WAS IMPORTED DIRECTLY INTO CANADA FROM A CBERA
BENEFICIARY COUNTRY OR THE U.S. VIRGIN ISLANDS. SUCH EVIDENCE MAY
INCLUDE AN AIR WAYBILL, BILL OF LADING, CARGO MANIFEST, INVOICE, OR
SIMILAR DOCUMENTATION.

* EVIDENCE OF ORIGIN OF RUM - THE IMPORTER MUST BE ABLE TO PROVIDE A
DECLARATION FROM THE PERSON WHO PRODUCED THE LIQUEUR OR SPIRITUOUS
BEVERAGE IN CANADA. THE FORMAT OF THE DECLARATION IS DESCRIBED IN 19
CFR 10.199(F).

* SUPPORTING DOCUMENTATION - THE IMPORTER MUST ALSO BE ABLE TO PROVIDE
THOSE PRODUCTION RECORDS THAT ARE NECESSARY FOR THE PREPARATION OF THE
DECLARATION DESCRIBED ABOVE.

THE IMPORTER MUST ALSO ESTABLISH AND IMPLEMENT A SYSTEM OF INTERNAL
CONTROLS TO DEMONSTRATE THAT REASONABLE CARE WAS EXERCISED IN CLAIMING
DUTY-FREE TREATMENT UNDER THE NEW RUM PROVISION OF THE CBERA. THE
CONTROLS SHOULD INCLUDE TESTS TO ASSURE THE ACCURACY AND AVAILABILITY
OF RECORDS THAT ESTABLISH THE FOLLOWING: ORIGIN OF THE RUM; DIRECT
SHIPMENT OF THE RUM FROM A CBERA BENEFICIARY COUNTRY OR THE U.S.
VIRGIN ISLANDS TO CANADA; THE ALCOHOL CONTENT OF THE FINISHED
LIQUEUR/BEVERAGE IMPORTED FROM CANADA; AND, THE DIRECT SHIPMENT OF THE
FINISHED LIQUEUR/BEVERAGE FROM CANADA TO THE U.S.

THE IMPORTER MUST BE PREPARED TO SUBMIT DIRECTLY TO THE PORT DIRECTOR,
IF REQUESTED, THOSE DOCUMENTS AND/OR SUPPORTING RECORDS DESCRIBED
ABOVE FOR A PERIOD OF 5 YEARS FROM THE DATE OF ENTRY OF THE RELATED
LIQUEUR OR SPIRITUOUS BEVERAGE. UPON REQUEST FROM THE PORT DIRECTOR,
THE IMPORTER WILL HAVE 60 CALENDAR DAYS TO PROVIDE SUCH RECORDS OR
SUPPORTING DOCUMENTS TO THE PORT DIRECTOR, OR SUCH ADDITIONAL TIME AS
THE PORT DIRECTOR MAY ALLOW FOR GOOD CAUSE.

CUSTOMS VERIFICATIONS:

A CLAIM FOR DUTY-FREE TREATMENT UNDER THE NEW CBERA RUM PROVISION WILL
BE SUBJECT TO WHATEVER VERIFICATION THE PORT DIRECTOR DEEMS NECESSARY.
THE PORT DIRECTOR MAY REQUEST RECORDS OR SUPPORTING DOCUMENTS THAT
ESTABLISH ANY OR ALL OF THE FOLLOWING:

* THE RUM USED TO PRODUCE THE LIQUEUR/BEVERAGE WAS THE GROWTH, PRODUCT
OR MANUFACTURE OF A CBERA BENEFICIARY COUNTRY OR THE U.S. VIRGIN
ISLANDS;

* THE RUM WAS SHIPPED DIRECTLY FROM A CBERA BENEFICIARY COUNTRY OR THE
U.S. VIRGIN ISLANDS TO CANADA; THE LIQUEUR/BEVERAGE WAS PRODUCED IN
CANADA;

* THE RUM ACCOUNTED FOR AT LEAST 90% OF THE ALCOHOL CONTENT OF THE
LIQUEUR/BEVERAGE; AND

* THE LIQUEUR/BEVERAGE WAS SHIPPED DIRECTLY FROM CANADA TO THE UNITED
STATES.

IF, FOR ANY REASON, THE PORT DIRECTOR IS UNABLE TO VERIFY THE CLAIM,
S/HE MAY DENY THE CLAIM FOR DUTY-FREE TREATMENT.

ACTION:

EFFECTIVE IMMEDIATELY, IMPORTERS MAY FILE CLAIMS FOR PREFERENTIAL
TARIFF TREATMENT OF LIQUEURS OR OTHER SPIRITUOUS BEVERAGES THAT MEET
THE CONDITIONS SPECIFIED ABOVE.

THE AUTOMATED COMMERCIAL SYSTEM (ACS) HAS BEEN UPDATED TO ALLOW FOR
AUTOMATED PROCESSING OF THESE ENTRIES.

QUESTIONS REGARDING THIS NOTICE FROM THE IMPORTING COMMUNITY SHOULD BE
REFERRED TO THE LOCAL CUSTOMS PORT. THE CUSTOMS PORT OF ENTRY MAY
REFER QUESTIONS TO LEON HAYWARD, TRADE AGREEMENTS BRANCH, AT (202)
927-9704.

/S/
ELIZABETH G. DURANT

CC: EXECUTIVE DIRECTOR, FIELD OPERATIONS