19 U.S.C. § 1312 — Bonded smelting and refining warehouses

Page 79 TITLE 19—CUSTOMS DUTIES § 1312 graph of section 311 of the Tariff Act of 1930 (19 U.S.C. 1311) shall be applied as if such first sentence did not include the phrase ‘at an exterior port’.’’ Executive Documents TRANSFER OF FUNCTIONS Functions of all other officers of Department of the Treasury and functions of all agencies and employees of such Department transferred, with certain exceptions, to Secretary of the Treasury, with power vested in him to authorize their performance or performance of any of his functions, by any of such officers, agencies, and employees, by Reorg. Plan No. 26 of 1950, §§ 1, 2, eff. July 31, 1950, 15 F.R. 4935, 64 Stat. 1280, 1281, set out in the Appendix to Title 5, Government Organization and Em- ployees. Customs officers, referred to in text, are under Department of the Treasury. § 1312. Bonded smelting and refining warehouses (a) Bond; charges against bond Any plant engaged in smelting or refining, or both, of metal-bearing materials as defined in this section may, upon the giving of satisfactory bond, be designated a bonded smelting or refin- ing warehouse. Metal-bearing materials may be entered into a bonded smelting or refining ware- house without the payment of duties thereon and there smelted or refined, or both, together with metal-bearing materials of domestic or for- eign origin. Upon arrival of imported metal- bearing materials at the warehouse they shall be sampled according to commercial methods and assayed, both under customs supervision. The bond shall be charged with a sum equal in amount to the duties which would be payable on such metal-bearing materials in their condition as imported if entered for consumption, and the bond charge shall be adjusted to reflect changes in the applicable rate of duty occurring while the imported materials are still covered by the bond. (b) Cancellation of charges against bond The several charges against such bond may be canceled in whole or in part— (1) upon the exportation from the bonded warehouses which treated the metal-bearing materials, or from any other bonded smelting or refining warehouse, of a quantity of the same kind of metal contained in any product of smelting or refining of metal-bearing mate- rials equal to the dutiable quantity contained in the imported metal-bearing materials less wastage provided for in subsection (c); except that— (A) in the case of a withdrawal for expor- tation of such a product to a USMCA coun- try, as defined in section 4502 of this title, if any of the imported metal-bearing materials are goods subject to USMCA drawback, as defined in section 4534(a) of this title, the duties on the materials shall be paid, and the charges against the bond canceled, be- fore the 61st day after the date of expor- tation; but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the USMCA country on the product, the duties on the materials may be waived or reduced (subject to section 4534(e) of this title) in an amount that does not exceed the lesser of— (i) the total amount of customs duties owed on the materials on importation into the United States, or (ii) the total amount of customs duties paid to the USMCA country on the prod- uct, and (B) in the case of a withdrawal for expor- tation of such a product to Chile, if any of the imported metal-bearing materials are goods subject to Chile FTA drawback, as de- fined in section 203(a) of the United States- Chile Free Trade Agreement Implementa- tion Act, the duties on the materials shall be paid, and the charges against the bond can- celed, before the 61st day after the date of exportation, except that the duties may be waived or reduced by— (i) 100 percent during the 8-year period beginning on January 1, 2004, (ii) 75 percent during the 1-year period beginning on January 1, 2012, (iii) 50 percent during the 1-year period beginning on January 1, 2013, and (iv) 25 percent during the 1-year period beginning on January 1, 2014, or (2) upon payment of duties on the dutiable quantity of metal contained in the imported metal-bearing materials, or (3) upon the transfer of the bond charges to another bonded smelting or refining ware- house by physical shipment of a quantity of the same kind of metal contained in any prod- uct of smelting or refining of metal-bearing materials equal to the dutiable quantity con- tained in the imported metal-bearing mate- rials less wastage provided for in subsection (c), or (4) upon the transfer of the bond charges to a bonded customs warehouse other than a bonded smelting or refining warehouse by physical shipment of a quantity of the same kind of metal contained in any product of smelting or refining equal to the dutiable quantity contained in the imported metal- bearing materials less wastage provided for in subsection (c), and upon withdrawal from such other warehouse for exportation or domestic consumption the provisions of this section shall apply; except that— (A) in the case of a withdrawal for expor- tation of such a product to a USMCA coun- try, as defined in section 4502 of this title, if any of the imported metal-bearing materials are goods subject to USMCA drawback, as defined in section 4534(a) of this title, the duties on the materials shall be paid, and the charges against the bond canceled, be- fore the 61st day after the date of expor- tation; but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the USMCA country on the product, the duties on the materials may be waived or reduced (subject to section 4534(e) of this title) in an amount that does not exceed the lesser of— (i) the total amount of customs duties owed on the materials on importation into the United States, or (ii) the total amount of customs duties paid to the USMCA country on the prod- uct, and Page 80 TITLE 19—CUSTOMS DUTIES § 1312 (B) in the case of a withdrawal for expor- tation of such a product to Chile, if any of the imported metal-bearing materials are goods subject to Chile FTA drawback, as de- fined in section 203(a) of the United States- Chile Free Trade Agreement Implementa- tion Act, the duties on the materials shall be paid, and the charges against the bond can- celed, before the 61st day after the date of exportation, except that the duties may be waived or reduced by— (i) 100 percent during the 8-year period beginning on January 1, 2004, (ii) 75 percent during the 1-year period beginning on January 1, 2012, (iii) 50 percent during the 1-year period beginning on January 1, 2013, and (iv) 25 percent during the 1-year period beginning on January 1, 2014, or (5) upon the transfer to another bonded smelting or refining warehouse without phys- ical shipment of metal of bond charges rep- resenting a quantity of dutiable metal con- tained in imported metal-bearing materials less wastage provided for in subsection (c) of the plant of initial treatment of such mate- rials provided there is on hand at the ware- house to which the transfer is made sufficient like metal in any form to satisfy the trans- ferred bond charges. If Canada ceases to be a USMCA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, no charges against such bond may be canceled in whole or part upon an expor- tation to Canada under paragraph (1) or (4) dur- ing the period such Agreement is in operation except to the extent that the metal-bearing ma- terials were of Canadian origin as determined in accordance with section 202 of the United States-Canada Free-Trade Agreement Imple- mentation Act of 1988. (c) Allowance on bond for wastage of metals For purposes of paragraphs (1), (3), (4), and (5) of subsection (b), due allowances shall be made for wastage of metals other than copper, lead, and zinc, as ascertained from time to time by the Secretary of the Treasury. (d) Credit for exportation of product other than refined metal Upon the exportation of a product of smelting or refining other than refined metal the bond shall be credited with a quantity of metal equiv- alent to the quantity of metal contained in the product exported less the proportionate part of the deductions allowed for losses in determina- tion of the bond charge being cancelled that would not ordinarily be sustained in production of the specific product exported as ascertained from time to time by the Secretary of the Treas- ury; except that— (1) in the case of a withdrawal for expor- tation to a USMCA country, as defined in sec- tion 4502 of this title, if any of the imported metal-bearing materials are goods subject to USMCA drawback, as defined in section 4534(a) of this title, charges against the bond shall be paid before the 61st day after the date of ex- portation; but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the USMCA country on the product, the bond shall be credited (subject to section 4534(e) of this title) in an amount not to exceed the lesser of— (A) the total amount of customs duties paid or owed on the materials on importa- tion into the United States, or (B) the total amount of customs duties paid to the USMCA country on the product; and (2) in the case of a withdrawal for expor- tation to Chile, if any of the imported metal- bearing materials are goods subject to Chile FTA drawback, as defined in section 203(a) of the United States-Chile Free Trade Agreement Implementation Act, charges against the bond shall be paid before the 61st day after the date of exportation, and the bond shall be credited in an amount equal to— (A) 100 percent of the total amount of cus- toms duties paid or owed on the materials on importation into the United States during the 8-year period beginning on January 1, 2004, (B) 75 percent of the total amount of cus- toms duties paid or owed on the materials on importation into the United States during the 1-year period beginning on January 1, 2012, (C) 50 percent of the total amount of cus- toms duties paid or owed on the materials on importation into the United States during the 1-year period beginning on January 1, 2013, and (D) 25 percent of the total amount of cus- toms duties paid or owed on the materials on importation into the United States during the 1-year period beginning on January 1, 2014. If Canada ceases to be a USMCA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, no bond shall be credited under this subsection with respect to an exportation of a product to Canada during the period such Agree- ment is in operation except to the extent that the product is a drawback eligible good under section 204(a) of the United States-Canada Free- Trade Agreement Implementation Act of 1988. (e) General bond for two or more warehouses Two or more smelting or refining warehouses may be included under one general bond and the quantities of each kind of metal subject to duty on hand at all of such warehouses may be aggre- gated to satisfy the bond obligation. (f) Definitions For purposes of this section— (1) the term ‘‘metal-bearing materials’’ means metal-bearing ores and other metal- bearing materials provided for in chapter 26 of the Harmonized Tariff Schedule of the United States, metal waste and scrap and unwrought metal to be smelted or refined provided for in chapters 71 through 83 of the Harmonized Tar- iff Schedule of the United States, and metal compounds to be processed for the recovery of their metal content; Page 81 TITLE 19—CUSTOMS DUTIES § 1312 (2) the term ‘‘smelting or refining’’ embraces only pyrometallurgical, hydrometallurgical, electrometallurgical, chemical, or other proc- esses— (A) for the treatment of metal-bearing ma- terials to reduce the metal content thereof to a metallic state in the course of recov- ering it in forms which if imported would be classifiable in chapters 71 through 83 of the Harmonized Tariff Schedule of the United States as unwrought metal, or in the form of oxides or other compounds which are ob- tained directly from the treatment of mate- rials provided for in chapter 26 of the Har- monized Tariff Schedule of the United States, and (B) for the treatment of unwrought metal or metal waste and scrap to remove impuri- ties or undesired components; and (3) the term ‘‘product of smelting or refin- ing’’ means metals or metal-bearing materials resulting directly from smelting or refining processes, but does not include metal-bearing ores of chapter 26 of the Harmonized Tariff Schedule of the United States. (g) Supervision and cost of labor under this sec- tion Labor performed and services rendered pursu- ant to this section shall be under the super- vision of an officer of the customs, to be ap- pointed by the Secretary of the Treasury and at the expense of the manufacturer. The Secretary of the Treasury is authorized to make such rules and regulations as may be necessary to carry out the provisions of this section. (June 17, 1930, ch. 497, title III, § 312, 46 Stat. 692; Pub. L. 87–456, title III, § 301(b), May 24, 1962, 76 Stat. 75; Pub. L. 100–418, title I, § 1214(h)(1), Aug. 23, 1988, 102 Stat. 1157; Pub. L. 100–449, title II, § 204(c)(2), Sept. 28, 1988, 102 Stat. 1862; Pub. L. 103–182, title II, § 203(b)(2), Dec. 8, 1993, 107 Stat. 2088; Pub. L. 108–77, title II, § 203(b)(2), Sept. 3, 2003, 117 Stat. 925; Pub. L. 116–113, title V, § 501(e)(2), Jan. 29, 2020, 134 Stat. 68; Pub. L. 116–260, div. O, title VI, § 601(c)(2)(A)(ii), Dec. 27, 2020, 134 Stat. 2150.) AMENDMENT OF SECTION For termination of amendment by section 107(c) of Pub. L. 108–77, see Effective and Ter- mination Dates of 2003 Amendment note below. For termination of amendment by section 501(c) of Pub. L. 100–449, see Effective and Ter- mination Dates of 1988 Amendment note below. Editorial Notes REFERENCES IN TEXT Sections 202 and 204 of the United States-Canada Free-Trade Agreement Implementation Act of 1988, re- ferred to in subsecs. (b) and (d), are sections 202 and 204 of Pub. L. 100–449, which are set out in a note under sec- tion 2112 of this title. Section 203(a) of the United States-Chile Free Trade Agreement Implementation Act, referred to in subsecs. (b)(1)(B), (4)(B) and (d)(2), is section 203(a) of Pub. L. 108–77, which is set out in a note under section 3805 of this title. The Harmonized Tariff Schedule of the United States, referred to in subsec. (f), is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of this title. PRIOR PROVISIONS Provisions similar to those in this section were con- tained in act Oct. 3, 1913, ch. 16, § IV, N, subsection 1, 38 Stat. 198, which was superseded by act Sept. 21, 1922, ch. 356, title III, § 312, 42 Stat. 940, and repealed by sec- tion 321 thereof. Section 312 of the act of 1922 was super- seded by section 312 of act June 17, 1930, and repealed by section 651(a)(1) of the 1930 act. Provisions more or less similar were contained in the Payne-Aldrich Tariff Act of Aug. 5, 1909, ch. 6, § 24, 36 Stat. 89, the Dingley Tariff Act of July 24, 1897, ch. 11, § 29, 30 Stat. 210, the McKinley Tariff Act of Oct. 1, 1890, ch. 1244, § 24, 26 Stat. 617, and the Wilson Tariff Act of Aug. 27, 1894, ch. 349, § 21, 28 Stat. 551. Previous provisions for sampling lead ores were con- tained in act Mar. 2, 1895, ch. 189, § 1, 28 Stat. 933, prior to repeal by act Sept. 21, 1922, ch. 356, title III, § 321, 42 Stat. 947. AMENDMENTS 2020—Subsec. (b). Pub. L. 116–113, § 501(e)(2)(A), sub- stituted ‘‘USMCA’’ for ‘‘NAFTA’’ wherever appearing. Subsec. (b)(1)(A), (4)(A). Pub. L. 116–260 substituted ‘‘(subject to section 4534(e) of this title)’’ for ‘‘(subject to section 1508(b)(2)(B) of this title)’’ in introductory provisions. Pub. L. 116–113, § 501(e)(2)(B), (C), in introductory pro- visions, substituted ‘‘section 4502 of this title’’ for ‘‘sec- tion 3301(4) of this title’’ and ‘‘section 4534(a) of this title’’ for ‘‘section 3333(a) of this title’’. Subsec. (d). Pub. L. 116–113, § 501(e)(2)(A), substituted ‘‘USMCA’’ for ‘‘NAFTA’’ wherever appearing. Subsec. (d)(1). Pub. L. 116–260 substituted ‘‘(subject to section 4534(e) of this title)’’ for ‘‘(subject to section 1508(b)(2)(B) of this title)’’ in introductory provisions. Pub. L. 116–113, § 501(e)(2)(B), (C), in introductory pro- visions, substituted ‘‘section 4502 of this title’’ for ‘‘sec- tion 3301(4) of this title’’ and ‘‘section 4534(a) of this title’’ for ‘‘section 3333(a) of this title’’. 2003—Subsec. (b)(1). Pub. L. 108–77, §§ 107(c), 203(b)(2)(A), temporarily substituted ‘‘except that—’’ and subpars. (A) and (B) for ‘‘except that in the case of a withdrawal for exportation of such a product to a NAFTA country, as defined in section 3301(4) of this title, if any of the imported metal-bearing materials are goods subject to NAFTA drawback, as defined in section 3333(a) of this title, the duties on the materials shall be paid, and the charges against the bond can- celed, before the 61st day after the date of exportation; but upon the presentation, before such 61st day, of sat- isfactory evidence of the amount of any customs duties paid to the NAFTA country on the product, the duties on the materials may be waived or reduced (subject to section 1508(b)(2)(B) of this title) in an amount that does not exceed the lesser of— ‘‘(A) the total amount of customs duties owed on the materials on importation into the United States, or ‘‘(B) the total amount of customs duties paid to the NAFTA country on the product, or’’. See Effective and Termination Dates of 2003 Amend- ment note below. Subsec. (b)(4). Pub. L. 108–77, §§ 107(c), 203(b)(2)(B), temporarily substituted ‘‘except that—’’ and subpars. (A) and (B) for ‘‘except that in the case of a withdrawal for exportation of such a product to a NAFTA country, as defined in section 3301(4) of this title, if any of the imported metal-bearing materials are goods subject to NAFTA drawback, as defined in section 3333(a) of this title, the duties on the materials shall be paid, and the charges against the bond canceled, before the 61st day after the date of exportation; but upon the presen- tation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the NAFTA country on the product, the duties on the materials may be waived or reduced (subject to section 1508(b)(2)(B) of this title) in an amount that does not exceed the lesser of— ‘‘(A) the total amount of customs duties owed on the materials on importation into the United States, or Page 82 TITLE 19—CUSTOMS DUTIES § 1312 ‘‘(B) the total amount of customs duties paid to the NAFTA country on the product, or’’. See Effective and Termination Dates of 2003 Amend- ment note below. Subsec. (d). Pub. L. 108–77, §§ 107(c), 203(b)(2)(C), tem- porarily substituted ‘‘except that—’’ and pars. (1) and (2) for ‘‘except that in the case of a withdrawal for ex- portation to a NAFTA country, as defined in section 3301(4) of this title, if any of the imported metal-bear- ing materials are goods subject to NAFTA drawback, as defined in section 3333(a) of this title, charges against the bond shall be paid before the 61st day after the date of exportation; but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the NAFTA country on the product, the bond shall be credited (subject to section 1508(b)(2)(B) of this title) in an amount not to exceed the lesser of— ‘‘(1) the total amount of customs duties paid or owed on the materials on importation into the United States, or ‘‘(2) the total amount of customs duties paid to the NAFTA country on the product.’’ See Effective and Termination Dates of 2003 Amend- ment note below. 1993—Subsec. (b). Pub. L. 103–182, § 203(b)(2)(B), in- serted concluding provisions following par. (5). Subsec. (b)(1). Pub. L. 103–182, § 203(b)(2)(A), struck out ‘‘(other than exportation to Canada on or after Jan- uary 1, 1994, or such later date as may be proclaimed by the President under section 204(b)(2)(B) of the United States-Canada Free-Trade Agreement Implementation Act of 1988, except to the extent that the metal-bearing materials were of Canadian origin as determined in ac- cordance with section 202 of such Act of 1988)’’ after ‘‘upon the exportation’’ and inserted provisions except- ing goods withdrawn for exportation to a NAFTA coun- try. Subsec. (b)(4). Pub. L. 103–182, § 203(b)(2)(A), struck out ‘‘(other than exportation to Canada on or after Jan- uary 1, 1994, or such later date as may be proclaimed by the President under section 204(b)(2)(B) of the United States-Canada Free-Trade Agreement Implementation Act of 1988, except to the extent that the metal-bearing materials were of Canadian origin as determined in ac- cordance with section 202 of such Act of 1988)’’ after ‘‘warehouse for exportation’’ and inserted provisions excepting goods withdrawn for exportation to a NAFTA country. Subsec. (d). Pub. L. 103–182, § 203(b)(2)(C), struck out ‘‘(other than exportation to Canada on or after January 1, 1994, or such later date as may be proclaimed by the President under section 204(b)(2)(B) of the United States-Canada Free-Trade Agreement Implementation Act of 1988, except to the extent that the product is a drawback eligible good under section 204(a) of such Act of 1988)’’ after ‘‘Upon the exportation’’ and inserted be- fore concluding period provisions excepting goods with- drawn for exportation to a NAFTA country, including pars. (1) and (2), as well as sentence relating to condi- tions arising should Canada cease to be a NAFTA coun- try. 1988—Subsec. (b)(1), (4). Pub. L. 100–449, § 204(c)(2)(A), temporarily inserted ‘‘(other than exportation to Can- ada on or after January 1, 1994, or such later date as may be proclaimed by the President under section 204(b)(2)(B) of the United States-Canada Free-Trade Agreement Implementation Act of 1988, except to the extent that the metal-bearing materials were of Cana- dian origin as determined in accordance with section 202 of such Act of 1988)’’ after ‘‘exportation’’. See Effec- tive and Termination Dates of 1988 Amendment note below. Subsec. (d). Pub. L. 100–449, § 204(c)(2)(B), temporarily inserted ‘‘(other than exportation to Canada on or after January 1, 1994, or such later date as may be pro- claimed by the President under section 204(b)(2)(B) of the United States-Canada Free-Trade Agreement Im- plementation Act of 1988, except to the extent that the product is a drawback eligible good under section 204(a) of such Act of 1988)’’ after ‘‘exportation’’. See Effective and Termination Dates of 1988 Amendment note below. Subsec. (f)(1). Pub. L. 100–418, § 1214(h)(1)(A), sub- stituted ‘‘chapter 26 of the Harmonized Tariff Schedule of the United States’’ for ‘‘schedule 6, part 1, of the Tariff Schedules of the United States’’ and ‘‘chapters 71 through 83 of the Harmonized Tariff Schedule of the United States’’ for ‘‘schedule 6, part 2, of such sched- ules’’ and struck out the quotation marks surrounding ‘‘metal waste and scrap’’ and ‘‘unwrought metal’’. Subsec. (f)(2)(A). Pub. L. 100–418, § 1214(h)(1)(B), sub- stituted ‘‘chapters 71 through 83 of the Harmonized Tariff Schedule of the United States’’ for ‘‘part 2 of schedule 6’’ and ‘‘chapter 26 of the Harmonized Tariff Schedule of the United States’’ for ‘‘part 1 of schedule 6’’ and struck out single quotation marks surrounding ‘‘unwrought metal’’. Subsec. (f)(3). Pub. L. 100–418, § 1214(h)(1)(C), sub- stituted ‘‘of chapter 26 of the Harmonized Tariff Sched- ule of the United States’’ for ‘‘as defined in part 1 of schedule 6’’. 1962—Pub. L. 87–456 amended section generally, and among other changes, substituted ‘‘metal-bearing min- erals’’ for ‘‘ores or crude metals’’, authorized adjust- ment of the bond charge to reflect changes in the appli- cable rate of duty occurring while the imported mate- rials are still covered by the bond, permitted two or more warehouses to be included under one general bond, prohibited allowances for wastage of copper, lead, and zinc, and defined ‘‘metal-bearing materials’’, ‘‘smelting or refining’’, and ‘‘product of smelting or re- fining’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2020 AMENDMENT Amendment by Pub. L. 116–260 effective July 1, 2020, see section 601(h) of div. O of Pub. L. 116–260, set out as a note under section 81c of this title. Amendment by Pub. L. 116–113 effective on the date the USMCA enters into force (July 1, 2020) and applica- ble with respect to goods entered, or withdrawn from warehouse for consumption, on or after that date, see section 501(g) of Pub. L. 116–113, set out as a note under section 81c of this title. EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT Amendment by Pub. L. 108–77 effective on the date the United States-Chile Free Trade Agreement enters into force (Jan. 1, 2004), and to cease to be effective on the date the Agreement ceases to be in force, see sec- tion 107(a), (c) of Pub. L. 108–77, set out in a note under section 3805 of this title. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–182 applicable (1) with re- spect to exports from the United States to Canada on Jan. 1, 1996, if Canada is a NAFTA country on that date and after such date for so long as Canada continues to be a NAFTA country and (2) with respect to exports from the United States to Mexico on Jan. 1, 2001, if Mexico is a NAFTA country on that date and after such date for so long as Mexico continues to be a NAFTA country, see section 213(c) of Pub. L. 103–182, formerly set out as an Effective Date note under former section 3331 of this title. EFFECTIVE AND TERMINATION DATES OF 1988 AMENDMENT Amendment by Pub. L. 100–449 effective on date the United States-Canada Free-Trade Agreement enters into force (Jan. 1, 1989), and to cease to have effect on date Agreement ceases to be in force, see section 501(a), (c) of Pub. L. 100–449, set out in a note under section 2112 of this title. Amendment by Pub. L. 100–418 effective Jan. 1, 1989, and applicable with respect to articles entered on or after such date, see section 1217(b)(1) of Pub. L. 100–418, Page 83 TITLE 19—CUSTOMS DUTIES § 1313 set out as an Effective Date note under section 3001 of this title. EFFECTIVE DATE OF 1962 AMENDMENT Amendment by Pub. L. 87–456 effective with respect to articles entered, or withdrawn from warehouse, for consumption on or after Aug. 31, 1963, see section 501(a) of Pub. L. 87–456. § 1313. Drawback and refunds (a) Articles made from imported merchandise Upon the exportation or destruction under customs supervision of articles manufactured or produced in the United States with the use of imported merchandise, provided that those arti- cles have not been used prior to such expor- tation or destruction, an amount calculated pur- suant to regulations prescribed by the Secretary of the Treasury under subsection (l) shall be re- funded as drawback, except that duties shall not be so refunded upon the exportation or destruc- tion of flour or by-products produced from im- ported wheat. Where two or more products re- sult from the manipulation of imported mer- chandise, the drawback shall be distributed to the several products in accordance with their relative values at the time of separation. (b) Substitution for drawback purposes (1) In general If imported duty-paid merchandise or mer- chandise classifiable under the same 8-digit HTS subheading number as such imported merchandise is used in the manufacture or production of articles within a period not to exceed 5 years from the date of importation of such imported merchandise, there shall be al- lowed upon the exportation, or destruction under customs supervision, of any such arti- cles, notwithstanding the fact that none of the imported merchandise may actually have been used in the manufacture or production of the exported or destroyed articles, an amount cal- culated pursuant to regulations prescribed by the Secretary of the Treasury under sub- section (l), but only if those articles have not been used prior to such exportation or destruc- tion. (2) Requirements relating to transfer of mer- chandise (A) Manufacturers and producers Drawback shall be allowed under para- graph (1) with respect to an article manufac- tured or produced using imported merchan- dise or other merchandise classifiable under the same 8-digit HTS subheading number as such imported merchandise only if the man- ufacturer or producer of the article received such imported merchandise or such other merchandise, directly or indirectly, from the importer. (B) Exporters and destroyers Drawback shall be allowed under para- graph (1) with respect to a manufactured or produced article that is exported or de- stroyed only if the exporter or destroyer re- ceived that article, directly or indirectly, from the manufacturer or producer. (C) Evidence of transfer Transfers of merchandise under subpara- graph (A) and transfers of articles under sub- paragraph (B) may be evidenced by business records kept in the normal course of busi- ness and no additional certificates of trans- fer or manufacture shall be required. (3) Submission of bill of materials or formula (A) In general Drawback shall be allowed under para- graph (1) with respect to an article manufac- tured or produced using imported merchan- dise or other merchandise classifiable under the same 8-digit HTS subheading number as such imported merchandise only if the per- son making the drawback claim submits with the claim a bill of materials or formula identifying the merchandise and article by the 8-digit HTS subheading number and the quantity of the merchandise. (B) Bill of materials and formula defined In this paragraph, the terms ‘‘bill of mate- rials’’ and ‘‘formula’’ mean records kept in the normal course of business that identify each component incorporated into a manu- factured or produced article or that identify the quantity of each element, material, chemical, mixture, or other substance incor- porated into a manufactured article. (4) Special rule for sought chemical elements (A) In general For purposes of paragraph (1), a sought chemical element may be— (i) considered imported merchandise, or merchandise classifiable under the same 8- digit HTS subheading number as such im- ported merchandise, used in the manufac- ture or production of an article as de- scribed in paragraph (1); and (ii) substituted for source material con- taining that sought chemical element, without regard to whether the sought chemical element and the source material are classifiable under the same 8-digit HTS subheading number, and apportioned quan- titatively, as appropriate. (B) Sought chemical element defined In this paragraph, the term ‘‘sought chem- ical element’’ means an element listed in the Periodic Table of Elements that is imported into the United States or a chemical com- pound consisting of those elements, either separately in elemental form or contained in source material. (c) Merchandise not conforming to sample or specifications (1) Conditions for drawback Upon the exportation or destruction under the supervision of the Customs Service of arti- cles or merchandise— (A) upon which the duties have been paid, (B) which has been entered or withdrawn for consumption, (C) which is— (i) not conforming to sample or speci- fications, shipped without the consent of the consignee, or determined to be defec- tive as of the time of importation, or (ii) ultimately sold at retail by the im- porter, or the person who received the