19 C.F.R. § 146.23

Accountability for merchandise in a zone

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(a) Identification of merchandise—(1) General. A zone lot number or unique identifier will be used to identify and trace merchandise.

(2) Fungible merchandise. Fungible merchandise may be identified by an inventory method authorized by Customs, which is consistently applied, such as First-In-First-Out (FIFO) and using a unique identifier.

(b) Inventory records. The inventory records will specify by zone lot number or unique identifier:

(1) Location of merchandise;

(2) Zone status;

(3) Cost or value, unless operator's or user's financial records maintain cost or value and the records are made available for Customs review;

(4) Beginning balance, cumulative receipts and removals, adjustments, and current balance on hand by date and quantity;

(5) Destruction of merchandise; and

(6) Scrap, waste, and by-products.

(c) Physical inventory. The operator shall take at least an annual physical inventory of all merchandise in the zone (unless continuous cycle counts are taken as part of an ongoing inventory control program) with prior notification of the date(s) given to Customs for any supervision of the inventory deemed necessary. The operator shall notify the port director of any discrepancies in accordance with § 146.53.

Notes of Decisions

Cited in 3 cases, 1978–2002 · leading case: Ford Motor Co. v. United States, 157 F.3d 849 (Fed. Cir. 1998).

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Ford Motor Co. v. United States, 157 F.3d 849 (Fed. Cir. 1998). “48 (e) (1985); see also 19 C.F.R. § 146.23 (1985). Thus, Ford could defer payment of duties on the car parts until it had assembled them into completed cars — and thereby capture the rate for ears, rather than car parts.”

Ford Motor Co. v. United States, 286 F.3d 1335 (Fed. Cir. 2002). “48 (e); see also 19 C.F.R. § 146.23 . Thus, Ford could defer payment of duties on car transmissions and engines until it had installed them in completed cars.”

Hawaiian Indep. Refinery v. United States, 460 F. Supp. 1249 (Cust. Ct. 1978). “Thus, the merchandise in question was listed in the sub-zone as nonprivileged merchandise, see 19 C.F.R. § 146.23 (1972), which under section 3 of the Act could only be appraised and classified and its duties liquidated thereon when “sent into the customs territory of the United…”

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