Tobacco; Importer Assessments

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AD53

Tobacco; Importer Assessments

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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SUMMARY: Section 1106 of the Omnibus Budget Reconciliation Act of 1993

(1993 Act) amends sections 106, 106A, and 106B of the Agricultural Act

of 1949 (the 1949 Act) to require, with respect to burley or flue-cured

tobacco imported in 1994 and subsequent years, that the importer pay a

``no-net-cost'' assessment (which insures against loss in the cost of

the federal tobacco price support program) and to require, with respect

to the 1994 through 1998 crops of tobacco, that an importer of any kind

or type of tobacco remit a nonrefundable marketing assessment to the

Commodity Credit Corporation (CCC) on each pound of tobacco imported.

The final rule adopted by this document addresses the amount of

assessments, the remittance of assessments, penalties for failure to

remit or timely remit assessments, importer reporting requirements, the

retention of records by importers of tobacco, the examination of

records and reports pertinent to importers, and the penalty for failure

to keep records and make reports.

EFFECTIVE DATE: January 1, 1994.

FOR FURTHER INFORMATION CONTACT: Gary W. Wheeler, Tobacco Marketing

Specialist, Tobacco and Peanuts Division, Agricultural Stabilization

and Conservation Service (ASCS), United States Department of

Agriculture (USDA), P.O. Box 2415, Washington, DC 20013-2415, telephone

202-720-7562.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule is issued in conformance with Executive Order

12866. Based on information compiled by the USDA, it has been

determined that this final rule:

(1) Would have an annual effect on the economy of less than $100

million;

(2) Would not adversely affect in a material way the economy, a

sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local, or tribal

governments or communities;

(3) Would not create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency;

(4) Would not materially alter the budgetary impact of

entitlements, grants, user fees, or loan programs or rights and

obligations of recipients thereof; and

(5) Would not raise novel legal or policy issues arising out of

legal mandates, the President's priorities, or principles set forth in

Executive Order 12866.

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not

applicable to this rule since the CCC is not required by 5 U.S.C. 553

or any other provision of law to publish a notice of proposed

rulemaking with respect to the subject matter of this rule.

Federal Assistance Program

The title and number of the Federal Assistance Program, as found in

the Catalog of Federal Domestic Assistance, to which this rule applies

are: Commodity Loans and Purchases--10.051.

Environmental Evaluation

It has been determined by an environmental evaluation that this

action will have no significant impact on the quality of the human

environment. Therefore, neither an environmental assessment nor an

environmental impact statement is needed.

Executive Order 12372

This program/activity is not subject to the provision of Executive

Order 12372 which requires intergovernmental consultation with State

and local officials. See the notice related to 7 CFR part 3015, subpart

V, published at 48 FR 29115 (June 24, 1983).

Executive Order 12778

This final rule has been reviewed in accordance with Executive

Order 12778. The provisions of this final rule are not retroactive and

preempt State laws to the extent that such laws are inconsistent with

the provisions of this final rule. Before any legal action is brought

regarding determinations made under the provisions of 7 CFR part 1464,

the administrative appeal provisions set forth at 7 CFR part 780 must

be exhausted.

Paperwork Reduction Act

The information collection requirements contained in these

regulations (7 CFR part 1464) have been approved by the Office of

Management and Budget (OMB) through December 31, 1996, and assigned OMB

No. 0560-0148. Public reporting burden for the collection of

information is estimated to average 15 minutes per response, including

the time for reviewing instructions, searching existing data sources,

gathering and maintaining the data needed, and completing and reviewing

the collection of information. Send comments regarding this burden

estimate or any other aspect of this collection of information,

including suggestions for reducing this burden, to Department of

Agriculture, Clearance Officer, OIRM, AG Box 7630, Washington, DC

20250; and to the Office of Management and Budget, Paperwork Reduction

Project (OMB No. 0560-0148), Washington, DC 20503.

A. Background: Statutory Provisions and General Provisions of the

Interim Rule

(1) Budget Deficit Marketing Assessment (BDMA) on Imported Tobacco

Section 1106 (b) (1) of the 1993 Act amended section 106 of the

1949 Act by adding a new paragraph (h) to require, effective for each

of the 1994 through 1998 crops of tobacco, that importers of tobacco

produced outside the United States shall remit to CCC a nonrefundable

BDMA in an amount equal to the product determined by multiplying the

number of pounds of tobacco imported by the sum of the respective per

pound marketing assessments imposed on purchasers of domestic burley

tobacco and domestic flue-cured tobacco pursuant to section 106 (g) of

the 1949 Act. Currently, section 106 (g) of the 1949 Act imposes a

marketing assessment of one half of one percent of the respective

national price support levels for price supported tobacco on any

purchaser who purchases the respective kind of such tobacco from any of

the 1991 through 1995 crops. The amended section 106 provides that the

importer of tobacco shall remit the BDMA at such time and in such

manner as prescribed by the Secretary. As indicated in the interim

rule, the national price support level for burley tobacco for the 1993-

1994 marketing year is $1.6830 per pound and the national price support

level for flue-cured tobacco for the 1993-1994 marketing year is

$1.5770 per pound. Because one half of one percent of the applicable

national price support level is .8415 cent for burley tobacco and .7885

cent for flue-cured tobacco, the interim rule provided, effectively,

that the assessment would be 1.6300 (.8415+.7885) cents per pound or

3.5935 (1.6300 x 2.2046) cents per kilogram for tobacco imported during

the period January 1 through June 30, 1994. This assessment, by the

terms of the statute, applies to all imported tobacco. For this

assessment and the more limited no-net-cost assessment, the interim

rule provided that imported tobacco, for purposes of the assessments,

would be any tobacco which is imported as unmanufactured tobacco. The

interim rule defined unmanufactured tobacco to be that which has not

been converted into a product ready for use by consumers. Further,

amended section 106 provides that any importer who fails to remit the

BDMA on imported tobacco shall be liable, in addition to any assessment

or late payment charge due, for a marketing penalty on the quantity of

tobacco as to which such failure occurs, at a rate per pound equal to

37.5 percent of the sum of the average market prices for burley and

flue-cured tobacco for the year immediately preceding the year in which

such tobacco was imported. The interim rule provided that the necessary

market price determinations would be made on the basis of prices for

the domestic marketing years ending in the calendar year preceding the

year of the importation. The average market prices per pound for burley

and flue-cured tobacco for the 1992-1993 marketing year were $1.8150

and $1.7260, respectively. Accordingly, under the interim rule, the

penalty that would be applicable with respect to the failure of an

importer to remit any BDMA on imported tobacco entered for consumption

into the commerce of the United States during 1994 would be $1.3279

($1.8150+$1.7260= $3.5410 x .3750=$1.3279) per pound or $2.9275

($1.3279 x 2.2046) per kilogram. The penalty would be in addition to

the amount due on the BDMA together with late payment charges. The rule

provided that such penalty would be assessed after the importer was

notified of the pending assessment of the penalty and has been afforded

an opportunity for a hearing before the Director, Tobacco and Peanuts

Division, ASCS, with respect to such assessment.

(2) No-Net-Cost Assessments on Imported Burley or Flue-Cured Tobacco

Pre-existing provisions of sections 106A and 106B of the 1949 Act

impose on domestic producers of any kind of tobacco for which domestic

quotas are in place as established under the Agricultural Adjustment

Act of 1938 (the 1938 Act), as well as on purchasers of domestic burley

and domestic flue-cured tobacco, ``no-net-cost assessments'' to insure

against losses in the operation of the federal price support program

for tobacco.

Subsections 1106 (b)(2) and (3) of the 1993 Act amended sections

106A and 106B of the 1949 Act to require that each importer of burley

or flue-cured tobacco pay a no-net-cost assessment on each pound of

burley or flue-cured tobacco that is imported by such importer. The

pre-existing provisions of section 106A of the 1949 Act allow, for

covered tobaccos, for the establishment of no-net-cost Funds whereas

section 106B provided, alternatively, for no-net-cost Accounts. These

Funds or Accounts are operated in cooperation with producer marketing

associations which perform various functions in connection with the

administration of the price support program. Sections 106A and 106B

alternatively refer to producer inputs into the Fund or Account as

``contributions'' or ``assessments.'' The interim rule provided,

pursuant to the 1993 Act amendments, that the importer of burley or

flue-cured tobacco would be required to pay into the respective account

or fund for the applicable producer association an amount equal to the

sum of the current producer and purchaser no-net-cost assessments or

contributions for the respective kind of tobacco. That is, for imported

flue-cured tobacco, for example, the importer would be required to pay

a no-net-cost assessment equal to the amount of the combined current

no-net-cost assessments or contributions paid by purchasers of domestic

flue-cured tobacco and by producers of domestic flue-cured tobacco.

For the 1993-1994 domestic burley marketing year, the producer

assessment is .1585 cent per pound and the purchaser assessment is

2.6585 cents per pound. With respect to domestic flue-cured tobacco

marketed during the 1993-1994 marketing year, the producer assessment

is .2115 cent per pound and the purchaser assessment is 2.2115 cents

per pound. For that reason, under the terms of the interim rule, the

Importer No-Net-Cost Assessment (INNCA) on burley tobacco imported

during the 1993-1994 marketing year after December 31, 1993, would be

2.8170 (.1585+2.6585) cents per pound or 6.2104 (2.8170 x 2.2046) cents

per kilogram, and the INNCA on flue-cured tobacco imported during the

1993-1994 marketing year after December 31, 1993, would be 2.4230

(.2115+2.2115) cents per pound or 5.3417 (2.4230 x 2.2046) cents per

kilogram. The interim rule noted that corresponding to the beginning of

new marketing years for domestic burley and flue-cured tobacco, the

INNCA will likely change on July 1 of each year for imported flue-cured

tobacco and on October 1 of each year for imported burley tobacco. The

interim rule noted, though misidentifying in one instance which section

was which, that the 106B amendments, unlike those for section 106A,

expressly limited the importer INNCA's to the combination of the

producer and purchaser payments for the ``respective'' kind of domestic

tobacco (burley or flue-cured tobacco). The rule set out, however, the

determination that even where section 106A applies, that the assessment

would not be the sum of the producer and purchaser current assessments

for both domestic burley and flue-cured tobacco together but only the

sum of the assessments for the respective kind of tobacco imported by

the importer.

The 1993 Act provides that the INNCA be paid at such time and in

such manner as may be prescribed by the Secretary and provides for a

marketing penalty in addition to the INNCA, against any importer who

fails to timely remit the INNCA. The penalty rate set by the statute is

75 percent of the average market price for the respective tobacco for

the preceding year. The interim rule provided that such determinations

would be made using market prices from the preceding marketing year

which for tobacco imported after December 31 of the 1993-1994 marketing

year for the respective domestic tobaccos would be $1.3613

($1.8150 x .75) per pound or $3.0011 ($1.3613 x 2.2046) per kilogram

for burley tobacco and $1.2945 ($1.7260 x .75) per pound or $2.8539

($1.2945 x 2.2046) per kilogram for flue-cured tobacco. The interim

rule provided that such penalties would be assessed after the importer

has been notified of the pending assessment of the penalty and has been

afforded an opportunity for a hearing before the Director, Tobacco and

Peanuts Division, ASCS.

B. Discussion of Comments

Fifteen letters of comment were received in response to the

December 23, 1993, interim rule. The January 10, 1994, revision was

limited to correcting an oversight with respect to the establishment of

an effective date for the rule. The comments have been grouped under 14

subjects, except for one general comment which is also addressed below.

Respondents included the following: five tobacco manufacturing

companies, four tobacco suppliers, one exporter association, one

customs broker, one international commission, one tobacco association,

one producer-owned tobacco loan association, and one international

accounting firm.

(1) Kind of Tobacco Covered and Amount of the Assessments

Four comments addressed these matters. Three commenters suggested

that BDMA should not be applicable to Turkish and Oriental tobacco, or

to stems and by products. One commenter suggested that importers should

not pay an INNCA equal to that of domestic producers and purchasers.

Other comments relating to the coverage of the rule are set out and

responded to under the heading below relating to the ``unmanufactured

tobacco'' definition.

The comments summarized above do not involve policy determinations

but are controlled by the statutory provisions involved as set out here

and in the interim rule. Accordingly, no adjustment has been made in

the rule.

(2) Refunds

Eleven comments were received on this topic. Six commenters

suggested that tobacco imported for the purpose of processing and

reexporting should be exempted from the collection of assessments. Two

commenters suggested that assessments on imported tobacco should not be

collected until pesticide residue analyses are completed and cleared.

One commenter recommended that refunds be to a successor in interest

where the tobacco has been transferred. One commenter stated that the

``Prompt Payment Act'' (31 U.S.C. 3901 et seq.) should apply to all

refunds. One commenter recommended that imports in de minimis amounts

be exempt from the collection of assessments.

The interim rule itself allowed for refunds of assessments on

tobacco brought into the United States solely for the purpose of

processing and subsequent delivery as unmanufactured tobacco to a

customer outside the United States. Delaying collection until the

actual disposition of the tobacco would be unworkable, would jeopardize

collections, and would be contrary to the language and coverage of the

statute. However, to address the concerns of the commenters, the final

rule redefines the point at which the tobacco is considered to be

``Entered'' into the United States (and thus imported) to be for

tobacco which is entered through the United States Customs Service

(Customs Service), the point at which the tobacco has been released by

the Customs Service for entry (direct entry or bonded warehouse

withdrawals) for consumption into the commerce of the United States.

Therefore, tobacco imported under the Customs Service's bonded

warehouse provisions, and not withdrawn for consumption into the

commerce of the United States, would not be subject to assessments. For

unmanufactured tobacco that has been entered for consumption and

subsequently reexported as unmanufactured tobacco, assessment refunds

will be made and will be, under the revised provisions of the final

rule, based on the entry weight as identified on Customs Service Form

CF7501 or CF7505, or other Customs Service documentation as determined

to be appropriate. Refund documentation, including proof of export,

will be required consistent with the Customs Service's ``duty

drawback'' procedures under section 313(a) of the Tariff Act of 1930,

as amended, and implementing Customs Service regulations.

With respect to pesticide analysis on imported tobacco, a refund

will be permitted upon appropriate proof of reexportation or

destruction of tobacco determined to be contaminated with nonapproved

pesticides. All requests for refunds (supported with Customs Service

``duty drawback'' documentation) must be forwarded to the Director,

Tobacco and Peanuts Division, ASCS.

These procedures will allow for importer refunds and for using

Customs Service's records and normal commercial records of the import/

export business community. Also, the modified rule makes allowances for

payments to successors in interest.

The ``Prompt Payment Act'' will be applied, as applicable, for all

refunds and payments. Said charges, as may accrue, would be due only

from the time the refund is due, not from the time the assessment was

paid on the entry of the tobacco. Because this is strictly an

administrative matter, there is no reference to the ``Prompt Payment

Act'' in the final rule.

The final rule adopts a de minimis exemption. Specifically, imports

of 5 kilograms or less will be exempt from any importer BDMA or INNCA

in order to accommodate industry needs to import small quantities of

tobacco for samples, research, and other purposes. This will also

eliminate the administrative burden that would result in small amounts

of tobacco being imported, tracked, and assessments collected.

To further accommodate importers who may have a need to import

small quantities of tobacco, CCC, in conjunction with the Customs

Service, will establish $250 as the minimum monetary level of the value

of the incoming tobacco, as determined by Customs Service, at which an

entry of tobacco will be considered a ``formal'' entry of tobacco with

respect to the application of Customs Service regulations and

procedures. All other tobacco imports will be considered as

``informal'' entries under Customs Service regulations and procedures.

However, the BDMA and INNCA's will be due on both ``formal'' and

``informal'' entries except for such quantities exempt under the de

minimis exemption.

(3) Collection of Importer Assessments

Nine comments were received relating to this subject. Five

commenters recommended that the Customs Service collect all importer

assessments. One commenter recommended payment of assessments within 10

workdays of release of the tobacco by the Customs Service. One

commenter recommended quarterly collection of assessments with payment

due 30 days following the end of each calendar quarter. One commenter

recommended that CCC accept tape or disk filings of requested data. One

commenter recommended allowing one check per assessment remittance.

As stated in the interim rule, it is USDA's intent to continue

working toward the goal of having the Customs Service collect all 1993

Act importer assessments. The final rule has been adapted to correspond

with Customs Service regulations and the Customs Service collection

schedule of 10 workdays from the date of entry for consumption. At the

present time, however, it is not possible to have collections made by

the Customs Service. Tape or disk filings will not be accepted because

the agency is not equipped to handle such filings and the long-term

effort for expediting the handling of the assessments will be to have

them collected by the Customs Service. For that reason, and because of

the additional cost and difficulty of enforcement which would be

involved, the suggestion for quarterly payments has not been adopted.

Rather, the payment schedule will conform, to the extent practicable,

with the 10 workday time period normally allowed for Customs Service

collections. However, this final rule amends the interim rule to reduce

the administrative burden on importers by allowing importers, with

respect to the assessments covered by this rule, to submit one

remittance covering all tobacco assessments then due.

(4) Form CCC-100

Five comments were received relating to this subject. Two

commenters recommended that the CCC-100 should allow for reporting

multiple entries. One commenter recommended that CCC allow importers to

electronically generate the CCC-100. Two commenters recommended

clarification as to when and where to remit assessments.

Based on the comments received, CCC-100 has been revised. The CCC-

100 has been modified to allow reporting multiple entries and will also

serve as the importers deposit ticket for remitting assessments.

Electronically-generated hard copy CCC-100's will be accepted by CCC.

Information on the back of the revised CCC-100 will provide

instructions for completing the form, including when and where to remit

assessments. Also, detailed information on filing procedures will be

available from the Director, Tobacco and Peanuts Division, ASCS.

Because the form is for administrative purposes and further amendments

to the form may be needed as the program becomes operational, it has

been determined that the form should not be made a formal attachment to

the rule. Copies of the revised form will be mailed to known importers

of tobacco.

(5) Assessment Rates on Kilogram Basis

Two commenters recommended that the assessment rates be established

on a per kilogram basis. As metric measures appear to be standard

measures for imports, references in pounds in the rule have been

changed to references in kilograms.

(6) ``Unmanufactured Tobacco'' Definition

One commenter complained that the interim rule definition of

``unmanufactured tobacco'' would result in the BDMA applying to all

imports and only to domestically produced burley and flue-cured

tobacco. Two commenters recommended that this rule should, in addition

to covering tobacco classified under Chapter 2401 of the Harmonized

Tariff Schedule (HTS) of the United States, also cover select

classifications of Chapter 2403 of the HTS. Two commenters recommended

clarification regarding the remittance of assessments for

undifferentiated mixes or blends of burley, flue-cured, and Oriental

tobacco.

With respect to the coverage of BDMA, the application of the rule

to all imported tobacco is statutory. Assessments for domestic tobacco

are beyond the scope of this rulemaking and are also provided for by

statute.

``Unmanufactured tobacco'' was defined in the interim rule to be

any tobacco that is not processed and packaged as a consumer tobacco

product. For greater specificity, ``unmanufactured tobacco'' is defined

in this final rule to include tobacco falling under Chapter 2401 of the

HTS and select import classifications identified under Chapter 2403 of

the HTS, namely: 2403912000, 2403914050, 2403914070, 2403990050,

2403990065, and 2403990070. These select Chapter 2403 classifications

are explicitly, under the modified rule, considered as unmanufactured

tobacco as they involve tobacco not processed and packaged as a

consumer tobacco product.

Importers who import unmanufactured undifferentiated mixes or

blends of burley, flue-cured, Oriental, or other tobacco which are

generated from the manufacturing of cigarettes or other processes, will

be required to remit INNCA's based on the compositional breakdown of

each kind of tobacco contained in such mixes or blends. Subject to

audit and correction, the remittance of INNCA must be accompanied by an

accurate report from the importer's commercial records and supporting

documentation from the suppliers of the number of kilograms of each

kind of tobacco in the mix or blend. This is strictly an INNCA issue

due to limited coverage of INNCA. The importer BDMA covers all tobacco

and thus the entire mix or blend, regardless of particular relative

amounts of the combined kinds of tobaccos.

(7) ``Entered'' and ``Entry Date'' Definitions

Three comments were received relating to this subject. Two

commenters recommended redefining the term ``Entered'' (with respect to

the entry of tobacco in the United States) to be consistent with

Customs Service definition for ``Entered''. One commenter recommended

redefining the term ``Entry date'' (for the same purpose) based on the

commenter's view that the interim rule definition was not clear on the

application of the rule when there was no official release date for the

tobacco.

This final rule redefines ``Entered'' to be consistent with Customs

Service practice for the reasons given above. Under the amended

definition, tobacco will be treated as having ``Entered'' the United

States if the tobacco has been released by the Customs Service for

entry (directly or from bonded warehouse withdrawals) for consumption

into the commerce of the United States, unless the tobacco is brought

into the country illegally or not under the control of the Customs

Service, in which case the date of physical entry into the territory of

the United States will be considered the time at which the tobacco was

imported. Also, for consistency with normal import practice and greater

clarity, the term ``Entry date'' has been redefined to mean that date

on which the tobacco was released by Customs Service for consumption

into the commerce of the United States unless the tobacco entered the

United States without such a release, in which case the entry date

shall be the date such tobacco physically entered the United States.

The official ``Entry date'', when there is one, should be identifiable

from Customs Service Forms CF7501 (direct entry) and CF7505 (bonded

warehouse withdrawals) and other Customs Service documentation.

(8) Prohibition of Use, Processing or Marketing of Tobacco for Which

the Assessments Have Not Been Paid

Four commenters recommended deleting the interim rule's provision

that the ``use, processing, or marketing of tobacco in the commerce of

the United States of any tobacco for which an assessment required by

this subpart is due, is prohibited''. That provision was designed to

reflect the terms of the statute, facilitate the collection of the

assessments, allow for greater consistency, and insure full collection

as required by the statute. Because of the time period allowed for

payment in the final rule, this provision has been revised to prohibit

any knowing use, processing, or marketing of tobacco where assessments

due on the tobacco have not been timely remitted.

(9) Late Payment and Penalties

Three comments were received relating to this subject. One

commenter wanted assurance that the date of all assessments and late

payments for imported tobacco would be the same for ``importers and

domestic producers, purchasers and operators''. The same commenter

further indicated that producers of quota tobacco were exempt from

marketing penalties whereas all importers' tobacco could be penalized

for failing to make payments. One commenter recommended that the rights

for reconsideration and appeal should not be limited only to

assessments being paid timely.

Domestic producers and purchasers pay assessments the day the

tobacco is marketed. Importers have 10 workdays to remit assessment

payments after the date of entry for consumption into the commerce of

the United States. With respect to domestic producers, penalties also

apply to producers of quota tobacco under certain conditions. For

example, marketings in excess of the farm's effective quota or false

identification of tobacco subjects the affected producer to a marketing

penalty, while importers are only penalized for failure to timely remit

the required assessments. In any event to the extent there are

differences in penalties, those differences are principally statutory

and differences in payment dates reflect differing marketing conditions

and practices. With respect to appeals, the interim rule allowed for

appeals relating to any adverse determination of the amount of any

assessment due or any marketing penalty. While that provision would

appear to be broad enough to cover all substantive disputes regarding

the application of the regulations to particular cases, a slight

revision has been made to clarify its coverage.

(10) Crediting of INNCA

Three commenters recommended that all INNCA collected on imported

tobacco be credited to the applicable purchaser no-net-cost accounts.

While those comments will be taken into account with respect to the

administration of the overall tobacco program, these comments are

outside the scope of this rulemaking.

(11) Trade Secrets and Confidential Information

One commenter recommended amending the interim rule to include

language addressing trade secrets and confidential information. It is

the intent of the agency that reports, certifications, and other

information furnished by the importers under this rule shall be kept

confidential by all employees of the USDA to the full extent allowed by

law. As that matter is administrative, rather than regulatory, no

adjustment has been made to the rule.

(12) ``Importer'' Definition

One commenter recommended redefining ``Importer'' to be consistent

with the Customs Service definition. By virtue of the change in the

definitions dealing with the entry of tobacco into the United States,

the definition of ``Importer'' should be, to the extent practicable,

consistent with the Customs Service's definition.

(13) Assessment Rates on Green Weight Basis

One commenter recommended that the importer assessment rates should

be applied on the basis of green weight (domestic farm weight).

Currently, there are approximately 65 tobacco entry classifications

identified under Chapters 2401 in addition to select classifications of

Chapter 2403 of the HTS of the United States (1994) which are

applicable to assessment collections. BDMA and INNCA's will be

collected on many classifications of tobacco as unmanufactured tobacco

can be imported in forms varying from a green weight basis to

homogenized or reconstituted tobacco. To accurately establish green

weight equivalents, an analysis of the various stages of processing

would have to be made and a separate conversion factor established for

arriving at the green weight equivalent for each HTS classification.

This would require an announcement of approximately 65 BDMA and INNCA

rates for entries under both HTS Chapters 2401 and select

classifications under 2403. The statute does not demand use of a green

weight basis, but rather applies the assessments simply to ``tobacco'',

and presumes the administration of an effective, workable program

applied with as much certainty as possible. The establishment of these

various rates would create an undue administrative burden as well as

onerous requirements on all persons involved. Accordingly, under the

rule, the BDMA and INNCA's will, in accordance with legislation, be

determined and collected on tobacco in the form in which it is

imported.

(14) Records Retention

Three comments addressed the length of time for which records are

required to be maintained under Sec. 1464.107 of the interim rule. That

section provides that records shall be retained for a period of three

years following the date of entry of such tobacco. The commenters

objected, however, to the additional provision in that section to the

effect that the destruction of such records at the end of that period

would be at the party's own risk on the ground that these records could

never be destroyed. That was not the intent and the rule has been

modified to avoid that suggestion. However, it remains the case that in

certain circumstances, a reasonably prudent person will retain certain

records beyond the three year period, such as when there is ongoing

dispute or special circumstances raising questions about compliance.

The rule, as modified, specifies that the burden of establishing

compliance shall be on the importer.

(15) General Comments

One comment questioned whether or not the references in the rule to

marketing assessments and to budget deficit assessments were the same.

As indicated, the rule covers two assessments, one being the BDMA on

all imported tobacco and the other being INNCA's on imported burley and

flue-cured tobacco. One comment questioned the classifications

applicable to domestic and imported tobacco. With respect to

classifications of tobacco, domestic flue-cured and imported flue-cured

tobacco would have similar characteristics. This would be true for all

domestic classifications of tobacco for which there are corresponding

import classifications. One comment stated that the sum of the BDMA is

higher on imported tobacco than on domestic tobacco. The legislation

sets the BDMA on imported tobacco as the sum of the marketing

assessments that are imposed on purchasers of domestic burley and flue-

cured tobacco. For domestic tobacco, there is also a producer

assessment. Hence, the assessments are comparable. In any event, any

differences are statutory. One comment stated that the method of

calculating INNCA or contributions results in higher import assessments

than for domestic tobacco. The legislation sets the INNCA on imported

burley or flue-cured tobacco as the sum of the current producer and

purchaser no-net-cost assessments or contributions on the domestic

production of the respective kind of tobacco. The assessments should be

the same. In any event, the formula is statutory. One comment objected

that assessment rates on domestic burley and flue-cured tobacco benefit

from changing once every 12 months versus twice a year on imported

tobacco. The assessment rates on imported tobacco change twice a year

only because, statutorily, they are a combination of the rates for two

domestic tobaccos with different marketing years.

Because there have been a number of modifications to the interim

rule published in the Federal Register on December 23, 1993 (58 FR

68017), as corrected on January 10, 1994 (59 FR 1274), it has been

determined that the regulations should, in this rule, be set out in

their entirety, as modified.

List of Subjects in 7 CFR Part 1464

Assessments, Loan programs/agriculture, Price support program,

Tobacco, Warehouses.

For the reasons set out in the preamble, 7 CFR part 1464 is amended

as follows:

PART 1464--TOBACCO

1. The authority citation for part 1464 continues to read as

follows:

Authority: 7 U.S.C. 1421, 1423, 1441, 1445, 1445-1 and 1445-2;

15 U.S.C. 714b, 714c.

2. Part 1464 is amended by revising subpart B to read as follows:

Subpart B--Importer Assessments

Sec.

1464.101 Definitions.

1464.102 Budget deficit marketing assessment.

1464.103 Importer no-net-cost assessments.

1464.104 Remittance of importer assessments.

1464.105 Refund of assessments.

1464.106 Marketing penalties.

1464.107 Recordkeeping.

1464.108 Reconsideration and appeal.

Subpart B--Importer Assessments

Sec. 1464.101 Definitions.

(a) Applicability. The definitions set forth in this section shall

be applicable for purposes of administering the provisions of this

subpart.

(b) Terms. For purposes of this subpart, the following terms shall

have the following meanings unless otherwise indicated.

Customs Service. The United States Customs Service of the United

States Department of the Treasury.

De minimis special entries. Imports of unmanufactured tobacco when

the total importation at any time or on any date is 5 kilograms or less

and such tobacco is imported segregated from other tobacco for use as

samples, for research, or other use approved by the Director.

Director. The Director, or Acting Director, Tobacco and Peanuts

Division, Agricultural Stabilization and Conservation Service, U.S.

Department of Agriculture.

Entered. Tobacco shall be considered to have entered the United

States when the tobacco has been released by the Customs Service for

entry (direct entry or bonded warehouse withdrawal) for consumption

into the commerce of the United States, unless the tobacco is brought

into the country outside the control of the Customs Service, in which

case the tobacco will be considered to have entered the United States

when such tobacco physically enters the territory of the United States.

Entry date. The date on which the tobacco was released by Customs

Service for consumption into the commerce of the United States, unless

the tobacco enters commerce in the United States without such a

release, in which case the entry date shall be the date such tobacco

physically entered the territory of the United States.

Imported tobacco. Effective January 1, 1994, any unmanufactured

tobacco, including Oriental and Turkish tobacco, that was not produced

in the United States but has entered the United States.

Importer. A person who owns or controls such tobacco at the time at

which the tobacco entered the United States.

Person. An individual, partnership, association, corporation,

cooperative, estate, trust, joint venture, joint operation, or other

business enterprise or other legal entity, and, when applicable, a

State, a political subdivision of a State, or any agency thereof.

United States. The 50 States of the United States, the District of

Columbia, Puerto Rico, or any Territory or Possession of the United

States.

Unmanufactured tobacco. Any tobacco that is not processed and

packaged as a consumer tobacco product, including, but not limited to,

any tobacco classifiable under the Harmonized Tariff Schedule of the

United States (HTS) in existence as of January 1, 1994, under Chapter

2401 of the HTS or under classifications 2403912000, 2403914050,

2403914070, 2403990050, 2403990065, and 2403990070 of Chapter 2403 of

the HTS.

Sec. 1464.102 Budget deficit marketing assessment.

(a) General. The importer of any unmanufactured imported tobacco

shall pay a budget deficit marketing assessment on each kilogram of

such imported tobacco if such tobacco is imported during any of the

1994 through 1998 calendar years, except for separate lots of de

minimis special entries.

(b) Amount of assessment. The budget deficit marketing assessment

required by this section shall be the amount determined by multiplying

the number of kilograms of imported tobacco by the sum, converted to

per kilogram basis, of the marketing assessment imposed in accordance

with Sec. 1464.11 on purchasers of domestically produced burley tobacco

and domestic flue-cured tobacco, respectively, for the marketing year

for those domestic tobaccos during which the imported tobacco was

imported.

Sec. 1464.103 Importer no-net-cost assessments.

(a) General. The importer of any unmanufactured imported burley or

flue-cured tobacco shall pay a no-net-cost assessment on each kilogram

of such tobacco that is imported after December 31, 1993, regardless of

the form in which it is imported and regardless of whether it is mixed

or blended with other tobacco, except for de minimis special entries.

(b) Amount of assessment. The amount of the no-net-cost assessment

which shall apply under this section shall be the amount determined by

multiplying:

(1) For imported burley tobacco, the number of kilograms of such

tobacco by the sum, converted to per kilogram basis, of the no-net-cost

producer and purchaser contributions or assessments as implemented

pursuant to subpart A for domestic burley tobacco that is marketed

during the domestic marketing year during which the tobacco was

imported.

(2) For imported flue-cured tobacco, the number of kilograms of

such tobacco by the sum, converted to a per kilogram basis, of the no-

net-cost producer and purchaser contribution or assessments as

implemented pursuant to subpart A for domestic flue-cured tobacco that

is marketed during the domestic marketing year during which the tobacco

was imported.

Sec. 1464.104 Remittance of importer assessments.

(a) Where to remit. A person making a remittance shall follow

instructions on the reverse side of form CCC-100.

(b) When to remit. (1) Importer assessments shall be remitted

within 10 workdays after the date on which the imported tobacco is

entered.

(2) Notwithstanding the requirement in paragraph (b)(1) of this

section, importer assessments remitted not later than April 10, 1994,

for tobacco that is entered during the period January 1, 1994, through

March 31, 1994, shall be considered to be timely remitted.

(c) Instructions. Remittances must be made in accordance with

instructions on form CCC-100.

(d) Documentation. Unless the Director shall direct otherwise, in

writing, each remittance of an importer assessment shall be accompanied

by form CCC-100, Importer Entry and Assessment Worksheet, and as

applicable, Customs Service Form CF7501 or CF7505, or other Customs

Service documentation that, based on the documentation and codes

normally required or used by the Customs Service, includes the

following with respect to each entry of imported tobacco:

(1) Entry filer code/entry number,

(2) Importer of record number,

(3) Importer of record name and address,

(4) Ultimate consignee number,

(5) Entry date,

(6) District/port of entry,

(7) Harmonized Tariff Schedule Number,

(8) Quantity entered (net weight in kilograms),

(9) Entry type (formal or informal), and

(10) Amount remitted.

(e) Late payment charge. Any importer who fails to timely remit any

assessment required by this subpart shall be subject to a late payment

charge. Such late payment charge shall be calculated and assessed in

accordance with part 1403 of this chapter, or successor regulations,

and shall be in addition to any penalty due or other charge due.

Sec. 1464.105 Refund of assessments.

Assessments paid on imported tobacco may be refunded if the person

importing such tobacco establishes, to the satisfaction of the

Director, that the tobacco on which the assessment was paid has been

reexported as unmanufactured tobacco or destroyed in an unmanufactured

state. Assessment refunds will be based on entry weight as identified

on Customs Service Form CF7501 or CF7505, or other documentation or

data as required by the Director or found by the Director to be

appropriate. Additional refund documentation, including proof of

export, will be required consistent with the ``duty drawback''

provisions administered by the Customs Service pursuant to section

313(a) of the Tariff Act of 1930, as amended. Persons seeking a refund

shall submit their request and documentation to the Director, Tobacco

and Peanuts Division, Agricultural Stabilization and Conservation

Service (ASCS), United States Department of Agriculture (USDA), P.O.

Box 2415, Washington, DC 20013-2415. Where deemed appropriate, the

Director may, in writing, allow the use of substitute documentation and

permit payments to successors in interest where the reexporter and

importer are not the same. Where exporter and importer are not the

same, refunds shall be to the importer unless the importer, in writing,

notifies the Director that the payment should be made to the exporter.

Sec. 1464.106 Marketing penalties.

(a) Failure to remit assessments. An importer who fails to timely

remit an assessment in accordance with this subpart shall be subject to

a marketing penalty.

(1) Budget deficit marketing assessment. With respect to the

assessment referred to in Sec. 1464.102, if an importer fails to timely

remit a budget deficit marketing assessment in accordance with the

provisions of this subpart, such importer shall be subject to a

marketing penalty, in addition to any budget deficit marketing

assessment or other sum due and any late payment charges, at a rate

equal to 37.5 percent of the sum of the per kilogram average market

prices (calculated to the nearest whole cent) of domestic flue-cured

and domestic burley tobacco for the respective domestic tobacco

marketing year that ends during the calendar year immediately preceding

the calendar year during which such imported tobacco was imported, on

the quantity of tobacco as to which the failure occurs.

(2) Importer no-net-cost assessment. With respect to assessments

referred to in Sec. 1464.103, if an importer of burley or flue-cured

tobacco fails to timely remit a no-net-cost assessment in accordance

with the provisions in this subpart, such importer shall be liable, in

addition to any no-net-cost assessment or other sum due and any late

payment charges, to a marketing penalty at a per kilogram rate equal to

75 percent of the average market price (calculated to the nearest whole

cent) for the respective kind of domestic tobacco (burley or flue-

cured) for the respective domestic tobacco marketing year in which such

imported tobacco was imported, on the quantity of tobacco as to which

the failure occurs.

(b) Exception to marketing penalty. A marketing penalty otherwise

required by this paragraph may be forgiven if the assessment for which

nonpayment of the penalty could be assessed is remitted not later than

15 calendar days after the date otherwise required for the remittance

by this subpart.

(c) Notification of marketing penalty. Before a marketing penalty

is assessed, the importer shall be notified of the pending assessment

and shall be afforded an opportunity for a hearing with respect to the

assessment of the penalty. Such notification will be by, and such

hearing will be before, the Director or designee.

(d) Marketing penalty reduction. The Executive Vice President, CCC,

or designee, may reduce the amount of any marketing penalty for which a

person otherwise would be liable under the provisions of this section

upon finding that failure to comply was unintentional or without

knowledge on the part of such person and that such reduction would not

damage the tobacco program or the administration of this part.

(e) Prohibition of use, processing or marketing of tobacco for

which the assessments have not been paid; other remedies. The knowing

use, processing, or marketing of tobacco in the commerce of the United

States of any tobacco for which an assessment or related charge

required or provided for by this subpart is past due, is prohibited.

The penalties and other remedies provided in this section shall be in

addition to, and not exclusive of, other remedies that may be

available.

Sec. 1464.107 Recordkeeping.

(a) Retention of records. Each importer of tobacco shall maintain

all records that are relevant to any imported tobacco that is subject

to an assessment in accordance with this subpart. Such records shall be

retained for a period of three years following the date of entry of

such tobacco. The burden of establishing compliance with this part

shall be on the importer of the tobacco.

(b) Examination of records and reports. The Executive Vice

President, CCC, the Director, or any person authorized by one of such

persons, or any auditor or agent of the Office of the Inspector

General, is authorized to examine any records that such person has

reason to believe are relevant to any matter pertinent to the payment

of importer assessments under this subpart. Upon request of an

authorized person, each importer shall make available for examination

such records as are under such importer's control that may be relevant

to imported tobacco that is subject to an assessment in accordance with

this subpart or otherwise relevant to the administration of this

subpart. Upon a failure to provide access or records, the Director may

presume that such an inquiry would have produced information

unfavorable to the party to the inquiry and shall make further

determinations in the matter accordingly.

Sec. 1464.108 Reconsideration and appeal.

An importer may request the Director to reconsider any

determination of the amount of any assessment due, any marketing

penalty assessed, or other adverse determination rendered in accordance

with this subpart. Any request for reconsideration shall be made within

15 calendar days of the date of the notification of such assessment,

marketing penalty, or adverse determination. If the importer is

dissatisfied with a determination rendered by the Director with respect

to a request for reconsideration, such importer may appeal the

determination to the Director, National Appeals Division, ASCS. Any

such appeal shall be handled in accordance with the provisions of 7 CFR

part 780.

Signed at Washington, DC on March 2, 1994.

Grant Buntrock,

Executive Vice President, Commodity Credit Corporation.

[FR Doc. 94-5224 Filed 3-8-94; 8:45 am]

BILLING CODE 3410-05-P