# Tobacco; Importer Assessments

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URL: https://www.frixlaw.com/law-library/documents/fr%3A94-5224

## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** March 9, 1994

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-5224. Public record. Not legal advice.