b) Direct Delivery Procedure

Merchandise which the Port Director has reason to believe has been, or will be, described inaccurately or incompletely in admission documentation presented by the Operator as set forth in 19 CFR 146.40.

(ii) The merchandise to be admitted to the zone, and the operations to be conducted therein, are known well in advance, are predictable and stable over the long term, and are relatively fixed in variety by the nature of the business conducted at the site (19 CFR 146.39(c)(2)). Any new class or kind of merchandise must first be approved in writing by the Board. This criterion excludes from consideration any merchandise not within the scope of authority as set out in the application to the Board and approved by the Board Order. CBP must have an opportunity to examine and become familiar with any such merchandise before it may be included in an application for direct delivery. Supplemental applications for direct delivery procedures may be filed for any merchandise meeting the requirements and not included in the original application.

(iii) The Operator is the owner or purchaser of the goods (19 CFR 146.39(c)(3)). A finding as to whether the Operator is the owner or purchaser of the goods is determined by CBP interpretation as to what constitutes the "owner or purchaser" under 19 U.S.C. §1484(a)(2)(B) and CD 099 3530-002. The Port Director may demand documentation to ascertain the Operator is the owner or purchaser of the goods. There may be more than one Operator of a general purpose zone.

(2) Decision on Application - The Port Director shall approve the application for direct delivery procedures if the criteria in 19 CFR 146.39(c) are met. The Port Director shall promptly notify the Operator in writing of CBP’s decision on the application. If the application is denied, the Port Director shall specify the reason for denial in his reply. The Port Director s decision will constitute the final CBP administrative determination concerning the application (19 CFR 146.39(d)).

(3) Revocation of Approval - The Port Director may revoke the approval given under this section if it becomes necessary for CBP to routinely examine the merchandise or documentation before or upon admission to the zone (19 CFR 146. 39(e)). The revocation may cover all or part of the merchandise for which approval for direct delivery had previously been given. Upon revocation, the merchandise may be admitted to the zone only under a prior permit issued under 19 CFR 146.32(c).

(b) Direct Delivery Procedures - The primary responsibility for direct delivery procedures rests with the Operator, as a means of expediting the delivery of merchandise to the zone without having to await a prior approval for admission by CBP. If a shipment to be admitted to a zone includes both merchandise approved for direct delivery procedures and merchandise not approved for direct delivery procedures, none of the

78

shipment will be authorized for direct delivery to the zone unless the Applicant segregates the packages containing merchandise not approved for direct delivery from the rest of the shipment, and holds the segregated portion intact at a secure location designated by the Port Director pending approval of a separate application for admission. Operators are advised to have a secure area of their zone approved by the Port Director to accommodate this situation prior to application for direct delivery. If the segregation and separate admission requirements are met, the portion of the shipment approved for direct delivery may be delivered to the zone pursuant to the provisions of 19 CFR 146.40 and CD 099-3210-015.

(1) Arrival of Conveyance - Upon arrival at a subzone or zone site of a conveyance containing foreign merchandise for direct delivery, the Operator shall:

(i) Collect in-bond or cartage documentation from the carrier;

(ii) Check the condition of any seal affixed to the conveyance and, if broken, missing, or improperly affixed, so notify the Port Director and receive instructions before unloading the merchandise;

(iii) Check each incoming in-bond and cartage shipment to determine if the manifested quantity or the quantity on the cartage document agrees with the quantity actually received;

(iv) Sign and date the in-bond or cartage documentation to accept responsibility for the merchandise under the Operators Bond and to relieve the carrier of responsibility;

(v) Forward the in-bond or cartage documentation so as to reach the Port Director within 2 working days after the date of arrival of the conveyance at the subzone or zone site;

(vi) Maintain a file of open in-bond manifests in chronological order of date of conveyance arrival to identify shipments that have arrived, but the entire contents of which have not been admitted to the subzone or zone site; and,

(vii) Notify the Port Director, by annotation on CBPF 214, when the entire contents of a shipment have been admitted (19 CFR 146.40(a)). The Port Director should cooperate with the Operator in seeing that FTZ personnel are properly trained to obtain in-bond and cartage documentation from the carrier and transmit it to CBP as specified in 19 CFR 146.40(a). When the documentation is received by CBP, the appropriate in-bond and cartage transactions under CBP control will be closed out. Merchandise which has been received by the Operator may be

79

examined by CBP personnel at any time on the basis of comparison with in-bond, cartage, bill of lading, or manifest documentation, or information obtained independently by CBP.

For in-bond merchandise arriving at the zone that will be admitted using an e-214, completion of the arrival via the e-214 indicates the Operators acceptance of responsibility for the merchandise under the Operators bond, effectively relieving the carrier of responsibility. Forwarding of the accompanying in-bond documentation to the Port Director is not required if the carrier posts the arrival. If CBP is requested to post the arrival, then the CBPF 7512 shall be presented.

(2) Admission to Zone - There are two methods of reporting admission of direct delivered merchandise depending on whether the applicant provides statistical reports on the admitted merchandise directly (electronically) to Census.

(i) e-214 – Options for single, daily, and cumulative reporting are available with the e214. Statistical information is obtained by Census from the Customs systems. The e214 is filed the first working day after the merchandise is received into the inventory control system.

(ii) Individual CBPF 214 - If an e-214 is not submitted, the Operator shall file with the Port Director , an individual CBPF 214 with a statistical copy on a CBPF 214A, for each shipment recorded into the inventory control and recordkeeping system during the previous business day (19 CFR 146.40(c)(2)).

This provision also states that the CBPF 214A shall be submitted by CBP to Census no later than ten (10) days after the end of the month in which the merchandise was received in the zone and no extension beyond that time frame will be approved by the Port Director.

(3) Merchandise not Admitted - Merchandise which is not admitted to a subzone or zone site as set forth in this section within 15 calendar days after its arrival there, will be sent to general order. It is the Operator’s responsibility to notify both CBP and a Class 11 (General Order Merchandise) warehouse of the non-admitted merchandise. The importer of record may also file an appropriate CBP entry for the merchandise and remove it from the zone premises.

(4) Inventory and Recordkeeping System - The Operator shall establish and maintain a continuing input quality control program to ensure that information concerning merchandise in admission documents, verified or corrected by counts and checks, is accurately recorded in the inventory control and recordkeeping system. Quantities recorded in the system, after allowance by the Port Director for any discrepancies, will be the quantities of merchandise for which the Operator shall be held liable under its bond for admission to the subzone or zone

80