---
kind: "range"
citation: "19 C.F.R. §§ 10.193–10.198b"
title: "19"
from: "10.193"
to: "10.198b"
count: 8
url: "https://uscodex.org/cfr/19/10.193..10.198b"
---

# §10.193. Imported directly.


To qualify for treatment under the CBI, an article shall be imported directly from a beneficiary country into the customs territory of the U.S. For purposes of [§ 10.191](/cfr/19/10.191.md) through [§ 10.198b](/cfr/19/10.198b.md) the words “imported directly” mean:

- (a) Direct shipment from any beneficiary country to the U.S. without passing through the territory of any non-beneficiary country; or
- (b) If the shipment is from any beneficiary country to the U.S. through the territory of any non-beneficiary country, the articles in the shipment do not enter into the commerce of any non-beneficiary country while en route to the U.S. and the invoices, bills of lading, and other shipping documents show the U.S. as the final destination; or
- (c) If the shipment is from any beneficiary country to the U.S. through the territory of any non-beneficiary country, and the invoices and other documents do not show the U.S. as the final destination, the articles in the shipment upon arrival in the U.S. are imported directly only if they:
  - (1) Remained under the control of the customs authority of the intermediate country;
  - (2) Did not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, and the Center director is satisfied that the importation results from the original commericial transaction between the importer and the producer or the latter's sales agent; and
  - (3) Were not subjected to operations other than loading and unloading, and other activities necessary to preserve the articles in good condition.

# §10.194. Evidence of direct shipment.

- (a) **Documents constituting evidence of direct shipment.** The Center director may require that appropriate shipping papers, invoices, or other documents be submitted within 60 days of the date of entry as evidence that the articles were “imported directly”, as that term is defined in [§ 10.193](/cfr/19/10.193.md). Any evidence of direct shipment required shall be subject to such verification as deemed necessary by the Center director.
- (b) **Waiver of evidence of direct shipment.** The Center director may waive the submission of evidence of direct shipment when otherwise satisfied, taking into consideration the kind and value of the merchandise, that the merchandise was, in fact, imported directly and that it otherwise clearly qualifies for treatment under the CBI.

# §10.195. Country of origin criteria.

- (a) **Articles produced in a beneficiary country—**
  - (1) **General.** Except as provided herein, any article which is either wholly the growth, product, or manufacture of a beneficiary country or a new or different article of commerce which has been grown, produced, or manufactured in a beneficiary country, may qualify for duty-free entry under the CBI. No article or material shall be considered to have been grown, produced, or manufactured in a beneficiary country by virtue of having merely undergone simple (as opposed to complex or meaningful) combining or packaging operations, or mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article. Duty-free entry under the CBI may be accorded to an article only if the sum of the cost or value of the material produced in a beneficiary country or countries, plus the direct costs of processing operations performed in a beneficiary country or countries, is not less than 35 percent of the appraised value of the article at the time it is entered.
  - (2) **Combining, packaging, and diluting operations.** No article which has undergone only a simple combining or packaging operation or a mere dilution in a beneficiary country within the meaning of [paragraph (a)(1)](#a-1) of this section shall be entitled to duty-free treatment even though the processing operation causes the article to meet the value requirement set forth in that paragraph.
    - (i) For purposes of this section, simple combining or packaging operations and mere dilution include, but are not limited to, the following processes:
      - (A) The addition of batteries to devices;
      - (B) Fitting together a small number of components by bolting, glueing, soldering etc.;
      - (C) Blending foreign and beneficiary country tobacco;
      - (D) The addition of substances such as anticaking agents, preservatives, wetting agents, etc.;
      - (E) Repacking or packaging components together;
      - (F) Reconstituting orange juice by adding water to orange juice concentrate; and
      - (G) **Diluting chemicals with inert ingredients to bring them to standard degrees of strength.**
    - (ii) For purposes of this section, simple combining or packaging operations and mere dilution shall not be taken to include processes such as the following:
      - (A) The assembly of a large number of discrete components onto a printed circuit board;
      - (B) The mixing together of two bulk medicinal substances followed by the packaging of the mixed product into individual doses for retail sale;
      - (C) The addition of water or another substance to a chemical compound under pressure which results in a reaction creating a new chemical compound; and
      - (D) A simple combining or packaging operation or mere dilution coupled with any other type of processing such as testing or fabrication (e.g., a simple assembly of a small number of components, one of which was fabricated in the beneficiary country where the assembly took place).
- (b) **Commonwealth of Puerto Rico, U.S. Virgin Islands, and former beneficiary countries—**
  - (1) **General.** For purposes of determining the percentage referred to in [paragraph (a)](#a) of this section, the term “beneficiary country” includes the Commonwealth of Puerto Rico, U.S. Virgin Islands, and any former beneficiary countries. Any cost or value of materials or direct costs of processing operations attributable to the U.S. Virgin Islands or any former beneficiary country must be included in the article prior to its final exportation from a beneficiary country to the United States.
  - (2) **Manufacture in the Commonwealth of Puerto Rico after final exportation.** Notwithstanding the provisions of [19 U.S.C. 1311](/usc/19/1311.md), if an article from a beneficiary country is entered under bond for processing or use in manufacturing in the Commonwealth of Puerto Rico, no duty will be imposed on the withdrawal from warehouse for consumption of the product of that processing or manufacturing provided that:
    - (i) The article entered in the warehouse in the Commonwealth of Puerto Rico was grown, produced, or manufactured in a beneficiary country within the meaning of [paragraph (a)](#a) of this section and was imported directly from a beneficiary country within the meaning of [§ 10.193](/cfr/19/10.193.md); and
    - (ii) At the time of its withdrawal from the warehouse, the product of the processing or manufacturing in the Commonwealth of Puerto Rico meets the 35 percent value-content requirement prescribed in [paragraph (a)](#a) of this section.
- (c) **Materials produced in the U.S.** For purposes of determining the percentage referred to in [paragraph (a)](#a) of this section, an amount not to exceed 15 percent of the appraised value of the article at the time it is entered may be attributed to the cost or value of materials produced in the customs territory of the U.S. (other than the Commonwealth of Puerto Rico). In the case of materials produced in the customs territory of the U.S., the provisions of [§ 10.196](/cfr/19/10.196.md) shall apply.
- (d) **Textile components cut to shape in the U.S.** The percentage referred to in [paragraph (c)](#c) of this section may be attributed in whole or in part to the cost or value of a textile component that is cut to shape (but not to length, width, or both) in the U.S. (including the Commonwealth of Puerto Rico) from foreign fabric and exported to a beneficiary country for assembly into an article that is then returned to the U.S. and entered, or withdrawn from warehouse, for consumption on or after July 1, 1996. For purposes of this paragraph, the terms “textile component” and “fabric” have reference only to goods covered by the definition of “textile or apparel product” set forth in [§ 102.21(b)(5)](/cfr/19/102.21.md?p=b-5) of this chapter.
- (e) **Articles wholly grown, produced, or manufactured in a beneficiary country.** Any article which is wholly the growth, product, or manufacture of a beneficiary country, including articles produced or manufactured in a beneficiary country exclusively from materials which are wholly the growth, product, or manufacture of a beneficiary country or countries, shall normally be presumed to meet the requirements set forth in [paragraph (a)](#a) of this section.
- (f) **Country of origin marking.** The general country of origin marking requirements that apply to all importations are also applicable to articles imported under the CBI.

# §10.196. Cost or value of materials produced in a beneficiary country or countries.

- (a) **“Materials produced in a beneficiary country or countries” defined.** For purposes of [§ 10.195](/cfr/19/10.195.md), the words “materials produced in a beneficiary country or countries” refer to those materials incorporated in an article which are either:
  - (1) Wholly the growth, product, or manufacture of a beneficiary country or two or more beneficiary countries; or
  - (2) Subject to the limitations set forth in [§ 10.195(a)](/cfr/19/10.195.md?p=a), substantially transformed in any beneficiary country or two or more beneficiary countries into a new or different article of commerce which is then used in any beneficiary country in the production or manufacture of a new or different article which is imported directly into the U.S.
- (b) **Questionable origin.** When the origin of a material either is not ascertainable or is not satisfactorily demonstrated to the Center director, the material shall not be considered to have been grown, produced, or manufactured in a beneficiary country.
- (c) **Determination of cost or value of materials produced in a beneficiary country.**
  - (1) **The cost or value of materials produced in a beneficiary country or countries includes—**
    - (i) The manufacturer's actual cost for the materials;
    - (ii) When not included in the manufacturer's actual cost for the materials, the freight, insurance, packing, and all other costs incurred in transporting the materials to the manufacturer's plant;
    - (iii) The actual cost of waste or spoilage (material list), less the value of recoverable scrap; and
    - (iv) Taxes and/or duties imposed on the materials by any beneficiary country, provided they are not remitted upon exportation.
  - (2) Where a material is provided to the manufacturer without charge, or at less than fair market value, its cost or value shall be determined by computing the sum of:
    - (i) All expenses incurred in the growth, production, or manufacture of the material, including general expenses;
    - (ii) An amount for profit; and
    - (iii) Freight, insurance, packing, and all other costs incurred in transporting the material to the manufacturer's plant.

# §10.197. Direct costs of processing operations performed in a beneficiary country or countries.

- (a) **Items included in the direct costs of processing operations.** As used in §§ [10.195](/cfr/19/10.195.md) and [10.198](/cfr/19/10.198.md), the words “direct costs of processing operations” mean those costs either directly incurred in, or which can be reasonably allocated to, the growth, production, manufacture, or assembly of the specific merchandise under consideration. Such costs include, but are not limited to the following, to the extent that they are includable in the appraised value of the imported merchandise:
  - (1) All actual labor costs involved in the growth, production, manufacture or assembly of the specific merchandise, including fringe benefits, on-the-job training, and the cost of engineering, supervisory, quality control, and similar personnel;
  - (2) Dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific merchandise;
  - (3) Research, development, design, engineering, and blueprint costs insofar as they are allocable to the specific merchandise and;
  - (4) **Costs of inspecting and testing the specific merchandise.**
- (b) **Items not included in the direct costs of processing operations.** Those items which are not included within the meaning of the words “direct costs of processing operations” are those which are not directly attributable to the merchandise under consideration or are not “costs” of manufacturing the product. These include, but are not limited to:
  - (1) Profit; and
  - (2) General expenses of doing business which are either not allocable to the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries, casualty and liability insurance, advertising, and salesmen's salaries, commissions, or expenses.

# §10.198. Evidence of country of origin.

- (a) **Shipments covered by a formal entry—**
  - (1) **Articles not wholly the growth, product, or manufacture of a beneficiary country—**
    - (i) **Declaration.** In a case involving an article covered by a formal entry which is not wholly the growth, product, or manufacture of a single beneficiary country, the exporter or other appropriate party having knowledge of the relevant facts in the beneficiary country where the article was produced or last processed shall be prepared to submit directly to the Center director, upon request, a declaration setting forth all pertinent detailed information concerning the production or manufacture of the article. When requested by the Center director, the declaration shall be prepared in substantially the following form:
    - (ii) **Retention of records and submission of declaration.** The information necessary for preparation of the declaration shall be retained in the files of the party responsible for its preparation and submission for a period of 5 years. In the event that the Center director requests submission of the declaration during the 5-year period, it shall be submitted by the appropriate party directly to the Center director within 60 days of the date of the request or such additional period as the Center director may allow for good cause shown. Failure to submit the declaration in a timely fashion will result in a denial of duty-free treatment.
    - (iii) **Value added after final exportation.** In a case in which value is added to an article in a bonded warehouse or in a foreign-trade zone in the Commonwealth of Puerto Rico or in the U.S. after final exportation of the article from a beneficiary country, in order to ensure compliance with the value requirement under [§ 10.195(a)](/cfr/19/10.195.md?p=a), the declaration provided for in [paragraph (a)(1)(i)](#a-1-i) of this section shall be filed by the importer or consignee with the entry summary as evidence of the country of origin. The declaration shall be properly completed by the party responsible for the addition of such value.
  - (2) **Merchandise wholly the growth, product, or manufacture of a beneficiary country.** In a case involving merchandise covered by a formal entry which is wholly the growth, product, or manufacture of a single beneficiary country, a statement to that effect shall be included on the commercial invoice provided to Customs.
- (b) **Shipments covered by an informal entry.** Although the filing of the declaration provided for in [paragraph (a)(1)(i)](#a-1-i) of this section will not be required for a shipment covered by an informal entry, the Center director may require such other evidence of country of origin as deemed necessary.
- (c) **Verification of documentation.** Any evidence of country of origin submitted under this section shall be subject to such verification as the Center director deems necessary. In the event that the Center director is prevented from obtaining the necessary verification, the Center director may treat the entry as dutiable.

# §10.198a. Duty reduction for certain leather-related articles.


Except as otherwise provided in [§ 10.233](/cfr/19/10.233.md), reduced rates of duty as proclaimed by the President will apply to handbags, luggage, flat goods, work gloves, and leather wearing apparel that were not designated on August 5, 1983, as eligible articles for purposes of the Generalized System of Preferences under Title V, Trade Act of 1974, as amended ([19 U.S.C. 2461 through 2467](/usc/19/2461..2467.md)), provided that the article in question at the time it is entered:

- (a) Was grown, produced, or manufactured in a beneficiary country within the meaning of [§ 10.195](/cfr/19/10.195.md);
- (b) Meets the 35 percent value-content requirement prescribed in [§ 10.195](/cfr/19/10.195.md); and
- (c) Was imported directly from a beneficiary country within the meaning of [§ 10.193](/cfr/19/10.193.md).

# §10.198b. Products of Puerto Rico processed in a beneficiary country.


Except in the case of any article described in [§ 10.191(b)(2)(i) through (vi)](/cfr/19/10.191.md?p=b-2-i..b-2-vi), the duty-free treatment provided for under the CBI will apply to an article that is the growth, product, or manufacture of the Commonwealth of Puerto Rico and that is by any means advanced in value or improved in condition in a beneficiary country, provided that:

- (a) If any materials are added to the article in the beneficiary country, those materials consist only of materials that are a product of a beneficiary country or the United States; and
- (b) The article is imported directly from the beneficiary country into the customs territory of the United States within the meaning of [§ 10.193](/cfr/19/10.193.md).