April 2019 — Question 44

XYZ company imports red paint made in Japan, and enters and pays duty on the paint. XYZ also buys the same red paint made in Toledo, Ohio. XYZ uses the red paint for its manufacture of toy fire engines, which it exports to China and sells domestically in the U.S. The Japanese paint is poured into a vat for use in the west side of the factory. The paint from Ohio is put into a vat for use by the east side. This separation of the paint is due only to the timing of the paint deliveries. The paint from Ohio and the paint from Japan are identical. The toy fire engines produced on the east and west side of the factory are also identical and are all sent to a central shipping area via conveyor belt to be boxed and shipped. Once the toys arrive in this area, they are packaged and boxed for shipping to China and cities in the U.S. without regard to which side of the factory produced them. Based on the above facts, and assuming all statutory and regulatory requirements are met, XYZ may be able to claim what type of duty drawback on the red paint used to paint the exported toy fire trucks?

• ARejected merchandise drawback
• BFinished petroleum derivatives drawback
• CDirect identification unused merchandise drawback
• DManufacturing drawback✓ CBP's answer
• ESubstitution unused merchandise drawback Category IX – Practical Exercise Please answer questions 45-51 using the commercial invoice below. COMMERCIAL INVOICE