(b) The Contractor warrants that all such supplies for which duty-free entry is to be claimed are intended to be delivered to the Government or incorporated in the end items to be delivered under this contract, and that duty shall be paid by the Contractor to the extent that such supplies, or any portion thereof (if not scrap or salvage), are diverted to nongovernmental use other than as a result of a competitive sale made, directed or authorized by the Contracting Officer.

(c) The Government agrees to execute duty-free entry certificates and to afford such assistance as appropriate in order to obtain the duty-free entry of supplies as to which the shipping documents bear the notation specified in paragraph (d) below, except as the Contractor may otherwise agree.

(d) All shipping documents submitted to Customs, covering those supplies that are specificially identified in the Schedule as supplies to be accorded duty-free entry, shall bear the following information:

(1) Government prime contract number; (11) Identification of carrier;

(iii) The notation: "UNITED STATES (insert name of Military Department)- -DUTYFREE ENTRY TO BE CLAIMED pursuant to Act of August 10, 1956 (10 U.S.C. 2383)." Upon arrival of shipment at port of entry, Collector of Customs, kindly notify the (insert title and address of Government representative), who will execute Customs Forms 7501 and 7501A and the Duty-Free Entry Certificate;

(iv) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and (v) Estimated value in United States dollars.

(e) The Contractor agrees to instruct the foreign supplier to prepare a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the Collector of Customs at the port of entry. The foreign supplier shall also be instructed to forward, at the time of shipment, a memorandum copy of the bill of lading (or other shipping document) to the designated Government representative.

(f) The Contractor will make appropriate provisions in subcontracts hereunder to assure that the entire substance of this clause is agreed to by each first- or lower-tier subcontractor, if any, who will import into the United States, its possessions, or Puerto Rico, supplies identified in the Schedule as supplies to be accorded duty-free entry.

(b) Duty-free entry for items not identified in the contract. Within the limits of § 6.603-2(a), the following clause shall be used unless the contracting officer anticipates that, in connection with the performance of the contract, neither the

prime contractor nor any first-tier subcontractor will make any purchase of foreign supplies in excess of $10,000 that would not be covered either by the clause in paragraph (a) of this section or by a clause authorized by § 6.605.

NOTICE OF IMPORTS-POSSIBLE DUTY-FREE ENTRY (NOV. 1961)

(a) Except as provided in paragraph (c) below, the Contractor shall notify the Contracting Officer in writing of any purchase in excess of $10,000 by the Contractor of foreign supplies (including without limitation raw materials, components, and intermediate assemblies) that are to be imported into the United States, its possessions, or Puerto Rico, for delivery to the Government, or for incorporation in end items to be delivered to the Government, under this contract; Provided, That if this contract contains any other clause providing for duty-free entry, such notice is not required for any supplies that are to be accorded duty-free entry under any other such clause. Any such notice shall be furnished to the Contracting Officer at least twenty (20) days before the importation of any supplies pursuant to any such purchase. The notice shall identify (1) the foreign supplies, (ii) the estimated amount of duty payable thereon, and (iii) the country of origin.

(b) If, within ten (10) days of receipt of any notice under (a) above, the Contracting Officer notifies the Contractor in writing that the Government will issue duty-free entry certificates for such foreign supplies, or if the Government otherwise tenders and the Contractor agrees to the issuance of such a duty-free entry certificate, the following subparagraphs shall apply:

(1) Except as otherwise approved by the Contracting Officer, the contract price shall be reduced by (or the allowable cost shall not include) the amount of duty which would be payable if duty-free entry certificates were not issued pursuant to the provisions of this clause.

(2) The Contractor warrants that all such foreign supplies for which duty-free entry certificates are to be issued in accordance with this clause are intended to be delivered to the Government or incorporated in end items to be delivered under this contract, and that duty shall be paid by the Contractor to the extent that such supplies, or any portion thereof (if not scrap or salvage), are diverted to non-governmental use other than as a result of a competitive sale made, directed or authorized by the Contracting Officer.

(3) The Government agrees to execute duty-free entry certificates and to afford appropriate assistance in order to obtain the duty-free entry of such foreign supplies as to which, pursuant to subparagraph (4) below, the shipping documents bear the nota

tion specified therein, except as the Contractor may otherwise agree.

(4) All shipping documents submitted to Customs, covering foreign supplies for which duty-free entry certificates are to be issued in accordance with this clause, shall bear the following information:

(i) Government prime contract number; (ii) Identification of carrier;

(iii) The notation: "UNITED STATES (insert name of Military Department) -DUTY-FREE ENTRY TO BE CLAIMED pursuant to Act of August 10, 1956 (10 U.S.C. 2383)." Upon arrival of shipment at port of entry, Collector of Customs, kindly notify the (insert the title and address of Government representative), who will execute Customs Forms 7501 and 7501A and the Duty-Free Entry Certificate;

(iv) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and

(v) Estimated value in United States dollars.

(5) The Contractor agrees to instruct the foreign supplier to prepare a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the Collector of Customs at the port of entry. The foreign supplier shall also be instructed to forward, at the time of shipment, a memorandum copy of the bill of lading (or other shipping document) to the designated Government representative.

(c) This clause shall not apply to purchases of foreign supplies in connection with this contract if (i) such foreign supplies are identical in nature with supplies purchased by the Contractor or any subcontractor hereunder in connection with his commercial business, and (ii) segregation of such supplies to insure use only on Government contracts containing duty-free entry provisions is not economical or feasible.

(d) The Contractor agrees to insert the substance of this clause in any first-tier subcontract hereunder in connection with which foreign supplies in excess of $10,000 may be imported by the subcontractor into the United States, its possessions, or Puerto -Rico.

supplies, in accordance with the clauses set forth in § 6.603-3 or authorized by § 6.605, the contractor shall be notified that the foreign supplier is to include on the bill of lading (or other shipping document) the information required to be inserted on such documents as provided in the clause. Failure to include such information on the bill of lading (or other shipping document) will result in the shipment being treated as a shipment without benefit of free entry under 10 U.S.C. 2383.

(c) The designated Government representative shall, except as provided in paragraph (e) of this section, retain the memorandum copy of the bill of lading (or other shipping document) pending notification by the Collector of Customs that the shipment has been released. The notification will contain a request for Customs Form 7501, Customs Form 7501A, and the duty-free entry certificate.

(d) Upon receipt of a request for duty-free entry, the designated Government representative shall promptly prepare the required customs forms and execute the duty-free entry certificate in accordance with paragraph (f) of this section and forward two copies of Customs Form 7501 and one copy of Customs Form 7501A to the Collector of Customs submitting the request.

(e) When the designated Government representative is located in a Canadian supplier's plant, he shall be authorized to prepare Customs Form 7501, and Customs Form 7501A and to execute the duty-free entry certificate thereon. These Customs Forms shall be placed in a sealed envelope addressed to the "Collector of Customs, Port of Entry" and shall be securely attached to the two copies of the bill of lading (or other shipping document) for the Collector of Customs, which accompany the shipment.

(f) The duty-free entry certificate referred to in this paragraph shall be printed, stamped, or typed on the face of Customs Form 7501 or attached thereto in the following form:

(SEPT. 1962)

I certify that the procurement of this material constituted an emergency purchase of war material abroad by the (indicate Department of the Army, Department of the Navy, Department of the Air Force, or Defense Supply Agency) and it is accordingly requested that such material be admitted

[Paragraph (f) amended, 27 F.R. 11653, Nov. 27, 1962]

§ 6.603-5 Immediate release permits.

Immediate release permits, executed on Customs Form 3461 (Application for Special Permit for Delivery of Perishable and other Articles, Immediate Delivery of Which is Necessary), entitle all shipments qualifying as "emergency purchases of war material abroad” to be released immediately by the Collectors of Customs at the various ports of entry, prior to and pending the filing of Customs Forms 7501 and 7501A and a dutyfree entry certificate. The existence of an immediate release permit on file at a port of entry does not dispense with the necessity of filing Customs Forms 7501 and 7501A and such duty-free entry certificates as are appropriate. Each Department shall designate the individuals responsible for issuance of Immediate Release Permits.

§ 6.604

Supplies for vessels or aircraft operated by the United States.

(a) Subject to the considerations set forth in § 6.602, a duty-free entry certificate may be issued when "certain supplies (not including equipment)" are purchased for vessels or aircraft operated by the United States. As used in this paragraph, the term "certain supplies (not including equipment)" includes articles known as "stores", such as food, medicines and toiletries, and, in addition, all consumable articles necessary and appropriate for the propulsion, operation and maintenance of the vessel or aircraft, such as fuel, oil, gasoline, grease, paint, cleaning compounds, solvents, wiping rags and polishes. It does not include portable articles necessary and appropriate for the navigation, operation or maintenance of the vessel or aircraft, and for the comfort and safety of the persons on board, such as rope, bolts and nuts, bedding, china and cutlery, which are included in the

term "equipment." The procedures to be followed in the issuance of such certificates shall be as prescribed by the respective Departments.

(b) The duty-free entry certificate referred to in this section shall be printed, stamped, or typed on the face of Customs Form 7501, or attached thereto, and shall be executed by a duly designated officer or civilian official of the appropriate Department in the following form: (JAN. 1959)

I certify that the procurement of this material constituted a purchase of supplies by the United States for vessels or aircraft operated by the United States, and is admissible free of duty pursuant to 19 U.S.C. 1309.

(Name)

(Title) (Organization)

§ 6.605 Duty-free entry of listed Canadian supplies.

§ 6.605-1 Policy.

(a) In keeping with the policy to enhance economic cooperation with Canada in the interests of continental defense (§ 6.504), duty-free entry should generally be accorded Canadian supplies that constitute, or that are directly or indirectly incorporated in, end items included in the Departmental lists of supplies maintained pursuant to § 6.103-5 (a). (These Departmental lists include supplies of a military character or which are involved in programs of mutual interest to the United States and Canada. Parts and equipment for listed supplies, even though not separately listed, are considered to be included in the lists when they are procured under a contract that also calls for listed supplies.) Dutyfree entry should be accorded such supplies by the issuance of duty-free entry certificates in accordance with §§ 6.605 through 6.605-5 and, in particular, as provided in the contract clause prescribed in § 6.605-2.

(b) In connection with contracts with United States prime contractors for the procurement of end items that are not included in the Departmental lists maintained pursuant to § 6.103-5(a), Canadian supplies that are themselves listed and are specifically identified in the contract as supplies that will be directly or indirectly incorporated in such unlisted end items should be accorded duty-free entry as provided in § 6.605-3.

§ 6.605-2 Contract clause.

Every contract in excess of $10,000, except construction contracts, that includes the procurement of end items contained in the list maintained by the pursuant Department concerned to

§ 6.103-5(a) shall include the following clause unless it is reasonably certain that no supplies will be imported from Canada by the contractor or any firstor lower-tier subcontractor in connection with the performance of the contract. The clause shall be included in invitations for bids or requests for proposals that are expected to lead to such a contract.

DUTY-FREE ENTRY-CANADIAN SUPPLIES
(Nov. 1961)

(a) Except as otherwise approved by the Contracting Officer, no amount is or will be included in the contract price on account of duty with respect to:

(1) All end items which constitute "Canadian end products" (as defined in paragraph 6-101 of the Armed Services Procurement Regulation) to be delivered under this contract; and

(11) All supplies (including, without limitation, raw materials, components and intermediate assemblies) produced or made in Canada which are to be incorporated in the end items to be delivered under this contract; provided, that such end items are made in the United States or Canada; except supplies imported into the United States prior to the date of this contract, or, in the case of supplies imported by a first- or lower-tier subcontractor hereunder, prior to the date of his subcontract.

(b) The Contractor warrants that all such Canadian supplies, for which such duty-free entry is to be claimed, are intended to be delivered to the Government or incorporated in the end items to be delivered under this contract, and that duty shall be paid by the Contractor to the extent that such supplies, or any portion thereof, (if not scrap or salvage), are diverted to nongovernmental use other than as a result of a competitive sale made, directed or authorized by the Contracting Officer.

(c) The Government agrees to execute duty-free entry certificates and to afford such assistance as appropriate in order to obtain the duty-free entry of Canadian end products or supplies as to which the shipping documents bear the notation specified in paragraph (d) below, except as the Contractor may otherwise agree.

(d) All shipping documents submitted to Customs, covering such Canadian end products or supplies for which duty-free entry is to be claimed, shall bear the following information.

(1) Government prime contract number; (11) Identification of carrier;

22-051-64— -14

(iii) The notation: "UNITED STATES (insert name of Military Department)-DUTY-FREE. ENTRY TO BE CLAIMED pursuant to Act of August 10, 1956 (10 U.S.C. 2383)." Upon arrival of shipment at port of entry, Collector of Customs, kindly notify the (insert title and address of Government representative), who will execute Customs Forms 7501 and 7501A and the Duty-Free Entry Certificate;

(iv) Gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and (v) Estimated value in United States dollars.

(e) The Contractor agrees to instruct the foreign supplier to prepare a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the Collector of Customs at the port of entry. The foreign supplier shall also be instructed to forward, at the time of shipment, a memorandum copy of the bill of lading (or other shipping document) to the designated Government representative.

(f) This clause shall not apply to purchases of Canadian supplies in connection with this contract if (i) such Canadian supplies are identical in nature with supplies purchased by the Contractor or any subcontractor hereunder in connection with his commercial business, and (ii) it is not economical or feasible to account for such supplies so as to assure that the amount of such supplies for which duty-free entry is claimed pursuant to this clause does not exceed the amount thereof purchased in connection with this contract.

(g) The Contractor agrees to insert the substance of this clause, including this paragraph (g), in all subcontracts for supplies hereunder that exceed $5,000. Each such subcontract shall require the subcontractor to identify this contract by its contract. number on any shipping documents submitted to Customs covering supplies for which duty-free entry is to be claimed pursuant to this clause.

If the procurement covers both listed and unlisted end items, the foregoing clause should be modified so as to limit its application to the listed end items.

§ 6.605-3 Listed supplies for unlisted end items.

In connection with negotiated contracts in excess of $10,000 with United States prime contractors for the procurement of end items that are not inIcluded in the Departmental lists maintained pursuant to § 6.103-5 (a), if the prospective contractor specifically identifies listed Canadian supplies that will be directly or indirectly incorporated in such unlisted end items and if the contract price does not include any amount

The

on account of duty with respect to such supplies, the contract should provide for the duty-free entry of such supplies by including provisions substantially as follows. The Schedule should identify the particular listed Canadian supplies that are to be accorded duty-free entry. contract should include a clause like that in § 6.605-2, but modified so as to cover only the particular Canadian supplies that are specifically identified in the Schedule. Thus, the clause may be modified by:

(a) In paragraph (a), deleting (i) and (ii) and substituting the words "those supplies that are specifically identified in the Schedule as Canadian supplies to be accorded duty-free entry";

(b) In paragraph (c) of the clause, deleting the words "end products or"; (c) In paragraph (d) of the clause, deleting the words "Canadian end products or supplies" and substituting a reference to the particular Canadian listed supplies, as in paragraph (a) of this section; and

(d) As to paragraph (g) of this clause, limiting the "flow-down" provision to subcontracts for supplies specifically identified in the Schedule, or, if appropriate, deleting the provision.

§ 6.605-4 Issuance of duty-free entry certificates.

Duty-free entry certificates shall be issued in accordance with the procedures set out in § 6.603-4.

§ 6.605-5 Amending existing contracts.

Any existing contract may be amended so as to be made consistent with § 6.6052 or 6.605-3; provided that, in the case of a fixed-price type contract, the contract price is reduced by the amount of the applicable duty. Under any costreimbursement type contract that has not been so amended, duty-free entry shall be accorded Canadian supplies to the extent permitted by § 6.602. Subpart G-Military Assistance Pro

gram Procurements [Revised] SOURCE: §§ 6.700 to 6.704-3 appear at 28 F.R. 2580, Mar. 16, 1963.

As used in this subpart, the following terms have the meanings set forth below.

(a) "End products" means articles, materials, and supplies, which are to be acquired for public use. As to a given contract, the end products are the items to be delivered to the Government, as specified in the contract, including supplies to be acquired by the Government for public use in connection with service contracts, but excluding installation and other services to be performed after delivery.

(b) "Components" means those articles, materials, and supplies, which are directly incorporated in end products.

(c) "United States" means the States, the District of Columbia, Puerto Rico, American Samoa, the Canal Zone, the Virgin Islands, Guam, and any areas subject to the complete sovereignty of the United States.

(d) "United States end product" means an unmanufactured end product which has been mined or produced in the United States, or an end product manufactured in the United States if the cost of components thereof which are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. A component shall be considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind determined by the Government to be not mined, produced or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

(e) "Domestic Concerns" means a concern located in the United States.

§ 6.702 Statutory requirements.

(a) Section 604 (a) of the Foreign Assistance Act of 1961 as implemented provides that funds made available under the Act shall not be used for procurement outside the United States except: