Sec. 146.93  Inventory control and recordkeeping system.

    (a) Attribution. All final products removed from or consumed within 
a petroleum refinery subzone must be attributed to feedstock admitted 
into said petroleum refinery subzone in the current or prior 
manufacturing period. Attribution must be based on records maintained by 
the operator. Attribution may be made by applying one of the authorized 
methods set forth in this section. Records must be maintained on a 
weight or volume basis.
    (1) Producibility. The producibility method of attribution requires 
that records be kept to attribute final products to feedstocks which are 
eligible for attribution as set forth in this section during the current 
or prior manufacturing period.
    (2) Actual production records. An operator may use its actual 
production records as provided for under Sec. 146.95(b) of this subpart.
    (3) Other inventory method. An operator may use the FIFO (first-in, 
first-out) method of accounting (see Sec. 191.22(c) of this chapter). 
The use of this method is illustrated in the appendix to this part.
    (b) Feedstock eligible for attribution. Only a feedstock that has 
been admitted into the refinery subzone is eligible for attribution. For 
a given manufacturing period, the quantity of feedstock eligible for 
attribution may be computed as beginning inventory, plus receipts less 
shipments of feedstock out of the subzone, and less ending inventory.
    (c) Consumption or removal of final product. Each final product that 
is consumed in or removed from a refinery subzone must be attributed to 
a feedstock eligible for attribution during the current or a prior 
manufacturing period. Each final product attributed as being produced 
from the separation of a privileged foreign status feedstock must be 
assigned the proper relative value as set forth in paragraph (d) of this 
section.
    (d) Relative value. A relative value calculation is required when 
two or more final products are produced as the result of the separation 
of privileged foreign status feedstock. Ad valorem and compound rates of 
duty must be converted to specific rates of duty in order to make a 
relative value calculation.
    (e) Privileged status after admission. Nonprivileged status 
feedstock is eligible for privileged status only if the request shows to 
the satisfaction of the Customs Service that there was no manipulation 
or manufacture of the feedstock to change its tariff classification 
before the request is granted. The absence of such manipulation or 
manufacture can be shown by demonstrating that the feedstock was placed 
in an

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empty tank, in a tank that contained only feedstock with the same 
nominal specifications or providing a sample which shows there was no 
change in tariff status. The existence of negligible amounts of other 
feedstocks may be disregarded only in accordance with Sec. 146.95(b). A 
request for after-admission privileged foreign status shall be denied 
unless the feedstock's tank records from admission to the time that the 
request is made accompany the request. A refiner who makes such a 
request shall not put any other feedstock having different nominal 
specifications into the tank until the request for privileged status is 
granted. The Customs Service will deny or revoke a post-admission 
request if a refiner fails to retain the integrity of the feedstock in 
the tank.
    (f) Consistent use required. The operator must use the selected 
method, measurement (weight or volume), and the price of product 
consistently (see Sec. 146.92(g) of this subpart and paragraph (a) of 
this section).