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HQ 224847

October 13, 1994

FOR-2-01/FOR-2-02-CO:R:C:E 224847 AJS


Mr. Stephen J. Leahy
Leahy & Ward
63 Commercial Wharf
Boston, MA 02110

RE: Conversion of automatic M-14 rifles into semiautomatic rifles in a foreign trade zone; 19 U.S.C. 81c(a); C.S.D. 84-4.

Dear Mr. Leahy:

This is in reply to your request of July 15, 1993, concerning Century Arms, Inc. (Century), and the manipulation of rifles in a Foreign Trade Zone (FTZ).


Century intends to import fully automatic M-14 rifles into a FTZ, at which time the selector switch and the connector assembly of the M-14 will be removed, thus converting the rifles to semi- automatic. These rifles will subsequently be exported.


Whether the subject operation is permissible in a FTZ.


FTZs are established under the authority of the FTZ Act of 1934, as amended, 19 U.S.C. 81a-81u. Section 81c provides for the admission of merchandise into a FTZ and its treatment and shipment to customs territory. Section 81c(a) states:
foreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this chapter, be brought into a zone and may be stored, sold, exhibited,
broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as otherwise provided in this chapter, and be exported . . .

The fifth provision of section 81c(a) as pertinent here provides:

That no operation involving any foreign or domestic merchandise brought into a zone which operation would be subject to any provision or provisions of . . . chapter 25 . . . of Title 26, if performed in Customs territory . . . shall be permitted in a zone except those operations . . . which were permissible under this chapter prior to July 1, 1949.

The manufacture of firearms was not permitted in FTZs before July 1, 1949. Consequently, if the subject operations is such a manufacture it would not be permissible under section 81c.

Chapter 25 of the Internal Revenue Code of 1939 placed taxes on the manufacture of pistols, revolvers, machine guns, and short-barrelled firearms. The applicable provisions of current law, the Internal Revenue Code of 1954, are 26 U.S.C. 4181, 4182, and 5811 et seq. These provisions tax the manufacture of all firearms. In Customs Service Decision (C.S.D.) 84-4, Customs ruled that the manufacture of all types of firearms, that is, those covered by 26 U.S.C. 4181, 4182 and 5811 et seq. is prohibited in a FTZ.

The Federal firearms laws that appear applicable here are administered by the Bureau of Alcohol, Tobacco and Firearms (BATF), with whom we have consulted. The BATF informed this office that it had no objections to the modification of the subject firearms for exportation. Therefore, we conclude that the subject firearms are not covered by 26 U.S.C. 4181, 4182 and 5811 et seq.

ATF also informed this office that Section 922(o) of the Gun Control Act of 1968 (GCA), as amended, prohibits the importation of M-14 automatic rifles into the United States other than for sale to governmental entities and law enforcement agencies. Firearms brought from outside the United States and placed in a FTZ are not considered imported for purposes of the GCA or the National Firearms Act, so the licensing and registration provisions of those Acts are not applicable here. However, the firearms are considered imported for purposes of the Arms Export Control Act of 1976 and are subject to the regulations issued
pursuant thereto (27 CFR 47). An approved permit is required to import the firearms into the FTZ. Further, the exportation would require an export license issued by the Department of State.


The subject operation is permissible in a FTZ. An approved permit is required for the importation of the merchandise and an export license is required for its export.


John Durant, Director
Commercial Rulings Division

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