Manipulation refers to the operations that may legally be performed on merchandise stored in a customs bonded warehouse or in an FTZ without triggering a duty change or loss of duty deferral. Authorized by 19 U.S.C. § 1562 and administered under 19 CFR Part 19.11.
Permitted manipulation operations:
- Cleaning — washing, dusting, polishing
- Sorting — separating by grade, quality, condition
- Repacking — transferring to different containers, breaking bulk, consolidating
- Labeling — applying brand labels, country-of-origin marks, batch numbers
- Reconditioning — minor repair to restore to original condition
Operations NOT permitted as manipulation (these would constitute manufacturing, which is not permitted in a Class 8 bonded warehouse without conversion to a manufacturing warehouse):
- Assembly into a different article
- Combining with other merchandise to produce a new article
- Any processing that constitutes substantial transformation
Bond and supervision. Manipulation requires a permit from the port director and is supervised by CBP. The surety bond on the warehouse covers any duties owed if the manipulation results in an unauthorized change.
FTZ comparison. Foreign Trade Zones permit much broader operations than bonded warehouses — including manufacturing and substantial transformation — under different regulatory and bond requirements (19 CFR Part 146 vs. Part 19).
Common uses:
- Wine and spirits relabeling for compliance with state ABC regulations
- Cosmetics relabeling for FDA requirements
- Bulk consumer goods broken down for distribution
- Damaged-shipment sorting to separate salable from unsalable units