On July 27, 2018, US Customs and Border Protection (CBP) released it long-awaited notice of proposed rulemaking (NPR) [USCBP-2018-0029] on modernized drawback procedures under the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). The NPR has been filed at the Office of the Federal Register for inspection and will be published in the Federal Register on August 2, 2018 with comments due 45 days after publication. The drawback regulations were the subject of Congressional hearings as well as a lawsuit in which the Court of International Trade found that the statutory deadline had been missed.
The NPR proposes to amend the CBP regulations to implement changes to the drawback regulations as directed by the TFTEA. The proposed regulations establish a new process for drawback pursuant to TFTEA which liberalizes the merchandise substitution standard, simplifies recordkeeping requirements, extends and standardizes timelines for filing drawback claims, and requires the electronic filing of drawback claims. TFTEA allows a transition period wherein drawback claimants will have the choice between filing claims under the existing process detailed in the current regulations or filing claims under the proposed new process. The NPR document explains how filings during the transition period will work, discusses the interim policy guidance procedures for filing claims prior to these regulations becoming final, and proposes to make TFTEA-related changes, dealing with bonds, regarding joint and several liability for the importer of the goods and the drawback claimant, and technical corrections and conforming changes to CBP regulations.
The NPR also proposes to clarify the prohibition on the filing of a substitution drawback claim for internal revenue excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise; or the substituted merchandise is the subject of a different claim for refund or drawback of tax under any provision of the Internal Revenue Code. CBP is proposing these amendments regarding excise taxes to protect the revenue by clarifying the relationship between drawback claims and Federal excise tax liability. Further, CBP proposes to add a basic importation and entry bond condition to foster compliance.