| Title: | DRAWBACK |
|---|---|
| Date: | 1993-12-21 |
| To: | abi |
| Links: | previous, next |
TO : ALL ABI BROKERS.
FROM : JUDY SCHOENY
SUBJECT : MOD-DRAWBACK
DATE : 12/15/93
THE CUSTOMS MODERNIZATION AND INFORMED COMPLIANCE ACT (MOD.
ACT) WAS PASSED ALONG WITH NAFTA AS IMPLEMENTING LEGISLATION.
MANY CHANGES TO THE CUSTOMS REGULATIONS, DIRECTIVES,
PROCEDURES AND FORMS WILL BE REQUIRED. HOWEVER, THIS WILL TAKE
TIME AND WE WILL INSURE THAT YOU HAVE THE REQUIRED INFORMATION IN
TIME TO IMPLEMENT THE NEW CHANGES AS THEY BECOME EFFECTIVE.
THE FOLLOWING OUTLINE WILL EXPLAIN THE CHANGES TO THE
DRAWBACK PROGRAM.
I. EFFECTIVE DATES
EXCEPT FOR 1313(P), THE AMENDMENTS ARE EFFECTIVE ON DECEMBER
8, 1993. THE AMENDMENTS ARE ALSO EFFECTIVE ON DECEMBER 8, 1993,
AS TO ANY DRAWBACK CLAIM FOR WHICH LIQUIDATION IS NOT FINAL (I.E.
WHICH EITHER HAS NOT BEEN LIQUIDATED OR, IF LIQUIDATED, WHICH MAY
BE OR HAS BEEN TIMELY PROTESTED).
THE AMENDMENTS TO SECTION 1313(P) APPLY TO CLAIMS FILED OR
LIQUIDATED ON OR AFTER JANUARY 1, 1988, AND CLAIMS THAT ARE
UNLIQUIDATED, UNDER PROTEST, OR IN LITIGATION ON THE DATE OF
ENACTMENT. THE DRAWBACK PENALTY (19 U.S.C. 1593A) IS EFFECTIVE
TO DRAWBACK CLAIMS FILED AFTER NATIONWIDE IMPLEMENTATION BY
CUSTOMS OF AN AUTOMATED DRAWBACK SELECTIVITY PROGRAM.
IF AMENDMENT OF THE DRAWBACK CLAIM IS NECESSARY, THE
AMENDMENT IS SUBJECT TO THE 3-YEAR TIME PROVIDED FOR IN THE ACT
(SEE FILING PERIOD).
II. SAME CONDITION
THE MOD. ACT AMENDS THE SAME CONDITION DRAWBACK PROVISIONS
(19 U.S.C. 1313(J)(1) (2)) TO ALLOW DRAWBACK ON IMPORTED
MERCHANDISE, OR OTHER DOMESTIC OR IMPORTED MERCHANDISE
SUBSTITUTED FOR THE IMPORTED MERCHANDISE, WHICH HAS NOT BEEN
USED, RATHER THAN WHICH IS IN THE SAME CONDITION AND HAS NOT BEEN
USED.
THE AMENDMENTS TO SECTION 1313(J) EXPAND WHAT MAY BE DONE TO
MERCHANDISE WITHOUT IT BEING CONSIDERED TO BE USED SO THAT THE
SO-CALLED "GRAY AREA" IS ELIMINATED AND MERCHANDISE EITHER
QUALIFIES FOR UNUSED MERCHANDISE DRAWBACK OR MANUFACTURING
DRAWBACK.
THE AMENDMENT ALSO CHANGES THE STANDARD FOR SUBSTITUTION
FROM FUNGIBLE TO COMMERCIALLY INTERCHANGEABLE. IN DETERMINING
WHETHER TWO ARTICLES WERE COMMERCIALLY INTERCHANGEABLE THE
CRITERIA TO BE CONSIDERED INCLUDE, BUT ARE NOT LIMITED TO:
GOVERNMENTAL AND INDUSTRIAL STANDARDS, PART NUMBERS, TARIFF
CLASSIFICATION, AND RELATIVE VALUES. THE TESTS ARE TO BE APPLIED
MORE STRINGENTLY IF THE ARTICLE WAS DESTROYED RATHER THAN
EXPORTED.
-2-
FOR UNUSED MERCHANDISE DRAWBACK WITHOUT SUBSTITUTION
(SECTION 1313(J)(1)), THE AMENDMENT PERMITS AN EXPORTER OR
DESTROYER TO ENDORSE THE RIGHT TO CLAIM DRAWBACK TO THE IMPORTER
OR ANY INTERMEDIATE PARTY (CONSISTENT WITH THE CENTRAL SOYA
DECISION FOR SECTION 1313(J)(2) DRAWBACK). THE AMENDMENT
CLARIFIES UNUSED MERCHANDISE DRAWBACK WITH SUBSTITUTION (SECTION
1313(J)(2)) IN LIGHT OF THE B.F. GOODRICH DECISION. UNDER THE
AMENDMENT, THE PARTY CLAIMING DRAWBACK MUST EITHER HAVE PAID THE
DUTIES ON THE IMPORTED MERCHANDISE OR HAVE RECEIVED FROM THE
PERSON WHO IMPORTED AND PAID THE DUTIES ON THE IMPORTED
MERCHANDISE A CERTIFICATE OF DELIVERY FOR THE IMPORTED
MERCHANDISE, COMMERCIALLY INTERCHANGEABLE MERCHANDISE, OR ANY
COMBINATION THEREOF.
THE AMENDMENT WILL BE APPLICABLE TO ALL DRAWBACK CLAIMS THAT
HAVE NOT BEEN FINALLY LIQUIDATED AND TO MERCHANDISE ELIGIBLE FOR
DRAWBACK FOR WHICH A CLAIM HAS NOT YET BEEN FILED.
III. MANUFACTURING DRAWBACK
- MERCHANDISE: CODIFIES AN ADMINISTRATIVE DECISION THAT
SUBSTITUTE MERCHANDISE WHICH SERVES AS A BASIS FOR DRAWBACK MAY
BE ANY OTHER MERCHANDISE (WHETHER IMPORTED OR DOMESTIC).
- DESTRUCTION: REFUNDS WILL BE ALLOWED IF THE ARTICLES ARE
DESTROYED RATHER THAN EXPORTED PROVIDED THAT THE ARTICLES ARE NOT
USED BEFORE DESTRUCTION.
- SUCCESSORSHIP: THE SAME MANUFACTURER HAS TO USE BOTH THE
IMPORTED AND SUBSTITUTED MERCHANDISE IN THEIR MANUFACTURING
PROCESS. THE AMENDMENTS ALLOW ONE COMPANY TO BUY ANOTHER
COMPANY'S FACTORY AND SATISFY THE "ONE MANUFACTURER" REQUIREMENT.
IT ALSO ALLOWS A PERSON TO BUY A FACTORY OR DIVISION OF ANOTHER
COMPANY AND INCLUDE A TRANSFER OF DRAWBACK RIGHTS. IN ALL CASES,
THE VALUE OF THE REALTY AND PERSONALITY TRANSFERRED MUST EXCEED
THE VALUE OF THE DRAWBACK RIGHTS TRANSFERRED TO PREVENT PURE
SALES OF DRAWBACK RIGHTS. IT ALSO REQUIRES CERTIFICATIONS
AGAINST MULTIPLE CLAIMS OF DRAWBACK RIGHTS.
ADDITIONAL MOD. ACT PROVISIONS
REJECTED MERCHANDISE
THE MOD. ACT. HAS EXTENDED THE PERIOD FOR RETURNING THE
IMPORTED MERCHANDISE TO CUSTOMS CUSTODY FROM 90 DAYS TO 3 YEARS.
IT ALLOWS THE DESTRUCTION OF THE IMPORTED MERCHANDISE AS AN
ALTERNATIVE TO EXPORTATION AND IT ALLOWS THE IMPORTER AND FOREIGN
SUPPLIER TO AGREE THAT THE IMPORTED MERCHANDISE WAS DEFECTIVE
WITHOUT REFERENCE TO PURCHASE SPECIFICATIONS OR SAMPLES.
MERCHANDISE COULD BE KEPT IN THE UNITED STATES FOR UP TO 3 YEARS
-3-
AND THE IMPORTER COULD GET A DUTY REFUND IF IT WAS SHOWN THAT THE
MERCHANDISE DID NOT CONFORM TO SAMPLE OR SPECIFICATION OR WAS
DEFECTIVE AT THE TIME OF IMPORTATION.
FILING OF CLAIMS
THE FILING OF CLAIMS ELECTRONICALLY IS PERMITTED.
PACKAGING MATERIAL
CURRENTLY, DUTIABLE PACKAGING MATERIAL MUST BE USED IN THE
PACKAGING OF THE DUTIABLE ARTICLE THAT IS TO BE EXPORTED IN ORDER
TO QUALIFY FOR A DUTY REFUND AND IS LIMITED TO SAME CONDITION
DIRECT IDENTIFICATION DRAWBACK UNDER 19 U.S.C. 1313(J)(1).
ELIGIBILITY HAS BEEN EXPANDED TO ALLOW A DUTY REFUND FOR DUTIABLE
PACKAGING MATERIAL IF USED IN THE PACKAGING OF THE DUTIABLE
IMPORTED MERCHANDISE UNDER NONCONFORMING MERCHANDISE DRAWBACK (19
U.S.C. 1313(C) AND EITHER THE DUTIABLE IMPORTED MERCHANDISE OR
ITS SUBSTITUTE MERCHANDISE UNDER BOTH DIRECT IDENTIFICATION AND
SUBSTITUTION UNUSED MERCHANDISE DRAWBACK (19 U.S.C. 1313(J)) AND
DIRECT IDENTIFICATION AND SUBSTITUTION MANUFACTURING DRAWBACK (19
U.S.C. 1313(A) AND (B)), SO LONG AS THE MERCHANDISE OR ARTICLE,
WHICHEVER IS APPLICABLE, IS EXPORTED OR DESTROYED.
FILING PERIOD
THERE WAS NO CURRENT STATUTORY PROVISION THAT SETS A TIME
LIMIT FOR FILING CLAIMS. TIME LIMITS ARE SET BY REGULATION. THE
TIME PERIOD FOR FILING A DRAWBACK CLAIM IS NOW ESTABLISHED BY
STATUTE. IT SETS A PERIOD OF 3 YEARS FROM THE DATE OF EXPORT OR
DESTRUCTION IN WHICH TO FILE A COMPLETE CLAIM. CUSTOMS HAS 3
YEARS FROM THE DATE OF PAYMENT OF A CLAIM TO INITIATE THE
VERIFICATION OF THAT CLAIM.
CRUDE PETROLEUM AND PETROLEUM DERIVATIVES
THE AMENDMENT ALLOWS ACCOUNTING FOR CRUDE PETROLEUM AND
PETROLEUM DERIVATIVES ON A QUANTITATIVE BASIS. THE CRUDE
PETROLEUM OR PETROLEUM DERIVATIVES WOULD HAVE TO BE EXPORTED (1)
WITHIN 180 DAYS OF THE DUTY-PAID ENTRY OF CRUDE PETROLEUM OR
PETROLEUM DERIVATIVES OF THE SAME KIND AND QUALITY; OR (2) DURING
THE PERIOD OF MANUFACTURE OR WITHIN 180 DAYS AFTER THE CLOSE OF
THE MANUFACTURING PERIOD FOR COVERED PETROLEUM PRODUCTS
MANUFACTURED UNDER THE DRAWBACK LAW. THE AMENDMENT CONTAINS A
PROVISION RELATING TO THE PURCHASE OR EXCHANGE OF A COVERED
MANUFACTURED PETROLEUM PRODUCT. FOR PURPOSES OF THIS PROVISION,
THE COVERED MANUFACTURED PETROLEUM PRODUCT MAY BE IDENTIFIED BY A
BILL OF LADING, OR EQUIVALENT DOCUMENT OF RECEIPT, TOGETHER WITH
A WAIVER BY THE TRANSFEROR OF ANY RIGHTS TO DRAWBACK ON THE
COVERED MANUFACTURED PETROLEUM PRODUCT. THERE IS NO LONGER A
REQUIREMENT THAT THE COVERED CRUDE PETROLEUM AND PETROLEUM
DERIVATIVES BE STORED IN A COMMON STORAGE FACILITY.
-4-
ALTERNATE CLAIMS
A CLAIMANT WHO IS DENIED DRAWBACK UNDER ONE PROVISION MAY
RAISE ALTERNATE CLAIMS UNDER OTHER PROVISIONS BY PROTEST.
CUSTOMS WILL NOT INTERPRET THE PROVISION FOR ALTERNATE CLAIMS AS
IMPOSING A REQUIREMENT ON CUSTOMS TO INVESTIGATE ALL POSSIBLE
BASES IN ADDITION TO THE CLAIMED BASIS BEFORE LIQUIDATING THE
DRAWBACK CLAIM AS PRESENTED.
DRAWBACK CERTIFICATES
ANY PERSON WHO PROVIDES A CERTIFICATION OF A FACT WHICH
ENABLED ANOTHER PERSON TO PERFECT A CLAIM FOR DRAWBACK MUST KEEP
RECORDS TO SHOW THE VALIDITY OF THE CERTIFIED FACT.
ENTRY ELIGIBILITY
THE CURRENT CUSTOMS PRACTICE AGAINST "PIGGYBACKING" OTHER
DUTY EXEMPTION BENEFITS (FOREIGN-TRADE ZONES, BONDED WAREHOUSES
AND DUTY-FREE TEMPORARY IMPORTATION) ONTO THE DRAWBACK BENEFITS
IS CODIFIED.
MULTIPLE CLAIMS ON ONE EXPORTATION
THIS CODIFIES THE CUSTOMS POSITION THAT ONLY ONE EXPORTATION
OR DESTRUCTION WOULD QUALIFY FOR A REFUND.
DRAWBACK PENALTY AND DRAWBACK COMPLIANCE PROGRAM
A NEW PROVISION (19 U.S.C. 1593A) ESTABLISHES PENALTY
PROVISIONS FOR THE SUBMISSION OF FALSE DRAWBACK REFUND CLAIMS.
WITH THIS PENALTY PROVISION, A "DRAWBACK COMPLIANCE PROGRAM"
WOULD BE CREATED. THE PROGRAM WOULD BE VOLUNTARY. UNDER THE
PROGRAM, CUSTOMS WOULD BE REQUIRED TO INFORM POTENTIAL DRAWBACK
CLAIMANTS CLEARLY ABOUT THEIR RIGHTS AND OBLIGATIONS. THE
PENALTY WOULD NOT GO INTO EFFECT UNTIL NATIONWIDE IMPLEMENTATION
OF THE DRAWBACK COMPLIANCE PROGRAM.