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Steel News February 21, 2018 04:30:44 AM

AIIS Customs Corner: ‘Simplified’ Drawback of Customs Duties and Fees

Paul Ploumis
ScrapMonster Author
The new rules take effect by statute on February 24, 2018. For the next year, drawback claimants will have the option of filing claims under the old rules or the new rules, although goods covered by one import entry must choose a single set of rules.

AIIS Customs Corner: ‘Simplified’ Drawback of Customs Duties and Fees

SEATTLE (Scrap Monster): The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) included significant changes to the rules governing drawback. Although described as “simplified,” changed requirements and the lack of regulations for the new procedures has left many people confused and perplexed.

Drawback allows for the repayment of 99% of the duties paid on importation upon the exportation of the imported product, merchandise made from the imported product, or merchandise substituted for the imported product.

The new rules take effect by statute on February 24, 2018. For the next year, drawback claimants will have the option of filing claims under the old rules or the new rules, although goods covered by one import entry must choose a single set of rules. After February 23, 2019 only the new rules will apply. Also on February 24, 2018 drawback claims must be filed electronically in ACE, although filings under the old rules (“core drawback”) can still be filed in paper form for the next year.

There is considerable concern about the filings under the new rules – not all functions are supported in ACE, and as of this writing no regulations have been issued. Customs has indicated that accelerated payment will be suspended until there are regulations in place, and there may not be any processing of claims made under the new rules until that happens.

The new rules do provide some easing of documentary requirements, change recordkeeping from three years from the date of the payment to three years from liquidation, and are intended to strengthen the drawback legal framework. Once actually in place the new provisions should make it easier for Customs to administer drawback.

One major change relates to substitution drawback – substituting domestic goods for imported ones and claiming drawback upon exportation. The current rule requires that substituted goods be “commercially interchangeable.” The new rule allows substitution of any product where there is a match at the 8-digit tariff level (except for certain items in “other” classifications). Calculation of drawback amounts has, however, been modified to ensure that low value domestic goods cannot receive the full drawback amount when substituted for high value imported goods.

Members of the trade community are looking forward to drawback practice under the new rules – they are seen as a welcome modernization. However, it remains to be seen how long it may be before Customs has new regulations in place and is able to administer the new requirements through ACE. Some activities may be suspended, and claimants may be uncertain how their claims will be processed.

Courtesy: AIIS

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