We have had a few days to review the new TFTEA drawback regulations (here) and wanted to provide you with our observations before the holiday. We were pleased to see that the comments provided by the trade were heavily considered by CBP and resulted in some “wins” for the industry.
Among the accepted amendments:
- Substitution Manufacturing claimants can determine the value of the substituted merchandise through either the acquisition value or the cost of production based on generally accepted accounting principles. This was a huge win for manufacturing claimants and we appreciate the support many of you provided in these submissions. We have expanded on this topic in this post (here). (§190.11(d))
- Proof of export in 190.72 added “including, but not limited to” and “normal course of business” language to allow for additional options to prove date and fact of exportation.
- Mixed use claims will now be allowed with TFTEA drawback as long as the claimant can provide proof that they can distinguish what was claimed on each type of claim (§190.51(a)(4)).
- The proposed regulations for changes to drawback bonds in §113.62 were removed entirely.
- A Waiver of Prior Notice for Destruction has been added in §190.71.
As the saying goes “you win some and you lose some”, and there were definitely some situations where we didn’t get what we wanted, including:
- CBP held firm on their new restrictions to drawback for excise tax which will greatly impact drawback, affecting wine, tobacco, beer, and distilled spirit claimants. We know this is a point of contention and will likely result in legal action from claimants against CBP.
- The notion for multiple substitution will not be allowed within these regulations. Multiple transfers are acceptable, however.
- Despite several arguments concerning manufacturing rulings being unnecessary and information requested in them being redundant with privilege applications, CBP ruled not to remove them from the final regulatory package. There will, however, be some revisions and we are working through those details.
The regulations left some unanswered questions, especially concerning transitioning from core to TFTEA, timing of TFTEA claim payments, and content for privilege applications. We are anticipating a guidance and policy document to be issued in the coming weeks which should provide clarification for the industry.