After 12 years of work to modify the statute for drawback under Title 19 U.S.C. 1313, the conference report for drawback simplification passed through the Senate on Thursday, 2/11/2016 as part of the Trade Facilitation and Trade Enforcement Act (TFTEA). With the President’s signature late yesterday afternoon, the two-year clock officially has started to complete the writing of the new regulations!
Some of the highlights of the new legislation:
- A switch to 8-digit substitution from commercially interchangeable merchandise unless there’s an 8-digit classification that starts with “other”, then 10-digit classification for substitution will be required.
- Substitution claims will be calculated on a lesser-of basis. For manufacturing substitution, the duty to be claimed will be the lesser of the duties paid on the imported merchandise or the duties paid on the substituted merchandise if it had been imported. For unused substitution, the duty to be claimed will be the lesser of the duties paid on the imported merchandise or the duties that would apply to the exported article if the exported article were imported.
- 5-year window from import date to file a claim will be uniform timeline across all types of drawback. Specific timelines outlined for certain drawback types will be maintained (1313(p), for example).
- Removes requirements for Certificates of Delivery under 1313(j)(2)(C)(ii)(II).
- An importer will be liable for drawback claims made by others in an amount equal to the lesser of the duties and fees the person claimed on the imported merchandise or the amount of duties and fees the importer authorized the other person to claim on the imported merchandise.
- There will be a one-year transition to the new law once the new regulations have been completed.
- Drawback record retention times extended to 3 years from the date of liquidation of the claim, pushed out from 3 years from the date of payment of the claim.
This is just a quick snapshot of what’s going to change. There will be more to come in detail as the regulations are ironed out. Stay tuned for what’s next!