Sandler Travis trade attorney Michael Cerny said during a conference on Friday that the White House Office of Management and Budget is expected to pass the regulation back to CBP in less than 30 days.
The trade community is hopeful that U.S. Customs and Border Protection (CBP) will release a notice of proposed rulemaking (NPRM) for new drawback processes as set forth in the Trade Facilitation and Trade Enforcement Act (TFTEA) within about 40 days, Sandler Travis attorney Michael Cerny said Friday during the 97th Annual American Association of Exporters and Importers (AAEI) Conference and Expo in Baltimore.
As a process, TFTEA drawback has been live in the Automated Commercial Environment (ACE) since Feb. 24.
Since the rollout, it has taken filers an average of three drawback submissions to get one processed, as the trade community continues to get familiar with the process, Cerny said. As of the end of May, CBP had received about 10,000 drawback submissions and processed about 3,100 claims, he said.
Cerny added that he believes that rate can improve to one submission per claim in about three months.
In terms of TFTEA drawback’s ACE functionality, “it’s very fluid,” said Dave Corn, vice president of drawback consultancy Comstock and Holt, during the AAEI conference. “Some days it feels like it’s working well, other days it feels like it’s not working at all.”
CBP has developed an “issue tracker,” and is working to transmit it to the trade so that compliance professionals can stay aware of issues, Corn said.
“If you come up with them, and send them into CBP, they do track them there,” he said. “They do impact more than one filer, so anybody who tries to file a claim in the same way will have that same issue.”
One of the remaining issues on many filers’ minds is how CBP will handle per-unit averaging for substitution claims, Cerny indicated.
CBP interim drawback guidance released in March says that the TFTEA substitution drawback framework, including per-unit averaging, is tentative and that accelerated payment refunds won’t be processed by CBP until TFTEA drawback regulations “are implemented.”
The “tentative framework” in the forthcoming TFTEA drawback NPRM — expected to be 450 pages — requires equal apportionment of duties, taxes and fees eligible for drawback for all units covered by a single line item on an import-entry summary to each unit of merchandise, the interim guidance says.
The ratio of total value of imported units as reported on a line item divided by the total quantity of imported units reported on a line item must be multiplied by the quantity of units designated as the basis for the drawback claim to determine the average per unit value, the guidance says.
CBP is considering using the acquisition value to calculate the value of substituted merchandise for manufacturing drawback claims, Cerny said, which is also mentioned in CBP’s guidance.
“What is the acquisition value?” he said. “We’re not really sure yet. What a lot of manufacturers have is they have standard costs, and I think we’d like to get to a point where we’re using the actual records of the manufacturer to develop standard costs, but we’re not sure yet.”
Principles for determining acquisition values for manufacturing substitution drawback will be important in the context of “lesser of” rules for TFTEA substitution drawback, whereby the amount of duties, taxes and fees to be refunded may not exceed the lesser of the amounts associated with designated imported merchandise or substituted merchandise, Cerny indicated.
Also speaking during the AAEI panel, Charter Brokerage President Matt Anderson described an ongoing lawsuit that seeks to require CBP to continue making accelerated payments of drawback on TFTEA claims.
Filed March 23 at the U.S. Court of International Trade (CIT), Tabacos de Wilson Inc. et al. vs. United States alleges that CBP violated the Administrative Procedure Act (APA) by stating in its interim guidance document for TFTEA drawback that it would not make accelerated payments for TFTEA drawback claims, even if claimants had been issued accelerated payment privileges and posted bonds to secure the revenue, according to a March 26 blog post by Neville Peterson law firm.
The APA requires formal “notice and comment” rulemaking before an agency issues substantive, legislative-type rules, and CBP didn’t follow these procedures before publishing its guidance document, Neville Peterson said.
Generally, the U.S. government is arguing that because Congress didn’t include a “penalty” in TFTEA for not issuing accelerated payment procedures, language in TFTEA Section 906(g)(2)(A) directing the government to “prescribe regulations for determining the calculation of amounts refunded in drawback under this section” is not an exigent deadline, Anderson stated in presentation slides.
The government also is arguing that CIT can’t rule on the case since the interim guidance are provisional rules, Anderson added.
The case is ongoing as the judge in the case has received both the plaintiffs’ and defendant’s oral and written arguments, Anderson said.
Trade community looks for drawn up drawback rules
