CBP Moving to Limit Substitution Drawback Claims

(World Trade Interactive)

U.S. Customs and Border Protection has issued a proposed rule designed to eliminate situations where imported merchandise subject to federal excise tax is effectively allowed into the U.S. 99% free of that tax through the application of a drawback claim. Comments on this rule are due by November 16.

According to CBP, the proposed amendments would preclude the filing of a substitution drawback claim for internal revenue excise tax paid on imported merchandise in situations where no excise tax was paid on the substituted merchandise or where the substituted merchandise is the subject of a different claim for refund or drawback of tax under any provision of the Internal Revenue Code. The proposal would continue to allow for the return of 99% of the duties, taxes and fees paid on the imported merchandise upon export, or when IRC taxes have been paid on substituted domestic product and the substituted merchandise is not the subject of a separate claim for refund or drawback of such taxes. CBP is also proposing to add a basic importation and entry bond condition to foster compliance with the amended drawback provision.

Read more here (with links to source documents).