CBP Again Extends Comment Deadline on its Proposed Rule on Drawback
U.S. Customs and Border Protection has issued a notice announcing that it is again extending the comment period on its proposed rule to amend 19 CFR to preclude the filing of a substitution drawback claim1 for Federal excise tax2 paid on imported merchandise in situations where (1) no excise tax was paid on the substituted merchandise or where (2) the substituted merchandise is the subject of a different claim for refund or drawback of Internal Revenue Code taxes.
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The comment period has been extended to January 12, 2010 (from December 14, 2009).
Highlights of CBP's Proposed Rule
The following are highlights of CBP's proposed rule:
Drawback would be limited to amount of taxes paid on substitute merchandise. CBP is proposing to amend the requirements for substitution drawback in 19 CFR 191.32 to add a new requirement that would limit, for purposes of drawback of Federal excise tax3, drawback granted on the export or destruction of substituted merchandise to the amount of taxes paid (and not returned by refund, credit, or drawback) on the substitute merchandise.
Associated bond condition would be added. CBP is proposing to amend the basic importation and entry bond conditions in 19 CFR 113.62 to add a new condition under which the principal would agree not to file, or transfer to a successor the right to file, a substitution drawback claim that would be inconsistent with the terms of the proposed limit on substitution drawback claims (discussed above).
(CBP is proposing to designate this new bond condition as 19 CFR 113.62(m) and to redesignate current paragraph (m) in 19 CFR 113.62 as paragraph (n).)
CBP notes that the consequences of default specified in the proposed redesignated 19 CFR 113.62(n) would apply in the case of a breach of this new bond condition.
TTB Also Extending Comment Deadline on Related Rule
The Alcohol and Tobacco Tax and Trade Bureau is also extending comments on its related proposed rule on drawback to January 14, 2010.
The TTB's proposed rule would amend its regulations to clarify the relationship between tax payment under the Internal Revenue Code and drawback of tax under the Tariff Act of 1930 by making conforming amendments to reflect CBP's proposed regulations.
(Note that CBP states its proposed amendments still allow for the return of 99% of the duties, taxes, and fees that are paid on the imported merchandise upon export, or when IRC excise 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.)
1Substitution drawback," is a type of drawback that permits other merchandise to be substituted for the imported merchandise for purposes of satisfying the exportation or destruction requirement.
2Federal excise taxes are imposed on the manufacture and distribution of certain non-essential consumer goods, such as distilled spirits, wines, beer (IRC Chapter 51), tobacco products (IRC Chapter 52), imported taxable fuel (IRC Chapter 32) and petroleum products (IRC Chapter 38).
3Referred to in proposed 19 CFR 191.32(b)(4) as internal revenue tax imposed under IRC Chapters 32, 38, 51, and 52.
(See ITT's Online Archives or 10/15/09 news, 09101520, for BP summary of CBP & TTB issuing proposed rules.
See ITT's Online Archives or 11/04/09 news, 09110410, for BP summary of CBP extending the comment period to December 14th from November 16th).)
- Comments due by 01/12/10
CBP contact - William Rosoff (202) 325-0047
CBP comment extension notice (USCBP-2009-0021, FR Pub 11/25/09) available at http://edocket.access.gpo.gov/2009/pdf/E9-28285.pdf
TTB comment extension notice (to be published on 11/27/09) available at http://www.federalregister.gov/OFRUpload/OFRData/2009-28366_PI.pdf
CBP proposed rule (USCBP-2009-0021, FR Pub 10/15/09) available at http://edocket.access.gpo.gov/2009/pdf/E9-24789.pdf
TTB propose rule (TTB-2009-0005, Notice No. 100, FR Pub 10/15/09) available at http://edocket.access.gpo.gov/2009/pdf/E9-24791.pdf