Bill Would Make Drawback Easier to Obtain in Some Circumstances
A recent bill from House Ways and Means Committee member Rep. Beth Van Duyne, R-Texas, would change the drawback statute so that items that have a Harmonized Tariff Schedule description beginning with "other" no longer would be ineligible for unused substitution drawback, drawback expert Dave Corn said.
According to the Neville Peterson law firm, "Pursuant to the Trade Facilitation and Trade Enforcement Act of 2015, 19 U.S.C. §1313(j)(5) provides that imported and exported goods are substitutable for drawback purposes if they are classifiable in the same 8-digit subheading of the HTSUS. However, goods may not be substituted if the first word in the 8-digit subheading is 'other'. In that case, goods are substitutable if they are classifiable in the same 10-digit statistical subheading, unless that subheading also begins with the word 'other'. If both the 8-digit and 10-digit subheadings begin with 'other', drawback is not available."
Spirit Aerosystems tried to challenge a CBP rejection of a drawback claim around the "other" HTS descriptor, but lost at the Court of International Trade (see 2401300041), and the court said the company's arguments were contrary to congressional intent.
The court said the other-other limitation is so that CBP doesn't have to spend lots of time evaluating whether the products are like-enough to qualify for substitution drawback, and to allow automation.
Corn, from Comstock C.J. Holt, said: “The new language is also meant to clarify retail returns to allow that merchandise to be commingled with new merchandise and not be considered 'used'. This allows for claimants to have returns from retail to be properly accounted for within an unused merchandise drawback campaign.”