CBP May Make Already Claimed Entries Ineligible for TFTEA Drawback, NCBFAA Says

CBP will likely adopt a hybrid “dual calculation system” for drawback in ACE, with substitution drawback calculated using line item per unit average and invoice level calculations for direct identification drawback, the National Customs Brokers & Forwarders Association of America said in an emailed update on Nov. 6. The decision will have “significant implications,” because line items previously claimed using substitution drawback would be ineligible for direct identification drawback, and vice versa, the trade group said. CBP is also considering making all merchandise imported in any entry claimed in a drawback claim under the existing law unavailable for substitution drawback claims under the new procedures of the Trade Facilitation and Trade Enforcement Act of 2015, it said.

The tentative positions came out of a recent meeting in Virginia of a drawback working group that includes CBP and members of the trade community, the NCBFAA said. “While that meeting did not involve CBP sharing specifics of the upcoming regulations, the discussion of various programming points in the CATAIR identified certain positions that might emerge in the proposed regulations,” the trade group said. “Please note that none of these positions are final, nor have they been officially endorsed by CBP. However, these positions are clearly possible outcomes that we might see in the NPRM and, to some degree, are already implicated in the draft TFTEA Drawback CATAIR, so they should be considered immediately by all interested parties,” it said. CBP did not immediately comment.

The ineligibility of entries claimed under current drawback law for TFTEA substitution drawback would be a direct consequence of the dual calculation system, the NCBFAA said. “Because [the Automated Commercial System] only records drawback claims at the entry level, the ACE system cannot now determine what line item was used in a legacy drawback claim,” it said. “Thus, remaining balances on imports claimed in legacy drawback could not be used in a TFTEA substitution claim, even if only a very small part of that entry was claimed.”

Trade community members of the working group are “extremely concerned about this possible outcome,” the NCBFAA said, “particularly since there are significant unused balances of imports legally available for drawback claims under the TFTEA statutory language. The elimination of drawback against entire entries, particularly where CBP could still verify drawback amounts as it does today at the entry level and/or using a manual checking process for amounts claimed against line items, does not seem to be justified under the clear statutory language granting these drawback rights.” The trade community is working to send examples to CBP showing the type of information claimants could submit to show remaining import balances and the amount already claimed under legacy procedures, the NCBFAA said.

Though CBP has said it has “every intention” of being able to accept TFTEA drawback claims by the Feb. 24, 2018, deadline mandated by the law, “there is no guarantee that the regulations will be ready by that time,” the NCBFAA said. The agency may not process TFTEA claims using accelerated payment until regulations become final, the association said. In a change in position, CBP is now set to require the quantity reported by a claimant in the unit of measure applicable to the tariff subheading identified in a line item, the trade group said. CBP also indicated during the meeting that rulings for 1313(b) manufacturing claimants will need to be updated to allow for new substitutable tariff subheadings, the NCBFAA said.