CBP Releases Guidance for TFTEA Drawback Claims

CBP released its draft guidance for drawback changes under the Trade Facilitation and Trade Enforcement Act to help provide detail on interim policies between when the agency starts accepting claims and when regulations are finalized. Along with a draft of Customs and Trade Automated Interface Requirements (see 1801290007) and business process documents, "this guidance document will serve as a reference for the tentative policy and procedures relating to major drawback change," CBP said. The agency recently said it did not expect to publish proposed drawback regulations by the time CBP starts taking TFTEA claims on Feb. 24 (see 1802020053).

The guidance will be "effective during what CBP considers an 'interim period,' which commences at the start of the transition year on February 24, 2018 and will continue until the Final Rule is in effect (i.e., when the TFTEA-Drawback regulations are implemented)," CBP said. Later changes to the guidance are possible and "the reader is responsible for monitoring the CBP website to ensure awareness of the status of any revisions to this document," it said. As expected (see 1801260036), the agency won't allow for accelerated payments on TFTEA drawback claims until the final regulations are in place.

CBP plans to include in its regulatory proposal the use of "per unit average value reported on the line from the entry summary that covered the designated imported merchandise," it said. The agency will use "lesser of" rules for manufacturing and unused merchandise substitution claims "where the amount to be refunded may not exceed the lesser of the amounts associated with the designated imported merchandise or the substituted merchandise (comparative values)," CBP said. Some wine and finished petroleum claims are exempt from the "lesser of" rules for substitution claims, it said.

The use of per unit averaging means that for substitution claims under TFTEA, "a single entry summary line item cannot be used for both direct identification and substitution drawback claims," CBP said. "Consequently, CBP proposes to limit each line on an entry summary to designation as the basis for either direct identification or substitution claims, but never both ... and the designation is determined by the type of drawback claim that is first filed for a portion of the merchandise reported on each line."

CBP said it will allow entries that have lines previously claimed for "core" drawback to also benefit from TFTEA drawback, provided both types of drawback aren't claimed on the same line. CBP will use manual processing in these "mixed use" cases. "Because line item reporting is not required for non-TFTEA drawback claims, CBP will have to perform manual verifications for TFTEA substitution drawback claims (refund calculation based on per unit averaging) when they designate any line items from import entries previously designated on non-TFTEA drawback claims (refund calculation based on invoice values)," the agency said. There were some industry concerns about this issue last year due to large unused balances of imports that are available for drawback under the TFTEA provisions (see 1711060043).