The domestic PVC compounds, if theoretically imported, would fall under the same 8-digit classification. The company then exports the domestically produced compounds to an oversees customer and uses these exports to secure a refund on the duty assessed on the imported chemicals. The statute specifically lists these qualifying articles/HTS classifications that allow for substitution at the classification level instead of the part level, as is the case for drawback provisions.
TFTEA Drawback – The New Regime: The drawback statute has been the subject of numerous amendments since 1789, the most recent of which occurred as part of the Trade Facilitation and Enforcement Act of 2015 (know by its acronym of TFTEA). The TFTEA amendments took effect Feb. 24, 2018 and allowed a one-year transition period where claimants could file either under the old or the new rules. This transition period ended on February 24, 2019.
Currently, claimants can only file under the new TFTEA drawback rules. The TFTEA changed the drawback program in certain key areas:
- Liberalized the drawback substitution standards
- Changed record keeping time parameters
- Extended and standardized timelines for filing drawback claims so that a company can claim drawback on import/export activity up to 5 years old
- Made the electronic filing of drawback claims a requirement
Third Party Drawback: The drawback regulations (found in 19 CFR 190) allow for the transfer of drawback rights when the importer and exporter of record are not the same company. Example: Company A imports orange juice from Brazil and pays the duty to Customs before selling the juice. While either entity can submit the drawback claim to Customs, (referred to as the drawback claimant) the drawback regulations grant the exporter the first right to submit the drawback claim to Customs and Border Protection (CBP).
Specifically, the importer can transfer the duty paid imports to the exporter with any record that provides the necessary data elements for the exporter to prepare and submit a claim for drawback. Required fields and data elements include the Customs Entry Number, the date of importation, duty paid, and HTS number, among others.
Conversely, if the importer wants to retain the drawback rights, and thus control the preparation and submission of the drawback claim, the importer needs to secure a waiver of drawback rights from the exporter. Additionally, the importer should also establish a procedure that provides them with a copy of the export bill of lading and commercial invoice for each export transaction included in the drawback entry.
Bottom-line: Both the importer and the exporter must cooperate in order to compliantly submit a drawback claim.