Issue 284, December 14, 2000
On November 9, 2000, President Clinton signed H.R. 4868 (Tariff Suspension and Trade Act of 2000 - P.L. 106-476). This Act, an omnibus bill, contained several sections related to duty drawback.

There are sections where either liquidation or reliquidation of drawback entries is now mandated by the Congress. The inclusion of these small individual bills (also referred to as private bills), which are usually introduced by members of Congress on behalf of a single constituent, is not unique. Most miscellaneous trade packages include one or more sections allowing a drawback entry, notwithstanding Customs' prior denial.

Another item included the petroleum derivatives paragraph of the drawback law (19 U.S.C. §1313(p)). This section added certain products to the list of "qualified articles". This means that these new additions will be afforded the benefits of this part of the drawback statute. Also, this section inserted language into §1313(p) that will maintain the status quo for merchandise that is grouped within a single eight-digit subheading of the Harmonized Tariff Schedule of the United States (HTSUS), even if there are future changes to the HTSUS. This is important if there are changes to the HTSUS in the future, whereby products now classified in the same eight-digit category are split into two or more different eight-digit categories.

One section establishes commercial interchangeability for certain rubber vulcanization accelerators under paragraph §1313(j)(2).

Finally, Congress added a new paragraph: §1313(x). This new section in the drawback law will allow drawback, under prescribed circumstances, for merchandise that is destroyed, even if the residue of the destroyed product is recycled. Essentially, this overturns Customs current definition of destruction. This new paragraph develops a methodology for this type of claim analogous to a valuable waste calculation.

The above is a synopsis of what has happened, but the focus now will shift to what may happen. On November 30, 2000, Customs staged a "Trade Symposium", which was intended to highlight initiatives that Customs and the Trade should undertake (see next Tuesday's article in The Danzas AEI Resource). The Entry Revision Project ("ERP") received the most attention. Customs, under the guise of ERP, made some rather startling proposals for the future of duty drawback.

Their first proposal was to eliminate duty drawback. Another proposal was to move the drawback program from Customs to the Internal Revenue Service. Additionally, Customs suggested a massive overhaul of the current statute, which is tilted to the exporter, and shift the law to the importer end of the continuum. Given the above as Customs' starting point, it will be exciting times in the drawback world for the near future!.

Our contributing writer, Bobby Waid, is the Executive Vice President of Danzas AEI Duty Drawback Services, located in Katy, Texas. If you have any questions or comments regarding this subject, you can contact Mr. Waid via email or at 281-578-9605.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.