Liquor eligibility for TFTEA drawback blurry

Several firms filed substitution drawback for distilled spirits after the new process debuted in ACE, but Treasury has not decided whether such products will qualify.    It’s “up in the air” whether distilled spirits will qualify for new drawback procedures established by the Trade Facilitation and Trade Enforcement Act (TFTEA) after several companies filed for substitution drawback in alcohol “excise tax situations,” Sandler Travis attorney Michael Cerny said Tuesday at the National Customs Brokers & Forwarders Association of America (NCBFAA) annual conference.
    The Treasury Department is considering distilled spirits’ eligibility for TFTEA drawback, Cerny said, after several companies filed protests with U.S. Customs and Border Protection (CBP) after it did not process substitution drawback claimed for distilled spirits.
    “It’s really about the situation where you file a drawback on an export, where the export went out excise tax-free,” he said during the conference in Rancho Mirage, Calif. “That’s the situation that Treasury has identified. The question is whether there will be something in the regulations that’s going to restrict that.”
   Cerny estimated that regulations would be issued in 30 to 60 days addressing distilled spirits’ eligibility for drawback. “We are all waiting on pins and needles to see what comes out of” an expected notice of proposed rulemaking.
    Speaking of TFTEA drawback in general, Cerny said he was “amazed” CBP was able to deploy the most complex function in the Automated Commercial Environment (ACE) on Feb. 24.
    Since deployment of the new system, several filers have reported drawback claims getting rejected, but CBP has managed to quickly fix those reported issues.
    In terms of broad fixes to ACE TFTEA drawback functionality, “for me to sit here and say, ‘What do we need?’ is a little difficult at this point because we’re still kind of slogging our way through to kind of find out and test all different types of scenarios,” Cerny said. “Overall, I think we probably have to revisit this question again in [three to six] months to see if there is something that needs to be updated within the process and within the deployment where Customs just didn’t anticipate because it’s just so complex.”
    In addition to drawback functionality, TFTEA calls for electronic proof of export, Cerny noted.
    One possibility for implementation of this requirement is to work in the ability for carriers to be able to update outbound manifests in ACE with the actual date of export, he said. Currently, electronic export information (EEI) data elements include estimated dates of export, and it can be off by several days, Cerny said. “The outbound manifest, I think, is the answer.”
    Linking outbound manifests with actual dates of export with EEI “would give an excellent record that could be used for proof of export,” he said.
    An additional earmark for ACE funding in this year’s budget cycle is helping programming efforts, and CBP has a list of priorities within ACE for how the money should be spent, said Jim Swanson, director of CBP’s Cargo and Security Controls Division for Cargo and Conveyance Security in CBP’s Office of Field Operations (OFO).
    Those priorities include building ACE functionality for de minimis, or Section 321, shipments; automation of maritime forms; and truck manifest, Swanson said. CBP also is considering house bill of lading, but Swanson predicted that it could be at least two years before the function rolls out in ACE.
    He emphasized that minimizing the use of paper files is at the core of CBP’s automation efforts, mentioning vessel clearance forms as an example.
    “I love the vessel clearance form, but it has some rather archaic language on it, because in there, when you clear a vessel, it talks about how many souls are laden on board the vessel and how many guns it was bearing,” Swanson noted. “We should issue them to people as a souvenir once, maybe … but we need to have a better process that encompasses automation.”