[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3363 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 3363

         To amend the Tariff Act of 1930 relating to drawback.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 20, 2005

Mr. Brady of Texas introduced the following bill; which was referred to 
                    the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
         To amend the Tariff Act of 1930 relating to drawback.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. DRAWBACK.

    Section 313 of the Tariff Act of 1930 (19 U.S.C. 1313) is amended 
to read as follows:

``SEC. 313. DRAWBACK.

    ``(a) Drawback for Exported Merchandise.--If merchandise is 
imported into the United States and that merchandise or its substitute, 
whether self-contained or contained in drawback merchandise, or 
drawback merchandise or its substitute, whether self-contained or 
contained in other drawback merchandise or its substitute, is 
subsequently exported, drawback shall be granted if the following 
conditions are met:
            ``(1)(A) The exporter of the imported merchandise or its 
        substitute imported the merchandise, or received the imported 
        merchandise or its substitute directly or indirectly from the 
        importer.
            ``(B) The exporter of the drawback merchandise or its 
        substitute received drawback merchandise or its substitute, or 
        produced drawback merchandise or its substitute directly or 
        indirectly.
            ``(2) The exported merchandise or its substitute is 
        classifiable within the same 8-digit HTS subheading as the 
        imported merchandise. If the exported merchandise or its 
        substitute is not classifiable within the same 8-digit HTS 
        subheading as the imported merchandise, the claimant may show 
        by records that--
                    ``(A) the exported merchandise or its substitute 
                could be classifiable within the same 8-digit HTS 
                subheading as the imported merchandise; or
                    ``(B) the imported merchandise or its substitute, 
                or drawback merchandise or its substitute, could be 
                contained in, used in the production of, or in any 
                other manner integrated with, the exported merchandise 
                or its substitute.
    ``(b) Drawback Claimants.--
            ``(1) In general.--A drawback claimant may be any party, if 
        the following conditions are met:
                    ``(A) If the claimant is not the importer, the 
                claimant has obtained permission from the importer to 
                receive drawback for the designated import.
                    ``(B) If the claimant is not the exporter, the 
                claimant has obtained permission from the exporter to 
                obtain drawback for the designated export.
            ``(2) Joint and several liability.--Importers, up to the 
        amount of duties, taxes, and fees on the designated import 
        permitted by the importer for drawback by the claimant, and 
        drawback claimants are jointly and severally liable for 
        drawback claims.
    ``(c) Time Limitation for Filing.--No drawback shall be paid unless 
the drawback claim is filed within 5 years from the earliest date of 
importation of the merchandise that is designated on the claim.
    ``(d) Amount of Drawback.--The drawback amount paid to the claimant 
shall not exceed the amount of duties, taxes, and fees paid on the 
designated line item. The exclusive means for determining the amount of 
drawback to be paid to the claimant shall be as follows:
            ``(1) For drawback under paragraphs (1)(A) and (2)(A) of 
        subsection (a), the lesser of--
                    ``(A) the amount of the duties, taxes, and fees per 
                unit on the line item designated for drawback, based 
                upon the entered value of that line item, multiplied by 
                the number of units claimed; and
                    ``(B) the amount of the duties, taxes, and fees per 
                line item unit that would have been imposed on the 
                exported merchandise or its substitute had such 
                merchandise been imported, based upon the value of that 
                exported merchandise or its substitute, multiplied by 
                the number of units claimed.
            ``(2) For drawback under paragraph (1)(B) and (2)(B) of 
        subsection (a), the amount of the duties, taxes, and fees per 
        unit on the line item designated for drawback, based upon the 
        entered value of that line item, multiplied by the number of 
        units claimed.
    ``(e) Refunds, Waivers, or Reductions Under Certain Free Trade 
Agreements.--
            ``(1) NAFTA.--For purposes of subsections (a) and (g), if 
        merchandise that is exported to a NAFTA country is a good 
        subject to NAFTA drawback, no customs duties on the merchandise 
        may be refunded, waived, or reduced in an amount that exceeds 
        the lesser of--
                    ``(A) the total amount of customs duties paid or 
                owed on the merchandise on importation into the United 
                States; or
                    ``(B) the total amount of customs duties paid on 
                the merchandise to the NAFTA country.
            ``(2) Canada.--If Canada ceases to be a NAFTA country and 
        the suspension of the operation of the United States-Canada 
        Free-Trade Agreement thereafter terminates, then for purposes 
        of subsection (a), the shipment to Canada during the period 
        such Agreement is in operation of merchandise made from or 
        substituted for, as appropriate, drawback eligible merchandise 
        under section 204(a) of the United States-Canada Free-Trade 
        Implementation Act of 1988 (19 U.S.C. 2112 note) does not 
        constitute an exportation.
            ``(3) Chile.--(A) For purposes of subsections (a) and (g), 
        if merchandise that is exported to Chile is a good subject to 
        Chile FTA drawback, no customs duties on the merchandise may be 
        refunded, waived, or reduced, except as provided in 
        subparagraph (B).
            ``(B) The customs duties referred to in subparagraph (A) 
        may be refunded, waived, or reduced by--
                    ``(i) 100 percent during the 8-year period 
                beginning on January 1, 2004;
                    ``(ii) 75 percent during the 1-year period 
                beginning on January 1, 2012;
                    ``(iii) 50 percent during the 1-year period 
                beginning on January 1, 2013; and
                    ``(iv) 25 percent during the 1-year period 
                beginning on January 1, 2014.
            ``(4) Fungible merchandise.--(A) The exportation to a NAFTA 
        country of merchandise that is fungible with and substituted 
        for imported merchandise, other than merchandise described in 
        paragraphs (1) through (8) of section 203(a) of that Act, shall 
        not constitute an exportation for purposes of subsection (a).
            ``(B) Beginning on January 1, 2015, the exportation to 
        Chile of merchandise that is fungible with and substituted for 
        imported merchandise, other than merchandise described in 
        paragraphs (1) through (5) of section 203(a) of the United 
        States-Chile Free Trade Agreement Implementation Act, shall not 
        constitute an exportation for purposes of paragraph (2). The 
        preceding sentence shall not be construed to permit the 
        substitution of unused drawback under paragraph (2) of this 
        subsection with respect to merchandise described in paragraph 
        (2) of section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act.
            ``(5) Total amount of customs duties paid or owed.--As used 
        in this subsection, the total amount of customs duties paid or 
        owed on the merchandise on importation into the United States 
        means the duties, taxes, and fees per unit paid on the import 
        line item designated for drawback.
    ``(f) Merchandise for Use in Vessels.--The provisions of this 
section shall apply to merchandise imported and used in the 
construction and equipment of vessels built for foreign account and 
ownership, or for the government of any foreign country, 
notwithstanding that such vessels may not within the strict meaning of 
the term be exported.
    ``(g) Agricultural Merchandise.--No drawback shall be available 
with respect to agricultural merchandise subject to over-quota rate of 
duty established under a tariff-rate quota, except on a direct 
identification basis when such merchandise has not been used in the 
United States.
    ``(h) Puerto Rico.--Any drawback authorized under this section 
shall be paid from the customs receipts of Puerto Rico if the duties 
were originally paid into the Treasury of Puerto Rico.
    ``(i) Destruction of Merchandise.--
            ``(1) In general.--The exportation requirement contained in 
        subsection (a) may be satisfied by destroying merchandise, 
        except that drawback merchandise is destroyed in lieu of 
        exportation only if--
                    ``(A) the merchandise that was imported is the 
                actual merchandise that is destroyed; and
                    ``(B) the claimant directly identifies the actual 
                merchandise that is destroyed in lieu of exportation.
            ``(2) Amount of drawback.--For claims filed pursuant to 
        this subsection, the drawback paid to the claimant shall be the 
        amount of the duties, taxes, and fees per line item unit on the 
        imported merchandise designated for drawback, whether by direct 
        identification or by accounting method, multiplied by the 
        number of units claimed.
    ``(j) Limitation on Exportation Requirement.--Imported merchandise 
that has not been regularly entered or withdrawn for consumption does 
not satisfy the exportation requirement of this section.
    ``(k) Claiming Exportation or Destruction.--An exportation or 
destruction may be claimed on only one drawback claim, except that 
components or ingredients of exported or destroyed merchandise that 
were not claimed on one drawback claim covering a certain exportation 
or destruction may be claimed on another drawback claim covering that 
same exportation or destruction.
    ``(l) Regulations.--The Secretary of the Treasury is authorized to 
promulgate regulations to carry out this section.
    ``(m) Flavoring Extracts; Medicinal or Toilet Preparations; Bottled 
Distilled Spirits and Wines.--
            ``(1) Flavoring extracts; medical or toilet preparations.--
        Upon the exportation of flavoring extracts, medicinal or toilet 
        preparations (including perfumery), manufactured or produced in 
        the United States in part from domestic alcohol on which an 
        internal revenue tax has been paid, there shall be allowed a 
        drawback equal in amount to the tax found to have been paid on 
        the alcohol so used.
            ``(2) Distilled spirits.--Upon the exportation of bottled 
        distilled spirits and wines manufactured or produced in the 
        United States on which an internal revenue tax has been paid or 
        determined, there shall be allowed, under regulations to be 
        prescribed by the Commissioner of Internal Revenue, with the 
        approval of the Secretary of the Treasury, a drawback equal in 
        amount to the tax found to have been paid or determined on such 
        bottled distilled spirits and wines. In the case of distilled 
        spirits, the preceding sentence shall not apply unless--
                    ``(A) the claim for drawback is filed by the 
                bottler or packager of the spirits; and
                    ``(B) the spirits have been stamped or restamped, 
                and marked, especially for export, under regulations 
                prescribed by the Commissioner of Internal Revenue, 
                with the approval of the Secretary of the Treasury.
    ``(n) Definitions.--As used in this section:
            ``(1) Drawback.--The term `drawback' means a refund of 99 
        percent of applicable duties, taxes, and fees paid pursuant to 
        Federal law upon importation of merchandise, and not refunded 
        under any other law, in a case in which--
                    ``(A) the imported merchandise or its substitute, 
                or drawback merchandise or its substitute, is exported; 
                or
                    ``(B) the imported merchandise is destroyed.
            ``(2) HTS.--The term `HTS' means the Harmonized Tariff 
        Schedule of the United States.
            ``(3) NAFTA country; good subject to nafta drawback.--The 
        terms `NAFTA country' and `good subject to NAFTA drawback' have 
        the meanings given those terms in sections 2(4) and 203(a), 
        respectively, of the North American Free Trade Agreement 
        Implementation (19 U.S.C. 3301(4) and 3333(a)).
            ``(4) Good subject to chile fta drawback.--The term `good 
        subject to Chile FTA drawback' has the meaning given that term 
        in section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act (19 U.S.C. 3805 note).
            ``(5) Substitute.--Any merchandise may be substituted for 
        any other merchandise when the two share the same 8-digit HTS 
        subheading. When the two do not share the same 8-digit HTS 
        subheading, they may be substituted for one another if a 
        claimant can demonstrate that they were both classifiable 
        within the same 8-digit HTS subheading during the period 
        beginning on the date of importation of the merchandise 
        designated for drawback to the date of the drawback claim. To 
        establish such a nexus, the claimant shall submit records with 
        its claim that demonstrate the link from one 8-digit HTS 
        subheading to the other 8-digit HTS subheading.
            ``(6) Fungible.--Merchandise is fungible when it is 
        commercially identical to other merchandise in all instances.
            ``(7) Line item.--The term `line item' means the line item 
        on the entry summary or its equivalent and a reconfigured 
        entry.
            ``(8) Contained in.--The term `contained in' means 
        contained in, used in the production of, or in any other manner 
        integrated with, other merchandise.
            ``(9) Drawback merchandise.--The term `drawback 
        merchandise' means merchandise in which is contained imported 
        merchandise or its substitute, or other drawback merchandise or 
        its substitute. Drawback merchandise may be exported or 
        destroyed with a claim for drawback, or it may be contained in 
        other drawback merchandise or its substitute.
            ``(10) Directly identify.--The term `directly identify' 
        means to identify of merchandise by a unique identifier such as 
        a serial number or by the use of an approved inventory 
        accounting method.''.
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