[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3443 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 3443

 To amend the Tariff Act of 1930 to clarify the provisions relating to 
                   drawback for exported merchandise.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 3, 2007

Mr. Thompson of California (for himself, Mr. Herger, Mr. McDermott, Mr. 
   Reynolds, Mr. Crowley, Mr. Nunes, and Mr. Israel) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Tariff Act of 1930 to clarify the provisions relating to 
                   drawback for exported merchandise.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drawback Simplification Act of 
2007''.

SEC. 2. DRAWBACK FOR EXPORTED MERCHANDISE.

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

``SEC. 313. DRAWBACK FOR EXPORTED MERCHANDISE.

    ``(a) Definitions.--In this section:
            ``(1) Bill of materials.--The term `bill of materials' 
        means records kept in the ordinary course of business that 
        identify each component incorporated into an article.
            ``(2) Destroyed.--The term `destroyed' means a process by 
        which merchandise or an article loses all commercial value. 
        Merchandise or an article shall be considered to be destroyed 
        even if valuable material is recovered from the merchandise or 
        article.
            ``(3) Directly.--The term `directly' means a transfer of 
        merchandise or an article from 1 person to another person 
        without any intermediate transfer.
            ``(4) Formula.--The term `formula' means records kept in 
        the ordinary course of business that identify the quantity of 
        each element, material, chemical, mixture, or other substance 
        incorporated into a manufactured article.
            ``(5) Fungible.--The term `fungible' means goods that are 
        commercially identical to 1 another in all instances.
            ``(6) 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).
            ``(7) Good subject to nafta drawback.--The term `good 
        subject to NAFTA drawback' has the meaning given that term in 
        section 203(a) of the North American Free Trade Agreement 
        Implementation Act (19 U.S.C. 3333(a)).
            ``(8) Hts.--The term `HTS' means the Harmonized Tariff 
        Schedule of the United States (19 U.S.C. 1202).
            ``(9) Incorporated into.--The term `incorporated into' 
        means any operation by which merchandise or an article becomes 
        classifiable in a different 8-digit HTS subheading number.
            ``(10) Indirectly.--The term `indirectly' means a transfer 
        of merchandise or an article from 1 person to another person 
        with 1 or more intermediate transfers.
            ``(11) Line item.--
                    ``(A) Import entry.--The term `line item' means, 
                for an import entry filed pursuant to section 484, the 
                identification of a commodity from 1 country by net 
                quantity, entered value, HTS subheading number, and 
                applicable duties, fees, and taxes.
                    ``(B) Designated export.--The term `line item' 
                means, for a designated export, the identification of a 
                commodity by HTS subheading number or Schedule B 
                number, declared value, and quantity.
            ``(12) Nafta country.--The term `NAFTA country' has the 
        meaning given that term in section 2 of the North American Free 
        Trade Agreement Implementation Act (19 U.S.C. 3301).
            ``(13) Schedule b.--The term `Schedule B' means the 
        Department of Commerce Schedule B, Statistical Classification 
        of Domestic and Foreign Commodities Exported from the United 
        States.
            ``(14) Secretary.--Except as otherwise provided, the term 
        `Secretary' means the Secretary of Homeland Security.
            ``(15) Substitute merchandise; substitute article.--The 
        terms `substitute merchandise' and `substitute article' mean--
                    ``(A) a good that is classifiable within the same 
                8-digit HTS subheading number as another good (the 
                Schedule B number may be used to demonstrate this 
                fact);
                    ``(B) a good demonstrated to have been classifiable 
                within the same 8-digit HTS subheading number as 
                another good at some point during the 5-year period 
                beginning on the date of importation of the designated 
                imported merchandise (the Schedule B number may be used 
                to demonstrate this fact); or
                    ``(C) for goods classifiable under headings 2710 or 
                3901 through 3914 of the HTS, a good demonstrated to 
                have been classifiable under the same 8-digit HTS 
                subheading number as another good according to the HTS 
                in effect on January 1, 2000 (the Schedule B number may 
                be used to demonstrate this fact).
    ``(b) In General.--
            ``(1) Drawback.--If merchandise is imported into the United 
        States and that merchandise, or substitute merchandise, is then 
        exported, or is incorporated into an article that is exported, 
        or a substitute article is exported, duties, fees, and taxes 
        paid upon entry or importation of the merchandise shall be 
        refunded as drawback pursuant to this section notwithstanding 
        any other provision of law.
            ``(2) Eligibility for drawback for merchandise incorporated 
        into multiple articles.--Merchandise described in paragraph (1) 
        that is incorporated into an article that is exported shall be 
        eligible for drawback under this section regardless of the 
        number of times that the merchandise is incorporated into an 
        article or an article is incorporated into another article.
    ``(c) Eligibility to Claim Drawback.--
            ``(1) Person making claim.--A person may claim drawback 
        under this section if the person--
                    ``(A)(i) imports the merchandise on which the claim 
                is based; or
                    ``(ii) obtains the importer's permission to claim 
                the drawback; and
                    ``(B) exports the merchandise or article on which 
                the claim is based or obtains the exporter's permission 
                to claim drawback.
            ``(2) Special rules.--
                    ``(A) In general.--When the exporter and importer 
                are not the same party, the exporter shall have 
                received the imported merchandise, substitute 
                merchandise, imported or substitute merchandise 
                incorporated into an article, or substitute article, 
                directly or indirectly from the importer.
                    ``(B) Rules for transfer.--The transfer of drawback 
                rights under this section shall be a private 
                transaction between parties that shall not be required 
                to be governed by this section or by regulations 
                promulgated under the authority of this section, and 
                U.S. Customs and Border Protection of the Department of 
                Homeland Security shall not be required to verify any 
                transfer of merchandise or article under this 
                subsection.
            ``(3) Claim for drawback on merchandise incorporated.--If 
        drawback is claimed for merchandise incorporated into an 
        article, the person making the claim shall submit a bill of 
        materials or formula identifying the merchandise and article by 
        the 8-digit HTS subheading number and the quantity of the 
        merchandise. Merchandise shall be deemed incorporated into an 
        article if the bill of materials or formula for that article 
        includes such merchandise.
            ``(4) Electronic filing.--A claim for drawback under this 
        section shall be made through an electronic data interchange 
        system authorized by the Secretary. Such system may include an 
        Internet-based system.
            ``(5) Time limit for claim.--Drawback may be paid under 
        this section only if the claim for drawback is filed within 5 
        years after the date the merchandise was imported. If the 
        merchandise has multiple dates of importation, the earliest 
        date of importation shall be used for purposes of this 
        paragraph.
    ``(d) Amount of Drawback.--
            ``(1) In general.--Except as provided in paragraph (2) and 
        except for drawback claims filed pursuant to subsection (g)(2), 
        the amount of a drawback made pursuant to this section shall be 
        the number of units claimed times the lesser of--
                    ``(A) the average of the duties, taxes, and fees 
                paid per unit of the designated import line item, or
                    ``(B) the average declared value per unit of the 
                designated export line item times the duties, taxes, 
                and fees that applied to the designated import line 
                item,
        less 1 percent.
            ``(2) Exception.--Where drawback is claimed based upon 
        imported merchandise or substitute merchandise being 
        incorporated into an article, the drawback amount shall be the 
        number of units of merchandise claimed times the average 
        duties, taxes, and fees per unit of the designated import line 
        item, less 1 percent.
            ``(3) Limitation.--The amount of duties, taxes, and fees to 
        be refunded pursuant to this subsection for merchandise shall 
        not include any duties, taxes, and fees previously refunded to 
        any person for such merchandise.
    ``(e) Refunds, Waivers, or Reductions Under Certain Free Trade 
Agreements.--
            ``(1) In general.--If an article that is exported to a 
        NAFTA country is a good subject to NAFTA drawback, no customs 
        duties on the good 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 good on importation into the United States; 
                or
                    ``(B) the total amount of customs duties paid on 
                the good on importation into the NAFTA country.
            ``(2) Special rule for 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 (b), the shipment to Canada during 
        the period such Agreement is in operation of an article made 
        from or substituted for, as appropriate, a drawback eligible 
        good under section 204(a) of the United States-Canada Free-
        Trade Implementation Act of 1988 (19 U.S.C. 1212 note) does not 
        constitute an exportation.
            ``(3) Special rule for chile.--
                    ``(A) In general.--For purposes of subsections (b) 
                and (g)(1), if an article that is exported to Chile is 
                a good subject to Chile FTA drawback, no customs duties 
                on the good may be refunded, waived, or reduced, except 
                as provided in subparagraph (B).
                    ``(B) Amount of customs duties.--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 exported to nafta country.--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 the North American Free Trade Agreement 
        Implementation Act (19 U.S.C. 3333(a)), shall not constitute an 
        exportation for purposes of subsection (b).
            ``(5) Fungible merchandise exported to chile.--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 (19 U.S.C. 3805 note), shall not 
        constitute an exportation for purposes of subsection (b). The 
        preceding sentence shall not be construed to permit the 
        substitution of unused drawback under subsection (b) of this 
        section with respect to merchandise described in paragraph (2) 
        of section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act.
    ``(f) Proof of Exportation.--A person claiming drawback under this 
section shall submit to the Secretary proof of the exportation by 
submitting at least 1 of the following:
            ``(1) The appropriate record from the United States 
        Government automated export system, or evidence of the 
        equivalent information if such system was unable to report the 
        exportation.
            ``(2) Export documentation issued in the normal course of 
        business.
            ``(3) If the drawback claims filed pursuant to paragraph 
        (1), (2), or (4) of subsection (e), the Canadian or Mexican 
        entry records.
            ``(4) For a deemed exportation, any record that establishes 
        the fact of deemed exportation that includes a description of 
        the article or merchandise by the 8-digit HTS subheading number 
        (or equivalent Schedule B number) under which the article or 
        merchandise would be classifiable, quantity, and declared 
        value.
    ``(g) Special Eligibility Rules.--
            ``(1) Vessels built for residents of a foreign country.--
        Drawback under this section may be claimed for materials 
        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.
            ``(2) Destroyed merchandise.--
                    ``(A) Eligibility for drawback.--Drawback under 
                this section may be claimed for--
                            ``(i) imported merchandise,
                            ``(ii) an article incorporating the 
                        imported merchandise, or
                            ``(iii) substitute merchandise,
                that is not exported because it was destroyed.
                    ``(B) Amount of drawback.--Subject to subparagraph 
                (C), the amount of drawback paid for a claim filed 
                pursuant to subparagraph (A) shall be--
                            ``(i) the average entered value per unit of 
                        merchandise, multiplied by
                            ``(ii) the duty, tax, and fee applicable to 
                        the designated line item of the merchandise, 
                        multiplied by
                            ``(iii) the number of units claimed, minus 
                        1 percent.
                    ``(C) Offsetting amounts.--The amount of duties, 
                taxes, and fees to be refunded pursuant to this 
                paragraph shall not include any duties, taxes, and fees 
                previously refunded to an importer of record or the 
                person claiming drawback. The value of the imported 
                merchandise on which drawback is claimed shall be 
                reduced by the value of any recovered materials 
                (including the value of any tax benefit or royalty 
                payment).
            ``(3) Agricultural products.--No drawback under this 
        section may be claimed for an agricultural product subject to 
        over-quota rate of duty established under a tariff-rate quota, 
        except under a direct identification basis and when such 
        product has not been used in the United States.
            ``(4) Merchandise not regularly entered.--Imported 
        merchandise that has not been regularly entered or withdrawn 
        for consumption shall not satisfy the exportation or 
        destruction requirements of this section.
            ``(5) Flavoring extracts, medicinal, or toilet 
        preparations; distilled spirits and wines.--
                    ``(A) Flavoring extracts, medicinal, 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.
                    ``(B) Distilled spirits and wines.--
                            ``(i) In general.--If distilled spirits and 
                        wines are imported into the United States and 
                        such spirts and wines, or substitute 
                        merchandise, are then exported, or are 
                        incorporated into an article that is exported, 
                        or a substitute article is exported, duties, 
                        fees, and taxes imposed upon entry or 
                        importation shall be refunded as drawback 
                        pursuant to subsection (b) notwithstanding any 
                        other provision of law.
                            ``(ii) Tax on bottled distilled spirits and 
                        wines.--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 the claim for drawback is 
                        filed by the bottler or packager of the spirits 
                        and unless such 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.
    ``(h) Prohibition on Other Claims for Drawback.--Merchandise that 
is exported or destroyed to satisfy any claim for drawback shall not be 
the basis of any other claim for drawback, except that appropriate 
credit and deductions for claims covering components or ingredients of 
such merchandise shall be made in computing drawback payments.
    ``(i) Liability for Claim.--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, for the full amount 
of the claim, are jointly and severally liable to the United States for 
drawback claims. In implementing this section, the Secretary shall 
provide by regulation that the United States attempt to recover from 
the drawback claimant before attempting to recover from the importer.
    ``(j) Payment From Receipts of Puerto Rico.--A drawback under this 
section for merchandise shall be paid from the customs receipts of 
Puerto Rico if the duties for such merchandise were originally paid 
into the Treasury of Puerto Rico.''.
    (b) Report.--
            (1) In general.--Not later than 1 year after the date the 
        drawback processing module is operational and the Automated 
        Commercial Environment becomes the exclusive system of record 
        nationally for drawback entries, the Commissioner of the Bureau 
        of Customs and Border Protection shall submit to the Committee 
        on Finance of the Senate and the Committee on Ways and Means of 
        the House of Representatives a report that evaluates the 
        utilization of direct identification in drawback claims, 
        including measurement of the number of non-NAFTA, 
        nondestruction claims filed using direct identification, and 
        the impact on personnel allocation within the Bureau.
            (2) Automated commercial environment defined.--In this 
        subsection, the term ``Automated Commercial Environment'' means 
        the automated trade processing system designed to collect, 
        process, and analyze commercial import and export data to 
        facilitate international trade and travel.
    (c) Technical and Conforming Amendments.--
            (1) Refunds.--Section 505(b) of the Tariff Act of 1930 (19 
        U.S.C. 1505(b)), is amended by adding at the end the following: 
        ``Refunds of excess moneys deposited, as determined on a 
        liquidation or reliquidation, shall be reduced by any amount 
        paid, on an accelerated basis or otherwise, to a drawback 
        claimant pursuant to section 313.''.
            (2) Review of protests.--The second sentence of section 
        515(a) of the Tariff Act of 1930 (19 U.S.C. 1515(a)) is amended 
        by striking the period at the end and inserting ``in accordance 
        with section 505.''.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall take effect on the date 
        that the Commissioner of the Bureau of Customs and Border 
        Protection publishes a finding that the Automated Commercial 
        Environment (as defined in subsection (b)(2)) is the exclusive 
        system of record in the United States for entry summaries and 
        shall apply to drawback claims designating import entry 
        summaries or reconfigured entries that are filed on or after 
        that date.
            (2) Exception.--Subsection (a)(15) of section 313 of the 
        Tariff Act of 1930 (relating to definitions of the terms 
        ``substitute merchandise'' and ``substitute article''), as 
        added by subsection (a) of this section, shall take effect on 
        the date of the enactment of this Act and shall apply for 
        purposes of determining commercial interchangeability for 
        unused merchandise drawback claims filed pursuant to subsection 
        (j)(2) of such section on or after the date of the enactment of 
        this Act but before the effective date described in paragraph 
        (1).
                                 <all>