[Federal Register Volume 63, Number 235 (Tuesday, December 8, 1998)]
[Notices]
[Pages 67722-67723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32515]


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DEPARTMENT OF THE TREASURY

Customs Service


Implementation of the Automated Drawback Selectivity Program

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: General notice.

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SUMMARY: This document sets forth for the information of the general 
public the text of a document that was previously published in the 
Customs Bulletin on November 25, 1998, pursuant to section 622 of the 
Customs Modernization provisions of the North American Free Trade 
Agreement Implementation Act, to provide notice of the nationwide 
operational implementation of an automated drawback selectivity 
program. Publication of that notice in the Customs Bulletin was a 
prerequisite to application of the section 622 provisions that provide 
for the imposition of monetary penalties for filing false drawback 
claims and that provide for the establishment of a drawback compliance 
program.

FOR FURTHER INFORMATION CONTACT: Al Morawski, Office of Field 
Operations (202-927-1082).

SUPPLEMENTARY INFORMATION:

Background

    On December 8, 1993, the President signed the North American Free 
Trade Agreement Implementation Act (the Act, Pub. L. 103-182, 107 Stat. 
2057). Title VI of the Act set forth Customs Modernization provisions 
that included, in section 622, provisions regarding penalties for false 
drawback claims. Paragraph (a) of section 622 amended the Tariff Act of 
1930 by adding section 593A (codified at 19 U.S.C. 1593a) which 
prescribes the actions that Customs may take (including the assessment 
of monetary penalties) for the filing of false drawback claims, 
requires Customs to establish a voluntary drawback compliance program, 
and requires the Secretary of the Treasury to promulgate regulations 
and guidelines to implement the section 593A provisions. Under 
paragraph (b) of section 622, the section 593A provisions apply to 
drawback claims filed on and after the nationwide operational 
implementation of an automated drawback selectivity program by Customs, 
and Customs was required to publish in the Customs Bulletin the 
effective date of that selectivity program. The notice mandated by 
paragraph (b) of section 622 was published in the Customs Bulletin on 
November 25, 1998, and is republished here for the information of the 
general public.

    Dated: December 2, 1998.
Stuart P. Seidel,
Assistant Commissioner, Office of Regulations and Rulings.

    Accordingly, the document that provided notice of the nationwide 
operational implementation of the automated drawback selectivity 
program, as discussed above, is reproduced below:

Department of the Treasury

United States Customs Service

[T.D. 98-88]

Implementation of the Automated Drawback Selectivity Program

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: General notice.

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SUMMARY: Pursuant to section 622 of the Customs Modernization 
provisions of the North American Free Trade Agreement Implementation 
Act, this document provides notice of the nationwide operational 
implementation of an automated drawback selectivity program. 
Publication of this notice is a prerequisite to application of the 
section 622 provisions that provide for the imposition of monetary 
penalties for filing false drawback claims and that provide for the 
establishment of a drawback compliance program.

DATES: The automated drawback selectivity program was implemented on 
August 29, 1998. The liability for monetary penalties for the filing 
of false drawback claims applies to drawback claims filed on and 
after November 25, 1998.

FOR FURTHER INFORMATION CONTACT: Al Morawski, Office of Field 
Operations (202-927-1082).

SUPPLEMENTARY INFORMATION:

Background

    The Customs Modernization provisions contained in Title VI of 
the North American Free Trade Agreement Implementation Act (the Act, 
Pub. L. 103-182, 107 Stat. 2057) included, in section 622, 
provisions regarding penalties for false drawback claims.
    Paragraph (a) of section 622 amended the Tariff Act of 1930 by 
adding section 593A (codified at 19 U.S.C. 1593a) which (1) 
prescribes the actions that Customs may take, including the 
assessment of monetary penalties, for the filing of a false 
(fraudulent or negligent) drawback claim, (2) requires Customs to 
establish a voluntary drawback compliance program under which 
participants in certain circumstances may be afforded an alternative 
to the monetary penalty that would normally apply for filing a false 
drawback claim, and (3) requires the Secretary of the Treasury to 
promulgate regulations and guidelines to implement the section 593A 
provisions.
    Under paragraph (b) of section 622, which concerns the effective 
date of the amendment made by paragraph (a), the section 593A 
provisions can apply only to drawback claims filed on and after the 
nationwide operational implementation of an automated drawback 
selectivity program by Customs. Customs is required under paragraph 
(b) of section 622 to publish in the Customs Bulletin the effective 
date of the selectivity program.

Drawback Compliance Program

    On March 5, 1998, Customs published in the Federal Register (63 
FR 10970) as T.D. 98-16 a final rule document which revised the 
provisions within the Customs Regulations that pertain to drawback. 
The bulk of those drawback regulatory changes involved a revision of 
Part 191 of the Customs Regulations (19 CFR Part 191) in order to, 
among other things, reflect extensive changes to the drawback law 
made by section 632 of the Act. The Part 191 texts as so revised 
also include a Subpart S, Secs. 191.191 through 191.195, which 
pertains to the drawback compliance program mandated by section 593A 
of the Tariff Act of 1930 as added by section 622 of the Act. Those 
Subpart S provisions are directed to procedural aspects of the 
drawback compliance program (such as program participation 
requirements, including application submission and approval 
standards) and therefore do not incorporate specific standards for 
the assessment or mitigation of penalties against program 
participants for filing false drawback claims. In view of the 
effective date limitation in paragraph (b) of section 622 of the 
Act, Customs has to date not accepted applications from prospective 
program participants or in any other way put those Subpart S 
provisions into operation.

Penalties and Mitigation Guidelines for False Drawback Claims

    On September 29, 1998, Customs published in the Federal Register 
(63 FR 51868) a notice of proposed rulemaking which set forth 
proposed amendments to the Customs Regulations to set forth the 
procedures to be followed when false drawback claims are filed and 
penalties are thereby incurred. The proposed regulatory changes 
implement all penalty aspects of section 622 of the Act and thus 
include proposed mitigation guidelines that Customs would follow in 
arriving at a just and reasonable assessment and disposition of 
liabilities when false drawback claims are filed and penalties are 
incurred by drawback compliance program participants or by persons 
who are not participants in that program. The document also proposed 
an amendment to the regulatory texts adopted by T.D. 98-16 to 
provide more specificity regarding the grounds and procedures for 
removal of a participant from the drawback

[[Page 67723]]

compliance program. The Background portion of the document also 
referred to paragraph (b) of section 622 of the Act, noting in this 
regard that the proposed regulatory amendments set forth in the 
document, if adopted as a final rule, will not be effective until 
Customs implements an automated drawback selectivity program.

Implementation of the Selectivity Program

    Customs hereby gives notice that on August 29, 1998, Customs 
implemented, on a nationwide operational basis, an automated 
drawback selectivity program. This criteria-based selectivity 
program automates the previously manual, labor-intensive processing 
of drawback claims. This automation will result in more efficient 
processing of drawback data and will move Customs one step closer to 
paperless processing of drawback claims.
    As a consequence of implementation of the drawback selectivity 
program, any person who files a false drawback claim on and after 
November 25, 1998, will become potentially liable for a monetary 
penalty under 19 U.S.C. 1593a. However, Customs does not intend to 
issue a penalty notice or take any other action authorized by 19 
U.S.C. 1593a in respect of any such violation until such time as 
final regulations implementing the provisions of 19 U.S.C. 1593a are 
in effect.

    Dated: November 4, 1998.
Robert S. Trotter,
Assistant Commissioner, Office of Field Operations.
[FR Doc. 98-32515 Filed 12-7-98; 8:45 am]
BILLING CODE 4820-02-P