MODIFICATION OF PROVISIONS RELATING TO DRAWBACK CLAIMS.

SEC. 1563. MODIFICATION OF PROVISIONS RELATING TO DRAWBACK CLAIMS. (a) Merchandise Not Conforming to Sample or Specifications.—Section 313(c) of the Tariff Act of 1930 (19 U.S.C. 1313(c)) is amended to read as follows:118 STAT. 2584 “(c) Merchandise Not Conforming to Sample or Specifications.—“(1) Conditions for drawback.—Upon the exportation or destruction under the supervision of the Customs Service of articles or merchandise—“(A) upon which the duties have been paid,“(B) which has been entered or withdrawn for consumption,“(C) which is—“(i) not conforming to sample or specifications, shipped without the consent of the consignee, or determined to be defective as of the time of importation, or“(ii) ultimately sold at retail by the importer, or the person who received the merchandise from the importer under a certificate of delivery, and for any reason returned to and accepted by the importer, or the person who received the merchandise from the importer under a certificate of delivery, and“(D) which, within 3 years after the date of importation or withdrawal, as applicable, has been exported or destroyed under the supervision of the Customs Service,the full amount of the duties paid upon such merchandise, less 1 percent, shall be refunded as drawback.“(2) Designation of import entries.—For purposes of paragraph (1)(C)(ii), drawback may be claimed by designating an entry of merchandise that was imported within 1 year before the date of exportation or destruction of the merchandise described in paragraph (1) (A) and (B) under the supervision of the Customs Service. The merchandise designated for drawback must be identified in the import documentation with the same eight-digit classification number and specific product identifier (such as part number, SKU, or product code) as the returned merchandise.“(3) When drawback certificates not required.—For purposes of this subsection, drawback certificates are not required if the drawback claimant and the importer are the same party, or if the drawback claimant is a drawback successor to the importer as defined in subsection (s)(3).”.(b) Time Limitation on Exportation or Destruction.—Section 313(i) of the Tariff Act of 1930 (19 U.S.C. 1313(i)), is amended—(1) by striking “No” and inserting “Unless otherwise provided for in this section, no”; and(2) by inserting “, or destroyed under the supervision of the Customs Service,” after “exported”.(c) Use of Domestic Merchandise Acquired in Exchange for Imported Merchandise of Same Kind and Quality.—Section 313(k) of the Tariff Act of 1930 (19 U.S.C. 1313(k)), is amended—(1) by striking “(k)” and inserting “(k)(1)”; and(2) by adding at the end the following new paragraph:“(2) For purposes of subsections (a) and (b), the use of any domestic merchandise acquired in exchange for a drawback product of the same kind and quality shall be treated as the use of such drawback product if no certificate of delivery or certificate of manufacture and delivery pertaining to such drawback product is issued, other than that which documents the product’s manufacture and delivery. As used in this paragraph, the term ‘drawback product’ 118 STAT. 2585 means any domestically produced product, manufactured with imported merchandise or any other merchandise (whether imported or domestic) of the same kind and quality, that is subject to drawback.”.(d) Packaging Material.—Section 313(q) of the Tariff Act of 1930 (19 U.S.C. 1313(q)), is amended to read as follows:“(q) Packaging Material.—“(1) Packaging material under subsections (c) and (j).—Packaging material, whether imported and duty paid, and claimed for drawback under either subsection (c) or (j)(1), or imported and duty paid, or substituted, and claimed for drawback under subsection (j)(2), shall be eligible for drawback, upon exportation, of 99 percent of any duty, tax, or fee imposed under Federal law on such imported material.“(2) Packaging material under subsections (a) and (b).—Packaging material that is manufactured or produced under subsection (a) or (b) shall be eligible for drawback, upon exportation, of 99 percent of any duty, tax, or fee imposed under Federal law on the imported or substituted merchandise used to manufacture or produce such material.“(3) Contents.—Packaging material described in paragraphs (1) and (2) shall be eligible for drawback whether or not they contain articles or merchandise, and whether or not any articles or merchandise they contain are eligible for drawback.“(4) Employing packaging material for its intended purpose prior to exportation.—The use of any packaging material for its intended purpose prior to exportation shall not be treated as a use of such material prior to exportation for purposes of applying subsection (a), (b), or (c), or paragraph (1)(B) or (2)(C)(i) of subsection (j).”.(e) Limitation on Liquidation.—Section 504 of the Tariff Act of 1930 (19 U.S.C. 1504) is amended—(1) by striking subsections (a) and (b) and inserting the following:“(a) Liquidation.—“(1) Entries for consumption.—Unless an entry of merchandise for consumption is extended under subsection (b) of this section or suspended as required by statute or court order, except as provided in section 751(a)(3), an entry of merchandise for consumption not liquidated within 1 year from—“(A) the date of entry of such merchandise,“(B) the date of the final withdrawal of all such merchandise covered by a warehouse entry,“(C) the date of withdrawal from warehouse of such merchandise for consumption if, pursuant to regulations issued under section 505(a), duties may be deposited after the filing of any entry or withdrawal from warehouse, or“(D) if a reconciliation is filed, or should have been filed, the date of the filing under section 484 or the date the reconciliation should have been filed,shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record. Notwithstanding section 500(e), notice of liquidation need not be given of an entry deemed liquidated.“(2) Entries or claims for drawback.—118 STAT. 2586“(A) In general.—Except as provided in subparagraph (B) or (C), unless an entry or claim for drawback is extended under subsection (b) or suspended as required by statute or court order, an entry or claim for drawback not liquidated within 1 year from the date of entry or claim shall be deemed liquidated at the drawback amount asserted by the claimant at the time of entry or claim. Notwithstanding section 500(e), notice of liquidation need not be given of an entry deemed liquidated.“(B) Unliquidated imports.—An entry or claim for drawback whose designated or identified import entries have not been liquidated and become final within the 1-year period described in subparagraph (A), or within the 1-year period described in subparagraph (C), shall be deemed liquidated upon the deposit of estimated duties on the unliquidated imported merchandise, and upon the filing with the Customs Service of a written request for the liquidation of the drawback entry or claim. Such a request must include a waiver of any right to payment or refund under other provisions of law. The Secretary of the Treasury shall prescribe any necessary regulations for the purpose of administering this subparagraph.“(C) Exception.—An entry or claim for drawback filed before the date of the enactment of this paragraph, the liquidation of which is not final as of the date of the enactment of this paragraph, shall be deemed liquidated on the date that is 1 year after the date of the enactment of this paragraph at the drawback amount asserted by the claimant at the time of the entry or claim.“(3) Payments or refunds.—Payment or refund of duties owed pursuant to paragraph (1) or (2) shall be made to the importer of record or drawback claimant, as the case may be, not later than 90 days after liquidation.“(b) Extension.—The Secretary of the Treasury may extend the period in which to liquidate an entry if—“(1) the information needed for the proper appraisement or classification of the imported or withdrawn merchandise, or for determining the correct drawback amount, or for ensuring compliance with applicable law, is not available to the Customs Service; or“(2) the importer of record or drawback claimant, as the case may be, requests such extension and shows good cause therefor.The Secretary shall give notice of an extension under this subsection to the importer of record or drawback claimant, as the case may be, and the surety of such importer of record or drawback claimant. Notice shall be in such form and manner (which may include electronic transmittal) as the Secretary shall by regulation prescribe. Any entry the liquidation of which is extended under this subsection shall be treated as having been liquidated at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer of record, or the drawback amount asserted at the time of entry by the drawback claimant, at the expiration of 4 years from the applicable date specified in subsection (a).”;(2) in subsection (c)—(A) by inserting “or drawback claimant, as the case may be,” after “to the importer of record”; and118 STAT. 2587(B) by inserting “or drawback claimant” after “of such importer of record”; and(3) in subsection (d), by striking the period at the end and inserting “or (in the case of a drawback entry or claim) at the drawback amount asserted at the time of entry by the drawback claimant.”.(f) Penalties for False Drawback Claims.—Section 593A(h) of the Tariff Act of 1930 (19 U.S.C. 1593a(h)) is amended by striking “subsection (g)” and inserting “subsections (c) and (g)”.(g) Effective Date.—(1) In general.—The amendments made by subsections (a), (b), (c), (d), and (f) shall take effect on the date of the enactment of this Act, and shall apply to—(A) any drawback entry filed on and after such date of enactment; and(B) any drawback entry filed before such date of enactment if the liquidation of the entry is not final on such date of enactment.(2) Subsection (e).—The amendments made by subsection (e) shall take effect on the date of the enactment of this Act, and shall apply to—(A) any entry of merchandise for consumption or entry or claim for drawback filed on and after such date of enactment; and(B) any entry or claim for drawback filed before such date of enactment if the liquidation of the entry or claim is not final on such date of enactment.