Legal Challenge to Excise Tax Drawback Provisions Expected Within Weeks
SAN ANTONIO, Texas -- A lawsuit challenging the new CBP drawback regulations that limit drawback on goods subject to excise taxes (see 1812190011) is expected soon, Sandler Travis lawyer Michael Cerny said on a panel at the National Customs Brokers & Forwarders Association of America's annual conference on April 16. CBP is saying "the export of excise-tax-free goods is considered a drawback, therefore you can't get a second drawback of that through substitution," Cerny said. "This is going to be challenged," and he said he expects a lawsuit within "the next few weeks." The excise tax changes became effective on Feb. 19, 2019.
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There doesn't seem to be any specific explanation for why a challenge has not already been filed, Cerny said. Filers are likely putting together the complaints and "I'm sure that it's coming any time now," he said. Comstock & Theakston Vice President David Corn said potential litigants are also likely waiting to see whether the agencies made any changes in response to commenters before filing suit.
The Section 301 tariffs have resulted in industries taking a closer look at drawback, Cerny said. For example, the technology industry is "all of a sudden paying 301 duties and paying a lot of them and they want their money back," Cerny said. After years of paying very low duties, the industry is now "dipping their toe into the drawback world," he said. The prohibition on drawback for the Section 232 tariffs on steel and aluminum still seems legally questionable and "I suspect someone's going to challenge that," he said.
Despite the original intent to make drawback simpler, the process remains as complicated as ever, said Anne-Marie Bush, president of Veritrade International. Cerny agreed and said that while certain parts of drawback are simpler under the new law, "in many ways it complicates it more."