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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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. DRAWBACK. 

4 Section 313 of the Tariff Act of 1930 (19 U.S.C. 

5 1313) is amended to read as follows: 

6 ‘‘SEC. 313. DRAWBACK. 

7 ‘‘(a) DRAWBACK FOR EXPORTED MERCHANDISE.— 

8 If merchandise is imported into the United States and 

9 that merchandise or its substitute, whether self-contained 

10 or contained in drawback merchandise, or drawback mer11 chandise or its substitute, whether self-contained or con12 tained in other drawback merchandise or its substitute, 
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1 is subsequently exported, drawback shall be granted if the 

2 following conditions are met: 

3 ‘‘(1)(A) The exporter of the imported merchan4 dise or its substitute imported the merchandise, or 

5 received the imported merchandise or its substitute 

6 directly or indirectly from the importer. 

7 ‘‘(B) The exporter of the drawback merchandise 

8 or its substitute received drawback merchandise or 

9 its substitute, or produced drawback merchandise or 

10 its substitute directly or indirectly. 

11 ‘‘(2) The exported merchandise or its substitute 

12 is classifiable within the same 8-digit HTS sub13 heading as the imported merchandise. If the ex14 ported merchandise or its substitute is not classifi15 able within the same 8-digit HTS subheading as the 

16 imported merchandise, the claimant may show by 

17 records that— 

18 ‘‘(A) the exported merchandise or its sub19 stitute could be classifiable within the same 8- 

20 digit HTS subheading as the imported mer21 chandise; or 

22 ‘‘(B) the imported merchandise or its sub23 stitute, or drawback merchandise or its sub24 stitute, could be contained in, used in the pro25 duction of, or in any other manner integrated 
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1 with, the exported merchandise or its sub2 stitute. 

3 ‘‘(b) DRAWBACK CLAIMANTS.— 

4 ‘‘(1) IN GENERAL.—A drawback claimant may 

5 be any party, if the following conditions are met: 

6 ‘‘(A) If the claimant is not the importer, 

7 the claimant has obtained permission from the 

8 importer to receive drawback for the designated 

9 import. 

10 ‘‘(B) If the claimant is not the exporter, 

11 the claimant has obtained permission from the 

12 exporter to obtain drawback for the designated 

13 export. 

14 ‘‘(2) JOINT AND SEVERAL LIABILITY.—Import15 ers, up to the amount of duties, taxes, and fees on 

16 the designated import permitted by the importer for 

17 drawback by the claimant, and drawback claimants 

18 are jointly and severally liable for drawback claims. 

19 ‘‘(c) TIME LIMITATION FOR FILING.—No drawback 

20 shall be paid unless the drawback claim is filed within 5 

21 years from the earliest date of importation of the mer22 chandise that is designated on the claim. 

23 ‘‘(d) AMOUNT OF DRAWBACK.—The drawback 

24 amount paid to the claimant shall not exceed the amount 

25 of duties, taxes, and fees paid on the designated line item. 
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1 The exclusive means for determining the amount of draw2 back to be paid to the claimant shall be as follows: 

3 ‘‘(1) For drawback under paragraphs (1)(A) 

4 and (2)(A) of subsection (a), the lesser of— 

5 ‘‘(A) the amount of the duties, taxes, and 

6 fees per unit on the line item designated for 

7 drawback, based upon the entered value of that 

8 line item, multiplied by the number of units 

9 claimed; and 

10 ‘‘(B) the amount of the duties, taxes, and 

11 fees per line item unit that would have been im12 posed on the exported merchandise or its sub13 stitute had such merchandise been imported, 

14 based upon the value of that exported merchan15 dise or its substitute, multiplied by the number 

16 of units claimed. 

17 ‘‘(2) For drawback under paragraph (1)(B) and 

18 (2)(B) of subsection (a), the amount of the duties, 

19 taxes, and fees per unit on the line item designated 

20 for drawback, based upon the entered value of that 

21 line item, multiplied by the number of units claimed. 

22 ‘‘(e) REFUNDS, WAIVERS, OR REDUCTIONS UNDER

23 CERTAIN FREE TRADE AGREEMENTS.— 

24 ‘‘(1) NAFTA.—For purposes of subsections (a) 

25 and (g), if merchandise that is exported to a 
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1 NAFTA country is a good subject to NAFTA draw2 back, no customs duties on the merchandise may be 

3 refunded, waived, or reduced in an amount that ex4 ceeds the lesser of— 

5 ‘‘(A) the total amount of customs duties 

6 paid or owed on the merchandise on importa7 tion into the United States; or 

8 ‘‘(B) the total amount of customs duties 

9 paid on the merchandise to the NAFTA coun10 try. 

11 ‘‘(2) CANADA.—If Canada ceases to be a 

12 NAFTA country and the suspension of the operation 

13 of the United States-Canada Free-Trade Agreement 

14 thereafter terminates, then for purposes of sub15 section (a), the shipment to Canada during the pe16 riod such Agreement is in operation of merchandise 

17 made from or substituted for, as appropriate, draw18 back eligible merchandise under section 204(a) of 

19 the United States-Canada Free-Trade Implementa20 tion Act of 1988 (19 U.S.C. 2112 note) does not 

21 constitute an exportation. 

22 ‘‘(3) CHILE.—(A) For purposes of subsections 

23 (a) and (g), if merchandise that is exported to Chile 

24 is a good subject to Chile FTA drawback, no cus25 toms duties on the merchandise may be refunded, 
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1 waived, or reduced, except as provided in subpara2 graph (B). 

3 ‘‘(B) The customs duties referred to in sub4 paragraph (A) may be refunded, waived, or reduced 

5 by— 

6 ‘‘(i) 100 percent during the 8-year period 

7 beginning on January 1, 2004; 

8 ‘‘(ii) 75 percent during the 1-year period 

9 beginning on January 1, 2012; 

10 ‘‘(iii) 50 percent during the 1-year period 

11 beginning on January 1, 2013; and 

12 ‘‘(iv) 25 percent during the 1-year period 

13 beginning on January 1, 2014. 

14 ‘‘(4) FUNGIBLE MERCHANDISE.—(A) The ex15 portation to a NAFTA country of merchandise that 

16 is fungible with and substituted for imported mer17 chandise, other than merchandise described in para18 graphs (1) through (8) of section 203(a) of that Act, 

19 shall not constitute an exportation for purposes of 

20 subsection (a). 

21 ‘‘(B) Beginning on January 1, 2015, the expor22 tation to Chile of merchandise that is fungible with 

23 and substituted for imported merchandise, other 

24 than merchandise described in paragraphs (1) 

25 through (5) of section 203(a) of the United States- 
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1 Chile Free Trade Agreement Implementation Act, 

2 shall not constitute an exportation for purposes of 

3 paragraph (2). The preceding sentence shall not be 

4 construed to permit the substitution of unused draw5 back under paragraph (2) of this subsection with re6 spect to merchandise described in paragraph (2) of 

7 section 203(a) of the United States-Chile Free 

8 Trade Agreement Implementation Act. 

9 ‘‘(5) TOTAL AMOUNT OF CUSTOMS DUTIES PAID

10 OR OWED.—As used in this subsection, the total 

11 amount of customs duties paid or owed on the mer12 chandise on importation into the United States 

13 means the duties, taxes, and fees per unit paid on 

14 the import line item designated for drawback. 

15 ‘‘(f) MERCHANDISE FOR USE IN VESSELS.—The pro16 visions of this section shall apply to merchandise imported 

17 and used in the construction and equipment of vessels 

18 built for foreign account and ownership, or for the govern19 ment of any foreign country, notwithstanding that such 

20 vessels may not within the strict meaning of the term be 

21 exported. 

22 ‘‘(g) AGRICULTURAL MERCHANDISE.—No drawback 

23 shall be available with respect to agricultural merchandise 

24 subject to over-quota rate of duty established under a tar-
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1 iff-rate quota, except on a direct identification basis when 

2 such merchandise has not been used in the United States. 

3 ‘‘(h) PUERTO RICO.—Any drawback authorized 

4 under this section shall be paid from the customs receipts 

5 of Puerto Rico if the duties were originally paid into the 

6 Treasury of Puerto Rico. 

7 ‘‘(i) DESTRUCTION OF MERCHANDISE.— 

8 ‘‘(1) IN GENERAL.—The exportation require9 ment contained in subsection (a) may be satisfied by 

10 destroying merchandise, except that drawback mer11 chandise is destroyed in lieu of exportation only if— 

12 ‘‘(A) the merchandise that was imported is 

13 the actual merchandise that is destroyed; and 

14 ‘‘(B) the claimant directly identifies the ac15 tual merchandise that is destroyed in lieu of ex16 portation. 

17 ‘‘(2) AMOUNT OF DRAWBACK.—For claims filed 

18 pursuant to this subsection, the drawback paid to 

19 the claimant shall be the amount of the duties, 

20 taxes, and fees per line item unit on the imported 

21 merchandise designated for drawback, whether by 

22 direct identification or by accounting method, multi23 plied by the number of units claimed. 

24 ‘‘(j) LIMITATION ON EXPORTATION REQUIRE25 MENT.—Imported merchandise that has not been regu-
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1 larly entered or withdrawn for consumption does not sat2 isfy the exportation requirement of this section. 

3 ‘‘(k) CLAIMING EXPORTATION OR DESTRUCTION.— 

4 An exportation or destruction may be claimed on only one 

5 drawback claim, except that components or ingredients of 

6 exported or destroyed merchandise that were not claimed 

7 on one drawback claim covering a certain exportation or 

8 destruction may be claimed on another drawback claim 

9 covering that same exportation or destruction. 

10 ‘‘(l) REGULATIONS.—The Secretary of the Treasury 

11 is authorized to promulgate regulations to carry out this 

12 section. 

13 ‘‘(m) FLAVORING EXTRACTS; MEDICINAL OR TOILET

14 PREPARATIONS; BOTTLED DISTILLED SPIRITS AND

15 WINES.— 

16 ‘‘(1) FLAVORING EXTRACTS; MEDICAL OR TOI17 LET PREPARATIONS.—Upon the exportation of fla18 voring extracts, medicinal or toilet preparations (in19 cluding perfumery), manufactured or produced in 

20 the United States in part from domestic alcohol on 

21 which an internal revenue tax has been paid, there 

22 shall be allowed a drawback equal in amount to the 

23 tax found to have been paid on the alcohol so used. 

24 ‘‘(2) DISTILLED SPIRITS.—Upon the expor25 tation of bottled distilled spirits and wines manufac-
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1 tured or produced in the United States on which an 

2 internal revenue tax has been paid or determined, 

3 there shall be allowed, under regulations to be pre4 scribed by the Commissioner of Internal Revenue, 

5 with the approval of the Secretary of the Treasury, 

6 a drawback equal in amount to the tax found to 

7 have been paid or determined on such bottled dis8 tilled spirits and wines. In the case of distilled spir9 its, the preceding sentence shall not apply unless— 

10 ‘‘(A) the claim for drawback is filed by the 

11 bottler or packager of the spirits; and 

12 ‘‘(B) the spirits have been stamped or re13 stamped, and marked, especially for export, 

14 under regulations prescribed by the Commis15 sioner of Internal Revenue, with the approval of 

16 the Secretary of the Treasury. 

17 ‘‘(n) DEFINITIONS.—As used in this section: 

18 ‘‘(1) DRAWBACK.—The term ‘drawback’ means 

19 a refund of 99 percent of applicable duties, taxes, 

20 and fees paid pursuant to Federal law upon impor21 tation of merchandise, and not refunded under any 

22 other law, in a case in which— 

23 ‘‘(A) the imported merchandise or its sub24 stitute, or drawback merchandise or its sub25 stitute, is exported; or 
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1 ‘‘(B) the imported merchandise is de2 stroyed. 

3 ‘‘(2) HTS.—The term ‘HTS’ means the Har4 monized Tariff Schedule of the United States. 

5 ‘‘(3) NAFTA COUNTRY; GOOD SUBJECT TO

6 NAFTA DRAWBACK.—The terms ‘NAFTA country’ 

7 and ‘good subject to NAFTA drawback’ have the 

8 meanings given those terms in sections 2(4) and 

9 203(a), respectively, of the North American Free 

10 Trade Agreement Implementation (19 U.S.C. 

11 3301(4) and 3333(a)). 

12 ‘‘(4) GOOD SUBJECT TO CHILE FTA DRAW13 BACK.—The term ‘good subject to Chile FTA draw14 back’ has the meaning given that term in section 

15 203(a) of the United States-Chile Free Trade Agree16 ment Implementation Act (19 U.S.C. 3805 note). 

17 ‘‘(5) SUBSTITUTE.—Any merchandise may be 

18 substituted for any other merchandise when the two 

19 share the same 8-digit HTS subheading. When the 

20 two do not share the same 8-digit HTS subheading, 

21 they may be substituted for one another if a claim22 ant can demonstrate that they were both classifiable 

23 within the same 8-digit HTS subheading during the 

24 period beginning on the date of importation of the 

25 merchandise designated for drawback to the date of 
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1 the drawback claim. To establish such a nexus, the 

2 claimant shall submit records with its claim that 

3 demonstrate the link from one 8-digit HTS sub4 heading to the other 8-digit HTS subheading. 

5 ‘‘(6) FUNGIBLE.—Merchandise is fungible when 

6 it is commercially identical to other merchandise in 

7 all instances. 

8 ‘‘(7) LINE ITEM.—The term ‘line item’ means 

9 the line item on the entry summary or its equivalent 

10 and a reconfigured entry. 

11 ‘‘(8) CONTAINED IN.—The term ‘contained in’ 

12 means contained in, used in the production of, or in 

13 any other manner integrated with, other merchan14 dise. 

15 ‘‘(9) DRAWBACK MERCHANDISE.—The term 

16 ‘drawback merchandise’ means merchandise in which 

17 is contained imported merchandise or its substitute, 

18 or other drawback merchandise or its substitute. 

19 Drawback merchandise may be exported or de20 stroyed with a claim for drawback, or it may be con21 tained in other drawback merchandise or its sub22 stitute. 

23 ‘‘(10) DIRECTLY IDENTIFY.—The term ‘directly 

24 identify’ means to identify of merchandise by a 
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1 unique identifier such as a serial number or by the 

2 use of an approved inventory accounting method.’’. 

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