OT:RR:CTF:EPDR H298165 ASZ
Center Director
Agriculture and Prepared Products
Center of Excellence and Expertise
U.S. Customs and Border Protection
555 Battery Street, Room 319
San Francisco, CA 94111
Attn: Ram Neupane, Drawback Specialist
RE: Application for Further Review of Protest Number 2809-18-100059; Deemed Liquidation
Dear Center Director:
The following is our decision regarding the application for further review (“AFR”) of
protest number 2809-18-100059, filed by Thomas Ferramosca Associates LLC, on behalf of
MHW Ltd. (“MHW”) on February 26, 2018, regarding the denial of its two drawback claims.
FACTS:
On October 16, 2013, MHW filed drawback entry number XXX-XXXX196-2, and on
November 6, 2013, it filed drawback entry number XXX-XXXX211-9. The drawback claims
were made pursuant to 19 U.S.C. § 1313(j)(1). MHW claimed that the underlying import entries
of denizen rum were subject to internal revenue taxes on alcohol. U.S. Customs and Border
Protection (“CBP”) liquidated drawback entry number XXX-XXXX196-2 on January 26, 2018,
and drawback entry number XXX-XXXX211-9 on February 9, 2018. Both entries were
liquidated without drawback. Pursuant to practice in 2018, the drawback office’s decision was
based on the position that CBP could not refund drawback of internal revenue tax paid to the
Alcohol and Tobacco Tax and Trade Bureau (“TTB”).
MHW filed protest number 2809-18-100059 on February 26, 2018, in which it asserted
that the drawback claims deemed liquidated pursuant to 19 U.S.C. § 1504(a)(2). In response to
the protest, the drawback office maintained its position that no internal revenue tax was paid to
CBP at the time of importation; therefore, CBP was not authorized to refund the tax. The
drawback office noted, however, that the harbor maintenance fee and merchandise processing fee
should be refunded.
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ISSUE:
Whether the drawback entries were deemed liquidated by operation of law pursuant to 19
U.S.C. § 1504(a)(2).
LAW AND ANALYSIS:
We note initially that the refusal to pay a claim for drawback is protestable pursuant to 19
U.S.C. § 1514(a)(6). Protests regarding the liquidation of drawback entries must be made within
180 days of the date of liquidation. 19 U.S.C. § 1514(c)(3)(A). The protested drawback claims
were liquidated on January 26, 2018 and February 9, 2018; therefore, the instant protest was
timely filed within 180 days on February 26, 2018. We also note that the drawback claims were
filed prior to when the implementing regulations for the Trade Facilitation and Trade
Enforcement Act were in effect. As such, 19 C.F.R. Part 191 controls our analysis.
In protesting CBP’s liquidation of the drawback claims, MHW asserts that the drawback
claims deemed liquidated by operation of law.
The statutory deadline for CBP to liquidate a drawback entry or claim, absent suspension
of liquidation or extension, is “within 1 year from the date of entry or claim.” 19 U.S.C.
§ 1504(a)(2)(A); see also 19 C.F.R. § 191.81(e)(2). Failure to comply with this statutory
deadline results in the entry’s deemed liquidation “at the drawback amount asserted by the
claimant or claim.” Id.
In the instant case, the drawback claim filed on October 16, 2013, was liquidated on
January 26, 2018, and the drawback claim filed on November 6, 2013, was liquidated on
February 9, 2018. Both claims were liquidated without drawback. The liquidation period for the
two drawback claims was neither suspended nor extended, and the import entry identified in the
drawback claims was liquidated at the time the claim was made. Therefore, the drawback claims
at issue were deemed liquidated on October 16, 2014 and November 6, 2014, respectively, at the
drawback amounts asserted by the claimant or claim.
As was the practice at that time, the drawback office represented that even if the claims
deemed liquidated by operation of law, CBP could not refund internal revenue tax that was paid
to a different agency. Furthermore, no evidence was proffered by MHW to prove that such tax
was paid to TTB. In Headquarters Ruling Letter (“HQ”) H277463 (Sept. 27, 2024), CBP held
that internal revenue, or excise, taxes for distilled spirits were eligible for drawback, including
instances where excise taxes were paid to TTB rather than CBP. That ruling also describes the
historical events leading to refunding of excise taxes. Accordingly, the internal revenue tax need
not have been paid to CBP in order to be eligible for drawback.
In conclusion, pursuant to 19 U.S.C. § 1504(a)(2)(A), the drawback claims at issue
deemed liquidated by operation of law at the drawback amounts asserted by each claim,
including the internal revenue taxes claimed.
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HOLDING:
Based on the foregoing, MHW’s drawback claims at issue under protest number 2809-
18-100059 deemed liquidated pursuant to 19 U.S.C. § 1504(a)(2)(A) and as a result must be
liquidated at the drawback amounts asserted by each claim. The protest should be GRANTED.
You are instructed to notify the Protestant of this decision no later than 60 days from the
date of this decision. Any reliquidation of the entry or entries in accordance with the decision
must be accomplished prior to this notification. Sixty days from the date of the decision, the
Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and
the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/,
or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
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