NAM Drawback Lawsuit Has 'Good Likelihood of Success,' Neville Peterson Says
The National Association of Manufacturers lawsuit against CBP and the Department of the Treasury over limits to drawback for goods subject to excise taxes seems to have a "good likelihood of success," law firm Neville Peterson said in an April 19 blog post. Specifically, NAM has a good argument that CBP's change for excise tax drawback "conflicts directly with the language of Section 313 of the Tariff Act, as amended by the Trade Facilitation and Trade Enforcement Act (TFTEA)," the law firm said. "On this point, NAM would seem to have a clear path to victory." That's because "Treasury’s proposal to limit [federal excise taxes (FET)] was first proposed as a change of practice in 2007, when the prior version of the drawback statute was in effect, and withdrawn in 2009," Neville Peterson said. "As amended by TFTEA, however, the drawback statute clearly forecloses the government’s position, since it indicates that the amount of FET drawback to be paid is that which 'would have been charged had the exported merchandise been imported.'”
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The firm expects the government to defend the rule changes by expanding the definition of a "drawback claim" to include "remissions or exemptions of taxes arising under other statutes," the firm said. NAM is also seeking "declaratory judgment regarding the extent to which the regulations can be applied to claims filed prior to their stated effective dates." Many courts are reluctant to issue declaratory judgments and "prefer to have a specific case or controversy presented (in a case like this, a denied drawback claim)," the firm said. "However, it is possible that Court, even if it does not issue a declaratory judgment, might include non-binding dicta in its decision which would have the effect of dissuading CBP from denying such claims." Neville Peterson was involved in the litigation that compelled CBP to issue the TFTEA drawback regulations and filed comments in opposition to the excise tax changes.