Drawback Currents Newsletter

Volume 3: Issue 8: Finally! Customs Establishes Wine Drawback Parameters

CBP Issues Penalties Wine Drawback Ruling

Contributed by Tony Nogueras

Customs Headquarters in a long awaited ruling issued its interpretation related to a provision of the Food, Conservation, and Energy Act of 2008 that addressed the commercial interchangeability of wine for drawback purposes. Section 15421 of the law stated that for drawback purposes imported and exported wine will be matched on a color for color basis (e.g. red for red and white for white) within a 50% wholesale price variance.  The new law, while clear in its general intent, left the door open for Customs to limit its scope through a more restrictive interpretation.   

The Customs ruling addressed a variety of specific issues raised by the San Francisco Drawback Office in a request for internal advice. San Francisco Customs sought clarification on the following points:

1. Whether wines produced from fermented rice or fruit other than grapes, such as cider, perry, plum wine, prune wine, sake, and mead, are within the scope of section 15421 of the Act;

2. Whether fortified wines that contain in excess of 14 percent alcohol by volume (including fortified dessert wine, sherry, port, and vermouth) are within the scope of section 15421 of the Act;

3. Whether carbonated wines, such as crackling wine, sparkling wine, or effervescent including champagne, are within the scope of section 15421 of the Act;

4. Whether imported and substituted wines in different size containers are within the scope of section 15421 of the Act; and,

5. Whether imported or substituted rosé table wine is commercially interchangeable with either red or white table wine.

Customs narrowed the scope of commercial interchangeability as it relates to wine by holding that the law only applied to still table wines under 14% alcohol by volume. This excluded consideration of any other wines made from fruit other than grapes as well as sparkling wines or still table wine over 14%. Rose wine was held to be its own separate color category.

The one positive holding for the industry involved wines shipped in different size containers (bulk shipping vs. bottled case goods). Wines shipped in various size packaging was considered to be commercially interchangeable regardless of the packaging configuration. This portion of the ruling was a significant win for the trade community as bulk wine and case goods fall into different internal revenue department tax categories as well as HTS classifications.

Ask the Expert: "What Proof of Export Does Customs Require for a Drawback Claim?"

In a letter sent to the Trade Community,  Catherine Markey, Drawback Chief for CPB in San Francisco, stated that issues related to proof of export accounts for the majority of drawback claim denials. 

Regulatory drawback provision 19 CFR 191.72 does not require a specific document to substantiate exportation for drawback purposes. Rather, the regulations hold that the document issued by the exporting carrier identifies the exporter, and establish the date and fact of exportation. While not the only document that would fulfill the regulatory criteria, the ocean or export bill of lading is most commonly presented to Customs to substantiate exportation for drawback purposes.  

If a claimant's export transaction is selected by Customs for review, the claimant must provide either an originally signed bill of lading or a certified copy thereof. The copy must be certified by the entity that issued the bill of lading (forwarder or carrier). Specifically, copy must include the statement, "This is a true and correct copy of the original", the name of the signatory, title, date signed, and have a wet signature. 

Additional clarification required, email alliance@alliancechb.com or call Tony Nogueras at: (801) 999-4510

Newsletter Archive

• Volume 3: Issue No. 7: CBP to Issue Penalties for Export Reporting Violations (pdf)

• Volume 3: Issue No. 6: HR 3443: Farm Bill Changes to Drawback Law (pdf)

• Volume 2: Issue No. 6: HR 3443: More Drawback Legislation Introduced! (pdf)

• Volume 2: Issue No. 5: HR 3443: Drawback Simplification Act (pdf)