A federal judge yesterday agreed to allow the industry trade group the Beer Institute (BI) to join a lawsuit filed by the National Association of Manufacturers (NAM) against a pair of federal agencies regarding the collection of so-called “duty drawback claims.”
Last week, the BI filed a motion in the U.S. Court of International Trade to join the lawsuit against the U.S. Department of the Treasury and Treasury secretary Steven T. Mnuchin, as well as U.S. Customs and Border Protection and commissioner John Sanders.
At issue is whether the Treasury can retroactively deny drawback claims filed by beer companies — while honoring similar claims made by wine companies — following a December 2018 ruling that the Treasury would accept future claims on a limited basis.
A drawback, according to the U.S. Customs and Border Protection website, “is the refund of certain duties, internal revenue taxes and certain fees collected upon the importation of goods. Such refunds are only allowed upon the exportation or destruction of goods under U.S. Customs and Border Protection supervision.”
Companies exporting products to countries other than Mexico and Canada are allowed to apply for a drawback if they are also importing similar goods from those regions back into the U.S.
In a statement to Brewbound, BI president and CEO Jim McGreevy said the BI is seeking a resolution on whether claims that beer companies filed “in good faith” will be honored.
“We believe the Department of Treasury should not pick winners and losers and should honor all existing drawback claims from alcohol producers,” he said.
According to the BI’s motion, its members “exported hundreds of millions of liters of alcoholic beverages” between February 2013 and February 2019 to countries other than those bordering the U.S.. Those beverages were classified similarly to ones BI members had previously imported and paid customs duties and federal excise taxes upon.
As such, the BI said those companies should be entitled to a “drawback of 99 percent of the duties, taxes and fees paid at importation under new unused merchandise substitution drawback provisions enacted as part of TFTEA [the Trade Facilitation and Trade Enforcement Act of 2015].” The BI said that adds up to “tens of millions of dollars in refunds of excise taxes paid upon importation” between 2016 and 2018.
Nevertheless, the BI argues its members have a “substantial backlog” of claims, which have “placed a serious ‘economic burden’” on their businesses.