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The definitive moment in the life of a drawback claim isn’t receiving the treasury check, depositing it, or even spending it, rather it is that moment when a claimant is challenged by Customs to prove that the export took place. How and why is this so important, you might ask? Well, it goes to the definition of export; the severance of a thing from the commerce of one county into the commerce of another…and that one of the keys to drawback is the export event.
Over the years, this Proof of Export (POE) issue has continually presented itself as a challenge to claimants in that what is perfectly acceptable to one branch of Customs is not acceptable to the Drawback unit. The export folks understand about AES, express or paperless bills of lading and filing of manifests electronically. Drawback POE, on the other hand relies on none of these technological advances, rather it is a throwback to days of old, when knights in armor rode on white horses protecting the kingdom. Well, you might view that as an obvious exaggeration, but not really. To gain access to a castle, one must have had some document proving that (s)he had business and the “gate keepers” sole job was to ensure that access was limited to those with a legitimate need, whatever that was.
Customs is the veritable “gate keeper” to the duty refund vault deep within the recesses of the dark and mysterious castle who have the ability to morph not law, but practices and policies governing procedures in an ever advancing environment of technology. However, as of this writing, the “proof” that Customs requires that goods were actually exported is, in the author’s opinion, rather draconian and somewhat myopic with respect to automation. We all understand that it is imperative that prior to issuing refunds that drawback claims are verified of course and an instrumental issue is proving that goods were exported. But the difference between a consolidator and freight forwarder blurs when you discover that one is authorized to certify a bill of lading and the other is not.
Failure to provide what Customs wants in terms of POE can be fatal to a drawback claim or program. Therefore, we recommend in somewhat terse terms perhaps, that all drawback claimants and filers be aware of what is required or minimally acceptable to Customs concerning POE, and take a preemptive posture to ensure all parties involved do actually have what is needed and have a program of compliance in place. Keep in mind that it is Customs policy that Drawback is a privilege, not a right.
In our next installment, we will be explaining what is required for various types of export, such as truck, air, ocean, hand carried and couriers. When the Star Trek “beaming thing” is finally figured out, we will also cover that. In the interim, should you have any questions about this pivotal subject, please feel free to call our office.
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