Cigarette Maker Says It Was Wrongly Denied Substitution Unused Merchandise Drawback
Cigarette manufacturer Scottsdale Tobacco said in an Aug. 13 motion for judgment that it was wrongly denied drawback for its Canada-origin paper-wrapped cigarettes entered in 2018 and 2019 (Scottsdale Tobacco v. United States, CIT # 24-00022).
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Scottsdale said it exported cigarettes manufactured in New York on four dates between December 2018 and February 2019. It entered them into the foreign-trade zone in Port Everglades, Florida, under the “zone restricted” status.
Because of this, it said, the cigarettes were considered to have been exported “for purposes of the drawback laws.”
In February 2019, citing the exports, Scottsdale said it filed for a substitution unused merchandise drawback for 23 entries of Canada-origin cigarettes. Like the exports, the imports were entered at Port Everglades, Florida, it said.
It noted that, under NAFTA, the imports weren’t assessed duties. But Scottsdale did pay federal excise taxes on them, for which it is now seeking the refund.
Three-and-a-half years after the exporter filed its drawback claim, CBP denied it, Scottsdale said.
The exporter said its drawback claim was timely and met all the requirements for a drawback for a substitution of unused merchandise. The claim identified the imported cigarettes and the subsequently exported merchandise, and both were classifiable under Harmonized Tariff Schedule subheading 2402.20.80, it said. Further, the exported goods weren’t sold or used domestically before being exported, so it had “possessed” them, it said.
Alternatively, it argued that its drawback entry had been deemed liquidated automatically after CBP failed to take action on it within a year. The agency hadn’t given Scottsdale any notice that it intended to extend the liquidation period, the exporter said.