U.S. Customs and Border Protection (CBP) has issued new guidance (CSMS #66319804) that significantly impacts how importers and brokers must report replacement duties under Chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS). This update specifically affects certain imports from the European Union, Japan, and the United Kingdom—and has direct implications for drawback filers seeking to preserve eligibility.

Affected HTSUS Headings

The following HTSUS provisions are impacted:

9903.02.20 – EU reciprocal tariff

9903.02.73 – Japan reciprocal tariff

9903.94.41 – Japan Section 232 automobile tariff

9903.94.43 – Japan Section 232 auto parts tariff

9903.94.32 – UK Section 232 auto parts tariff

What’s Changed?

For products with Column 1 duty rates below 15% (or below 10% for UK auto parts), CBP now requires:

• Full replacement duty to be reported under the applicable Chapter 99 HTSUS heading.
• Zero duty and line value to be reported under the standard Chapter 1–97 HTSUS classification.
• Exception: This rule does not apply to entries intended for drawback.

Implications for Drawback Filers

CBP has reaffirmed that Section 232 duties are not eligible for drawback. However, to preserve eligibility for the Column 1 portion (drawback eligible duties), importers must split duty reporting as follows:

Correct Reporting for Drawback:

• Chapter 1–97 HTSUS line: Report the Column 1 duty amount and line value.
• Chapter 99 HTSUS line: Report the difference between the total duty and the Column 1 rate.

Example from CBP outlined in CSMS #66319804

For a Japanese automobile with a 2.5% Column 1 duty rate:

• HTSUS 8703.22.01 → Report 2.5% duty
• HTSUS 9903.94.41 → Report 12.5% duty
• Drawback Eligibility: Only the 2.5% Column 1 duty is eligible for recovery.

Why This Matters

Retroactive: These changes are retroactive, meaning entries filed without the correct split duty reporting may be ineligible for drawback unless corrected via a Post Summary Correction (PSC).

Timing: Given that the drawback lookback period can extend up to five years, importers may not know at the time of entry whether a drawback claim will be pursued. Often, this decision is made well after the entry summary is submitted and sometimes too late to file a PSC to correct these entries.

Tradewin’s Recommendations

To preserve future drawback eligibility, we strongly recommend that importers:

• Instruct brokers to file entries in a manner that supports potential duty drawback claims, even if no claim is currently planned.
• Review prior entries to ensure they are structured to allow for accurate recovery of eligible duties though duty drawback.

If you're unsure how this guidance affects your program, contact your Tradewin consultant. We're here to help you stay compliant and maximize your recovery.