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Craft Beverage Modernization Act (CBMA) Procedures and Requirements 2021 Revisions (CSMS #45315560) - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP

On December 30, 2020, U.S. Customs and Border Protection (CBP) issued Cargo Systems Messaging Service (CSMS) #45315560, titled “Craft Beverage Modernization Act (CBMA) – Procedures and Requirements 2021.” The CBMA allows for reduced tax rates or credits on certain importations of distilled spirits, beer or wine in limited quantities.  The CSMS describes the procedures and requirements for importations subject to the CBMA made during the 2021 calendar year.  The CSMS is available at
https://content.govdelivery.com/bulletins/gd/USDHSCBP-2b375e8?wgt_ref=USDHSCBP_WIDGET_2?utm_source=google&utm_medium=google&utm_term=(not%20provided)&utm_content=undefined&utm_campaign=(not%20set)&gclid=undefined&dclid=undefined&GAID=1035833621.1609253237.

The CBMA Tax Rate Table for imported distilled spirits, beer, and wine is available at
https://www.cbp.gov/trade/program-administration/entry-summary/cbma-2017/cbma-irt-tax-rate-table-imports.

CBP states that the 2021 procedures and requirements largely follow those of 2020. However, the 2021 CBMA revisions include some changes, and CBP notes that when the 2021 Updates to the Automated Commercial Environment (ACE) are deployed, CBP expects to further update the 2021 CBMA procedures and requirements.

 I.  Completing CBMA Claims

            a.  On Entry

Importers and other filers are encouraged to claim the CBMA reduced tax rate or credits at the time of entry. To do so, use the CBMA flag (Product Claim Code “C”) on the entry summary line.

Filers must maintain and have on file three supporting documents: (1) a complete and accurate CBMA Spreadsheet CBP155, (2) Controlled Group Spreadsheet CBP154, and (3) Assignment Certification CBP156.  Missing, incomplete or inaccurate information on required CBMA documents may result in the liquidation or reliquidation of entries at the higher non-CBMA rate and/or enforcement action

Although required to have these three CBMA supporting documents before making a CBMA claim, filers will only be required to submit the three documents upon CBP’s request for CBMA claims that are filed at the time of entry.  Where filers receive a “DOCS required” message from ACE, they must upload the supporting documentation and a complete Entry Summary Package in the Document Image System (DIS), linked to the entry number. Where filers receive a request for supporting documentation through a CBP Form 28, the documents in DIS must be linked to the entry number and not to the Importer of Record. Filers may submit these documents via DIS XML or DIS email.

Additionally, all filings of CBMA claims must be submitted with the following certification:

The information submitted is true and accurate and I assume the responsibility for proving such representations. I understand that I am liable for any false statements or material omissions made on or in connection with this submission.  I certify that I have determined and ascertained that the control group of which I am a member (including both domestic and foreign members of the control group) has not exceeded the quantitative limit applicable to the tax rate or tax credit I am claiming.

            b.  Post-Entry

Filers may also make a CBMA claim by filing a Post Summary Correction (PSC) or by filing a protest for liquidated entries.  For CBMA claims submitted via protest, importers/filers must select the “CBMA” protest issue in the ACE electronic protest module.

For PSCs, filers must submit the three supporting documents for each CBMA claim upon request by CBP via DIS.

For protests, filers must submit the three supporting documents for each CBMA claim with the claim without request by CBP. These documents must uploaded in the protest module in ACE.

For paper entries and protests, the three supporting documents should be submitted to the Entry Unit at the Port of entry. Filers must provide the Center with the paper documents and protest number after submitting the CBP Form 19 and receiving the protest number.

 II.  Format of Supporting Documentation

The CBMA Spreadsheets must be submitted as Excel spreadsheets in .xlsx extension format. For document requests on CBMA claims made at time of entry or PSC, filers must use the following file name convention in DIS: CBP155-[Entry Number the CBMA Spreadsheet is Linked to]_CBMA_Spreadsheet.xlsx. Filers must use the “CBMA_IMPORTER_SPREADSHEET” Document Label when submitting the CBMA Spreadsheets to DIS. The information required in the CBMA Spreadsheet is detailed in the CBP template available at https://www.cbp.gov/document/template/cbma-spreadsheet.

CBP requires that the importer have on file a new 2021 Controlled Group Spreadsheet for every 2021 CBMA claim, even where there have been no changes since the 2020 filing. A separate spreadsheet must be maintained for each Controlled Group to which the importer belongs. The Controlled Group Spreadsheet must be submitted as Excel spreadsheets in .xlsx extension format. For document requests on CBMA claims made at time of entry or PSC, filers must use the following file name convention in DIS: CBP154-[Controlled_Group_Name]_[Calendar Year]_Controlled_Group_Spreadsheet.xlsx. Filers must use the “CBMA_CONTROLLED_GROUP” Document Label when submitting the Controlled Group Spreadsheets to DIS. The information required in the Controlled Group Spreadsheet is detailed in the CBP template available at https://www.cbp.gov/document/template/cbma-controlled-group-spreadsheet.

The Assignment Certification must be issued on the letterhead of the foreign producer/assigning entity and signed by a duly authorized employee or officer. The foreign producer/assigning entity, specific rate or credit authorized, amount of importations allocated, type of alcohol allocated, and applicable calendar year should be clearly identified. New Assignment Certifications must be submitted each year of the allocation, even if there has been no change from the previous year. For document requests on CBMA claims made at the time of entry or PSC, filers must use the following file name convention in DIS: CBP156-[Assigning_Entity_Name]_[Calendar Year]_Assignment_Certification.pdf. Filers must use the “CBMA_PRODUCER_CERTIFICATE” DIS Document Label when submitting Assignment Certifications in DIS. The information required in the Assignment Certification is detailed in the CBP template available at
https://www.cbp.gov/trade/basic-import-export/craft-beverage-modernization-tax-reform-act-2017/certification.

The templates and procedures regarding these three documents are available at
https://www.cbp.gov/trade/program-administration/entry-summary/cbma-2017.

Our office is available to answer any additional questions regarding the CBMA procedures.


Federal Register Notices:

01/06/2020 – As of January 1, 2021, most textile, apparel, and leather products imported into Turkey will be subject to risk assessment through Turkey's Risk-Based Trade Control System (TAREKS). See the Communique on the Inspection of Some Textile, Clothing and Leather Product (2021/18) published in Turkish.


USTR Releases Findings in DST Investigations - Office of US Trade Administration

Washington, DC – The U.S. Trade Representative has issued findings in Section 301 investigations of Digital Service Taxes (DSTs) adopted by India, Italy, and Turkey, concluding that each of the DSTs discriminates against U.S. companies, is inconsistent with prevailing principles of international taxation, and burden or restricts U.S. commerce.  

The findings on each of the DSTs are supported by comprehensive reports, which are being published today on USTR’s website.  

USTR is not taking any specific actions in connection with the findings at this time but will continue to evaluate all available options.  

The Section 301 investigations of the DSTs adopted by India, Italy, and Turkey were initiated in June 2020, along with investigations of DSTs adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, Indonesia, Spain, and the United Kingdom.  USTR expects to announce the progress or completion of additional DST investigations in the near future. 

The reports and Federal Register notices summarizing the determinations are available at the following links: India DST report; India DST notice; Italy DST report; Italy DST notice; Turkey DST report; Turkey DST notice.


Treasury Sanctions Key Actors in Iran’s Steel Sector - U.S. Department of Treasury

WASHINGTON – Today (1/5/21), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated a China-based supplier of graphite electrodes, a key element in steel production, as well as twelve Iranian producers of steel and other metals products, and three foreign-based sales agents of a major Iranian metals and mining holding company. The Iranian metals sector is an important revenue source for the Iranian regime, generating wealth for its corrupt leaders and financing a range of nefarious activities, including the proliferation of weapons of mass destruction and their means of delivery, support for foreign terrorist groups, and a variety of human rights abuses, at home and abroad.

“The Trump Administration remains committed to denying revenue flowing to the Iranian regime as it continues to sponsor terrorist groups, support oppressive regimes, and seek weapons of mass destruction,” said Secretary Steven T. Mnuchin.

Today’s action was taken pursuant to Executive Order (E.O.) 13871, which imposes sanctions on several sectors of the Iranian economy, including Iran’s steel sector, that continue to generate significant revenue for the Iranian regime.

Chinese Supplier of Materials Critical to Iranian Steel Production

Chinese company Kaifeng Pingmei New Carbon Materials Technology Co., Ltd. (KFCC) specializes in the manufacture of carbon materials, key elements in steel production. Between December 2019 and June 2020, KFCC fulfilled orders totaling thousands of metric tons of materials for several Iranian steel companies. In mid-2020, KFCC, working with an Iranian trading firm, sold 300 metric tons of graphite electrodes and miscellaneous equipment to Pasargad Steel Complex in Iran.

KFCC is being designated pursuant to E.O. 13871 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Iranian steelmaker Pasargad Steel Complex, an entity designated pursuant to E.O. 13871 for operating in the steel sector of Iran.

Iranian Steel Companies and Foreign-based Sales Agents 

OFAC is designating 12 Iranian steel manufacturers or holding companies, whose combined annual output capacity reaches millions of metric tons of steel product.

The Pasargad Steel Complex is an Iranian steel manufacturer, operating a complex capable of producing 1.5 million tons of steel billets per year. The Gilan Steel Complex Company maintains a hot rolling mill with a 2.5-million-ton capacity and a cold rolling mill with an annual capacity of 500,000 tons. Both entities are being designated pursuant to E.O. 13871 for operating in the steel sector of Iran.

Iran-based Middle East Mines and Mineral Industries Development Holding Company (MIDHCO), a metals and mining holding company that includes steelmakers Sirjan Iranian Steel and Zarand Iranian Steel Company, has a collective production capacity of over 19 million tons of steel, iron, and copper products. MIDHCO encompasses seventeen subsidiaries, including fully owned companies in Germany, China, and the United Kingdom. MIDHCO’s Germany-based subsidiary GMI Projects Hamburg GmbH paid foreign companies for procurement of parts and machinery on behalf of Sirjan Iranian Steel and Zarand Iranian Steel Company. MIDHCO’s China-based subsidiary World Mining Industry Co., Ltd. seeks to develop business relationships with Chinese suppliers in the industry.

MIDHCO is being designated for owning, controlling, or operating Sirjan Iranian Steel and Zarand Iranian Steel Company, entities that are part of the steel sector of Iran.

GMI Projects Hamburg GmbH, World Mining Industry Co., Ltd., and U.K.-based GMI Projects Ltd. are being designated for being owned or controlled by MIDHCO.

OFAC is also designating Iranian steelmakers Khazar Steel Co., Vian Steel Complex, South Rouhina Steel Complex, Yazd Industrial Constructional Steel Rolling Mill, West Alborz Steel Complex, Esfarayen Industrial Complex, Bonab Steel Industry Complex, Sirjan Iranian Steel, and Zarand Iranian Steel Company pursuant to E.O. 13871 for operating in the steel sector of Iran.

Concurrent with this action, the State Department is sanctioning KFCC and the Islamic Republic of Iran Shipping Lines (IRISL) subsidiary Hafez Darya Arya Shipping Company pursuant to Section 1245(a)(1)(C)(II) of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA) for having knowingly sold, supplied, or transferred, directly or indirectly, graphite to or from Iran, and such graphite was sold, supplied, or transferred to or from an Iranian person on the SDN List. The State Department is also sanctioning Majid Sajdeh, a principal executive officer of Hafez Darya Arya Shipping Company, pursuant to IFCA Section 1245(a)(1)(C)(II).  

Sanctions Implications

All property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons. 

In addition, persons that engage in certain transactions with the persons designated today by OFAC may themselves be exposed to sanctions. Furthermore, any foreign financial institution that knowingly conducts or facilitates a significant transaction for or on behalf of the persons designated by OFAC today could be subject to U.S. correspondent or payable-through account sanctions.


14,504 Fake ID Items Seized by Cincinnati CBP in 2020 - U.S. Customs & Border Protection

CINCINNATI –- The unprecedented pandemic year is finally behind us, but the search is always on in Cincinnati for fake identification documents being sent into the country. Despite the disruptive events of the previous 12 months, CBP officers and specialists at the Port of Cincinnati remained committed to safeguarding our borders and serving the American people.

In 2020, CBP officers in Cincinnati seized 14,504 fraudulent identification items, in the form of licenses, holographic stickers or seals, laminates, social security cards, passports, visas, and other types of identification. Over 97% of all fake documents seized at the Port of Cincinnati originated in China and Hong Kong.

Officers found that the holographic stickers, laminates, and seals were often shipped with blank cards showing intent to manufacture fake credit cards and IDs to be sold on the black market. The shipments were headed to addresses throughout the United States.

“Fake IDs are used to facilitate underage drinking, which is dangerous in and of itself,” said Cincinnati Port Director Richard Gillespie. “The story can get even darker, however. Fake documents are associated with identity theft, public benefit fraud, and human trafficking, and terrorists use them to evade travel screening measures. Our officers and specialists are trained to recognize fake identification documents and they are dedicated to protecting innocent civilians.”

CBP officers coordinate identification findings with CBP’s Fraudulent Document Analysis Unit, Homeland Security Investigations, and other federal partners in order to combat any illicit activity. Visit CBP’s YouTube channel to learn more about how CBP’s Office of Field Operations secures our nation’s borders.

Fake documents play a significant role in human trafficking, and CBP would like to raise awareness of the dangers associated with fake documentation and human trafficking by supporting #WearBlueDay, recognized on January 11th, in support of the Department of Homeland Security’s (DHS) Blue Campaign. Follow @DHSBlueCampaign on Facebook, Twitter, and Instagram.


Fire Extinguisher Manufacturer Ordered to Pay $12 Million Penalty for Delay and Misrepresentations in Reporting Product Defects - U.S. Department of Justice

A federal judge today ordered Walter Kidde Portable Equipment Inc. (Kidde) to pay a $12 million civil penalty in connection with allegations that the company failed to timely inform the Consumer Product Safety Commission (CPSC) about problems with fire extinguishers manufactured by the company, the Department of Justice announced.

Kidde, based in Mebane, N.C., agreed to the civil penalty and other terms as part of a consent decree entered by U.S. District Judge Loretta C. Biggs of the Middle District of North Carolina. The consent decree resolves allegations in a complaint filed by the United States against Kidde on December 30.

The complaint concerned Kidde fire extinguishers with plastic handles that were the subject of a recall announced by the CPSC and Kidde in 2017. According to the recall announcement, the fire extinguishers could fail to discharge during a fire emergency, and their nozzles could detach. A subset of the recalled fire extinguishers was the subject of an earlier recall in February 2015. The complaint alleged that Kidde violated the Consumer Product Safety Act by significantly underreporting prior to the first recall the scope and nature of the defect and risk, and the number of products and models affected. According to the complaint, Kidde also failed to immediately report to the CPSC information concerning nozzles detaching from fire extinguishers. The complaint further alleged that Kidde made misrepresentations to the CPSC and misused a registered safety certification mark.

“Companies must immediately report to the CPSC information about unreasonable risks and defects that create substantial hazards,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Civil Division. “The Department of Justice will continue to take appropriate enforcement actions against companies that jeopardize consumer safety by failing to comply with reporting requirements.”

“I want to convey my thanks to CPSC staff and to our partners at the Department of Justice for finalizing this consent decree without the need for extended litigation,” said CPSC Acting Chairman Robert S. Adler.

The court’s order requires Kidde to maintain a compliance program to ensure that the company complies with the Consumer Product Safety Act and to maintain internal controls and procedures designed to ensure timely, complete, and accurate reporting to the CPSC as required by law. Kidde is subject to liquidated damages if the company is not in compliance with the consent decree. In agreeing to the consent decree, Kidde did not admit that it violated the law.                                                  

The government is represented by Trial Attorneys Claude Scott and Daniel Zytnick of the Department of Justice Civil Division’s Consumer Protection Branch, with the assistance of Patricia Vieira of the CPSC’s Office of the General Counsel.
 
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