What is duty drawback?

Duty drawback in the United States is defined as the refund of certain duties, internal revenue taxes and certain fees collected upon the importation of goods. The amount of drawback that can be claimed is for 99% of the import duties, taxes, and fees that were paid on merchandise that qualifies for drawback.

The following provides a summary of each of the types of drawback available for claimants in the U.S.:

• Unused Merchandise Direct Identification – 19 U.S.C. 1313(j)(1): Imported merchandise is unused and exported or destroyed under CBP supervision. Claimant must be able to directly identify the import that is subsequently exported either by a consistent identifier (i.e., serial number or lot number) or through an alternative accounting method. Time limit between import date and date of filing of the claim must be within 5 years.
• Unused Merchandise Substitution – 19 U.S.C. 1313(j)(2): Substituted merchandise must be classifiable under the same 8 or 10 digit HTS classifications, as stated in the regulations (here). Basket provision restrictions apply. Time limit between import date and date of filing of the claim must be within 5 years. This type of drawback is not eligible for merchandise exported to Canada, Mexico, or Chile.
• Manufacturing Direct Identification – 19 U.S.C. 1313(a): Articles manufactured in the U.S. using imported merchandise that are then exported or destroyed. Time limit between import date and date of filing of the claim must be within 5 years.
• Manufacturing Substitution – 19 U.S.C. 1313(b): If both imported merchandise and merchandise of the same 8-digit HTS classification (whether imported or domestic) are used to manufacture articles, some of which are exported or destroyed before use, then drawback is eligible for the duty paid imported merchandise. Time limit between import date and date of filing of the claim must be within 5 years.
• Rejected Merchandise – 19 U.S.C. 1313(c): Drawback may be recovered on the duties paid for merchandise that is exported or destroyed because it does not conform to samples or specifications, was shipped without the consent of the consignee, or is determined to be defective as of the time of importation. Goods returned from retail sale can be claimed by designating an import within 1 year before the date of exportation or destruction of the returned goods. Time limit between import date and date of filing of the claim must be within 5 years.
• Petroleum Derivatives – 19 U.S.C. 1313(p): This type of drawback applies to the HTS numbers listed in the statute. Imports and exports are matched based on the 8-digit classification for qualifying (p) articles. Time limit between entry date and export date must be within 180 days. Time limit between import date and date of filing of the claim must be within 5 years.