Duty Drawback

Duty drawback is CBP's refund of certain duties, internal revenue taxes and fees collected when goods were imported, paid back when the merchandise is exported or destroyed. The law is 19 U.S.C. 1313 and the regulations are in 19 CFR part 190, rewritten after the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). The refund is generally 99% of the duties, taxes and fees paid on the imported merchandise.

The main types

• Manufacturing drawback (19 U.S.C. 1313(a) and (b)): imported merchandise is used to make articles in the United States that are then exported or destroyed. Under substitution, duty-paid imports can be matched with merchandise classifiable under the same 8-digit HTS subheading used in manufacture within five years of import
• Unused merchandise drawback (1313(j)): imported goods are exported or destroyed without being used in the United States, within five years of import. Substitution with merchandise under the same 8-digit HTS subheading is also allowed in some cases
• Rejected merchandise drawback (1313(c)): goods that did not conform to sample or specifications, were shipped without the consignee's consent, were defective at import, or were sold at retail and returned, then exported or destroyed within five years

Deadline and filing

A drawback claim must be filed no later than five years after the date the merchandise on which drawback is claimed was imported; claims not completed within that period are treated as abandoned (19 U.S.C. 1313(r)). Claims are filed electronically in the Automated Commercial Environment (ACE), often by a licensed customs broker. CBP can verify any claim and examine the records behind it, so the import entries, export proof and, for manufacturing claims, production records must tie together.

Who can claim

Under 19 CFR 190.82, the exporter (or the party that destroyed the goods) is entitled to claim, unless it waives the right by certification and assigns it to the manufacturer, producer, importer or an intermediate party. The refund is paid to the claimant.

What is not refunded

19 CFR 190.3 lists the duties, taxes and fees that are and are not subject to drawback. Antidumping and countervailing duties are not refunded, and over-quota agricultural products are limited. Check eligibility for your product and duty type before relying on a refund in your pricing.

Drawback vs other duty-saving options

• A foreign-trade zone or bonded warehouse defers or avoids duty before it is paid; drawback recovers it afterward
• Drawback suits goods that are already duty-paid and then turn out to be re-exported, for example returns sent back to the supplier or stock sold abroad

Where Airlift fits

Airlift does not file drawback claims; that is work for the claimant or a licensed customs broker. What we provide as an NVOCC is the export shipment itself, such as USA to India ocean freight, and the bill of lading that documents it. Because a claim has to tie the export back to the import entry, keep the export paperwork, including any Automated Export System filing, with the import entry.