Duty Drawback | A Simple Guide
What is duty drawback?
Importers pay certain duties, taxes, and fees when importing merchandise into the United States—if those articles are then exported or destroyed, claimants can receive a refund (up to 99%) on those duties if the merchandise is eligible for duty drawback.
Companies with eligible products can save thousands of dollars through the duty drawback program.
Who can claim duty drawback?
Those entitled to claim drawback are:
- the exporter or destroyer
- the importer if they are the same party as the exporter (or have been assigned the right to claim drawback)
- the manufacturer, producer, or intermediate party (if they have been assigned the right to claim drawback)
Claimants can self-file, but due to the complexity of the claim (as well as necessary software), it is advisable to enlist the service of a licensed Customs broker.
Brief history of drawback
Ever since the second Act of Congress in 1789, the United States government has recognized the need for a duty drawback program—according to U.S. Customs and Border Protection, its intent was to create jobs, encourage manufacturing, and encourage exports.
Duty drawback has a long history in the United States, demonstrating its clear value to the economy. Approximately 3 billion dollars are available in duty drawback every year.
Primary types of drawback
While there are many different types of drawback claims, these are some of the most common:
Manufacturing Drawback:
merchandise used to manufacture an article which is destroyed or exported within 5 years of import
Unused Merchandise Drawback:
unused merchandise exported or destroyed within 5 years of import
➡ learn more about unused merchandise drawback
Rejected Merchandise Drawback:
defective or non-conforming merchandise returned to Customs for destruction or exportation within 5 years of import
Same Condition Drawback under USMCA:
merchandise exported to Canada or Mexico that has not been materially altered
Common duties subject to drawback
- All “Ordinary Customs duties”
- Marking duties
- Internal revenue taxes
- Merchandise processing fees where pursuant to 19 U.S.C. 1313 (j)
- Harbor maintenance taxes where pursuant to 19 U.S.C. 1313 (j)
Common duties not subject to drawback
- Merchandise processing fees except as previously stated
- Harbor maintenance fees except as previously stated
- Anti-dumping and countervailing duties
- On agricultural products duty-paid under a tariff-rate quota (with exceptions)
Duty drawback time frame
There is a 5-year statutory period for filing duty drawback claims which can be submitted to one of the drawback offices in Chicago, Houston, New York, or San Francisco.
Work with an experienced drawback broker
Get started by contacting our drawback team with details about your shipments and any initial questions you have.
We’ll help you determine your eligibility for the duty drawback program and answer your questions about the drawback process.
Shannon Alexander, CHB, CCS
salexander@cjinternational.com
Shannon is a licensed Customs Broker with over 3 decades of industry experience.
Get in touch with Shannon via phone, email, or by submitting a contact form.
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