What is Duty Drawback? Your Guide to Maximizing Refunds

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Understanding Duty Drawback

Duty drawback is a U.S. Customs and Border Protection (CBP) program that allows businesses to reclaim up to 99% of duties, taxes, and fees paid on imported goods that are later exported or destroyed.

It’s a powerful tool for companies to reduce costs, increase cash flow, and stay competitive in the global marketplace.

“Drawback is the refund, reduction, or waiver in whole or in part of customs duties assessed or collected upon importation of an article or materials which are subsequently exported.”

U.S. Customs and Border Protection, Source

The Bottom Line:

If your company imports and then exports goods—or destroys them under supervision—you may be entitled to a significant refund.

Who Qualifies for Duty Drawback?

Many businesses are eligible without realizing it. You may qualify if you:

  • Import goods into the United States and later export them.
  • Manufacture products using imported components and export the finished goods.
  • Re-export unused imported products without alteration.
  • Reject imported merchandise due to defects or non-conformance.

✅ Key Update:

Since the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), eligibility has expanded, making it easier for companies to qualify through substitution standards and extended filing deadlines (up to 5 years from the date of import).

The 5 Main Types of Duty Drawback

1. Manufacturing Drawback (Direct Identification)

If you use imported materials to manufacture goods for export and can directly track the specific imported components, you qualify for Direct Identification Manufacturing Drawback.

✅ Example: Using imported fabric to manufacture clothing for export.

✅ Learn More: Manufacturing Direct Identification Drawback

2. Manufacturing Drawback (Substitution)

Under Substitution Manufacturing Drawback, you can substitute commercially interchangeable materials, even if the specific imported goods weren’t used in production.

✅ Example: Using U.S.-sourced and imported bolts interchangeably to manufacture machines for export.

✅ Learn More: Manufacturing Substitution Drawback

3. Unused Merchandise Drawback (Direct Identification)

If you export the same imported product without any use and can trace it precisely, you qualify for this program.

✅ Example: Re-exporting unsold imported electronics.

✅ Learn More: Unused Merchandise Direct Identification Drawback 

4. Unused Merchandise Drawback (Substitution)

Allows the export of commercially interchangeable goods rather than the exact imported goods.

✅ Easier qualification under TFTEA rules (using 8-digit HTSUS numbers).

✅ Example: Exporting a domestically sourced phone charger that matches an imported charger.

5. Rejected Merchandise Drawback

If imported goods are defective, not as ordered, or not permitted into the country and are returned or destroyed, you may claim a full duty refund.

✅ Example: Returning imported parts that didn’t meet product specifications.

How the Duty Drawback Process Works

Step 1: Review your import and export history.

Step 2: Gather necessary documentation (import entry summaries, export bills of lading, manufacturing records).

Step 3: Determine the correct type of drawback claim.

Step 4: File a detailed drawback claim with U.S. Customs.

Step 5: Receive up to 99% of your eligible duties back!

? Tip: Working with a licensed drawback specialist significantly increases approval rates and refund amounts.

Common Mistakes to Avoid When Filing Duty Drawback Claims

❌ Missing the 5-year filing deadline.

❌ Failing to maintain proper documentation.

❌ Using the wrong type of drawback claim.

❌ Not establishing commercial interchangeability for substitution claims.

✅ Pro Tip: Even minor errors can result in denied claims. Meticulous recordkeeping and expert guidance are crucial.

Why Work with a Duty Drawback Expert?

Duty drawback law is complex, and the refund process requires a deep understanding of U.S. Customs regulations, documentation, and compliance standards.

At J.M. Rodgers, our licensed brokers and specialists manage the entire process—from eligibility analysis to claim submission—to maximize your refunds while ensuring full compliance.

✅ Experience across industries

✅ Proprietary drawback technology for faster claims

✅ Audit-ready documentation and Customs support

Start Recovering Your Duty Refunds Today

If you import and export goods, you could be missing out on significant refunds.

Let the experts at J.M. Rodgers guide you through the duty drawback process and help you maximize your potential recovery.

? Ready to find out if you qualify?

Fill out the Duty Drawback Contact Form below to get started with a free consultation.

Our team will review your situation and provide expert guidance at no cost or obligation.

Unused Direct Identification – 1313j1

  • Refunds of duty paid on goods directly matched by part number to the export within 5 years after importation by either: 
    • Direct Match by Serial Number
    • Match using Customs an approved accounting methods
  • Refund calculated based on Invoice quantity and invoice value
  • May claim on exports to 
    • Canada & Mexico.
    • Chile
    • American Virgin Islands (St. John, St. Thomas, St. Croix)
    • Samoa
    • Wake Island
    • Midway Island
    • Kingman Reef
    • Guam
    • Canton Island
    • Edinburgh Island
    • Johnson Island
    • Palmyra Island

Unused Substitution – 1313j2

  1. Refunds of duty paid on goods matched by HTS number to the export within 5 years after importation.
    1. Export Value per unit is a factor in refund calculation.

Petroleum Derivatives – 1313p

  • Refunds of duty paid on goods matched by specific HTS numbers to the export within 5 years after importation.
    • Matching imports are limited to 6 months prior to the export date.

Sharing Drawback

  • Refunds of your excess unclaimed imports and excess unclaimed exports.
  • Please contact JMR to discuss this further.

Manufacturing Drawback

Manufacturing Direct Identification – 1313a

  • Refunds of the duty paid on imported merchandise used to manufacture products exported or destroyed within 5 years after importation.
  • Import part numbers are matched to the part numbers of the components used in the manufacture of the products.

Manufacturing Substitution

  • Refunds of the duty paid on imported merchandise used to manufacture products exported or destroyed within 5 years after importation.
  • Import HTS numbers are matched to the same HTS numbers of the components used in the manufacture of the products.

USMCA Manufacturing Drawback.

  • Refunds of whichever is the lessor between either:
    • the duty paid on imported merchandise used to manufacture products exported to Canada or Mexico within 5 years after importation.
    • The duty paid to Canada or Mexico Customs for product exported there.
  • Claims filed separate from other drawback claims

Rejected Merchandise Drawback

    • Refunds of duty paid on goods rejected by importer within 5 years after importation for either: 
      • not conforming to sample or specifications
      • shipped without the consent of the consignee
    • for being defective

Goods Returned after sold at Retail

  • Refunds of duty paid on goods sold for retail and then ultimately returned:
    • Match is based on both part number and HTS number
    • Matching imports are limited to 1 year prior to export date

Destruction Drawback

  • Refunds of duty paid on goods that are completely or partially destroyed 
  • Customs prior notification of destruction is required

How Our Duty Drawback Experts Can Help

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