A Duty Drawback, also called a Drawback, is a refund of the shipper’s paid customs duties, fees, and certain taxes. The refund is issued by U.S. Customs and Border Protection (CBP) when duty-paid imported cargo is subsequently exported or destroyed.
To receive a duty drawback on a shipment, shippers must file a duty drawback claim within five years from the date of import. While there are more than the types listed below, the four main types of duty drawback are:
1. Unused Merchandise Drawback
(Provisions: 19 USC 1313(j)(1) and 1313(j)(2))
Unused Merchandise Drawback provides a refund on import duties for exported products, as long as the merchandise remains in the same condition as when it entered the country and has not been used in the U.S. for its intended purpose.
2. Manufacturing Drawback
(Provisions: 19 USC 1313(a) and 1313(b))
Manufacturing Drawback applies to raw imported materials used in the production of new and different products or articles of commerce that are intended for export.
3. Petrochemical Drawback
(Provision: 19 USC 1313(p))
Petrochemical Drawback is an industry-specific option that works slightly differently. Instead of a refund, petrochemical companies may receive a reduced duty rate on domestically produced petrochemical exports if the imported ingredients fall under the same HTSUS (Harmonized Tariff Schedule of the United States) classification as the exported product.
4. Rejected Merchandise Drawback
(Provision: 19 USC 1313(c))
Rejected Merchandise Drawback applies to imported goods that do not meet specifications, were shipped without the consignee’s consent, or were defective and returned by the buyer. In such cases, the duty-paid merchandise must be either exported or destroyed under customs supervision to qualify.