Duty Drawback

Duty Drawback, also called Drawback, is a refund of the shipper’s paid customs duties, fees, and certain taxes. The refund is made by U.S. Customs and Border Protection (CBP) in cases where duty-paid import cargo is subsequently exported or destroyed.

To receive duty drawback on a shipment, shippers must lodge a claim within 5 years of the import date. While there are more types of duty drawback than the list below, the four main types are: 

1. Unused Merchandise Drawback (Provisions: 19 USC 1313(j)(1) and 1313(j)(2)) 

Unused Merchandise Drawback provides a refund of import duties for exported merchandise that is in the same condition as when it entered the country and has not been used in the USA for its intended purpose.

2. Manufacturing Drawback (Provisions: 19 USC 1313(a) and 1313(b))

Manufacturing Drawback covers the raw imported materials necessary for the production of new and different products/articles of commerce intended for exportation.

3. Petrochemical Drawback (Provision: 19 USC 1313(p))

Petrochemical Drawback works slightly differently and is an industry-specific drawback option. Instead of receiving a refund on import duties, petrochemical companies can receive a reduced duty rate on their domestically-produced petrochemical exports if the imported ingredients fall under the same HTSUS (Harmonized Tariff Schedule of the United States) classifications as the exported product.

4. Rejected Merchandise Drawback (Provision: 19 USC 1313(c))

Rejected Merchandise Drawback applies to imported merchandise that does not meet intended specifications or was shipped without the consignee’s consent. Duty-paid merchandise can either be exported or destroyed by customs to qualify. This drawback also covers merchandise sold and then returned by the buyer due to a defect.

For companies seeking to recover eligible duties, fees, and taxes, professional duty drawback services can help identify opportunities, prepare compliant claims, and maximize refunds.