Duty Drawback

Duty Drawback Simplification: What You Need to Know

After 12 years of consistent effort on the part of Customs and Trade, The Trade Facilitation and Trade Enforcement Act of 2015 was passed into law and signed by the President on February 24, 2016. This law will become effective on February 24, 2018. At that point, there will be a one year transition period where drawback claimants may file drawback claims under the new law or under the old law. However, on February 24, 2019, all drawback claims must be filed using the new duty drawback law. The duty drawback regulations have not yet been written.

The following are some of the main highlights of this new law:

  • Drawback claims will be matched based on 8-digit HTS substitution rather than commercial interchangeability. However, if the 8-digit classification starts with “other”, then the matching will be based on 10-digit HTS classification.
  • Drawback time frames will be 5 years from import to filing a drawback claim.
  • Drawback record keeping will be pushed out further from 3 years from payment of the drawback claim to 3 years from liquidation of the drawback claim.
  • Claims on MPF and HMF will be available for manufacturing drawback in addition to unused drawback.
  • The requirement for Certificates of Delivery will be removed and business records kept in the normal course of business will be used to track these transfers.
  • The duty to be claimed for manufacturing substitution will be based on the lesser of the duties paid on the imported merchandise compared to the duties paid on the substituted merchandise if it were imported.
  • The duty to be claimed for unused substitution will be based on the lesser of the duties paid on the imported merchandise compared to the duties paid on the exported article if it were imported