February 17, 2023

What is Duty Drawback?

According to U.S. Customs and Border Protection, Drawback is the refund of certain duties, internal revenue taxes, and certain fees collected upon importing goods. Such refunds are only allowed upon the exportation or destruction of goods under U.S. Customs and Border Protection supervision. Duty Drawback is an incentive scheme that allows importers, exporters, and manufacturers the opportunity to recover customs duties in the United States.

What are the three areas of Drawback?

Manufacturing drawback (must be claimed within 5 years from the import date)

The Drawback might be claimed on an exported article under Customs Law in the United States if the article was manufactured using the importer’s material or components. Also, substituting domestically produced merchandise of the same kind and quality as imported duty-paid merchandise is allowed.

Unused merchandise (must be claimed within 5 years from the import date)

Duty Drawback may be claimed on duty paid merchandise that is exported from the United States without having been used in the process of manufacturing.

Rejected Merchandise (must be claimed within 5 years from the import date)

Customs Law provides for duty drawback on merchandise which does not conform to sample or specification if exported under Customs supervision.

What are the benefits of Duty Drawback?

There are several benefits to looking into the Duty Drawback process for your organization, as it not only increases company revenue and improve cash flow but can equally enhance a company’s ability to be one step ahead of the competition.

Did you know that a company can retroactively claim drawback on exports shipped?
The Duty Drawback is payable to the exporter or destroyer of the imported articles. The exporter or destroyer may legally waive those rights to an importer or any intermediate party.

For all the latest news on Duty Drawback and to learn more about the customs drawback scheme get in touch, you can also read all our Trade Advisory updates here.

Duty Drawback savings of $3m+ for Automotive Client

Our Automotive client was heavily impacted by Section 301 tariffs, which have been applied to imports into the United States of America on automotive parts sourced from China.

The significant increase in purchasing costs became a financial burden to the client, impacting not only cash flow but also bottom-line results. Read our case study here

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