Duty Drawback is a program that helps exporters offset some of the costs accrued during the export process. It permits the American manufacturer to compete in foreign markets without the handicap of including in the costs, the duty paid on imported merchandise. The program gives rebates on Customs and Central Excise chargeable on any imported or excisable materials used to manufacture goods meant for export.
Steps to Successfully Claim Duty Drawback
1. There are Four Types of Duty Drawback
- Manufacturing direct identification drawback: When an imported material is used to manufacture a product in the US and then the same is subsequently exported from the country, the import duty paid earlier can be recovered.
- Manufacturing substitution drawback
- Unused merchandise direct identification drawback
- Unused merchandise substitution drawback
2. Common Duties Eligible for Drawback
- All ordinary customs duties
- Voluntary Tender
- Duties paid as part of a prior disclosure
- Marketing Duties
- Internal Revenue Taxes
- MPF (merchandise processing fees)
- HMF (harbor maintenance fees)
- 1592(d) duties
- Section 301 duties for Chinese goods (subject to change)
Duties NOT Eligible for Drawback
- Anti-dumping and Countervailing duties
3. Who Qualifies
- An importer who exports/destroys.
- An importer who manufactures and exports/destroys.
- A purchaser of imported merchandise who manufactures and exports/destroys.
- An exporter who purchases a product made from imported merchandise.
- An exporter who purchases imported duty-paid merchandise that is not used in the United States.
- Exporter of record with drawback rights.
4. How do I claim duty drawback?
- To claim duty drawback, you must file a drawback claim with the CBP.
- The regulations expand and harmonize the time window for all drawbacks claim types to five (5) years from the date of importation to the filing of the drawback claim related to that import.
- The new CBP regulations require that all supporting records relating to drawback claims must be maintained for three (3) years from the date of the liquidation of the claim.
If you are interested in learning more about this program and to find out if your import shipments do qualify for Duty Drawback, please contact NUCO’s Customs Brokerage division and our expert team will be more than happy to review this program with you and to file your claim for duty drawback.