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U.S. Customs Duty Drawback

What is Drawback?:

Drawback basically consists of the request for a refund of customs duties paid on imported merchandise -- on the basis of a later exportation (or destruction) of articles somehow connected to the imported merchandise. This concept does not exist in many nations. In the U.S. it does exist under very strict rules.

In the U.S., drawback dates back practically to the dawn of the Republic. In other nations, drawback was recognized, even before the existence of the U.S., as "the most reasonable [encouragement to exportation]." This is how Adam Smith, in his 1776 book, 'The Wealth of Nations', described drawback.

See: "What Every Member of the Trade Community Should Know About: Drawback, A Basic Level Informed Compliance." Publication of the U.S. Customs Service - March 1998

The General Rule in Duty Drawback:

The claimant (original U.S. importer) may recover up to 99% of the duty paid for goods entered into the commerce of the United States, duty paid, and exported out of U.S. Customs territory.

The claim must be filed within three years of the date of exportation. More, duty drawback is disfavored by law. "Disfavored" being a legal term to imply that merits of the procedure must favor the government unless all specific requirements are met -- all specific requirements.

U.S. Customs requires careful attention to detail as the goods must be properly accounted for as either secifically exported (or destroyed).

Each part exported must be cross-referenced back to the importation. To support the claim the drawback specialist must collect and sift through reams of U.S. Customs forms on the entry side, usually dating back many years. In turn, the specialist must collect and confirm that the export documentation sufficiently evidences exportation of:

A.] That specific part number; and

B.] That duty was paid on that specific part number.

NOTE: We are talking about THE SAME GOODS -- NOT SIMILAR GOODS. For drawback you must provide the full evidence that specific, physical goods came in & went out -- dates, numbers, marks -- everything.

The procedure is complicated -- get help. Most experts specialzed in this field charge a percentage of the darawback amount recovered from customs.



Retain The Services of A Licensed U.S. Customs Broker Which Has A Qualified Drawback Department

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Accept Your Responsibility To Provide Both Full & Continuing Guidance

* The Cargo Letter does not provide legal advice applicable to specific situations. The information provided is believed generally reliable, but should be confirmed through the current text of cited laws and authorities. It is understood that all laws & authorities are subject to change without notice to the public. Where specific situations or the conduct of your busniess are concerned, it is important to consult your company attorney or advisor directly. The Cargo Letter cannnot be responsible for failure to follow these instructions.


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