Duty Drawback

Duty drawback runs in four steps:

1. Import and pay duties. You import merchandise and pay the customs duties, taxes, and fees due at entry.
2. Export or destroy. The same goods, or under substitution rules commercially interchangeable goods, are later exported or destroyed under CBP supervision.
3. File a claim. You file a drawback claim electronically in ACE, matching the import entries to the export or destruction evidence.
4. Recover up to 99%. CBP refunds up to 99% of the eligible duties, taxes, and fees.

With an approved drawback bond you can elect accelerated payment and receive the refund before CBP finishes reviewing the claim. How much you actually recover depends heavily on how imports are matched to exports. Stable's duty drawback desk automates the matching and claim assembly that make this practical at volume.

Four categories cover most claims:

• Manufacturing drawback (19 U.S.C. 1313(a) and 1313(b)) for imported materials used to make an exported product.
• Unused merchandise drawback (1313(j)(1)) for imported goods exported or destroyed in essentially the same condition.
• Substitution unused merchandise drawback (1313(j)(2)), where commercially interchangeable goods matched at the 8-digit HTS level are substituted for the imported goods.
• Rejected merchandise drawback (1313(c)) for goods that did not conform to specification, were shipped without consent, or were defective.

Choosing the right type depends on accurate HTS classification and clean import and export records.

The party that exports or destroys the merchandise generally holds the right to claim, but that right can be assigned. Importers, manufacturers, and exporters all commonly file. You have to establish two things: that duties were paid on the import, and that the goods were exported or destroyed. Because the importer and the exporter are often different companies, drawback frequently involves a certificate of delivery or an assignment of drawback rights between them.

The core deadline: a drawback claim must be filed within five years of the date of import. Claimants keep supporting records, including import entry summaries, proof of export such as bills of lading, and manufacturing or inventory records, for three years from the date the claim is paid. Under TFTEA, substitution is matched at the 8-digit HTS subheading, and claims use a 'lesser of' rule that compares the duty on the imported and the substituted merchandise. Clean recordkeeping is the difference between a claim that survives audit and one that gets denied.

The Trade Facilitation and Trade Enforcement Act (TFTEA) modernized drawback, with the new rules fully in effect since February 2019. The headline changes: substitution is now matched at the 8-digit HTS level rather than requiring the same kind and quality, all claims are filed electronically in ACE, recordkeeping was simplified, and a new method governs how substitution claims are calculated. The result is a process that is far easier to automate, which is why software-driven drawback programs have widened access to refunds that once required specialist brokers.