What is Duty Drawback?

February 21, 2020

What is Duty Drawback?

Duty Drawback is a refund of the customs duties paid (less 1% which is retained by United States Customs and Border Protection as a processing fee) which may be claimed if the imported goods are subsequently exported. It is an incentive scheme that allows importers and exporters, as well as manufacturers, in the United States to recover customs duties. 

Duty Drawback has three focus areas:

Manufacturing drawback (must be claimed within 5 years from the import date)
Drawback may be claimed on an exported article in accordance with Customs Law in the United States if the article was manufactured using the importer’s material or components. In addition, substituting domestically produced merchandise of the same kind and quality as imported duty-paid merchandise is allowed.

Unused merchandise (must be claimed within 5yrs 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 5yrs from the import date)
Customs Law provides for duty drawback on merchandise, which does not conform to sample or specification, if it is exported under Customs supervision.

What are the benefits of Duty Drawback for our clients? 

There are several benefits to looking into Duty Drawback 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? 
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 to any intermediate party.  

Read more about how our Trade Advisory team helped our Automotive client save over $3m here

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