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A duty drawback is the refund of certain duties, internal revenue taxes, and certain fees collected upon the importation of goods and refunded when the merchandise is exported or destroyed.

Eligibility for drawback will be evaluated based on whether the company is in compliance with Customs and other applicable federal regulations and/or laws.

What forms of duty drawbacks are there?

There are three forms of duty drawbacks consisting of manufacturing, unused merchandise, and rejected merchandise.

Manufacturing Drawback

Imported articles used in manufacturing or production that are later exported or destroyed under CBP supervision. Drawback rulings are required for eligibility. The forms of manufacturing drawbacks include:

  • Direct Identification: a refund of duties paid on materials or components that were previously imported into the United States and used here in the manufacture or production of goods for export.
  • Substitution Manufacturing Drawback: a drawback of duties is payable with respect to imported, duty-paid components or materials, even if goods are produced for export with other foreign or domestic components or materials of the “same kind and quality” (“SKAQ”).

Unused Merchandise Drawback

A “same condition” drawback, is a refund of 99% of duties, fees, and taxes paid with respect to imported merchandise that is subsequently exported (or destroyed under Customs supervision) within three years after its date of importation, without having been changed in condition or used in the United States prior to such exportation or destruction.

Rejected Merchandise

Merchandise that is defective, does not meet specific standards or is shipped without consent that is exported back to the overseas manufacturer or destroyed.