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Unused Merchandise Drawback Methods

A) Direct Identification Method - Unused

The most common type of duty drawback is unused merchandise. A claimant may file a claim for drawback on imported material that is subsequently exported in an unused condition. Prior to exportation Customs must be advised of an export shipment in order to afford them the opportunity to examine the export shipment. The claimant’s records must clearly establish the fact that the exported merchandise was the imported merchandise.

Applications:

In order to file claims for drawback the following applications must be filed with U.S. Customs:

1. Waiver of Prior Notice:

  • Allows the filing of drawback claims on future exports without U.S. Customs having to supervise the exportation
  • One to three months for approval from U.S. Customs
  • Claims may be filed pending approval, no payment until approved

2. One Time Waiver of Prior Notice:

  • Allows the retroactive filing of drawback claims for the last five years notwithstanding the fact that prior notice was not given to U.S. Customs
  • One to three months for approval from U.S. Customs
  • Claims may be filed pending approval, no payment until approved

3. Accelerated Payment Privilege:

  • Allows for payment of drawback claim within three to four weeks of filing
  • Claims may be filed pending approval, no payment until approved
  • Drawback bond must be posted

Documentation:

The documents needed to prepare the applications and the actual claims include but are not limited to:

  • Import purchase order
  • Import purchase invoice
  • Receiving record
  • Entry summary*
  • Export sales invoice
  • Export bill of lading**

* The drawback claimant need not have paid the import duties directly to U.S. Customs. Import duties are often buried in the purchase price on imported merchandise obtained from an American distributor. U.S. Customs assumes that the drawback value of the merchandise passes on with the sale of the imported merchandise.

** The Customs Regulations state that the exporter is entitled to the drawback refund unless he waives that right. Many companies sell drawback eligible merchandise to Domestic companies who subsequently export the merchandise. If the proper waiver is obtained from the exporter claims may also be filed against those exports.

Time Frames:

  • A claim for drawback must be filed within five years from the date of importation.
  • The subject merchandise must be exported within five years from the date of importation.

B) Substitution Method

A claimant may file a claim for drawback on imported material even if the merchandise exported is not the actual imported merchandise. Substituted merchandise must be classifiable under the same 8-digit HTSUS subheading number as the designated imported merchandise (plus other requirements.) Prior to exportation, Customs must be advised of an export shipment to afford them the opportunity to examine the export shipment. The claimant’s records must clearly establish the fact that the exported merchandise is “classifiable under the same 8-digit HTSUS subheading number as the designated imported merchandise.

Applications:

In order to file claims for drawback the following applications must be filed with U.S. Customs:

1. Waiver of Prior Notice:
  • Allows the filing of drawback claims on future exports without U.S. Customs having to supervise the exportation 
  • 90 days for approval from U.S. Customs
  • Claims may be filed pending approval, no payment until approved 

2. One Time Waiver of Prior Notice:

  • Allows the retroactive filing of drawback claims for the last five years notwithstanding the fact that prior notice was not given to U.S. Customs 
  • 90 days for approval from U.S. Customs
  • Claims may be filed pending approval, no payment until approved

3. Accelerated Payment Privilege:

  • Allows for payment of drawback claim within three to four weeks of filing 
  • Claims may be filed pending approval 
  • Drawback bond must be posted
4. Determination of HTSUS Classification for Substituted Merchandise rulings:
  • Allows for the determination of the substitution of merchandise 
  • Three to four months for approval
  • Claims may be filed pending approved  

Documentation:

The documents needed to prepare the applications and the actual claims include but are not limited to:

  • Import purchase order
  • Import purchase invoice
  • Receiving record
  • Entry summary*
  • Export purchase order
  • Export sales invoice
  • Export bill of lading**

Recommended list of items needed for Substitution Drawback Application

* The drawback claimant need not have paid the import duties directly to U.S. Customs. Import duties are often buried in the purchase price on imported merchandise obtained from an American distributor. U.S. Customs assumes that the drawback value of the merchandise passes on with the sale of the imported merchandise. 
 
** The Customs Regulations state that the exporter is entitled to the drawback refund unless he waives that right. Many companies sell drawback eligible merchandise to Domestic companies who subsequently export the merchandise. If the proper waiver is obtained from the exporter claims may also be filed against those exports

Time Frames:
  • A claim for drawback must be filed within five years from the date of importation
  • The subject merchandise must be exported within five years from the date of importation. 

For a free, no obligation assessment of your company's Duty Drawback potential, complete the Duty Drawback Questionnaire.  Contact your local representative or email us today to get started!

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Download our Duty Drawback Questionnaire

 

 

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