Duty Drawback

Duty Drawback

Each year, over 300,000 importers pay about $20 billion in duties to the U.S. Government. Out of this, $1.5 to $2.3 billion can be refunded, but only $550 million is actually recovered, leaving hundreds of millions unclaimed. These refunds are called "duty drawback." Duty drawback refunds the import duties paid when goods enter the country, and up to 99% of these duties can be recovered by those who export the goods later. Our fees are a percentage of the refunds our clients receive from Customs.

We start obtaining refunds by filing applications with the Drawback Liquidation Branch. As a National permit holder, USGTG can handle your claims at any of their branches nationwide. Our applications help speed up the refund process. USGTG is ready to assist with your duty drawback needs for unused merchandise, unused substitutions, and rejected merchandise.

Background

A drawback is a refund of customs duties or taxes paid on items imported into the United States. This refund occurs when the items are exported or destroyed. The goal is to boost American manufacturing and sales by enabling U.S. businesses to compete internationally without the burden of import costs in their export prices. In fiscal year 1998, $528 million was refunded.

There are three main types of drawbacks, each with specific requirements. Most businesses will use two types authorized under Section 1313, Title 19, U.S.C.:

1. Unused Merchandise: Refunds on items not used in the U.S.

2. Rejected Merchandise: Refunds on items that don't meet specifications or are defective upon arrival.

To file for a drawback, Customs Form (CF) 7551 must be submitted. GTG will prepare the form according to Customs guidelines, detailing all relevant import transactions for the drawback claim. This form can be filed manually or electronically. Each import transaction may require its own drawback entry, which could need supporting documents such as invoices, customs entry forms, waybills, and packing lists. A Customs single transaction bond, known as a drawback bond, will be submitted with the claim.

Articles which have subsequently been exported for which proper documentation can be gathered to substantiate such a claim:

Submit and File Prior Notice of Intent to Export Waiver Application.
Submit and File Commercial Interchangability Application.
Submit and File Future Notice of Intent to Export Waiver Application.
Submit and File Accelerated Payment Application.
Gather and Create Import vs. Export Database.
Implement Procedures & Policies For Filing All Future Duty Drawback Claims.
Reconcile All Import & Export Documents.
Submit and File Duty Drawback Entries with US Customs.

NAFTA drawback rules apply to goods brought into the U.S. and then exported to Canada after January 1, 1996, and to goods exported to Mexico after January 1, 2001. According to 19 U.S.C. 1313, an item sent to a NAFTA country may qualify for duty refunds. Generally, the refund amount is the lower of:

1. Total Customs duties, taxes, and certain fees paid on imported goods, or

2. Total Customs duties paid on the finished goods sent to the NAFTA country.

A NAFTA drawback claim must be filed separately from any claims under Section 191 of the Customs Regulations, following the requirements outlined in 19 CFR 181 and 19 CFR 191.

Merchandise Processing Fee (MPF) Refund

When merchandise is officially processed, Customs charges a fee of 0.21 percent, known as the merchandise-processing fee (MPF). This fee is based on the value of the merchandise, capped at $485 and with a minimum of $25. Following the Texport decision, Customs must refund the MPF. Therefore, requests for MPF refunds will be made for all eligible drawback claims, calculated using a relative accounting method.