Don’t Let Drawback Intimidate You

by Renee Predki

I have often wondered why potential drawback claimants are so intimidated by duty drawback. By CBP’s own admission, there are millions of dollars eligible for refunds via drawback, yet remain unclaimed each and every year. Most potential claimants cite documentation retention as a deterrent. Yet the type of documentation required for drawback is already being retained internally by the importer, manufacturer and exporter as part of their normal business practices.

Duty drawback was enacted in 1789 to promote US innovation and exportation. Although the concept of refunding import duties has been in effect for well over 200 years, it is still misunderstood and under-utilized by US importers, manufacturers and/or exporters.

Whereas the original drawback provision specifically addressed the importation of salt-cured fish, drawback now encompasses not only import duties but also MPF and HMF fees as well as taxes imposed on alcohol (wine and spirits) as long as the imported products are not modified in any way while in the US. Additionally, the import duties on items/components imported and used to produce a new finished product are also eligible for refund via the provisions for manufacturing drawback.

Currently, under the regulations in place, the claimant can claim eligible exports dating back up to 3 years. Even if the importer and exporter/manufacturer are different entities, a single document (Certificate of Delivery or Certificate of Manufacture and Delivery if manufacturing is involved prior to export) can transfer the drawback rights from one entity to another, as long as backup documentation is retained by the parties involved.

Even if an importer is not a frequent exporter but has that one, big annual shipment, a drawback claim can be submitted prior to the export shipment taking place to recover the eligible duties. If the importer receives a shipment of defective goods and returning the goods would not be economical, the defective product could be destroyed under Customs’ supervision and the import duties could be recovered via drawback.

The takeaway from this should be that drawback can be a useful, lucrative tool for importers, manufacturers and exporters alike. If you are unsure if drawback could work for you, it is to your benefit to speak with a qualified drawback service provider, such as Vandegrift, and discuss the specifics of a potential drawback program at your company. Don’t be one of the many companies who leave behind millions of dollars of recoverable duties just because drawback intimidates you…