Goods imported to the United States are subject to Customs duties and taxes, but there are situations where an importer may be eligible for a rebate on duties paid (Duty Drawback). A common example would be when freight is imported into the US and sold to a foreign customer and re-exported - Duties paid on the imported merchandise may be refundable by US Customs.
Duty Drawback is a refund of duty paid on imported merchandise that is linked to an exportation (or destruction) of an article. There are three categories of drawback:
- Manufacturing drawback
- Unused merchandise drawback
- Rejected merchandise drawback
(Within each category, there are variations such as the ability to substitute the imported article, and specific time limits to manufacture or export articles)
Manufactured Drawback is available when imported merchandise or an eligible substitute merchandise is used to manufacture an article which is exported or destroyed within 5 years of import.
Unused Merchandise Drawback is available when imported merchandise is exported or destroyed within 3 years of import without being used in the U.S.. Domestic or other merchandise which is commercially interchangeable with the imported merchandise may be substituted for the imported merchandise and drawback is granted on the export or destruction of the substituted merchandise, imported merchandise or any combination if the exported merchandise was not used in the U.S. and was possessed by the drawback claimant.
Rejected Merchandise Drawback is available when imported merchandise not conforming to sample or specifications, shipped without consent or determined to be defective at the time of import is returned to Customs custody within 3 years of the date of import and is exported or destroyed. The merchandise may be established to be defective at the time of import by presenting evidence of the agreement of the foreign shipper and the importer acknowledging that fact.
*Intent to Export for Drawback should be declared to allow Customs the opportunity to examine the cargo.