Duty Drawback

What is duty drawback?

Duty drawback is a customs refund program that allows importers or exporters to reclaim duties, taxes, or fees paid on imported goods that are subsequently exported or destroyed under customs supervision. This system is designed to encourage international trade by reducing overall import costs for businesses engaged in manufacturing, re-exporting, or global supply chain operations. By applying for a duty drawback, companies can improve cash flow, enhance supply chain efficiency, and maintain trade compliance while maximizing cost savings on international shipments.

What types of drawback can be applied to goods?

Unused Merchandise Drawback

• Direct Identification (19 USC 1313(j)(1))
• Substitution (19 USC 1313(j)(2))

Substitution of Finished Petroleum Derivatives (19 USC 1313(p))

Manufacturing Drawback

• Direct Identification (19 USC 1313(a))
• Substitution (19 USC 1313(b))

Other Common Drawback Types

• Rejected Merchandise Drawback (19 USC 1313(c))
• Packaging Material (19 USC 1313(q))
• Flavoring extracts; medicinal or toilet preparations; bottled distilled spirits and wines (19 USC 1313(d))

How do you claim duty drawback?

In the United States, claimants file with U.S. Customs and Border Protection (CBP), usually within five years of the date of import. You'll need records that link the imported goods to their export or destruction, such as entry, export, and payment documents. Eligibility rules vary by drawback type, so many companies work with a licensed customs broker.

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