A Duty Drawback is a refund on duties, taxes, and fees paid on imported goods, that are later exported as unused or as finished product. It can also include merchandise destroyed under U.S. Customs supervision. Drawbacks were introduced by CBP to reduce costs and incentivize exports – spurring on the economy.
There are three major types of Customs Border Patrol- CBP duty drawback returns.
Unused Merchandise Drawback provides for drawback upon the exportation or destruction under CBP supervision of imported merchandise upon which was paid any duty, tax, or fee, if the merchandise has not been used within the United States before such exportation or destruction.
Manufacturing Drawback provides for drawback upon the exportation or destruction under CBP supervision of commodities manufactured or produced in the United States with the use of imported merchandise, provided that those articles have not been used in the United States prior to such exportation or destruction.
Rejected Merchandise Drawback provides for drawback upon the exportation or destruction under CBP supervision of imported merchandise which has been entered, or withdrawn from warehouse, for consumption, duty-paid, and which:
The answer varies greatly. Once Duty Drawback privileges approvals are received, with Accelerated Payment Privilege, checks are typically issued 4 to 6 weeks after the drawback claim is filed. If no accelerated payment privileges are applied, then it can take one to two years or more to receive a duty drawback refund.
The Accelerated Payment privilege allows the claimant to receive duty drawback payment based on when the claim is filed. Without this privilege the claimant would need to wait until the entry has liquidated. That process can take one to two years or more. With this privilege, payment of claims may be paid as quickly as four to six weeks.
If imported merchandise is unused and exported, manufactured into another product and exported, or destroyed under Customs supervision, up to 99 percent of the duties, taxes and/or fees paid on the merchandise may be recovered.
A company new to duty drawbacks will need to apply to U.S. Customs for their Accelerated Payment Request and Waivers for both prior and future notice, as well as certain other privileges where applicable. The regulations state after receipt of the Duty Drawback Privileges package, U.S. will either approve or respond for further information within 90 days of receipt. So, under normal circumstances, after the applications are submitted, it can take from 3 to 6 months for approval.
Duty Drawbacks FAQs: