Duty drawback is a refund of certain duties, internal revenue taxes, and certain fees collected upon the importation of goods into the United States, which are refunded when the merchandise is exported or destroyed. It is the oldest trade program in the United States, codified in 1789. The refund is only allowed upon the export/destruction of the imported merchandise or a valid substitute, or the export/destruction of a certain article manufactured from the imported merchandise or a valid substitute. Claimants may be the importer, exporter, or intermediate party within the drawback transaction. The following duties, taxes, and fees paid on the imported merchandise can be recovered by claimants:
- Regular duties paid on an entry
- Merchandise processing fees
- Harbor maintenance fees
- Internal revenue taxes paid on alcohol and tobacco products
- Taxes paid on petroleum products
There are several types of drawback authorized under Section 1313, Title 19, United States Code (U.S.C.), including unused merchandise drawback, rejected merchandise drawback, and manufacturing drawback. The amount of duties to be refunded is determined by deducting the value of recovered materials accruing to the drawback claimant from the value of the imported merchandise that is destroyed or from the value of the merchandise used or designated as used in the manufacture of the article. Importers can receive up to 99% of their previously paid duties, and a shipper can retroactively claim duty drawback back five years.
