What is "Drawback"? A program that provides a refund for a majority of goods that are exported or destroyed after importation into the United States.
If the goods are exported or destroyed drawback permits Customs to refund 99% of the duties when the goods were imported into the U.S. The only difficult part about drawback is that you must maintain precise compliance with the drawback rules and regulations - the government is not going to just return money willy nilly. The importer must fill out the drawback application before exportation.
There are (4) types of drawback:
1. Merchandise not conforming to sample or specifications - Imported goods that were not solicited not conform to the samples or specifications at the time it was imported. Must be done within 3 years from the time the merchandise was released from Customs.
2. Unused merchandise drawback - Imported goods that have not been "used" (speak to an expert about whether your particular product qualifies as used). Must be done within 3 years from the time the merchandise was released from Customs.
3. Manufacturing drawback - Imported goods used to manufacture new goods. Manufacturer's Drawback requires that a "ruling" be approved by Customs so that Customs is aware of how the product is being manufactured.
4. Substitution for drawback purposes - Like manufacturing drawback, but you may substitute components of exported products with "commercially interchangeable" (again speak to an expert as to whether you qualify) components. For example: You import Company A screws into the U.S. but instead use Company B screws to manufacture your product. Company A screws and Company B screws are found to be commercially interchangeable, in other words industry equivalents. Must be done before the close of the 3-year period beginning on the date of importation of the imported merchandise
Happy Importing :)
I was under the impression that drawback would also apply for goods received into the US, which are then exported to Canada (combine FCL-then split it and ship some to Canada). Is this correct to your understanding?
ReplyDeleteBrian,
ReplyDeletePlease see the link, hope it helps with your question.
http://www.drawbackpros.com/NAFTA_Drawbacks.html
Brian,
ReplyDeleteDrawback will only be provided for the part of the shipment that was sent to Canada. Thank you Michael for your contribution.
Very interesting to know about Drawback in your countries. Here in Brazil, Drawback is an incentive to exportation only.
ReplyDeleteAccording to the actual Brazilian rules, Drawback can be operated under the following modalities:
1.Suspension of taxes due on importation of raw materials for further processing and subsequently exported;
2.Exemption from taxes due on importation to replenish inventories of raw materials which have been previously imported and used in the processing of product was exported, and
3.Refund of taxes paid on imported raw materials that were used in the manufacturing of the exported product.
Due to recent amendments to systematic drawback, the Brazilian exporter may also purchase raw materials in the domestic market.
Regards