Duty Drawback FAQ

Duty drawback is a U.S. Customs and Border Protection (CBP) program authorized under 19 U.S.C. §1313 that allows companies to recover up to 99% of duties, taxes, and certain fees paid on imported merchandise when those goods are later exported or destroyed. The program exists to encourage U.S. manufacturing and international trade by preventing double taxation on goods that do not ultimately remain in U.S. commerce.

Eligible companies may recover up to 99% of duties, taxes, and certain fees paid on imported merchandise that is later exported or destroyed.

If your business is involved in importing and exporting goods to and from the United States, you could be eligible. The program offers a 99% refund on duties paid for goods that are imported and then subsequently exported.

Even if your business doesn't handle both importing and exporting directly, you may still qualify if these activities occur at any point in your supply chain. Eligibility depends on detailed documentation and compliance with customs regulations — accurate records are essential.

• Unused Merchandise Drawback — A refund of import duties for exported merchandise in the same condition as when it entered the country, unused in the USA for its intended purpose.
• Manufacturing Drawback — Covers raw imported materials necessary for the production of new and different products intended for exportation.
• Rejected Merchandise Drawback — Applies to imported merchandise that does not meet intended specifications, was shipped without the consignee's consent, or was returned by the buyer due to a defect.
• Destruction Drawback — Allows companies to recover duties on imported merchandise destroyed under CBP supervision — commonly used when goods are obsolete, damaged, or unsafe.
• Petroleum Derivatives Drawback — A specialized provision for petroleum, petrochemical, and chemical products exported within the statutory timeframe under §1313(p).

Shippers must lodge a claim within 5 years of the import date. Under current law, export or destruction must also generally occur within five years of the date of import.

You should gather documentation such as:

• Import entry summaries (CBP Form 7501)
• Export bills of lading
• Manufacturing records (for manufacturing drawback)

CBP evaluates key data elements including entry number, HTS classification, quantity, value, duty paid, export date, and proof of export.

Most companies that attempt drawback themselves encounter frustration from the volume of paperwork, statutory laws, customs regulations, and procedures involved. The process is further complicated by the effects of various Free Trade Agreements and constantly changing drawback laws.

Inaccurate data, incomplete documentation, or unsupported substitutions can result in claim denials or compliance exposure. Working with an experienced drawback specialist is strongly recommended.

Processing times vary depending on the complexity of the claim and quality of documentation. Companies participating in accelerated payment programs may receive refunds sooner after filing.

Since February 24, 2019, it has been mandatory that all drawback claims are filed electronically into CBP's Automated Commercial Environment (ACE) platform, as mandated by the TFTEA law.

CBP requires that imports that took place under the NAFTA agreement and those under USMCA are not commingled in the same claim. The import date determines which agreement controls a particular entry. Claims under NAFTA imports can continue to be filed until the 5-year window passes.