The Duty Drawback Blog

In the intricate world of international trade, various mechanisms exist to facilitate smoother transactions and encourage commerce across borders. One such mechanism is duty drawback, a process that offers significant benefits to businesses engaged in importing and exporting goods. In this guide, we will delve into the concept of duty drawback, its benefits, and how businesses can leverage it to their advantage.

The implications in the case of Union of India and ORS. v. Patil and Sons Belgaum

Department of Commerce's new policies and trade community advancements

Recent news from CBP regarding cargo messaging and expediting cargo shipping

We are excited to announce our first monthly newsletter! Our goal of this new endeavor is to keep our clients and the companies in our network up to date with all information regarding drawback, CBP and more!

A free trade agreement (FTA) is an agreement between two or more countries where the countries agree on certain obligations that affect trade in goods. Currently, there are 14 Free Trade Agreements in effect in the U.S. with 20 different countries. An importer collects and maintains the information to support the FTA qualification. An exporter from the U.S. is required to complete a declaration verifying that their goods qualify for free trade with the participating country. The rules associate with FTAs are complicated and the analysis is intricate. There are multiple steps to the process and each one must be completed in order to move onto the next. 1. Classify the product according to the HTSUS in order to determine the rule of origin for the specific finished product 2. Choose a preference criteria from the 4 available. 3. Use the rule of origin to determine the qualification of the finished good.

How proper classification can equate to big savings for your company.

Duty Drawback is a refund from Customs, for 99% of the duties paid on imported materials that are subsequently exported, destroyed or used in the manufacture of exported goods. Today, only about 25 percent of eligible duty is being recovered. This means that $5 billion dollars goes unclaimed for drawback, and that money might be yours. So, how do you know if you are a candidate for a lucrative duty drawback program?

The new drawback regulations are written and will take effect on February 24, 2019. That’s less than a month from now!! ITM is prepared to continue filing on behalf of all of our clients and we are excited about the possibility of new opportunities that will now exist under the new guidelines.

Customs has maintained that the ultimate goal of TFTEA is to streamline and simplifying the drawback process. At this time, there are no formal regulations in effect, but the guidelines have been released and reviewed extensively by the trade. After much conversation and deliberation, the trade was allowed and has formally submitted a response to Customs on these proposed regulations and now waits the allotted 90 days to find out how they have been received and what the final determinations will be.

In April of 2018, the current administration announced that it would impose increased tariffs on items imported from China. By April of 2018, the Office of the US Trade Representative (USTR), released the first list of 1,300 tariff numbers subject to an additional 25% duty. That list, referred to as US List 1, went into effect on July 6th and included steel and aluminum. The USTR announced that this would subsequently be followed by a List 2 and 3.

Why it's important to prepare for TFTEA drawback under the new and more flexible standards.

Did you hear that Customs is simplifying the duty drawback regulations? Have you avoided starting a program because it’s too complicated, too frustrating or just too much work?

Join us on June 8th @ 2:00 pm (ET) for our new 20-minute webinar: Free Trade Agreements. In this informative webinar, we will show you how to take full advantage of Free Trade Agreements.

Utilizing the benefits associated with Free Trade Agreements (FTA’s), is one of the best ways for U.S. exporters to sell their goods and services in foreign markets. Because there are fewer trade barriers, FTA’s enable U.S. companies to compete internationally. According to the International Trade Administration, 47% of U.S. goods that were exported in 2015 went to FTA partner countries. Those exports totaled $710 billion dollars. Many companies do not take advantage of the savings afforded them by participating in trade with FTA countries because they (1) are not aware of them, (2) do not understand them, or (3) do not have the resources to implement them.

Learn the three key factors to determine if you are paying too much Duty on your imports.

The first thing you need to do is evaluate the connection between your imports and your exports. On a macro scale, you will need to determine the amount of duty you pay per year on imports (e.g. $250,000). Next, identify what percentage of your total sales is exported (e.g. 10%). Now multiply the percentage of exports times the amount of duty paid per year on imports, you will get a ball park estimate of your duty drawback recovery potential ($25,000 per year in this example). Of course every import is not exported, but this is a good calculation to use in order to establish a general starting point. The duty drawback regulations allow a claimant to go back 3 years when claiming drawback on exports, so using the example above this company would get an initial potential recovery of $75,000. If after using the calculation method above, you find that pursuing a duty drawback program seems viable, the next aspect for consideration is the clarification of the exporter of record. By law, the exporter of record is the party entitled to claim duty drawback. If you are not the exporter of record, those rights can be transferred back to you by the exporter of record, but this is an additional step that warrants consideration. The third point to assess is your company’s import history and available supporting documentation. You need not be the direct importer in order to claim duty drawback. If you obtain imported merchandise from a domestic third party, you can use that material in a duty drawback program by obtaining certificates of delivery. Again, this is an additional step in the process, one in which can be simplified by acquiring the services of a duty drawback professional. Once you have determined that you have a viable duty drawback program, a potential claimant will need to obtain permission from U.S. Customs and Border Protection in order to file the duty drawback claims. These permission letters include accelerated payment, waiver of prior notice, and in the case of a manufacturing process, a specific or general drawback ruling. When the applications have been filed with Customs, the duty drawback claims can then be submitted. It is imperative that a claimant files the older exports first, most importantly because you will begin to lose the ability to claim them once you exceed the statutory 3-year period. Once your applications are approved, payment should be received from Customs in approximately 30 days.

Join us on August 30th @ 2:00 pm (ET) for our new 20-minute webinar: DUTY DRAWBACK 101. In this informative webinar, we will introduce you to the concept of Drawback and how to use it to get money back from the U.S. government.

To explain duty drawback simply, if you import something into the US, pay a duty or tax on it and export it as is, or as part of a US manufactured product, you can recoup 99% of the duty paid on the import upon the export.

Importers and exporters trading with foreign countries may be eligible for free trade agreement benefits. Contact us today for a review of your circumstances to see if you can save money while ensuring compliancy.

To explain duty drawback simply, if you import something into the US, pay a duty or tax on it and export it as is, or as part of a US manufactured product, you can recoup 99% of the duty paid on the import upon the export.

ITM has collected hundreds of thousands of dollars for PEM America, none of which we would have recovered without their help. If you're not going to use this service, you'll be leaving an awful lot of money on the table.

Every year, more than 1.5 billion dollars of refundable customs duties go unclaimed. Importers and exporters are entitled to refunds of their duties paid on imported goods. Our new guide introduces the concept of duty drawback and serves as your starting point for an informed approach to reducing your total duty burden. 

Simply trading with Korea does not qualify you for free entry. To qualify for free trade benefits, an importer and/or exporter needs to consider the rules of origin of the article.

If you are an importer who was once privy to duty free entry under GSP and your internationally sourced product is now imposed with an import duty, you may be able to claim duty drawback on these items once you ship them out of the United States.

Importers and exporters should be aware that they may be entitled to refunds or reductions of their duty rates. This guide introduces the concept of tariff management and serves as a starting point for an informed approach to reducing your total duty burden.

Proper classification is required to be compliant not only with free trade agreements but also with the importation of merchandise.

If you have expired, imported products that you plan to destroy, you can claim duty drawback on that product upon it’s destruction with the appropriate supporting documentation.