If the term ‘duty drawback’ is new to you, don’t feel bad. You’re not alone.

According to Oradell, N.J.-based Comstock & Theakston Inc., 90 percent of the duty drawback refunds companies are eligible for in a typical year remain unclaimed and are ultimately lost.

Duty drawback is the recovery of U.S. duties paid on merchandise that enters and subsequently leaves the commerce of the country to join the commerce of another country (including Canada and Mexico). Additionally, a drawback can be claimed on goods damaged and not useable upon arrival.

Millions of dollars go unclaimed either because businesses don’t know about it or they worry about what it will take to collect the money.

Freight Management Inc. partners with industryleading duty drawback companies to help you get the most efficient refund back on your inbound freight.

Here’s how we do it.

Drawback Basics

  • Conduct a thorough assessment
    – Determine recovery potential: Duty paid method most common
    – Assess the resources required
  • Decide on approach:
    Specialist or in-house
  • Implementation process
    – Establish program procedures
    – Outline initial actions
    – Review record retention

Areas of Exposure/Opportunity

  • Recordkeeping time period
    (Up to seven years)
  • No forwarder to certify
  • Routed shipments
  • Mexico shipments
  • Courier exports
    – Ability to track historical shipments
    – Print verification of proof of delivery

Drawback Claim Preparation

  • Document and data gathering
    – Import data elements: Entry number, invoice number, import date, port code, HTS, classification, duty rate, part number, description, quantity, and value
    – Bill of material: Import part number, export part number, descriptions and quantity factor
    – Export data elements: B/L number, invoice number, export date, destination country, part number, description and quantity
  • Claim generation and submission

Drawback Records Needed

  • Import – CF7501 and invoice
  • Receipt/delivery
  • Raw materials inventory
  • Manufacturing
    – Bills of material
    – Specifications
  •  Finished goods inventory
  • Accounting records

Destruction Drawback (if applicable)

  • Definition – The complete destruction of articles and merchandise to the extent that they have no commercial value
  • Destruction under customs supervision: Must give prior notification of intent to destroy drawback-eligible merchandise

Unused Merchandise Drawback (if applicable)

  • USC 1313(j) – A refund of duties on imported merchandise exported in essentially the same condition
  • Merchandise processing fee now eligible for refund under 1313(j)

Methods of Matching Exports to Imports (if applicable)

  • Direct ID – Specifically identifying an export with its import using serial number, lot number or a drawback accounting methodology
  • Substitution – Matching exports to imports of similar merchandise
  • Caution – NAFTA eliminated substitution under 1313(j) (unused merchandise) on Canadian and Mexican exports.