Duty Drawback: Recovering Overpaid Tariffs

What Is Duty Drawback?

Duty drawback is a refund of customs duties, taxes, and fees paid on imported goods that are subsequently exported from the United States. The program, authorized under 19 USC 1313, allows importers to recover up to 99% of the duties paid. Despite being one of the oldest trade programs in the US (dating to 1789), drawback is significantly underutilized — CBP estimates that only 3-5% of eligible duties are actually claimed.

Types of Drawback

1. Manufacturing drawback (19 USC 1313(a)): Duties refunded when imported goods are manufactured into a different article that is then exported
2. Unused merchandise drawback (19 USC 1313(j)(1)): Duties refunded when imported goods are exported in the same condition without being used in the US
3. Substitution drawback (19 USC 1313(j)(2)): Duties refunded when commercially interchangeable domestic or imported goods are exported in place of the imported goods
4. Rejected merchandise drawback (19 USC 1313(c)): Duties refunded when imported goods are rejected and returned to the foreign seller

TFTEA Modernization

The Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015 significantly modernized drawback. Key changes include extending the export window from 3 to 5 years after import, allowing electronic filing through ACE, broadening the definition of commercially interchangeable goods for substitution drawback, and increasing the drawback rate from 99% to 99% of ALL duties including Section 301 tariffs, AD/CVD duties, and other trade remedy duties.

Eligibility Requirements

To claim drawback, you must have proof of import (entry summary, CF7501), proof of export (export documentation, CBP export records), correlation between imported and exported goods (matching HTS codes for unused merchandise, BOM for manufacturing), timely filing (within 5 years of import), and a drawback entry filed with CBP through ACE.

Common Pitfalls

• Not tracking import-export pairs at the line-item level
• Missing the 5-year filing window
• Claiming drawback on goods entered under a trade preference program (drawback and FTA benefits cannot be combined)
• Insufficient documentation to prove commercial interchangeability for substitution drawback
• Not including Section 301 and AD/CVD duties in drawback claims (many filers still only claim MFN duties)

How Camtom Supports Drawback

Camtom’s classification data creates a clean foundation for drawback claims. Accurate HTS codes ensure proper matching between import and export entries, Section 301 and AD/CVD exposure is calculated for each entry line, and product descriptions are standardized to support commercial interchangeability arguments. Paired with a drawback specialist, Camtom’s data accelerates the filing process and improves claim accuracy.