CHAPTER XV DRAWBACK Types of Drawback

CHAPTER XV DRAWBACK ¨ Types of Drawback ¨ ¨ ¨ § Manufacturing Drawback • Direct Identification Drawback • Substitution Drawback § Rejected Merchandise Drawback § Unused Merchandise Drawback General Manufacturing Drawback Ruling Specific Manufacturing Drawback Ruling Evidence of Exportation Filing for Drawback Claims Person Entitled to Receive Drawback 1

DRAWBACK t t Refund, in whole or in part, of all ordinary customs duties, internal revenue taxes and fees paid for imported merchandise when it is reexported or destroyed under the Customs supervision Antidumping and countervailing duties not refundable To encourage manufacturing in the U. S. and American manufacturers can better compete in international markets Drawback claims must be filed with Customs within 3 years after export. No automatic drawback due to re-exports. 2

DRAWBACK t Firms who did not pay duties for imported dutypaid components directly to the U. S. Customs & Border Protection (CBP) are also eligible with CBP Form 7552, Delivery Certificate for Purposes of Drawback from the importer of the same components 3

Manufacturing Drawback t t Manufactured article which incorporated imported duty-paid components must be exported before a drawback claim is filed. However, Refund of duties paid on materials and equipment for vessels or aircraft foreign account can be filed even before their exportation. 4

Manufacturing Drawback Direct Identification Manufacturing Drawback t t t A refund of duty paid on an imported article which was used in the manufacture of an exported article. Identification of imported articles must be maintained. Must be exported within 5 years after importation of components Manufacturing operations must take place within three(3) years after receipt by manufacturer of designated imported duty-paid components 5

Manufacturing Drawback Substitution Manufacturing Drawback t t t A refund of duty paid on an imported article (designated article), when both imported dutypaid article and domestic article of same kind and quality are used in manufacture of exported articles. Components must be interchangeable Enables manufacturer to obtain drawbacks without expense of maintaining separate inventories for imported & domestic articles Must be used within 3 years from the receipt by the manufacturer 6

Rejected Merchandise Drawback t t t A refund of duty paid on imported merchandise found not conforming to sample or specification or shipped without the consent of the buyer, or defective. Returned to customs within 3 years of import and reexported or destroyed under Customs supervision. Required to provide Customs with documents indicating reasons for rejection 7

Unused Merchandise Drawback t t t A refund of duty paid on the imported merchandise that was reexported or destroyed without being used in the U. S. Within 3 years of import Drawback available for substituted merchandise when § § reexported or destroyed, if not used in the U. S. and possessed by the same claimant. Must be commercially interchangeable. Determination of commercial interchangeability must be obtained from U. S. Customs 8

General Manufacturing Drawback Ruling (GMDR) t t t Designed to simplify drawback procedures for certain common manufacturing operations. General manufacturing drawback rulings for various products are contained in Appendix A to Part 191 -Drawback of CFR (Code of Federal Regulations) A manufacturer submits a letter of notification of intent to operate under GMDR to any drawback office. Drawback office acknowledges it Remain in effect indefinitely, unless no drawback claim is filed for 5 years & notice of termination is published in the Customs Bulletin. 9

General Manufacturing Drawback Ruling (GMDR) t GMDR currently available for burlap, components parts, flaxseed, fur skins, orange juice, petroleum or its derivatives, piece goods, steel, sugar 10

Specific Manufacturing Drawback Ruling (SMDR) t t A manufacture applies to the Customs & Border Protection Headquarters for its approval for a Specific Manufacturing Drawback Ruling, when GMDR is not desirable or not available. Sample formats for application for Specific Manufacturing Drawback Ruling are contained in Appendix B to Part 191 -Drawback of CFR Duration of approved SMDR: The same as GMDR Approval of SMDR application usually takes one to two years 11

Evidence of Exportation 1) Transport Documents of Export 2) Chronological Summary of Exports 3) Certified Notice of Exportation for Mail Shipments 4) Notice of Lading for Supplies on certain Vessels or Aircraft 5) Notice of Transfer for Articles to a Foreign Trade Zone 12

Filing for Drawback Claims (1) Exporter must have an acknowledged General Manufacturing Drawback Ruling or an approved Specific Manufacturing Drawback Ruling (2) Drawback Documents • Drawback Entry, CBP Form 7551 • Delivery Certificate for Purposes of Drawback, CBP Form 7552 • Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback, CBP Form 7553 • Import Entry Numbers or Coding Sheet • Evidence of exportation or destruction 13

Filing for Drawback Claims (3) Time of Filing • Claims within 3 years after the date of exportation of the articles which drawback is claimed. No extension 14

Person Entitled to Receive Drawback (1) Exporter in the B/L, Air Waybill, Freight Waybill or Cargo Manifest, unless manufacturer reserves the right (2) Manufacturer who reserves a right to drawback if it is not an exporter t Drawback must be filed by the claimant or a licensed customs broker 15