Drawback allows companies to recover up to 99% of duties paid on qualifying U.S. imports. These duties include normal customs duty, internal revenue taxes and marking duties. The merchandise processing fee, or MPF, is now available for recovery under certain drawback provisions, though other commodity-specific fees, etc. are not recoverable.
Three Types of Drawbacks
Manufacturing drawback is a refund of duties paid on imported merchandise used in the manufacture of articles that are either exported or destroyed. The imported merchandise must be used in manufacture and exported within five years from the date of importation of the merchandise. An approved drawback ruling (formerly called a drawback contract) must be on file with customs before any manufacturing drawback claims are filed.
Unused merchandise drawback is a refund of duties paid on imported merchandise that is exported or destroyed without undergoing manufacture, and is never used in the United States. The imported merchandise must be exported within three years from the date of importation of the merchandise.
Rejected merchandise drawback is refund of duties on imported merchandise that is exported because it did not conform to sample or specifications, or was shipped without the consent of the consignee. Merchandise must be returned to customs custody within three years of the date of its importation in order to qualify for this type of drawback. Rejected merchandise must be exported and cannot be destroyed in lieu of such exportation.
Marisol Drawback Services
Drawback is a complex topic. Please contact your local Marisol International representative or e-mail to Stacy Cruz with any questions about Marisol’s Drawback Services. You can find additional information at the CBP.gov website Drawback resource pages.
In the interests of paperwork reduction, CBP introduced a prototype program in 1998 called Reconciliation. This program is advantageous to importers who have knowledge that certain information regarding their transactions will not be available until after entry, as it allows them to consolidate the reporting of post-entry information by compiling the necessary changes of up to 9,999 entries into a single submission for processing.
Traditionally, importers have made corrections to their entries on a case by case basis. The most common means to achieve this is by filing a SIL/PEA with the port at which the entry was filed, for every entry that needs adjusting. Each adjustment would have to be processed by CBP separately, and for those importers that habitually require changes, this can be an extensive amount of clerical work for both the importer and CBP.
It is still necessary to use traditional post-entry methods in the cases where Reconciliation can not be used. The most common example: Reconciliation cannot be used to fix mistakes made at time of entry. Those importers that are not using Reconciliation and consistently have large quantities of SIL/PEA’s could be perceived as having careless reporting habits. However, in cases where full information is not yet available, eliminating the necessity of filing SIL/PEA’s can serve to drastically reduce the total number of post-entry claims filed by an importer. In short, Reconciliation is an invaluable compliance tool for compliance-conscious importers.
Marisol Reconciliation Services
For more information on Reconciliation and how it can benefit your company, please contact Marisol International’s Reconciliation team at (405) 949-5457, or via email to Stacy Cruz.