WHAT IS DUTY DRAWBACK?
Duty drawback is the refund of Customs duties, taxes and fees paid on imported items that are matched with subsequently exported or destroyed items.
What is duty drawback?
Companies can go back five years to claim on past imports and exports.
Companies can go back five years to claim on past imports and exports. Duty drawback refunds 99% of duties, taxes and fees paid on imported products, if those products, comparable products, or products produced from the imported product are exported within five years. Thanks to eight-digit substitution, the imported and exported products do not have to be the exact same products. Charter pioneered the legislative change for eight-digit substitution drawback, first in 1993 for the energy industries and in 2016, for all imported and exported products.
Today, drawback provides extensive opportunities in every segment of the U.S. economy. Charter is ideally positioned to unlock this value for its clients with its unique, and comprehensive knowledge and experience.
The modernization of drawback regulations has created new opportunities for companies to secure refunds. These new opportunities can be found by exploring not only imports and exports but also manufacturing, supply-chain movements, domestic sales, and purchases and in and out of network supply-chain sales. The increase of new drawback scenarios also increases the need for a highly compliant drawback program that uses state-of-the-art technology and analytics with dynamic and expert personnel.
Contact Charter to learn more about our drawback services and drawback analysis, at no cost to you. Drawback can be difficult, which is why Charter is here to partner with our clients and explore numerous drawback opportunities while remaining vigilant about compliance.
What is duty drawback?
Duty drawback, or drawback, is a fundamental principle of international trade law and policy under which duties, taxes and fees paid on imported merchandise are refunded upon the exportation of qualified articles. Duty drawback has been a part of U.S. international trade policy since the founding of the country, and the concept of drawback exists in the trade policies of nearly all economically developed nations. Essentially, duty drawback is an export promotion program intended to eliminate or recover the costs of duties, taxes and fees on merchandise sold on international markets; in fact, it is one of the few export incentive programs acceptable under World Trade Organization rules. In the United States, drawback is codified at 19 U.S.C § 1313 and administered by the Customs and Border Protection.
There are multiple drawback models that can be used to optimize a drawback program and maximize a company’s refund. Charter can advise on which model(s) can be used for the largest monetary gain.
Maximizing Duty Drawback with Charter.
Charter Brokerage’s drawback experts unlock the value of all available drawback provisions for our clients. Our company’s widespread professional background includes the following:
- More than 200 years of combined specialized experience in eight-digit drawback.
- Filing more than 90% of the historic eight-digit drawback claims with Customs since 1994.
- More than 25 years of expanding clients’ duty-drawback programs.
- The resources necessary to manage large, medium, and small accounts – Charter currently files a third or more of the total duty-drawback refunds issued by U.S. Customs.
- Extensive knowledge of the contents of the TFTEA as well as the process to maximize drawback under the new rules.
If you are an importer (or buy from an importer), an exporter (or sell to an exporter) or a manufacturer, there is a drawback model that provides opportunities for savings. If you are interested in understanding how to capture these new financial savings in the context of TFTEA, please contact Charter’s duty-drawback experts. Call: (281) 599-1252 | Email: Inquiries@charterbrokerage.net
What is duty drawback?
Petroleum, Petrochemicals, Chemicals and Plastics
The provision of the drawback statute in subsection (p), the so-called petroleum and their derivatives drawback section (see 19 U.S.C. 1313(p) for the provision) provides a series of specific rules that apply to certain petroleum, petrochemical, chemical and plastics tariff classifications that are enumerated in the law. Subsection (p) permits the recovery of customs duties, taxes, and fees) paid on the importation of goods classified in specified eight-digit descriptions of the Harmonized Tariff Schedule when matched against exports of the same classifications. Current time restrictions apply for substitution and manufacturing claims that invoke 1313(p). Because this provision permits certain unique substitutions in both an unused or manufacturing claim, Charter Brokerage can identify potential recoveries often overlooked by other drawback service providers. Charter files the vast majority of 1313(p) claims filed with Customs and our expertise in leveraging these special rules to the benefit of our clients is simply unmatched by any other drawback providers.
Charter Brokerage: The Drawback Industry Advocate
Through Charter’s unyielding perseverance and advocacy efforts, the following list of legislative and executive branch victories have expanded duty drawback for many industries over the past three (3) decades. This list proves Charter’s commitment to our client base and the fact that we will always be vigilant to expand duty drawback. Charter retains two (2) lobbying firms in Washington D.C., no other drawback broker has the same type and level of commitment to expanding drawback opportunities for their clients.
- 1993 – 1313(p) Drawback – provided for 8-digit substitution for petroleum and its derivatives
- 1998 – 1313(p) amendments to expand by adding crude, MTBE, and lubricating oils
- 1999 – 1313(p) technical amendments to clarify and facilitate filings
- 2001 – Amendment to Miscellaneous Trade Bill securing gas/jet substitution
- Reference either 2000 HTSUS or current HTSUS for substitution.
- 2004 – Legislative correction to allow taxes and fees paid
- Struck “because of its” and replaced with “upon entry or”
- 1999 to 2003 – 19 USC 1309 military sales, established eligibility for duty drawback
- 2004 to 2007 – Ethanol and RBOB drawback rulings
- 2007/2008 – Energy & Farm bills ethanol drawback effort
- 2005 to Present – Protection of taxes and fees drawback
- 2006 to 2016 – P.L. #114-125 (HR 644, Sec. 906) – Drawback Simplification *
- 2016 – 2017 – NAFTA Duty Drawback Coalition, effort to remove Art. 303 restriction on drawback for exports to Mexico and Canada.
- Note Art. 303 restrictions were not successful removed in USMCA (see Art. 2.5).
- 2018 – Charter funded the Tabaco’s de Wilson case that resulted in requiring CBP to issue the TFTEA regulations, thereby enabled accelerated payment under TFTEA
- 2019 – Successful modification to USMCA enabling legislation that expanded drawback opportunities.
- 2019-2020 – Charter funded National Association of Manufacturers case at the CIT and CAFC to allow for the recovery of certain excise taxes. The case was successful at the CIT and is currently being appealed at the CAFC.
*On February 24, 2016, the President signed Public Law 114-125, which enacted H.R. 644 “The Trade Facilitation and Trade Enforcement Act” (TFTEA) of 2015. The enactment of this law marks the successful completion of a 10-year effort by Charter, along with other members of the trade community and USCBP, to enact the most sweeping enhancement and expansion of the drawback law in our nation’s history.
As one of the original architects of eight-digit substitution drawback for petroleum products and their derivatives, Charter has been at the forefront of the efforts to expand this eight-digit substitution approach to all U.S. industries. Charter has unparalleled capabilities to evaluate all the opportunities that will maximize our client’s drawback program.