FAQ: Can I Get a Refund on my Duties Paid if I Export the Same Product?

Theoretically, yes, provided that duty drawback requirements are satisfied.

Duty drawback was established in 1789 to promote exports by means of offering duty refund when imported merchandise has been exported.

Since then, the program has been modified and modernized, however, the fundamentals remain the same – if Customs duties, taxes and fees were paid on imported merchandise, the drawback claimant may receive up to 99% refund of duties paid, after the product is exported or destroyed under U.S. Customs supervision within 5 years from the date of importation and before the drawback claim is filed.

When exporting the same product that was imported, the drawback claim can be filed under one of two provisions:

1. Unused Merchandise Drawback – if a company imports finished products with the intention to sell them to their customers overseas, then unused merchandise drawback might be the best option.
2. Rejected Merchandise Drawback – if a company received imported product and discovered that it was defective, or product was shipped without its consent, or, perhaps, the imported merchandise did not conform to the sample specifications and the company had no other choice but to ship the same product back, then that company might explore the rejected merchandise drawback option.

Identifying rejected merchandise is self-explanatory, whereas the condition of unused merchandise requires more insight.

The term “unused” does not necessarily mean that the item must remain untouched from the moment it was imported until it is shipped outside of U.S. There are certain operations that can be performed to imported merchandise, that would not alter the “unused” condition of the product for the purposes of unused merchandise duty drawback.

FOR EXAMPLE

A company imports machinery and intends to sell it to their customer, provided the customer is satisfied with the machine’s performance.

The machine is put together for a demonstration. After testing, the customer decides that the machine’s performance fell short of their expectations.

The importer of the machinery, however, has another buyer oversees willing to purchase the machine instead. The item is then disassembled and packaged to be shipped abroad.

The performed operations did not alter the “unused” condition of this machinery for the purposes of unused merchandise drawback, since the imported and exported item essentially remained the same.

Find more answers to drawback questions like…

Can I Get a Refund on Duties Paid for Obsolete Product?

And reach out to our Global Trade Solutions team at Green Worldwide Shipping to start a conversation on how Green can help you benefit from a duty drawback program.

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