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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
DRAWBACK • 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.
DRAWBACK • Firms who did not pay duties for imported duty-paid 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
Manufacturing Drawback • 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 for foreign account can be filed even before their exportation.
Manufacturing Drawback Direct Identification Manufacturing Drawback • 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
Manufacturing Drawback Substitution Manufacturing Drawback • A refund of duty paid on an imported article (designated article), when both imported duty-paid 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
Rejected Merchandise Drawback • 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
Unused Merchandise Drawback • 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
General Manufacturing Drawback Ruling (GMDR) • 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.
General Manufacturing Drawback Ruling (GMDR) • GMDR currently available for burlap, components parts, flaxseed, fur skins, orange juice, petroleum or its derivatives, piece goods, steel, sugar
Specific Manufacturing Drawback Ruling (SMDR) • A manufacture applies to the Customs & Border Protection Headquarters for its approval for a Specific Manufacturing Drawback Ruling, when GMDR is not desirable. • 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
Evidence of Exportation • Transport Documents of Export • Chronological Summary of Exports • Certified Notice of Exportation for Mail Shipments • Notice of Lading for Supplies on certain Vessels or Aircraft • Notice of Transfer for Articles to a Foreign Trade Zone
Filing for Drawback Claims • 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
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
Person Entitled to Receive Drawback • 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 • Drawback must be filed by the claimant or a licensed customs broker