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CBP Eases Process for Claiming Drawback on Unused Merchandise

Tuesday, April 09, 2013
By Shawn McCausland
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection announced April 5 a change that should make it a little easier to claim unused merchandise drawback. This type of drawback allows the refund of up to 99% of customs duties paid on imported merchandise that is exported or destroyed within three years of import without being used in the U.S. (Sandler & Travis Trade Advisory Services is offering a webinar on drawback May 29 – click here for more details.)

Generally, notice of intent to export or destroy merchandise that may be the subject of unused merchandise drawback is required prior to export or destruction to give CBP the opportunity to examine the merchandise. However, this requirement may be waived, and currently CBP approves such waivers for either direct identification unused drawback (19 USC 1313(j)(1)) or substitution unused drawback (19 USC 1313(j)(2)).

As of April 5, CBP drawback offices began accepting amendments to existing 1313(j) waiver of prior notice privileges provided that the claimant submits documentation to support the applicable drawback program related to the amendment. The existing approval will be updated to include the additional 1313(j) type and will apply to drawback claims that meet the statutory timeframes. For example:

- CBP approves Company A for a one-time retroactive waiver and waiver of prior notice (prospective waiver) on Jan. 1, 2010, for drawback under 1313(j)(1). The retroactive waiver applies to claims for exports prior to Jan. 1, 2010.

- Company A adds a new product line on which it decides to claim unused substitution drawback under 1313(j)(2). 

- On Nov. 1, 2012, Company A amends its existing retroactive and prospective waivers of prior notice to include 1313(j)(2). CBP approves the amendment on Dec. 19.

- Company A is ready to file a claim on Dec. 27 and may now file a drawback claim for qualifying exports back to Dec. 27, 2009, for the 1313(j)(2) claim it is ready to file.

CBP notes that this process applies to existing approved WPN privileges under 1313(j). Claimants must comply with the three-year statutory time period for exports (i.e., claims cannot be filed on exports exceeding that time period) and must continue to file notices of intent to export until they receive the privilege approval from the drawback office.

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