Drawback Entries in International Shipping

In respect of international shipping, drawback is a refund of duty and taxes, when internationally shipping goods had been imported to the USA, duty and taxes paid and now it is exporting out of the USA.

A refund can take place if:

• Internationally shipping/Exporting imported merchandise;
• Destroy imported merchandise;
• Put in Foreign Trade Zone in Restricted Status (for export or destruction only).

The refund can be on:

• Duty;
• Taxes;
• Marking duty if any;
• Merchandise processing fee, BUT only under one condition: it has to be used merchandise drawback;
• Harbor maintains fee are NOT refundable.

Types of drawbacks in international shipping:

1. Unused international shipping merchandise. I.e. the same condition and quality in and out;
2. Rejected international shipping merchandise;
3. Manufacturing drawback, when international shipping items used in a manufacturing process.

PROCEDURE FOR FILING DRAWBACKS IN INTERNATIONAL SHIPPING:

A. DRAWBACK ENTRY:

1. CF 7551 - "Drawback Entry Form";
2. CF 7553 - "Notice of intent to Export"

a. FOR EXPORT: You give to Customs Drawback Entry forms (7551 and 7553 in 2 (TWO) working days BEFORE the goods ar going to leave the USA. If Customs did not response, you are free to export.

b. FOR DESTRUCTION: 7 (SEVEN) working days notice to Customs is require. Customs must response in 4 working days.

c. If you did not file 7553, then Customs will reject the claim for drawback.
However, Customs may give you ONE-TIME exemptions in a case of that you file a written application including the fact why you did not file the 7553. Customs will response within 90 days and advise whether or not they reject the international shipping claim.
If they reject, then you have 30 days to claim in the headquarters.

d. Customs may waive NOTICE OF EXPORT (CF 7553) if you have a international shipping good records and request in advance. It is for large corporations, which does a lot of drawbacks.

B. DRAWBACK CLAIM (Package of the drawback claim):

1. CF 7551 - "Drawback Entry";
2. CF 7552 - "Assignment of rights" if requires, since another exporter;
3. CF 7553 - "Notice of intent to Export";
4. Proof of Export - Airbill, BOL, SED (7525) etc.

There are 5 offices in the United States where Drawback on international shipping can be filed (not 9 like before):

1. Chicago;
2. Houston;
3. Long Beach;
4. New York;
5. San Francisco.

Time limit is 3 (THREE) YEARS of the date of EXPORT. No extensions, unless a nation disaster (records had been destroyed). Then can be extended for 18 more months.

Drawback claims on international shipping take a long time to get the money back. It can take up to ONE YEAR AFTER THE ORIGINAL ENTRY IS LIQUIDATED.
However, you can get an accelerated payment. Since you put bond on your import (i.e. the amount of money you're getting back) Customs will certify the payment:
- Within 3 weeks;
- 2-3 months if the entry filed manually.

You can perform ANY operation of the international shipping merchandise in the USA with the exception of assembly.

Substitution is ALLOWED in drawback, but it must be commercial interchangeable.
In order to find ether it is interchangeable or not you have to get a ruling from the Customs:
- Non-binding ruling from Port Director;
- Binding ruling from Headquarters.

UNUSED INTERNATIONALLY SHIPPED MERCHANDISE

Must be exported within 3 (THREE) YEARS OF DAY OF IMPORT. You submit whole package of the international shipping drawback claim)

REJECTED MERCHANDISE

Must be exported within 3 (THREE) YEARS OF DAY OF IMPORT.
You must file 7553 with written explanation why international shipping goods had been rejected and submit to Customs in 5 (FIVE) working days. Customs must response within 2 (TWO) working days whether or not they are going to inspect it.

2 (two) TYPES OF MANUFACTURING DRAWBACKS - When international shipping goods are manufactured in the U.S. with foreign parts and then an entire item sent out of the country.

1. GENERAL MANUFACTURING DRAWBACK;
2. SPECIFIC MANUFACTURING DRAWBACK

GENERAL MANUFACTURING DRAWBACK:

Customs publishes General Drawback Ruling in the CFR 19 part 191 appendix A.
Each has a treasury decision # on it.
A manufactory sends to Port Director letter that it will comply with the manufactory drawback and the drawback will be filed and later liquidated.
Customs sends back an Acknowledgement Letter with UNIQUE computer generated # that will be used on ALL the drawback claims.

SPECIFIC MANUFACTURING DRAWBACK:

The applicant applies to Headquarters (not to Port Director) and the Headquarters sends back an Acknowledgement Letter with UNIQUE computer generated # that will be used on ALL the international shipping drawback claims.

Both of them apply to DIRECT EDIFICATION (1) and SUBSTITUTION (2).

Substitution - you CAN substitute domestic international shipping merchandise in drawback claim on export referred to the TRADE OFF.
Substituted international shipping merchandises must be the same in brand and quality.

The requirements for the TRADE OFF are:
It must be used in the manufactory within 3 YEARS of receipt and exported within the same 3 year.
The completed international shipping articles must be exported within 5 YEARS of the date of import, i.e.
YOU MUST INTRODUCE PARTS WITHIN 3 YEARS AND EXPORT COMPLETED ARTICLES WITHIN 5 YEARS.

TRADE OFF MUST BE:

1. Two separate legal entity. I.e. you cannot trade off to yourself;
2. No cash sales, since there are no paper trail;
3. Headquarters approved merchandise as equal class and quality.

DRAWBACK TERMINOLOGY

PREDECESSOR - original exporter who is entitled to the drawback

DRAWBACK SUCCESSOR - who has rights assigned by CF 7552 ("Assignment of rights" if requires, since another exporter)

USED IN - multiply foregn products in one item

APPEARED IN - one foreign item

VOLUNTARY-TENDER - intentional overpayment (usually to bulk)

MISCELLANEOUS:

• Drawbacks as a rule in the sum of 99%, except from export from continues custody. Then 100%.
• NAFTA DRAWBACKS COVERED BY CFR 19 part 181 (non by 191)
• No drawback on international shipping agricultural products permitted under tariff rate quota, which paid over quota rate.
  EXCEPT TOBACCO.
• Even with correctly filed drawback claims Customs has right request an additional information. Then importer must response in 30 days.

RECOUP OF TIME LIMITS FOR DRAWBACK EXPORTS:

1. Not ordered - 3 years;
2. Unused/in same conditions - 3 years;
3. Manufactory drawback - 5 years;
4. Substitution - 3 years;
5. Time to file claim - 3 year;
6. Records keeping - 3 years after the payment