What is duty drawback?
Duty drawback is a refund of the duties, taxes, and certain fees you paid when you imported merchandise — granted when that merchandise, or a commercially interchangeable substitute, is later exported or destroyed. It is one of the oldest provisions in U.S. trade law, written into the very first Tariff Act of 1789, and it exists for a simple reason: import duties are meant to protect the domestic market, so goods that never actually stay and compete here shouldn’t bear that cost.
Today it’s governed by 19 U.S.C. § 1313 and the modernized regulations at 19 CFR Part 190 — the rules rewritten after the 2015 TFTEA law (the older Part 191 lingers only for legacy claims). The headline number: you can recover up to 99% of the duties paid. CBP keeps 1%.
A quick example
Suppose you import $1,000,000 of components and pay $80,000 in duties over the year, then re-export a third of the finished goods. You could be eligible to recover up to 99% of the duty attributable to that exported third — roughly $26,000 — and you can look back across five years of entries, not just this one. For a company that exports regularly, drawback routinely adds up to a six- or seven-figure recovery.
The main types of drawback
Almost every claim falls into one of three buckets:
1. Manufacturing drawback
You import materials, use them to manufacture a different product, and export that product. You recover the duty paid on the imported inputs. (19 U.S.C. § 1313(a) direct identification; § 1313(b) substitution.)
2. Unused merchandise drawback
You import goods and then export or destroy them without using them in the United States. Common for returns, overstock, and distribution hubs that import to re-export. (§ 1313(j).)
3. Rejected merchandise drawback
You import goods that turn out defective, not to specification, or shipped without your consent, and you export or destroy them. (§ 1313(c).)
A powerful TFTEA feature is substitution: you don’t always have to drawback the exact item you imported. You can substitute a commercially interchangeable good that shares the same 8-digit HTS classification — which makes drawback feasible even when imports and exports aren’t individually serial-tracked. Substitution claims use a “lesser of” rule: the refund is based on the lesser of the duty on the imported goods or the duty that would apply to the substituted exported goods.
Who qualifies?
If any of these sound like you, drawback is worth a serious look:
- You import and also export — directly, or through customers and distributors abroad.
- You’re a manufacturer using imported inputs in products you ship overseas.
- You destroy unsold, expired, or defective imported inventory under customs supervision.
- You run a distribution or e-commerce operation that re-exports a meaningful share of what it imports.
You don’t even have to be the party that exported. Rights can be assigned — an importer can claim drawback on goods a customer later exported, with the right documentation and a drawback successor arrangement.
The rules that trip people up
- The five-year clock. Under TFTEA, a claim must be filed within five years of the date of import. Miss it and the duty is gone — the single most expensive mistake, because companies often discover drawback a year too late.
- It’s electronic now. Drawback is filed in CBP’s ACE system as a type-47 entry. The old paper CBP Form 7551 is legacy.
- Privileges speed up the cash. Accelerated Payment (AP) lets you receive the refund before CBP finishes liquidating the claim; Waiver of Prior Notice (WPN) lets you export or destroy without notifying CBP in advance each time. Both require an application (and AP a bond).
- Records matter. You must be able to trace the import to the export — entry summaries, proof of export, bills of materials for manufacturing — and retain the supporting records for three years from the date the claim is paid.
- Not every tariff is drawback-eligible. Ordinary customs duties, the Merchandise Processing Fee, and Section 301 duties are generally recoverable; Section 232 and certain IEEPA actions are excluded. Eligibility is program-specific — exactly the kind of detail worth checking line by line.
Why most importers leave it on the table
Drawback is one of the few places where the government will literally write you a check — and yet most eligible mid-market importers never claim it. Three reasons:
- The data is scattered. Proving drawback means joining import entries to export records across systems, often years apart.
- The matching is fiddly. Substitution at the 8-digit level, the lesser-of calculation, and per-program eligibility are all easy to get wrong.
- It feels like a project. Companies assume it needs a specialist engagement before they even know whether there’s money there.
So the duty sits unclaimed until the five-year window quietly closes.
How Commers helps
Commers is built to make drawback visible by default. Because the platform already holds the verified, classified data of every entry it clears, it can:
- Surface eligibility automatically. It scans your cleared entries and flags which have drawback potential — no separate data project.
- Match imports to exports. It links import lines to export records at the 8-digit HTS level (including substitution) and applies the 99% × lesser-of calculation, so you see a real recoverable number, not a guess.
- Watch the five-year clock. Every eligible entry is tracked against its import date, and claims are surfaced well before the window closes.
- Get you to filing. Eligible claims are organized toward an electronic type-47 drawback entry in ACE — one click from filing, instead of a months-long reconstruction.
It’s the only part of Commers that’s revenue-aware: instead of a flat fee for service, drawback becomes a share of duty you’d otherwise never have seen.
See what you could recover.
Book a 20-minute demo and we’ll walk through how Commers finds drawback — and overpaid duty — in your own entries.
Frequently asked questions
How far back can I claim duty drawback?
Up to five years from the date of import, under TFTEA’s uniform rule. Entries older than five years are no longer claimable.
How much can I get back?
Up to 99% of the duties, taxes, and eligible fees paid on the imported merchandise. CBP retains 1%.
Do I have to be the company that exported the goods?
Not necessarily. Drawback rights can be assigned, and substitution rules let you claim against commercially interchangeable goods classified under the same 8-digit HTS code.
What records do I need?
Enough to trace the import to the export or destruction — entry summaries, proof of export, and (for manufacturing drawback) bills of materials. Retain the records for three years after the claim is paid.
Is drawback worth it for a mid-size importer?
Often, yes. If you export or destroy even a modest share of what you import, five years of accumulated duty can be substantial — and electronic filing in ACE has lowered the effort considerably.
This article is general information, not legal or customs advice. Drawback eligibility depends on your specific facts; confirm program details with a licensed customs broker or CBP. Sources: 19 U.S.C. § 1313; 19 CFR Part 190.